Eaton Corporation v. Westport Insurance Corporation
Filing
97
DECISION AND ORDER signed by Judge Lynn Adelman on 4/4/18 Granting Eaton's 77 Motion for Leave to File Second Amended Complaint; Denying the four defendants' 80 Motion for Reconsideration and/or Certification of the Order Denying their Motion to Dismiss; and Denying Eaton's 94 Motion to Compel Discovery. (cc: all counsel) (kwb)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
EATON CORPORATION,
Plaintiff,
v.
Case No. 15-C-1157
WESTPORT INSURANCE COMPANY,
AIU INSURANCE COMPANY,
GRANITE STATE INSURANCE COMPANY,
NEW HAMPSHIRE INSURANCE COMPANY, and
NORTH RIVER INSURANCE COMPANY
Defendants.
______________________________________________________________________
DECISION AND ORDER
Eaton Corporation claims that five excess insurance companies must defend and
indemnify it in connection with personal-injury suits alleging exposure to asbestos in
products manufactured by Eaton’s predecessor, Cutler-Hammer. In a separate suit
pending in Ohio state court, Eaton asserts different insurance-coverage claims that
arise out of asbestos suits that do not involve Cutler-Hammer products. The claims in
the Ohio action arise out of Eaton’s axle-brake products.
In a prior order, I denied a motion to dismiss filed by four of the defendants to this
case, AIU Insurance Company, Granite State Insurance Company, New Hampshire
Insurance Company, and North River Insurance Company. (Order of Oct. 27, 2017,
ECF No. 75.) The motion sought dismissal of this action under the Wilton/Brillhart
abstention doctrine or, alternatively, a dismissal based on forum non conveniens. The
four defendants argued that it was more convenient for all of Eaton’s asbestos-related
insurance claims to proceed in the action pending in Ohio state court. In rejecting the
four defendants’ request that I abstain under Wilton/Brillhart, I noted that abstention
under that doctrine is available only when the claims in the suit are claims for
declaratory relief.
Because Eaton had alleged claims for damages against a fifth
defendant—Westport Insurance Company—I determined that I could not abstain under
Wilton/Brillhart. See R.R. Street & Co. v. Vulcan Materials Co., 569, F.3d 711, 716–17
(7th Cir. 2009) (holding that court has no discretion under Wilton/Brillhart to dismiss
non-declaratory claims, such as claims for damages, when those claims are
“independent” of the declaratory claims).
The four defendants now move for reconsideration of my decision to deny
abstention under Wilton/Brillhart. They contend that I misconstrued their motion as
seeking dismissal of this entire action, including Eaton’s claims against Westport. In
fact, the four defendants now contend, their original motion sought only dismissal of
Eaton’s claims against them. These defendants contend that because Eaton seeks
only declaratory relief against them, I may abstain from exercising jurisdiction over
those claims, even though I have no discretion to abstain from exercising jurisdiction
over Eaton’s claims against Westport.
Just prior to the time that the four defendants filed their motion for
reconsideration, Eaton filed a motion to amend its complaint to “clarify” that, in fact, it is
seeking damages from those defendants, just as it is seeking damages from Westport.
(Br. in Supp. of Mot. for Leave at 1, ECF No. 78.) Moreover, Eaton points out that it has
always sought injunctive relief against the four defendants. Eaton argues that because
it seeks non-declaratory relief against all of the defendants, I cannot abstain from
exercising jurisdiction over any of its claims under Wilton/Brillhart. The four defendants
oppose the motion to amend. They also contend that, even though Eaton seeks forms
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of non-declaratory relief against them, abstention under Wilton/Brillhart is not foreclosed
because Eaton’s claims for non-declaratory relief are not “independent” of the claims for
declaratory relief. In this order, I consider the motion to amend and the motion for
reconsideration. I also briefly discuss a third motion—Eaton’s motion to compel—that
relates to these matters.
As noted, Eaton proposes to file a second amended complaint to clarify that it
seeks damages from AIU, Granite State, New Hampshire, and North River for breach of
contract. Eaton contends that its first amended complaint already contains claims for
damages against these four defendants, and that the second amended complaint
merely makes the request for damages explicit. This is a fair characterization of the
pleadings. Although Eaton’s first amended complaint demanded only declaratory and
injunctive relief against the defendants other than Westport, it alleged that those
defendants had breached the insurance policies they issued to Eaton by failing to
defend it in the underlying asbestos suits and to indemnify it with respect to any
judgments or settlements in those suits.
(First Am. Compl. ¶¶ 12–13, 25, 50–54.)
Under federal notice pleading standards, this was sufficient to state a claim for breach
of contract against the four defendants. See Fed. R. Civ. P. 8(a); Bartholet v. Reishauer
A.G., 953 F.2d 1073, 1077–78 (7th Cir. 1992) (noting that litigants are not required to
draft complaints with multiple counts or to plead legal theories). Moreover, Eaton’s not
including a demand for damages against the four defendants in the first amended
complaint would not have prevented it from later seeking damages in connection with its
claim for breach of contract. See Fed. R. Civ. P. 54(c) (specifying that every judgment
other than a default judgment “should grant the relief to which each party is entitled,
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even if the party has not demanded that relief in its pleadings”). Thus, the proposed
second amended complaint does not alter the claims asserted against the four
defendants. Indeed, amending the complaint to include an explicit count for breach of
contract and an explicit demand for damages is likely unnecessary. However, because
Eaton has requested leave to amend, and because granting leave will not prejudice the
defendants, I will grant Eaton’s motion for leave. See Fed. R. Civ. P. 15(a)(2); Forman
v. Davis, 371 U.S. 178, 182 (1962).
The four defendants contend that Eaton’s claims for injunctive relief and
damages are “wholly dependent” on its claim for declaratory relief, and that therefore
the presence of such claims does not prevent me from abstaining under Wilton/Brillhart.
The Seventh Circuit used the “wholly dependent” phrase in R.R. Street in the course of
explaining that a district court may abstain from hearing an entire action that includes
requests for non-declaratory relief when the claims for non-declaratory relief are not
“independent” of a claim for declaratory relief. 569 F.3d at 716–17 & n.6. The court
explained that “[a] claim for non-declaratory relief is ‘independent’ of the declaratory
claim if: 1) it has its own federal subject-matter-jurisdictional basis, and 2) its viability is
not wholly dependent upon the success of the declaratory claim.” Id. at 717 n.6. The
court further explained that an independent claim is one “that would continue to exist if
the request for a declaration simply dropped from the case.” Id. (emphasis removed).
Here, the four defendants argue that Eaton’s injunction and damages claims are
dependent on the declaratory claim because they will stand or fall together. (See Reply
Br. in Supp. of Mot. for Reconsideration at 5.) It is true that Eaton’s request for an
injunction and damages will likely fail if the request for declaratory relief fails. That is so
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because Eaton essentially asserts only a single claim for breach of contract against
each insurer, for which the various forms of relief—damages, an injunction, and a
declaratory judgment—are merely remedies. Thus, if Eaton fails to show that an insurer
breached its insurance policy, then Eaton will not be entitled to any relief against that
insurer.
But a non-declaratory claim is not “dependent” on a declaratory claim
whenever it is impossible to win the non-declaratory claim without also winning the
declaratory claim. Rather, in this context, “dependence” means that it is not possible to
litigate the non-declaratory claim in federal court without the declaratory claim’s being
part of the case. As discussed above, a non-declaratory claim is independent of the
declaratory claim if the non-declaratory claim would remain viable “if the request for a
declaration simply dropped from the case.” R.R. Street, 569 F.3d at 717 n.6. Here, this
test is met. If the request for declaratory relief dropped from the case, the requests for
damages and injunctive relief would survive, as the underlying claim for breach of
contract would still be viable. In other words, even if I dismissed Eaton’s request for
declaratory relief right now, Eaton’s claims for breach of contract, together with its
requests for damages and an injunction, could proceed. Therefore, I have no discretion
to abstain under Wilton/Brillhart.
The defendants’ motion for reconsideration of my
denial of their motion to dismiss will be denied.
Before moving on, I note that the four defendants, in their motion for
reconsideration, make an alternative request that I certify that my prior order denying
their motion to dismiss meets the standard for taking an interlocutory appeal under 28
U.S.C. § 1292(b). The standard requires, among other things, that the order involve a
controlling question of law as to which there is substantial ground for difference of
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opinion. Id. Here, I see no substantial ground for difference of opinion as to whether I
have discretion to abstain under Wilton/Brillhart. As explained above, Eaton asserts
independent claims for non-declaratory relief against all of the defendants, and R.R.
Street clearly establishes that in such circumstances a court may not abstain under
Wilton/Brillhart. Therefore, the defendants’ request for certification under § 1292(b) will
be denied.
Finally, I address Eaton’s motion to compel discovery from the four defendants.
Eaton served requests for written discovery on these defendants more than a year ago
but then agreed that the defendants did not need to respond until their motion to dismiss
was decided. Recently, Eaton determined that the pendency of the defendants’ motion
for reconsideration should not further delay their discovery responses and demanded
that the defendants respond by March 21, 2018. When the defendants refused, Eaton
filed its motion to compel. I will deny this motion as moot. Now that I have decided the
motion for reconsideration, I expect that the parties will confer and attempt to agree on
appropriate deadlines for the defendants to respond to the written discovery. In the
event that the parties cannot agree, any party may file a motion seeking appropriate
relief.
For the reasons stated, IT IS ORDERED that Eaton’s motion for leave to file a
second amended complaint (ECF No. 77) is GRANTED.
IT IS FURTHER ORDERED that the four defendants’ motion for reconsideration
and/or certification of the order denying their motion to dismiss (ECF No. 80) is
DENIED.
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FINALLY, IT IS ORDERED that Eaton’s motion to compel (ECF No. 94) is
DENIED.
Dated at Milwaukee, Wisconsin, this 4th day of April, 2018.
s/ Lynn Adelman
LYNN ADELMAN
District Judge
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