The Cincinnati Specialty Underwriters Insurance Company v. Solaris Power Services, LLC et al

Filing 34

ORDER denying 20 motion to dismiss case; denying 21 motion to dismiss party. Signed on 6/4/15 by District Judge Ortrie D. Smith. (Wolfe, Steve)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
THE CINCINNATI SPECIALTY
UNDERWRITERS INSURANCE
COMPANY,
Plaintiff,
vs.
SOLARIS POWER SERVICES, LLC,
GLEN SIMONS, KEVIN JOHNSON
and ANITA JOHNSON,
Defendants.

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Case No. 15-0056-CV-W-ODS

ORDER AND OPINION DENYING DEFENDANTS’ MOTIONS
TO DISMISS OR TO STAY
Pending are two separate motions to dismiss or to stay the case. Both motions
(Doc. # 20 and Doc. # 21) are denied.

I. BACKGROUND

In November 2013 Kevin and Anita Johnson filed suit against Solaris Power
Services and Glen Simons in Jackson County Circuit Court. The suit arose out of
injuries Kevin suffered while performing maintenance on electrical equipment at the
General Motors Fairfax Assembly Plant in Kansas City, Kansas. The Johnsons’ suit
alleges Solaris was an electrical contractor responsible for insuring the equipment that
Kevin was servicing had been turned off and de-energized. Simons was Solaris’s agent
at the time. The state court suit alleges Solaris and Simons were negligent in a variety
of respects.
Plaintiff in this case – Cincinnati Specialty Underwriters Insurance Company, or
“CSU” – issued a Commercial General Liability (“CGL”) policy to Solaris. CSU alleges
that Solaris and Simons have sought “coverage” under the policy, that it is defending
Solaris and Simons under a reservation of rights, and that it owes no duty to defend or

indemnify. Amended Complaint, ¶¶ 12, 35-36. CSU asks the Court to declare the
parties’ rights and obligations and declare that the CGL policy “do[es] not provide
coverage, including a defense or indemnification, to Simons and/or Solaris, for the
liability asserted against them in the underlying lawsuit . . . .” Amended Complaint,
page 16.
The Johnsons have filed a motion to dismiss or to stay. Solaris and Simons have
filed their own motion seeking the same relief.

II. DISCUSSION

A.

Defendants have intimated CSU is forum shopping, and present this insinuation
as both a reason to dismiss and a reason to award them costs. The Court rejects the
insinuation.
CSU filed this suit in Michigan state court, choosing that forum because Solaris is
a Michigan limited liability company. CSU voluntarily dismissed the suit; it says it
dismissed the suit because the individual defendants (the Johnsons and Simons)
contested personal jurisdiction. The Court credits this explanation because (1)
Defendants do not deny it and (2) it seems plausible in light of subsequent events.
CSU tried again, this time in federal district court in Kansas. The Johnsons and
Simons filed motions to dismiss, contending they were not subject to personal
jurisdiction, and their motions were granted. CSU then voluntarily dismissed the suit as
to Solaris.
To suggest CSU is “forum shopping” (as Defendants have) is an inappropriate
use of the term. The Court finds nothing particularly untoward in what CSU has done,
and is far more bothered by Defendants’ insinuations that CSU has engaged in
condemnable conduct. The Court further declares that it is not inclined to exercise its
discretion under Rule 41(d) to order CSU to pay costs of the prior actions over and
above any costs that have been imposed by the judges in the prior actions.

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Defendants also contend CSU could have filed this suit in state court. True, but
this could be said of practically any suit filed in federal court, and of every suit
predicated on state law claims. The Court declines to attach negative meaning to
CSU’s decision to sue in federal court and not state court.

B.

Defendants contend the Court should exercise its discretion to dismiss the case
because it seeks a declaratory judgment. Ordinarily, courts have a “virtually unflagging
obligation” to entertain cases within their jurisdiction. Colorado River Water
Conservation Dist. v. United States, 424 U.S. 800, 817 (1976). A case seeking only a
declaratory judgment provides federal courts with some discretion to dismiss, e.g.,
Wilton v. Seven Falls Co., 515 U.S. 277 (1955); Brillhart v. Excess Ins. Co., 316 U.S.
491 (1942), but that discretion is not as limitless and standardless as Defendants
suggest. In fact, Brillhart and Wilton apply in full force only if there is a parallel state
court proceeding. Royal Indemnity Co. v. Apex Oil Co., 511 F.3d 788, 793 (8th Cir.
2008); Scottsdale Ins. Co. v. Detco Indus., Inc., 426 F.3d 994, 998-99 (8th Cir. 2005).1
Here, there is no parallel proceeding in state court. A parallel suit is one
involving substantially the same parties litigating substantially the same issues. CSU is
not a party to the state court suit, and the state suit presents only the issue of Solaris’s
and Simons’s liability to the Johnsons and does not present any issue regarding CSU’s
duties to defend or indemnify or provide an opportunity to interpret the insurance policy.
Contrary to Defendants’ suggestion, CSU cannot intervene in the state suit to interject
these issues, e.g., Griffits v. Campbell, 426 S.W.3d 684, 688 (Mo. Ct. App. 2014) (and
cases cited therein) – and even if CSU could intervene it has not, and the fact remains
that the state suit is not parallel.
Scottsdale Ins. dictates consideration of several factors to guide when a federal
court should abstain from resolving a declaratory judgment action when parallel
proceedings are absent:
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Moreover, even when there are parallel proceedings the preferred course is to
stay the federal action, not dismiss it. Royal Indemnity Co., 511 F.3d at 797.
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1. Whether the federal suit will serve a useful purpose in clarifying and
settling legal relations,
2. Whether the federal suit will terminate and afford relief from uncertainty,
3. The strength of the state interest in having the issue decided in state
court,
4. Whether the issue can be more efficiently resolved in the state court,
5. Whether there will be unnecessary entanglement between the suits, and
6. Whether the declaratory judgment action is used for procedural fencing.
426 F.3d at 998. Here, the federal action will serve at least one purpose that cannot be
served in the state-court action: ascertaining CSU’s obligation to continue defending
Solaris and Simons, thereby resolving uncertainty surrounding that issue. Indeed,
CSU’s obligation to defend is not, cannot be, and never will be raised in the tort suit, so
there is no state interest to consider much less defer to. This observation also
demonstrates there is no risk of entanglement with the state court proceedings because
the issue will not be raised in state court, and this Court’s resolution of the issue will not
require examination of the underlying facts giving rise to the tort claims. “The duty to
defend is determined by comparing the language of the insurance policy with the
allegations in the complaint. If the complaint merely alleges facts that give rise to a
claim potentially within the policy’s coverage, the insurer has a duty to defend.”
Interstate Bakers Corp. v. OneBeacon Ins. Co., 686 F.3d 539, 542 (8th Cir. 2012)
(quotation omitted). The absence of an opportunity for CSU to resolve its defense
obligations in the state court suit and the clear distinction between the issues presented
in the two cases issues dictate that the Court should, at a minimum, allow this claim to
proceed.
CSU's duty to indemnify also is not raised in the underlying suit, although it could
be raised in some future garnishment action if (1) the Johnsons prevail in the underlying
tort suit and (2) CSU declines to indemnify. It could also be raised in a separate
declaratory judgment suit filed by Defendants in state court (which they have threatened
to file).2 Regardless of what might happen in the future, there is presently no suit
2

The Court expresses no opinion as to whether it would stay or dismiss this suit if
Defendants file a declaratory judgment action in state court. A lot might depend on
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permitting CSU to resolve its indemnification obligation. Nonetheless, the Court has
other concerns that relate to issues of efficient judicial administration. "The duty to
indemnify is determined by the facts as they are finally determined by some other
means, for example through summary judgment or settlement" and can only be
ascertained after the underlying suit against the insured is resolved. McCormack Baron
Mgt.Servs., Inc., v. American Guarantee & Liability Ins., 989 S.W.2d 168, 173-74 (Mo.
1999) (en banc).3 CSU’s claims regarding its duty to indemnify are deemed ripe for
determination despite the uncertainty of the existence, much less the basis, of Solaris’s
and Simons’s liability. E.g., Scottsdale Ins. Co. v. Universal Crop Protectional Alliance,
LLC, 620 F.3d 926, 934 (8th Cir. 2010). Nonetheless, the Court retains discretion to
stay or defer consideration of CSU’s claims regarding its duty to indemnify until the state
court proceedings are completed and thereby provide the information McCormack
Baron indicates is necessary to resolve those issues. However, the Court does not
know enough about the underlying state suit (and in particular its progress) to ascertain
whether a stay on this issue would be appropriate, and the case must proceed in any
event to allow resolution of CSU’s obligation to defend. The wisdom of staying the case
can be revisited, if necessary, once the issues surrounding CSU’s obligation to defend
are resolved.

whether the Court believes any such case constitutes “procedural fencing,” how much
progress has occurred in this case and whether CSU removes any such suit to federal
court based on diversity of citizenship.
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The duty to defend is broader than the duty to indemnify, and depends on the
existence of potential liability. E.g., Penn-Star Ins. Co. v. Grifffey, 306 S.W.3d 591, 59697 (Mo. Ct. App. 2010); King v. Continental W. Ins. Co., 123 S.W.3d 259, 264 (Mo. Ct.
App. 2003). Because the duty to defend is broader than the duty to indemnify, a
determination that CSU owes no duty to defend would be tantamount to a determination
that it also owes no duty to indemnify.
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III. CONCLUSION

The motions to dismiss or to stay are denied.
IT IS SO ORDERED.

/s/ Ortrie D. Smith
ORTRIE D. SMITH, SENIOR JUDGE
UNITED STATES DISTRICT COURT

DATE: June 4, 2015

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