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National Union Fire Insurance Company of Pittsburgh, PA. v. Ampam Riggs Plumbing Incorporated

United States District Court, D. Arizona

May 9, 2014

National Union Fire Insurance Company of Pittsburgh, PA, Plaintiff,
v.
Ampam Riggs Plumbing Incorporated, et al., Defendants.

ORDER

CAVID G. CAMPBELL, District Judge.

Defendants Del Webb Communities, Inc., Del Webb's Coventry Homes, Inc., and Del Webb's Coventry Homes Construction Co. (hereinafter "Del Webb") filed a motion to dismiss or stay all claims in this case against all Defendants. Doc. 22. Plaintiff National Union Fire Insurance Company of Pittsburgh, PA ("National Union") responded by voluntarily dismissing the claims against Del Webb. Docs. 25, 26. Del Webb then filed a motion to intervene to continue seeking dismissal of the claims against Defendant AMPAM Riggs Plumbing, Inc. ("AMPAM). Doc. 27. The motions have been fully briefed. For the reasons stated below, the Court will grant Del Webb's motion to intervene, deny as moot the motion to dismiss, and provide directions for the continuing litigation of this case.[1]

I. Background.

AMPAM is a plumbing subcontractor that was hired by Del Webb to install plumbing systems in Del Webb's residential development in Anthem, Arizona. Doc. 22 at 7. National Union is an excess liability insurer that issued five liability policies to AMPAM between 1999 and 2003. Docs. 22 at 7, 31 at 3. Del Webb asserts that it is an additional insured under the policies. Doc. 22 at 7. In December 2007, Joan Kirsch, individually and on behalf of other homeowners at the Anthem development, filed a class action lawsuit against Del Webb for breach of implied and expressed warranties, alleging defective and improperly installed plumbing systems at the Anthem development (hereinafter "the Kirsch action"). Docs. 22 at 7, 31 at 4. Del Webb asked National Union to defend it in the lawsuit in April 2008. Doc. 22 at 7. National Union refused, claiming that Del Webb is not an additional insured under the policies and had no proof that the primary insurance had been exhausted. Doc. 22 at 8. Del Webb asserts that it repeatedly offered proof of National Union's obligation to defend it, but that National Union continued to refuse coverage. Id. at 8-9.

In December 2009, Del Webb filed a third-party complaint in the Kirsch action against AMPAM and other subcontractors, seeking indemnification and defense under the subcontracts. Docs. 22 at 8, 31 at 4. Del Webb ultimately obtained a summary judgment holding that AMPAM had a duty to defend Del Webb. Doc. 27-2 at 17-20. AMPAM has filed for bankruptcy, its liability in the Kirsch action has been discharged, and, according to Del Webb, it is likely now defunct. Doc. 27-3. Despite being served as a Defendant in this case, AMPAM has not answered and did not participate in the Rule 26(f) conference as required by the Court's order. Docs. 29, 34.

In August 2013, Del Webb sued National Union in federal court in the Central District of California ("the California action"), alleging various claims including breach of contract and breach of the duty of good faith and fair dealing, and seeking declaratory relief on the coverage dispute. Docs. 22 at 10, 31 at 5. National Union filed this case in January 2014, also seeking declaratory relief regarding the coverage issues. Doc. 1. National Union then moved to dismiss or stay the California action pending resolution of this case. Doc. 31 at 5. The California federal court denied the motion, citing the "first-to-file" rule that Del Webb argues should result in dismissal of this case. Doc. 27-5.[2]

II. Voluntary Dismissal and Motion to Dismiss.

After being served in this action, Del Webb moved to dismiss the case in its entirety under the first-to-file rule. Doc. 22 at 13. This rule arises from the doctrine of federal comity, "which permits a district court to decline jurisdiction over an action when a complaint involving the same parties and issues has already been filed in another district." Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 94-95 (9th Cir. 1982). The rule "is not a rigid or inflexible rule to be mechanically applied, but rather is to be applied with a view to the dictates of sound judicial administration." Id. at 95 (citing Church of Scientology of Cal. v. U.S. Dept. of Army, 611 F.2d 738, 750 (9th Cir.1980)). Indeed, the "most basic aspect of the first-to-file rule is that it is discretionary[.]" Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622, 628 (9th Cir. 1991).

In response to the motion, National Union conceded that the first-to-file rule bars its complaint in this case against Del Webb, but not against AMPAM, and filed a notice voluntarily dismissing the claims against Del Webb. Docs. 25, 26. National Union now argues that because the claims against Del Webb have been dismissed, the Court has lost jurisdiction over Del Webb and any arguments made in its motion to dismiss, including arguments that National Union's claims against AMPAM should be dismissed. Doc. 30 at 2. National Union urges the Court to deny the motion to dismiss as moot.

"Under Rule 41(a)(1), a plaintiff has an absolute right voluntarily to dismiss his action prior to service by the defendant of an answer or a motion for summary judgment." Concha v. London, 62 F.3d 1493, 1506 (9th Cir. 1995) (citing Hamilton v. Shearson-Lehman American Express, Inc., 813 F.2d 1532, 1534 (9th Cir. 1987)). "Even if the defendant has filed a motion to dismiss, the plaintiff may terminate his action voluntarily by filing a notice of dismissal under Rule 41(a)(1)" as to some or all of the defendants and some or all of the claims. Concha, 62 F.3d at 1506 (citing Miller v. Reddin, 422 F.2d 1264, 1265 (9th Cir. 1970); Pedrina v. Chun, 987 F.2d 608, 609 (9th Cir. 1993)). The "filing of a notice of voluntary dismissal with the court automatically terminates the action as to the defendants who are the subjects of the notice." Concha, 62 F.3d at 1506.

The effect of National Union's voluntary dismissal is clear: "a dismissal under Rule 41(a)(1) is effective on filing, no court order is required, the parties are left as though no action had been brought, the defendant can't complain, and the district court lacks jurisdiction to do anything about it." Commercial Space Mgmt. Co., Inc. v. Boeing Co., Inc., 193 F.3d 1074, 1078 (9th Cir. 1999). Thus, Del Webb is no longer a defendant in this case and its motion to dismiss is moot - "the parties are left as though no action had been brought." Id.

III. Motion to Intervene.

Without conceding that National Union's voluntary dismissal mooted the motion to dismiss, Del Webb has filed a motion to intervene in this case. Doc. 27. Del Webb seeks to "take whatever steps are necessary to prevent National Union from obtaining a default judgment against AMPAM that it could then attempt to use offensively against Del Webb." Id. at 8. Del Webb argues that it is entitled to intervene as a matter of right under Rule 24(a) because it is the real party in interest to National Union's ...


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