Liberty Corporate Capital Ltd. et al v. Kalmus et al
MEMORANDUM OPINION. Signed by Judge Royce C. Lamberth. (ad)
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
Liberty Corporate Capital Ltd. and Amtrust
Corporate Member Ltd.,
Stuart Roy Kalmus, Eric Tiedtke, and
Tiedtke Marketing Group, Inc.,
Civil Case No. 5:16-cv-1076
Before the Court is defendants Eric Tiedtke and Tiedtke Marketing Group's Motion to
Dismiss Plaintiffs' First Amended Complaint Pursuant to Federal Rule of Civil Procedure
12(b)(l), filed January 5, 2017, ECF No. 19. Having considered the motion, responses, replies,
exhibits, filings, and applicable law, the Court will deny the defendants' motion.
Defendant Dr. Stuart Roy Kalmus was a self-employed dentist who suffers from a bilateral
essential tremor of his hands, arms, and shoulders which has been progressive over the past twenty
years. Pls.' Am. Compl. 3--4, ECF No. 14. Dr. Kalmus first consulted his primary care physician
regarding his essential tremor on March 9, 2012. Id. at 4. On October 19, 2012, Dr. Kalmus
sought specialized medical attention for his essential tremor from a neurologist, was prescribed
medication, and was diagnosed with an essential tremor just over a month later. Id.
On or around June 30, 2013, Dr. Kalmus applied for permanent and total disability
insurance. Id. at 5. Dr. Kalmus' application was prepared by defendant Eric Tiedtke and/or
defendant Tiedtke Marketing Group, Inc., and the insurance policy went into effect July 1, 2013.
Id. Two months later, Dr. Kalmus consulted with another neurologist regarding his essential
tremor. Id. It is undisputed that Dr. Kalmus was aware of his condition before, during, and after
applying for the policy.
On or around July 13, 2015, Dr. Kalmus sent a Proof of Loss statement to Hanleigh
Management, Inc., the policy's Coverholder. Id. The Proof of Loss statement declares that Dr.
Kalmus became permanently and totally disabled as a result of his essential tremor on July 1, 2015.
Id. at 6. Hanleigh Management, Inc. investigated Dr. Kalmus' .claim, at which point Dr. Kalmus
provided them with medical records which verified his diagnosis of essential tremor and his
subsequent disability. Id.
Plaintiffs Liberty Corporate Capital Ltd. and AmTrust Corporate Member Ltd. are the
underwriters of Dr. Kalmus' policy. In their amended complaint, plaintiffs seek declaratory
judgment that (1) Dr. Kalmus' essential tremor is a pre-existing condition not covered by the
policy; (2) there is no loss due to injury or sickness under the policy; (3) the pre-existing condition
limitation bars coverage; (4) Rider #1 bars coverage for Dr. Kalmus' claim; (5) Dr. Kalmus'
essential tremor did not manifest itself while the policy is in force and his total disability did not
commence within 1 year of a covered sickness; and (6) there is a lack of fortuity. Id. at 9-20. In
the alternative, plaintiffs seek declaratory judgment that defendant Eric Tiedtke and/or defendant
Tiedtke Marketing Group, Inc. should indemnify plaintiffs for any damages resulting from
defendants' breach of the agency relationship. Id. at 20. Specifically, the plaintiffs claim that
Tiedtke misrepresented the nature of the policy's coverage of preexisting conditions.
Dr. Kalmus has filed a counterclaim against all plaintiffs for breach of contract, violations
of the Prompt Payment of Claims provisions of the Texas Insurance Code, violations of the Texas
Deceptive Trade Practices Act (DTP A), and violations of the Texas Insurance Code attributable
to the plaintiff underwriters. Second Am. Answer, Countercl., and Cross-cl. 11-14, ECF No. 18.
Dr. Kalmus has also filed a cross-claim against Eric Tiedtke and Tiedtke Marketing Group for
violations of the DTPA, violations of the Texas Insurance Code, and Negligent Misrepresentations.
Id. at 15-19.
Defendants Eric Tiedtke and Tiedtke Marketing Group filed a Motion to Dismiss plaintiffs'
original complaint pursuant to Federal Rules of Procedure 12(b)(l) and 12(b)(6). Mot. to Dismiss
1-2, ECF No. 10. Defendants argued that this Court lacks jurisdiction because the matter is not
ripe for consideration since there has not yet been a judgment or a determination as to coverage,
and that even if the matter is ripe that the plaintiffs failed to plead facts which would allow the
plaintiffs to indemnify Eric Tiedtke or the Tiedtke Marketing Group. Id. at 4-6.
Plaintiffs filed an amended complaint shortly thereafter, and defendants Eric Tiedtke and
Tiedtke Marketing Group filed a Motion to Dismiss the plaintiffs' amended complaint pursuant to
Federal Rule of Civil Procedure 12(b)(1 ). Mot. to Dismiss Pis.' First Am. CompI. 1-2. Defendants
argued that the matter is not ripe for consideration since there has not yet been a judgment or a
determination as to coverage. Id. at 3-5.
The Federal Rules of Civil Procedure require this Court to dismiss a cause for lack of
subject matter jurisdiction "when the court lacks the statutory or constitutional power to adjudicate
the case." Home Builders Assn. ofMississippi, Inc. v. City ofMadison, 143 F.3d 1006, 1010 (5th
Cir. 1998). In matters of jurisdiction, "the burden of establishing federal jurisdiction rests on the
party seeking the federal forum." Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001).
The Federal Declaratory Judgment Act only grants the federal courts jurisdiction to provide
declaratory relief in "a case of actual controversy." 28 U.S.C. § 2201(a). When considering a
declaratory judgment action, a district court must engage in a three-step inquiry: (1) whether it is
justiciable; (2) whether, if the court has jurisdiction, it has the authority to grant declaratory relief;
and (3) whether the court should exercise its discretion to decide the action. Orix Credit Alliance,
Inc. v. Wolfe, 212 F.3d 891, 896 (5th Cir. 2000). With regards to the first step, "A declaratory
judgment action is ripe for adjudication only where an 'actual controversy' exists. Id. (quoting
28 U.S.C. § 2201(a)). An actual controversy is typically found when there is "a substantial
controversy of sufficient immediacy and reality between parties having adverse legal interests."
Middle South Energy, Inc. v. New Orleans, 800 F.2d 488, 490 (5th Cir. 1986). When looking at
ripeness, a case that is ripe is one in which any remaining issues are "purely legal, and will not be
clarified by further factual development." Thomas v. Union Carbide Agric. Prods. Co., 473 U.S.
568, 581 (1985). The primary factors to be considered are "the fitness of issues for judicial
decision and the hardship to the parties of withholding court consideration." Abbott Labs. v.
Gardner, 387 U.S. 136, 148-49 (1967).
Defendants argue that the controversy is not ripe because there has not yet been a judgment
or a determination of coverage by the plaintiffs. However, the facts as pleaded by both the
plaintiffs and Dr. Kalmus state that the plaintiffs have already denied Dr. Kalmus' claim for the
loss incurred from his essential tremor. Mot. to Dismiss Pls.' First Am. Compl. 2; Pls.' Am.
Indeed, Dr. Kalmus' counter-claims against the plaintiffs for breach of contract,
violations of the Texas Insurance Code, and violations of the Texas Deceptive Trade Practices Act
all rely on the denial of claims by the plaintiffs. Def.'s Second Am. Answer, Countercl., and
Cross-cl. 11-15, ECF No. 18.
Assuming that coverage under the policy has already been denied, as both parties allege,
the Court does not believe that the legal rights of the parties will be further clarified by any factual
No factual questions remain, and the only question that remains is a legal
determination of the parties' rights and obligations under the policy. It may very well be that
defendant Eric Tiedtke and/or defendant Tiedtke Marketing Group made misrepresentations
regarding the nature or prerequisites of coverage of preexisting conditions under the policy, as
defendant Dr. Kalmus claims, but that question is legal in nature and therefore does not affect the
determination of whether this controversy is ripe. As alleged, the facts are ripe for adjudication.
The Supreme Court has stated that "Ripeness is a justiciability doctrine designed to prevent
the courts, through avoidance of premature adjudication, from entangling themselves in abstract
disagreements." National Park Hospitality Ass 'n v. Dep 't of Interior, 538 U.S. 803, 807 (2003).
Dr. Kalmus asserts that the permanent and total disability caused by his essential tremor is covered
by his insurance policy, while the plaintiffs assert that it is not. This disagreement is over a
concrete question with tangible, serious consequences, not the sort of abstract disagreement that
the Supreme Court urges courts to rely on ripeness to avoid. There is no future event that must
occur in order for the Court to determine parties' rights and obligations under the policy, and
therefore this matter is both ripe and justiciable.
Defendants' motion to dismiss under 12(b)(l) rests entirely on the assertion that the
plaintiffs' declaratory judgment claim is not ripe for consideration. Mot. to Dismiss Pls.' First
Am. Compl. 5. This Court finds that the plaintiffs' declaratory judgment claim is ripe and
justiciable. The defendants' motion will be denied.
Further, in light of the plaintiffs' Amended Complaint, defendants' Motion to Dismiss the
plaintiffs original Complaint will be denied as moot.
A separate order shall issue.
United States District Judge
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