Evanston Insurance Co v. T S R Inc et al

Filing 30

MEMORANDUM RULING re 10 Motion to Dismiss for Lack of Jurisdiction filed by Edward Gill, Darla Gill 12 Motion to Dismiss Complaint/ Motion to Stay Case/Motion to Transfer Case filed by T S R Inc, 16 Motion to Stay and 16 Motion to Dismiss Complaint for Declaratory Judgment filed by Marilyn Bedgood, Ocie Drury, Daniel Bedgood, Larry Drury. Signed by Judge James T Trimble, Jr on 12/21/2009. (crt,Leleux, M)

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IN ALEXANDRIA, LA. RECE1V~D DEC 2 1 Z009 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA MONROE DIVISION TONY R. CLERK BY--~-~5~uTT EVANStON INSURANCE CO. VERSUS TSR, INC. d/b/a OL' MAN TREESTANDS, EDWA1W GILL, individually and as administrator of the estate of minor child, HARLEY GILL, DARLA GILL, individually, DANIEL BEDGOOD and MA1ULYN BEDGOOD, and LARRY DRURY and OCII~DRURY CIVIL ACTION NO. 09-642 JUDGE TRIMBLE MAGISTRATE JUDGE KIRK MEMORANDUM RULING Before the court are three (3) motions to dismiss, transfer or stay filed by defendants Edward and Darh~ ill,' TSR, Inc. ("TSR"),2 Daniel and Marilyn Bedgood and Larry and Ocie Drurey.3 For G the reasotis expressed below, the court finds that these motions should be DENIED as to all requested reliefs. I. BACKGROUND A Relevant Facts Plaintiff Evanston Insurance Company ("Evanston") issued a general liability insurance `R. 10. 2R 12. 3R. 16. 1 policy4 t~ SR, effective March 24, 2008 to March 24, 2009 with a retroactive date of May 24, T 2006.~ TSR is a designer and manufacturer of treestands sold as "Ol'Man Treestands" and used primarily by hunters.6 The policy contains a Prior Recall Exclusion Endorsement which excludes from coverage any claim based upon or arising out of the past product recall involving disfunction of the locking pins in the treestands for products sold from August 2006 through January 2007.~ Eyanston asserts that this endorsement was included in the policy after TSR disclosed that, prior to applying for coverage, it issued a voluntary recall of certain locking pins used in its treestand~.8Daniel Bedgood, Marilyn Bedgood, Larry Drurey and Ocie Drurey filed suit against TSR in Nøvember 2008 in this federal district court ("Bedgood suit") and their claims are currently pending before the undersigned.9 The Bedgood suit alleges that sole defendant TSR, as designer and manufacti~~rer the treestands at issue, is liable for injuries sustained by Larry Drurey and Daniel of Bedgood allegedly caused by malfunctioning locking pins under the Louisiana Products Liability Act ("LPLA"). 4Pplicy No. SP-835988 [R. 18 at p. 2]. A copy of the policy is attached as "Exhibit A" to TSR's mdtion at R. 12-4. 5R~.12-4 at p. 9. 6~plicatiofl or insurance [R. 12-4 at pp. 3 8-40]. f 7Epdorsement No. 4 [R. 12-4 at p. 15]. 8The parties have not disclosed the specific details of the recall as ofthe date of issuance of this ruling, but the court does not find these details necessary for determination of the issues now beforie us. 9C~viAction No. 08-1726. l 2 Edward and Dana Gill filed suit against the seller ofthe treestand and TSR in the Thirtieth Judicial ~istrict Court for the Parish of Vernon, Louisiana ("Gill suit"), asserting similar claims based on injuries allegedly caused by defective locking pins in a TSR treestand.'° Evanston is not a named 4efendant in either of these products liability cases. T$R made a claim on the Evanston policy for defense and indemnity as to these and other products liability suits filed in Alabama and Mississippi federal courts. Evanston is now providing defense tc~ SR under a reservation ofrights letter based on the Prior Recall Exclusion Endorsement T and has miw instituted three declaratory actions: one in Alabama, one in Mississippi and the one now before this court. Evanston asks this court to determine its obligations regarding defense and indemnity to TSR under the general liability policy at issue. The Gills, Bedgoods and TSR have each filed motions asking the court to dismiss Evanston's declarator~action. We examine them below. ' B. Applicable Standard The Declaratory Judgment Act" provides, in part, that, subject to certain exceptions, Any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such'2 `°~uNo. 79751. A copy of the complaint is attached as "Exhibit A" to the Gills' motion it to dismiss~{R.10]. "2~8 .S.C. U 12~ §~201 2202. 2 - at § 2201(a). 3 Thus, whether or not to grant declaratory relief lies within the "unique and substantial discretion" ofthe district court.'3 The court's discretion, while broad, is not infinite.'4 As such, the court ab4ses its discretion "unless [it] addresses and balances the purposes of the Declaratory Judgment Act and the factors relevant to the abstention doctrine on the record."15 Specifically, the court mu~consider the following factors: t (1) whether there is a pending state action in which all of the matters in controversy might be fully litigated.; whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant; whether the plaintiff engaged in forum shopping in bringing the suit; whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exists; whether the federal court is a convenient forum for the parties and witnesses; whether retaining the lawsuit would serve the purposes ofjudicial economy; and 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.'6 (2) (3) (4) (5) (6) (7) A~he party advocating federal jurisdiction, Evanston bears the burden of proof as to these t `3Wiltonv. Seven Falls Co., 515 U.S. 277, 286 (1995). `4Travelers Ins. Co. v. Louisiana Farm Bureau Federation. Inc., 996 F.2d 774, 778 Cir. 1993). lSJ~_; ( th 5 Rowan Companies. Inc. v. Griffin, 876 F.2d 26 ( th 5 Cir. 1989). `61~rillhart . Excess Ins. Co. of America, 316 U.S. 491 (1942); St. Paul Ins. Co. v. Trejo, v 39 F.3d 5$5 (5th Cir. 1994). 4 elements.17 II. ANALYSIS A~ The Gill Motion18 D~fendantsEdward Gill'9 and Darla Gill ("Gills") filed a motion, now before this court, urging th~ ourt to dismiss or, alternatively, transfer or stay Evanston's declaratory relief action on c the basis that complete diversity does not exist as among the parties. The Gills point out that their suit, filed in the Thirtieth Judicial District Court, names James McKee d/b/a Star Gun, Archery and Computer ("Star Gun"), as a defendant and that, because Star Gun is a Louisiana business and the Gills are L~ouisianaesidents, Evanston's action belongs in state court.2° r As pointed out by Evanston's opposition brief~,21these defendants appear to misapprehend the nature~oEvanston's requested relief. Evanston names the Gills and TSR as defendants, but does f not include Star Gun. The Gills appear to argue that Star Gun has been excluded from the list of defendants to Evanston's declaratory action in order to manufacture diversity jurisdiction.22 W~ ind the Gills' argument to be without merit. Star Gun is not a plaintiff against TSR in f any known products liability action. As such, Star Gun is not a potential plaintiff as to Evanston pursuant to the Louisiana Direct Action Statute, which authorizes an injured party to assert claims `71~amming . United States, 281 F.3d 158 v 18~ (sth Cir. 2001). 10. `9I~dividually nd as administrator of estate of minor child Harley Gill. a 2O~ loatp. 1. 21R 14. 22~ 10 at pp. 1-2. 5 directly against a tortfeasor's insurer if, j~~r ~ the accident occurred in Louisiana.23 Thus, the court sen$es no ill motive in Evanston's exclusion of Star Gun from the instant suit. Moreover, were we to find that Star Gun is an indispensable party for purposes of adjudicating declaratory relief, its inclusion ~ould not destroy diversity. Evanston is an Illinois corporation. Neither Star Gun, nor any named defendant is domiciled in Illinois such as would destroy complete diversity jurisdiction.24 The Gill motion alternatively requests that Evanston's declaratoryjudgment action be stayed pending adjudication of the Gill suit now pending in Louisiana's Thirtieth Judicial District Court. The court does not find, non has the Gill motion asserted, any compelling reason for the issuance of a stay in these proceedings and finds, instead, that a timely answer to the question ofwhether or not TSR has the right to defense and indemnity from Evanston in the Gill and Bedgood suits best serves judicial e~onomy. The court also finds that transfer of Evanston's suit for declaratory relief is inappropriate, given that Evanston's motive is to determine its obligations not only to TSR, but also to the Gills, Bedgoods~ nd Drureys, who each possess the right of direct action under Louisiana law. The Gill a motion faiis to demonstrate that ajudgment by the Alabama court would prevent future direct action by these iijdividual plaintiffs. Moreover, while the motion asserts the inconvenience of this federal forum, it rails to offer any facts in support of the same. The court notes that the Gills reside in Vernon Parish, a reasonably short distance from Monroe, Louisiana. This argument is without merit. 23La. R.S. 22:1269. 24 $tate Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523 (1967) (diversityjurisdiction encompas~es ases in which any two adverse parties are not citizens of the same state); c Strawbrid~e . Curtiss, 7 U.S. 267 (1806) (complete diversity exists where no plaintiff and v defendant are citizens of the same state). 6 F~rhese reasons, the court finds that the Gill motion should be denied. t R. The TSR Motion25 TSR's motion asserts that dismissal of Evanston's declaratory action is appropriate because the Alabama state court, in which TSR filed its first declaratory action, will address the issue of Evanston~'s bligations under the insurance policy.26 TSR further asserts that this district court is an o inconvenient forum for TSR, given its location in Florida.27 Finally, TSR asserts that Evanston has engaged in impermissible forum shopping which should be discouraged by dismissal.28 In the alternative, TSR requests a stay ofthese proceedings until such time as the Alabama court has ruled on Evanston's first declaratory action or a transfer of this case to either the U.S. District Court for the Soutl*rn District of Alabama or the U.S. District Court for the Northern District ofFlorida.29 These arguments require that we weigh the seven (7) factors discussed above. First, we consider, as argued by TSR, whether or not there is a pending state court action in which all the matters a~ssue will be fully litigated. In assessing this first factor, a court should consider "the i scope of the pending state court proceeding and the nature of defenses open there," as well as "whether necessary parties have been joined, [and] whether such parties are amenable to process in that proceeding... "30 25~ 12. 26~12-1 atp. 2. ~ 27TSR is a Florida corporation with its principle place of business in Jay, Florida. 28R 12-2 at p. 3. 29~ _atp4 30I~rillhart316 U.S. 491, 495 (1942). , 7 E~vanston enies that the Alabama court can adjudicate the coverage issue as to the Louisiana d defendants, as they are not parties to the Alabama declaratory action and that court would likely not have persbnal jurisdiction over them.3' Evanston also points out that, given the availability ofdirect action by~the ouisiana defendants under Louisiana law, a coverage adjudication by the Alabama L court woald not foreclose the possibility of future direct actions against it by these defendants.32 Having reviewed Evanston's Alabama state court complaint, it is clear that the relief sought in that fir~declaratory action is identical to that sought in this forum. An adjudication of the extent t of Evanstpn's obligations under the policy at issue would likely require the application of Florida insurance~ nd contract law. In this way, the claims are no different. However, as pointed out by a Evanston, none of the individual defendants to this action are parties to the pending Alabama state court suit ~tndthere is no evidence before this court which would support a finding that the Alabama state coui~tpossesses requisite jurisdiction over the Gills, Bedgoods and Drureys such that a judgment by that court would foreclose future direct action against Evanston by these individual plaintiffs. In this way, we find that the pending Alabama suit will not fully adjudicate all matters in controver~y.33 Evanston admits that it filed this declaratory action in anticipation of future direct action by the Gills, Bedgoods and Drureys. TSR asserts that this factor weighs in favor of dismissal. The court disagrees. Given the availability of direct action against it, Evanston's suit fits the purpose of 31~ 18 atp. 5. 32a 33~rillhart,316 U.S. at 495 (1942); Sherwin-Williams Co. 383 (5t~~ k. 2003). C 8 v. Holmes County, 343 F.3d the Declaratory Judgment Act: to offer an opportunity for relief to a party threatened with liability without r~quiringhat an action be instituted against that party as a prerequisite for relief.34 t We similarly reject TSR's assertion that Evanston engaged in forum shopping when it filed three declaratory judgment actions in three separate courts. As discussed above, any adjudication ofEvanstbn' s obligations under the policy must be applicable to potential direct action claimants and it appears that Evanston filed a direct action in each jurisdiction where suits against TSR were already pending. Thus, in the court's view, the existing products liability claims against TSR created a reasonable basis for these declaratory filings. TSR has not demonstrated any inequities which would arise from allowing Evanston's anticipatory suit to proceed. Likewise, we find no evidence that this court is an inconvenient forum. Although~ SR is located in Florida, we do not find that, as a designer and manufacturer of goods T sold in LØuisiana, it has demonstrated that the burden attendant to answering Evanston's suit is undue. The court also finds, as above, that allowing this declaratory action to proceed in this court best serves judicial economy when compared with the three (3) potential direct actions which may name Evanston as a defendant, were its obligations under the policy still in question.35 Finally, the court notes that it is not being called upon to construe a state court decree issued in the parallel state court proceeding. Evanston's suit asks for interpretation of a policy ofinsurance under app~icable lorida law. No suit is pending in a Florida court and, thus, no court among the F 34$herwin-Williams Co. v. Holmes County, 343 F.3d 383, 391 (5t~Cir. 2003); Rowan ~ Compani~sInc. v. Griffin, 876 F.2d 26, 28 (5t1~Cir. 1989) (quoting Government Employees Ins. , Co. v. Le~leu, 72 F.Supp. 421, 427 (E.D.La. 1967)). 2 9 Louisiar~j, ississippi and Alabama courts currently engaged is more or less able than this court to M apply Fldrida law on the merits of Evanston's claims. A~ccordinglyt,he court finds that the evidence does not suggest dismissal. We find, instead, that plaintiff's choice of forum is logical given the pending products liability actions against TSR in Louisi~tna ourts and the jurisdictional ramifications of any potential judgment by the Alabama c Circuit Cpurt. T$R's motion will be denied. C+ Bedgood Motion36 The third motion before the court was filed jointly by the Bedgood and Drurey defendants37 and request, as those before it, dismissal or, alternatively, a stay of these proceedings. The arguments made in the Bedgood motion are identical to those advanced by TSR. Accordingly, for the reasoi~s ssigned above, the Bedgood motion will be denied. a III. CØNCLUSION W~ietheor not to exercise jurisdiction over a declaratory action is a matter lying within the r court's discretion. Having considered the seven (7) factors required by applicable jurisprudence, the court finds that no evidence before us weighs in favor of dismissal. The unique facts and circumstances ofthe pendingproducts liability claims in this court and the Thirtieth Judicial District Court in Vernon Parish create a reasonable basis for the filing of this second declaratory action in 36R. 16. 37The court notes that the Bedgoods are residents of Madison Parish, Louisiana and the Drureys are residents of West Carroll Parish, Louisiana. Given the proximity of these defendants to this coi~rtwe find, as with the other defendants, that this court is an adequately convenient , forum. Additionally, we find no evidence that the Alabama state court or the Mississippi federal court wouid be more convenient for these defendants. 10 addition to the first-filed action in the Alabama Circuit Court. We find no cause why Evanston should b~ orced to defend as many as three (3) potential suits against it under Louisiana's Direct f Action statute when this single declaratory action will suffice to resolve the parameters of its obligations under the insurance policy issued to TSR. Such a result favors piecemeal litigation of claims aiid is adverse to judicial economy. Additionally, we do not find that this forum creates an undue bu~den r conveys an unreasonable advantage to Evanston. o Given these findings, the court will issue an order denying all three motions to dismiss, stay or transfer in their entirety. Alexanthia, Louisiana December 2 ( , 2009 ______________________________________ AMES T. TRIMBLE, JR. UNI D STATES DISTRICT JUDGE 11

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