LANCER INSURANCE COMPANY v. HARLEYSVILLE MUTUAL INSURANCE et al
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE EDUARDO C. ROBRENO ON 6/9/15. 6/9/15 ENTERED AND COPIES MAILED TO UNREPS, EMAILED.(rf, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
LANCER INSURANCE COMPANY,
HARLEYSVILLE MUTUAL INSURANCE,
M E M O R A N D U M
EDUARDO C. ROBRENO, J.
June 9, 2015
This action results from an underlying lawsuit
involving a car accident. Lancer Insurance Company, the
plaintiff here, is the insurer of the defendants in the
underlying lawsuit. In this case, Lancer seeks a declaratory
judgment that two other insurance companies – Harleysville
Mutual Insurance and American Alternative Insurance – also owe
coverage to those defendants, and must therefore defend and
indemnify them in the underlying lawsuit. Those insurance
companies have moved for judgment on the pleadings. For the
reasons that follow, the Court will deny the motion, but sua
sponte dismiss the action without prejudice.
BACKGROUND AND PROCEDURAL HISTORY1
Defendant Kenneth Propst allegedly owns several
companies, including: Defendant Archbald Vanpool, Inc. (“AVP”),
which is insured by Plaintiff Lancer Insurance Company
(“Lancer”); Buy Rite Service Center (“Buy Rite”), an auto repair
shop insured by Defendant Harleysville Mutual Insurance
(“Harleysville”), where Propst allegedly services the vehicles
owned and operated by his various businesses; Propst Bussing and
Transporation Co., Inc. (“PBT”), which is insured by Defendant
American Alternative Insurance Company (“American”); and others.
Compl. ¶¶ 15-24, ECF No. 1.
In 2011, Propst was involved in a single-vehicle
accident, with Defendant Lori Trojanowicz riding as his
passenger. Compl. ¶¶ 11-12. As a result of injuries she claims
to have sustained in the accident, Trojanowicz filed a civil
action (“the underlying lawsuit”) against Propst, AVP, and Ford
Motor Company (which is not a party to the instant case) in the
Court of Common Pleas of Lackawanna County, Pennsylvania, where
the accident occurred. See Lackawanna County Civil Action,
Compl. Ex. 1, ECF No. 1-1.
Trojanowicz alleges in the underlying lawsuit that
Propst and/or AVP owned the vehicle involved in Propst’s
Disputed facts are construed in favor of Lancer, the
accident, which occurred in the course and scope of Propst’s
employment with AVP. Id. ¶¶ 9-12. She further alleges that the
accident was caused by a defective rear axle that Propst and/or
AVP knew or should have known about, and that Propst and/or AVP
negligently failed to take appropriate actions to ensure the
vehicle’s safe operation. Id. ¶¶ 21-29.
On July 10, 2014, Lancer – again, AVP’s insurer –
filed the instant Complaint for Declaratory Judgment. ECF No. 1.
Lancer argues that to the extent that the allegations of the
underlying lawsuit include negligence on the part of Propst
and/or AVP, they may be entitled to coverage under either or
both of the insurance policies issued to Propst entities by
Harleysville and American. Lancer believes that Buy Rite is the
alter ego of Propst and/or AVP. Compl. ¶ 22. Accordingly, Lancer
“seeks a declaration whether either or both the [Harleysville]
policy and/or the [American policy] provides such coverage to
Propst and/or to AVP for the underlying lawsuit,” Compl. ¶ 27,
including a declaration that Harleysville and American “are
required to defend and indemnify Propst and/or AVP in the
underlying lawsuit,” id. at 5.
American filed an Answer. ECF No. 25. Nationwide
Mutual Insurance Company (“Nationwide”) – Harleysville’s
successor by merger – also filed an Amended Answer, as well as a
Counterclaim/Crossclaim for Declaratory Judgment against Lancer,
American, Propst, AVP, and Trojanowicz. ECF No. 33. Nationwide
seeks a declaratory judgment that it owes no obligation to
defend and/or indemnify Propst and/or AVP in the underlying
lawsuit or, in the alternative, that the Harleysville policy is
excess to all liability insurance available to Propst and/or
AVP. Nationwide Answer 21.
Nationwide filed a Motion for Judgment on the
Pleadings. ECF No. 26. Lancer filed a brief in opposition, ECF
No. 28, and Nationwide filed a reply brief, ECF No. 34. American
joined Nationwide’s Motion for Judgment on the Pleadings, ECF
No. 27. Lancer then filed an opposition noting the distinctions
between Nationwide and American, ECF No. 29, and American filed
a reply brief, ECF No. 30. The motion is now ripe for
Federal Rule of Civil Procedure 12(c) provides,
“[a]fter the pleadings are closed – but early enough not to
delay trial – a party may move for judgment on the pleadings.”
Judgment on the pleadings is appropriate only if the moving
party “clearly establishes that no material issue of fact
remains to be resolved and that he is entitled to judgment as a
matter of law.” Society Hill Civic Ass’n v. Harris, 632 F.2d
1045, 1054 (3d Cir. 1980) (citation omitted). In reviewing a
Rule 12(c) motion, a court “must view the facts presented in the
pleadings and the inferences to be drawn therefrom in the light
most favorable to the nonmoving party.” Rosenau v. Unifund
Corp., 539 F.3d 218, 221 (3d Cir. 2008) (quoting Jablonski v.
Pan Am. World Airways, Inc., 863 F.2d 289, 290-91 (3d Cir.
When a party’s Rule 12(c) motion is “based on the
theory that the plaintiff failed to state a claim,” the motion
“is reviewed under the same standards that apply to a motion to
dismiss under Federal Rule of Civil Procedure 12(b)(6).” Caprio
v. Healthcare Revenue Recovery Grp., LLC, 709 F.3d 142, 146-47
(3d Cir. 2013). In order to withstand a motion to dismiss, a
complaint must include factual allegations sufficient to “raise
a right to relief above the speculative level.” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007). Satisfying that standard
“requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.”
Id. Rather, the pleadings “must contain sufficient factual
matter, which if accepted as true, states a facially plausible
claim for relief.” Caprio, 709 F.3d at 147. A claim possesses
such plausibility “when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009).
Nationwide makes several arguments, the first of
which – that Lancer lacks standing to bring this claim – is
The Declaratory Judgments Act permits a district
court, “[i]n a case of actual controversy within its
jurisdiction,” to “declare the rights and other legal relations
of any interested party seeking such declaration.” 28 U.S.C.
§ 2201(a). To gain Article III standing, which is required in
order to establish a justiciable case or controversy, a
plaintiff must identify “(1) a cognizable injury that is
(2) causally connected to the alleged conduct and is (3) capable
of being redressed by a favorable judicial decision.” Williams
v. BASF Catalysts LLC, 765 F.3d 306, 327 (3d Cir. 2014) (quoting
Pa. Family Inst., Inc. v. Black, 489 F.3d 156, 165 (3d Cir.
2007)) (internal quotation marks omitted). However, “[e]ven when
a case falls within these constitutional boundaries, a plaintiff
may still lack standing under the prudential principles by which
the judiciary seeks to . . . limit access to the federal courts
to those litigants best suited to assert a particular claim.”
Gladstone Realtors v. Vill. of Bellwood, 441 U.S. 91, 99-100
(1979). In order to establish prudential standing, a plaintiff
Accordingly, the Court need not consider the merits of
Nationwide’s remaining arguments.
must show, among other things, that she is asserting her “own
legal interests rather than those of third parties.” Phillips
Petroleum Co. v. Shutts, 472 U.S. 797, 804 (1985).
Here, Lancer lacks prudential standing because it
seeks a declaration about third parties’ legal interests rather
than its own. Notably, Lancer has not requested such remedies as
reimbursement or equitable contribution.3 See Transp. Ins. Co. v.
Pa. Mfrs.’ Ass’n Ins. Co., 641 F. Supp. 2d 406, 411-12 (E.D. Pa.
2008) (holding that an insurance company had standing to seek a
declaratory judgment that it was entitled to a share of
indemnification or equitable contribution from another insurance
company), rev’d on other grounds, 346 F. App’x 862 (3d Cir.
2009). Rather, Lancer has requested a declaration that Propst
and/or AVP are covered by the Harleysville and/or American
insurance policies, and that such coverage requires Harleysville
and/or American to defend and indemnify Propst and/or AVP in the
underlying lawsuit. In other words, Lancer requests a
declaration about what other insurers are required to do for
Lancer does argue in its brief opposing the Motion for
Judgment on the Pleadings that it is entitled to equitable
contribution, but apparently only in response to Nationwide’s
argument that Lancer is not so entitled, because nowhere does
the Complaint for Declaratory Judgment mention equitable
contribution, or contribution of any kind. In the Complaint,
Lancer seeks only “a declaration whether either or both the Buy
Rite policy and/or the policy issued by American Alternative
provides such coverage to Propst and/or to AVP for the
underlying lawsuit.” Compl. ¶ 27.
their insureds, not about what they are required to do for
Lancer. See Wausau Ins. Cos. v. Indem. Ins. Co. of N.A., No. 900722, 1990 WL 82085, at *1 (E.D. Pa. June 11, 1990) (holding
that plaintiff insurance company had no standing to seek a
declaration that another insurance company could not deny
coverage to third parties on a separate policy, even though that
denial of coverage induced a third party to seek coverage from
the plaintiff). Plainly, therefore, Lancer is asserting the
legal interests of third parties rather than its own, and thus
has no standing to pursue this claim. See Am. Safety Indem. Co.
v. Fairfield Shopping Ctr., LLC, No. 12-2415, 2014 WL 6607940,
at *5 (N.D. Ala. Nov. 20, 2014) (“In sum, American Safety seeks
a determination of coverage under an insurance policy to which
it is a complete stranger and as to which there is no coverage
dispute between the actual parties. Under these circumstances,
there is no justiciable controversy between [the insurance
companies], and the district court is without subject matter
jurisdiction . . . .”).4 Nor can the Court declare the respective
Lancer points to United Services Auto Association v.
Royal-Globe Insurance Company, 511 F.2d 1094 (10th Cir. 1975),
in which the Tenth Circuit held that the insurer of the driver
of a rented car had standing to seek a declaratory judgment that
the insurer of the rental company was responsible to defend and
indemnify the driver in a suit arising out of an accident
involving the driver. Id. at 1096. That court, however, did not
appear to consider the necessity for prudential standing, and in
support of its conclusion, cited only one case, Lumbermens
Mutual Casualty Company v. Iowa Home Mutual Casualty Company,
obligations of the various parties under a hypothetical set of
facts in which Propst and/or AVP make future claims again
Nationwide. Williams, 765 F.3d at 327.
Therefore, Lancer has not presented the Court with a
justiciable controversy, and so the Court has no subject matter
jurisdiction over this claim. Under these circumstances, the
claim must be dismissed without prejudice, as such a dismissal
is not a decision on the merits. See Figueroa v. Buccaneer Hotel
Inc., 188 F.3d 172, 182 (3d Cir. 1999); Carlsberg Res. Corp. v.
Cambria Sav. and Loan Ass’n, 554 F.2d 1254, 1256 (3d Cir. 1977).
Accordingly, the Court will deny the Motion for Judgment on the
Pleadings, but sua sponte dismiss the case without prejudice.
For the foregoing reasons, the Court will deny
Nationwide and American’s Motion for Judgment on the Pleadings,
but dismiss the case without prejudice. An appropriate order
405 P.2d 160 (Okla. 1965). Lumbermens was an attempt by one
insurer to recover against another insurer the amount paid in
settling a third party’s claims. As discussed above, that
situation is plainly distinct from what Lancer seeks to do here,
and a decision that there is standing in such a case does not
provide support for the proposition that an insurer can seek a
declaratory judgment regarding another insurer’s rights as to a
third party rather than as to the first insurer.
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