Bancinsure, Inc. v. McCaffree et al
MEMORANDUM AND ORDER overruling 258 Motion for Further Relief Based on Declaratory Judgment Pursuant to 28:2202. Signed by District Judge Kathryn H. Vratil on 8/29/2017. (hl)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
CARL L. MCCAFFRE, et al.,
MEMORANDUM AND ORDER
This matter is before the Court on plaintiff’s Motion For Further Relief Based On
Declaratory Judgment Pursuant To 28 U.S.C. § 2202 (Doc. #258) filed December 2, 2016. Plaintiff
seeks litigation-related fees and costs pursuant to a settlement agreement arising from prior
proceedings in this Court. For reasons stated below, the Court overrules plaintiff’s motion.
Prior to 2008, BancInsure1 sold directors and officers liability policies to Columbian
Financial Corporation and Columbian Bank and Trust Company (“the Bank”). In August of 2008,
the Bank was declared insolvent and the Federal Deposit Insurance Corporation was appointed
receiver (“FDIC-R”). In 2011, FDIC-R filed suit against defendants, who are directors and officers
of the Bank. Before this occurred, BancInsure filed a declaratory judgment suit in the District Court
of Johnson County, Kansas which the FDIC-R removed to this Court in February of 2012. In
February of 2013, FDIC-R and defendants settled their dispute in the 2011 case and executed a
written settlement agreement (“SA”) which resolved their case but allowed BancInsure to pursue
Plaintiff in this case is an appointed authorized receiver for Red Rock Insurance
Company, formerly known as BancInsure, Inc. Plaintiff is hereinafter designated as “BancInsure.”
its declaratory judgment action to determine coverage under its directors and officers liability policy.
The SA stipulated that if the Court found no coverage under the policy, defendants would pay
BancInsure $250,000 plus $679,340, which BancInsure had advanced to defendants for defense
costs. The SA also stipulated that, in any potential dispute regarding the agreement, the Court
retained personal jurisdiction over the parties.
In February of 2014, the Court granted BancInsure’s motion for summary judgment and
found no coverage under the policy. In April of 2014, BancInsure moved to amend the judgment
to include monetary damages for payment of defense costs. The Court denied this motion, noting
that BancInsure had not sought damages, had not timely sought summary judgment on any damages
theory and had no right to recover such damages. Defendants appealed the Court’s decision with
respect to coverage, and the Tenth Circuit Court of Appeals affirmed. The United States Supreme
Court denied certiorari in August of 2014.
In the instant action, BancInsure seeks “further necessary relief” based on the declaratory
judgment. BancInsure claims that defendants are obligated to pay litigation-related fees and costs
pursuant to the settlement agreement in the underlying action. BancInsure relies on the Declaratory
Judgment Act, 28 U.S.C. § 2202, which permits courts to order “[f]urther necessary or proper relief
based on a declaratory judgment.” 28 U.S.C. § 2202. BancInsure argues that it should be able to
enforce the SA in these proceedings and that it is necessary for the Court to award relief based on
the declaratory judgment.
Whether further relief on the declaratory judgment is necessary or proper
BancInsure seeks relief under the Declaratory Judgment Act, 28 U.S.C. § 2202. Under
Section 2202, a court may grant “[f]urther necessary or proper relief based on a declaratory
judgment or decree.” Id. BancInsure asserts that Section 2202 provides a mechanism by which it
can secure reimbursement of defense costs advanced under the policy, pursuant to its reservation
of rights. BancInsure claims that the SA establishes its rights to reimbursement. As defendants
correctly point out, however, what BancInsure actually seeks is enforcement of the SA, a wholly
separate contract. It is not seeking further relief on the declaratory judgment, but instead seeking
to enforce the SA. BancInsure’s motion then is not actually a claim for further relief on the
declaratory judgment, but a claim for breach of contract and unjust enrichment under the SA. To
pursue these claims, BancInsure must file a new action.
Whether the Court retained jurisdiction to adjudicate disputes under the SA
While defendants agreed that the District of Kansas would retain personal jurisdiction over
the parties for potential actions arising from the SA, the Court did not retain jurisdiction to
adjudicate such disputes in this declaratory judgment action. Personal jurisdiction over defendants
is not the same as the Court retaining jurisdiction over the case.
Because BancInsure has brought new and distinct causes of action, and because the Court
did not retain jurisdiction to adjudicate them, the Declaratory Judgment Act does not authorize
BancInsure to pursue its claim for further relief in this action.
IT IS THEREFORE ORDERED that plaintiff’s Motion For Further Relief Based On
Declaratory Judgment Pursuant To 28 U.S.C. § 2202 (Doc. #258) filed December 2, 2016 is
Dated this 29th day of August, 2017 at Kansas City, Kansas.
s/ Kathryn H. Vratil
KATHRYN H. VRATIL
United States District Judge
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