TERRENCE BOYLE, Chief Judge, District
This matter is before the Court on Plaintiffs Motion to Remand the instant matter to the Superior Court of Wake County for further proceedings. Plaintiff also moves the Court for sanctions under Rule 11 of the Federal Rules of Civil Procedure. Defendant Young Contracting Co., Inc. ("Young") objects to Plaintiff's motions and requests oral arguments in the disposition of this matter. For the reasons discussed below, Plaintiff's Motion to Remand will be granted. The Court will deny Plaintiff's motion for sanctions and Defendant's motion for oral arguments.
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Plaintiff C.R. Hassinger Grading Company, Inc. ("Hassinger"), a citizen and resident of North Carolina, with its principal place of business in Wake County, North Carolina, filed this action in the North Carolina Superior Court for Wake County on April 23, 1998. Defendants Young and ESA 0161, Inc. ("ESA") were each served on April 29, 1998, with Plaintiff's Amended Complaint and Summons. On May 21, 1998, Defendant Young filed a Notice of Removal removing the instant action to this Court, and filed a Motion to Dismiss in this Court, asserting improper venue.
The basis of Hassinger's Complaint is non-payment for labor and materials supplied to a project owned by ESA. The contract between Young, the general contractor, and ESA, the owner, was for Young to complete a hotel project. In the course of fulfilling this contract, Young contracted with Hassinger, a subcontractor, to provide certain materials and labor associated with the project. A dispute over payment and quality of work developed between Hassinger and Young. In the course of this dispute Hassinger filed a Claim of Lien under North Carolina law against ESA's property. Young fulfilled its contractual obligations to ESA and bonded off the Claim of Lien with the bond taking the place of ESA's land.
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This Court does not have jurisdiction over this matter as there is not complete diversity of citizenship, as required by 28 U.S.C. § 1332(a). Plaintiff is a citizen of North Carolina, as is Defendant ESA. Amended Complaint ¶¶ 1, 3. Young claims that Hassinger defeated diversity by fraudulently joining ESA as a Defendant in this matter despite the fact that Hassinger has no viable claim against ESA. In Marshall v. Manville Sales Corp., 6 F.3d 229, 232 (1993), the Fourth Circuit stated: "In order to establish that a nondiverse defendant has been fraudulently joined, the removing party must establish either: `[T]hat there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court; or that there has been outright fraud in the plaintiff's pleading of jurisdictional facts.'" (quoting B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. 1991). Young argues that Hassinger has no possibility of establishing a valid cause of action against ESA, the in-state Defendant, in state court.
The Marshall court explained that:
[t]he burden on the defendant claiming fraudulent joinder is heavy: the defendant must show that the plaintiff cannot establish a claim against a nondiverse defendant even after resolving all issues of fact and law in the plaintiff's favor.
Paulos v. Naas Foods, Inc.,
959 F.2d 69, 73 (7
th Cir. 1992). A claim need not ultimately succeed to defeat removal; only a possibility of a right to relief need be asserted. 14A Charles Wright et al.,
Federal Practice Procedure § 3723, at 353-54 (1985).
Id. Construing all of the disputed facts and law in the Plaintiff's favor, joinder of ESA was proper and this action should be remanded to North Carolina state court. A lien claimant must fully comply with all of the required elements of North Carolina law to establish entitlement to recovery.
Southeastern Sav. Loan Ass'n v. Rentenbach Constructors, Inc., 114 Bankr. 441 (E.D.N.C. 1989),
aff'd per curiam, 907 F.2d 1139 (4
th Cir. 1990). To perfect a lien, the claimant must file its claim "in the office of the clerk of superior court in each county wherein the real property subject to the claim of lien is located. . . ." N.C. Gen. Stat. § 44A-12(a), (b) (1995). Hassinger complied with these requirements.
Young subsequently posted a bond to remove the lien under North Carolina General Statutes section 44A-16. Under section 44A-16(6), discharge upon deposit of a corporate bond is only appropriate if the bond is of a sufficient sum and "conditioned upon the payment of the amount finally determined to be due in satisfaction of said lien. . . ." Thus, section 44A-16 does not discharge the property owner of all liability of such lien claim, it merely alleviates the owner's land of the burden of a lien during the pendency of any lien litigation. See Gelder Associates v. Ins. Co., 34 N.C. App. 731, pet. rev. denied, 294 N.C. 441 (1977); George v. Hartford Acc. Indem. Co., 102 N.C. App. 761 (1991); modified on other grounds, 330 N.C. 755 (1992). To protect its lien rights against ESA, Hassinger need to file a lawsuit asserting those rights. "The owner of the property is obviously a necessary party in an action to enforce a contractor's lien." Hetrick McLaughlin, Webster's Real Estate Law in North Carolina § 20.16(c) at 868 (4th ed. 1994).
Because North Carolina lien law does not require the dismissal of the owner of the property upon the filing of a bond discharging a lien upon land, Hassinger did not fraudulently join ESA, the nondiverse Defendant in this matter. Young's removal of this matter to this Court was therefore improper and this matter must be remanded to the state court for further proceedings. This Court does not find it necessary to hear oral arguments in reaching its conclusion on the disposition of the instant motion. This Court also does not find that sanctions under Rule 11 are warranted.
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For the reasons discussed above, Plaintiff's Motion to Remand the instant matter is GRANTED. The Court DENIES Young's Motion for Oral Argument and DENIES Plaintiff's Motion for Sanctions. Because this Court does not have jurisdiction over this case, further pending motions are rendered moot.
SO ORDERED.