Jacobs Eng'g Grp. v. Consol. Rail Corp.

JACOBS ENGINEERING GROUP, INC., Plaintiff, v. CONSOLIDATED RAIL CORPORATION and CONRAIL, INC., Defendants.

Civil Action No. 2:20CV554 (RCY)

United States District Court, E.D. Virginia, Norfolk Division

April 14, 2022

MEMORANDUM OPINION

Roderick C. Young, United States District Judge

This matter is before the Court on Defendants' Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(1) or, in the Alternative, Stay Proceedings (“Motion to Dismiss”) (ECF No. 16). The motion has been fully briefed, and the Court dispenses with oral argument because the facts and legal contentions are adequately presented in the materials before the Court, and oral argument would not aid in the decisional process. E.D. Va. Loc. Civ. R. 7(J). For the reasons stated below, the Court will grant Defendants' Motion to Dismiss.

I. FACTUAL ALLEGATIONS

Jacobs Engineering Group, Inc. (“Jacobs” or “Plaintiff”) is a Delaware corporation with its principal place of business in Texas. (Am. Compl. ¶ 3 ECF No. 12.) Consolidated Rail Corporation (“CRC”) is a railroad company and the primary operating subsidiary of Conrail, Inc. (“Conrail”) (collectively “Defendants”). (Id. ¶ 8.) Conrail is jointly owned by CSX Corporation and Norfolk Southern Corporation (“Norfolk Southern”), the latter of which is based in Norfolk, Virginia. (Id.) For several years, Jacobs has provided engineering and/or construction management services for CRC under so-called “on-call” contracts. (Id. ¶ 9.) These on-call contracts set forth the overarching terms governing the parties' relationship, including dispute resolution, indemnity in the event of lawsuits, apportionment of liability, and insurance requirements. (Id.) On November 13, 2008, Jacobs and CRC entered into an Engineering Services Agreement (the “2008 Agreement”), an on-call agreement under which Jacobs could provide engineering design, in-house engineering, and construction management services to CRC. (Id. ¶ 11.) The 2008 Agreement provided that “[t]he period of performance for this Agreement shall begin 1 December 2008 and shall terminate on 31 December 2009 unless sooner terminated in accordance with Appendix A.” (Id. ¶ 13.) Although the 2008 Agreement was set to expire at the end of 2009, the parties extended the period of performance, typically for one-year periods, through a series of change orders. (Id.) In late 2015, the parties began negotiating a new on-call contract to replace the 2008 Agreement. (Id. ¶ 14.) On December 29, 2015, two days before the 2008 Agreement was set to expire and with the replacement contract not yet complete, the parties agreed upon a three-month extension. (Id. ¶ 15.) The three-month extension extended the period of performance until March 31, 2016. (Id.) By late March 2016, the parties had agreed on the terms of the new contract but agreed to a ten-day extension of the 2008 Agreement to allow time to complete the contracting process. (Id. ¶ 17.) On March 31, 2016, CRC and Jacobs entered into the Engineering and Design Services Agreement (the “2016 Agreement”). (Id. ¶ 18.)

On June 5, 2016, one of CRC's contractors, Cornell & Company, Inc. (“Cornell”), performed work on the Delair Bridge, a vertical-life railroad bridge that crosses the Delaware River between Philadelphia and Pennsauken, New Jersey. (Id. ¶ 23.) CRC had engaged Cornell to replace the steel cables attached to the bridge counterweights, which are used to lift the bridge span up and down (the “Ropes Project”). (Id.) Cornell used hydraulic jacks-which it obtained from a third party-to support the lift span while it replaced steel cables. (Id. ¶ 24.) In the course of replacing the steel cables, one of the hydraulic jacks failed, creating an explosion that caused the death of Cornell employee, Walter Lenkowski. (Id.) Another Cornell employee, Mark Spriggs, was injured by the explosion. (Id.) This incident is the subject of two lawsuits currently pending in the Philadelphia Court of Common Pleas: one on behalf of Mr. Lenowski's estate, and the other by Mr. Spriggs. (Id. ¶ 25.) These two lawsuits were consolidated for the purposes of discovery and trial (the “Philadelphia Litigation”). (Id.) Both plaintiffs in the Philadelphia Litigation assert claims against Conrail, Jacobs, Actuant Corporation d/b/a and/or Enerpac (the alleged manufacturer of the hydraulic jack), Parker-Hannifin Corp. (the alleged manufacturer of the t-fitting attached to the hydraulic jack), and W.B. Equipment Service Corp. d/b/a and/or W.B. Equipment Service Co., Inc. (who allegedly owned the hydraulic jack and rented it to Cornell). (Id. ¶ 26.) Initially, CRC, the entity with whom Jacobs entered the 2016 Agreement, was not a party to either case. (Id.) With respect to Conrail and Jacobs, the plaintiffs in the Philadelphia Litigation assert negligence claims alleging that both parties failed to ensure Cornell utilized adequate fall protection measures during the steel cable replacement. (Id. ¶ 27.) Additionally, Conrail filed a crossclaim against Jacobs for contractual indemnification in each of the Philadelphia Litigation matters and demanded that Jacobs defend Conrail with respect to each case. (Id. ¶ 28.) Conrail also filed a crossclaim against Jacobs for breach of contract, asserting that Jacobs “had an obligation to procure insurance naming Defendant Conrail, Inc. as an additional insured, as such must provide Defendant Conrail, Inc. with a defense and indemnity as an additional insured.” (Id. ¶ 29.) However, Conrail's crossclaims did not specify which contract served as the basis of its claim. (Id. ¶ 30.)

Jacobs alleges that substantially all discovery motions practice conducted by Jacobs in the Philadelphia Litigation is attributable to its defense against the plaintiffs' claims. (Id. ¶ 32.) Jacobs also filed a motion for summary judgment in the Philadelphia Litigation seeking dismissal of the plaintiffs' claims and all crossclaims. (Id. ¶¶ 33-34.) The Philadelphia court dismissed Jacobs' motion for summary judgment as well as all other defendants' motions for summary judgment, including Conrail. (Id. ¶ 35.)

Jacobs brings suit in this Court seeking “a declaratory judgment as to the rights and legal relations between itself and Defendants CRC and Conrail concerning an actual controversy existing between the parties over two lawsuits in the [Philadelphia Litigation].” (Id. at 1.)

II. PROCEDURAL HISTORY

On November 6, 2020, Plaintiff filed a Complaint against CRC (ECF No. 1). On February 4, 2021, CRC filed a Motion to Dismiss (ECF No. 9). On February 18, 2021, Plaintiff filed a Response to CRC's Motion to Dismiss (ECF No. 11). On February 25, 2021, Plaintiff filed an Amended Complaint against CRC and Conrail (ECF No. 12). On March 11, 2021, CRC filed a Motion to Dismiss the Amended Complaint Pursuant to Federal Rule of Civil Procedure 12(b)(1) or in the Alternative, Stay Proceedings (“Second Motion to Dismiss”) (ECF No. 16). On March 22, 2021, Conrail filed a Notice of Joinder in Defendant CRC's Second Motion to Dismiss (ECF No. 18), notifying the Court that Conrail was joining in CRC's Second Motion to Dismiss. The Notice of Joinder also contained a “Supplemental Statement” that informed the Court of developments in the Philadelphia Litigation. (Notice of Joinder at 1, ECF No. 18.) On March 25, 2021, Plaintiff filed a Memorandum in Opposition to CRC's Second Motion to Dismiss (ECF No. 20). On March 31, 2021, Defendants filed a Reply (ECF No. 22). On April 5, 2021, Plaintiff filed an Opposition to Conrail's Notice of Joinder (ECF No. 23).^[1] On January 14, 2022, Plaintiff filed a Status Report (ECF No. 28) notifying the Court that the Philadelphia court denied Conrail's Motion to Amend. (Status Rep. at 1, ECF No. 28.) The Status Report also informed the Court that the Philadelphia court had bifurcated the crossclaims between Conrail and Jacobs from the trial in the Philadelphia Litigation that is set to begin on May 2, 2022. (Id. at 2.) Additionally, the Pennsylvania state court ordered that Conrail be deemed the owner of Delair Bridge for the purposes of the May 2, 2022 state trial only. (Id.)

III. LEGAL STANDARD

The Fourth Circuit has recognized that “a defendant may challenge subject matter jurisdiction in one of two ways.” Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009) (citing Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982)). First, “the defendant may contend ‘that a complaint simply fails to allege facts upon which subject matter jurisdiction can be based, '” under a Rule 12(b)(6) consideration. Id. Second, the defendant “may challenge jurisdiction under Rule 12(b)(1) by asserting that the jurisdictional allegations of the complaint are not true.” Princeton Excess & Surplus Lines Ins. Co. v. Immigr. Ctrs. of Am. - Farmville, LLC, No. 3:12CV895, 2013 WL 6246366, at *3 (E.D. Va. Nov. 21, 2013) (quoting Kerns, 585 F.3d at 192). “In that instance, the court may consider facts related to jurisdiction by going beyond the allegations of the complaint and may indeed hold an evidentiary hearing.” Id. Here, Defendants' jurisdictional challenge is brought pursuant to Rule 12(b)(1). The burden of proving subject matter jurisdiction is on Plaintiff. Richmond, Fredericksburg & Potomac R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991) (citing Adams, 697 F.2d at 1219). In determining whether jurisdiction exists, the Court “is to regard the pleadings' allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Id.

Here Plaintiff asserts subject matter jurisdiction based on diversity under 28 U.S.C. § 1332 and brings this action under 28 U.S.C. § 2201, the Declaratory Judgment Act. (Am. Compl. ¶¶ 1, 6.) In such a case, the...