Crescent Univ. City Venture, LLC v. Trussway Mfg., Inc.

Crescent Univ. City Venture, LLC v. Trussway Mfg., Inc., 2018 NCBC 71.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
MECKLENBURG COUNTY 18 CVS 1642

CRESCENT UNIVERSITY CITY
VENTURE, LLC,

Plaintiff,

v.
ORDER AND OPINION ON
TRUSSWAY MANUFACTURING, DEFENDANT’S MOTION TO DISMISS
INC.; and TRUSSWAY
MANUFACTURING, LLC, AND PLAINTIFF’S MOTION TO
CONSOLIDATE
Defendants.

1. THIS MATTER is before the Court on (i) Defendant Trussway

Manufacturing, LLC’s f/k/a Trussway Manufacturing, Inc.’s (“Trussway”) Motion to

Dismiss and (ii) Plaintiff Crescent University City Venture, LLC’s (“Crescent”)

Motion to Consolidate (collectively, the “Motions”) in the above-captioned case.

2. After considering the Motions, the briefs of the parties in support of and in

opposition to the Motions, and the arguments of counsel for the parties at the May

30, 2018 hearing on the Motions, the Court hereby DENIES Trussway’s Motion to

Dismiss and GRANTS Crescent’s Motion to Consolidate for the reasons set forth

herein.

Smith Moore Leatherwood LLP, by Timothy P. Lendino and Robert R.
Marcus, for Defendant Trussway Manufacturing, LLC f/k/a Trussway
Manufacturing, Inc.

Troutman Sanders LLP, by Kiran H. Mehta, Samuel T. Reaves, and
Kristen L. Schneider, for Plaintiff Crescent University City Venture,
LLC.

Bledsoe, Chief Judge.
I.

BACKGROUND

3. The Court does not make findings of fact when considering a motion to

dismiss, but instead recites those facts included in the Complaint that are relevant

to the Court’s determination. See Concrete Serv. Corp. v. Inv’rs Grp., Inc., 79 N.C.

App. 678, 681, 340 S.E.2d 755, 758 (1986).

A. Factual Background

4. Crescent owned and developed Circle University City (the “Project”), a

student apartment complex near the University of North Carolina at Charlotte.

(Compl. ¶ 9, ECF No. 3.) The Project contains 189 apartment units spanning five

different buildings. (Compl. ¶ 9.)

5. Crescent hired AP Atlantic, Inc. d/b/a Adolfson & Peterson Construction

(“AP Atlantic”) to serve as the general contractor for the Project. (Compl. ¶ 12.) AP

Atlantic entered a subcontract with Madison Construction Group (“Madison”) under

which Madison agreed to provide all labor, materials, supplies, and equipment for all

framing and installation work on the Project. (Compl. ¶ 14.) In particular, Madison

agreed to supply a complete flooring system, including floor trusses and roof trusses.

(Compl. ¶ 14.) Madison hired Trussway to design, manufacture, and supply the floor

trusses required for the Project. (Compl. ¶ 15.) Trussway manufactured and

delivered these trusses to the Project site. (Compl. ¶¶ 18–19.)

6. On January 30, 2015, after the Project was complete and occupied by

students, the ceiling in Unit C302 began to sag and crack. (Compl. ¶ 20.) Four
months later, the ceilings in Units C101 and E103 similarly dipped and cracked.

(Compl. ¶ 24.)

7. Simpson Gumpertz & Heger, Inc. (“SGH”), a structural engineering firm

hired by Crescent, inspected the floor truss systems to determine why the ceilings

were failing. SGH concluded that the floors in the affected units were sagging

because the floor trusses were defective. SGH further concluded that the floor trusses

were defective because they contained unnecessary gaps between the metal connector

plates (“MCPs”) and lumber components of the trusses.1 (Compl. ¶¶ 22–23, 26.)

Following SGH’s findings, Crescent hired another general contractor, Summit

Contracting Group, to perform a Project-wide repair of all defective trusses. (Compl.

¶ 29.)

8. In total, Crescent incurred approximately $5.2 million in repair costs

associated with the Project. (Compl. ¶ 32.) Crescent also spent approximately $2.7

million providing housing for displaced students and sustaining other miscellaneous

expenses while Project-wide repairs were performed. (Compl. ¶ 32.)

B. Procedural Background

9. On August 5, 2015, AP Atlantic filed a lawsuit against Crescent (the “AP

Atlantic Action”), alleging that Crescent had refused to pay AP Atlantic for general

contractor services AP Atlantic provided for the Project. (Mot. Consolidate ¶ 1, ECF

No. 9.) AP Atlantic asserted claims against Crescent and Crescent’s surety, the

Guarantee Company of North America USA. (Mot. Consolidate ¶ 1.)

1 Floor trusses consist of pieces of lumber, known as truss members, held together by MCPs.
(Compl. ¶ 22.)
10. On August 19, 2016, Crescent filed a separate suit in Mecklenburg County

(the “Crescent Action”) against Adolfson & Peterson, Inc. (“A&P”), AP Atlantic’s

parent corporation, for damages related to the failure of the Project’s floor trusses.

(Pl.’s Mot. Consolidate ¶ 3.) The Crescent Action bears the filing number 16 CVS

14844.

11. On October 10, 2016, the Crescent Action was consolidated with the AP

Atlantic Action (the “Consolidated Action”). Order Mot. Consolidate at 3–4, Crescent

Univ. City Venture, LLC v. AP Atl., Inc., No. 15 CVS 14745 (N.C. Super. Ct. Oct. 10,

2016) [hereinafter “Order Mot. Consolidate”], ECF No. 98. The Court ordered that

the AP Atlantic Action be designated as the “Lead Action” and that “[a]ll disputed

issues raised in either the Crescent Action or the AP Atlantic Action . . . be deemed

to be disputed issues in the Lead Action.” (Order Mot. Consolidate ¶ 7(c).) Trussway

is currently a third-party defendant in the Consolidated Action as the result of claims

brought by AP Atlantic.2

12. On January 25, 2018, Crescent filed this action and asserted a separate

negligence claim against Trussway. This new suit against Trussway involves the

manufacturing, delivery, and supply of floor trusses for the Project. (Compl. ¶¶ 37–

41.)

2 Trussway was initially characterized as a direct defendant in the AP Atlantic Action, but
AP Atlantic’s claims against Trussway were asserted in the alternative in the event the
trusses were found to be defective—a fact AP Atlantic has consistently denied. Am. Compl.
at 1, Crescent Univ. City Venture, LLC, No. 15 CVS 14745 (Nov. 20, 2015), ECF No. 6. After
several rounds of amended pleadings and a settlement agreement further changed the claims
in the Consolidated Action, the parties and the Court agreed that Trussway is a third-party
defendant in the Consolidated Action. Order Consent Mot. Realign Parties at 5, Crescent
Univ. City Venture, LLC, No. 15 CVS 14745 (Dec. 11, 2017), ECF No. 284.
13. On February 14, 2018, Crescent filed its Motion to Consolidate, seeking to

consolidate this action with the Consolidated Action.

14. On March 16, 2018, Trussway filed its Motion to Dismiss, asserting the

“prior action pending” doctrine as a bar to the claims in this lawsuit.

II.

MOTION TO DISMISS

15. “The ‘prior pending action’ [or prior action pending] doctrine involves

essentially the same questions as the outmoded plea of abatement, and

is . . . intended to prevent the maintenance of a subsequent action that is wholly

unnecessary.” Johns v. Welker, 228 N.C. App. 177, 179, 744 S.E.2d 486, 489 (2013)

(quoting Shoaf v. Shoaf, 219 N.C. App. 471, 475, 727 S.E.2d 301, 305 (2012)). A

motion to dismiss a claim or case on such grounds “is a preliminary motion of the type

enumerated in Rule 12(b)(2)–(5) and the time for filing such motion is governed by

that rule.” Brooks v. Brooks, 107 N.C. App. 44, 47, 418 S.E.2d 534, 536 (1992). A

failure to raise the prior action pending defense either in a pre-answer motion or in

an answer is a waiver of the defense. Id. As stated by the Supreme Court of North

Carolina, “[t]he ordinary test for determining whether or not the parties and causes

are the same for the purpose of abatement by reason of the pendency of the prior

action is this: Do the two actions present a substantial identity as to parties, subject

matter, issues involved, and relief demanded?” Clark v. Craven Reg’l Med. Auth., 326

N.C. 15, 21, 387 S.E.2d 168, 172 (1990) (quoting Cameron v. Cameron, 235 N.C. 82,

85, 68 S.E.2d 796, 798 (1952)).
16. A motion to dismiss under the prior action pending doctrine is usually

treated as a motion under North Carolina Rule of Civil Procedure 13(a), the

compulsory counterclaim rule, and when ruling on such a motion, the trial court

“properly considers the record in the prior action.” Chesson v. Rives, 2017 NCBC

LEXIS 113, *3 (N.C. Super. Ct. Dec. 13, 2017); see Atkins v. Nash, 61 N.C. App. 488,

489, 300 S.E.2d 880, 881 (1983) (explaining that this State’s Supreme Court “has

treated denial of a motion to dismiss on the ground of a prior action pending as a

motion pursuant to” Rule 13(a)); see also 1 G. Gray Wilson, North Carolina Civil

Procedure § 13-5 (3d ed. 2007) (“A motion to dismiss on the ground of a pending prior

action may be based on failure to state a claim . . . but will usually be treated as a

motion pursuant to Rule 13(a).”).

17. Trussway argues that the prior action pending doctrine abates Crescent’s

new negligence claim because the Consolidated Action and this action involve the

same parties and subject matter, and both suits are pending in a court within this

State having like jurisdiction. While a motion to dismiss under the prior action

pending doctrine is usually brought in circumstances that implicate Rule 13(a),

Trussway asserts that the doctrine applies equally to subsequent lawsuits involving

permissive claims. Trussway also suggests that Crescent’s new suit is an “end-run

around Rule 15” and that Crescent should have moved for leave to amend under Rule

15 rather than filing a new lawsuit. (Def.’s Br. Opp’n Mot. Consolidate 3, ECF No.

17.)
18. Crescent asserts that the prior action pending doctrine does not apply to

suits involving claims that would have been considered permissive claims in an

earlier action. Crescent further argues that even if the Court reads the doctrine in

the broad manner Trussway promotes, the Court should still deny the Motion to

Dismiss because this action does not involve the “same parties” as the Consolidated

Action.

19. The Court need not resolve questions concerning the prior action pending

doctrine’s precise parameters here. Under either a narrow application of the doctrine

in the context of Rule 13(a) or the broader test for abatement advocated by Trussway,

the prior action pending doctrine does not provide grounds for dismissing Crescent’s

claim in this lawsuit.

20. First, treating Trussway’s motion under the prior action pending doctrine

as a motion under Rule 13(a), the Court concludes dismissal of Crescent’s claim would

be improper. Under Rule 13(a), a pleading must

state as a counterclaim any claim which at the time of serving the pleading
the pleader has against any opposing party, if it arises out of the transaction
or occurrence that is the subject matter of the opposing party’s claim and does
not require for its adjudication the presence of third parties of whom the court
cannot acquire jurisdiction.

N.C. R. Civ. P. 13(a). Rule 13(a) “requires a party to assert as a counterclaim any

claim arising out of the same transaction or occurrence as the pending action, at peril

of being barred from asserting the claim in a later action.” Furr v. Noland, 103 N.C.

App. 279, 281, 404 S.E.2d 885, 886 (1991) (internal quotation marks omitted).
21. For Trussway’s motion to succeed under this standard, Trussway must show

that Crescent’s negligence claim should have been brought as a compulsory

counterclaim within the Consolidated Action. If Crescent’s claim would be deemed

compulsory in the Consolidated Action, then the present claim is abated.

22. Crescent’s present claim, however, does not allege a compulsory

counterclaim in the Consolidated Action and therefore need not have been brought in

that action. When a defendant impleads a third-party defendant, the plaintiff and

the third-party defendant are not opposing parties. See Caterpillar, Inc. v. Lewis, 519

U.S. 61, 66 n.1 (1996) (citing 3 James W. Moore et al., Moore’s Federal Practice § 14.26

(2d ed. 1996)). The plaintiff and third-party defendant do not become opposing

parties until either the plaintiff asserts a claim against the third-party defendant or

the third-party defendant asserts a claim against the plaintiff. See id.

23. Crescent and Trussway have not made affirmative claims against each other

in the Consolidated Action and, thus, were not “opposing parties” before this lawsuit

was filed. As a result, the Consolidated Action did not contain a claim between

Crescent and Trussway that could provide the basis for a compulsory counterclaim,

and Crescent’s negligence claim in this action would not be deemed a compulsory

counterclaim in the Consolidated Action. See N.C. R. Civ. P. 13(a)–(b) (requiring the

presence of an opposing party’s claim for a counterclaim to be asserted).

Consequently, if Trussway’s Motion to Dismiss is treated as a motion under Rule

13(a), the Court concludes that the Motion to Dismiss must be denied.
24. Trussway’s Motion to Dismiss fares no better under the broader application

of the prior action pending doctrine that Trussway advances, which focuses solely on

whether the two actions before the Court “present a substantial identity as to parties,

subject matter, issues involved, and relief demanded[.]” Clark, 326 N.C. at 21, 387

S.E.2d at 172. While the subject matter of the Consolidated Action and this action

are the same and this Court has jurisdiction over both lawsuits, the Court concludes

that a substantial identity does not exist as to the parties in the two suits.

25. Trussway supports its assertion that the Consolidated Action and this

action present a substantial identity as to parties involved by citing Clark. The Court

disagrees and finds that Clark, in fact, requires that the Court reach the opposite

conclusion.

26. The plaintiff in Clark brought an initial lawsuit against several defendants.

Id. at 18, 387 S.E.2d at 170. After appealing the trial court’s dismissal of that suit,

the plaintiff filed a second lawsuit. Id. The second lawsuit named one defendant

from the first action but substituted other defendants and added another plaintiff.

Id. at 21–22, 387 S.E.2d at 172. The original defendant involved in both the prior

and new actions asserted the defense of abatement. Id. at 19, 387 S.E.2d at 171. The

North Carolina Court of Appeals affirmed the trial court’s decision to grant the

original defendant’s plea in abatement and held that the parties in the two cases were

substantially similar. Id. at 22, 387 S.E.2d at 172. Specifically, the Clark court noted

that only the original defendant had moved to abate the second action, that the

plaintiff’s rights against the additional defendants would not be affected by the
abatement, and that “[t]he exclusion of two defendants who had been named in the

first suit from [the] second suit ha[d] no bearing on the redundancy of [the] second

suit as to the [original defendant.]” Id. at 21, 387 S.E.2d at 172. In short, the second

suit was properly abated as to the original defendant because the original defendant

was an opposing party in the prior suit. See id.

27. Trussway’s argument is thus correct in one sense—two lawsuits may have

substantially similar identities as to the parties involved despite the absence of

certain parties from the second lawsuit. What Trussway ignores, however, is the

“redundancy” that existed in Clark when the same plaintiff brought two lawsuits

against the same defendant. Here, in contrast, Trussway is not a defendant in the

Consolidated Action, and Crescent has not asserted any claims against Trussway in

the Consolidated Action. Crescent’s negligence claim in this action is not

“redundan[t]” as to Trussway. Id. The Court therefore concludes that this action and

the Consolidated Action do not “present a substantial identity as to [the] parties”

involved. Id. Thus, under Trussway’s advocated implementation of the prior action

pending doctrine, Trussway’s Motion to Dismiss must still be denied.

III.

MOTION TO CONSOLIDATE

A. Legal Standard

28. “Rule 42(a) of the North Carolina Rules of Civil Procedure provides the trial

court with authority to consolidate pending ‘actions involving a common question of

law or fact.’” Boone Ford, Inc. v. IME Scheduler, Inc., 800 S.E.2d 94, 96 (N.C. Ct.
App. 2017) (quoting N.C. R. Civ. P. 42(a)). “Whether two or more cases should be

consolidated for trial is a decision left to the sound discretion” of the trial judge. Id.

“A trial court’s ruling on a Rule 42 motion will not be reversed on appeal absent a

manifest abuse of discretion.” Markham v. Nationwide Mut. Fire Ins. Co., 125 N.C.

App. 443, 448, 481 S.E.2d 349, 353 (1997).

B. Analysis

29. For the following reasons, the Court concludes that consolidation is

appropriate in this case.

30. First, the record demonstrates that the Consolidated Action and this action

contain common questions of law and fact, and both Crescent and Trussway

acknowledge that this action is substantially related to the Consolidated Action.

(Def.’s Br. Supp. Mot. Dismiss 3, ECF No. 16; Mot. Consolidate ¶ 9.)

31. Second, when duplicative actions arise, parties and third parties often incur

considerable, undue expense. See Wood v. Brown, 25 N.C. App. 241, 245, 212 S.E.2d

690, 692 (1975) (finding that “justice would best be served by” consolidating two

related actions and avoiding “considerable expense”). Consolidating the actions here

will be less costly than requiring them to proceed separately and less likely to cause

financial prejudice to any party.

32. Third, a decision to leave the actions separate may leave Trussway open to

inconsistent verdicts. See Green v. Duke Power Co., 305 N.C. 603, 608, 290 S.E.2d

593, 596 (1982) (“[W]hen the same issues are present in both trials, [it] creat[es] the
possibility that a party will be prejudiced by different juries in separate trials

rendering inconsistent verdicts on the same factual issue.”).

33. Fourth, at the May 30, 2018 hearing, Trussway indicated that, should the

Court deny Trussway’s Motion to Dismiss, consolidation would be the least

prejudicial option available to the Court from Trussway’s perspective. Thus, given

the Court’s decision to deny the Motion to Dismiss, both parties to this action now

favor consolidation.3

34. The Court thus concludes, in the exercise of its discretion, for the reasons

stated above and in the interests of judicial economy, that the Consolidated Action

and this action should be consolidated for all future proceedings, including but not

limited to trial, under North Carolina Rule of Civil Procedure 42.

IV.

CONCLUSION

35. Based on the foregoing, the Court hereby ORDERS as follows:

a. The Motion to Dismiss is DENIED.

b. The Motion to Consolidate this action (Mecklenburg County, No. 18 CVS

1642) and the Consolidated Action (Mecklenburg County, Nos. 15 CVS

14745 and 16 CVS 14844) is GRANTED, and the Court shall enter an order

in the Consolidated Action stating the same.

3 Additionally, the other parties to the Consolidated Action that have chosen to weigh in on
Crescent’s Motion to Consolidate unanimously consent to consolidation. Defs.’ AP Atlantic
and Adolfson & Peterson Construction, Inc.’s Resp. and Approval Crescent’s Mot. Consolidate
at 5, Crescent Univ. City Venture, LLC, No. 15 CVS 14745 (Feb. 22, 2018).
c. This action and the Consolidated Action shall be consolidated for all future

proceedings, including but not limited to trial, and prior pleadings shall be

deemed filed in both actions.

d. The AP Atlantic Action shall remain the Lead Action in the Consolidated

Action and matters filed in the Lead Action shall be deemed to be filed in

the AP Atlantic Action, the Crescent Action, and this action. Accordingly,

(i) all future pleadings in the AP Atlantic Action, the Crescent Action, or

this action shall be filed in and made part of the Lead Action, (ii) the case

caption for all future pleadings in the AP Atlantic Action, the Crescent

Action, or this action shall be captioned in the Lead Action, and (iii) copies

of the pleadings in this action filed prior to the entry of this Order shall be

incorporated into and made part of the Lead Action.

e. All disputed issues raised in this action shall be deemed to be disputed

issues in the Lead Action.

f. This action shall be subject to the Court’s September 20, 2016 Case

Management Order in the AP Atlantic Action and all subsequent

amendments to that order, and counsel in this action does not need to

conduct a separate case management meeting or submit a case

management report to the Court in this action.

g. Counsel for all parties in the Consolidated Action shall meet and confer and

submit to the Court a joint status report concerning any revisions to the

current case management deadlines that the parties believe are required
as a result of the Court’s decision to grant the Motion to Consolidate. The

parties shall have through and including August 3, 2018 to file this report.

h. In the event the parties cannot agree on the matters contained within the

joint status report, the parties shall file a joint status report detailing the

parties’ respective positions on revisions to the current case management

deadlines by the same date.

SO ORDERED, this the 16th day of July, 2018.

/s/ Louis A. Bledsoe, III
Louis A. Bledsoe, III
Chief Business Court Judge