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Noatex Corp. v. King Construction of Houston LLC

United States District Court, N.D. Mississippi, Oxford Division

May 14, 2014


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For Noatex Corporation, a California Corporation, Plaintiff: James C. Simpson , Jr., LEAD ATTORNEY, Wise Carter Child & Caraway, PA, Gulfport, MS; Robert E. Kohn, LEAD ATTORNEY, PRO HAC VICE, KOHN LAW GROUP, INC., Santa Monica, CA; Nicole Collins Huffman, DIAS & ASSOCIATES, P.A., Tampa, FL.

For Jim Hood, Mississippi Attorney General, State of Mississippi, ex rel, Intervenor: Douglas T. Miracle, LEAD ATTORNEY, Attorney's General Office, Jackson, MS.

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Presently before the undersigned is Plaintiff Noatex Corporation's motion for attorney's fees [66]. Upon due consideration, the Court finds that the motion should be denied.[1]

A. Factual and Procedural Background

Auto Parts Manufacturing Mississippi, Inc. (" APMM" ) contracted with Noatex Corporation (" Noatex" ) for Noatex to construct an auto parts manufacturing facility in Guntown, Lee County, Mississippi, near Toyota Motor Manufacturing, Mississippi, Inc. in Blue Springs, Mississippi. Noatex subcontracted with King Construction of Houston LLC (" King Construction" ), a Mississippi limited liability company, to provide some materials and labor for the construction. Noatex alleges that APMM owes it money for goods and services that Noatex provided to APMM under the contract. Noatex questions some of the invoices submitted to it by King Construction pertaining to the subcontract work. In response to this billing dispute between Noatex and King Construction, King Construction notified APMM on September 23, 2011, pursuant to Mississippi's " Stop Notice" Statute, Mississippi Code § 85-7-181 (the " Stop Notice statute" ), that Noatex owed King Construction $260,410.15 and that King Construction was filing a " Laborer's and Materialman's Lien and Stop Notice" in the Chancery Court of Lee County, Mississippi. The stop notice bound the disputed funds in APMM's hands to secure invoice claims that Noatex allegedly owed to King Construction. See Miss. Code Ann. § 85-7-181 (" [T]he amount that may be due . . . shall be bound in the hands of such owner for the payment in full ...." ). King Construction's filing of the stop notice in the lis pendens record of the chancery court had the effect of establishing King Construction's lien priority over the property that was the subject of the dispute. See id. § 85-7-197. APMM later deposited the $260,410.15 into the registry of the Chancery Court of Lee County.

The dispute resulted in three lawsuits, one of which is the case sub judice.[2] Noatex

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filed this declaratory action against Defendants King Construction and its principal Carl King (collectively, the " King Defendants" ), challenging the facial constitutionality and constitutionality-as-applied of Mississippi's " Stop Notice" Statute, Mississippi Code § 85-7-181 (the " Stop Notice statute" ). The State of Mississippi intervened as a defendant to defend the constitutionality of its statute. On April 12, 2012, United States Magistrate Judge S. Allan Alexander, who was assigned this declaratory action by mutual consent [52] of the parties, issued a declaratory judgment in favor of Noatex, concluding that § 85-7-181 violated due process and, thus, that the stop notice filed by King Construction against Noatex in the Chancery Court of Lee County, Mississippi, had no effect on the funds that had been deposited in the Court's registry. See Ct's Order [62]; Final J. [63]. On appeal, inter alia, the Fifth Circuit Court of Appeals affirmed the Court's ruling that Mississippi's Stop Notice statute was facially unconstitutional due to the lack of procedural safeguards that amounted to a facially unconstitutional deprivation of property without due process. See Noatex Corp. v. King Constr. of Houston, L.L.C., 732 F.3d 479, 487 (5th Cir. 2013).

Subsequently, the Magistrate Judge requested submissions from the parties regarding remaining motions and issues that needed to be resolved in order to fully and finally conclude this case in this Court. On April 1, 2014, the case was reassigned to the undersigned Senior United States District Court Judge. The parties maintain that the remaining issue in this case is the issue of attorney's fees.

B. Analysis and Discussion

1. Jurisdiction

The Court first addresses the issue of its jurisdiction. Although this case has had a storied history, the undersigned was first assigned this case on April 1, 2014. The undersigned recognizes that the Magistrate Judge briefly addressed jurisdiction in her April 12, 2012 Order [62] (" This court has federal question jurisdiction over the declaratory judgment action ... under 28 U.S.C. § 1331." ). However, " [f]ederal courts must be assured of their subject matter jurisdiction at all times and may question it sua sponte at any stage of the judicial proceedings." In re Bass, 171 F.3d 1016, 1021 (5th Cir. 1999). Whenever the possibility of lack of jurisdiction arises, a federal court has the duty to thoroughly examine its own jurisdiction. Villarreal v. Smith, 201 F.App'x 192, 194 (5th Cir. 2006) (per curiam) (citing United States v. Hays, 515 U.S. 737, 742, 115 S.Ct. 2431, 132 L.Ed.2d 635 (1995); Marshall v. Gibson's Prods., Inc., 584 F.2d 668, 672 (5th Cir. 1978)). When examining jurisdiction, a federal court looks to " (1) the complaint alone; (2) the complaint supplemented by undisputed facts in the record; or (3) the complaint supplemented by undisputed facts and the court's resolution of disputed facts." Id. at 195 (citing Clark v. Tarrant County, 798 F.2d 736, 741 (5th Cir. 1986)).

Noatex brought this case pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201. See Noatex's Compl. [1] ¶ ¶ 40-43; Noatex's Mem. Br. Supp. Mot. Attorney's Fees [67] at 1. The Declaratory Judgment Act provides that " [i]n a case of actual controversy within its jurisdiction ... any court of the United States ... 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." 28 U.S.C. § 2201(a). " Declaratory Judgment Act claims, without another basis for jurisdiction, cannot support the district court's

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jurisdiction." Simi Inv. Co. v. Harris County, Tex., 236 F.3d 240, 247 (5th Cir. 2000); see Medtronic, Inc. v. Mirowski Family Ventures, LLC, __ U.S. __, __, 134 S.Ct. 843, 848, 187 L.Ed.2d 703 (Jan. 22, 2014) (citing Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671, 70 S.Ct. 876, 94 L.Ed. 1194 (1950) (" [T]he Declaratory Judgment Act does not 'extend' the 'jurisdiction' of the federal courts." )). Thus, although Noatex brought this action under the Declaratory Judgment Act, for the Court to have jurisdiction over the case, " [t]here must be an independent basis of jurisdiction, under statutes equally applicable to actions for coercive relief." See 10B Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 2766 (3d ed. 1998).

i. Diversity Jurisdiction

Unquestionably, Noatex's declaratory judgment action is not based on diversity jurisdiction, as Noatex brought the suit only on the basis of federal question jurisdiction and diversity jurisdiction cannot be assumed.[3] Complete diversity of citizenship exists under 28 U.S.C. § 1332; Noatex and the King Defendants are citizens of different states.[4] However, the amount-in-controversy requirement of 28 U.S.C. § 1332 is not satisfied. " For a plaintiff to invoke diversity jurisdiction of the federal court, the plaintiff must allege facts that indicate the amount in controversy exceeds $75,000, excluding interests and costs." Villarreal, 201 F.App'x at 195 (citing 28 U.S.C. § 1332(a)). In this case, Noatex's complaint sought only declaratory relief and costs of the suit.[5] Section 1332's amount-in-controversy requirement is not satisfied by costs; to satisfy diversity jurisdiction, the amount in controversy must " exceed[ ] the sum or value of $75,000, exclusive of interest and costs." 28 U.S.C. § 1332. Even taking into account the undisputed facts in the record and the Court's resolution of disputed facts, see Clark, 798 F.2d at 741, the jurisdictional amount in controversy is not satisfied.

On June 26, 2012, following the Court's declaratory judgment, Noatex filed a motion for further relief [86], stating " [Noatex] respectfully moves for an order of further necessary or proper relief' and that " [f]urther monetary relief is necessary and proper to give effect to the Court's [declaratory judgment]." See Noatex's Mot. Further Relief [86] at 1. Noatex requested damages against the King Defendants equal to the amount of the stop notice plus interest and attorney's fees. The Magistrate Judge denied the motion for further relief stating:

In finding that the Mississippi stop notice procedure was unconstitutional, this court did not determine that Noatex was entitled to recover damages in any amount; indeed, Noatex never sought such a determination in this action, either in its complaint or at any other time before ...

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