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Walsh Construction Co. v. Chicago Explosive Services, LLC

United States District Court, N.D. Indiana, Hammond Division

September 25, 2017

WALSH CONSTRUCTION CO., Plaintiff,
v.
CHICAGO EXPLOSIVE SERVICES, LLC, and PMG INDUSTRIAL, LLC, Defendants.

          OPINION AND ORDER

          RUDY LOZANO, JUDGE.

         This matter is before the Court on Defendant Chicago Explosive Services, LLC's Motion to Dismiss Plaintiff's Complaint for Lack of Subject Matter Jurisdiction, filed by Defendant, Chicago Explosive Services, LLC, on May 27, 2016 (DE #66). For the reasons set forth below, the motion is GRANTED. This case is DISMISSED WITHOUT PREJUDICE for lack of subject matter jurisdiction.

         BACKGROUND

         Plaintiff, Walsh Construction Company (“Walsh”), filed its Complaint on March 17, 2014. (DE #1.) The Complaint lists the following claims: Count I, Breach of Contract against Chicago Explosive Services, LLC (“CES”); Count II, Breach of Contract for Failure to Indemnify against CES; Count III, Breach of Contract for Failure to Properly Procure Insurance against CES; Count IV, Negligence against CES; Count V, Negligence against PMG Industrial, LLC (“PMG”); Count VI, Strict Liability against CES; and Count VII, Strict Liability against PMG. (DE #1.) CES filed a Motion for Enlargement of Time in which to Answer or Otherwise Respond to Complaint on May 30, 2014. (DE #11.) CES then filed its Answer to Complaint along with a Motion to Dismiss Count II and III of Plaintiff's Complaint on June 11, 2014. (DE's #13 & #15.) The Court denied the Motion to Dismiss Count II and III of Plaintiff's Complaint on October 20, 2014. (DE #27.)[1]

         A protracted discovery period ensued during which several requests for extensions of time related to discovery matters were granted. On May 27, 2016, the instant motion to dismiss was filed. (DE #66.) In response to the motion, Walsh requested an enlargement of time to respond so that it could conduct discovery on the issue raised in the motion to dismiss -- lack of subject matter jurisdiction. (DE #69.) On June 28, 2016, Magistrate Judge Paul R. Cherry ordered all discovery not related to subject matter jurisdiction stayed, and he vacated the discovery schedule providing new deadlines for specific, jurisdictionally based discovery matters. (DE #73.) On November 7, 2016, Walsh filed its response to the instant motion to dismiss. (DE #83.) CES filed its reply on November 18, 2016. (DE #86.) The motion is ripe for adjudication.

         DISCUSSION

         Facts

         Walsh, an Illinois corporation with its principal place of business in the state of Illinois, was hired by the Indiana Department of Transportation (“INDOT”) pursuant to INDOT Contract IB-30997-A to demolish the Cline Avenue Bridge (“Bridge”) in East Chicago, Indiana. (DE #1, pp. 1-2.) Walsh retained CES, a limited liability company with its principal place of business in Indiana, pursuant to a subcontract agreement (“Subcontract”) to perform certain “blasting” tasks associated with the Bridge demolition. (Id.; see also Subcontract, DE #1-1.) CES was assisted by PMG in completing the blasting work. (DE #1, p. 3.) Walsh alleges that some of the blasting work was performed in an improper and negligent manner, which ultimately led to Walsh incurring significant monetary damages. (Id. at 3-11.) Walsh filed the instant Complaint bringing claims of breach of contract, negligence, and strict liability. (Id.) The Complaint alleges that jurisdiction is proper under 28 U.S.C. § 1332 because the amount in controversy exceeds $75, 000 and because diversity exists between the parties. Id. at 1-2. Specifically, Walsh alleges that it is a citizen of Illinois while, “[u]pon information and belief, ” CES and PMG are citizens of Indiana for purposes of diversity jurisdiction.[2] Id. at 1.

         CES's Limited Liability Company Operating Agreement defines its initial members as Richard N. Flores, Patrick L. Carney, and Brant Flores. (DE #66-2.) It is not disputed that both Richard N. Flores and Brant Flores are citizens of Indiana as is alleged in the Complaint. However, during the course of discovery, it was discovered that Carney has never been a citizen of Indiana.[3] (DE #66-3, p. 2.) While the parties agree that Carney was never a citizen of Indiana, they dispute the actual state of his citizenship as of March 17, 2014, the date of the filing of the Complaint. The following is a summary of the evidence as provided by both parties.

         In the “Declaration of Patrick L. Carney in Support of Defendant Chicago Explosive Services, LLC's Motion to Dismiss” (the “Declaration” or “Carney's Declaration”), Carney states that: (1) he maintained citizenship in Illinois at all relevant times; (2) he currently (as well as during previous relevant time periods) maintains residency at 10343 South Oakley Street, Chicago, Illinois 60643 (“10343 Oakley Street”); (3) he maintains a Driver's License issued by the State of Illinois with an expiration date of August 12, 2016; (4) his Illinois and Federal tax returns identify his address as 10343 Oakley Street; (5) he maintains a vacation home at 1209 Varela Street, Key West, Florida 33040 (“1209 Varela Street”); and (6) he is not a citizen of Florida or Indiana. (DE #66-3.) CES has provided copies of Carney's 2013 and 2014 Illinois and Federal tax returns, which identify his address as 10343 Oakley Street (DE ##86-4 through 86-7), an Illinois Driver's License issued on August 18, 2012, that has an expiration date of August 12, 2016, and lists Carney's address as 10343 Oakley Street (DE #86-8), a certificate of an Illinois vehicle title dated June 9, 2008 (DE #86-9), and a money market account statement dated February 28, 2014, with an address of 10343 Oakley Street (DE #86-10). Carney also testified that he was a registered voter in the State of Illinois as of March 17, 2014, and that he voted in the Illinois primary as late as 2016. (DE #86-11, pp. 2-3.)

         In 2010, Carney purchased the properties located at 1209 Varela Street and 1207 Varela Street in Key West, Florida. (DE #83-5, pp. 4-5.) When asked about the purpose of the property at his deposition on October 4, 2016 (the “Deposition”), Carney initially testified as follows:

Q: And I understand these properties were initially purchased as a vacation home, correct? A: Correct. One of the -- yeah, correct. Q: I mean, it it's not correct, then please feel free to correct me, because I don't want to put words in your mouth.
A: It wasn't purchased for a vacation home. I knew eventually I would move down here full time. That's why I bought the house. I didn't figure I'd come down two weeks out of the year, or anything like that. I bought the house because of the change in business, obviously, getting out of the blasting business, the pits at the Board of Trade that you are familiar with -- well, probably, you know what I'm talking about. Those are all going -- I was in the pit back in the day. They are all pretty much - for 2007 you could see the handwriting on the walls, all going computerized; hence, there was really no reason for me to remain in Chicago. So, it wasn't purchased just as an occasional - it was purchased as a final destination.
Q: When you purchased it in 2010, approximately what percentage of the year did you spend in Key West?
A: 2010? All total, probably maybe three months.[4]

(Id. at 5-6.) Later in that same Deposition, Carney expanded upon his position when asked again about the property:

Q: Looking back at Exhibit 17, No. 7 states that, ‘I maintain a vacation home at 1209 Varela Street, Key West, Florida, 33040'; that's what it states, right?
A: Yes.
Q: But we have already talked about today, and it is your position that that property is not -- was never a vacation home?
A: I didn't say that at all. I said that it was a destination home eventually. I mean, obviously when I first bought it it was for a vacation home. And there is probably an overriding reason I bought it to begin with. Has nothing to do with what we are talking about here at all. So it is just a ...

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