United States District Court, D. Massachusetts
REPORT AND RECOMMENDATION RE: MOTION OF GAUTAM CHITNIS TO DISMISS FOURTH PARTY COMPLAINT (DOCKET ENTRY # 36)
MARIANNE B. BOWLER, Magistrate Judge.
Pending before this court is a motion to dismiss filed by fourth party defendant Gautam Chitnis ("Chitnis"), a Massachusetts resident. (Docket Entry # 36). Fourth party plaintiff Alexandra Serrano ("Serrano"), also a Massachusetts resident, opposes the motion. (Docket Entry # 37). Chitnis argues that this court lacks subject matter jurisdiction over the fourth party complaint and, even if jurisdiction exists, abstention is appropriate. Serrano submits that this court has supplemental jurisdiction over the one count fourth party complaint.
STANDARD OF REVIEW
Where, as here, a district court considers a Fed.R.Civ.P. 12(b)(1) ("Rule 12(b)(1)") motion, it must credit the plaintiff's well-pled factual allegations and draw all reasonable inferences in the plaintiff's favor. Merlonghi v. U.S., 620 F.3d 50, 54 (1st Cir. 2010) (citing Valentin v. Hospital Bella Vista, 254 F.3d 358, 363 (1st Cir. 2001)); Sanchez ex rel. D.R.S. v. U.S., 671 F.3d 86, 92 (1st Cir. 2012) ("credit[ing] the plaintiff's well-pled factual allegations and draw[ing] all reasonable inferences in the plaintiff's favor" under Rule 12(b)(1)). "The district court may also consider whatever evidence has been submitted, such as the depositions and exhibits submitted.'" Merlonghi v. U.S., 620 F.3d at 54 (quoting Aversa v. United States, 99 F.3d 1200, 1210 (1st Cir. 1996)).
Moreover, "Federal courts are courts of limited jurisdiction'" and "[t]he existence of subject-matter jurisdiction is therefore never presumed.'" Fafel v. Dipaola, 399 F.3d 403, 410 (1st Cir. 2005) (quoting Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375, 377 (1994), and Viqueira v. First Bank, 140 F.3d 12, 16 (1st Cir. 1998)). When a defendant (Chitnis) challenges subject matter jurisdiction, the plaintiff (Serrano) bears the burden of proving jurisdiction. Johansen v. U.S., 506 F.3d 65, 68 (1st Cir. 2007).
In April 2013, plaintiff GE Buildtech Corp. ("GE"), doing business as G&E Build Tech Corp., filed a complaint against defendants KGCI, Inc. ("KGCI") and Merchants Bonding Company to collect a $56, 000 balance under a construction contract for work at the Charlestown Navy Yard. (Docket Entry # 1). The complaint sets out claims for breach of contract, quantum meruit, violation of Massachusetts General Laws chapter 93A ("chapter 93A") and violation of the Miller Act, 40 U.S.C. §§ 3131-3134. (Docket Entry # 1). Notably, it asserted federal question jurisdiction based on the Miller Act claim. (Docket Entry # 1).
The complaint alleged that KGCI, the general contractor, entered into a contract with the United States of America, through the National Park Service, to perform renovations and construction work at the Charlestown Navy Yard ("the project"). In January 2011, KGCI hired Serrano as a project manager and agreed to pay her $2, 097 per week. Serrano purportedly managed the project for KGCI and recommended that KGCI enter into a subcontract with GE. In recommending GE, Serrano allegedly did not comply with a number of KGCI policies. In November 2011, KGCI entered into the subcontract with GE. Under the subcontract, GE furnished labor and materials for drywall and carpentry services on the project. (Docket Entry # 1, ¶ 6, p. 2) (Docket Entry # 10, ¶ 6, p. 1).
In May 2013, KGCI filed an amended answer and asserted a counterclaim against GE for breach of contract. (Docket Entry # 10). KGCI, a Massachusetts corporation, also filed a third party complaint against Serrano alleging fraud because Serrano induced KGCI to subcontract with GE without obtaining insurance documents. The third party complaint additionally included a claim that Serrano converted KGCI's property, namely, a laptop, iPhone and iPad. (Docket Entry # 10). In July 2013, Serrano answered the third party complaint and asserted counterclaims against KGCI including violations of section 148 of Massachusetts General Laws chapter 149 ("the Wage Act") for inter alia not paying Serrano for her last two weeks of work at KGCI from August 1 to 15, 2012. Serrano also brought additional state law claims for breach of contract, quantum meruit and violation of chapter 93A against KGCI.
In addition to the foregoing counterclaims, Serrano filed the fourth party complaint against Chitnis for violating the Wage Act. (Docket Entry # 14-2). As set out in the fourth party complaint, Chitnis controlled and directed the work of Serrano, the project manager at KGCI. Chitnis was also the president and treasurer of KGCI. On August 15, 2012, "KGCI and Serrano mutually agreed to end Serrano's employment." (Docket Entry # 14-2, ¶ 19). KGCI, however, never compensated Serrano for the work she performed from August 1 to 15, 2012. KGCI also failed to compensate Serrano for three weeks paid vacation and for work performed in excess of 40 hours per week.
In August 2013, Chitnis filed an answer denying that KGCI hired Serrano "in her individual capacity" or that KGCI employed Serrano. (Docket Entry # 17). Chitnis also denied that KGCI failed to compensate Serrano for the two weeks of work in August 2012. (Docket Entry # 17). Chitnis seeks costs and attorneys' fees from Serrano for filing a frivolous fourth party complaint in bad faith. Serrano denies such liability. (Docket Entry # 18). In February 2014, KGCI filed for chapter 11 bankruptcy protection. (Docket Entry # 27).
Chitnis moves to dismiss the fourth party complaint due to lack of subject matter jurisdiction. He points out, correctly, that no party challenged the jurisdiction over the third party complaint by KGCI, a Massachusetts corporation, against Serrano, a Massachusetts resident, based on violations of state common law. Serrano then filed the fourth party complaint against Chitnis, also a Massachusetts resident, setting out only a state law claim. In light of the absence of diversity or federal question jurisdiction over the fourth party complaint, Chitnis contends it is subject to dismissal.
Serrano relies on federal question jurisdiction, 28 U.S.C. § 1331, based on the cause of action under the Miller Act, 40 U.S.C. § 3133(b), to establish jurisdiction over the original complaint. According to Serrano, such jurisdiction provides the basis to assert supplemental jurisdiction, 28 U.S.C. § ...