Title Pro Closings, LLC v. Tudor Insurance Company

Filing 51

MEMORANDUM OPINION AND ORDER: 1. Title Pro's Motion to Strike Third Party Complaint 28 is GRANTED IN PART and DENIED AS MOOT IN PART. It is granted to the extent that the motion asks for the Court to decline to exercise its discretionary a uthority over the matter. It is otherwise denied as moot as the state court will have jurisdiction to decide the other arguments made therein. 2. Bruce Hall's Motion to Dismiss 37 , which incorporates Title Pro's Motion to Strike, is lik ewise GRANTED IN PART and DENIED AS MOOT IN PART. It is granted to the extent that it asks for Tudors complaint to be dismissed and for the Court to decline to exercise its discretionary authority over the matter. It isotherwise denied as moot. 3. Chicago Title Insurance Company's Motion to Dismiss Tudor Insurance Company's Third Party Complaint 48 is alsoGRANTED IN PART and DENIED AS MOOT IN PART. It is granted to the extent that it asks the Court to decline to exercise its discr etionary authority over the matter. The rest of the requests for relief found in the motion are denied as moot. 4. The assorted state court plaintiffs' Motion to Dismiss Third-Party Complaint 49 is too GRANTED IN PART and DENIED AS MOOT IN PA RT. It is granted to the extent that it asks the Court to decline to exercise its discretionary authority over the matter; it is otherwise denied as moot.5. Tudor Insurance Company's Motion to Realign the Parties 23 is DENIED AS MOOT. Signed by Honorable Judge Mark E. Fuller on 7/3/2012. (Attachments: # 1 Civil Appeals Checklist)(jg, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
SOUTHERN DIVISION
TITLE PRO CLOSINGS, L.L.C.,
Plaintiff,
v.
TUDOR INSURANCE COMPANY,

Case No. 1:11-cv-673-MEF
(WO—Do not publish)

Defendant & Third-Party Plaintiff,
v.
BRUCE R. HALL, CHICAGO TITLE
INSURANCE COMPANY, et al.,
Third-Party Defendants.

M EMORANDUM O PINION AND O RDER
I. I NTRODUCTION
The Court has pending before it a bevy of motions filed by the horde of parties
pursuing this case. The pending pleadings include a Motion to Realign the Parties (Doc. #
23) filed by the defendant and third-party plaintiff, Tudor Insurance Company (“Tudor”);
a Motion to Strike Third Party Complaint (Doc. # 28) filed by the plaintiff, Title Pro
Closings, L.L.C. (“Title Pro”); a Motion to Dismiss (Doc. # 37) filed by third-party
defendant Bruce Hall (“Hall”); a Motion to Dismiss (Doc. # 48) filed by third-party
defendant Chicago Title Insurance Company (“Chicago Title”); and, finally, a Motion to
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Dismiss (Doc. # 49) filed and joined by a number of individual third-party defendants.
Because the Court warned Tudor that adding new claims or parties would cause the Court
to revisit its earlier decision to exercise its discretionary authority to hear the parties’
declaratory judgment actions (see Doc. # 21), Title Pro’s motion to strike and the motions
to dismiss filed by the third-party defendants will be GRANTED IN PART and
DENIED IN PART. They will be granted to the extent necessary to return the claims and
parties to state court, which is the more appropriate venue. The motions will otherwise be
denied as moot.
II. B ACKGROUND
This case had a thorny procedural history before the filing of the five motions now
before the Court. Yet even further into the briar patch the parties have gone. Finding the
way out of the thicket will require first describing the underlying state court actions and
how they came to be in federal court. Next, it will be necessary to discuss a related action
that Tudor filed in federal court and has since dismissed. And finally, a brief description
of the posturing in the case at hand, along with an overview of the pending motions, will
be necessary too.
A. The Peterses’ state court lawsuit
This adventure began on April 27, 2010, when Robert and Bethanie Peters (“the
Peterses”) filed suit against Title Pro and another defendant, Tammy Peters,1 in the

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It is unclear whether Robert and Bethanie Peters are related to Tammy Peters.

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Circuit Court of Houston County, Alabama.2 The Peterses’ various claims against Title
Pro and Tammy Peters sounded in negligence, breach of contract, and fraud. Shortly after
the Peterses filed suit, Title Pro sent its insurer, Tudor Insurance Company, a letter
informing Tudor about the Peterses’ claims. Even though the insurer had not been joined
in the action, Tudor filed a motion to stay the proceedings, which the state court denied.
But Tudor would get to participate soon enough: Title Pro filed a misnamed “CrossClaim for Declaratory Judgment” against the insurer on August 27, 2010, thereby joining
Tudor in the action as a third-party defendant.
On July 27, 2011—a little less than a year after impleading Tudor—Title Pro filed
a motion to sever its declaratory judgment action against Tudor and have it set for trial. In
effect, Title Pro’s severance motion sought to cleave its declaratory action against Tudor
from the underlying suit brought by the Peterses so as to have the question of insurance
coverage decided separately. The state circuit court granted the motion on August 7,
2011, and calendared the case for trial. Tudor then removed the now-severed case to
federal court. Title Pro moved to remand the action, but this Court denied the motion,
finding that Tudor properly removed the case and that the Court should exercise its
discretionary authority under the Declaratory Judgment Act. See Title Pro Closings,
L.L.C. v. Tudor Ins. Co., ___ F. Supp. 2d ___, No. 1:11-cv-673, 2012 WL 125117 (M.D.
Ala. Jan. 17, 2012).

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From as best the Court can tell, the state court case is Robert Peters v. Title Pro Closings,
L.L.C., 10-cv-144.

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B. The other state court lawsuits against Title Pro
In addition to the state court suit filed by the Peterses, a number of other plaintiffs
sued Title Pro and Tammy Peters in the Circuit Court of Houston County, Alabama, right
around the same time.3 On May 28, 2010, Tudor filed a declaratory judgment action in
the United States District Court for the Middle District of Alabama. The case was
assigned to Judge Thompson and styled Tudor Insurance Company vs. Title Pro
Closings, L.L.C., No. 1:10-cv-483. In its complaint, Tudor joined Title Pro as a defendant
along with the Peterses, Chicago Title Insurance, and the various state court plaintiffs.
Tudor sought a declaration that it owed no duty to defend and indemnify Title Pro as to
the claims filed by the state court plaintiffs.
Meanwhile, in state court, the individual plaintiffs amended their complaints to
add attorney Bruce Hall as a defendant. They alleged that Hall, as a principal of Title Pro,
caused their losses. Hall filed a declaratory judgment action asking for a declaration that
Tudor had the duty to defend and indemnify him. But due to the pending action in Judge
Thompson’s court dealing with the same question, Tudor filed a motion to dismiss Hall’s
declaratory action, which Judge Moulton, the state court judge presiding over the case,
granted on September 1, 2011.

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The state court suits pending in the Circuit Court of Houston County, Alabama, are: Jacob
Alvestad v. Title Pro Closings, L.L.C., 10-cv-181; Jacqui Burgoon v. Title Pro Closings, L.L.C., 10-cv182; Chester Nolin v. Title Pro Closings, L.L.C., 10-cv-134; William Kirchner v. Title Pro Closings,
L.L.C., 10-cv-209; Ryan B. Dorminey v. Title Pro Closings, L.L.C., 10-cv-359; and Debora R. Guice v.
Title Pro Closings, L.L.C., 10-cv-301.

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Back in federal court, on November 4, 2011, Tudor asked Judge Thompson to
grant summary judgment in its favor, as did Chicago Insurance Company. Judge
Thompson denied both motions on January 9, 2012, and set a trial date. Two days later,
Tudor developed cold feet and filed a motion to dismiss its declaratory judgment action
without prejudice. Judge Thompson granted the motion.
After Tudor dismissed the case, Hall revived his state court declaratory judgment
action, asking Judge Moulton to rescind the circuit court’s previous order, which had
dismissed Hall’s claim due to the pendency of the same claim before Judge Thompson.
On February 2, 2012, Judge Moulton granted Hall’s motion and reinstated his request for
a declaration on Tudor’s duty to defend and indemnify him. Presumably Judge Moulton
reasoned that, because the claim was no longer pending in federal court, he could go
ahead and hear it in state court.
C. The posturing in this case
On February 10, 2012—less than a month after Tudor dismissed the declaratory
judgment action pending before Judge Thompson, and eight days after Hall revived his
declaratory judgment claim—the insurer attempted to assert the exact same claims in this
case by filing a third-party complaint. Tudor added as third-party defendants the various
state court plaintiffs who had sued Title Pro, Tammy Peters, and Bruce Hall. (Doc. # 22.)
He also added Hall himself and Chicago Title Insurance Company. (Id.) Tudor added
these litigants because, “the [t]hird[-][p]arty [d]efendants clearly have an interest in the

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subject of the action, and the disposition of this action in their absence may leave the
original parties to this lawsuit subject to the risk of incurring inconsistent obligations.”
(Id. at ¶ 22.) Having added all the necessary parties, Tudor sought a declaration that “it
no longer has any duty to defend Title Pro Closings . . . or R. Bruce Hall with respect to
civil litigation filed in the Circuit Court of Houston County, Alabama” and that it “has no
duty to indemnify” them. (Id. at ¶ 23.)
Tudor’s third-party complaint prompted the five motions now pending before the
Court. First, Tudor filed a Motion to Realign Parties (Doc. # 23), asking the Court to
rearrange the litigants on the side of the “v” corresponding to their respective interests.
Second, Title Pro filed an Objection To and Motion to Strike Defendant’s Third Party
Complaint (Doc. # 28) that essentially asks to have the case sent back to state court. To
support its position, Title Pro discusses how Hall revived his state court declaratory
judgment action after Tudor voluntarily dismissed its case before Judge Thompson, and
from there argues that state court is the proper place to have the insurance coverage
issues litigated due to the pendency of Hall’s motion. Third, Bruce Hall filed a Motion to
Dismiss (Doc. # 37) that incorporates the arguments in Title Pro’s Motion to Strike.
Fourth, Chicago Title Insurance Company filed a Motion to Dismiss Tudor Insurance
Company’s Third Party Complaint (Doc. # 48). Chicago Title Insurance argued, among
other things, that the Court should decline to exercise its discretionary authority to decide
Tudor’s declaratory judgment action and instead leave the resolution of the issues to

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Alabama’s state courts. Fifth, and finally, the state court plaintiffs that were joined as
third-party defendants in Tudor’s third-party complaint filed a Motion to Dismiss (Doc. #
49) adopting the arguments made by Title Pro in its Motion to Strike and by Chicago
Title Insurance in its Motion to Dismiss.
The parties raised a number of collateral issues in these various motions, but the
Court will discuss only whether it should exercise its discretionary authority to decide
Tudor’s request for a declaration that it owes neither a defense nor indemnity to Title Pro
and Bruce Hall.
III. D ISCUSSION
Under the Declaratory Judgment Act, a federal court “may declare the rights and
other legal relations of any interested party seeking” such a declaration. 28 U.S.C. § 2201
(emphasis added). Given the permissive language in the Act, the Supreme Court, starting
with its decision in Brillhart v. Excess Insurance Co. of America, 316 U.S. 491 (1942),
has “repeatedly characterized the Declaratory Judgment Act as ‘an enabling Act, which
confers a discretion on the courts rather than an absolute right upon the litigant.’”
Assurance Co. of Am. v. Legendary Home Builders, 305 F. Supp. 2d 1266, 1270 (S.D.
Ala. 2003) (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995)). In other
words, when it passed the Act, “Congress sought to place a remedial arrow in the district
court’s quiver; it created an opportunity, rather than a duty, to grant a new form of relief
to qualifying litigants.” Wilton, 515 U.S. at 288. Hence “there is . . . nothing automatic or

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obligatory about the assumption of ‘jurisdiction’ by a federal court to hear a declaratory
judgment action,” and “the normal principle that federal courts should adjudicate claims
within their jurisdiction yields to considerations of practicality and wise judicial
administration.” Legendary Home Builders, 305 F. Supp. 2d at 1270 (citing Guar. Nat’l
Ins. v. Beeline Stores, 945 F. Supp. 1510, 1514 (M.D. Ala. 1996) (M. Thompson, J.)).
Comity concerns also factor into the equation. Indeed, the Brillhart Court made
clear that federal courts should defer to prior pending state court actions to avoid
“[g]ratuitous interference with the orderly and comprehensive disposition of a state court
litigation.” 315 U.S. at 495. Federal courts should therefore err on the side of dismissing
declaratory judgment actions in favor of pending state court suits involving the same
parties and the same issues of state law.
Here, the Court initially decided to exercise its discretionary authority to hear the
declaratory judgment action removed by Tudor. See Title Pro Closings, L.L.C. v. Tudor
Ins. Co., ___ F. Supp. 2d ___, No. 1:11-cv-673-MEF, 2012 WL 125117 (M.D. Ala. Jan
17, 2012). At the time, the Peterses had a pending state court action against Title Pro on
liability and damages, and Title Pro had pending a declaratory judgment action against
Tudor in federal court. Thus the two cases had different sets of adverse parties and dealt
with two different issues. Since then, however, the circumstances have changed: Tudor
has voluntarily dismissed the declaratory judgment action pending before Judge
Thompson, Hall has revived his state court declaratory judgment action, and Tudor has

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filed a third-party declaratory judgment complaint adding Hall, the state court plaintiffs,
and Chicago Title Insurance. Each one of these procedural developments favors
dismissing the actions now pending before this Court and allowing the state court to
decide the disputes.
The Court exercised its discretionary authority over the removed declaratory
judgment action because there was “no pending declaratory judgment action in the
underlying suit.” Title Pro, ___ F. Supp. 2d at ___, 2012 WL 125117 at *4. Indeed, the
Court relied on how federal courts “routinely adjudicate[] coverage disputes brought
under the Declaratory Judgment Act when there is an underlying state court cases on the
merits, which involves different issues and different parties (as is the case here).” Id. But
this is no longer the case. Once Tudor dismissed its case before Judge Thompson, it
allowed Hall to revive his state court declaratory judgment action. And Hall took full
advantage of the opportunity: he successfully revived his claim on February 2, 2012. So
by the time Tudor filed its third-party complaint in this Court ten days later, there was
already a state declaratory judgment action pending between the insurer and Hall. As a
result, this case no longer involves different issues and different parties than the
underlying state court case. These developments vitiate the Court’s reasoning for initially
deciding that the removed declaratory judgment action “falls outside of Brillhart’s
reach.” Title Pro, ___ F. Supp. 2d at ___, 2012 WL 125117 at *4.
Equally important, if Tudor is allowed to proceed with its third-party declaratory

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judgment action, it would get a second crack at a case it voluntarily dismissed before
Judge Thompson after pursuing it past the summary judgment stage. Allowing the insurer
to do this would sanction judge shopping, encourage procedural gamesmanship, and let
multiply duplicative litigation, thereby ignoring “considerations of practicality and wise
judicial administration,” Beeline Stores, 945 F. Supp. at 514, which the Court must
account for when deciding to exercise its discretionary authority. Discouraging these
inefficient litigation tactics4 is yet another sound reason for dismissing Tudor’s claim.
Accordingly, the Court will grant the motions to dismiss so as to have the parties litigate
their disputes once and for all in state court.5
IV. C ONCLUSION
Having fully considered the parties’ briefs, and for the reasons discussed above, it
is hereby ORDERED as follows:
1.

Title Pro’s Motion to Strike Third Party Complaint (Doc. # 28) is
GRANTED IN PART and DENIED AS MOOT IN PART. It is

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The docket sheet had over 130 entries and the parties had sunk almost two years worth of
litigation costs into the matter when Tudor voluntarily dismissed the case after Judge Thompson set it for
trial.
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Tudor makes a number of arguments in an attempt to avoid this result, claiming that it “is
entitled” to litigate these issues in federal court; that “Title Pro would have this Court slam the doors on
Tudor,” which would “prevent Tudor[] from exercising its due process rights to have a judicial
determination as to whether . . . there is coverage under its policy of insurance”; and that “Alabama
plainly does not have a strong interest in adjudicating Tudor’s duties in state court.” (Doc. # 38 at 11–12.)
These arguments lack merit. Tudor has no right to avail itself of a discretionary remedy. Nor will the
insurer have its due process rights denied by having to litigate these claims in state court. Alabama,
moreover, has an interest in adjudicating disputes under its law, which is precisely what this case turns
on.

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granted to the extent that the motion asks for the Court to decline to
exercise its discretionary authority over the matter. It is otherwise
denied as moot as the state court will have jurisdiction to decide the
other arguments made therein.
2.

Bruce Hall’s Motion to Dismiss (Doc. # 37), which incorporates
Title Pro’s Motion to Strike, is likewise GRANTED IN PART and
DENIED AS MOOT IN PART. It is granted to the extent that it
asks for Tudor’s complaint to be dismissed and for the Court to
decline to exercise its discretionary authority over the matter. It is
otherwise denied as moot.

3.

Chicago Title Insurance Company’s Motion to Dismiss Tudor
Insurance Company’s Third Party Complaint (Doc. # 48) is also
GRANTED IN PART and DENIED AS MOOT IN PART. It is
granted to the extent that it asks the Court to decline to exercise its
discretionary authority over the matter. The rest of the requests for
relief found in the motion are denied as moot.

4.

The assorted state court plaintiffs’ Motion to Dismiss Third-Party
Complaint (Doc. # 49) is too GRANTED IN PART and DENIED
AS MOOT IN PART. It is granted to the extent that it asks the
Court to decline to exercise its discretionary authority over the
matter; it is otherwise denied as moot.

5.

Tudor Insurance Company’s Motion to Realign the Parties (Doc. #
23) is DENIED AS MOOT.

DONE this the 3rd day of July, 2012.
/s/ Mark E. Fuller
UNITED STATES DISTRICT JUDGE

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