USF Insurance Company v. Metcalf Realty Company Inc et al
MEMORANDUM OPINION AND ORDER:re 35 and 44 . As further set out in order,the court DENIES the motions to dismiss but GRANTS the motion for extension of time. Metcalfs response to USFs motion for summary judgment is due on June 24, 2013. Signed by Judge Abdul K Kallon on 06/03/2013. (CVA)
2013 Jun-03 PM 01:30
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
USF INSURANCE COMPANY,
METCALF REALTY COMPANY,
INC., et al.,
Civil Action Number
MEMORANDUM OPINION AND ORDER
Plaintiff USF Insurance Company filed this declaratory judgment action
against Defendants Metcalf Realty Company, Inc., Thomas Cantone, and Indian
Harbor Insurance Company seeking a declaration of the rights and obligations of
the parties in an underlying state court action. Before the court is Metcalf Realty
Company’s motion to dismiss, or in the alternative, motion for extension of time to
respond to USF’s motion for summary judgment and supplemental motion to
dismiss. Docs. 35, 44. For the reasons stated below, the court DENIES the
motions to dismiss but GRANTS the motion for extension of time. Metcalf’s
response to USF’s motion for summary judgment is due on June 24, 2013.
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I. APPLICABLE STANDARD
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain “a
short and plain statement of the claim showing that the pleader is entitled to
relief.” “[T]he pleading standard Rule 8 announces does not require ‘detailed
factual allegations,’ but it demands more than an unadorned, the-defendantunlawfully-harmed-me accusation.” Iqbal, 556 U.S. 662, 678 (citing Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Mere “labels and conclusions” or
“a formulaic recitation of the elements of a cause of action” are insufficient.
Iqbal, 556 U.S. at 678 (citations and internal quotation marks omitted). “Nor does
a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual
enhancement.’” Id. (citing Bell Atl. Corp., 550 U.S. at 557).
Federal Rule of Civil Procedure 12(b)(6) permits dismissal when a
complaint fails to state a claim upon which relief can be granted. “To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678
(citations and internal quotation marks omitted). A complaint states a facially
plausible claim for relief “when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (citation omitted). The complaint must establish “more
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than a sheer possibility that a defendant has acted unlawfully.” Id.; see also Bell
Atl. Corp., 550 U.S. at 555 (“Factual allegations must be enough to raise a right to
relief above the speculative level.”). Ultimately, this inquiry is a “context-specific
task that requires the reviewing court to draw on its judicial experience and
common sense.” Iqbal, 556 U.S. at 679.
II. FACTUAL AND PROCEDURAL BACKGROUND
Woodside Condominium Association purchased Thomas Cantone’s
condominium unit in a foreclosure sale. Doc. 1 at ¶ 7. Thereafter, Metcalf, acting
as Woodside’s agent, sued Cantone in Jefferson County Circuit Court seeking
Cantone’s ejectment, Woodside’s right to possession, damages due to wrongful
possession, and attorney’s fees. Id. Cantone filed counterclaims for breach of
contract, negligence, conspiracy to force eviction through intentional and
wrongful conduct, violation of a general warranty to covenant of quiet enjoyment,
and constructive eviction. Id. at ¶ 11. Apparently, Metcalf asked USF to defend it
against the counterclaim under a commercial general liability insurance policy.
See id. at ¶ 12.
On July 24, 2012, USF filed this action against Metcalf, Cantone, and
Indian Harbor Insurance Company seeking a declaration that USF had no
obligation to provide Metcalf a defense or indemnity coverage in the underlying
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state court action. Doc. 1. Subsequently, on April 3, 2013, the state court ruled
that Metcalf lacked standing to pursue the ejectment action since only Woodside
held legal title to the condominium and, accordingly, dismissed the lawsuit
without prejudice. Doc. 35 at 10. In light of the ruling, Metcalf filed this motion
to dismiss claiming that this court lacked subject matter jurisdiction since “the
underlying case has been dismissed [and] has rendered any actual controversy . . in
this case moot” or, alternatively, that this court should dismiss Metcalf “as there is
no longer any case or controversy pertaining to Metcalf.” Doc. 35 at 3, 4, 10.
Consequently, the issue before this court is whether the state court’s decision to
dismiss Metcalf’s lawsuit renders this declaratory judgment action moot. For the
reasons stated below, the court finds that it does not and that USF can still pursue
this declaratory judgment action.
A plaintiff seeking “to invoke the jurisdiction of the federal courts must
satisfy the threshold requirement imposed by Article III of the Constitution by
alleging an actual case or controversy.” City of Los Angeles v. Lyons, 461 U.S. 95,
101 (1983) (citing Flast v. Cohen, 392 U.S. 83, 94-101 (1968); Jenkins v.
McKeithen, 395 U.S. 411, 421-25 (1969)). “The Declaratory Judgment Act, ‘in its
limitation to cases of actual controversy, manifestly has regard to the
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constitutional provision,’ and thus ‘is operative only in respect to controversies
which are such in the constitutional sense.’” Auto-Owners Ins. Co. v. Toole, 947 F.
Supp. 1557, 1565-66 (M.D. Ala. 1996) (citation omitted) (internal quotation marks
omitted). To demonstrate such case or controversy, the plaintiff must assert a
“‘personal stake in the outcome’ in order to ‘assure the concrete adverseness
which sharpens the presentation of issues’ necessary for the proper resolution of
constitutional questions.” Id. (citing Baker v. Carr, 369 U.S. 186, 204 (1962)).
The case or controversy requirement is not met when the plaintiff merely alleges
an abstract injury. “The plaintiff must show that he ‘has sustained or is
immediately in danger of sustaining some direct injury’ as the result of the
challenged official conduct and the injury or threat of injury must be both ‘real and
immediate,’ not ‘conjectural’ or ‘hypothetical.’” Id. at 101-02 (emphasis added)
(citations omitted). Significantly, in the insurance context, a controversy exists
when the insured seeks a defense from the insurer but the insurer denies coverage,
see Amer. Fidelity & Cas. Co. v. Penn. Threshermen & Farmer’s Mut. Cas. Ins.
Co., 280 F.2d 453, 461 (5th Cir. 1960), and “with an injured third person
concerning a policy’s validity even though the injured person may decide not to
sue,” Amer. Centennial Ins. Co. v. Sinkler, 903 F. Supp. 408, 410 (E.D. N.Y.
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With this legal background in mind, notwithstanding the state court’s
dismissal of Metcalf’s lawsuit, the case or controversy requirement is met here
because an actual controversy exists between the parties and their interests are
adverse. Specifically, unlike the duty to indemnify component of USF’s claim,
which is no longer ripe for adjudication in light of the dismissal of the state court
action, Nationwide Ins. v. Zavalis, 52 F.3d 689, 693 (7th Cir. 1995), ascertaining
whether a duty to defend exists is still a ripe inquiry because USF alleged that it
sustained injury when it expended funds to defend Metcalf under a reservation of
rights. Doc. 1 at ¶¶ 17-18. In fact, USF filed this declaratory judgment, in part,
for a determination of whether it owes Metcalf a defense or, alternatively, is due
reimbursement from Indian Harbor. Id. Since USF expended funds to defend
Metcalf in the now dismissed state court matter and may be entitled to recoup
these funds, the parties still have a stake in the outcome of the declaratory
judgment.1 Therefore, Metcalf’s motions to dismiss are DENIED.
Additionally, given the dispute at issue, there is a reasonable expectation that an
ejectment action is imminent and that Cantone will reassert the allegations raised in his
counterclaims against Metcalf, id. at ¶¶ 9-11, causing the parties to incur future injuries on the
issues regarding whether a duty to indemnify and/or defend exists.
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DONE the 3rd day of June, 2013.
ABDUL K. KALLON
UNITED STATES DISTRICT JUDGE
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