Essex Insurance Company v. Sheppard & Sons Construction Inc et al
Filing
202
ORDER granting 149 Motion for Summary Judgment. Signed by Honorable Timothy D. DeGiusti on 7/13/2015. (cla)
I N THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
ESSEX INSURANCE COMPANY,
Plaintiff,
v.
SHEPPARD & SONS
CONSTRUCTION, INC., et al.,
Defendants.
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Case No. CIV-12-1022-D
ORDER
Before the Court is the Motion for Summary Judgment of Defendant C&D Dozer Services,
L.L.C. (C&D Dozer) [Doc. No. 149]. Plaintiff Essex Insurance Company (Essex) has responded
[Doc. No. 159] and C&D Dozer has replied [Doc. No. 166]. The matter is fully briefed and ready
for decision.
I.
Introduction
Essex brought this declaratory judgment action seeking a declaration that it has no duty to
defend or indemnify its insured, Defendant Sheppard & Sons Construction, Inc. (Sheppard), under
the terms of certain commercial general liability insurance policies. Insurance coverage is at issue
as a result of the alleged negligent construction of a dental facility (the Dental Facility) owned by
Defendants Dr. Gabe D. Nabors and The Dental Lodge (collectively, the Dental Defendants). After
the commencement of this action, Sheppard was sued in Oklahoma state court by the Dental
Defendants as a result of the alleged negligent construction. Sheppard acted as the general contractor
and provided services and materials for construction of the Dental Facility. Defendant C&D Dozer
is a subcontractor and performed work as part of the construction of the Dental Facility. C&D Dozer
is also sued by the Dental Defendants in the state court action as are additional parties who provided
work in the course of the construction of the Dental Facility. As pertinent to the discussion below,
Sheppard and C&D are alleged to be joint tortfeasors, both contributing to the negligent construction
of the Dental Facility.
C&D Dozer moves for summary judgment on a jurisdictional question – whether there is an
actual case or controversy between Essex and C&D Dozer sufficient to warrant issuance of a
declaratory judgment. Defendants Bituminous Casualty Corporation (Bituminous) and First Mercury
Insurance Company (Mercury), did not separately move for summary judgment. However, in
responding to the motion for summary judgment of Essex, see Responses [Doc. Nos. 131, 134],
these defendants contend, like C&D Dozer, that no justiciable controversy exists. Essex filed a reply
[Doc. No. 142] and fully addressed the arguments raised by Mercury and Bituminous, raising
essentially the same arguments as those made with respect to C&D Dozer. See, e.g., Essex’s Reply
at p. 6 (“At the very least, the rights that Sheppard and C&D have against each other as codefendants in the state court action gives rise to a sufficient controversy between Essex and
Bituminous, their insurers.”). Therefore, the Court addresses the actual case or controversy issue as
to all three Defendants in this Order.1
Because Defendants C&D Dozer, Bituminous and Mercury seek dismissal on grounds that
no actual case or controversy exists, the Court finds the motion for summary judgment is more
1
Moreover, the Court has “an independent obligation to determine whether subject-matter
jurisdiction exists” and may raise the issue sua sponte at any time. 1mage Software, Inc. v. Reynolds
& Reynolds Co., 459 F.3d 1044, 1048 (10th Cir. 2006); see also Kitchen v. Herbert, 755 F.3d 1193,
1201 (10th Cir.) (addressing existence of Article III case or controversy sua sponte), cert. denied,
– U.S. –, 135 S.Ct. 265 (2014). And, “[a]n action for declaratory relief, like any other action, must
still satisfy the case or controversy requirement.” Roe v. Aegis No. 13-cv-03040-KMT, 2014 WL
4746721 at * 8 (D. Colo. Sept. 24, 2014) (unpublished op.) (citing Medtronic, Inc. v. Mirowski
Family Ventures, LLC, – U.S. – , 134 S.Ct. 843, 848 (2014)).
2
properly treated as a motion pursuant to Fed. R. Civ. P. 12(b)(1). See, e.g., Goodman v. United
States, 185 Fed. Appx. 725, 727 (10th Cir. 2006) (“Subject matter jurisdiction is appropriately dealt
with by means of a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1), and we will
treat the district court’s summary judgment ruling as if it were a ruling on a 12(b)(1) motion.”).2
II.
Discussion
Federal courts are limited by Article III of the United States Constitution to hearing only
“cases” or “controversies.” U.S. Const. Art. III, § 2. This is a “bedrock requirement.” Valley Forge
Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 471
(1982) Indeed, “‘[n]o principle is more fundamental to the judiciary’s proper role in our system of
government than the constitutional limitation of federal-court jurisdiction to actual cases or
controversies.’” Raines v. Byrd, 521 U.S. 811, 818 (1997) (quoting Simon v. Eastern Kentucky
Welfare Rights Org., 426 U.S. 26, 37 (1976)).
The Declaratory Judgment Act provides “[i]n a case of actual controversy within its
jurisdiction . . . any court of the United States . . . may 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. The Act, therefore, recognizes the constitutional limitation that federal courts only
have jurisdiction over “cases” and “controversies.” Aetna Life Ins. Co. of Hartford, Conn. v.
Haworth, 300 U.S. 277, 240 (1937).
2
An exception to this rule exists where resolution of the jurisdictional question is intertwined
with the merits of the case. See Holt v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995). In such
circumstances, resolution of the jurisdictional question requires resolution of an aspect of the
substantive claim and requires the court to convert a motion to dismiss into a motion for summary
judgment. See id., see also Pringle v. United States, 208 F.3d 1220, 1223 (10th Cir. 2000). Here,
the Court need not consider the motion as a motion for summary judgment because the jurisdictional
question does not require resolution of any aspect of the substantive claims.
3
The party seeking the declaration bears the burden of establishing the existence of an actual
case or controversy. Cardinal Chem. v. Morton Int’l, Inc., 508 U.S. 83, 95 (1967). To determine
whether a case or controversy exists, the court must determine “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.”
Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941).
Even where the case or controversy requirement is satisfied, whether the power to issue a
declaration of rights should be exercised is a matter within the sound discretion of the district court.
St. Paul Fire and Marine Ins. Co. v. Runyon, 53 F.3d 1167, 1168 (10th Cir. 1995). Factors the court
may consider include: (i) whether the declaratory judgment action would resolve the controversy;
(ii) whether the action would serve a useful purpose in clarifying legal relations between the parties;
(iii) whether the action is being used for “procedural fencing” or a “race to res judicata”; (iv) whether
entertaining the action would increase friction between state and federal courts and improperly
encroach upon state jurisdiction; and, (v) whether a better or more effective remedy is available. Id.
at 1169. Where a concurrent proceeding in state court encompasses the same controversy, “the
federal court is not required to refuse jurisdiction” but it should not entertain the action “if the same
fact-dependent issues are likely to be decided in another pending proceeding.” Id. at 1170 (citations
omitted).
C&D Dozer contends there is no actual case or controversy on the following grounds: (1)
under governing Oklahoma law, C&D Dozer cannot sue Essex directly for any claim of indemnity
or contribution and “C&D’s insurer would have the right to seek contribution from the joint
tortfeasor, not from the joint tortfeasor’s insurer;” (2) Oklahoma law governing joint and several
4
liability “obviate[s] the need to seek indemnity or contribution from an entity named on the verdict
form” as each defendant in the state court action “will be allocated a percentage of responsibility on
the jury verdict form;” and (3) no contractual right of indemnity exists between C&D Dozer and
Sheppard. See Motion at pp. 8, 9, 10. C&D Dozer further claims that Essex is impermissibly using
this federal forum to litigate the state court action. C&D Dozer contends the Court has no subject
matter jurisdiction to do so because the parties to the state court action are non-diverse. See id. at
pp. 10-11. C&D Dozer’s primary concern is that “this Court will make Findings of Fact to which
C&D will be bound in the State Court Action” and that such findings “should not be the result of a
‘Declaratory Judgment’ concerning insurance coverage.” See id. at p. 11.
Bituminous similarly contends no adverse legal interest of sufficient immediacy exists
between it and Essex. And, like C&D Dozer, Bituminous relies on the fact that Oklahoma is not a
“direct action” state. Mercury adopts the arguments of Bituminous.
In response, Essex urges the Court to apply the law of the case doctrine and adhere to
previous rulings the Court has made finding this declaratory judgment action is proper and that the
actual case or controversy requirement is satisfied. See Response at pp. 4-8. Alternatively, Essex
states that sufficient adverse interests exist between it and C&D Dozer and relies on Maryland Cas.
Co. for the proposition that if C&D Dozer recovers a judgment against Sheppard under any
contribution or indemnity theory, the fact that C&D Dozer could in turn seek payment under Essex’s
policies gives rise to a sufficient justiciable controversy. See id. at pp. 8-9. According to Essex, the
fact that joint and several liability may exist under Oklahoma law further supports its position
because such liability could create issues involving contribution and indemnity that “in turn, would
require determinations of insurance coverage.” Id. at p. 11. Finally, Essex contends the coverage
5
issues before this Court could impact “the flow of the underlying litigation” including the prospect
for settlement and, therefore, there is a sufficient case or controversy. See id at pp. 11-12. Essex
alleges that Bituminous and Mercury may make subrogation claims against Sheppard, and
consequently, Essex, for benefits that may be due under C&D Dozer’s policies.3 On this basis, Essex
contends an actual case or controversy exists as against all three Defendants.
A.
The Court’s Prior Justiciability Ruling
The Court previously denied the Dental Defendants’ motion seeking dismissal of this action
on grounds of lack of a justiciable controversy. See Order [Doc. No. 92]. The Court stated in its
Order the following regarding sources of insurance coverage:
In addition to its insurance policy with Essex, Sheppard had [a] builder’s risk
insurance policy issued by Zurich and effective during the time period in which the
dental facility was constructed. Defendant C&D had liability and excess liability
policies issued by Defendants Bituminous Insurance Company (“Bituminous”) and
First Mercury Insurance Company (“Mercury”), and these were effective during the
time period in which the dental facility was constructed.
See Order at p. 2. In a subsequent Order [Doc. No. 98] the Court denied as moot a motion of Zurich
to the extent “some of its arguments are similar to those asserted in the motion to dismiss filed by
[the Dental Defendants] and denied by the Court in its September 9, 2013 Order [Doc. No. 92].”4
The record reflects that Zurich then filed a Notice [Doc. No. 122] disclaiming any interest in the right
to seek indemnification and/or contribution from Essex with respect to any benefits Zurich may have
3
See Essex’s Reply [Doc. No. 142] at p. 5 (“Bituminous could stand to pay a judgment
entered against its insured, C&D. Any judgment so rendered and paid could be used by Bituminous,
subrogated to the rights of C&D, to seek contribution from Essex.”).
4
The Court did not make any express jurisdictional ruling as to Zurich, but deemed the
motion of Zurich “moot” “to the extent that the arguments are the same” as those raised by the
Dental Defendants. See Order [Doc. No. 98] at 1 (emphasis added). Moreover, both Zurich and
Essex insured the same party, Sheppard.
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to pay as a result of the state court litigation. Zurich was subsequently dismissed from this action.
See Order [Doc. No. 124].
At the time the Court entered its order on September 9, 2013, the Dental Defendants alleged
“no lawsuit ha[d] been filed by another party seeking recovery from Sheppard.” See Order [Doc. No.
92] at p. 2.5 On that basis, the Dental Defendants contended no justiciable controversy existed.
The Court rejected this argument. See id. at p. 5 citing Columbian Financial Corp. v.
BancInsure, Inc., 650 F.3d 1372, 1377 (10th Cir. 2011). As stated in the Court’s Order, the fact that
the Dental Defendants had presented a claim to Sheppard related to damages to the Dental Facility,
even though no lawsuit had yet been filed, was sufficient to establish a controversy “involving the
scope of coverage under the insurance policy.” Id.
B.
Law of the Case Doctrine
Essex maintains that the issue currently before the Court has been previously addressed and
decided in the Court’s September 9, 2013 Order. Therefore, Essex seeks application of the law of
the case doctrine.
As an initial matter, Essex’s request for application of the law of the case doctrine is
misplaced as the Court’s prior order is interlocutory in nature. See Stewart v. Beach, 701 F.3d 1322,
1329 (10th Cir. 2012) (addressing law of the case doctrine and noting that district courts “generally
remain free to reconsider their earlier interlocutory orders”).6 Moreover, the Court addressed a
5
The state court action was not filed until September 30, 2013.
6
In Dobbs v. Anthem Blue Cross and Blue Shield, 600 F.3d 1275, 1279-80 (10th Cir. 2010),
a case cited by Essex, the Court applied the law of the case to a finding made in a prior appeal that
had become final. Similarly, in Wilmer v. Board of County Commrs. of Leavenworth County, 69
F.3d 406, 409 (10th Cir. 1995) the Court recognized that “[l]aw of the case principles do not bar a
(continued...)
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different issue when ruling on the Dental Defendant’s motion to dismiss, i.e., whether a justiciable
controversy existed as between Essex and the Dental Defendants. Cf Stewart, 701 F.3d at 1328 n.
6 (noting that when urging application of law of the case doctrine, appellant failed to draw a
distinction between two defendants, one of whom was not a party to the case at the time the district
judge ruled on the issue alleged to be governed by the doctrine). The current motion filed by C&D
Dozer, conversely, raises the issue of the Court’s subject matter jurisdiction over claims brought
against it – an issue neither explicitly or implicitly addressed in the Court’s prior Order. See Wilmer
v. Board of County Commr’s. of Leavenworth County, 69 F.3d 406, 410 (10th Cir. 1995)
(consideration of jurisdictional issue previously raised by dissent but not ruled on by majority was
not barred by law of the case doctrine “[b]ecause only matters actually decided, explicitly or
implicitly, become law of the case”).
The justiciable controversy issue is distinct as to the respective defendants. The Dental
Defendants are allegedly injured third-parties, and, therefore, established Tenth Circuit precedent
supports the conclusion that a justiciable controversy exists as between Essex and the Dental
Defendants. See, e.g., Franklin Life Ins. Co. v. Johnson, 157 F.2d 653, 658 (10th Cir. 1946) (“In
declaratory actions brought to determine coverage under insurance policies issued to protect the
insured against liability to third persons, third persons asserting such liability have been held to be
proper parties to a declaratory judgment proceeding, although their claims against the insurer are
contingent upon recovery of a judgment against the insured.”). But C&D Dozer (and necessarily,
therefore its insurers, Bituminous and Mercury), is not an injured third-party. Instead, the only
6
(...continued)
district court from acting unless an appellate decision has issued on the merits of the claim sought
to be precluded.” Id. (emphasis added, citation and internal quotations omitted).
8
relationship between C&D Dozer and Essex is that C&D Dozer is a potential joint-tortfeasor of
Essex’s insured, Sheppard. Because a different justiciability issue is now before the Court, the law
of the case doctrine presents no impediment to the Court addressing the issue.
C.
Article III’s Justiciable Controversy Requirement
Essex argues that sufficient adverse interests exist between it and C&D Dozer to satisfy the
justiciability requirement. But Essex relies primarily on case law addressing the relationship between
an insurer and a third-party tort claimant, like the Dental Defendants, injured by the insured. See,
e.g., Response at pp. 8-9 (citing Maryland Casualty Co.). As discussed below, Essex’s reliance on
such case law is inapposite as the relationship at issue here is more attenuated.
Essex further contends that, under Tenth Circuit precedent, the impact of a declaratory
judgment on settlement of the state court litigation is sufficient to create a justiciable controversy.
See Response at pp. 9, 11-12. Essex relies on Kunkel v. Continental Cas. Co., 866 F.2d 1269, 127576 (10th Cir. 1989).
In Kunkel, the justiciable controversy at issue was between an insurance company,
Continental Casualty Company (Continental) and its insured, Elmer Kunkel (Kunkel) an accountant.
Kunkel faced liability in underlying litigation for securities fraud violations. He brought a
declaratory judgment action against Continental to determine the amount of coverage provided by
his malpractice insurance policy. Without knowing the amount of coverage, settlement negotiations
in the underlying litigation were at an impasse.
Continental claimed no justiciable controversy existed because the existence of coverage was
dependent upon both the outcome of the underlying litigation charging Kunkel with securities laws
violations and a determination that any liability incurred by Kunkel was not excepted from the
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policy’s terms. But the court found a justiciable controversy existed. Important to the court’s
determination was the fact that settlement of the underlying litigation without a determination as to
the amount of coverage was a “virtual impossibility.” Id. at 1275.
While Kunkel supports the Court’s prior determination that a justiciable controversy exists
between Essex and Sheppard, it does not address the type of liability implicated by the relationship
currently at issue before the Court, that is the relationship between Essex and a third-party potential
joint tortfeasor. Moreover, unlike Kunkel, no settlement impasse is at issue here. Therefore, the
Court does not find Kunkel controlling.
Essex further contends the Tenth Circuit’s decision in Allendale Mut. Ins. Co. v. Kaiser
Engineers, Division of Henry J. Kaiser Co., 804 F.2d 592 (10th Cir. 1986) supports finding the
existence of a justiciable controversy.
In that case, Allendale Mutual Insurance Company
(Allendale) brought a declaratory judgment action against third-party tortfeasors Kaiser Engineers
(Kaiser) and Sergent Hauskins & Backwith (Sergent) and sought a declaration that if it were held
liable to its insured, United Nuclear Corporation (United), it would be entitled to judgment against
these tortfeasors.
United suffered damages when a dam built by Kaiser and Sergent failed, causing huge losses.
Allendale denied that coverage existed under its policy with United. In underlying litigation, United
sued Allendale and coverage was found to exist. United was awarded more than $24 million in
damages against Allendale. While an appeal of the damages award was pending, Allendale brought
a declaratory judgment action in federal court against Kaiser and Sergent seeking a declaration that
if held liable to United, it would be entitled to judgment against these defendants as subrogee of
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United’s claims. United brought the declaratory judgment action based on a concern that the statute
of limitations on any subrogation claim would expire during the pendency of the appeal.
The Tenth Circuit found a justiciable controversy existed. Id. at 595. However, the court
based this finding on two factors. First, “a state court had rendered a legal judgment binding upon
Allendale[.]” Id. at 595. As the court stated: “[a]t least at the moment the insurer has suffered a legal
judgment requiring it to make payment to the insured, that insurer has a sufficient interest in recovery
against third parties who allegedly caused the injury to create an actual controversy within the
meaning of the Declaratory Judgment Act.” Id. at 594. Second, the fact that Allendale’s subrogation
claim might be barred by a statute of limitations compelled finding a justiciable controversy. As the
court held, “a clear need” existed for the present action because if the action were not maintainable,
“Allendale would be forced to choose between giving up its right to appeal the state court award to
its insured, and giving up its subrogation rights against the defendant.” Id. In reaching this
conclusion, the court distinguished its holding in National Valve & Mfg. Co. v. Grimshaw, 181 F.2d
687 (10th Cir. 1950) where the court sustained the district court’s dismissal of a contractor’s claim
for indemnity while appeal of the judgment against it was pending in state court. The court stated:
“[t]here was no indication in that case that a statute of limitations problem existed, or other
circumstances revealed a need for immediate adjudication; the court’s decision was upheld as not
an abuse of discretion in the circumstances of the case.” Allendale, 804 F.2d at 594. The court
further stated: “[t]he lack of any need for an early determination of the right to indemnification
distinguishes National Valve from the case before us.” Id.
Unlike Allendale, Essex is not a party to the underlying state court litigation and does not
face either an actual or prospective judgment issued directly against it. Nor has Essex identified any
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other need for immediate adjudication like that present in Allendale. As the Court held in Allendale,
these factors rendered the case distinct.
The parties have not cited any case addressing Article III’s case or controversy requirement
in the context presented by C&D Dozer’s motion. But a recent decision of another court, on facts
analogous to those presented here, concludes that Article III’s requirements are not satisfied under
these circumstances. See Pennsylvania Mfrs. Indem. Co. v. Air Power, Inc., No. 1:13CV217, 2014
WL 1513966 (M.D. N.C. April 16, 2014) (unpublished op.).
In Air Power, Plaintiff, Pennsylvania Manufacturers Indemnity Company (PMIC) brought
a declaratory judgment action against its insured, Air Power, Inc. (Air Power) and two other
defendants, an injured third-party, Steven Ray Freeman (Freeman) and a potential joint-tortfeasor,
Graco, Inc. (Graco). PMIC sought a declaration that it was not required to defend or indemnify Air
Power in an underlying state court personal injury action brought by Freeman against Air Power and
Graco.
Addressing the relationship of the parties to the federal declaratory judgment action, the
Court stated:
Here, Plaintiff does not insure Defendant Graco and Defendant Graco is not
the injured party. Rather, the only possible connection between Defendant Graco and
Plaintiff is that Defendant Graco and Defendant Air Power could be jointly and
severally liable for damages if Defendant Freeman prevails in Count 4 of the
underlying [state court] litigation. Thus, if Plaintiff has a duty to indemnify
Defendant Air Power, then there potentially could be a dispute involving both
Plaintiff and Defendant Graco as to payment of those damages for which Defendant
Graco and Defendant Air Power could be jointly and severally liable.
Id. at *5. The court then determined that “Defendant Graco’s only potential stake in the outcome
of the coverage dispute between Plaintiff and Plaintiff’s insured, Defendant Air Power, is that it may
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ultimately be held to be a joint tortfeasor with Defendant Air Power in . . . the underlying litigation.”
Id. at *6. The court concluded that “this sole potential connection between Defendant Graco and
Plaintiff is too attenuated and remote to be a case or controversy under Article III” and further
“fail[s] to allege an actual case or controversy between [Plaintiff] and Defendant Graco” as required
by the Declaratory Judgment Act. Id.
In reaching this conclusion, the court relied upon Lott v. Scottsdale Ins. Co., 811 F. Supp.2d
1224 (E.D. Va. 2011) as instructive and in particular, the Lott court’s statement that “[u]nlike a tort
claimant, a joint tortfeasor’s stake in the outcome of a coverage dispute between a different tortfeasor
and that tortfeasor’s insurer is generally too attenuated and remote to fall within Article III.” Id., 811
F. Supp.2d at 1231. In Lott, a similar issue was presented to the Court, though the parties were
aligned differently. The insurance company of the first tortfeasor was named as a defendant and the
plaintiffs brought an action for a declaratory judgment that the insurance company was required to
defend and indemnify its insured in an underlying state court action.
In Lott the parents of a child who drowned at a swimming club brought a state court action
against two alleged tortfeasors, the swim club and the company hired by the swim club to manage
its operations. The swim club and the management company each notified their respective liability
insurers. The swim club’s insurer accepted the defense and acknowledged it had a duty to indemnify
its insured for any damages it may have to pay in the state court litigation. But the management
company’s insurer denied owing its insured either a duty to defend or indemnify.
As a result, the Lotts, together with the swimming club and its insurer, brought a declaratory
judgment action against the management company and its insurer seeking a declaration that the
insurer was required to defend and indemnify the management company. The court realigned the
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management company as a plaintiff, leaving its insurer as the sole defendant in the declaratory
judgment action.
The court first determined that the Lotts, as the injured third parties, had standing to sue and
that a justiciable controversy existed between them and the management company’s insurer.7
Moreover, the parties did not dispute that the management company, as the insured, had standing
to sue.
As to the swim club – the second tortfeasor – and its insurer, however, the Court concluded
those parties did not have standing to sue. See Lott, 811 F. Supp.2d at 1231 (“Unlike a tort claimant,
a joint tortfeasor’s stake in the outcome of a coverage dispute between a different tortfeasor and that
tortfeasor’s insurer is generally too attenuated and remote to fall within Article III.”). The Lott court
noted that “[n]ot surprisingly, the parties have identified no case, nor has any been found, holding
that a joint tortfeasor has standing to participate in a declaratory judgment action concerning the
duties to defend or indemnify owed to the other tortfeasor by its insurer.” Id. The court concluded
that the “remoteness of any injury in fact to [the swim club] and [its insurer] is quite apparent . . . .”
Id. at 1232. The court relied on many contingent factors including the fact that any damages would
have to be awarded against both joint tort-feasors and contribution would only be permitted if the
swim club were required to pay more than its pro rata share. Id. The court found the only present
injury asserted by the swim club and its insurer was “an inability to settle the case without sufficient
7
The Court based this holding on two aspects of Virginia law. First, Virginia law allowed
the Lotts to sue the insurance company directly for any outstanding amount of an unsatisfied
judgment against its insured. Second, Virginia law deemed the Lotts, as tort claimants, third-party
beneficiaries of the insurance policy. See Lott, 811 F. Supp. 2d at 1230.
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insurance money in the ‘pot.’” but that this injury “plainly does not qualify as an injury-infact . . . .” Id.
The Court finds persuasive the decisions in Air Power and Lott, which address circumstances
virtually identical to those presented in this action. The parties here do not dispute that under
Oklahoma law, C&D Dozer has no right to seek contribution directly against Essex, as was the case
in Lott. And, as discussed, the Tenth Circuit authority relied upon by Essex is distinguishable from
the circumstances presented here. Therefore, the Court finds no justiciable controversy as between
C&D Dozer and Essex, and Essex’s claims against C&D should be dismissed without prejudice.
Necessarily, therefore, the Court finds Essex’s claims against Butiminous and Mercury should be
dismissed without prejudice.
D.
Discretionary Factors
In addition, the Court finds discretionary factors warrant dismissal of C&D Dozer,
Butiminous and Mercury from this action. This declaratory judgment action will not resolve any
controversy among these parties in this litigation nor will it resolve any controversy in the state court
litigation as Essex is not a party to that litigation. And to the extent resolution of factual issues in
this case decided against C&D Dozer might impair its defenses in the state court action (e.g., the
quality of work provided by C&D Dozer), the Court’s exercise of jurisdiction may improperly
encroach upon the state court’s jurisdiction.
III.
Conclusion
For the reasons set forth, the law of the case doctrine does not apply as the issues presently
before the Court were not addressed in the Court’s September 9, 2013 Order. Because no justiciable
case or controversy exists between Essex and Defendants C&D Dozer Services, Mercury and
15
Bituminous, dismissal of these defendants is proper as the Court lacks subject matter jurisdiction
over the claims brought against them.
IT IS THEREFORE ORDERED that Defendant C&D Dozer Services L.L.C.’s Motion for
Summary Judgment, construed as a motion pursuant to Fed. R. Civ. P. 12(b)(1), is GRANTED and
Plaintiff’s claims as to this defendant are dismissed without prejudice.
IT IS FURTHER ORDERED that Plaintiff’s claims against Defendants First Mercury
Insurance Company and Bituminous Casualty Corporation are dismissed without prejudice.
IT IS SO ORDERED this 13th day of July, 2015.
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