Western States Contracting et al v. Spilsbury et al
Filing
472
ORDER AND MEMORANDUM DECISION: all claims in this action that are not raised in the First Amended Counterclaim, Crossclaim and Third-Party Complaint of CRE/ADC Venture 2012-1 (Dkt. Nos. 464-66), are remanded to the Fifth District Court for the State of Utah, Washington County, Case Number 080501763. Signed by Judge Tena Campbell on 8/10/15 (alt)
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION
WESTERN STATES CONTRACTING, and
TRITON GRADING & PAVING, LLC,
Plaintiffs,
GORDON SPILKER HUBER
GEOTECHNICAL CONSULTANTS, INC.,
Intervening Plaintiff,
ORDER
AND
vs.
MEMORANDUM DECISION
JERALD M. SPILSBURY, et al.,
Case No. 2:10-CV-1141-TC
Defendants.
_____________________________________
AND ALL RELATED CLAIMS.
This case, which was removed from state court in 2010, has evolved significantly over
the years it has been litigated in this court. Based on the case’s current procedural status, the
court, for the reasons set forth below, remands a substantial amount of the remaining claims to
state court, leaving only the foreclosure and guaranty claims of CRE/ADC Venture 2012-1, LLC,
to be adjudicated here.
This case arose out of a failed real estate development project that resulted in loan
defaults and a multitude of competing mechanics lien claims by contractors. One of the
defendants in the state case was ANB Financial NA, which had loaned a substantial amount of
money to the project developers. In November 2010, after the FDIC was appointed as Receiver
for ANB (and substituted as a defendant in the state case), the FDIC removed the entire state case
to federal court. Numerous parties filed related claims against the FDIC.
This court’s jurisdiction was based solely on the FDIC’s presence in the case. (See Order
Granting Motion to Sever (Dkt. No. 186) ¶ 4.) In June 2012, this court remanded a portion of the
claims to state court—that is, those portions of the action that did not relate to property
specifically encumbered by the FDIC’s deeds of trust. (Id. ¶ 8.)
In June 2013, private entity CRE/ADC Venture 2012-1, LLC was substituted for the
FDIC as to claims, defenses, and other purposes, as laid out in the court’s June 18, 2013 Order
Granting Stipulated Motion to Substitute Parties (Dkt. No. 292). Even though the FDIC was no
longer a party, the court retained jurisdiction. (See Order Denying Motion to Remand (Dkt. No.
337).)
On February 11, 2015, the court granted the Stipulation and Joint Motion to Dismiss
Claims Against CRE/ADC Venture 2012-1, LLC, and ordered “that all claims brought by any
party against CRE/ADC Venture 2012-1, LLC be dismissed with prejudice.” (Order of
Dismissal (Dkt. No. 447).) On June 30, 2015, CRE/ADC filed a First Amended Counterclaim,
Crossclaim and Third-Party Complaint (Dkt. Nos. 464-66) limiting its claims to two: (1) judicial
foreclosure on four deeds of trust; and (2) enforcement of two Guaranties connected to the four
deeds of trust. The remaining claims in this lawsuit involve parties other than CRE/ADC.
The stipulated dismissal of all other claims against CRE/ADC materially changed the
case’s procedural posture. Consequently, during the court’s May 18, 2015 status conference, the
court asked the parties to file a memorandum regarding “the possibility of this case being
remanded to the state court.” (See Dkt. No. 459.) Based on the parties’ filings (see Dkt. Nos.
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467 and 470) and the court’s review of the remaining claims and federal law concerning
jurisdiction of this court, the court remands all but CRE/ADC’s judicial foreclosure and guaranty
causes of action to state court.
The court may remand state law claims over which it has supplemental jurisdiction.
Under the Third Circuit’s reasoning in New Rock Asset Partners, L.P. v. Preferred Entity
Advancements, Inc., 101 F.3d 1492 (3d Cir. 1996), the court holds that the claims unrelated to
the interests claimed by CRE/ADC are supplemental.
There is no practical reason why the court should adjudicate the state law claims that do
not involve CRE/ADC. Those claims were originally filed in state court. When the claims were
removed, the court had jurisdiction over them solely because the FDIC was a party. Now the
claims that originated with the FDIC are being litigated by the FDIC’s successor, CRE/ADC.
But CRE/ADC is not a party to the state case, and its judicial foreclosure and guaranty claims
present discrete issues. On the other hand, many of the parties in this case are involved with the
complex parallel state action concerning the same real estate development. Their causes of
action here may very well overlap with claims in state court, and the potential for inconsistent
decisions exists. Moreover, keeping the non-CRE/ADC claims in federal court would waste
judicial resources.
For the foregoing reasons, the court exercises its discretion to send all the claims not
concerning CRE/ADC back to the state case from which they were removed and to keep the
discrete issues involving CRE/ADC’s deeds of trust. Specifically, the court ORDERS that all
claims in this action that are not raised in the First Amended Counterclaim, Crossclaim and
Third-Party Complaint of CRE/ADC Venture 2012-1, LLC (Dkt. Nos. 464-66), are remanded to
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the Fifth District Court for the State of Utah, Washington County, Case Number 080501763.
SO ORDERED this 10th day of August, 2015.
BY THE COURT:
TENA CAMPBELL
U.S. District Court Judge
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