Great American E & S Insurance Company

Filing 29

ORDER granting 15 Motion to Dismiss. Signed by Chief Judge Terrence W. Boyle on 11/15/2018. (Stouch, L.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:18-CV-113-BO

GREAT AMERICAN E&S INSURANCE )
COMPANY,
)
)
Plaintiff,
)
)
v.
)
)
BUTTERBALL, LLC,
)
)
Defendant.
)

ORDER

This cause comes before the Court on defendant's motion to dismiss or, in the alternative,
to transfer this action to the United States District Court for the Western District of Missouri.
Plaintiff has responded, defendant has replied, and a hearing was held 'on the matter before the
undersigned on November 7, 2018, at Raleigh, North Carolina. In this posture, the matter is ripe
for ruling 'and, for the reasons that follow, this action is dismissed.
BACKGROUND
Plaintiff, Great American, instituted this action by filing a complaint in this Court on March .
26, 2018, seeking a declaratory judgment pursuant to 28 U.S.C. § 2201. Specifically, Great
American seeks a declaration that its Policy of Insurance No. PEL 2628947 04 provides no
coverage to defendant, Butterball, for an environmental pollution claim. [DE 3]. Great American
has continuously insured Butterball since 2008 and the policy at issue provided premises
environmental liability insurance to Butterball. The complaint alleges that on or about May 5,
2015, Butterball became aware of unknown liquids leaking from unmarked tanks, overflowing
containment areas, and other potential environmental issues at its 530 North Main Street, Carthage,

Missouri site.

Butterball has spent approximately $3,000,000.00 on remediation costs and

anticipates additional cleanup costs of approximately $500,000.00.
The. complaint further alleges that the 530 North Main Street location is not a covered
location under the policy, that the claim is not covered because it was not reported to Great
American as soon as practicable, that Great American has been and continues to be prejudiced by
the prolonged and unexcused delay in notice, and that Butterball has incurred expenses in violation
of the policy.

Great American alleges that for these independent and sufficient reasons a

declaration that the policy at issue provides no coverage to Butterball is appropriate. Great
American's complaint seeking a declaratory judgment was filed prior to its denial of Butterball's
claim for coverage. [DE 20] Franken Deel. ifif 6,7.
On July 18, 2018, Butterball initiated a civil action against Great American in Jasper
County, Missouri Circuit Court seeking a declaratory judgment that the policy at issue here
provides coverage, and additionally alleging claims for breach of contract and vexatious refusal to
pay under Missouri law. Se,e [DE 21-12];.see also Butterball v. Great Am. E&S Ins. Co., No. 3:18CV-5074-BP (W.D.Mo. Aug. 16, 2018). Great American removed that action to the United States
District Court for the Western District of Missouri, and shortly thereafter filed a motion to transfer
the Missouri action to this Court, which remains pending. Id at [DE 11] (W.D.Mo. Aug. 24,
2018). Butterball filed the instant motion to dismiss or transfer on September 17, 2015.
DISCUSSION
A district court may upon the filing of an appropriate pleading "declare the rights and other
legal relations of any interested party seeking such declaration, whether or not further relief is or
could be sought." 28 U.S.C. § 2201(a). However, a district court may in its discretion decline to
exercise jurisdiction over a declaratory judgment action, as no mandatory obligation to declare the

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litigant's rights is imposed by the Declaratory Judgment Act. Aetna Cas. & Sur. Co. v. Ind-Com

Elec. Co., 139 F.3d 419, 421 (4th Cir. 1998). A court's discretion in declining to exercise
jurisdiction over a declaratory judgment action is not unfettered, and it may only do so for good
reason. Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 324 (4th Cir. 1937).
Guiding a court's discretion in determining whether to exercise jurisdiction over a
declaratory judgment action is whether "the judgment will serve a useful purpose in clarifying and
settling the legal relations in issue," and whether "it will terminate and afford relief from the
uncertainty, insecurity, and controversy giving rise to the proceeding." Id at 325. Declaratory
judgment actions should not be used to "to try a controversy by piecemeal, or to try particular
issues without settling the entire controversy, or to interfere with an action which has already been
instituted." Id Declaratory judgment actions should also not be used "as a tool to strengthen a
negotiation position or to preempt claimant's choice of forum."

Dunn Computer Corp. v.

Loudcloud, Inc., 133 F.Supp. 2d 823, 829-30 (E.D. Va. 2001).
As is required to exercise jurisdiction under the Declaratory Judgment Act, the Court has
determined that it has jurisdiction over the parties and that an actual controversy of sufficient
immediacy has been presented. Volvo Const. Equip. N Am., Inc., v. CLM Equip. Co., Inc., 386
F.3d 581, 592 (4th Cir. 2004). The Court has further determined, however, that it is appropriate
to decline to exercise such jurisdiction in this instance.
Although courts in this circuit generally follow the first-filed rule to afford a presumption
of priority to an action which is filed first, Learning Network, Inc. v. Discovery Comm., Inc., 11 F.
App'x 297, 300 (4th Cir. 2001); Nutrition & Fitness, Inc. v. Blue Stuff, Inc., 264 F. Supp. 2d 357,
360 (W.D.N.C. 2003), courts will decline to apply the first-filed rule where special circumstances
exist. See Remington Arms Co. v. Alliant Techsystems, Inc., No. 1:03CV1051, 2004 WL 444574,

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at *3 (M.D.N.C. Feb. 25, 2004). Here, Great American's suit was filed prior to its denial of
Butterball's claim and in "apparent anticipation of a suit in another forum." Yoder v. Heinold

Commodities, Inc., 630 F. Supp. 756, 760 (E.D. Va. 1986). It is therefore appropriate to decline
to apply the first-filed rule in this instance.
In the absence of any priority to Great American's choice of forum, the Court is aware of
no circumstance which would prevent the parties from enjoying a full and adequate forum in the
W estem District of Missouri, within which they may seek adjudication of all claims arising out of
their dispute. See Selective Ins. Co. ofAm. v. Dail, No. 4:14-CV-00103-F, 2015 WL 5330109, at
*2 (E.D.N.C. Sept. 11, 2015) (noting that pendency of another federal action involving the same
parties and issues is an important factor to be considered). Continuing to exercise jurisdiction here
would thus serve no useful purpose, and this matter is properly dismissed.
CONCLUSION
For the foregoing reasons, the Court in its discretion declines to exercise jurisdiction over
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this action. Defendant's motion to dismiss [DE 15] is GRANTED. The clerk is directed to close
the case.

SO ORDERED, this }.§'day ofNovember, 2018.

T RRENCE W. BOYLE
CHIEF UNITED STATES DISTRICT

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