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Association Insurance Company v. McSwain M Fabrication, Inc.

United States District Court, D. Colorado

December 7, 2017

ASSOCIATION INSURANCE COMPANY, Plaintiff,
v.
MCSWAIN M FABRICATION, INC., FRONTIER RESTORATION, GENARO SANCHEZ, doing business as Sanchez Plumbing, MELQUIADES RUBIO, doing business as Scorpion Masonry, KLYDESDALE CONTRACTING, INC., CB CONCRETE, INC., DORNE BUTTS, doing business as DGB Construction, NEW GENERATION PLASTERING, LLC, and NIRON CONSTRUCTION, LLC, Defendants.

          OPINION AND ORDER DENYING MOTIONS FOR DEFAULT JUDGMENT

          MARCIA S. KRIEGER, CHIEF UNITED STATES DISTRICT JUDGE.

         THIS MATTER comes before the Court pursuant to the Plaintiff's (“Association”) Motions for Default Judgment (# 64, 65, 66, 67, 68, 69, 70, 71) against all Defendants except Frontier Restoration.

         FACTS

         Although the Amended Complaint (# 22) in this action is skel and conclusory, the pertinent facts are straightforward. Defendant Niron Construction (“Niron”), a general contractor, managed the construction of some townhome residences in Denver Colorado. Although the Amended Complaint never expressly states, it appears that the remaining Defendants here were subcontractors who performed various services for Niron on that project.

         In 2016, the buyers of those townhomes sued Niron in state court, alleging that the construction was defective in various ways. Again, the Amended Complaint here is fairly vague about that suit, but it is possible to infer that the Defendant subcontractors were also named as defendants in the state court lawsuit. Association states that it tendered a defense and indemnification to Niron, it's insured, in that action. It also appears to allege that it “tendered [a] defense and indemnity” to the Defendant subcontractors as well.[1] Beyond stating that a default judgment was entered against certain of the subcontractors in the state action, the Amended Complaint gives no indication about the scope, course, or outcome of that lawsuit.

         It appears that, [2] as part of the contract between Niron and its subcontractors, Niron required that each subcontractor indemnify Niron for “any and all claims . . .arising out of, resulting from or related to the [subcontractor's] performance of work.” The agreement also required that each subcontractor maintain comprehensive general liability insurance that “insure[s] the hold harmless and indemnification agreements” of the contract. Association contends that none of the Defendant subcontractors complied with these requirements and that, as a result, Association “has paid in excess of its policy obligations for Niron's defense.”

         Finally, although the subcontractor Defendants owed their various contractual duties to Niron, Association notes that its policy with Niron provides that “if [Niron] has rights to recover all or part of any payment we have made . . ., those rights are transferred to us.” Thus, Association appears to believe that it is entitled to assert any claims against the Defendant subcontractors that Niron would be able to assert.

         Based on these allegations, Association brings the following claims against the subcontractor Defendants (all of which appear to be brought under Colorado law): (i) a request for a declaration that those Defendants are obligated to provide defense and indemnification to Niron (any by extension, Association) in the state court action, among other things; (ii) breach of contract, under a third-party beneficiary theory, in that the subcontractor Defendants breached the terms of their contract with Niron and that the Defendant subcontractors and Niron intended the terms of that contract to benefit Association; (iii) equitable subrogation, in that Association is entitled to recover from the Defendant subcontractors for amounts it paid on their behalf; and (iv) unjust enrichment.

         With the exception of Defendant Frontier Restoration, none of the Defendants defended or appeared in this action. Association then filed motions for default judgment (# 64-71) against each of the Defendant subcontractors, as well as against Niron.[3] Each of the motions is substantively identical, and each asks for “a declaration that Association is entitled to recover from [the Defendant] amounts Association has paid toward the defense and/or indemnity of Defendant Niron in the underlying action.” None of the motions is supported by an affidavit or other evidentiary material that attempts to quantify the amounts Association has paid on behalf of each Defendant, or otherwise elaborate on the bare assertions in the Amended Complaint.

         ANALYSIS

         A. Subject-matter jurisdiction

         Association invokes this Court's subject-matter jurisdiction under 28 U.S.C. §1332, premised on diversity of citizenship. Such jurisdiction exists when two criteria are met: the parties are citizens of diverse states, and the amount in controversy exceeds $75, 000.

         The Amended Complaint alleges that Association is a citizen of Georgia, being both incorporated and having its principal place of business there. As to the Defendants, Association alleges that three entities, Defendants McSwain M Fabrication, Klydesdale Contracting, and CB Concrete, are corporations incorporated and having their principal place of business in Colorado. Two Defendants, Dorne Butts and Melquiades Rubio, are identified as individuals, for whom Association has identified their “principal place of business” and “principal mailing address” as being in Colorado. The remaining Defendants, Genaro Sanchez[4] and New Generation Plastering (and, for that matter, Niron) are identified as limited liability companies; for these, Association offers only the conclusory assertion that “upon information and belief, the members of [each LLC] are citizens of the state of Colorado.”

         The assertion of the corporations' citizenship is sufficient to demonstrate ...


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