Crescent Univ. City Venture, LLC v. Trussway Mfg., Inc.

Crescent Univ. City Venture, LLC v. Trussway Mfg., Inc., 2018 NCBC 71.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION MECKLENBURG COUNTY 18 CVS 1642 CRESCENT UNIVERSITY CITY VENTURE, LLC, Plaintiff, v. ORDER AND OPINION ON TRUSSWAY MANUFACTURING, DEFENDANT’S MOTION TO DISMISS INC.; and TRUSSWAY MANUFACTURING, LLC, AND PLAINTIFF’S MOTION TO CONSOLIDATE Defendants.

1. THIS MATTER is before the Court on (i) Defendant Trussway Manufacturing, LLC’s f/k/a Trussway Manufacturing, Inc.’s (“Trussway”) Motion to Dismiss and (ii) Plaintiff Crescent University City Venture, LLC’s (“Crescent”) Motion to Consolidate (collectively, the “Motions”) in the above-captioned case.

2. After considering the Motions, the briefs of the parties in support of and in opposition to the Motions, and the arguments of counsel for the parties at the May 30, 2018 hearing on the Motions, the Court hereby DENIES Trussway’s Motion to Dismiss and GRANTS Crescent’s Motion to Consolidate for the reasons set forth herein.

Smith Moore Leatherwood LLP, by Timothy P. Lendino and Robert R. Marcus, for Defendant Trussway Manufacturing, LLC f/k/a Trussway Manufacturing, Inc. Troutman Sanders LLP, by Kiran H. Mehta, Samuel T. Reaves, and Kristen L. Schneider, for Plaintiff Crescent University City Venture, LLC.

Bledsoe, Chief Judge.

I.

BACKGROUND 3. The Court does not make findings of fact when considering a motion to dismiss, but instead recites those facts included in the Complaint that are relevant to the Court’s determination. See Concrete Serv. Corp. v. Inv’rs Grp., Inc., 79 N.C. App. 678, 681, 340 S.E.2d 755, 758 (1986).

A. Factual Background 4. Crescent owned and developed Circle University City (the “Project”), a student apartment complex near the University of North Carolina at Charlotte. (Compl. ¶ 9, ECF No. 3.) The Project contains 189 apartment units spanning five different buildings. (Compl. ¶ 9.)

5. Crescent hired AP Atlantic, Inc. d/b/a Adolfson & Peterson Construction (“AP Atlantic”) to serve as the general contractor for the Project. (Compl. ¶ 12.) AP Atlantic entered a subcontract with Madison Construction Group (“Madison”) under which Madison agreed to provide all labor, materials, supplies, and equipment for all framing and installation work on the Project. (Compl. ¶ 14.) In particular, Madison agreed to supply a complete flooring system, including floor trusses and roof trusses. (Compl. ¶ 14.) Madison hired Trussway to design, manufacture, and supply the floor trusses required for the Project. (Compl. ¶ 15.) Trussway manufactured and delivered these trusses to the Project site. (Compl. ¶¶ 18–19.)

6. On January 30, 2015, after the Project was complete and occupied by students, the ceiling in Unit C302 began to sag and crack. (Compl. ¶ 20.) Four months later, the ceilings in Units C101 and E103 similarly dipped and cracked. (Compl. ¶ 24.)

7. Simpson Gumpertz & Heger, Inc. (“SGH”), a structural engineering firm hired by Crescent, inspected the floor truss systems to determine why the ceilings were failing. SGH concluded that the floors in the affected units were sagging because the floor trusses were defective. SGH further concluded that the floor trusses were defective because they contained unnecessary gaps between the metal connector plates (“MCPs”) and lumber components of the trusses.1 (Compl. ¶¶ 22–23, 26.)

Following SGH’s findings, Crescent hired another general contractor, Summit Contracting Group, to perform a Project-wide repair of all defective trusses. (Compl.

¶ 29.)

8. In total, Crescent incurred approximately $5.2 million in repair costs associated with the Project. (Compl. ¶ 32.) Crescent also spent approximately $2.7 million providing housing for displaced students and sustaining other miscellaneous expenses while Project-wide repairs were performed. (Compl. ¶ 32.)

B. Procedural Background 9. On August 5, 2015, AP Atlantic filed a lawsuit against Crescent (the “AP Atlantic Action”), alleging that Crescent had refused to pay AP Atlantic for general contractor services AP Atlantic provided for the Project. (Mot. Consolidate ¶ 1, ECF No. 9.) AP Atlantic asserted claims against Crescent and Crescent’s surety, the Guarantee Company of North America USA. (Mot. Consolidate ¶ 1.)

10. On August 19, 2016, Crescent filed a separate suit in Mecklenburg County (the “Crescent Action”) against Adolfson & Peterson, Inc. (“A&P”), AP Atlantic’s parent corporation, for damages related to the failure of the Project’s floor trusses. (Pl.’s Mot. Consolidate ¶ 3.) The Crescent Action bears the filing number 16 CVS 14844.

11. On October 10, 2016, the Crescent Action was consolidated with the AP Atlantic Action (the “Consolidated Action”). Order Mot. Consolidate at 3–4, Crescent Univ. City Venture, LLC v. AP Atl., Inc., No. 15 CVS 14745 (N.C. Super. Ct. Oct. 10, 2016) [hereinafter “Order Mot. Consolidate”], ECF No. 98. The Court ordered that the AP Atlantic Action be designated as the “Lead Action” and that “[a]ll disputed issues raised in either the Crescent Action or the AP Atlantic Action . . . be deemed to be disputed issues in the Lead Action.” (Order Mot. Consolidate ¶ 7(c).) Trussway is currently a third-party defendant in the Consolidated Action as the result of claims brought by AP Atlantic.2 12. On January 25, 2018, Crescent filed this action and asserted a separate negligence claim against Trussway. This new suit against Trussway involves the manufacturing, delivery, and supply of floor trusses for the Project. (Compl. ¶¶ 37– 41.)

13. On February 14, 2018, Crescent filed its Motion to Consolidate, seeking to consolidate this action with the Consolidated Action.

14. On March 16, 2018, Trussway filed its Motion to Dismiss, asserting the “prior action pending” doctrine as a bar to the claims in this lawsuit.

II.

MOTION TO DISMISS 15. “The ‘prior pending action’ [or prior action pending] doctrine involves essentially the same questions as the outmoded plea of abatement, and is . . . intended to prevent the maintenance of a subsequent action that is wholly unnecessary.” Johns v. Welker, 228 N.C. App. 177, 179, 744 S.E.2d 486, 489 (2013) (quoting Shoaf v. Shoaf, 219 N.C. App. 471, 475, 727 S.E.2d 301, 305 (2012)). A motion to dismiss a claim or case on such grounds “is a preliminary motion of the type enumerated in Rule 12(b)(2)–(5) and the time for filing such motion is governed by that rule.” Brooks v. Brooks, 107 N.C. App. 44, 47, 418 S.E.2d 534, 536 (1992). A failure to raise the prior action pending defense either in a pre-answer motion or in an answer is a waiver of the defense. Id. As stated by the Supreme Court of North Carolina, “[t]he ordinary test for determining whether or not the parties and causes are the same for the purpose of abatement by reason of the pendency of the prior action is this: Do the two actions present a substantial identity as to parties, subject matter, issues involved, and relief demanded?” Clark v. Craven Reg’l Med. Auth., 326 N.C. 15, 21, 387 S.E.2d 168, 172 (1990) (quoting Cameron v. Cameron, 235 N.C. 82, 85, 68 S.E.2d 796, 798 (1952)).

16. A motion to dismiss under the prior action pending doctrine is usually treated as a motion under North Carolina Rule of Civil Procedure 13(a), the compulsory counterclaim rule, and when ruling on such a motion, the trial court “properly considers the record in the prior action.” Chesson v. Rives, 2017 NCBC LEXIS 113, *3 (N.C. Super. Ct. Dec. 13, 2017); see Atkins v. Nash, 61 N.C. App. 488, 489, 300 S.E.2d 880, 881 (1983) (explaining that this State’s Supreme Court “has treated denial of a motion to dismiss on the ground of a prior action pending as a motion pursuant to” Rule 13(a)); see also 1 G. Gray Wilson, North Carolina Civil Procedure § 13-5 (3d ed. 2007) (“A motion to dismiss on the ground of a pending prior action may be based on failure to state a claim . . . but will usually be treated as a motion pursuant to Rule 13(a).”).

17. Trussway argues that the prior action pending doctrine abates Crescent’s new negligence claim because the Consolidated Action and this action involve the same parties and subject matter, and both suits are pending in a court within this State having like jurisdiction. While a motion to dismiss under the prior action pending doctrine is usually brought in circumstances that implicate Rule 13(a), Trussway asserts that the doctrine applies equally to subsequent lawsuits involving permissive claims. Trussway also suggests that Crescent’s new suit is an “end-run around Rule 15” and that Crescent should have moved for leave to amend under Rule rather than filing a new lawsuit. (Def.’s Br. Opp’n Mot. Consolidate 3, ECF No. 17.)

18. Crescent asserts that the prior action pending doctrine does not apply to suits involving claims that would have been considered permissive claims in an earlier action. Crescent further argues that even if the Court reads the doctrine in the broad manner Trussway promotes, the Court should still deny the Motion to Dismiss because this action does not involve the “same parties” as the Consolidated Action.

19. The Court need not resolve questions concerning the prior action pending doctrine’s precise parameters here. Under either a narrow application of the doctrine in the context of Rule 13(a) or the broader test for abatement advocated by Trussway, the prior action pending doctrine does not provide grounds for dismissing Crescent’s claim in this lawsuit.

20. First, treating Trussway’s motion under the prior action pending doctrine as a motion under Rule 13(a), the Court concludes dismissal of Crescent’s claim would be improper. Under Rule 13(a), a pleading must state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.

N.C. R. Civ. P. 13(a). Rule 13(a) “requires a party to assert as a counterclaim any claim arising out of the same transaction or occurrence as the pending action, at peril of being barred from asserting the claim in a later action.” Furr v. Noland, 103 N.C. App. 279, 281, 404 S.E.2d 885, 886 (1991) (internal quotation marks omitted).

21. For Trussway’s motion to succeed under this standard, Trussway must show that Crescent’s negligence claim should have been brought as a compulsory counterclaim within the Consolidated Action. If Crescent’s claim would be deemed compulsory in the Consolidated Action, then the present claim is abated.

22. Crescent’s present claim, however, does not allege a compulsory counterclaim in the Consolidated Action and therefore need not have been brought in that action. When a defendant impleads a third-party defendant, the plaintiff and the third-party defendant are not opposing parties. See Caterpillar, Inc. v. Lewis, 519 U.S. 61, 66 n.1 (1996) (citing 3 James W. Moore et al., Moore’s Federal Practice § 14.26 (2d ed. 1996)). The plaintiff and third-party defendant do not become opposing parties until either the plaintiff asserts a claim against the third-party defendant or the third-party defendant asserts a claim against the plaintiff. See id. 23. Crescent and Trussway have not made affirmative claims against each other in the Consolidated Action and, thus, were not “opposing parties” before this lawsuit was filed. As a result, the Consolidated Action did not contain a claim between Crescent and Trussway that could provide the basis for a compulsory counterclaim, and Crescent’s negligence claim in this action would not be deemed a compulsory counterclaim in the Consolidated Action. See N.C. R. Civ. P. 13(a)–(b) (requiring the presence of an opposing party’s claim for a counterclaim to be asserted).

Consequently, if Trussway’s Motion to Dismiss is treated as a motion under Rule 13(a), the Court concludes that the Motion to Dismiss must be denied.

24. Trussway’s Motion to Dismiss fares no better under the broader application of the prior action pending doctrine that Trussway advances, which focuses solely on whether the two actions before the Court “present a substantial identity as to parties, subject matter, issues involved, and relief demanded[.]” Clark, 326 N.C. at 21, 387 S.E.2d at 172. While the subject matter of the Consolidated Action and this action are the same and this Court has jurisdiction over both lawsuits, the Court concludes that a substantial identity does not exist as to the parties in the two suits.

25. Trussway supports its assertion that the Consolidated Action and this action present a substantial identity as to parties involved by citing Clark. The Court disagrees and finds that Clark, in fact, requires that the Court reach the opposite conclusion.

26. The plaintiff in Clark brought an initial lawsuit against several defendants. Id. at 18, 387 S.E.2d at 170. After appealing the trial court’s dismissal of that suit, the plaintiff filed a second lawsuit. Id. The second lawsuit named one defendant from the first action but substituted other defendants and added another plaintiff. Id. at 21–22, 387 S.E.2d at 172. The original defendant involved in both the prior and new actions asserted the defense of abatement. Id. at 19, 387 S.E.2d at 171. The North Carolina Court of Appeals affirmed the trial court’s decision to grant the original defendant’s plea in abatement and held that the parties in the two cases were substantially similar. Id. at 22, 387 S.E.2d at 172. Specifically, the Clark court noted that only the original defendant had moved to abate the second action, that the plaintiff’s rights against the additional defendants would not be affected by the abatement, and that “[t]he exclusion of two defendants who had been named in the first suit from [the] second suit ha[d] no bearing on the redundancy of [the] second suit as to the [original defendant.]” Id. at 21, 387 S.E.2d at 172. In short, the second suit was properly abated as to the original defendant because the original defendant was an opposing party in the prior suit. See id. 27. Trussway’s argument is thus correct in one sense—two lawsuits may have substantially similar identities as to the parties involved despite the absence of certain parties from the second lawsuit. What Trussway ignores, however, is the “redundancy” that existed in Clark when the same plaintiff brought two lawsuits against the same defendant. Here, in contrast, Trussway is not a defendant in the Consolidated Action, and Crescent has not asserted any claims against Trussway in the Consolidated Action. Crescent’s negligence claim in this action is not “redundan[t]” as to Trussway. Id. The Court therefore concludes that this action and the Consolidated Action do not “present a substantial identity as to [the] parties” involved. Id. Thus, under Trussway’s advocated implementation of the prior action pending doctrine, Trussway’s Motion to Dismiss must still be denied.

III.

MOTION TO CONSOLIDATE A. Legal Standard 28. “Rule 42(a) of the North Carolina Rules of Civil Procedure provides the trial court with authority to consolidate pending ‘actions involving a common question of law or fact.’” Boone Ford, Inc. v. IME Scheduler, Inc., 800 S.E.2d 94, 96 (N.C. Ct. App. 2017) (quoting N.C. R. Civ. P. 42(a)). “Whether two or more cases should be consolidated for trial is a decision left to the sound discretion” of the trial judge. Id. “A trial court’s ruling on a Rule 42 motion will not be reversed on appeal absent a manifest abuse of discretion.” Markham v. Nationwide Mut. Fire Ins. Co., 125 N.C. App. 443, 448, 481 S.E.2d 349, 353 (1997).

B. Analysis 29. For the following reasons, the Court concludes that consolidation is appropriate in this case.

30. First, the record demonstrates that the Consolidated Action and this action contain common questions of law and fact, and both Crescent and Trussway acknowledge that this action is substantially related to the Consolidated Action. (Def.’s Br. Supp. Mot. Dismiss 3, ECF No. 16; Mot. Consolidate ¶ 9.)

31. Second, when duplicative actions arise, parties and third parties often incur considerable, undue expense. See Wood v. Brown, 25 N.C. App. 241, 245, 212 S.E.2d 690, 692 (1975) (finding that “justice would best be served by” consolidating two related actions and avoiding “considerable expense”). Consolidating the actions here will be less costly than requiring them to proceed separately and less likely to cause financial prejudice to any party.

32. Third, a decision to leave the actions separate may leave Trussway open to inconsistent verdicts. See Green v. Duke Power Co., 305 N.C. 603, 608, 290 S.E.2d 593, 596 (1982) (“[W]hen the same issues are present in both trials, [it] creat[es] the possibility that a party will be prejudiced by different juries in separate trials rendering inconsistent verdicts on the same factual issue.”).

33. Fourth, at the May 30, 2018 hearing, Trussway indicated that, should the Court deny Trussway’s Motion to Dismiss, consolidation would be the least prejudicial option available to the Court from Trussway’s perspective. Thus, given the Court’s decision to deny the Motion to Dismiss, both parties to this action now favor consolidation.3 34. The Court thus concludes, in the exercise of its discretion, for the reasons stated above and in the interests of judicial economy, that the Consolidated Action and this action should be consolidated for all future proceedings, including but not limited to trial, under North Carolina Rule of Civil Procedure 42.

IV.

CONCLUSION 35. Based on the foregoing, the Court hereby ORDERS as follows: a. The Motion to Dismiss is DENIED.

b. The Motion to Consolidate this action (Mecklenburg County, No. 18 CVS 1642) and the Consolidated Action (Mecklenburg County, Nos. 15 CVS 14745 and 16 CVS 14844) is GRANTED, and the Court shall enter an order in the Consolidated Action stating the same.

SO ORDERED, this the 16th day of July, 2018.

/s/ Louis A. Bledsoe, III Louis A. Bledsoe, III Chief Business Court Judge