Mid-Continent Casualty Company v. G.R. Construction Management, Inc. et al

Filing 47

ORDER granting 36 motion to dismiss; granting 36 motion to stay; granting 37 Motion to dismiss for lack of jurisdiction. Defendants G.R. Construction Management, Inc.'s and Dana M. DiCarlo's Motions to Dismiss 36 37 are GRAN TED. Plaintiff's Amended Complaint for Declaratory Relief is DISMISSED without prejudice. The Clerk is directed to enter judgment accordingly, terminate all pending motions and deadlines, and close the file.Signed by Judge Sheri Polster Chappell on 10/5/2017. (LMF)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
MID-CONTINENT CASUALTY
COMPANY, a foreign corporation
Plaintiff,
v.

Case No: 2:17-cv-55-FtM-38CM

G.R. CONSTRUCTION
MANAGEMENT, INC. and DANA M.
DICARLO,
Defendants.
/
OPINION AND ORDER 1
This matter comes before the Court on Defendants G.R. Construction
Management, Inc.’s (“GRC”) and Dana M. DiCarlo’s Motions to Dismiss or, in the
Alternative, Stay the Amended Complaint (Docs. 36; 37). Plaintiff Mid-Continent Casualty
Company (“MCC”) has filed responses to both Motions to Dismiss (Docs. 38; 39).
Because the motions present overlapping arguments, the Court will address them
collectively here.

1

Disclaimer: Documents filed in CM/ECF may contain hyperlinks to other documents or
websites. These hyperlinks are provided only for users’ convenience. Users are
cautioned that hyperlinked documents in CM/ECF are subject to PACER fees. By
allowing hyperlinks to other websites, this Court does not endorse, recommend, approve,
or guarantee any third parties or the services or products they provide on their websites.
Likewise, the Court has no agreements with any of these third parties or their websites.
The Court accepts no responsibility for the availability or functionality of any hyperlink.
Thus, the fact that a hyperlink ceases to work or directs the user to some other site does
not affect the opinion of the Court.

BACKGROUND
Unless stated otherwise, the following facts are drawn from the Amended
Complaint for Declaratory Relief (Doc. 30) and attachments, and will be construed in a
light most favorable to MCC.
Ten years ago, DiCarlo hired GRC, a certified general contractor, to remodel and
renovate his home. (Doc. 30 at ¶¶ 1, 14; Doc. 30-4 at ¶¶ 4, 10). During the summer of
2014, DiCarlo allegedly discovered various latent defects and damages that could not
have been reasonably discovered until that time. (Doc. 30 at ¶ 16). DiCarlo thus sued
GRC and others in state court for negligence (the “Underlying Action”). (Doc. 30 at ¶ 17).
MCC insures GRC and is currently defending it in the Underlying Action, subject to a full
and complete reservation of rights. (Doc. 30 at ¶ 17). MCC issued commercial general
liability policies to GRC, each lasting for a one year period (collectively, the “Insurance
Policies”). (Docs. 30 at ¶ 8; 36 at 2; see Docs. 30-1; 30-2; 30-3). Pertinent here, the
Insurance Policies contained an insuring agreement, exclusions, definitions, and
endorsements, that MCC argues could affect their duty to indemnify GRC. (Doc. 30 at ¶¶
9-12, 20-32).
MCC now brings this action for declaratory relief, pursuant to 28 U.S.C. § 2201,
requesting that the Court determine the scope of MCC’s obligations, if any, to indemnify
GRC should it be found liable in the Underlying Action. (See Doc. 30). Defendants GRC
and DiCarlo seek to dismiss MCC’s amended complaint, arguing that the issue of
indemnification is not ripe until the Underlying Action has been resolved and liability found
by the state court. (Docs. 36 at 4-8; 37 at 3-6). MCC disagrees. It contends that the
declaration it seeks here can be determined independently of the Underlying Action, and

2

that continuing this action could be beneficial to clarifying the parties’ legal relationships
and decision-making in the Underlying Action. (Doc. 38 at 2, 10-11).
DISCUSSION
Where there is “a case of actual controversy” the Declaratory Judgment Act (the
“Act”) provides discretion to “any court of the United States . . . [to] declare the rights and
other legal relations of any interested party seeking such declaration, whether or not
further relief is or could be sought.” 28 U.S.C. § 2201(a). While the Act grants federal
courts discretion and “competence to make a declaration of rights; it does not impose a
duty to do so.” Ameritas Variable Life Ins. Co. v. Roach, 411 F.3d 1328, 1330 (11th Cir.
2005) (citing Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494 (1942)). The term
“‘case of actual controversy’ in the Act refers to the type of ‘Cases’ and ‘Controversies’
that are justiciable under Article III.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118,
127 (2007) (citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240 (1937)). “Article III of
the United States Constitution limits the jurisdiction of the federal courts to cases and
controversies of sufficient concreteness to evidence a ripeness for review.” Digital Props.,
Inc. v. City of Plantation, 121 F.3d 586, 589 (11th Cir. 1997).
Turning to the case at hand, the Court finds that MCC’s indemnification issue is
not yet ripe for review, and thus is due to be dismissed. “The ripeness doctrine involves
consideration of both jurisdictional and prudential concerns” and “protects federal courts
from engaging in speculation or wasting their resources through the review of potential or
abstract disputes.” Id. “The ripeness inquiry requires a determination of (1) the fitness of
the issues for judicial decision, and (2) the hardship to the parties of withholding court
consideration.” Id. (citing Abbott Lab. v. Gardner, 387 U.S. 136, 149 (1967)). Under the

3

Act, the case or controversy requirement “provides that a declaratory judgment may only
be issued in the case of an ‘actual controversy.’ That is, under the facts alleged, there
must be a substantial continuing controversy between parties having adverse legal
interests.” Emory v. Peeler, 756 F.2d 1547, 1551-52 (11th Cir. 1985) (citation omitted).
“Additionally, the continuing controversy may not be conjectural, hypothetical, or
contingent; it must be real and immediate, and create a definite, rather than speculative
threat of future injury” and “[t]he remote possibility that a future injury may happen is not
sufficient to satisfy the ‘actual controversy’ requirement for declaratory judgments.” Id. at
1552 (citing City of Los Angeles v. Lyons, 461 U.S. 95, 103 (1983)).
As stated, MCC seeks to clarify its duty to indemnify GRC, but that duty is
inherently unclear because the state court has not yet decided GRC’s liability, if any, in
the Underlying Action. Because the state court case is ongoing, MCC is concerned with
a potential future injury that is neither real nor immediate at this time. If GRC is found not
liable then there is no need for MCC to indemnify it. There is also no current “substantial
continuing controversy” between MCC and GRC involving “adverse legal interests,” nor
is there any considerable hardship for MCC if the Court withholds consideration of this
issue. 2 Continuing the instant action could require the Court to engage in undue
consideration of an abstract dispute, where the potential for legal adversity is contingent
upon the ruling of the state court in the Underlying Action. Such a speculative exercise
by the Court is inconsistent with Article III and the Act.

2

The only evident controversy between the two parties is the one created by MCC in initiating the instant
action. If anything, MCC and GRC have aligned legal interests, as MCC is defending GRC in state court in
the Underlying Action. It would be in MCC’s and GRC’s mutual interest for GRC to be found not liable, as
it would spare GRC from having to pay damages and save MCC from having indemnify GRC in accordance
with its Insurance Policies.

4

Other courts have found that it is improper to adjudicate an indemnification issue
before the underlying state court action is concluded. “The duty to indemnify is dependent
upon the entry of a final judgment, settlement, or a final resolution of the underlying
claims.” J.B.D. Const., Inc. v. Mid-Continent Cas. Co., 571 F. App’x 918, 927 (11th Cir.
2014). “Because an insurer’s duty to indemnify is dependent on the outcome of the case,
any declaration as to the duty to indemnify is premature unless there has been a
resolution of the underlying claim.” Northland Cas. Co. v. HBE Corp., 160 F. Supp. 2d
1348, 1360 (M.D. Fla. 2001) (citations omitted). Thus, determining MCC’s duty to
indemnify when the state court has not determined whether GRC is liable would be a
premature exercise in hypotheticals. See Interstate Fire & Cas. Co. v. McMurry Constr.
Co., Inc., No. 6:16-cv-841-Orl-41TBS, 2017 WL 821746, at *3-4 (M.D. Fla. Mar. 2, 2017)
(dismissing a declaratory judgment action because no immediate controversy or
impending injury could be ascertained until after the underlying state court claim was
resolved, and thus the case was not ripe for review). It would be prudent to allow the
Underlying Action to conclude, where the parties have already begun discovery and
where the state trial court is in a better position to evaluate the facts and the legal
arguments that follow. After the Underlying Action has concluded, the Court could
reference the finalized record if litigation were to proceed on this issue in the future.
What is more, MCC’s reliance on Higgins v. State Farm Fire & Cas. Co., 894 So.
2d 5 (Fla. 2004) is unconvincing. In Higgins, the Florida Supreme Court held that the
Florida Declaratory Judgment Act “authorize[s] declaratory judgments in respect to
insurance policy indemnity coverage and defense obligations in cases where it is
necessary to resolve issues of fact in order to decide the declaratory judgment action.”

5

Id. at 15. MCC argues that the Court is “Erie-bound” to follow Florida law, and therefore,
bound to follow Higgins. (Doc. 38 at 3-4). “A federal court sitting in diversity is required to
apply . . . federal procedural law.” Burke v. Smith, 252 F.3d 1260, 1265 (11th Cir. 2001)
(citing Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). And “[t]he Eleventh Circuit has
expressly held that the operation of the Declaratory Judgment Act . . . is procedural only.”
Burlington Ins. Co. v. Wilford Roofing Co., Inc., No. 3:13-cv-944-J-39MCR, 2015 WL
12546284, at *2 (M.D. Fla. Mar. 11, 2015) (citing GTE Directories Pub. Corp. v. Trimen
Am., Inc., 67 F.3d 1563, 1567 (11th Cir. 1995)). Because MCC brings this case under the
federal Declaratory Judgment Act, Higgins does not apply here. Id.; see also MidContinent Cas. Co. v. Nassau Builders, Inc., No. 3:16-cv-921-J-34JRK, 2017 WL
1191383, at *7 (M.D. Fla. Mar. 31, 2017) (finding that Higgins is not binding because the
case was brought under the federal Declaratory Judgment Act); McMurry, 2017 WL
821746, at *4 (finding Higgins irrelevant to whether the court should dismiss the federal
declaratory judgment action). Even if the Court were Erie-bound to follow Higgins, as
MCC argues, there is nothing in Higgins to suggest that its holding would force the Court
to continue with this action or overpower the Court’s discretion on whether to grant a
declaratory judgment.
In sum, the Court holds that dismissal of this action is proper because it is not ripe
as a case of actual controversy. Because the Court is dismissing this case, it need not
address Defendants’ alternative request to stay this action.
Accordingly, it is now
ORDERED:

6

1) Defendants G.R. Construction Management, Inc.’s and Dana M. DiCarlo’s Motions
to Dismiss (Docs. 36; 37) are GRANTED.
2) Plaintiff’s Amended Complaint for Declaratory Relief is DISMISSED without
prejudice.
3) The Clerk is directed to enter judgment accordingly, terminate all pending motions
and deadlines, and close the file.
DONE and ORDERED in Fort Myers, Florida this 5th day of October, 2017.

Copies: All Parties of Record

7