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Davis v. Grubb

United States District Court, Third Circuit

May 23, 2013

TROY and JENNIFER DAVIS, and JILL U. TILLMAN, Plaintiffs,
v.
BRIAN and ERIN GRUBB and ORLEANS HOMEBUILDERS, INC., Defendants. ALLSTATE INSURANCE COMPANY a/s/o TROY and JENNIFER DAVIS, Plaintiffs,
v.
BRIAN and ERIN GRUBB and ORLEANS HOMEBUILDERS, INC., Defendants.

OPINION

JOEL H. SLOMSKY, District Judge.

I. INTRODUCTION

This case arises out of a dispute over property damage. Plaintiffs Troy and Jennifer Davis and Jill U. Tillman filed an action against Defendants Brian and Erin Grubb and Stock Grange, L.P.[1] in the Court of Common Pleas of Chester County. A second action was filed by Allstate Insurance Company ("Allstate") as subrogee of the Davises against the Grubbs and Stock Grange in the Court of Common Pleas of Chester County. Plaintiffs in both actions seek damages for property loss caused by two separate floods. The Complaint alleges that work on the Grubbs' property by homebuilder Stock Grange was performed negligently, which allowed the two floods to damage the property.

The cases were removed to this Court under federal question jurisdiction because the claims against Stock Grange implicate an interpretation of the Bankruptcy Code. United States District Courts have original but not exclusive jurisdiction over interpretation of the Bankruptcy Code pursuant to 28 U.S.C. § 1334(b).[2] This Court granted an unopposed Motion to Consolidate the two cases because the interpretation involves common questions of law and fact. (Doc. No. 23.)[3] The matter of interpretation was raised in Plaintiffs' Motions to Remand both cases to state court. These Motions are now before the Court for disposition.[4]

Plaintiffs seek to remand this case to state court, arguing: 1) the case was improperly removed to federal court under 28 U.S.C. § 1441(a)[5] because the claims here are for negligence and breach of warranty, both state law claims; and 2) the claims are viable because they arose after the Bankruptcy Court approved a Second Amended Joint Plan of Reorganization for Stock Grange (hereafter "Plan"), which only discharged all prior claims. Conversely, Defendant Stock Grange submits that: 1) this Court should retain jurisdiction in order to interpret the Bankruptcy Code and determine whether Plaintiffs' claims were discharged in bankruptcy; and 2) Plaintiffs' claims against Stock Grange arose before the date of approval of the Plan and therefore were discharged in bankruptcy.

At the November 7, 2012 hearing, counsel for both parties agreed that after this Court resolves the bankruptcy issue, this case should be remanded to state court for adjudication of the common law claims. (Hr'g Tr., 11-13 No. 07, 2012.) For reasons that follow, this Court will find that Plaintiffs' claims were discharged in the bankruptcy proceeding filed by Stock Grange. The Court will also grant the Motions to Remand this case to state court.

II. FACTUAL BACKGROUND

In February 2008, Plaintiffs purchased a residential property located at 1348 Brownsville Drive, Coatesville, Pennsylvania from Defendant Stock Grange. It was covered by a five year warranty on drainage, which guaranteed that groundwater would be diverted away from the residence. (Doc. No. 17 at 2 n.1.) The Grubbs own the property adjacent to Plaintiffs' property. The Grubbs' property sits on a hill above Plaintiffs' property. (Doc. No. 1 at 17.)

On March 1, 2010, Stock Grange filed a petition under Chapter 11 of the Bankruptcy Code. (Id. at 10.) On October 19, 2010, Stock Grange gave public notice of the bankruptcy in USA Today. (Doc. No. 19 at 13.) On December 1, 2010, the United States Bankruptcy Court for the District of Delaware confirmed the Plan. (Doc. No. 1 at 17; Doc. No. 6 at 6-7.) The Plan lists February 14, 2011 as the effective date of release of all prior claims against Stock Grange. (Doc. No. 6 at 6-7.) Plaintiffs allege that on August 28 and September 7, 2011, the contents of their home were damaged when rain fell on the Grubbs' property and "ran in a torrent down the hill" to their property. (Doc. No. 1 at 17.)

On May 24, 2012, Plaintiffs filed the action against the Grubbs and Stock Grange in the Chester County Court of Common Pleas (captioned Troy and Jennifer Davis and Jill U. Tillman v. Brian and Erin Grubb and Orleans Homebuilders, Inc., No. 12-05265) (the "Davis case"). Plaintiffs made trespass and nuisance claims of action against the Grubbs and negligence and breach of warranty claims against Stock Grange. On August 14, 2012, Defendant Stock Grange removed the case to this Court, alleging that federal question jurisdiction existed because of the bankruptcy question. On September 7, 2012, Plaintiff filed the Motion to Remand, which is before the Court. (Doc. No. 6.)

On October 26, 2012, Allstate, as subrogee of Plaintiffs, filed a complaint against Grubb and Stock Grange in the Court of Common Pleas of Chester County (captioned Allstate Insurance Company a/s/o Troy and Jennifer Davis v. Brian and Erin Grubb and Orleans Homebuilders, Inc., No. 12-11416) (the "Allstate case"). Allstate made negligence and trespass claims against the Grubbs and negligence and breach of warranty claims against Stock Grange. (Doc. No. 1 of Case No. 12-6747.) On December 3, 2012, Defendant Stock Grange removed the case to this Court, again alleging federal question jurisdiction because of the bankruptcy question. On December 28, 2012, Allstate filed the second Motion to Remand, which is also before the Court. (Doc. No. 7 of Case No. 12-6747.)

On January 4, 2013, Stock Grange filed a Motion to Consolidate the Davis case and the Allstate case. (Doc. No. 21.) On March 25, 2013, this Court granted the unopposed Motion to Consolidate the cases because, as noted previously, they involve common matters.

III. STANDARD OF REVIEW

A defendant may remove a civil action from state court to federal court if the case could have been originally brought in the federal forum. 28 U.S.C. § 1441(a). A United States District Court has "original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11." 28 U.S.C. § 1334(b).

A case removed to federal court may be remanded to state court if "at any time before final judgment it appears that the district court lacks subject matter jurisdiction...." 28 U.S.C. § 1447(c). Removal statutes should be strictly construed "against removal and all doubts should be resolved in favor of remand." Batoff v. State Farm Ins. Co. , 977 F.2d 848, 851 (3d Cir.1992) (quoting Steel Valley Auth. v. Union Switch & Signal Div. , 809 ...


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