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John S. Clark Co., Inc. v. Travelers Indemnity Co. of Illinois

United States District Court for the Middle District of North Carolina
359 F. Supp. 2d 429 (2004)


Facts

John S. Clark Company, Inc. (plaintiff), a building contractor based out of North Carolina, obtained insurance from Travelers Indemnity Company of Illinois (defendant) to cover a construction project as well as damage arising from work performed by subcontractors and any costs incurred to replace or repair damage on said project. Clark hired Herrera Masonry Inc. (defendant) as subcontractor on the project, pursuant to a contract that contained warranties by Herrera against all deficiencies and defects in its work and an indemnification clause. When certain portions of the project collapsed due to deficiencies in Herrera’s work, Clark repaired and rebuilt these and other defective portions. Clark filed suit in state court demanding payment and indemnity from both Travelers and Herrera for damage to the project and repair costs. Travelers removed the action to federal court. Clark and Herrera each filed separate motions to remand the case back to state court for lack of subject-matter jurisdiction because complete diversity was lacking between Clark and Herrera. Desiring to litigate this action in federal court, Travelers filed a motion to dismiss Herrera for jurisdictional purposes, arguing that the court should retain jurisdiction of Clark’s claims against Travelers and that Clark should pursue its claims against Herrera separately in state court.

Rule of Law

Issue

Holding and Reasoning (Bullock, J.)

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