In Any Construction Lawsuit, Be Sure to Name the Right People

Originally posted 2013-08-12 10:45:29. Republished by Blog Post Promoter

Map of the United States District Courts in Vi...
Map of the United States District Courts in Virginia, showing the boundaries of the Eastern and Western Districts, and their divisions. (Photo credit: Wikipedia)

The title of this post may seem obvious. Of course you need to name the right people. “Why even write about this?” you may ask yourself. The answer to this question is that the list of all of the parties necessary to a successful lawsuit may not be so obvious.

One example is the case of a Virginia mechanic’s lien lawsuit. The obvious parties would be the contractor or subcontractor that owes the money and the owner of the property. However, you can’t stop there. The trustees to any deed of trust and the bank or other party that may hold a note on the property are necessary parties as well. Failure to name one of these necessary parties can lead to dismissal of your suit. This is why I always recommend a title search prior to any mechanic’s lien memorandum being recorded and an update prior to suit.

A recent case out of the Eastern District of Virginia Federal Court in Alexandria illustrates another case where the plaintiff did not correctly answer the “necessary party” question. In ADI Construction of Va. LLC v. Bordewick the court considered a design build contract and a claim on that contract. After settling much of the claim with certain parties, the Plaintiff, ADI, sought to recover the final amounts owed for its work from the authorized agents and representatives of the Owner named in the original contract, Executive Readiness, d/b/a Guardian 24/7. However, in filing its suit, it only named the agent and representative but failed to name Guardian.

The Court found that Guardian was a necessary party to the lawsuit under Fed. R. Civ. P. 19(a)(1)(B)(ii), reasoning:

On the one hand, plaintiff seeks to recover a portion of the money allegedly owed to it from defendants through the current lawsuit, a lawsuit which primarily relies on the assertion that Guardian is not a party to or liable under the Agreement and that defendants are instead. On the other hand, plaintiff already has accepted a settlement for a portion of the money allegedly owed to it from other defendants that are entities who work for or are otherwise connected to Guardian, a resolution of which is inconsistent with plaintiff’s current stance in this litigation.

The Court then dismissed the lawsuit because addition of Guardian would destroy its diversity jurisdiction and suggested that the Virginia state courts could handle the case.

While this final disposition did not end the matter, the failure to name Guardian and file in Virginia state court caused the loss of time and money on the part of the plaintiff. For this reason, involving an experienced construction lawyer in the process early on could have saved time and money by making sure that the correct parties were named from the beginning.

I encourage you to read the full text of the opinion (linked above) and let me know if you have any other take aways from this interesting case.

As always, I welcome your comments below. Please subscribe to keep up with this and other Construction Law Musings.

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