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AMCO Insurance Co. v. Emery & Associates

March 17, 2010

AMCO INSURANCE COMPANY AS SUBROGEE OF STAR HOTELS, INC., PLAINTIFF,
v.
EMERY & ASSOCIATES, INC., PREMIER HOSPITALITY GROUP - KITTANNING, L.P., GENERAL HOSPITALITY, INC., KRATSA CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: David Stewart Cercone United States District Judge

Electronic Filing

MEMORANDUM OPINION AND ORDER OF COURT

I. INTRODUCTION

Plaintiff, AMCO Insurance Company as Subrogee of Star Hotels, Inc. ("AMCO" or "Plaintiff") filed this action pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. § 2201 et seq., seeking a determination of the applicability of the Pennsylvania Statute of Repose, 42 PA. CONS. STAT. ANN. § 5536, to an action for damages subsequently filed in this Court at Case No. 02:09cv904. Defendants, Emery & Associates, Inc. ("Emery"), Premier Hospitality Group-Kitanning L.P. ("Premier"), General Hospitality Inc. ("General Hospitality")and Kratsa Corporation ("Kratsa")(collectively "Defendants"), have filed Motions to Dismiss contending that the complaint seeks a judicial declaration which would ultimately amount to an advisory opinion, and therefore, does not meet the case and controversy requirement under Article III of the United States Constitution. AMCO has responded and the motion is now before the Court.

II. STATEMENT OF THE CASE

In or about 1994, Premier, General Hospitality and Kratsa hired Emery to act as general contractor for the construction of a hotel in Armstrong County, Pennsylvania. Complaint ¶¶ 9 & 10. Construction of the hotel was completed in December of 1995, and in January of 2001, Premier, General Hospitality and Kratsa sold the hotel to Star Hotels, who thereafter operated the hotel as a Comfort Inn. Complaint ¶¶ 10 & 11. On or about December 13, 2008, a fire occurred in the hotel causing damages alleged to be in excess of $2 million. Complaint ¶ 12.

AMCO alleges that the fire was caused, and allowed to develop, grow and spread, as a result of deficiencies in the design, planning, supervision and construction of the hotel. Complaint ¶ 13. This action was filed because AMCO expected Defendants to assert the statute of repose as a defense to any action by AMCO for monetary damages*fn1 . Complaint ¶ 14.

AMCO contends that the statute of repose is inapplicable because, in the construction the hotel, the Defendants engaged in acts or omissions that were not lawful. AMCO seeks a declaration that the language of the statute explicitly limits its applicability to those persons who lawfully undertake the design and construction of an improvement to real property, and certain lapses in the construction of the hotel were contrary to the Pennsylvania Code.

III. LEGAL STANDARD FOR MOTION TO DISMISS

The purpose of a motion to dismiss for failure to state a claim is to test the legal sufficiency of the allegations contained in the complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). In analyzing a motion under Rule 12(b)(6), a court must determine whether the allegations contained in the complaint, construed in the light most favorable to the plaintiff, suggest the required elements of a particular legal theory. Bell Atlantic v. Twombly, 550 U.S. 544 555-556 (2007); Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008).

The Third Circuit divided Rule 12(b)(1) motions into two categories: facial and factual. Mortensen v. First Federal Savings & Loan Ass'n, 549 F.2d 884, 891. A facial attack on jurisdiction is directed to the sufficiency of the pleading as a basis for subject matter jurisdiction. "In reviewing a facial attack, the court must only consider the allegations of the complaint and documents referenced therein and attached thereto in the light most favorable to the plaintiff." Gould Electronics Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). Thus, a facial challenge offers to the plaintiff similar safeguards to those related to Rule 12(b)(6) motions. Med. Soc'y of N.J. v. Herr, 191 F. Supp. 2d 574, 578 (D. N.J. 2002). The Defendants' 12(b)(1) motion presents a facial attack on Plaintiff's amended complaint.

IV. DISCUSSION

The Declaratory Judgment Act (the "Act"), in relevant part, provides that: in a case of actual controversy within its jurisdiction, . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.

28 U.S.C. § 2201(a)(Emphasis added). Aside from the express requirement that an "actual controversy*fn2 " must exist before this Court can exercise jurisdiction, the Act does not mandate that federal district courts exercise jurisdiction over every declaratory judgment action. See State Auto. Ins. Companies v. Summy, 234 F.3d 131, 133 (3d Cir. 2000). In Brillhart v. Excess Ins. Co. of America, 316 U.S. 491 (1942), the Supreme Court found that "although the District Court had jurisdiction of the suit under the Federal Declaratory ...


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