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Edge Investment, LLC v. District of Columbia

United States District Court, District of Columbia

March 30, 2018

DISTRICT OF COLUMBIA et al., Defendants.



         This case involves a dispute between Plaintiff Edge Investment, LLC (“Edge”), a building construction company, and Defendants, various District of Columbia entities and their contractors. Defendants razed a building constructed by Edge, claiming that the building had damaged an underground sewer. A lawsuit addressing the same dispute and many of the same claims as this case is well into discovery in the Superior Court of the District of Columbia (the “Superior Court”). Before the Court are Defendant District of Columbia Water and Sewer Authority's (“D.C. Water”) and Defendant George S. Hawkins' Motions to Stay or Dismiss. For the reasons described below, the Court will grant these motions in part and stay the case pursuant to the Colorado River doctrine.

         I. Background

         A. Factual Background

         For purposes of these motions, the Court assumes the truth of the facts set forth in Edge's complaint. The Northeast Boundary Tunnel Sewer (the “NEBTS”) is an underground waste and storm sewer. ECF No. 1 (“Compl.”) ¶¶ 15, 28. D.C. Water is authorized to operate the NEBTS on behalf of the District of Columbia (the “District”). Id. ¶¶ 15-16.

         On April 10, 2013, the D.C. Department of Consumer and Regulatory Affairs (“DCRA”) issued a building permit authorizing construction of a three-story residential building on a lot (the “Lot”) located near the H Street corridor. Id. ¶¶ 3, 24. The NEBTS runs approximately thirteen feet below the Lot. Id. ¶ 18. In May 2013, Edge purchased both the Lot and the approved building permit. Id. ¶ 39. Prior to doing so, Edge obtained a title report, which did not identify any easement granting authority to access or operate an underground sewer tunnel on the Lot. Id. ¶ 38.

         On May 22, 2013, one of Edge's construction managers placed a call, as required by the Underground Facilities Protection Act (“UFPA”), D.C. Code § 34-2701 et seq., to the District of Columbia's “one-call center” to provide notice about upcoming excavation on the Lot and request information about any conflicts. Id. ¶¶ 46, 49. A contractor for D.C. Water, Pinpoint Underground, LLC (“Pinpoint”), subsequently provided a “Clear/No Conflict” response to Edge's request. Id. ¶¶ 52-54, 56-58. Having been given the green light, Edge began construction on the new building (the “Building”). Id. ¶ 67.

         In November 2013, a third party submitted paperwork to D.C. Water to obtain approval for water and sewer service at the Building on the Lot. Id. ¶ 72. On December 2, 2013, a D.C. Water employee responded via email that construction over the NEBTS would be very costly. Id. ¶ 73. That was when Edge first learned that the NEBTS ran under the Lot. Id.

         In light of this development, the parties hired experts to assess what harm, if any, the Building might cause to the NEBTS. Edge submitted engineering reports to D.C. Water in December 2013 and March 2014, which concluded that the Building did not present any danger to the NEBTS. Id. ¶ 98. And D.C. Water had inspectors visit the site on July 31, 2014, who reported no damage to the NEBTS under the Lot. Id. ¶ 103. But D.C. Water claims that later inspections revealed a crack in the NEBTS, and that an engineering firm it hired concluded that demolition of the Building was one way to protect the NEBTS. Id. ¶¶ 108-109.

         Edge alleges that, on or around December 2014, D.C. Water, DCRA, and others formed a conspiracy to quickly raze the Building without providing Edge adequate due process. Id. ¶ 111. On January 8, 2015, DCRA issued a Notice to Revoke the permits for the Building. Id. ¶ 118. Next, DCRA issued a Notice of Intent to Raze a Residential Structure on January 22 (which was later withdrawn), id. ¶¶ 122-133; another on January 29 (also later withdrawn), id. ¶¶ 126, 151; and, finally, another on April 22, 2015, id. ¶ 152. The Building was razed on May 18, 2015, by Celtic Demolition, Inc. (“Celtic”), a contractor for D.C. Water. Id. ¶ 156. Edge alleges that D.C. Water lacked the authority to raze the Building and that it did not receive adequate due process before the Building was razed. See Id. ¶¶ 158-160, 166-174.

         In September 2015, after the Building had been razed, DCRA placed two liens totaling approximately $3.65 million on the Lot, which represented the costs of demolishing the Building and repairing the NEBTS. Id. ¶¶ 204-213.

         B. Procedural Background

         1. Superior Court Proceedings

         On January 8, 2016, D.C. Water brought suit in Superior Court (the “Superior Court Action”) seeking damages for harm caused to the NEBTS. See D.C. Sup. Ct. Case No. 2016 CA 000187 B (“Sup. Ct. Dkt.”). In its complaint, D.C. Water asserted negligence claims against nine defendants, including Edge and the District of Columbia. Compl. ¶ 216. Several defendants moved to dismiss in February and March 2016; those motions were denied, and D.C. Water filed an amended complaint with leave of the court on April 18, 2016. See ECF No. 23 at 6; Sup. Ct. Dkt. Again, several defendants moved to dismiss the amended complaint, and Edge filed both a partial motion to dismiss and a motion for partial summary judgment. Sup. Ct. Dkt. In June 2016, Edge's motion for partial summary judgment was denied, and discovery proceeded. Id. In September 2016, the Superior Court granted the District's motion to dismiss, but all other motions to dismiss were denied, at least in part. Id. In December 2016, the District of Columbia removed the Superior Court Action to federal court. See D.C. Water & Sewer Auth. v. First Hand Land, LLC et al., No. 1:16-cv-02456-ABJ (D.D.C.) (“Removed Case Dkt.”). After D.C. Water filed a motion to remand, the District of Columbia notified the court it did not oppose remand, and the court remanded the case to Superior Court in March 2017. Removed Case Dkt., ECF No. 32.

         Multiple parties have filed counterclaims and third-party complaints in the Superior Court Action. On October 24, 2016, Edge filed counterclaims against D.C. Water. Id. On February 1, 2017, Edge filed amended counterclaims, alleging violations of substantive due process and procedural due process, conspiracy to violate Edge's due process rights, an unconstitutional taking, trespass, negligence under the UFPA, and inverse condemnation under the Fifth Amendment to the U.S. Constitution. See Removed Case Dkt., ECF No. 22. Also, on November 7, 2016, Edge filed a third-party complaint against the District, asserting many of the same claims. See Removed Case Dkt., ECF No. 11 at 162-78. Edge filed an amended third-party complaint on February 2, 2017, alleging violations of substantive due process and procedural due process, conspiracy to violate Edge's due process rights, an unconstitutional taking, trespass, inverse condemnation under the Fifth Amendment to the U.S. Constitution, and action to quiet title. Removed Case Dkt., ECF No. 23; Sup. Ct. Dkt.[1] The District filed an answer on October 15, 2017. Sup. Ct. Dkt. D.C. Water also filed a complaint against Pinpoint that was consolidated with the Superior Court Action. Id.

         On November 17, 2017, Superior Court Judge John Mott issued an order on D.C. Water's motion to dismiss Edge's amended counterclaims. Id. Judge Mott dismissed Edge's claim for negligence under the UFPA, but denied the motion as to the other six claims. Id. On January 12, 2018, Judge Laura Cordero, to whom the case had been reassigned, issued a revised Scheduling Order that set deadlines for expert reports (May 4 and July 6, 2018), the close of discovery (September 14, 2018), deciding dispositive motions (November 9, 2018), and the conclusion of mediation (November 20, 2018). Id.

         2. The Instant Case

         On April 6, 2017, Edge filed this complaint against the District of Columbia, D.C. Water, Celtic, and a number of individuals employed by D.C. Water and DCRA. See Compl. ¶¶ 4-14. The complaint alleges 13 causes of action against one or more of the Defendants: violation of substantive due process and procedural due process; conspiracy to violate due process rights; an unconstitutional taking; inverse condemnation; two counts alleging violations of the Racketeer Influenced and Corrupt Organizations (“RICO”) Act; a request for a declaratory judgment; negligent supervision; negligence under the UFPA; trespass; action to quiet title; and a request for injunctive relief. Id. ¶¶ 251-370. Edge had already brought most, but not all, of these causes of action in the Superior Court Action; its new causes of action include the two RICO claims. Edge's complaint in this case also adds Celtic and a number of D.C. Water and DCRA employees in their personal capacities as defendants.

         Presently before the Court are motions to stay the case pursuant to the Colorado River abstention doctrine or, alternatively, to dismiss the case, filed by D.C. Water, ECF No. 23, and Defendant George S. Hawkins, ECF No. 28.[2]

         II. Legal Standard

         Even if other abstention doctrines do not apply, “a district court may nonetheless exercise its discretion and decline to hear a case that is otherwise properly before it based on the principles the Supreme Court set forth in Colorado River” Atkinson v. Grindstone Capital, LLC, 12 F.Supp.3d 156, 161 (D.D.C. 2014). “In Colorado River, the Supreme Court explained that where there are two courts with concurrent jurisdiction over the same matter, the decision to abstain from an exercise of jurisdiction may sometimes rest on considerations of ‘[w]ise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.'” Id. (alteration in original) (quoting Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)).[3]

         In most circuits, “[i]n order to decide whether the Colorado River doctrine applies to a particular case, [a court] must first determine whether the concurrent state and federal lawsuits are parallel.” TruServ Corp. v. Flegles, Inc., 419 F.3d 584, 591 (7th Cir. 2005); see also Ambrosia Coal & Const. Co. v. Pages Morales, 368 F.3d 1320, 1330 & n.21 (collecting cases). The D.C. Circuit “has yet to address” whether this threshold inquiry is required in this Circuit and, if so, the standard for it. Saddler v. AMEC Foster Wheeler Env't & Infrastructure, Inc., 253 F.Supp.3d 210, 219 (D.D.C. 2017). Nevertheless, the Court will assume that this requirement applies. If actions are deemed parallel, then a district should consider the following factors “when deciding whether it will abstain in favor of letting the case proceed in the other forum: [1] which court first obtained jurisdiction over the property in dispute, if any; [2] any inconvenience that might result from litigating in a federal forum; [3] which court ...

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