Pennsylvania National Mutual Casualty Insurance Company v. St. Catherine of Siena Parish et al
ORDER denying 69 Motion to Dismiss. Signed by Judge Kristi K. DuBose on 3/18/2014. (adk)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
PENNSYLVANIA NATIONAL MUTUAL
CASUALTY INSURANCE CO.,
ST. CATHERINE OF SIENA PARISH, et al.,
CIVIL ACTION NO. 13-00066-KD-M
This matter is before the Court on Defendant St. Catherine’s Motion to Dismiss and
Abstain (Doc. 69) and Pennsylvania National’s Response (Doc. 94).
This is a declaratory judgment action1 to determine whether Pennsylvania National (the
insurer) has a duty to indemnify Kiker (its insured) for the November 2, 2012 $350,000 state
court verdict entered against Kiker and in favor of St. Catherine on St. Catherine’s breach of
(Docs. 1, 17). Specifically, Pennsylvania National seeks a determination by
this Court that St. Catherine’s breach of contract and faulty workmanship claims against Kiker
do not constitute an “occurrence” under the relevant commercial general liability policy (“CGL
policy”) and that the CGL policy excludes damages for bodily injury and property damage.
1 The Complaint alleges federal diversity jurisdiction.
(Doc. 17 at 2).
2 St. Catherine of Sienna Parish v. Kiker Corporation, Thompson Engineering, Inc., Thompson
Engineering Testing, Inc., and Damon Lett Roofing, Circuit Court of Mobile County, Alabama (CV 2010-900578).
This dispute relates to replacement of St. Catherine’s roof (after Kiker replaced the roof with a “40 year roof,” it
began leaking 4 years later) which prompted St. Catherine to sue Kiker in state court for negligence, wantonness,
breach of contract, misrepresentation and suppression. Pennsylvania National defended Kiker under a reservation
of rights, advising Kiker there was no coverage under the terms of the insurance policy for breach of contract. All
claims were dismissed except for negligence and breach of contract, which proceeded to trial. At trial, the court
granted Kiker’s motion for judgment as a matter of law on the negligence claim, while the jury resolved the breach
of contract claim (finding in favor of St. Catherine in the amount of $350,000). Thereafter, Kiker and St. Catherine
appealed the state court jury verdict, which remains pending on appeal before the Alabama Supreme Court.
Catherine seeks dismissal of this action, on the following specific grounds: 1) Pennsylvania
National’s indemnification claims are premature (not ripe); 2) Pennsylvania National lacks
standing; and/or 3) a stay should be entered, per Colorado River abstention, given the pending
At the outset, while St. Catherine’s motion -- styled as a Rule 12(b)(1) motion to dismiss
due to lack of subject matter jurisdiction -- is technically untimely,3 the Court finds that the
motion is not limited to this issue, as St. Catherine has raised the broader issues of standing,
ripeness, and abstention.
Nevertheless, this Court can assess the presence (or absence) of
subject matter jurisdiction at any given time.
The standard of review for a Rule 12(b)(1) motion to dismiss for lack of subject-matter
jurisdiction is the same as the standard of review for a Rule 12(b)(6) motion to dismiss attacking
the legal sufficiency of the complaint.
F.3d 1271, 1279 (11th Cir. 2009).
Carmichael v. Kellogg, Brown & Root Servs., Inc., 572
The Supreme Court explained that “[t]o 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.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting and
explaining its decision in Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). To be
plausible on its face, the claim must contain enough facts that “allow[ ] the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at
3 Per Rule 12(b)(1), “a motion asserting [this]…defense [of lack of subject matter jurisdiction] must be
made before pleading if a responsive pleading is allowed.” St. Catherine filed its Answer in March 2013, and did not
move to dismiss for lack of subject matter jurisdiction before doing so. (Doc. 28 at 3-5). See, e.g., U.S. ex rel
Powell v. American InterContinental Univ., Inc., 2012 WL 2885356, *2 (N.D. Ga. Jul. 12, 2012).
In considering a 12(b) motion, the court is primarily limited to the face of the complaint
and its attachments.
“However, where the plaintiff refers to certain documents in the complaint
and those documents are central to the plaintiff's claim, then the Court may consider the
documents part of the pleadings ...” Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d
1364, 1368-1369 (11th Cir. 1997) (internal citations omitted).
Several circumstances exist in
which a court may consider matters outside of the pleadings in ruling on a 12(b) motion without
converting the motion to a motion for summary judgment. Davis v. Self, 2013 WL 754853, *2
(N.D. Ala. Feb. 25, 2013). One of these circumstances arises when facts or documents are
subject to judicial notice.
Fed. R. Evid. 201(a)-(d); La Grasta v. First Union Securities, Inc.,
358 F.3d 840, 845 (11th Cir. 2004) (“In analyzing the sufficiency of the complaint, we limit our
consideration to the well-pleaded factual allegations, documents central to or referenced in the
complaint, and matters judicially noticed”).
The considerations in this case, as noted below, are influenced by the status of underlying
state court case from the Mobile County Circuit Court – from which a state court judgment (via
jury verdict) has issued.
Because this case (and the related documents) are part of the public
record, to the extent necessary for resolution of this motion to dismiss, the Court takes judicial
notice of same without converting the motion into one for summary judgment.
Universal Express, Inc. v. U.S. S.E.C., 177 Fed. Appx. 52, 53 (11th Cir. 2006) (“A district court
may take judicial notice of certain facts without converting a motion to dismiss into a motion for
4 Additionally, “[a]t the pleading stage, general factual allegations of injury resulting from the defendant's
conduct may suffice, for on a motion to dismiss we presum[e] that general allegations embrace those specific facts
that are necessary to support the claim.” Lujan, 504 U.S. at 561. For a motion to dismiss, standing is evaluated
based on the facts alleged in the complaint, and the court may not “speculate concerning the existence of standing or
piece together support for the plaintiff.” Shotz v. Cates, 256 F.3d 1077, 1081 (11th Cir. 2001).
summary judgment ... Public records are among the permissible facts that a district court may
consider.”); United States v. Jones, 29 F.3d 1549, 1553 (11th Cir.1994) (“a court may take notice
of another court's order ... for the limited purpose of recognizing the ‘judicial act’ that the order
represents or the subject matter of the litigation”).
In order for a federal court to have subject matter jurisdiction to hear an action, there
must be an actual case or controversy.
U.S. Const. Art. III, § 2, cl. 1; Lujan v. Defenders of
Wildlife, 504 U.S. 555, 559 (1992).
“A party has standing to bring an action under the
Declaratory Judgment Act if an actual controversy exists ... which is the same as an Article III
case or controversy.” Arris Group, Inc. v. British Telecomm. PLC, 639 F.3d 1368, 1373 (11th
Cir. 2011) (internal quotation marks omitted).
A Declaratory Judgment Act plaintiff must
allege facts from which it appears “there is a sufficient likelihood that he will be affected by the
allegedly unlawful conduct in the future.”
1234, 1265 (11th Cir. 2001).
Johnson v. Bd. of Regents of Univ. of Ga., 263 F.3d
See also Bowen v. First Family Fin. Serv., Inc., 233 F.3d 1331,
1340 (11th Cir. 2000) (same); Malowney v. Fed. Collection Deposit Group, 193 F.3d 1342, 1346
(11th Cir. 1999) (noting that a plaintiff seeking declaratory relief must allege facts from which it
appears there is a substantial likelihood that he will suffer injury in the future).
a declaratory judgment action, “the question in each case is whether the facts alleged, under all
the circumstances, show that there is a substantial controversy, between parties having adverse
legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory
judgment.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). See also e.g., Lee
v. Bethesda Hosp., Inc., 2013 WL 6480066, *2 (S.D. Fla. Dec. 10, 2013) (citing MedImmune
and holding that “if the ‘facts alleged, under all the circumstances, show that there is a
substantial controversy, between parties having adverse legal interests, of sufficient immediacy
and reality,’ then a case or controversy exists”).
Additionally, the Declaratory Judgment Act provides that a court “may declare the rights
and other legal relations of any interested party seeking this declaration.” 28 U.S.C. § 2201.
The Supreme Court has characterized the Declaratory Judgment Act as an enabling Act,
conferring “a discretion on the courts rather than an absolute right upon the litigant.”
Seven Falls Co., 515 U.S. 277, 287 (1995). Such broad discretion rests with the district courts
because “[w]hen all is said and done ... ‘the propriety of declaratory relief … will depend upon a
circumspect sense of its fitness informed by the teachings and experience concerning the
functions and extent of federal judicial power[;]’” indeed, “facts bearing on the usefulness of the
declaratory judgment remedy, and the fitness of the case for resolution, are peculiarly within
their grasp.” Id. at 287, 289.
St. Catherine contends that this Court lacks subject matter jurisdiction because
Pennsylvania National lacks standing as the injury it cites is not actual or imminent, nor is it
redressable by the Court.
(Doc. 69 at 6).
Specifically, St. Catherine asserts that Pennsylvania
National alleges no imminent harm in the Complaint, only that it is not liable for the verdict in
the underlying state court litigation.
St. Catherine, however, relies on general standing
case law for this assertion rather than standing in the context of a declaratory judgment action.
Based on the complaint, Pennsylvania National alleges that: 1) the jury’s verdict of
$350,000 against its insured Kiker was only for St. Catherine’s breach of contract claim, for
which it has no duty to defend or indemnify Kiker; 2) a bona fide justiciable controversy exists
amendments/endorsements are clear and unambiguous; 4) there is no indemnity afforded under
the policy to Kiker for the verdict entered against it in the underlying state court litigation; 5) it is
not liable for satisfying any portion of the $350,000 judgment awarded to St. Catherine for its
claims against Kiker; and 6) it owes no further duty to defend Kiker.
(Doc. 17 at 7).
Pennsylvania National has shown that a case or controversy exists for purposes of the
Declaratory Judgment Act because under all the circumstances, there is a substantial controversy
between parties having adverse legal interests of sufficient immediacy and reality to warrant the
issuance of a declaratory judgment.
Indeed, case law supports such a result.
As explained in Edwards v. Sharkey, 747 F.2d 684, 686-687 (11th Cir. 1984):
The second jurisdiction issue focuses on whether there was a “case or controversy”
before the district court as required by 28 U.S.C. § 2201. The Fifth Circuit Court of
Appeals has cautioned against the exercise of jurisdiction in suits for declaratory
judgment when the question of the apportionment of insurance coverage may never arise
due to the lack of a judgment establishing the liability of the insured. See American
Fidelity & Casualty Co. v. Pennsylvania Thresherman & Farmers' Mutual Casualty Co.,
280 F.2d 453 (5th Cir.1960). This caution, however, is predicated on the traditional
discretion of federal courts exercising jurisdiction over declaratory judgment actions. See
id. at 461 (“The mandatory obligation of a District Court to accept and determine a suit
for declaratory relief is not commensurate with the full scope of a ‘case or controversy’
within the constitutional sense.”); MacMillen-Bloedel, Inc. v. Fireman's Insurance Co.,
558 F.Supp. 596, 599 (S.D.Ala.1983) (interpreting American as rule governing
discretion). But see Great Northern Paper Co. v. Babcock & Wilcox Co., 46 F.R.D. 67, 70
(N.D.Ga.1968) (American a constitutional rule). Moreover, the Supreme Court of the
United States has held that a “case or controversy” exists to support declaratory relief
between an injured third party and an insurance company even in the absence of a
judgment in favor of the third party against the insured. Maryland Casualty Co. v. Pacific
Coal & Oil Co., 312 U.S. 270, 61 S.Ct. 510, 85 L.Ed. 826 (1940). Finally, even if there
was no “case or controversy” before the district court because of the lack of a judgment
against the insured, the settlement of the tort actions provides the necessary establishment
of the insured's liability. See Allstate Insurance Co. v. Employers Liability Assurance Co.,
445 F.2d 1278, 1281 (5th Cir.1971).
Thus, standing has been found to exist for insurance coverage disputes which are “manifestly
susceptible of judicial determination” under Article III -- even when no insurance claim has been
submitted and no judgment triggering insurance obligations has issued.
See, e.g., Maryland
Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941) (holding that a tort claimant had
Article III standing to seek a declaration in federal court that the tortfeasor’s insurer owed the
insured tortfeasor a duty to indemnify even though the underlying tort suit had not yet been
reduced to judgment); American States Ins. Co. v. Bailey, 133 F.3d 363, 368 (5th Cir. 1998)
(finding in a declaratory judgment action by the insurer, that a case or controversy existed even
though injured parties’ claims against insured had not yet been reduced to a judgment).
in the case of liability policies, a dispute or controversy between the insurer and insured as to the
fact or extent of liability under the policy, including the insurer's obligation to defend the
insured, is generally held to present an actual or justiciable controversy within the Declaratory
See generally Penn-America Ins. Co. v. Coffey, 368 F.3d 409 (4th Cir. 2004);
Athridge v. Aetna Cas. & Sur. Co., 351 F.3d 1166 (D.C. Cir. 2003).
Here: 1) an insurance claim has been submitted; 2) there has already been a state court
judgment triggering insurance obligations; 3) Pennsylvania National initiated this litigation after
the state court judgment was rendered; and 4) per the declaratory judgment action, there is an
active dispute between the insured (Kiker) and the insurer (Pennsylvania National), as to
coverage under the policy.
Declaratory Judgment action.
As such, Pennsylvania National has standing to bring this
St. Catherine’s position that Pennsylvania National lacks
standing because it has “taken an active role” in appealing the state court judgment is not
supported by law.
As such, St. Catherine’s motion to dismiss, based on Pennsylvania
National’s lack of standing, is due to be denied.
Lack of Ripeness
As noted supra, following the November 2012 state court judgment, Kiker and St.
Catherine appealed, and the appeal remains pending before the Alabama Supreme Court. In the
instant motion to dismiss, St. Catherine contends that this federal case is not ripe because: 1)
Pennsylvania National appealed the state court verdict on the basis that it is not liable to
indemnify Kiker such that the obligation created by the state court judgment “is not yet a
certainty but rests with the Alabama Supreme Court[,]” and the declaratory judgment complaint
is accordingly based on future events that may never happen; and 2) St. Catherine’s cross-appeal
of the dismissal of its negligent and negligent supervision claims raises an issue of agent status as
to Damon Lett that may have “drastic ramifications for coverage issues[.]” (Doc. 69 at 8).
At the outset, St. Catherine is mistaken.
Pennsylvania National was not a party to the
state court litigation and is thus not a party to the appeal.
Additionally, a declaratory judgment should not be entered unless there is a controversy
“ripe” for judicial resolution: “[p]ut a different way, ‘[a] controversy, to be justiciable, must be
such that it can presently be litigated and decided and not hypothetical, conjectural, conditional
or based upon the possibility of a factual situation that may never develop.”
Saint Paul United
Meth. Church v. Gulf States Conf. Assn. of Seventh-Day Adventists, Inc., 2012 WL 4477653, *2
(M.D. Ala. Sept. 28, 2012) (citing binding precedent Brown & Root, Inc. v. Big Rock Corp., 383
F.2d 662, 665 (5th Cir. 1967)).
A lack of ripeness is not a viable basis for St. Catherine’s
motion to dismiss because a judgment has already been rendered against the insured (Kiker) and
the underlying claim has been resolved.
See, e.g., Essex Ins. Co. v. Foley, 2011 WL 1706214,
*3 and note 5 (S.D. Ala. May 5, 2011) (citing Allstate Ins. Co. v. Employers Liability Assur.
Corp., 445 F.2d 1278, 1281 (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”)), and
Allstate Indem. Co. v. Lewis, 985 F. Supp. 1341, 1349 (M.D. Ala. 1997) (“the duty to indemnify
is not ripe for adjudication until the insured is in fact held liable in the underlying suit”) (citation
“It is simply inappropriate to exercise jurisdiction over an action seeking a
declaration of the plaintiff's indemnity obligations absent a determination of the insureds’
Employers Mut. Cas. Co. v. All Seasons Window & Door Mfg., Inc., 387 F.Supp.2d
1205, 1211-1212 (S.D. Ala. 2005)) (footnotes omitted).
See also e.g., Pennsylvania Nat. Mut.
Cas. Ins. Co. v. King, 2012 WL 280656, *5 (S.D. Ala. Jan. 30, 2012) (“[c]ase law is legion for
the proposition that an insurer's duty to indemnify is not ripe for adjudication unless and until the
insured or putative insured has been held liable in the underlying action”).
As the state court has already determined the liability of Kiker, the insured, a lack of
ripeness is not a proper grounds upon which St. Catherine can root its motion to dismiss.
such, St. Catherine’s motion to dismiss, based on a lack of ripeness, is due to be denied.
St. Catherine asserts that entry of a stay based on Colorado River abstention is proper
under the circumstances.
However, Colorado River authorizes a federal court to dismiss or stay
an action where there is an ongoing parallel action in state court, but only under exceptional
circumstances because the general rule is that “the pendency of an action in the state court is no
bar to proceedings concerning the same matter” in federal court and federal courts have a
“virtually unflagging obligation to exercise their jurisdiction.” Jackson-Platts v. General Elec.
Capital Corp., 727 F.3d 1127, 1140 (11th Cir. 2013); Moorer v. Demopolis Waterworks and
Sewer Bd., 374 F.3d 994, 997 (11th Cir. 2004); Ambrosia Coal & Constr. Co. v. Pages Morales,
368 F.3d 1320, 1328 (11th Cir. 2004).
The Supreme Court framed this doctrine as an
“extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy
properly before it.”
Colorado River Water Conservation Dist. v. United States, 424 U.S. 800,
813 (1976).5 Indeed, “[o]nly the clearest of justifications will warrant dismissal of the federal
action” under Colorado River.
Ambrosia Coal, 368 F.3d at 1329 (citation omitted).
As a threshold matter, a federal court may abstain under Colorado River only if there is a
parallel state action – i.e., an action involving “substantially the same parties and substantially
the same issues.”
Ambrosia Coal, 368 F.3d at 1330.
Cases are parallel when they involve the
same parties and claims; however, when the two cases are not truly duplicative in the identity of
the parties and claims, Colorado River abstention is not appropriate.
See, e.g., Essex Ins. Co. v.
Foley, 2011 WL 290423, *2 at note 4 (S.D. Ala. Jan. 27, 2011) (providing that “[w]here the
declaratory judgment action is brought by an insurer against an insured, there are no parallel
proceedings if (1) the insurer was not a party to the suit pending in state court; and (2) the state
court actions involved issues regarding the insured's liability, whereas the federal suit involved
matters of insurance coverage”) (citation and internal quotation marks omitted).
“There is no
clear test for deciding whether two cases contain substantially similar parties and issues.
But…the balance…begins titled heavily in favor of the exercise of the [federal] court’s
5 The Eleventh Circuit identified six factors courts consider in assessing if Colorado River abstention is
proper: 1) whether any court has assumed jurisdiction over property, 2) the relative inconvenience of the fora, 3) the
potential for piecemeal litigation, 4) the temporal order in which each forum obtained jurisdiction, 5) whether state
or federal law governs, and 6) whether the state court is adequate to protect the parties' rights. Ambrosia Coal, 368
F.3d at 1331. Courts “must weigh these factors with a heavy bias in favor of exercising jurisdiction.” TranSouth
Financial Corp. v. Bell, 149 F.3d 1292, 1295 (11th Cir.1998). No one factor is necessarily dispositive; “the factors
must be considered flexibly and pragmatically, not as a mechanical checklist.” Ambrosia Coal, 368 F.3d at 1332.
“One factor alone can be the sole motivating reason for the abstention.” Moorer, 374 F.3d at 997.
jurisdiction…if there is any substantial doubt about whether two cases are parallel the court
should not abstain.” Acosta v. James A. Gustino, P.A., 478 Fed. Appx. 620, 622 (11th Cir.
Additionally, “the decision to invoke Colorado River necessarily contemplates that the
federal court will have nothing further to do in resolving any substantive part of the case.”
Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 28 (1983).
Despite St. Catherine’s contentions, the state and federal proceedings are not parallel.
Pennsylvania National was not a party to the underlying state case. The parties in the underlying
state court case were St. Catherine of Sienna Parish, Kiker Corporation, Thompson Engineering,
Inc., Thompson Engineering Testing, Inc., and Damon Lett Roofing.
The only “same parties”
-- as between the state court case and this federal case -- are St. Catherine and Kiker.
Additionally, the underlying state action involved St. Catherine suing Kiker for negligence,
wantonness, breach of contract, misrepresentation and suppression related to a construction
contract, as opposed to the insurance coverage issues presented in this federal case.
Substantially the same parties are thus not litigating substantially the same issues in both courts.
As such, abstention under Colorado River is not appropriate.
Based upon the foregoing, the Court finds that St. Catherine’s Motion to Dismiss and
Abstain (Doc. 69) is DENIED.
DONE and ORDERED this the 18th day of March 2014.
/s/ Kristi K. DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE
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