Bituminous Casualty Corporation v. O'Kelley
Filing
20
OPINION AND ORDER by District Judge James H. Payne: denying 12 defendant's Motion to Dismiss and Alternative Motion to Transfer (cjt, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF OKLAHOMA
BITUMINOUS CASUALTY,
CORPORATION,
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Plaintiff,
vs.
MARIAH O’KELLEY, as surviving
spouse of JERRY D. O’KELLEY,
deceased,
Defendant.
Case No. CIV-11-210-JHP
OPINION AND ORDER
Before the Court are Defendant Mariah O’Kelley’s Motion to Dismiss and Alternative
Motion to Transfer (Docket No. 12), Response of [Plaintiff] Bituminous Casualty Corporation to
Defendant’s Motion to Dismiss and Alternative Motion to Transfer (Docket No. 13), and Defendant
Mariah O’Kelley’s Reply Regarding Motion to Dismiss (Docket No. 15). For the reasons set forth
below, Defendant’s motion is DENIED.
BACKGROUND
This action arises from an oil field accident in Okfuskee County, Oklahoma, on or around
February 22, 2007, in which a workover rig owned by K & W Well Services, Inc. (K&W) fell over,
resulting in the death of Jerry O’Kelley, Defendant’s husband.1 At the time of the accident, Mr.
O’Kelley was working in the rod basket of the workover rig.2 The workover rig was insured under
1
Response of [Plaintiff] Bituminous Casualty Corporation to Defendant’s Motion to
Dismiss and Alternative Motion to Transfer and Brief in Support (Response) at 1, Docket No.
13.
2
Id. at 1-2.
a policy issued by Plaintiff Bituminous Casualty Company (Bituminous).3
On May 12, 2011, Defendant’s counsel sent a demand letter to Plaintiff claiming benefits
under any Uninsured/Underinsured Motorist (UIM) policies K&W had obtained from Bituminous.4
The demand letter included a copy of the Oklahoma Supreme Court’s decision in Ply v. National
Union Fire Insurance Co. and stated that Ply “makes clear the applicability of UIM coverage in this
type of situation.”5 On June 15, 2011, Plaintiff Bituminous denied Defendant’s claim and filed a
Complaint for Declaratory Judgment with this Court.6 It is from this Complaint that Defendant
brings the instant Motion to Dismiss and Alternative Motion to Transfer.
DISCUSSION
Defendant moves to dismiss Plaintiff’s Complaint for Declaratory Judgment citing that this
Court lacks subject matter jurisdiction.7 In the event subject matter jurisdiction exists, Defendant
then urges this Court to discretionarily dismiss Plaintiff’s Complaint.8 Should this Court find
dismissal improper, Defendant alternatively requests that this Court transfer the case to the Western
District of Oklahoma, where Plaintiff Bituminous is currently pursuing similar litigation.9
3
Defendant Mariah O’Kelley’s Motion to Dismiss and Alternative Motion to Transfer
and Brief in Support (Motion to Dismiss) at 2, Docket No. 12.
4
Response at 2, Docket No. 13.
5
Id. See also Ply, 2003 OK 97, 81 P.3d 643.
6
Motion to Dismiss at 2, Docket No. 12; Bituminous Casualty Corporation’s Complaint
for Declaratory Judgment (Complaint), Docket No. 2.
7
Motion to Dismiss at 3, Docket No. 12.
8
Id. at 7.
9
Id. at 11 (citing Bituminous Cas. Corp. v. Pollard, Case No. CV-10-379-M).
2
A. Motion to Dismiss
1. Subject Matter Jurisdiction
Defendant first claims that this Court lacks subject matter jurisdiction to hear Plaintiff’s
Complaint for Declaratory Judgment because there is no actual controversy at issue.10 “[A]
declaratory judgment plaintiff must present the court with a suit based on an ‘actual controversy,’
a requirement the Supreme Court has repeatedly equated to the Constitution's case-or-controversy
requirement.”11 “[T]he question in each case is whether the facts alleged, under all the
circumstances, show that there is a substantial controversy, between parties having adverse legal
interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”12
Defendant offers Surefoot LC v. Sure Foot Corp. in support of her contention that Plaintiff’s
Complaint presents no actual controversy for this Court to consider.13 As Defendant notes, Surefoot
hearkened back to Supreme Court formulations of the actual controversy requirement in Aetna Life
Insurance Co. v. Haworth and Maryland Casualty Co. v. Pacific Coal & Oil Co.14 Defendant fails
to mention that, in both Aetna and Maryland Casualty, the Supreme Court found a substantial
controversy warranting declaratory judgment existed when an insurance claimant’s claim had been
10
Id. at 3.
11
Surefoot LC v. Sure Foot Corp., 531 F.3d 1236, 1240 (10th Cir.2008).
12
Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed.
826 (1941).
13
Response at 4-5, Docket No. 12 (citing Surefoot LC v. Sure Foot Corp., 531 F.3d 1236,
1240 (10th Cir.2008)).
14
See Motion to Dismiss at 5, Docket No. 12. Surefoot, 531 F.3d at 1244.
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denied, but the claimant had yet to file suit against the insurer.15
In supporting its finding of an actual controversy in Surefoot, the Tenth Circuit relays the
facts of Aetna Life Insurance Co. v. Haworth:
In [Aetna] an insured repeatedly claimed coverage under certain insurance policies
for a present disability, but never brought suit against the insurer; meanwhile, the
insurer, though believing the insured was not entitled to any payment under the
policies, felt compelled to maintain a sum of money in reserve to guard against the
contingent liability posed by the insured's claims. Seeking to dispel the cloud that the
insured's claims placed over the insurer's business affairs, and unwilling to wait until
the insured finally (if ever) filed suit, the insurer sought a declaration of the insured's
rights in federal court.16
The Aetna Court ultimately found there was a substantial controversy warranting declaratory
judgment,17 and the similarity of the facts in Aetna to those in the instant case offer firm support that
Plaintiff’s Complaint demonstrates a substantial controversy warranting declaratory judgment. Here,
as in Aetna, Defendant claims coverage under an insurance policy, even citing case law that
allegedly supports the claim. Here, as in Aetna, Plaintiff insurer believes Defendant is not entitled
to payment under the policy, and here, as in Aetna, Plaintiff seeks a declaration of rights under the
policy in an effort to remove the very real and very immediate impact on its business affairs posed
by imminent litigation.
Surefoot points out that, in Aetna, multiple claims were made without suit, and that the
15
See Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 239-40, 57 S.Ct. 461, 465, 81
L.Ed. 617 (1937); Maryland Cas. Co., 312 U.S. at 274, 61 S.Ct. at 513, 85 L.Ed. 826. Note that
the Tenth Circuit in Surefoot cited Aetna and Maryland Casualty as the “heartland of declaratory
judgment cases.” See Surefoot, 531 F.3d at 1245.
16
Surefoot, 531 F.3d at 1245 (citing Aetna, 300 U.S. at 239-40, 57 S.Ct. at 461, 81 L.Ed.
17
Aetna, 300 U.S. at 243, 57 S.Ct. at 465, 81 L.Ed. 617.
617.
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company felt compelled to maintain reserve sums to guard against contingent liability.18 Here, one
claim, made through an attorney, citing case law allegedly supporting coverage, is enough to place
the Plaintiff in the same costly cloud of uncertainty, while the injured defendant decides if she will
ever file suit.19
Considering all the facts presented, the parties have taken adverse positions with respect to
their existing rights and obligations regarding the UIM policy. This has created a substantial
controversy between parties of adverse interests. Further, this Court’s reading of Aetna, Maryland
Casualty, and Surefoot, in light of the facts presented, support its finding that this substantial
controversy is of sufficient immediacy and reality to warrant the issuance of declaratory judgment.
As such, Defendant’s motion to dismiss for lack of subject matter jurisdiction is denied.
2. Discretionary Dismissal
Both the Supreme Court and the Tenth Circuit have made clear that, although the Declaratory
Judgment Act gives federal courts competence to make a declaration of party rights, it does not
impose any duty to do so.20 With this in mind, Defendant next implores this Court to employ its
18
See Surefoot, 531 F.3d at 1245 (citing Aetna, 300 U.S. at 239-40, 57 S.Ct. at 461, 81
L.Ed. 617.
19
See id. (noting that without declaratory judgment, a cloud on business exists until
insured “finally (if ever) files suit”). This Court’s reasoning should not be mistaken for an
application of a “reasonable apprehension test”, which was soundly rejected by the Supreme
Court in MedImmune Inc. v. Genentech Inc., 549 U.S. 118, 132 n.11, 127 S.Ct. 764, 774, 166
L.Ed.2d 604 (2007) (finding case law contradicts Tenth Circuit’s “reasonable apprehension of
imminent suit” test). In the instant case, the thinly veiled threat of suit contained in Defendant’s
demand letter merely provides evidence that the instant controversy is both “real” and
“immediate.”
20
State Farm Fire & Cas. Co., v. Mhoon, 31 F.3d 979, 982 (citing Public Affairs Assoc.
Inc v. Rickover, 369 U.S. 111, 112, 82 S.Ct. 580, 581, 7 L.Ed.2d 604 (1962)).
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discretion under the Declaratory Judgment Act and decline jurisdiction over Plaintiff’s Complaint.21
The Tenth Circuit has adopted an expanded list of factors to weigh when deciding whether
or not to hear a declaratory action.22 These include:
[1] whether a declaratory action would settle the controversy; [2] whether it would
serve a useful purpose in clarifying the legal relations at issue; [3] whether the
declaratory remedy is being used merely for the purpose of “procedural fencing” or
“to provide an arena for a race to res judicata ”; [4] whether use of a declaratory
action would increase friction between our federal and state courts and improperly
encroach upon state jurisdiction; and [5] whether there is an alternative remedy
which is better or more effective.23
The Court now considers each of these factors in turn.
Here, the parties disagree as to whether or not Defendant’s husband could rightfully be an
“insured” under K&W’s UIM policy.24 A declaratory judgment as to whether or not coverage existed
at the time of the accident would both settle this immediate controversy between the parties and
would clarify the legal relations at issue as the litigation moves forward. Declaratory judgment
would end uncertainty as to coverage by the Plaintiff and allow Defendant’s claims to proceed
against all appropriate parties.
Defendant makes the argument that the existence of a similar suit in the Western District of
Oklahoma filed by Plaintiff Bituminous indicates that filing in the Eastern District evidences that
Plaintiff is “forum shopping” or engaging in “procedural fencing.”25 The Court rejects this argument.
21
Response at 7, Docket No. 12.
22
Mhoon, 31 F.3d at 983
23
Id.
24
Response at 2-3, Docket No. 13.
25
Motion to Dismiss at 8, Docket No. 12.
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The existence of a similar suit for declaratory relief in the Western District, where the accident
giving rise to that suit occurred, does little to indicate to this Court that Plaintiff is forum shopping.
The accident in question here occurred in the Eastern District, thus Plaintiff’s selection of this Court
as its forum appears a natural choice. Defendant’s later admission, that Plaintiff’s Oklahoma offices,
Plaintiff’s attorneys, and a good deal of the witnesses reside in the Western District,26 further serves
to weaken Defendant’s argument that Plaintiff is “forum shopping” in Eastern Oklahoma.
Defendant’s claim that this suit would create friction between state and federal law is
similarly unsupported.27 Although the instant case concerns a question clearly of state law, the case
offered by Defendant in support of her claims of federal/state friction clearly supports an opposite
conclusion.28 Ply better demonstrates that friction between federal and state law on this issue is
minimal. In Ply, the Oklahoma Supreme Court was answering certified questions of law as certified
to it by the United States District Court for the Northern District of Oklahoma.29 The very nature of
this action, a certified question of state law from a federal court to Oklahoma’s highest judicial body,
indicates an interplay on the instant issues between federal and state jurisdictions, not friction.
Further, Oklahoma’s Revised Uniform Certification of Questions of Law Act offers an avenue for
this Court to make decisions involving evolving state law without fear of encroachment.30
26
Id. at 10-11.
27
See id. at 9.
28
Defendant cites the parties’ different interpretations of Ply v. National Union Fire
Insurance Co., as creating friction, but offers no clear reasoning to support this conclusion. See
Motion to Dismiss at 9, Docket. No. 12 (citing Ply, 2003 OK 97, 81 P.3d 643).
29
Ply, 2003 OK 97, ¶ 3 ,81 P.3d 643, 645.
30
See OKLA. STAT. SUPP. 20, §§ 1601 et. seq. (1997).
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Finally, looking for alternative remedies, this Court sees no better or more effective means
of settling this controversy. The alternative proposed by Defendant, a dismissal until she decides a
suit is proper, leaves Plaintiff contemplating possible liability to the Defendant while waiting in a
costly holding pattern as to its own rights under the policy.
Weighing all of the factors above, this Court finds that declaratory relief is the best and most
effective means of settling this coverage controversy and moving litigation forward. As such,
Defendant’s motion for discretionary dismissal is denied.
B. Motion to Transfer
As an alternative to dismissal, Defendant asks this court to transfer this case, pursuant to 28
U.S.C. § 1404(a), to the Western District of Oklahoma.31 Section 1404(a) deals with the right to
transfer an action properly filed and states, “[f]or the convenience of parties and witnesses, in the
interest of justice, a district court may transfer any civil action to any other district or division where
it might have been brought.” Although the Defendant admits the Eastern District of Oklahoma is a
proper forum for the instant action, the inquiry does not end there. Because the Defendant seeks
transfer, the Court must now examine the case under the traditional § 1404(a) factors to determine
whether the case should be transferred to a more convenient district.
A “party moving to transfer a case pursuant to § 1404(a) bears the burden of establishing that
the existing forum is inconvenient.”32 The factors to consider in determining whether to transfer a
case pursuant to § 1404(a) are:
31
Motion to Dismiss at 10, Docket No. 12.
32
Chrysler Credit Corp. v. County Chrysler, Inc., 928 F.2d 1509, 1515 (10th Cir.1991).
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(1) the plaintiff's choice of forum; (2) the accessibility of witnesses and other sources
of proof, including the availability of compulsory process to insure attendance of
witnesses; (3) the cost of making the necessary proof; (4) questions as to the
enforceability of a judgment if one is obtained; (5) relative advantages and obstacles
to a fair trial; (7) difficulties that may arise from congested dockets; (8) the
possibility of the existence of questions arising in the area of conflict of laws; (9) the
advantage of having a local court determine the questions of local law; and, (10) all
other considerations of a practical nature that make a trial easy, expeditious, and
economical.33
The Court first recognizes that the Plaintiff’s choice of forum is the Eastern District of
Oklahoma. In order to disturb this choice, Defendant must show the balance of the factors weigh
strongly in favor of transfer.34 Defendant cannot meet this standard. Although the parties and their
attorneys live in the Western District, the accident occurred in the Eastern District, and many of the
witnesses, including the investigating law enforcement personnel and the medical first responders,
reside or work in the Eastern District. There is no argument as to the availability of compulsory
process.
The actual site of the accident is in the Eastern District as well, making this district closest
to many physical sources of proof and therefore likely reducing the cost of obtaining that proof. At
a minimum, the cost of making the necessary proof will not be greater in the Eastern District.
Further, Defendant offers no argument that trial in the Eastern District will pose any unique conflicts
of law that would not be present in the Western District,35 or that there is a distinct advantage to
33
Texas Gulf Sulphur Co. v. Ritter, 371 F.2d 145, 147 (10th Cir.1967).
34
William A. Smith Contracting Co. v. Travelers Indem. Co., 467 F.2d 662, 664 (10th
Cir.1972).
35
The Court does note Defendant’s concern over inconsistent judgments arising from two
similar cases progressing in two separate districts. However, under Oklahoma law, the
interpretation of insurance contracts is done on a fact-intensive, case-by case basis, with factual
distinctions minimizing the possibility of conflicting judgments. See Wickham v. Equity Fire &
Cas. Co., 1994 OK CIV APP 148, ¶ 11, 889 P.2d 1258, 1260 (determination of policy (cont.)
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having a local court decide this issue. Finally, Defendant declines to offer argument that trial in the
Eastern District poses issues concerning judgment or enforceability, fair trial concerns, or difficulties
associated with congested dockets. After considering all of these factors and all other considerations
of a practical nature that make a trial easy, expeditious, and economical, this Court finds that transfer
of this case to the Western District of Oklahoma is not warranted.
CONCLUSION
For the reasons set forth herein, both Defendant Mariah O’Kelley’s Motion to Dismiss
and Alternative Motion to Transfer are DENIED.
IT IS SO ORDERED this 12th day of October, 2011.
(cont.) definitions a case-by case analysis considering “the circumstances of the accident, the use
of the vehicle, the relevant terms of the policy at issue, and any underlying public policy
concerns”).
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