Cooper Industries, LLC v. Toastmaster Inc. et al

Filing 81

MEMORANDUM AND ORDER (See Full Order) IT IS HEREBY ORDERED that defendant Wausau's motion to dismiss 64 pursuant to Fed. R. Civ. P. (b)(1) is granted, and Spectrum's counterclaim against Wausau is dismissed. Signed by District Judge Catherine D. Perry on 3/22/17. (EAB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
NORTHERN DIVISION
COOPER INDUSTRIES, LLC,
Plaintiff,
vs.
SPECTRUM BRANDS, INC.,
Defendant/Counter Plaintiff,
vs.
COOPER INDUSTRIES, LLC, et al.,
Counter Defendants.

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Case No. 2:16 CV 39 CDP

MEMORANDUM AND ORDER
This matter is before me on Wausau’s motion to dismiss Spectrum’s first
amended counterclaim for declaratory relief. I previously granted Wausau’s first
motion to dismiss without prejudice to Spectrum’s right to file an amended
counterclaim, and will not restate the underlying factual and procedural
background of this case or the legal standards governing the motion to dismiss.
In its amended counterclaim, Spectrum seeks a declaration under the
Declaratory Judgment Act, 28 U.S.C. § 2201, that insurer Wausau owes insurance
benefits to its insured Cooper for environmental liabilities arising out of the Asset
Purchase Agreement. Having carefully reviewed the first amended counterclaim in

light of the relevant standards, I conclude that Spectrum lacks standing to seek a
declaration about the rights and obligations owed under an insurance contract to
which it is not a party or third-party beneficiary. Spectrum is not a party to the
insurance contract between Wausau and Cooper and has no judgment against
Cooper. Spectrum did not solve the deficiencies of its counterclaim against
Wausau by converting its breach of contract claim into one for declaratory relief,
as the Declaratory Judgment Act does not create an independent basis for federal
subject-matter jurisdiction. Victor Foods, Inc. v. Crossroads Economic Dev. of St.
Charles County, Inc., 977 F.2d 1224, 1227 (8th Cir. 1992). “The Declaratory
Judgment Act does not extend the jurisdiction of the federal courts[;] it only
enlarges the range of remedies available.” Midland Farms, LLC v. United States
Department of Agriculture, 35 F. Supp. 3d 1056, 1065-66 (D.S.D. 2014) (internal
quotation marks and citations omitted). Federal district courts can grant
declaratory relief under the Declaratory Judgment Act in “a case of actual
controversy within its jurisdiction.” 28 U.S.C. § 2201. “Therefore, an independent
source of jurisdiction, such as diversity or federal question jurisdiction, must exist
before a federal court can order declaratory relief.” Midland Farms, 35 F. Supp.
3d at 1066.
To state a claim against Wausau under the Declaratory Judgment Act,
Spectrum must meet the “case or controversy” requirements of article III of the
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Constitution and also have “standing to sue under the relevant state law.” Wolfe v.
Gilmour Mfg. Co., 143 F.3d 1122, 1126 (8th Cir. 1998) (citing Metropolitan
Express Services, Inc. v. City of Kansas City, 23 F.3d 1367, 1369–70 (8th
Cir.1994)). Wausau contends that Missouri law governs its insurance obligations
to Cooper. Spectrum argues only that Missouri courts “may” apply Illinois law,
but it does not dispute that Illinois law is the same as Missouri law on this issue.
Assuming, without deciding, that Spectrum has Article III standing, the dispositive
issue is whether Spectrum has standing under state law to assert a counterclaim
against Wausau seeking a declaration that Wausau owes a duty to defend and
indemnify Cooper for environmental liabilities Spectrum is asserting against
Cooper when Spectrum has not yet obtained a judgment against Cooper. See
Wolfe, 143 F.3d at 1126; Radha Geismann, M.D., P.C. v. American Economy Ins.
Co., 2013 WL 5312714, at *2 (E.D. Mo. Sept. 20, 2013). It does not.
“Under Missouri law, a party has standing to obtain a declaration of rights,
status, and legal relationship under a contract only if it is a party to the contract or
a third party beneficiary thereof.” Nationwide Mutual Ins. Co. v. Harris Medical
Associates, LLC, 2013 WL 5532691, at *4 (E.D. Mo. Oct. 7, 2013). There is no
dispute here that Spectrum is neither a party to, nor a third party beneficiary of, any
insurance contracts between Cooper and Wausau. As such, it lacks standing to
pursue its counterclaim against Wausau under Missouri law. See id. at *5.
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Applying Illinois law would not change the result here. See Adams v. Employers
Ins. Co. of Wausau, 49 N.E.3d 924, 928 (Ill. Ct. App. 2016). For the foregoing
reasons, I will grant Wausau’s motion to dismiss Cooper’s counterclaim under Fed.
R. Civ. P. 12(b)(1) for lack of standing.
Spectrum remains free to pursue its claims against Cooper under various
provisions of the Asset Purchase Agreement, and Wausau remains involved in this
case as it is providing a defense to Cooper. Despite the dismissal of Spectrum’s
counterclaim against Wausau, I expect Wausau and all parties to continue their
mediation efforts in good faith.
Accordingly,
IT IS HEREBY ORDERED that defendant Wausau’s motion to dismiss
[64] pursuant to Fed. R. Civ. P. (b)(1) is granted, and Spectrum’s counterclaim
against Wausau is dismissed.

CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE

Dated this 22nd day of March, 2017.

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