Chartis Specialty Insurance Company v. JSW Steel (USA), Inc.

Filing 37

ORDER DENYING 6 MOTION to Dismiss Pursuant to Rule 12(b)(6) as to Plaintiff's Duty to Defend Only, GRANTING 36 Joint MOTION to Abate, Deadlines terminated.(Signed by Judge Gray H. Miller) Parties notified.(rkonieczny, 4)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
CHARTIS SPECIALTY INSURANCE CO .,
Plaintiff,
v.
JSW STEEL (USA), INC.,
Defendant.

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CIVIL ACTION H-14-1527

O RDER
This order addresses the following motions pending before the court: Defendant JSW Steel
Inc.’s (“JSW”) motion to dismiss as to plaintiff’s duty to defend (Dkt. 6); and the parties’ jointly
filed motion to abate scheduling deadlines (Dkt. 36). After considering the motion, responses, and
applicable law, JSW’s motion to dismiss is DENIED and the parties’ jointly filed motion to abate
scheduling deadlines is GRANTED.
This case arises out of insurance policies that plaintiff Chartis Specialty Insurance Company
(“Chartis”) issued to JSW to cover specified business-related risks. Dkt. 1 at 1–3. JSW made a
claim on the policies after it was sued for allegedly conspiring to boycott another business and run
it out of business. Id. at 3. Chartis alleges that it agreed to defend JSW in the claim out of an
abundance of caution, even though the pleadings in the case alleged no facts that might implicate the
insurance coverage, because one of the causes of action against defendants was for “business
disparagement.” Dkt. 11 at 3. However, the business disparagement claim was abandoned before
the trial. Id. At that point, Chartis notified JSW that it would not continue to defend the lawsuit
after a verdict had been reached, nor indemnify JSW for the final judgment. Id. JSW continued to

seek coverage for the lawsuit, at which point Chartis filed this lawsuit seeking a declaratory
judgment as to its rights and obligations under the policies. Dkt. 1 at 1.
JSW moves to dismiss Chartis’ complaint under Federal Rule of Civil Procedure Rule
12(b)(6), which allows dismissal for “failure to state a claim upon which relief may be granted.” In
such a motion, the court must liberally construe the complaint in favor of the plaintiff, and the court
cannot dismiss the complaint “unless it appears beyond doubt that the plaintiff can prove no set of
facts in support of his claim which would entitle him to relief.” Collins v. Morgan Stanley Dean
Witter, 224 F.3d 496, 498 (5th Cir. 2000). Such motions are viewed with disfavor and are rarely
granted. The court has reviewed the pleadings and finds that Chartis has plead facts sufficient to
state a claim upon which relief could be granted as to duty to defend.1 Therefore, JSW’s motion to
dismiss is DENIED.
Further, because the duty to defend is a question of law for the court to address, the court
agrees with the parties that the deadlines should be abated and reset once the court has issued a ruling
on this issue. Therefore, the parties’ joint motion to abate the current deadlines is GRANTED.
It is so ORDERED.
Signed at Houston, Texas on February 26, 2015.

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Gray H. Miller
United States District Judge

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Since JSW filed the motion to dismiss, it has also submitted the same issue and arguments to this court in a motion
for summary judgment. Dkt. 22. Chartis has also filed a motion for summary judgment as to the duty to defend and
the duty to indemnify. Dkt. 20. The court will consider these motions concurrently and in due course. At that time,
the court will also consider the motion to abate consideration of the duty to indemnify (Dkt. 23), and whether the
timing is appropriate to consider the motion to strike JSW ’s expert report on attorney’s fees (Dkt. 29).

2