Henderson and Coker, Inc. v. National Trust Insurance Company

Filing 9

MEMORANDUM OPINION AND ORDER that Plaintiff's Motion to Remand 5 is DENIED. Signed by Chief Judge William Keith Watkins on 1/7/2013. (Attachments: # 1 Civil Appeals Checklist)(jg, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
EASTERN DIVISION
HENDERSON AND COKER, INC.,
Plaintiff,
v.
NATIONAL TRUST INSURANCE
COMPANY,
Defendant.

)
)
)
)
)
)
)
)
)
)

CASE NO. 3:12-CV-432-WKW
[WO]

MEMORANDUM OPINION AND ORDER
Before the court is Plaintiff Henderson & Coker Inc.’s Motion to Remand.
(Doc. # 5.) Defendant National Trust Insurance Company opposes the motion. (Doc.
# 8.) Henderson & Coker has not replied. For the reasons that follow, the motion is
due to be denied.
I. STANDARD OF REVIEW
Federal courts have a strict duty to exercise the jurisdiction conferred on them
by Congress. Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996). At the
same time, “[f]ederal courts are courts of limited jurisdiction.” Burns v. Windsor Ins.
Co., 31 F.3d 1092, 1095 (11th Cir. 1994). Hence, in actions removed from state court
to federal court, federal courts strictly construe removal statutes, resolve all doubts in

favor of remand, and place the burden of establishing federal jurisdiction on the
defendant. Miedema v. Maytag Corp., 450 F.3d 1322, 1328–30 (11th Cir. 2006).
II. BACKGROUND
Every child in Sunday school knows it is a wise man who builds his house upon
a rock, but a fool who builds his house on sand. Unfortunately, the Good Book does
not have much to say about modern construction techniques. As a result, when the
Faithful at St. John the Apostle Church decided to build a new facility, they were on
their own when it came time to choose building materials. Ultimately, they settled on
an Exterior Insulation and Finishing System manufactured by Dryvit Systems, and
contracted with Plaintiff Henderson & Coker, Inc., to build the new structure.
When problems arose with the new building at St. John’s, Robert J. Baker
(acting as “Bishop of Birmingham in Alabama, a corporation sole, for the benefit of
the Faithful at St. John the Apostle Church” (Doc. # 1-2)) went to court. In a fifteencount complaint filed in the Circuit Court of Tallapoosa County, Alabama, Bishop
Baker sued six defendants, all of whom were involved in building the new structure,
and one of whom was Henderson & Coker, the plaintiff in this removed action.
Over two years later, on December 7, 2011, Henderson & Coker filed a thirdparty complaint against National Trust Insurance Company (“NTIC”). Henderson &
Coker had an insurance policy with NTIC from April 1, 2007, to April 1, 2009, and
2

the third-party complaint alleges that policy obligated NTIC to defend and indemnify
Henderson & Coker when Bishop Baker filed suit. On April 20, 2012, Judge Tom F.
Young of Tallapoosa County granted NTIC’s motion to sever the Third-Party Claim,
and the controversy between Henderson & Coker and NTIC became a case unto itself.
The Tallapoosa County Clerk of Court assigned a new civil action number to
Henderson & Coker, Inc., v. National Trust Insurance Company, and NTIC paid a
new filing fee.
On May 17, 2012, Defendant NTIC removed the severed action to this court
based upon diversity jurisdiction. See 28 U.S.C. §§ 1332, 1441. In this removed
action, Plaintiff Henderson & Coker seeks recovery under state law for breach of
contract and bad faith, and also seeks a declaratory judgment as to the rights and
obligations of the parties under the insurance policy. Henderson & Coker now moves
to remand this action back to the Circuit Court of Tallapoosa County.
III. DISCUSSION
Although Henderson & Coker seeks remand of the entire cause, it has not
explained why the court should remand the state-law claims for breach of contract and
bad faith. Nor does Henderson & Coker argue there was some procedural defect in
the removal, or dispute any of the allegations that establish diversity jurisdiction.
(Doc. # 1, at 4.) That being the case, there is no dispute that the statutory prerequisites
3

for removal are met, and as another district court in this circuit has noted “[r]emoval
is, no doubt, an absolute right so long as the statutory prerequisites are met.” Herman
Schamisso, PVBA v. Menelli, Inc., 657 F. Supp. 63, 65 (S.D. Fla. 1986). Accordingly,
Henderson & Coker’s motion to remand is due to be denied with regard to its claims
for breach of contract and bad faith.
Henderson & Coker’s argument that the declaratory judgment count should be
remanded fails similarly. To argue the court should exercise its discretion and decline
jurisdiction over the declaratory judgment count, Henderson & Coker cites the rule
from Ameritas Variable Life Insurance Co. v. Roach, 411 F.3d 1328, 1332 (11th Cir.
2005). The problem is that the Ameritas rule only applies when “another suit is
pending in a state court presenting the same issues, not governed by federal law,
between the same parties.” Id. at 1330 (citing Brillhart v. Excess Ins. Co. of Am., 316
U.S. 491, 494 (1942)).
But there is no parallel state-court proceeding here. It is true that the removed
action now before the court was once a part of the suit Bishop Baker brought against
Henderson & Coker, but the state court’s order unmistakably severed the two suits.
(See Doc. # 1-16.) From that point on, the liability action brought by Bishop Baker
and the insurance dispute filed by Henderson & Coker were two separate cases. The
two cases are legally distinct: Bishop Baker’s suit involves fifteen causes of action
4

arising from construction of a building while Henderson & Coker’s three-count
complaint deals only with NTIC’s obligations under an insurance contract. Further,
Henderson & Coker is the only party the two actions have in common. Although
Henderson & Coker characterizes the two actions as parallel, the situation here is
simply not one addressed by the Ameritas holding. Despite their common origin, the
Tallapoosa County case and the one before the court are two separate actions that
involve different legal issues between different parties.
Because the Ameritas rule does not apply, all that is left (besides the related
state-law claims discussed above) is a run-of-the-mill dispute over insurance coverage,
which is “among the most common uses of the Declaratory Judgment Act in federal
courts.” Specialty Underwriters Alliance v. Peebles McManus LLC, 643 F. Supp. 2d
1298, 1301 (M.D. Ala. 2009.) In fact, this court “routinely adjudicates coverage
disputes brought under the Declaratory Judgment Act when there is an underlying
state court case on the merits, which involves different issues and different parties (as
is the case here).” Id. at 1302. And while the court has discretion to dismiss or stay
this action, “[i]t is an abuse of discretion . . . to dismiss a declaratory judgment action
in favor of a state court proceeding that does not exist.” Fed. Reserve Bank of Atlanta
v. Thomas, 220 F.3d 1235, 1247 (11th Cir. 2000). In this case, there exists no parallel
action in state court that would implicate the rule from Ameritas, and Henderson &
5

Coker has presented no other reason to decline jurisdiction over the declaratory
judgment count.
IV. CONCLUSION
Accordingly, it is ORDERED that Plaintiff’s Motion to Remand (Doc. # 5) is
DENIED.
DONE this 7th day of January, 2013.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE

6