Arch Insurance Company v. Tanner et al
Filing
100
MEMORANDUM OPINION AND ORDER granting 36 Motion to Dismiss for Lack of Jurisdiction. Eagle Oil & Gas Co.'s and Tony Reasoner's Amended Cross-Claim 36 is dismissed from this action. Signed by District Judge Keith Starrett on 7/2/12 (scp)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
HATTIESBURG DIVISION
ARCH INSURANCE COMPANY
VERSUS
PLAINTIFF
CIVIL ACTION NO. 2:11cv179KS-MTP
EDWARD JACK TANNER, TERESA DIANE TANNER,
CONSERVATOR OF THE PERSON AND ESTATE OF
EDWARD JACK TANNER, TERESA DIANE TANNER,
INDIVIDUALLY, EAGLE OIL & GAS CO., TONY REASONER,
B & B OIL WELL SERVICE COMPANY AND V.A. SAULS, INC.
DEFENDANTS
AND
EAGLE OIL & GAS CO. AND TONY
REASONER
COUNTER/CROSS/THIRD-PARTY PLAINTIFFS
VERSUS
ARCH INSURANCE COMPANY
B & B OIL WELL SERVICE COMPANY
V.A. SAULS, INC.
TRAVELERS INDEMNITY COMPANY
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA, AND
AMERICAN INTERSTATE INSURANCE COMPANY
COUNTER-DEFENDANT
CROSS-DEFENDANT
CROSS-DEFENDANT
THIRD-PARTY DEFENDANT
THIRD-PARTY DEFENDANT
THIRD-PARTY DEFENDANT
MEMORANDUM OPINION AND ORDER
This matter is before the court on a Motion to Dismiss Eagle Oil & Gas Co.’s and
Tony Reasoner’s Amended Cross-Claim [#36], filed on behalf of V.A. Sauls, Inc. The
court, having reviewed the motion, the response, the briefs of counsel, the pleadings
and exhibits on file, and being otherwise fully advised in the premises, finds that the
motion is well taken and should be granted. The court specifically finds as follows:
BACKGROUND
Arch Insurance Company (“Arch”) filed its Amended Complaint for Declaratory
Judgment on October 6, 2011. In its Amended Complaint, Arch seeks a declaration that
(a) “Arch does not have any defense or indemnity obligations under the Arch Policy to
Tony Reasoner;” (b) “Arch does not have any indemnity obligations under the Arch
Policy to Edward Jack Tanner or the Estate of Edward Jack Tanner, or Teresa Diane
Tanner;” and (c) “Arch does not have any indemnity obligations under the Arch Policy
on behalf of Tony Reasoner, V.A. Sauls or Eagle” with respect to claims made in a
lawsuit filed in the Circuit Court of Jasper County by the Tanners in February 2011.
Arch’s suit “aris[es] out of its issuance to B & B, an insurance policy bearing policy
number HOPKG0023800, with a policy period of December 1, 2009 to December 1,
2010.”
On November 14, 2011, Eagle Oil & Gas Co. (“Eagle”) and Tony Reasoner
(“Reasoner”) (collectively “Eagle”) filed an Amended Cross-claim against V. A. Sauls,
Inc. (“Sauls”). In the cross-claim, Eagle seeks a declaration that (a) “there is no Master
Service Contract between Eagle and Sauls,” and, accordingly, (b) “Eagle does not have
any duty to defend and indemnify Sauls in Tanners’ underlying personal injury action.”
Eagle’s cross-claim thus arises out of a Master Service Contract between Eagle and
Sauls, or the denial that such an agreement exists.
Eagle argues that if this court was to determine that Eagle and Sauls agreed to
terms found in the Master Service Contract, then, it (Eagle) reserves “all other potential
defenses, including, but without being limited to, those potential defenses which exist
under the Statute of Frauds, the Texas Civil Practice and Remedies Code, the Texas
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Oilfield Anti-Indemnification Act, and Mississippi’s Anti-Indemnification Statute.”
However, previously to Eagle’s cross-claim being asserted herein, on July 28, 2011,
Sauls filed a cross-claim against Eagle in the Circuit Court of Jasper County, Mississippi
on the exact same issues presented in Eagle’s cross-claim filed herein.
In arguing for the dismissal of that cross-claim, Sauls takes two positions. It first
contends that the cross-claim fails to satisfy the prerequisites of Fed.R.Civ.P. 13(g),
since it does not, according to Sauls, arise “out of the transaction or occurrence that is
the subject matter of the original action or of a counterclaim . . ..” Sauls also maintains
that Eagle’s cross-claim against it creates an appropriate basis for abstention, and that
the court should thus exercise its discretion to abstain from considering Eagle’s
cross-claim against Sauls. Finding that the cross-claim fails to satisfy the requirements
of Rule 13(g), the court will not address the abstention issue.
LAW AND ANALYSIS
Sauls has filed its motion pursuant to Federal Rule of Civil Procedure 12(b)(1),
Federal Rule of Civil Procedure 13(g) and 28 U.S.C. § 2201(a). A Rule 12(b)(1) motion
attacks the court’s jurisdiction to hear and to decide any issues in the case and
therefore the court must address that at any time during the pendency of the litigation
that is asserted or even indeed upon its own motion. See Williamson v. Tucker, 645 F.
2d 404 (5th Cir. 1981). It is well settled that on a 12(b)(1) motion the court may go
outside the pleadings and consider additional facts, whether contested or not and may
even resolve issues of contested facts. Rule 13(g) requires that a cross-claim arise “out
of the transaction or occurrence that is the subject matter of the original action.”
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It is generally held that cross-claims fall within the ancillary jurisdiction of a court,
thus, independent jurisdictional grounds need not be asserted. See Consolo v. Fed.
Maritime Comm'n, 383 U.S. 607, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966); Childress v.
Cook, 245 F.2d 798 (5th Cir. 1957). Ancillary (now supplemental) jurisdiction is a limited
exception to the general rule that the jurisdiction of federal courts derives only from the
Constitution (or from the statutes). Werneth v. Cook, 487 F.Supp. 144, 146 (D. C. Miss.
1979). While Federal courts have used various tests to determine whether a crossclaim meets the jurisdictional test, “it is clear that the cross-claim must be so closely
related to the original claim that justice requires it to be heard in the same action.”
Werneth at 146. The Fifth Circuit has stated:
a claim has a logical relationship to the original claim if it arises out of the
same aggregate of operative facts as an original claim in two senses: (1)
that the same aggregate of operative facts serves as a basis of both
claims; or (2) that the aggregate core of facts upon which the original
claim rests actuates additional legal rights in a party defendant that would
otherwise remain dormant.
Amco Const. Co. v. Mississippi State Bldg. Commission, 602 F.2d 730, 733 (5th Cir.
1979) (citing Revere Copper & Brass, Inc. v. Aetna Casualty & Surety Co., 426 F.2d
709, 715 (5th Cir. 1970)).
Eagle argues that the test or standard set forth above and cited and relied upon
by Sauls is correct, but that Sauls misapplies it. It is beyond purview that under that
standard, a cross-claim satisfies the applicable test and creates a basis for ancillary
jurisdiction if “the same operative facts serve as the basis of both claims or the
aggregate core of facts upon which the claim rests activates additional legal rights,
otherwise dormant, in the defendants.” Plant v. Blazer Financial Services, Inc., 598
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F.2d 1357, 1361 (5th Cir. 1979).
Thus, Eagle argues that in this case, a logical relationship plainly exists between
Eagle’s cross-claim against Sauls and the original action, as well as between that
cross-claim and Eagle’s counter-claim against Arch, because all of the claims in this
proceeding relate to, and ultimately arise from, the occurrence of Mr. Tanner’s alleged
injuries, damages, and losses.
However, Sauls correctly argues that Arch’s claim arises from an insurance
policy it issued to B&B while Eagle’s cross-claim arises from a Master Service Contract
(or lack thereof as alleged by Eagle) between Eagle and Sauls. Thus, Sauls contends
that these two claims arise from completely separate contracts between completely
separate parties. The court agrees with Sauls’ analysis of the case based on the
analysis of the varied claims as follows.
Through this action, Arch seeks a declaration regarding its defense or indemnity
obligations under the Arch Policy. Eagle seeks a declaration that “there is no Master
Service Contract between Eagle and Sauls,” and, “Eagle does not have any duty to
defend and indemnify Sauls in the Tanners’ underlying personal injury action.” It is
clear that these two claims involve completely unrelated analysis: Arch’s claim requiring
a legal analysis of duties under an insurance contract, and Eagle’s cross-claim first
requiring a factual analysis as to whether a contract exists, then, a legal analysis of
duties under a Master Service Contract, both issues being litigated in the previously
filed state court litigation.
The remedy sought by Arch has nothing to do with whether a Master Service
Contract was entered into by Eagle and Sauls. Arch makes no reference to a Master
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Service Contract between Eagle and Sauls in its Amended Complaint. Whether a
Master Service Contract exists between Eagle and Sauls bears no consequence to
Arch’s requested relief. Eagle’s cross-claim simply has no connection to Arch’s claims.
Eagle’s cross-claim does not arise from the same transaction; does not comprise
an integral part of the main claim; and could not be determined without a substantially
distinct effort at fact-finding. See Amco, 602 F.2d at 733. As was true of the dismissed
cross-claim in Amco, it is not “necessary to decide the proposed cross claim to protect
the integrity of the original claim or to insure that the disposition of the original claim
would not have been frustrated.” Id. Eagle’s cross-claim “stands apart; it is a cause of
action wholly independent and separate.” Id.
IT IS THEREFORE ORDERED AND ADJUDGED that the Motion to Dismiss
Eagle Oil & Gas Co.’s and Tony Reasoner’s Amended Cross-Claim [#36] filed on behalf
of V.A. Sauls, Inc. is granted and that cross-claim is dismissed from this action.
SO ORDERED AND ADJUDGED this the 2nd day of July, 2012.
s/ Keith Starrett
UNITED STATES DISTRICT JUDGE
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