American Empire Surplus Lines Insurance Company v. Davie Shoring, Inc.
ORDER AND REASONS granting in part, denying in part 13 MOTION to Dismiss for Failure to State a Claim; All of American Empire's claims involving the Unknown Lawsuits are DISMISSED as unripe. In all other respects, Davie Shoring's motion is DENIED. Signed by Judge Lance M Africk on 8/8/2017.(blg)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
AMERICAN EMPIRE SURPLUS LINES
DAVIE SHORING, INC.
ORDER AND REASONS
Before the Court is Davie Shoring’s motion to dismiss certain claims in the
above-captioned matter pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules
of Civil Procedure. Davie Shoring also requests that the Court stay consideration of,
or dismiss pursuant to principles of abstention, any remaining claims. American
Empire opposes the motion.
For the foregoing reasons, the Court will dismiss some of American Empire’s
claims, but it will not abstain from adjudicating the remaining claims.
This case centers on two insurance policies issued by American Empire to
Davie Shoring in the mid-2000s. 1 The first policy’s coverage period spanned from
December 30, 2005 to December 30, 2006 (“the 2005-06 policy”), 2 and the second
policy’s coverage period spanned from December 30, 2006 to December 12, 2007 (“the
2006-07 policy”). 3
See R. Doc. No. 1.
R. Doc. No. 1-1.
3 R. Doc. No. 1-2.
These policies impose duties on American Empire to defend and indemnify
Davie Shoring with respect to various types of legal claims brought against Davie
Shoring. 4 The policies include certain exclusions and exceptions. 5 The policies also
provide that Davie Shoring has no right to sue American Empire under the policies’
coverage provisions “unless all of [the policies’] terms have been fully complied with”
by Davie Shoring. 6 Those terms include notifying American Empire “as soon as
practicable of an ‘occurrence’ or an offense which may result in a claim,” as well as
fulfilling recordkeeping, notification, and cooperation requirements “[i]f a claim is
made or ‘suit’ is brought.” 7
American Empire alleges that Davie Shoring has not complied with these
terms. According to American Empire,
an unknown number of plaintiffs have filed suits against Davie Shoring
in which they seek to recover money damages to compensate them for
property damage to their real and personal property or bodily injuries
that they claim to have sustained as a result of either Davie Shoring’s
breach of its contract with the plaintiffs or its negligence. 8
American Empire contends that these plaintiffs are asserting legal claims against
Davie Shoring that fall within the policies’ coverage periods, but that Davie Shoring
has not fulfilled its obligations under the policies with respect to the suits filed on
those claims. As an example, American Empire points to one active state court case
See R. Doc. No. 1, ¶¶ 8, 26.
See, e.g., R. Doc. No. 1-1, at 28-34, 36.
6 See id., at 37; R. Doc. No. 1-2, at 33.
7 See R. Doc. No. 1-1, at 36-37; R. Doc. No. 1-2, at 32-33.
8 R. Doc. No. 1, ¶ 15.
against Davie Shoring: Amy Law v. Davie Shoring, Inc. (“Underlying Lawsuit”).9
Filed on August 20, 2007, the Underlying Lawsuit involves claims arising out of a
contract between Davie Shoring and the Underlying Lawsuit plaintiff that is dated
March 24, 2006. 10 American Empire alleges that it learned about the Underlying
Lawsuit on January 29, 2016, when the Underlying Lawsuit plaintiff served
American Empire with an amended petition for damages asserting a claim against
American Empire for the first time in that litigation. 11
American Empire now seeks a declaration that “no coverage exists for the
claims asserted against Davie Shoring” in the Underlying Lawsuit “because Davie
Shoring failed to provide timely notice of the suit and claim to American Empire.” 12
Moreover, American Empire seeks a declaration that “[t]o the extent that other
lawsuits have been filed against Davie Shoring [(“Unknown Lawsuits”)] and [Davie
Shoring] has not provided notice of those suits or claims to American Empire in
compliance with” the 2005-06 and 2006-07 policies, “no coverage is owed for those
lawsuits as a result of Davie Shoring’s failure to timely notify American Empire of
the pending suit and claims.” 13
American Empire also seeks declarations that 1) the claims asserted in the
Underlying Lawsuit and the Unknown Lawsuits do not qualify as “occurrences”
See R. Doc. No. 1-3 (petition for damages in the Underlying Lawsuit).
See R. Doc. No. 1, ¶¶ 16, 19; see also R. Doc. No. 1-5 (contract between Davie
Shoring and the Underlying Lawsuit plaintiff).
11 R. Doc. No. 1, ¶ 24.
12 Id. ¶ 29.
13 Id. ¶ 41.
under the policies; 14 2) the claims asserted in the Underlying Lawsuit and the
Unknown Lawsuits fall under the “York Work Exclusion” in the policies; 15 and 3) “no
coverage exists for claims against Davie Shoring” in the Underlying Lawsuit “because
Davie Shoring . . . fail[ed] to cooperate with American Empire in both the defense and
settlement” of the case. 16
Finally, American Empire seeks reimbursement for
“amounts it has paid to defend itself and Davie Shoring against” the Underlying
Lawsuit and the Unknown Lawsuits “as damages resulting from Davie Shoring’s
breach of [c]ontract.” 17
With respect to its present motion, Davie Shoring argues that any legal claims
arising from the Unknown Lawsuits should be dismissed as unripe 18 or, alternatively,
dismissed pursuant to Rule 12(b)(6). 19 Davie Shoring also argues that dismissal
reimbursement. 20 Finally, Davie Shoring argues that, to the extent that the Court
does not dismiss American Empire’s claims, the Court should either stay or dismiss
the case on abstention grounds. 21
Id. ¶¶ 43, 47.
Id. ¶¶ 50, 54.
16 Id. ¶ 57.
17 Id. ¶ 65.
18 See R. Doc. No. 13-1, at 4-6.
19 See id. at 6-8.
20 See id. at 8.
21 See id. at 8-12.
Davie Shoring argues that American Empire’s claims related to the Unknown
Lawsuits should be dismissed as unripe under Rule 12(b)(1).
Rule 12(b)(1) of the Federal Rules of Civil Procedure provides for the dismissal
of an action where the court finds that it does not have subject matter jurisdiction.
Where “a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the
court should consider the Rule 12(b)(1) jurisdictional attack before addressing any
attack on the merits.” Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001).
This approach “prevents a court without jurisdiction from prematurely dismissing a
case with prejudice.” Id.
“A case is properly dismissed for lack of subject matter jurisdiction when the
court lacks the statutory or constitutional power to adjudicate the case.” Home
Builders Ass’n of Miss., Inc. v. City of Madison, Miss., 143 F.3d 1006, 1010 (5th Cir.
1998). “Courts may dismiss for lack of subject matter jurisdiction on any one of three
different bases: (1) the complaint alone; (2) the complaint supplemented by
undisputed facts in the record; or (3) the complaint supplemented by undisputed facts
plus the court’s resolution of disputed facts.” Clark v. Tarrant County, 798 F.2d 736,
741 (5th Cir. 1986) (citing Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981)).
Where the defendant has questioned the court’s subject matter jurisdiction, the
plaintiff has the burden of “proving by a preponderance of the evidence that the trial
court does” possess the requisite jurisdiction to hear the case.
Weinberger, 644 F.2d 521, 523 (5th Cir. 1981).
Ripeness is an “essential component[ ] of federal subject-matter jurisdiction.”
Sample v. Morrison, 406 F.3d 310, 312 (5th Cir. 2005). “A court should dismiss a case
for lack of ‘ripeness’ when the case is abstract or hypothetical.” New Orleans Public
Serv., Inc. v. The Council of the City of New Orleans, 833 F.2d 583, 586 (5th Cir. 1987).
The primary considerations in the ripeness inquiry are “the fitness of the issues for
judicial decision and the hardship to the parties of withholding court consideration.”
“A case is generally ripe if any remaining questions are purely legal ones;
conversely, a case is not ripe if further factual development is required.” Id.
With respect to ripeness in the declaratory judgment context, “[a] declaratory
judgment action is ripe for adjudication only where an ‘actual controversy’ exists.”
Orix Credit All. Inc. v. Wolfe, 212 F.3d 891, 896 (5th Cir. 2000). Generally speaking,
an actual controversy exists where “a substantial controversy of sufficient immediacy
and reality [exists] between parties having adverse legal interests.” Id. (quoting
Middle South Energy, Inc. v. City of New Orleans, 800 F.2d 488, 490 (5th Cir. 1986))
(alteration in original).
“Whether particular facts are sufficiently immediate to
establish an actual controversy is a question that must be addressed on a case-bycase basis.” Id.
Davie Shoring contends that American Empire’s claims with respect to the
Unknown Lawsuits are unripe. 22 In Davie Shoring’s view, American Empire is
Davie Shoring does not challenge as unripe American Empire’s claims with respect
to the known Underlying Lawsuit.
attempting to “extend and repurpose the particular circumstances of [the Underlying
Lawsuit] into justification for broad declaratory relief from any and all . . . potential
claims for which coverage may or may not be available under” the 2005-06 and 200607 policies. 23
For its part, American Empire contends that its inability to affirmatively
identify the Unknown Lawsuits does not merit dismissal on ripeness grounds. To
American Empire, because these other lawsuits are “already filed in various
Louisiana courts,” its inability to identify them is “irrelevant to an analysis of
The Court concludes that American Empire’s claims against Davie Shoring
with respect to the Unknown Lawsuits are unripe. These claims lack “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 Orix Credit,
212 F.3d at 896. While American Empire states in its opposition to the present
motion that it has thus far identified “nine additional suits” filed in federal and state
courts in Louisiana that “may be at issue” in this case, 25 American Empire has not
amended its complaint to add information respecting these other lawsuits. In fact,
even in its opposition American Empire does not explain why it believes that these
lawsuits implicate the 2005-06 and 2006-07 policies.
For all the Court knows,
American Empire has simply identified cases where Davie Shoring is a party, but it
R. Doc. No. 13-1, at 5.
R. Doc. No. 16, at 11 (emphasis in original).
25 Id. at 4.
has not distinguished the cases based on their subject matter—and this seems likely,
as American Empire also acknowledges in its opposition, after pointing toward these
nine other lawsuits, that “it cannot identify specific underlying suits that are at issue”
at this time. 26
Whether any lawsuits concerning the 2005-06 and 2006-07 policies other than
the Underlying Lawsuit have even been filed against Davie Shoring is purely abstract
and hypothetical at this point in the present litigation. New Orleans Public Serv.,
833 F.2d at 586. Were the Court to do as American Empire asks, the resulting opinion
would be nothing more than “an opinion advising what the law would be upon a
hypothetical state of facts.” MedImmune, 549 U.S. at 127.
The Fifth Circuit has instructed in no uncertain terms that “a case is not ripe
if further factual development is required.” New Orleans Public Serv., 833 F.2d at
586. Suffice it to say, American Empire’s claims vis-à-vis unknown and unidentified
lawsuits requires further factual development. Cf. Orix Credit, 212 F.3d at 896
(“[U]nasserted, unthreatened, and unknown claims do not present an immediate or
real threat . . . such that declaratory relief is proper.”).
Such claims are
quintessentially unripe and so are unfit for judicial resolution.
Because the Court concludes that American Empire’s claims with respect to
the Unknown Lawsuits are unripe, the Court need not consider Davie Shoring’s
alternative argument that these claims fail under Rule 12(b)(6).
Id. at 6.
Davie Shoring also asserts that American Empire’s claim for reimbursement
of its and Davie Shoring’s defense costs associated with the known Underlying
Lawsuit fails under Rule 12(b)(6).
Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a district court
may dismiss a complaint, or any part of it, where a plaintiff has not set forth wellpleaded factual allegations that would entitle him to relief. See Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007); Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir.
A plaintiff’s factual allegations must “raise a right to relief above the
speculative level.” Twombly, 550 U.S. at 555. In other words, 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 Twombly,
550 U.S. at 570)).
A facially plausible claim is one where “the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678. If the well-pleaded factual allegations
“do not permit the court to infer more than the mere possibility of misconduct,” then
“the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to
relief.’” Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ. P. 8(a)(2)) (alteration in original).
On a Rule 12(b)(6) motion to dismiss, a court limits its review “to the complaint,
any documents attached to the complaint, and any documents attached to the motion
to dismiss that are central to the claim and referenced by the complaint.” Lone Star
Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010); see also
Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999). In assessing the complaint,
the Court must accept all well-pleaded factual allegations as true and liberally
construe all such allegations in the light most favorable to the plaintiff. Spivey, 197
F.3d at 774; Lowrey v. Tex. A&M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997). Where
“the complaint ‘on its face show[s] a bar to relief,’” then dismissal is the appropriate
course. Cutrer v. McMillan, 308 Fed. App’x. 819, 820 (5th Cir. 2009) (quoting Clark
v. Amoco Prod. Co., 794 F.2d 967, 970 (5th Cir. 1986)).
Davie Shoring argues that American Empire “identifies no basis in law or fact
that would entitle it to recover any costs of defending Davie Shoring” or itself in the
Underlying Lawsuit. 27 American Empire does not respond to this argument. 28
Louisiana law governs the construction and interpretation of the two insurance
policies at issue in this case—and as such whether a breach of the policies occurred.
See Am. Int’l Specialty Lines Ins. Co. v. Canal Indemnity Co., 352 F.3d 254, 260 (5th
Cir. 2003) (“The parties agree, and Louisiana choice of law rules dictate, that in this
action involving the interpretation of insurance policies issued in Louisiana,
Louisiana substantive law governs our decision.”). When determining Louisiana law,
the Court looks to the final decisions of the Louisiana Supreme Court. In re Katrina
Canal Breaches Liti., 495 F.3d 191, 206 (5th Cir. 2007).
R. Doc. No. 19, at 7; see also R. Doc. No. 13-1, at 8 (challenging American Empire’s
claims for damages).
28 See R. Doc. No. 16, at 11-14 (addressing only the declaratory judgment claims).
Without further amendment, the Court understands American Empire to
assert a breach of contract claim that seeks reimbursement as damages. Under
Louisiana law, “[t]he essential elements of a breach of contract claim are (1) the
obligor’s undertaking an obligation to perform, (2) the obligor failed to perform the
obligation (the breach), and (3) the failure to perform resulted in damages to the
obligee.” Favrot v. Favrot, 68 So.3d 1099, 1108-09 (La. Ct. App. 4th Cir. 2011).
Under the policies, Davie Shoring was obligated to notify American Empire
“[i]f a claim is made or ‘suit’ is brought,” as well as cooperate with American Empire
in the defense and settlement of the claim or suit. 29 American Empire contends that
Davie Shoring did not fulfill those obligations and as a result American Empire
Accepting the factual allegations in the complaint as true and
construing them in the light most favorable to American Empire, the Court concludes
that American Empire has stated a breach of contract claim against Davie Shoring.
With respect to American Empire’s remaining claims involving the Underlying
Lawsuit—which include claims for both declaratory and monetary relief—Davie
Shoring asks the Court to stay or dismiss the claims on abstention grounds.
As an initial matter, American Empire and Davie Shoring argue over the
applicable standard by which the Court should determine whether abstention is
appropriate. 30 “If the federal suit seeks only a declaration of rights, the district
See R. Doc. No. 1-1, at 36-37; R. Doc. No. 1-2, at 32-33.
See R. Doc. No. 13-1, at 8-12; R. Doc. No. 16, at 14-15.
court’s discretion to stay or dismiss the suit is governed by a standard derived from”
Brillhart v. Excess Ins. Co. of America, 316 U.S. 491 (1942). Am. Guarantee & Liab.
Ins. Co. v. Anco Insulations, Inc., 408 F.3d 248, 250 (5th Cir. 2005). Yet “[i]f the suit
involves a request for monetary or other relief, the district court’s discretion to stay
is ‘narrowly circumscribed’ by its obligation to hear cases within its jurisdiction, even
if declaratory relief is also requested, and the propriety of a stay is governed by the
‘exceptional circumstances’ standard” articulated in Colorado River Water
Conservation Dist. v. United States, 424 U.S. 800 (1976). Am. Guarantee & Liab. Ins.
Co., 408 F.3d at 250-51.
In this case, American Empire seeks both declaratory and monetary relief.
Moreover, the claim for monetary relief is not facially meritless. See Trent v. Nat’l
City Bank of Ind., 145 Fed. App’x 896, 898 (5th Cir. 2005) (“When a party seeks both
coercive and declaratory relief, we may still apply Brillhart if the request for coercive
relief is ‘frivolous.’”). Therefore, Colorado River provides the standard by which the
Court must determine whether abstention is appropriate.
The Court easily concludes that abstention is not appropriate under Colorado
River. “Colorado River discretion to stay is available only where the state and federal
proceedings are parallel—i.e., where the two suits involve the same parties and the
same issues.” Am. Guarantee & Liab. Ins. Co., 408 F.3d at 251 (emphasis added).
American Empire is not a party in the Underlying Lawsuit. 31
R. Doc. No. 1, ¶ 25; R. Doc. No. 13-1, at 2.
Underlying Lawsuit does not involve the scope of the 2005-06 and 2006-07 policies,
but rather centers on a contract between Davie Shoring and the Underlying Lawsuit
plaintiff. 32 As such, the Court lacks discretion to abstain from this case pursuant to
Further, even if Brillhart and not Colorado River provided the controlling
standard, the Court would still conclude that abstention is inappropriate.
Brillhart standard—as articulated by the Fifth Circuit in St. Paul Ins. Co. v. Trejo,
39 F.3d 585 (5th Cir. 1994)—consists of seven factors:
1) whether there is a pending state action in which all of the matters in
controversy may be fully litigated, 2) whether the plaintiff filed suit in
anticipation of a lawsuit filed by the defendant, 3) whether the plaintiff
engaged in forum shopping in bringing the suit, 4) whether possible
inequities in allowing the declaratory plaintiff to gain precedence in
time or to change forums exist, 5) whether the federal court is a
convenient forum for the parties and witnesses, and 6) whether
retaining the lawsuit in federal court would serve the purposes of
judicial economy, . . . [and 7)] whether the federal court is being called
on to construe a state judicial decree involving the same parties and
entered by the court before whom the parallel state suit between the
same parties is pending.
Trejo, 39 F.3d at 590-91. These Trejo factors hone in on “the proper allocation of
decision-making between state and federal courts,” fairness, and efficiency. The
Sherman-Williams Co. v. Holmes Cnty., 343 F.3d 383, 390 (5th Cir. 2003).
None of the Trejo factors weigh in favor of staying or dismissing the action.
The Underlying Lawsuit “does not involve the same parties” and “does not involve
R. Doc. No. 1, ¶¶ 15-16, 19-22; R. Doc. No. 13-1, at 2.
the same legal issues—the scope of [American Empire and Davie Shoring’s] insurance
policies.” Ironshore Specialty Ins. Co. v. Tractor Supply Co., 624 Fed. App’x 159, 166
(5th Cir. 2015). Moreover, there is no indication that American Empire filed suit in
expectation of Davie Shoring filing suit, that American Empire was forum shopping,
or that any inequities would result from the Court’s exercise of jurisdiction. In
addition, this Court is by all accounts a convenient forum for the parties, and concerns
of judicial economy are not implicated—after all, the pending state action does not
involve the same parties and the same issues. Finally, there is no state judicial decree
that the Court must interpret in order to resolve the issues in this case. As “[a]ll
seven of the Trejo factors weigh against dismissal,” abstention is also unwarranted
under Brillhart. Id. at 169.
IT IS ORDERED that Davie Shoring’s motion is GRANTED IN PART and
DENIED IN PART.
All of American Empire’s claims involving the Unknown
Lawsuits are DISMISSED as unripe. In all other respects, Davie Shoring’s motion
New Orleans, Louisiana, August 8, 2017.
LANCE M. AFRICK
UNITED STATES DISTRICT JUDGE
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