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Building Construction Enterprises, Inc. v. Gary Meadows Construction Co.

April 4, 2007

BUILDING CONSTRUCTION ENTERPRISES, INC. PLAINTIFF
v.
GARY MEADOWS CONSTRUCTION CO., INC. DEFENDANT



The opinion of the court was delivered by: Garnett Thomas Eisele United States District Judge

ORDER

Presently before the Court is Plaintiff's Motion for Reconsideration of the Order granting Defendant's Motion for Voluntary Dismissal. Plaintiff requests that the Court enter an order denying Defendant's Motion for Voluntary Dismissal and transfer the entire case to the United States District Court for the Western District of Missouri, Western Division.

I. Background

On June 1, 2006, Plaintiff Building Construction Enterprises, Inc. ("BCE") filed this breach of contract action based upon a construction contract for work to be performed on the Arkansas State University Student Center. Defendant Gary Meadows Construction Co., Inc. ("GMCC") filed its Answer and a Counterclaim for unpaid invoices. GMCC stated therein that Plaintiff BCE had a performance bond issued by Safeco Insurance Company of America ("Safeco"), and thus, Safeco is liable on the performance bond for the amount Plaintiff BCE is indebted to Defendant GMCC for labor and materials used.

On October 31, 2006, Defendant GMCC filed its Third Party Complaint against Safeco, which alleged that GMCC was entitled to recover from Safeco any and all damages it suffered by reason of BCE's breach of contract. Safeco filed its Answer on December 5, 2006, and then filed an Amended Answer on December 22, 2006, requesting dismissal or transfer. In its Amended Answer, Safeco alleged that the contract between BCE and GMCC provided that Jackson County, Missouri was the chosen venue and requested transfer. GMCC filed a response to Safeco's Amended Answer on January 5, 2007. GMCC stated that Safeco was not a party to the referenced contract and further contended that BCE waived the forum provision of the contract by filing its Complaint in this Court. GMCC also stated that Section 9 of the performance bond between Safeco, as surety, BCE, and Arkansas State University, as owner, provides that "[a]ny proceeding . . . under this Bond may be instituted in any court of competent jurisdiction in the location in which the work or part of the work is located . . . ."

On January 16, 2007, Third Party Defendant Safeco filed its Supplemental Motion to Dismiss, or Alternatively, for Transfer. In addition to its venue arguments, Safeco argued that GMCC's claim against Safeco was not ripe for adjudication because GMCC could not in any event recover on its claim against Safeco, until the liability of BCE and GMCC under the subcontract was determined.

On February 9, 2007, Defendant/Third Party Plaintiff GMCC filed its Motion for Voluntary Dismissal of Third Party Defendant Safeco, agreeing with Safeco's ripeness argument. Thus, GMCC withdrew its objection to Safeco's Motion to Dismiss and moved for voluntary dismissal of its Third Party Complaint against Safeco. On February 12, 2007, without the benefit of a response from Plaintiff BCE, the Court entered an Order granting GMCC's Motion for Voluntary Dismissal of Safeco.

On February 14, 2007, Plaintiff BCE filed its response in opposition to GMCC's Motion for Voluntary Dismissal of Safeco requesting instead transfer of the action to the United States District Court for the Western District of Missouri. Safeco also filed a response to GMCC's Motion withdrawing its request to dismiss the Third Party Complaint on the condition that the entire action be transferred to the Western District of Missouri. Subsequently, Plaintiff BCE filed a Motion for Reconsideration of the Order granting the Motion for Voluntary Dismissal, to which GMCC filed a response.

II. Motion for Reconsideration

First, BCE argues that Federal Rule of Civil Procedure 41(a) requires that a stipulation of dismissal must be signed by all parties who appeared in the action, and that such requirement applies to the voluntary dismissal of a Third Party Complaint under Federal Rule of Civil Procedure 41(c). However, the Court agrees with GMCC's argument that the Court properly granted its motion pursuant to Federal Rule of Civil Procedure 41(a)(2), which provides that a claim can be dismissed "upon Order of the Court."

Second, BCE argues that it is a necessary party to any action between GMCC and Safeco. Thus, BCE argues that BCE will be required to again litigate the same subject matter in a different forum if Safeco's Motion to Transfer is not granted. Additionally, BCE argues that it may be required to indemnify Safeco in the event of any further claim or suit by Meadows. However, GMCC argues that BCE's claim that there will be a separate action in a different venue is misplaced because Arkansas Code Annotated § 18-44-503 and § 22-9-403 require that any action against Safeco on its bond be brought in Arkansas. Arkansas Code Annotated § 18-44-503 provides:

(a) No contract in any sum exceeding twenty thousand dollars ($20,000) providing for the repair, alteration, or erection of any public building, public structure, or public improvement shall be entered into by the State of Arkansas or any subdivision thereof, by any county, municipality, school district, or other local taxing unit, or by any agency of any of the foregoing, unless the contractor shall furnish to the party letting the contract a bond in a sum equal to the amount of the contract.

(b) All persons, firms, associations, and corporations who have valid claims against the bond may bring an action on the bond against the corporate surety, provided that no action shall be brought on the bond after twelve (12) months from the date on which the Arkansas Building Authority or institutions exempt from construction review and approval by the authority approve final payment on the state contract, nor shall any action be brought outside the State of Arkansas. Ark. Code Ann. § 18-44-503 (emphasis added). Arkansas Code Annotated § 22-9-403(b) provides:

(b)(1) No action shall be brought on a bond after one (1) year from the date final payment is made on the contract, nor shall an action be ...


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