Starr Indemnity & Liability Company v. Exxon Mobil Corporation

Filing 13

MEMORANDUM AND ORDER denying 6 Defendant's Motion to Dismiss.(Signed by Judge Nancy F. Atlas) Parties notified.(TDR, 4)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
STARR INDEMNITY & LIABILITY
COMPANY,
Plaintiff,
v.
EXXON MOBIL CORPORATION,
Defendant.

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CIVIL ACTION NO. H-14-0725

MEMORANDUM AND ORDER
This case is one of three related cases currently pending before this Court.1 The
case is currently before the Court on the Motion to Dismiss [Doc. # 6] filed by
Defendant Exxon Mobil Corporation (“Exxon”), to which Plaintiff Starr Indemnity
& Liability Company (“Starr”) filed a Response [Doc. # 10]. Exxon neither filed a
reply nor requested additional time to do so. Having considered the full record and
relevant legal authorities, the Court denies the Motion to Dismiss.
I.

BACKGROUND
In January 2013, Kevin Roberts and Arturo Munoz, employees of Savage

Refinery Services, LLC (“Savage”), were injured while working at Exxon’s Baytown

1

The two other related cases are The Insurance Company of the State of Pennsylvania
v. Exxon Mobil Corp., Civil Action No. H-14-0053, and Exxon Mobil Corp. v. Starr
Indem. & Liability Co., et al., Civil Action No. H-14-1147. This ruling is consistent
with the Court’s recent rulings in those two cases.

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Refinery. Roberts filed a personal injury lawsuit (“Roberts Lawsuit”) against Exxon,
which has now been settled. Munoz also asserted a personal injury claim against
Exxon in connection with his injuries, but he has not filed a lawsuit.
Savage is the insured under an insurance policy, known as a “bumbershoot”
policy, issued by Starr.2 Following the accident in which Roberts and Munoz were
insured, Exxon claimed that it is an additional insured under the Starr bumbershoot
policy. Starr denied Exxon’s status as an additional insured, and filed this declaratory
judgment action seeking a declaration that Exxon is not entitled to coverage under the
policy. Exxon filed its Motion to Dismiss, which is now ripe for decision.
II.

ANALYSIS
Exxon argues that there is no subject matter jurisdiction over this dispute.

Exxon argues also that the Court should dismiss the declaratory judgment action
because the Roberts Lawsuit remains pending in Texas state court.3 Starr responds
that this Court has admiralty/maritime jurisdiction because the bumbershoot policy
under which Exxon claims to be an additional insured is a marine contract, and that

2

A “bumbershoot” policy is “a type of umbrella coverage designed specifically to
insure marine risks, but it can also include non-marine risks.” See, e.g., Axis Ins. Co.
v. Buffalo Marine Servs., Inc., 2013 WL 5231619, *2 n.5 (S.D. Tex. Sept. 13, 2013).

3

In the Motion to Dismiss, Exxon argued that the declaratory judgment was not ripe
at the time it was filed on March 21, 2014. In its brief, however, Exxon argues that
Starr now has a ripe duty to indemnify it for the Roberts settlement amount. See
Memorandum of Law [Doc. # 7], p. 12.

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2

the Roberts Lawsuit is not a parallel lawsuit that could form the basis for dismissal or
abstention.
A.

Subject Matter Jurisdiction

Starr argues that this Court has admiralty/maritime jurisdiction because the
insurance policy under which Exxon claims to be an additional insured is a marine
contract. Exxon argues that this Court lacks subject matter jurisdiction because the
lawsuit has “no ‘salty flavor’.” See Motion, p. 2. It is undisputed that the Starr
insurance policy is a “bumbershoot” policy that provides excess coverage for
traditional marine risks as well as non-marine risks. It provides excess coverage for
multiple vessels, and lists a Marine General Liability/Terminal Operators
Liability/Charterer’s Legal Liability policy among the underlying insurance policies
for which the “bumbershoot” policy provides excess coverage. The United States
Supreme Court has held that admiralty jurisdiction applies to contracts that combine
marine and land-based elements if the marine elements not “insubstantial.” See
Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 27 (2004). The Fifth Circuit, applying Kirby,
has held that such “bumbershoot” policies “are widely recognized as common marine
insurance policies.” St. Paul Fire & Marine Ins. Co. v. Bd. of Comm’rs of the Port
of New Orleans, 418 F. App’x 305, 308 (5th Cir. Mar. 15, 2011) (citing The St. Paul
Travelers Cos. v. Corn Island Shipyard, Inc., 495 F.3d 376, 379 n.1 (7th Cir. 2007)).

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3

The fact that the underlying injury occurred during land-based activities does not
require a different result. See, e.g., Kirby, 543 U.S. at 18, 27 (in Kirby, the train
carrying machinery on its final, inland leg following shipment from Australia derailed,
leading Justice Sandra O’Connor to refer to the case as “a maritime case about a train
wreck”); Alleman v. Omni Energy Servs. Corp., 580 F.3d 280, 284 (5th Cir. 2009) (“In
ascertaining whether that contract is a maritime contract, we look to the ‘nature and
subject-matter’ of the contract and ask whether it has ‘reference to maritime service
or maritime transactions.’”). Indeed, the underlying claim in St. Paul Fire & Marine
arose on land when a top loader fell into a pothole, injuring the driver. See St. Paul
Fire and Marine Ins. Co. v. Bd. of Comm’rs of the Port of New Orleans, 646 F. Supp.
2d 813, 816 (E.D. La. 2009), aff’d, 418 F. App’x 305, 308 (5th Cir. Mar. 15, 2011).
As a result, pursuant to Kirby, Alleman, and St. Paul, the Starr-issued policy is a
marine insurance policy, and this Court has admiralty/maritime jurisdiction.
B.

Dismissal Based on “Pending State Court” Case

Exxon argues that the Court should dismiss or abstain from deciding Starr’s
declaratory judgment claim pursuant to the Declaratory Judgment Act, the AntiInjunction Act, and principles of comity, federalism and abstention.4 Each of these
4

The Declaratory Judgment Act, 28 U.S.C. § 2201(a), allows a federal court to
“declare the rights and other legal relations of any interested party seeking such
declaration, whether or not further relief is or could be sought.” The Anti-Injunction
(continued...)

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4

arguments is based on Exxon’s position that the Roberts Lawsuit, which has now been
settled, is “parallel litigation pending in state court.”5 See Motion to Dismiss Original
Complaint [Doc. # 11], p. 3 (“a district court does not have authority to consider the
merits of a declaratory judgment action when . . . the declaratory judgment Defendant
previously filed a cause of action in state court”); p. 4 (arguing that in “determining
whether to exercise discretion to assert its jurisdiction in a declaratory judgment
action” the Court should consider “whether there is a pending state action in which all
of the matters in controversy may be fully litigated”). Exxon’s premise is faulty.
Suits are parallel if they “involv[e] the same parties and the same issues.”
Brown v. Pacific Life Ins. Co., 462 F.3d 384, 395 n.7 (5th Cir. 2006) (quoting
RepublicBank Dallas, Nat’l Ass’n v. McIntosh, 828 F.2d 1120, 1121 (5th Cir. 1987)).
Starr is not a party to the Roberts Lawsuit against Exxon, and Roberts is not a party
to this case. It is undisputed that the Roberts Lawsuit does not involve claims
regarding whether Exxon is an additional insured under Starr’s bumbershoot policy.
Additionally, although it technically remains pending in state court, the Roberts

4

(...continued)
Act, 28 U.S.C. § 2283, precludes a federal court from granting “an injunction to stay
proceedings in a State court” except in circumstances not relevant here.

5

Exxon notes that it filed a lawsuit in the 125th Judicial District Court of Harris
County, Texas. That lawsuit, which was filed after this lawsuit, has been removed
and is currently pending before the undersigned. See Exxon Mobil Corp. v. Starr
Indem. & Liability Co., et al., Civil Action No. H-14-1147.

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5

Lawsuit has been settled and the settlement has been partially funded. Exxon has not
demonstrated that the Roberts Lawsuit is parallel litigation that would render nonjusticiable Starr’s claim for declaratory judgment that Exxon is not an additional
insured. Because the Court can decide the declaratory judgment claim in this case
without enjoining or otherwise interfering with the Roberts Lawsuit, Exxon has not
demonstrated that this Court lacks authority to decide the issues in this case without
violating the Anti-Injunction Act. Moreover, as noted above, Exxon has a pending
lawsuit before this Court seeking a declaratory judgment that it is an additional
insured under the Starr insurance policy. See Exxon Mobil Corp. v. Starr Indem. and
Liability Co., Civil Action No. H-14-1147.
Based on the foregoing, the Court concludes that the “additional insured”
dispute between Exxon and Starr is justiciable and that the Court has the authority to
decide Starr’s declaratory judgment claim. The Court exercises its discretion to retain
jurisdiction over this dispute and, as a result, the Court denies Exxon’s Motion to
Dismiss.
IV.

CONCLUSION AND ORDER
This Court has general maritime jurisdiction, and the Court declines to dismiss

this case or abstain from deciding whether Exxon is an additional insured under the
Starr insurance policy issued to Savage. Accordingly, it is hereby

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ORDERED that Defendant’s Motion to Dismiss [Doc. # 6] is DENIED.
SIGNED at Houston, Texas, this 18th day of June, 2014.

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