James River Insurance Company v. Ultratec Special Effects Inc et al

Filing 100

MEMORANDUM OPINION AND ORDER re 87 MOTION to Dismiss filed by Fountain, Parker, Harbarger and Associates, Inc.; for reasons stated within Fountain Parker's motion to dismiss, 87 , is DENIED and the motion to stay is GRANTED solely as to the duty to indemnify claim. Signed by Judge Abdul K Kallon on 06/20/2017. (KBB)

FILED
2017 Jun-20 AM 10:24
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION
JAMES RIVER INSURANCE
COMPANY,

)
)
)
Plaintiff/Counterclaim Defendant,
)
)
vs.
)
)
ULTRATEC SPECIAL EFFECTS,
)
INC., et al.,
)
Defendants
)
)
)
ULTRATEC SPECIAL EFFECTS, )
INC.,
)
)
Third-Party Plaintiff
)
)
v.
)
)
BRITTON-GALLAGHER &
)
ASSOCIATES, INC. AND
)
FOUNTAIN PARKER,
)
HARBARGER AND ASSOCIATES, )
LLC.
)
)
Third-Party Defendants.

Civil Action Number
5:16-cv-00949-AKK

MEMORANDUM OPINION AND ORDER
James River Insurance Company, Inc. filed this declaratory judgment action
pursuant to 28 U.S.C. § 2201 against various defendants, 1 seeking to establish that

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Specifically, James River has named Ultratec Special Effects, Inc., MST Properties, LLC,
Robert Holland, Randy Moore, Mike Thouin, John Anthony, David J. Cothran, as Administrator
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no coverage exists for employees of Ultratec Special Effects based on an
Employer’s Liability Exclusion and that it has no obligation to defend or
indemnify any Ultratec employees in three underlying state court actions. Doc. 1 at
11–12. In response to James River’s lawsuit, Ultratec filed a Third-Party
Complaint, alleging various torts arising out of the procurement of the insurance
policies in question. See generally doc. 76. One of the third-party defendants,
Fountain Parker Harbarger and Associates, LLC, has filed a motion to dismiss on
abstention grounds based on a parallel litigation contention or, in the alternative, to
stay this action pending the disposition of the underlying state lawsuits. See doc.
87. For the following reasons, Fountain Parker’s motion to dismiss is due to be
denied.
I.

ANALYSIS

The Declaratory Judgment Act is “an enabling Act, which confers a discretion
on the courts rather than an absolute right upon the litigant.” Wilton v. Seven Falls
Co., 515 U.S. 277, 287 (1995). As such, the decision to hear a declaratory
judgment action is committed to the discretion of the district court. Brillhart v.
Excess Ins. Co. of America, 316 U.S. 491, 494 (1942); Wilton v. Seven Falls Co.,
515 U.S. 277, 282 (1995); Angora Enterprises, Inc. v. Condominium Ass’n of
Lakeside Village, Inc., 796 F.2d 384, 387 (11th Cir. 1986). Moreover, where there
for the Estate of Aimee Cothran, Donald Ray Sanderson, as Administrator for the Estate of
Virginia Marie Sanderson, and Coleen McKenna Whorton. Doc. 1.
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is a parallel state proceeding, an alternative form of relief, or other adequate
remedy, “a court, in the exercise of the discretion that it always has in determining
whether to give a declaratory judgment, may properly refuse declaratory relief if
the alternative remedy is better or more effective.” Angora Enterprises,796 F.2d at
387–88.
Litigation

is

parallel

where

“substantially

the

same

parties

are

contemporaneously litigating substantially the same issues in more than one
forum.” Georgia v. U.S. Army Corps of Engineers, 223 F.R.D. 691, 697 (N.D. Ga.
2004). Contrary to Fountain Parker’s contention, the litigation pending before the
court is not parallel to the state court litigation. 2 Based on a review of the
complaints, the identity of parties and issues in the underlying state court actions
are not similar enough to those in this action such that this case qualifies as parallel
litigation. Among other things, James River is not a party to the three state court
cases, there are no insurance coverage claims or defenses at issue in those cases
based on the record before the court, and, as James River notes, it has also filed a
claim for money damages, seeking reimbursement of monies it has thus far paid
out in defense costs. See, e.g., docs. 1-1, 1-2, 1-3, 93 at 2. As such, dismissal on
2

The Eleventh Circuit has developed a list of factors to consider “to aid district courts in
balancing state and federal interests” when making a “discretionary decision whether to abstain
from exercising jurisdiction over state-law claims in the face of parallel litigation in the state
courts.” Ameritas Variable Life Ins. Co. v. Roach, 411 F.3d 1328, 1331 (11th Cir. 2005). The
court will not analyze the Ameritas factors in light of its finding that this litigation is not parallel
to the state actions.
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abstention grounds is not warranted. See Quackenbush v. Allstate Ins. Co., 517
U.S. 706, 714 (1996) (“[F]ederal courts have the power to dismiss or remand cases
based on abstention principles only where the relief being sought is equitable or
otherwise discretionary.”).
Alternatively, Fountain Parker requests that the court stay this action pending
the resolution of the state cases. This request is due to be granted in part. The court
declines to stay the duty to defend claim because the coverage issues in this case
would still remain undecided even after the completion of the state court actions.
Moreover, a stay would likely render moot the duty to defend issue by depriving
James River of a forum in which to litigate this claim. See Atlantic Ca. Ins. Co. v.
GMC Concrete Co., Inc., 2007 WL 4335499, *4 (S.D. Ala. 2007).
The stay is due to be granted, however, as to the duty to indemnify claim. See
Allstate Ins. Co. v. Employers Liability Assur. Corp., 445 F.2d 1278, 1279 (5th Cir.
1971) (“[N]o action for declaratory relief will lie to establish an insurer’s liability .
. . until a judgment has been rendered against the insured since, until such
judgment comes into being, the liabilities are contingent and may never
materialize.”). See also Cincinnati Ins. Co. v. Holbrook, 867 F.2d 1330 (11th Cir.
1989); Employer Mut. Cas. Co. v. Evans, 76 F. Supp. 2d 1257, 1262 (N.D. Ala.
1999). In the absence of a judgment in the underlying state actions, this claim is
not yet ripe. Therefore, because the duty to indemnify is only relevant if there is a
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state court judgment and if this court finds first that James River has a duty to
defend, the court will stay the indemnification claim.
CONCLUSION
For the foregoing reasons, Fountain Parker’s motion to dismiss, doc. 87, is
DENIED and the motion to stay is GRANTED solely as to the duty to indemnify
claim.
DONE the 20th day of June, 2017.

_________________________________
ABDUL K. KALLON
UNITED STATES DISTRICT JUDGE

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