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Deluxe Building Systems, Inc v. Constructamax

June 6, 2011

DELUXE BUILDING SYSTEMS, INC., PLAINTIFF,
v.
CONSTRUCTAMAX, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Brown, Chief Judge

NOT FOR PUBLICATION

MEMORANDUM OPINION

This matter comes before the Court upon the motion of non-party the New Jersey Housing and Mortgage Finance Agency (hereinafter the "Agency") to intervene in this case pursuant to Federal Rule of Civil Procedure 24. (Doc. No. 265) That motion is opposed by all current parties in this case. In addition to its opposition to the Agency's proposed intervention, party Arch Insurance Company and Arch Reinsurance Company (hereinafter, collectively "Arch"), has filed a motion to dismiss this case pursuant to Rule 12(b)(1). (Doc. No. 274) The Court has considered the parties' written submissions and their oral arguments presented to the Court on May 16, 2011. Having done so, the Court will grant the Agency's motion and, in the Court's discretion, allow the Agency to join this case as a defendant. As a result of that decision, Arch's motion is moot and will be denied. The reasons for the Court's decisions follow.

II. BACKGROUND

On March 25, 2011, the Agency filed a motion to intervene in this case pursuant to Rule 24. In support of that motion, the Agency argues that it should be allowed to intervene either as of right, or in the Court's discretion, because the Agency has a direct interest in this case. All parties have opposed the Agency's proposed intervention for various reasons. Most notably, on April 18, 2011, Arch filed its opposition to the Agency's motion to intervene, and concurrently, cross-moved to dismiss this case pursuant to Rule 12(b)(1). In support of its cross-motion, Arch argues that the Agency must be joined pursuant to Rule 19, an action that Arch asserts would destroy the parties' diversity, and therefore require dismissal of this case for lack of subject-matter jurisdiction.

After considering the parties' written submissions, the Court ordered oral argument on May 16, 2011. During oral argument, the Agency appeared to stipulate that, if it intervenes, the claims the Agency will assert against Arch are identical to the corresponding counterclaims Whitlock has asserted againt Arch, and upon which the Court has granted summary judgment to Whitlock as to Arch's liability. Further, at oral argument, it became apparent that Arch and CMAX, who seek dismissal for lack of subject-matter jurisdiction, and the Agency and Whitlock, who oppose that action, rely upon the same Third Circuit precedent for their entirely contrary positions.

Having considered the parties' written and oral arguments, the Court concludes that the Agency can intervene in this action without destroying diversity jurisdiction, and in the Court's discretion, that the Agency's intervention is appropriate. As such, the Court will allow the Agency to intervene pursuant to Rule 24 for the following reasons.

II. DISCUSSION

A. The Agency May Intervene

The Agency asserts that the Court should exercise discretion and allow the Agency to intervene in this case pursuant to Rule 24(b). That portion of Rule 24, which governs permissive intervention, states that, "on timely motion, the court may permit anyone to intervene who . . .

(B) has a claim or defense that shares with the main action a common question of law or fact." FED. R. CIV. P. 24(b)(1)(B). Here, therefore, the Court may permit the Agency to intervene in this case pursuant to the plain language of this statute because, as the Agency, Whitlock, and apparently all parties acknowledge, the Agency's proposed claims against Arch are identical to those already lodged against Arch by Whitlock. Indeed, as noted, Whitlock has been granted summary judgment on these same claims as to Arch's liability, with only the issue of damages outstanding. Thus, pursuant to Rule 24(b)(1)(B), the Court will permit the Agency to intervene.

In doing so, the Court notes that the Agency's intervention will not deprive the Court of subject-matter jurisdiction in this case, which has at all times been based upon the parties' diversity of citizenship pursuant to 28 U.S.C. Section 1332. In opposition to the Agency's proposed intervention, Arch asserts that, because Arch's principal place of business is New Jersey, the Court cannot exercise supplemental jurisdiction over the Agency's proposed common law claims against Arch pursuant to the terms of 28 U.S.C. Section 1367. That statute states as follows in pertinent part:

(a) Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United State Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties.

(b) In any civil action of which the district courts have original jurisdiction founded solely on section 1332 of this title, the district courts shall not have supplemental jurisdiction under subsection (a) over claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure, or over claims by persons proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules, when ...


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