Sherwin Alumina Company LLC

Filing 26

ORDER granting 16 Motion to Dismiss. The Court DISMISSES Union Pacific's counterclaim against Sherwin under the Declaratory Judgments Act. (Signed by Judge Nelva Gonzales Ramos) Parties notified.(lcayce, 2)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
SHERWIN ALUMINA COMPANY LLC, §
§
Plaintiff,
§
VS.
§ CIVIL ACTION NO. 2:15-CV-132
§
UNION PACIFIC RAILROAD
§
COMPANY,
§
§
Defendant.
§
ORDER
Before the Court is “Plaintiff Sherwin Alumina Company, LLC’s [Sherwin’s]
Motion to Dismiss Defendant Union Pacific Railroad Company’s [Union Pacific’s]
Counterclaim for Declaratory Judgment” (D.E. 16) and Union Pacific’s Response (D.E.
17). Sherwin claims that Union Pacific’s counterclaim should be dismissed because it is
not an independent claim but only reasserts affirmative defenses in an attempt to qualify
for an award of attorney’s fees. For the reasons set out below, the motion is GRANTED.
Sherwin seeks dismissal under Federal Rule of Civil Procedure 12(b)(6), which
provides for dismissal of a counterclaim just as it does a complaint. Sierra Club, Lone
Star Chapter v. Cedar Point Oil Co., 73 F.3d 546, 576-77 (5th Cir. 1996). Sherwin
reasons that Union Pacific’s counterclaim does not state a claim upon which relief may
be granted because a declaratory judgment action is not available to resolve disputes
already pending before the court. BHP Petroleum Co. v. Millard, 800 S.W.2d 838, 841
(Tex. 1990). More specifically, to survive dismissal under Texas law, a defendant's

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counterclaim for declaratory judgment must have greater ramifications than the original
suit—it must seek affirmative relief. Id. at 842.
While sitting in diversity jurisdiction, this Court applies federal procedure and
state substantive law. Cates v. Sears, Roebuck & Co., 928 F.2d 679, 687 (5th Cir. 1991).
The right to seek a declaratory judgment is considered procedural. Utica Lloyd's of Texas
v. Mitchell, 138 F.3d 208, 210 (5th Cir. 1998) (noting that attorney’s fees are not
available under the federal Declaratory Judgments Act and refusing to apply the
attorney’s fee component of the Texas Declaratory Judgments Act). Therefore the Court
applies the federal Declaratory Judgments Act, 28 U.S.C. § 2201, the act under which
Union Pacific pled its claims.
In describing the case or controversy required for declaratory relief, the Supreme
Court of the United States applies an analysis similar to that of the Texas Supreme Court:
“The disagreement must not be nebulous or contingent but must have taken on fixed and
final shape so that a court can see what legal issues it is deciding, what effect its decision
will have on the adversaries, and some useful purpose to be achieved in deciding them.”
Pub. Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 244 (1952) (disapproving of the
use of declaratory judgment procedure to transform a defensive issue into an offensive
claim in a preemptive invocation of jurisdiction). Without a useful purpose beyond
determining the outcome of a contract action on the defendant’s defensive issues, the
defendant’s counterclaim for a declaratory judgment serves no real purpose.
According to the pleadings here, Sherwin has sued Union Pacific under a single
count of breach of contract, relying on the terms of an executory rail transportation
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agreement, UPCQ 81351.018, which incorporates by reference a tariff established by
Union Pacific’s Circular 16-E.

D.E. 1.

In Union Pacific’s counterclaim, it seeks

declaratory judgment that Sherwin’s lock-out of certain employees in response to an
employee strike eliminated or excused Union Pacific’s obligation to comply with the
terms of UPCQ 81351.018. D.E. 11. While Union Pacific insists that this counterclaim
calls into question the parties’ respective obligations under a separate agreement, an
Industrial Track Agreement, there are no factual allegations referencing the Industrial
Track Agreement in its counterclaim—no mention of that agreement whatsoever. D.E.
11, 17. And while Union Pacific has included a generic request for leave to amend in its
response (D.E. 17, p. 8), a court need not grant a motion for leave to amend where the
movant fails to specify what amendment is desired and how it would cure its pleading
defects. United States ex rel. Willard v. Humana Health Plan of Texas Inc., 336 F.3d
375, 387 (5th Cir. 2003). When seeking to amend, the movant must set forth “with
particularity the grounds for the amendment and the relief sought.” Id. A “bare request in
an opposition in a motion to dismiss” absent any particular grounds is inadequate. Id.
Whether to entertain a claim for declaratory judgment is a matter committed to
this Court’s discretion. 28 U.S.C. § 2201; Canal Indemnity Co. v. Wilburn Container XPress Inc., 95 F.3d 53 (5th Cir. 1996). Under the circumstances, the Court finds that
Union Pacific is using the declaratory judgment procedure simply to assert its defenses in
a manner that will entitle it to attorney’s fees under Texas substantive law. Declaratory
judgment is consequently inappropriate.

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For these reasons, the Court GRANTS the motion to dismiss and DISMISSES
Union Pacific’s counterclaim against Sherwin under the Declaratory Judgments Act.

ORDERED this 15th day of September, 2015.

___________________________________
NELVA GONZALES RAMOS
UNITED STATES DISTRICT JUDGE

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