Often, those practicing
in the construction defect field have faced questions concerning the joinder of
a party. Recently, the U.S. District Court for the District of Colorado weighed
in on the requirements for joinder under the Colorado Rules of Civil
Procedure. See Roche Constructors, Inc. v. One Beacon America Ins. Co.,
2012 WL 1060000 (D. Colo. 2012). Roche secured
a construction contract to build a detention facility for the Lincoln County
Sheriff’s Office in Lincoln County, Nebraska.
In turn, Roche entered into a subcontract with Dobberstein Roofing
Company, Inc. in October 2009 to install the roofing system and other related
work at the detention facility. The
subcontract agreement required Dobberstein to maintain adequate commercial
general liability insurance and to add Roche as an additional insured under the
policy. Roche maintained a builder’s
risk policy issued by OneBeacon America Insurance Company and Dobberstein
secured a certificate of liability insurance underwritten by Transportation
Insurance Company (“TIC”). Id. at
*1.
Roche alleged that Dobberstein
constructed the roofing system in a negligent manner in violation of the
subcontract. Roche claims it incurred
additional costs to repair structural damage to the roofing system as a result
of Dobberstein’s negligent work. In
order to cover said damage, Roche tendered insurance claims to OneBeacon and
TIC. According to Roche, OneBeacon denied
coverage and TIC failed to respond to Roche’s claims. In June 2011, Roche brought claims against
all three, Dobberstein, OneBeacon, and TIC in the Weld County District Court. Id. at *2. Roche brought claims for breach of an
insurance contract, insurance bad faith, statutory damages for insurance bad
faith, and declaratory judgment against OneBeacon and TIC. Roche claimed breach of contract, breach of
implied warranty and express warranty, and negligence against Dobberstein.
About a month later,
OneBeacon removed the case to the U.S. District Court for the District of
Colorado pursuant to federal subject matter jurisdiction based on
diversity. All of the defendants
consented to removal. On August 22, 2011,
Roche filed a motion to remand the case and an amended motion to remand on
August 23, 2011. In its motions to
remand, Roche argued removal was improper because Dobberstein had contractually
waived its right to remove the case pursuant to the forum selection clauses in
the subcontract agreement. As such,
Roche argued Dobberstein is estopped from consenting to removal and that the
resulting lack of unanimous consent precludes removal pursuant to 28 U.S.C. §
1446(b). Id. at *3. After finding that Roche’s amended motion to
remand timely, the court turned to the merits of said amended motion.
The court acknowledged
that the forum selection clause in the subcontract agreement between Roche and
Dobberstein expressly gave Roche the right to choose the forum to have any
matters arising out of litigation to be heard.
Neither OneBeacon nor TIC disputed that Roche had the right to choose
the forum in litigation or that the forum selection clause was unenforceable. The court found Dobberstein violated the
forum selection clause by consenting to remove the case to federal court, which
was not the forum selected by Roche. Id. Because Dobberstein could not properly
consent to removal, not all defendants consented to removal from the Weld
County Court. OneBeacon and TIC argued
that the court should sever the two sets of claims and only remand the claims
against Dobberstein. In its motion to
sever, OneBeacon argued that Roche had engaged in a fraudulent misjoinder by
suing diverse defendants in state court.
TIC argued that Roche waived its ability to remand by choosing to
combine its claims against defendants not subject to the forum selection clause
in one action.
While acknowledging
when procedural misjoinder generally occurs[1] in
its opinion, the U.S. District Court for the District of Colorado indicated
that the application of procedural misjoinder was not necessary to resolve
Roche’s amended motion to remand.[2] According to the court, the joinder of claims
against multiple defendants in a single action is governed by Colorado Rule of
Civil Procedure 20, which provides:
All persons may be joined in one
action as defendants if there is asserted against them jointly, severally, or
in the alternative, any right to relief in respect of or arising out of the
same transaction, occurrence, or series of transactions or occurrences and if
any question of law or fact common to all defendants will arise in the
action.
Id.
at *4 (quoting C.R.C.P. 20(a)). Under Colorado law, Rule 20 is given the
“broadest possible reading.” Id.;
see City of Aurora ex rel. Utility
Enterprise v. Colorado State Eng’r, 105 P.3d 595, 623 (Colo. 2005). The U.S. District Court for the District of
Colorado found that Roche’s complaint met the requirements for a Rule 20
joinder. More specifically, the court
found that all claims arise from the construction of the detention facility,
meaning the case will involve a significant amount of overlapping
evidence. Additionally, the court found
common questions of fact and/or law exist concerning the claims, such as
Dobberstein’s alleged negligent construction, the extent to which the OneBeacon
policy covers negligent construction, the subcontract terms as it relates to
Roche’s coverage under Dobberstein’s policy with TIC, and whether TIC waived
its right to assert certain policy provisions.
Id. at *5. Accordingly,
the court granted Roche’s amended motion to remand, and remanded the case back
to the Weld County District Court.
For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.
[1] According to the U.S. District
Court for the District of Colorado, procedural misjoinder generally occurs
“when a plaintiff sues a diverse defendant in state court and joins a
non-diverse or in-state defendant even though the plaintiff has no reasonable
procedural basis to join such defendants in one action.” Id. at *4.
[2] The U.S. District Court for the
District of Colorado also acknowledged that the Tenth Circuit had not adopted
the doctrine of procedural misjoinder, and the court declined to resolve this
issue since the application of the procedural misjoinder was not necessary to
resolve Roche’s amended motion.
No comments:
Post a Comment