United States v. Dawn Properties, Inc.United States v. Dawn Properties, Inc.
ORDER (1) GRANTING MOTIONS TO DISMISS THIRD-PARTY COMPLAINT FILED BY THIRD-PARTY DEFENDANTS AND DISMISSING ALL THIRD-PARTY DEFENDANTS; (2) DENYING MOTION FOR JOINDER FILED BY THIRD-PARTY PLAINTIFFS; AND (3) DENYING AS MOOT JOINT MOTION TO STAY PROCEEDINGS
BEFORE THE COURT are the following Motions to Dismiss filed by Third-party Defendants pursuant to Federal Rule of Civil Procedure 12(b)(6): [70] Motion to Dismiss filed by Greg Stewart and Nosidam, LLC; [76] Motion to Dismiss filed by City of Ridgeland, Mississippi; [80] Motion to Dismiss filed by Harrison County, Mississippi; [85] Motion to Dismiss filed by Jackson County, Mississippi; [94] Motion to Dismiss filed by Drace Construction Corp.; [110] Motion to Dismiss filed by City of Hattiesburg, Mississippi; and [134] Motion to Dismiss filed by Harry Baker Smith Architects, II, LLC. These Third-party Defendants ask the Court to dismiss the Third-party Complaint filed against them by Defendants/Third-party Plaintiffs Dawn Properties, Inc.; Southern Cross Construction Company, Inc.; The Beach Club, LLC; the Beach Club II, LLC; The Belmont of Lamar, LLC; Grand Biscayne Apts., LLC; and Sealnn, LLC (“Defendants” or “Third-party Plaintiffs”).
Also before the Court is the [126] Motion .for Joinder in which the Defendants/Third-party Plaintiffs, anticipating that the Court may grant the Motions to Dismiss, seek to join the Third-party De
The Court has considered the submissions of the parties and the applicable law and finds that the Motions to Dismiss should be granted because (1) there is no right to indemnity or contribution under the federal laws at issue; (2) any state law indemnity claim is preempted by federal law; (3) Mississippi law does not allow for contribution claims against the Third-party Defendants; and, (4) regardless, any state law claim for contribution is preempted by federal law. The claims against the cities and counties should be dismissed for the additional reason that they owed no duty to the Third-party Plaintiffs. The Court finds that the claims against the remaining Third-party Defendants, Gerald James Hopkins and the City of Long Beach, should be dismissed sua sponte.
Furthermore, the Court is of the opinion that joinder pursuant to Rule 19 is unwarranted because the Court can accord complete relief among the United States and the current Defendants without the presence of the Third-party Defendants. The current Defendants cannot use Rule 20 to join additional parties as defendants.
The Court denies as moot the [83] Joint Motion to Stay Proceedings filed by Third-party Defendants Greg Stewart, Nosidam, LLC, and City of Ridgeland.
BACKGROUND
The United States filed this .action against Defendants Dawn Properties, Inc.; Southern Cross Construction Company, Inc.; Ridgeland Construction One, LLC; The Beach Club, LLC; the Beach Club II, LLC; The Belmont of Lamar, LLC; Grand Biscayne Apts., LLC; and Sealnn, - LLC. The United States alleges that the Defendants were the owners, developers, and builders of several local residential apartment complexes and seeks to hold them liable for purported violations of the Fair Housing Act (FHA) and the Americans with Disabilities Act (ADA).
The Defendants (except for Ridgeland Construction, which filed a Motion to Dismiss) filed a Third-Party Complaint pursuant to Federal Rule of Civil Procedure 14 against Greg Stewart; Nosidam, LLC; Gerald James Hopkins; Harry Baker Smith Architects, II, LLC; Drace Construction Corp.; City of Ridgeland; City of Long Beach; Jackson County; City of Pass Christian (which has since been voluntarily dismissed); and John Does 1-100. They thereafter amended their Third-party Complaint to add Harrison County. These Third-party Plaintiffs claim , that if they are found liable in this action, then the Third-party Defendants “should also be held liable and/or should otherwise contribute for all or part of the United States’ claims found to have merit .... ” (1st Am. Compl. 2, ECF No. 48).
After this Court denied Third-party Plaintiff Ridgeland Construction’s Motion to Dismiss the United States’ Complaint against it, Ridgeland Construction filed its Answer and Third-party Complaint against
Multiple Third-party Defendants have moved to dismiss the claims against them for failure to state a claim upon which relief can be granted. They argue that there is no right to indemnity or contribution under the FHA and ADA, and, further, that any state law indemnity or contribution claim is preempted by federal law. The cities and counties also argue that they cannot be liable because they did not have any duty to the Third-party Plaintiffs to ensure compliance with the FHA and ADA.
The Third-party Plaintiffs argue that even if the Court dismisses their Rule 14 claims against the Third-party Defendants, the Court must still join those entities in this action under Federal Rule of Civil Procedure 19(a)(1)(A), or, alternatively, may join those entities under Rule 20(a)(2).
Discussion
Motions to Dismiss
“Under the Rule 12(b)(6) standard of review, th[e] court accepts ‘all well-pleaded facts as true and construes the complaint in the light most favorable to the plaintiff.’ ” Jaso v. Coca Cola Co.,
The Third-party Defendants correctly argue that there is no right to indemnity or contribution under the FHA or the ADA. See United States v. Bryan Co., No. 3:11-cv-302-CWR-LRA,
The Third-party' Plaintiffs argue that they can still assert claims for contribution under Mississippi state law. They do not argue that they can assert claims for state law indemnity, and, regardless, any claim for state law indemnity would be preempted by federal law. See id. at *3-6. Therefore, this Court must determine whether the Third-party Plaintiffs can assert claims for state law contribution against the Third-party Defendants.
Greg Stewart and Nosidam, LLC (collectively, “Stewart”), Drace Construction Corp. (“Drace”), and Harry Baker Smith Architects (“HBSA”)
The Third-party Plaintiffs allege that Stewart was the construction manager and/or general contractor for several of the apartment complexes at issue. (1st Am. Compl. 6, 8, 10 (¶¶ 20-21, 31, 36-37), ECF No. 48). They claim that if those complexes are “found to be non-compliant with the FHA and/or ADA codes and regulations and the Defendants are held liable,” then Stewart should also be held liable and otherwise contribute for all or part of the awarded damages. (Id.). They make similar claims against Drace and HBSA as construction manager and architect of some of the apartment complexes. (See id. 6,9-10 (¶¶ 22, 35, 38)).
The Court agrees with Stewart that these allegations fail to state a claim. Under Federal Rule of Civil Procedure 14, “a third-party claim must be for some
“Under Mississippi law, a defendant has no right to implead a third-party defendant in order to seek contribution from a joint tortfeasor who has not been sued by the plaintiff.” Id. This is because “the long-standing rule in this state [is] that contribution among joint tortfeasors is unavailable absent a joint judgment against the tortfeasors, and, unlike in most states, contribution (and thus impleader based upon contribution) among joint tortfeasors is seriously limited under Mississippi law.” Estate of Hunter v. Gen. Motors Corp.,
Even if impleader was appropriate, the Court agrees with those federal courts to have addressed this issue that the FHA and the ADA preempt state law claims for both indemnity and contribution. See, e.g., Miami Vall. Fair Hous. Ctr., Inc. v. Campus Vill. Wright State, LLC, No. 3:10cv00230,
The Third-party Plaintiffs attempt to get around this law by arguing that while they “did not specifically set forth state-law causes of action against Stewart or the other Third-Party Defendants[,]” those claims “should be readily apparent.” (Third-party Pis.’ Mem. 8, ECF No. 88). According to them, “Stewart was in a contractual relationship with several of the Third-Party Plaintiffs because they hired him to be the general contractor/construction manager on three of the projects identified by the United States.” (Id.). Thus, they claim that “Stewart owed contractual duties as well as professional duties and a standard of care to those entities in terms of the design and construction of the complexes.” (Id.). In support, the Third-party Plaintiffs cite United States v. Quality Built Construction, Inc.,
Quality Built was distinguished in Miami Valley Fair Housing Center, Inc. v. Campus Village Wright State, LLC, No. 3:10cv00230,
There is a distinction between (1) a state-law claim seeking indemnification or contribution stemming from proven FHA violations and (2) a state-law contract claim arising from breach of a duty imposed by the particular terms of a contract, rather than duties imposed by the FHA; or a state law negligence claim based on a standard of care not imposed by the FHA. This distinction hinges on whether the breach of contract or negligence claims are in substance reiterations of claims seeking indemnification or contribution for proven FHA violations. For example, the District Court in Quality Built Constr. determined that the FHA did not support the defendant/builder’s claim for indemnification from a co-defendant (an architectural design firm) to the extent the need for indemnification arose from the defendant/builder’s FHA violations. Yet the District Court also determined that defendant/builder raised ‘distinct state law claims ...,’ for breach of contract and breach of standard of care, ‘which may allow for some form of contribution from [the codefendant architectural firm].’
Id. at *9 (internal citations omitted).
Accordingly, the court said that the owner’s state law claims could proceed, “but only to the extent that those claims are not de facto indemnification or contribution claims arising from [alleged] FHA violation(s), if any violation is proven.” Id. Since the owner’s claims merely restated the FHA violations, the court dismissed the state law claims as de facto claims for indemnification and/or contribution arising from FHA violations. Id. at *9-10.
The purported breach of contract and negligence claims against Stewart are akin to the de facto claims -for indemnification and/or contribution in Miami Valley, rather than the distinct state law claims in Quality Built. The Third-party Plaintiffs “do not distinguish-between a state law breach of contract or negligence claim and a claim for indemnification or contribution arising from FHA violations.” Miami Vail,
For all these reasons, the Court grants Stewart’s Motion to Dismiss.
City of Ridgeland (“Ridgeland”), City of Hattiesburg (“Hattiesburg”), Harrison County, and Jackson County
The Third-party Plaintiffs claim that Ridgeland should be held liable if they are held liable because
Ridgeland, by and through the Building Permits and Inspections Divisions of its Community Development Department, is responsible for ensuring that structures such as the Lexington are in com-. pliance with the applicable BuildingCodes adopted by the City and for issuing Certificates of Occupancy when a structure is found to be in compliance. The Building Code adopted by Ridge-land at the time that the Lexington was completed required that the complex be FHA and ADA compliant.
(1st Am. Compl. 4 (¶ 13), ECF No. 48). They state that Ridgeland should “be held liable or otherwise contribute for all or part of the damages suffered due to its actions in issuing a building permit and Certificate of Occupancy on a structure that was not FHA and/or ADA compliant.” (Id. (¶ 14)). Their claims against Hatties-burg, Harrison County, and Jackson County are nearly identical to their claims against Ridgeland. (See id. at 6-9 (¶¶ 24-25, 28-29, 33-34)).
The Court finds that the Third-party Plaintiffs’ claims for state law contribution against Ridgeland, Hattiesburg, Harrison County, and Jackson County should be dismissed for the same reasons discussed above. Namely, Mississippi law does not permit the Third-party Plaintiffs’ contribution claim, such claim would be precluded by federal law in any event, and any state law claim for negligence against these entities is a de facto contribution claim. (See, e.g., Third-party Pis.’ Mem. 5, ECF No. 103) (“If Dawn [one of the Third-party Defendants] is found liable, then it seeks contribution because Ridgeland owed duties to Dawn to ensure compliance with the ADA and the FHA_”).
Additionally, it was the responsibility of the Third-party Plaintiffs, not the cities or counties, to ensure compliance with the FHA and the ADA. This duty was non-delegable. See Bo’yan,
Finally, since Ridgeland Construction’s claims against Ridgeland are the same as those brought by the other Third-party Plaintiffs, (see Compl. 13 (¶¶ 55-56), ECF No. 154), the Court dismisses those claims sua sponte under Federal Rule of Civil Procedure 12(b)(6). See First Gibraltar Bank, FSB v. Smith,
Gerald James Hopkins (“Hopkins”) and City of Long Beach (“Long Beach”)
The claims against Hopkins and Long Beach are no different in substance from the claims against the Movants. (See 1st Am. Compl. 5, 7-9 (¶¶ 15, 17-18, 26, 30, 35)). Accordingly, the Court sua sponte dismisses those claims under Rule 12(b)(6). See First Gibraltar Bank,
Motion for Joinder
The Court next considers the argument of the Third-party Plaintiffs that the Third-party Defendants should be joined as defendants in this action under Federal Rule of Civil Procedure 19, or, alternatively, Rule 20.
Federal Rule of Civil Procedure 19
Under Rule 19(a)(1)(A), a court is required to join a “person who is subject to
The Third-party Plaintiffs argue that they are not seeking contribution against the Third-party Defendants under Rule 19, but, rather, that they “seek joinder of the other parties that participated in the alleged scheme by the United States so that those parties may bear the fault attributable to them if violations did occur.” (Defs.’ Reply 5, ECF No. 161; see also Defs.’ Mem. 2, 5-6, ECF No. 127). The Court construes this as an argument that the Third-party Defendants should be joined because they are necessary parties to this action separate and apart from any contribution claims (which claims would be improper under Rule 19).
The Third-party Plaintiffs bear the initial burden to show that a missing party is necessary. Hood ex rel. Miss. v. City of Memphis,
A missing party is necessary if in the absence of that party, the Court cannot accord complete relief among the existing parties. See Orff v. United States,
The Defendants/Third-party Plaintiffs argue that the Third-party Defendants must be joined because “Defendants’ interest would not be protected as they would bear sole responsibility for the shared liability between the parties not named in the lawsuit.” (Defs.’ Mem. 6, ECF No. 127). First, “[i]t is well-established that Rule 19 does not require the joinder of joint tortfeasors.” Nottingham v. Gen. Am. Commc’ns Corp.,
Second, even accepting the Third-party Plaintiffs’ new argument that the parties were not necessarily joint tortfeasors,
Finally, because the Court finds that the Third-party Defendants are not necessary parties under Rule 19(a), it has no need to consider the four factors in Provident Tradesmens Bank & Trust Co. v. Patterson,
Federal Rule of Civil Procedure 20
Rule 20(a)(2) allows for permissive joinder of defendants if “any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and ... any question of law or fact common to all defendants will arise in the action.” However, “a defendant can not use rule 20 to join a person as an additional defendant.”' Hefley v. Textron, Inc.,
Conclusion
For all the reasons discussed herein, it is beyond doubt that the Third-party Plaintiffs, including Ridgeland Construction in its recently filed Third-party Complaint, can prove no set of facts in support of any claim against the Third-party Defendants. Furthermore, the Third-party Plaintiffs have not shown that joinder of the Third-party Defendants is necessary pursuant to Federal Rule of Civil Procedure 19, and they are not entitled to the requested relief pursuant to Federal Rule of Civil Procedure 20.
IT IS, THEREFORE, ORDERED AND ADJUDGED that the [70, 76, 80, 85, 94, 110, 134] Motions to Dismiss filed by Greg Stewart and Nosidam, LLC; City of Ridgeland; Harrison County; Jackson County; Drace Construction Corp.; City of Hattiesburg; and Harry Baker Smith Architects, II, LLC are GRANTED and all claims against those parties are DISMISSED WITH PREJUDICE. Those parties are therefore terminated from this action.
IT IS FURTHER ORDERED AND ADJUDGED that the [154] Third-party Complaint against Gerald James Hopkins and the City of Ridgeland filed by Ridge-land Construction One, LLC is DISMISSED WITH PREJUDICE.
IT IS FURTHER ORDERED AND ADJUDGED that the [126] Motion for Joinder is DENIED, and that the [83] Joint Motion to Stay Proceedings is DENIED AS MOOT.
Notes
. The City of Long Beach and Hopkins each filed Motions to Dismiss on November 21 and 25, respectively, to which the time for the Third-party Plaintiffs to respond has not yet expired.
. The City of Ridgeland filed a Motion to Dismiss Ridgeland Construction's Third-Party Complaint on November 25, 2014. The time for Ridgeland Construction to respond to that Motion has not yet expired.
. For the same reasons, the Court finds that it would be futile to allow any amendment, even if the Third-party Plaintiffs had properly requested one pursuant to Federal Rule of Civil Procedure-15. (See Third-party Pis.’ Mem. 8, ECF No. 88).
. The Third-party Plaintiffs cite no law for this argument. Even so, the absence of joint and several liability is not the standard for joining parties under Rule 19.