United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND ORDER
F. ATLAS SENIOR UNITED STATES DISTRICT JUDGE
insurance coverage dispute is before the Court on Third-Party
Defendants Bryan C. Wagner and Wagner Oil Company's
(collectively, the “Wagner Parties”) Motion to
Dismiss (the “Motion”) [Doc. # 248] cross-claims
filed by the Third-Party Defendant Insurers. The
Third-Party Insurers timely filed a joint response in
opposition to the Motion, to which the Wagner Parties timely
replied. The Motion is now ripe for
determination. After considering the parties' briefing,
all pertinent matters of record, and the applicable legal
authorities, the Court denies the Motion.
complete procedural and factual background for this
longstanding litigation is addressed in the Court's
November 15, 2017, Memorandum and Order (the
“M&O”) [Doc. # 191');">191');">191');">191');">191');">191');">191');">191]. The Court focuses here
only on the facts germane to the pending Motion. Generally
speaking, this litigation revolves around the issue of
whether certain insurers have a contractual duty to defend or
indemnify the Wagner Parties in connection with an ongoing
lawsuit currently being litigated in Texas state court (the
“Texas Suit”). In the Texas Suit, ExxonMobil
Corporation (“Exxon”) alleges that the Wagner
Parties are contractually obligated to defend and indemnify
it from claims asserted against it in two separate lawsuits
filed in Louisiana state courts (collectively, the
“Louisiana Lawsuits”). Specifically, Exxon
alleges that the claims asserted in the Louisiana Lawsuits
against it stem from unspecified “environmental
damage” to one or more properties located in Louisiana
subject to mineral rights purchased by the Wagner Parties
from Exxon. In April 2016, the jury in the Texas Suit
rendered a substantial verdict against the Wagner Parties.
However, to date, the trial court in the Texas Suit has not
January 30, 2017, Defendant Northfield Insurance Company
(“Northfield”) filed a Third-Party Complaint
against certain Third-Party Insurers [Doc. # 59] regarding
those insurers obligations to defend and indemnify the Wagner
Parties in the Texas Suit. On September 19, 2017, Northfield
amended its Third-Party Complaint to include the remaining
Third-Party Insurers [Doc. # 153].
two months later, the Court issued the M&O. In the
M&O, the Court concluded that, under the terms of the
policy it issued to the Wagner Parties, Northfield has a duty
under Texas law to defend the Wagner Parties in the Texas
Suit. The Court also concluded that the issue of
Northfield's duty to indemnify the Wagner Parties with
respect to the Texas Suit was not ripe for adjudication
because final judgment had not been entered in that matter.
Consequently, the Court stayed Northfield's claims for
declaratory judgment on the issue of its duty to indemnify
the Wagner Parties in connection with the Texas Suit.
to issuance of the M&O, the Third-Party Insurers filed
counterclaims against Northfield and cross-claims against the
Wagner Parties seeking declaratory judgment that the
Third-Party Insurers, under the terms of their respective
policies, have no duty to defend or indemnify the Wagner
Parties in relation to the Texas Suit. By the Motion, the
Wagner Parties seek dismissal of the Third-Party
Insurers' cross-claims due to lack of subject matter
jurisdiction on the ground no justiciable controversy exists
between themselves and the Third-Party Insurers.
Specifically, the Wagner Parties contend that because they
are not currently seeking defense or indemnity from any
Third-Party Insurer, and because final judgment still has not
been entered in the Texas Suit, the Third-Party Insurers'
claims are not ripe for adjudication. For the reasons
discussed hereafter, the Court concludes that it has subject
matter jurisdiction over a live controversy between the
Wagner Parties and the Third-Party Insurers regarding the
latter's duty to defend the former in the Texas Suit.
Nevertheless, the Third-Party Insurers' cross-claims
regarding the duty to indemnify must be stayed at this time.
Declaratory Judgment Act “‘is an enabling act,
which confers discretion on the courts rather than an
absolute right on a litigant.'”
Sherwin-Williams Co. v. Holmes County, 343 F.3d 383,
389 (5th Cir. 2003) (quoting Wilton v. Seven Falls
Co., 515 U.S. 277, 287 (1995)). “‘The
Declaratory Judgment Act has been understood to confer on
federal courts unique and substantial discretion in deciding
whether to declare the rights of litigants.'”
Id. (quoting Wilton, 515 U.S. at 286).
“‘In the declaratory judgment context, the normal
principle that federal courts should adjudicate claims within
their jurisdiction yields to considerations of practicality
and wise judicial administration.'” Id.
(quoting Wilton, 515 U.S. at 289).
determining whether a declaratory judgment action is properly
before it, “[a] federal district court must determine
(1) whether the declaratory action is justiciable; (2)
whether the court has the authority to grant declaratory
relief; and (3) whether to exercise its discretion to decide
or dismiss the action.” Id. at 387; see
also Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891,
895 (5th Cir. 2000). An assertion that a declaratory judgment
action is not justiciable is an attack on the Court's
subject matter jurisdiction. See Orix Credit Alliance,
Inc., 212 F.3d at 895.
declaratory judgment action, like any other action, must be
ripe in order to be justiciable.” Id. at 896
(citing United Transp. Union v. Foster, 205 F.3d
851, 857 (5th Cir. 2000)). “A declaratory judgment
action is ripe for adjudication only where an ‘actual
controversy' exists.” Id. (citations
omitted). “[A]n actual controversy exists where a
substantial controversy of sufficient immediacy and reality
exists between parties having adverse legal interests.”
Id. (citations and internal quotation marks
omitted); accord Venator Group Specialty, Inc. v.
Mathew/Muniot Family, 322 F.3d 835, 838 (5th Cir. 2003).
plaintiff can prove a declaratory judgment action is
justiciable “by establishing actual present harm or a
significant possibility of future harm.” Roark
& Hardee LP v. City of Austin, 522 F.3d 533, 542
(5th Cir. 2008) (citation and internal quotation marks
omitted). “By its very nature, a declaratory judgment
action focuses on an injury that has not yet occurred; the
issue is whether the injury is sufficiently likely to justify
judicial intervention.” RSUI indem. Co. v. Enbridge
(U.S.) Inc., 2008 WL 5158179, at *2 (S.D. Tex. Dec. 9,
2008) (citing Orix Credit Alliance, Inc., 212 F.3d
at 898). “The threat of litigation, if specific and
concrete, can indeed establish a controversy upon which
declaratory judgment can be based.” Orix Credit
Alliance, Inc., 212 F.3d at 897.