Fisk Electric Company v. Webcor Builders, Inc.

Background

The dispute arose from construction of the Transbay Transit Center. In March 2009, the Transbay Joint Powers Authority (TJPA) entered a prime contract with the Webcor/Obayashi Joint Venture (WOJV). In November 2014, WOJV and Fisk Electric Company entered a subcontract for electrical work on the project.

Fisk later sued WOJV, the joint venture’s members, and sureties. WOJV asserted counterclaims against Fisk and filed a third-party complaint against TJPA. Separately, WOJV had sued TJPA in state court over project delays and cost overruns. That case and five other related state lawsuits were consolidated.

The federal court had previously stayed this case under the Colorado River doctrine because of the related state litigation. The Ninth Circuit reversed and vacated that stay. WOJV then filed a second motion to stay, relying on the Landis doctrine and arguing that the contracts contemplated resolving the disputes involving WOJV, Fisk, and TJPA in one proceeding.

WOJV’s Motion to Stay

The court denied WOJV’s second motion to stay. It held that the Landis doctrine applies when the parallel case is in another federal district court, not when the parallel litigation is in state court. The court stated that, in this situation, a stay based on parallel state proceedings could be granted only under the Colorado River doctrine, which the Ninth Circuit had already rejected in this case.

The court also rejected WOJV’s contract argument. It interpreted the prime contract provision incorporated into the subcontract as a venue provision, not a requirement for consolidated proceedings. The court further stated that Fisk could cooperate with WOJV’s litigation against TJPA without formally becoming a party to that litigation.

TJPA’s Motion to Dismiss the Third-Party Complaint

TJPA moved to dismiss, strike, or stay WOJV’s third-party complaint, primarily arguing that the court should decline supplemental jurisdiction. Supplemental jurisdiction is a court’s authority to hear related claims that would not independently qualify for federal jurisdiction.

WOJV argued that TJPA was a necessary party under Federal Rule of Civil Procedure 19. The court rejected that argument. It explained that the “complete relief” part of Rule 19 concerns whether the court can provide relief among the parties already in the case; it does not require joining someone merely because that person might be involved in future litigation. The court also held that the possibility of different results in separate lawsuits is not the same as the inconsistent obligations that require joinder under Rule 19. The court found no risk that WOJV would face multiple liability on Fisk’s claims and noted that contribution or indemnity rights do not automatically make another party necessary.

Supplemental Jurisdiction

The court granted TJPA’s motion to dismiss WOJV’s third-party complaint. Under 28 U.S.C. § 1367(c)(2), a court may decline supplemental jurisdiction when a related claim substantially predominates over the claims within the court’s original jurisdiction. The court found that WOJV’s third-party complaint was far broader than Fisk’s complaint. It concerned the entire project, including alleged design errors, delays, change orders, acceleration, contract-price issues, and claims involving many subcontractors.

The court concluded that Fisk’s claims were only one part of the larger dispute described in WOJV’s third-party complaint. Because the third-party complaint would largely replicate the consolidated state-court action, the court declined supplemental jurisdiction under § 1367(c)(2).

The court also held that § 1367(c)(4) provided an independent basis for the ruling. That provision allows a court to decline supplemental jurisdiction in exceptional circumstances for other compelling reasons. The court found such circumstances because allowing WOJV’s third-party complaint to proceed in federal court would frustrate judicial efficiency while the broader project dispute was already being addressed in state court.

The court distinguished this ruling from the Ninth Circuit’s earlier rejection of a Colorado River stay or dismissal. Unlike a Colorado River ruling, which would prevent the court from hearing the case, the court’s decision here concerned only WOJV’s third-party complaint against TJPA. The federal court would continue exercising jurisdiction over Fisk’s claim and WOJV’s counterclaim.

Disposition

The court denied WOJV’s motion to stay and granted TJPA’s motion to dismiss. The court expressed no opinion on whether WOJV should be allowed to file a narrower third-party complaint. The order disposed of Docket Nos. 97 and 99. Judge Edward M. Chen signed the order.