Hudson Specialty Insurance Company v. Talex Enterprises, LLC et al

Filing 61

ORDER denying 10 Motion to Dismiss filed by Board of Mayor and Selectmen of McComb, Mississippi. Signed by Honorable David C. Bramlette, III on March 8, 2018 (JBR)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
HUDSON SPECIALTY INSURANCE COMPANY
V.

PLAINTIFF
CAUSE NO. 5:17-CV-137-DCB-MTP

TALEX ENTERPRISES, LLC,
JUBILEE PERFORMING ARTS CENTER, INC.,
TERRANCE L. ALEXANDER, and the
BOARD OF MAYOR AND SELECTMEN
OF MCCOMB, MISSISSIPPI, et al.

DEFENDANTS

ORDER AND OPINION
Before the Court is a Motion to Dismiss [Doc. 10] filed by
Defendant Board of Mayor and Selectmen of McComb, Mississippi (the
“City”).
Background
A downtown McComb building collapsed because too much water
gathered on its roof. This declaratory judgment action asks whether
two insurance policies that might otherwise cover damage caused by
the collapse are void due to an insured’s misrepresentations to
his insurer, Hudson Specialty Insurance Company (“Hudson”).1

The Court assumes familiarity with this dispute and incorporates the
facts it stated in its Order and Opinion dated February 8, 2018. See Doc. 52.
1

The City —— citing no authority —— asks the Court to decline
jurisdiction

and

dismiss

this

declaratory

action

because

it

duplicates another action pending in Pike County Circuit Court.2
In that

action, the City

sued

Hudson and its insureds,

alleging the negligence of both caused the building’s collapse.
The coverage and policy-validity issues raised here were not raised
there.
I
The Declaratory Judgment Act gives the Court discretion to
declare the rights of litigants. 28 U.S.C. § 2201(a). But before
it decides whether it should exercise that discretion, the Court
must find two things: that this case is justiciable and that the
Court may grant the declaratory relief Hudson requests. Orix Credit
Alliance, Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000). The
Court so finds here.
This suit presents a live dispute between Hudson and the City.
One party supports coverage, the other opposes it. The case is
therefore justiciable. See Maryland Cas. Co. v. Pacific Coal & Oil
Co., 312 U.S. 270, 273 (1941).

2 The City’s Motion to Dismiss consists of five paragraphs it placed at
the beginning of its Answer. See Doc. 10. The Motion is not accompanied by a
memorandum of supporting authority. See Id.

2

The Court also finds that it has authority to rescind Hudson’s
insurance policies and to declare Hudson’s obligations under those
policies —— the relief Hudson seeks in this suit. See Massachusetts
Mut. Life. Ins. Co. v. Nicholson, 775 F. Supp. 954, 962 (N.D. Miss.
1991).
Next, the Court considers the more involved question. Should
the Court exercise its discretion to decide this declaratory
action? The answer depends on seven factors:
1)

Pendency of a state-court action in which all
of the disputed issues may be litigated;

2)

Whether

Hudson

filed

this

action

in

anticipation of a declaratory action by the
Defendants;
3)

Whether Hudson “forum shopped” in filing this
action;

4)

Inequities

in

allowing

Hudson

to

change

forums;
5)

Convenience of forum in this Court;

6)

Whether retaining jurisdiction of this action
advances judicial economy; and

3

7)

Whether the Court is asked to construe a state
judicial decree involving the same parties.3

The first factor is neutral. Although a suit is pending in
Pike County Circuit Court, it involves fewer parties than, and
different issues from, this suit.4 And the crux of the state-court
suit is the liability of Hudson’s insureds; coverage questions
have not yet been raised —— at least not directly. That is not to
say that coverage and policy-validity issues cannot be litigated
in the state-court suit. They can. But the pendency of that action,
particularly where coverage and policy-validity are not raised,
does not require the Court to decline to decide this suit. See
Northfield Ins. Co. v. Adams, 158 F.3d 584, 1998 WL 648601, at *3
(5th Cir. 1998) (per curiam).
The second factor supports the Court’s exercise of discretion
to decide this case. Hudson filed this suit on November 13, 2017,
about three months after the City sued Hudson and its insureds in
Pike County Chancery Court. [Doc. 1-4]. Hudson brought this suit

Sherwin-Williams Co. v. Holmes Cty., 343 F.3d 383, 388 (5th Cir.
2003). These considerations are sometimes called the Trejo factors, and
were identified in St. Paul Ins. Co. v. Trejo, 39 F.3d 585 (5th Cir.
1994). They address three concerns —— federalism, fairness, and
efficiency. See Sherwin-Williams Co., 343 F.3d at 390-91.
3

4 The only parties to the state-court action are the City, five John Doe
defendants, Hudson, and Hudson’s insureds —— Talex Enterprises, LLC and Terrance
Alexander. See Doc. 1-5. By contrast, the parties in this suit are the City,
Hudson, Hudson’s insureds, and a group of 18 persons, natural and juridical,
who may sue Hudson’s insureds for damage caused by the collapse. See Doc. 13.

4

in response to —— not in anticipation of —— the City’s state-court
suit.
The third factor, like the second, supports the Court’s
exercise of discretion to decide this case. Simply filing a
declaratory

action

in

federal

court

is

not

an

act

of

forum

shopping. See AXA Re Property & Cas. Ins. Co. v. Day, 162 Fed.
App’x 316, 321 (5th Cir. 2006) (per curiam). The City does not
offer, and the Court is unaware of, any facts suggesting this suit
was filed for improper or abusive purposes. See Sherwin Williams
Co., 343 F.3d at 400.
The fourth factor also supports the Court’s exercise of
discretion to decide this case. The coverage and policy-validity
issues Hudson raises here have not been raised in the state-court
suit. So deciding those issues in this suit will not allow Hudson
to “inequitably gain precedence in time,” nor to effect a change
in forum for the declaratory relief it seeks. See AXA, 162 F.
App’x. at 321.
The fifth factor is neutral. Litigating this suit in this
Court is perhaps less convenient for the Defendants than litigating
it in Pike County Circuit Court. But asking the Defendants to
travel 70 miles to this Court is hardly burdensome, much less

5

“vexatious.”5 See Sherwin Williams Co., 343 F.3d at 400. In any
event,

the

City’s

distance-from-the-courthouse

argument

is

unpersuasive: the Court participates in electronic filing via
CM/ECF.
The sixth factor supports the Court’s exercise of discretion
to decide this case. Neither coverage nor policy-validity is being
litigated in the state-court suit, so resolving those issues in
this

streamlined

declaratory

action

should

advance

judicial

economy, not undermine it.6
The

seventh

and

final

factor

also

supports

the

Court’s

exercise of discretion to decide this case. The Court is not asked
to “construe a state judicial decree” involving the same parties.
Sherwin-Williams Co., 343 F.3d at 388.
Having considered the seven factors, and the purposes of the
Declaratory Judgment Act, the Court concludes that it should
exercise its discretion to decide this suit.
The merits of the motion resolved, the Court next addresses
its form.

The Court uses this distance because the City represents in its Motion
to Dismiss that “[a]ll of the numerous parties listed in the Complaint reside
approximately 70 miles from this Court.” See Doc. 10, p. 2.
5

6 This action will not require the Court to consider novel questions of
Mississippi law, only settled questions as to the effect of an insured’s
misrepresentation in an insurance policy application. See Prudential Ins. Co.
of America v. Russell’s Estate, 274 So. 2d 113, 116 (Miss. 1973).

6

II
Rules govern filings submitted with this Court.7 Two are
relevant here: a motion must be filed separately from an answer,
and a motion must be accompanied by a supporting memorandum,
including citations to authority. L.U.CIV.R. 7(b)(2)(A), 7(b)(4).
The City’s Motion to Dismiss violates both rules. Moving
forward, if the City wants the Court to consider a motion, it must
file the motion and a memorandum of supporting authority as
separate docket entries.
Accordingly,
IT IS HEREBY ORDERED

that

Defendant Board of Mayor and

Selectmen of McComb, Mississippi’s Motion to Dismiss [Doc. 10] is
DENIED.
SO ORDERED, this the 8th day of March, 2018.

/s/ David Bramlette_________
UNITED STATES DISTRICT JUDGE

7 See Local Uniform Civil Rules of the United States District Courts for
the
Northern
and
Southern
Districts
of
Mississippi,
available
at
http://www.mssd.uscourts.gov/sites/mssd/files/2017MASTERCOPYCivil.pdf

7