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GGA-PC, and Beazley Insurance Company, Inc. v. Performance Engineering, Inc.

United States District Court, D. Nebraska

June 26, 2017

GGA-PC, and BEAZLEY INSURANCE COMPANY, INC., Plaintiffs,
v.
PERFORMANCE ENGINEERING, INC., and ROBERT ALLEN WHORLEY, P.E.; Defendants.

          MEMORANDUM AND ORDER

          JOSEPH F. BATAILLON SENIOR UNITED STATES DISTRICT JUDGE

         This matter is before the court on the plaintiffs' motion and amended motions to strike affirmative defenses, or alternatively, for partial judgment on the pleadings, Filing Nos. 20, Filing No. 22, and Filing No. 24.[1] This is an action for damages for breach of contract, negligence, and gross negligence in connection with engineering design services. Jurisdiction is based on diversity of citizenship under 28 U.S.C. § 1332.

         I. FACTS

         Plaintiff GGA-PC (“GGA”) is an architectural firm, and plaintiff Beazley Insurance Company (“Beazley”) is its insurer. Defendant Performance Engineering, Inc., (“Performance”) is an engineering firm and defendant Robert Allen Whorley, P.E. (“Whorley”) is an engineer with the firm. The plaintiffs allege that Seward County, Nebraska hired GGA to design a Law Enforcement Center and to provide construction documents for the project. GGA then entered into a contract with defendant Performance that required Performance to provide the structural engineering design for the Project and to prepare structural documents. Performance subsequently submitted the documents to GGA, sealed with defendant Robert Allen Whorley's professional engineer seal. The plaintiffs allege that structural design services the defendants provided and the structural documents they prepared were inadequate and improper. They allege that as a result of the defendants' inadequate and improper structural design, extra work had to be performed on the project, including strengthening beams, reinforcing structural connections, modifying footings, performing additional surveying, levelling concrete floors installing an additional supports, columns, vapor barriers, roof drains and roof insulation.

         As the result of the defendant's breach of contract and negligence, plaintiff GGA alleges it has suffered damages in the amount of approximately $82, 000 in employee costs, independent engineering fees and attorney fees for responding to change order proposals and to claims for the extra work. Plaintiff Beazley issued an insurance policy to GGA, and alleges it has been damaged in the amount of $183, 766 for payments in performance to its obligations to GGA under the policy. See Filing No. 1, Complaint.

         In their Answer, the defendants admit that Performance entered into a contract with GGA, but deny liability under any theory. They deny that the documents submitted by Performance contained structural defects, or that the plaintiffs suffered damages as a result of those defects. The defendants raise the defense of lack of subject matter jurisdiction asserting that because “GGA agreed to limit the liability of Defendants to $50, 000” under the terms of the parties' contract, the plaintiffs cannot meet the amount in controversy required for the court's exercise of diversity jurisdiction. Defendants also assert as an affirmative defense that the plaintiffs are bound by the limitation of liability clause contained in the contract and the defendants are thus not liable for any damages beyond $50, 000. See Filing No. 17, Answer. The limitation of liability clause in the contract is set forth in the defendants' Answer as follows:

Limitation of Liability: In order for the client to obtain the benefits of a fee which includes a lesser allowance for risk funding, the client agrees to limit PE's [Performance] liability arising from PE's professional acts, errors or omissions, such that the total aggregate liability of PE shall not exceed PE's total fee for the services rendered on this project, or the amount of fifty thousand dollars ($50, 000.00), whichever is less.

Filing No. 17, Answer at 7-8.

         The plaintiffs move to strike the defendants' affirmative defenses of lack of subject matter jurisdiction and the limitation of their liability and, alternatively, seek a judgment on the pleadings with respect to the issues. The plaintiffs argue the defendants' affirmative defenses fail as a matter of law because the limitation of liability provision on which the defendant rely is void and unenforceable under Nebraska law. Neither party has submitted a copy of the contract at issue.

         II. LAW

         Under Fed. R. Civ. P. 12(f), courts may strike “from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). Courts enjoy liberal discretion to strike pleadings under this provision. BJC Health System v. Columbia Cas. Co., 478 F.3d 908, 917 (8th Cir. 2007). Striking a party's pleading, however, is an extreme and disfavored measure. Id.A motion to strike an affirmative defense may be granted where the defense has no basis in law, is insufficient as a matter of law, and the moving party will suffer prejudice in the absence of the court granting its motion to strike. See United States v. Dico, Inc., 266 F.3d 864, 880 (8th Cir. 2001).

         As a general rule, a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) is reviewed under the same standard as a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Ginsburg v. InBev NV/SA, 623 F.3d 1229, 1233 n.3 (8th Cir. 2010). When reviewing a Rule 12(c) motion, the Court must view all facts pleaded by the nonmoving party as true and grant all reasonable inferences in favor of that party. Poehl v. Countrywide Home Loans, Inc., 528 F.3d 1093, 1096 (8th Cir. 2008). Judgment on the pleadings is appropriate when there is no dispute as to any material facts and the moving party is entitled to judgment as a matter of law. Ashley Cty. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009); Poehl, 528 F.3d at 1096.

         A federal court has jurisdiction over a case where the parties are citizens of different states and the amount in controversy, excluding interest and costs, is greater than $75, 000. 28 U.S.C. § 1332(a). “The objection that a federal court lacks subject-matter jurisdiction . . . may be raised by a party, or by a court on its own initiative, at any stage in the litigation, even after trial and the entry of judgment.” Arbaugh v. Y & H Corp., 546 U.S. 500, 506 (2006)); see also James Neff Kramper Family Farm P'ship v. IBP, Inc., 393 F.3d 828, 834 (8th Cir. 2005) (noting court's obligation to raise the issue sua sponte).

         A complaint can be challenged for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1) either “on its face or on the factual truthfulness of its averments.” Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir. 1993). “In a facial challenge to jurisdiction, all of the factual allegations concerning jurisdiction are presumed to be true and the motion is successful if the plaintiff fails to allege an element necessary for subject matter jurisdiction.” Id.In a factual attack on the jurisdictional allegations of the complaint, however, the court can consider competent evidence such as affidavits, deposition testimony, and the like in order to determine the factual dispute. Id.;see Osborn v. United States, 918 F.2d 724, 729 n. 6 (8th Cir. 1990) (stating “the non-moving party receives the same protections [for facial attacks under Rule 12(b)(1)] as it would defending against a motion brought under Rule 12(b)(6)”) (citation omitted); Brown v. Green Tree Servicing LLC,820 F.3d 371, 373 (8th Cir. 2016) (noting that the court may generally consider documents attached to a ...


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