Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Federal Insurance Co. v. Northfield Insurance Co.

United States District Court, S.D. Texas, Houston Division

June 26, 2018

FEDERAL INSURANCE COMPANY, Plaintiff/Counter-Defendant,
v.
NORTHFIELD INSURANCE COMPANY, Defendant/Counter-Plaintiff/Third Party Plaintiff,
v.
BRYAN C. WAGNER, et al., Third Party Defendants.

          MEMORANDUM AND ORDER

          NANCY F. ATLAS SENIOR UNITED STATES DISTRICT JUDGE

         This 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.[1] The Third-Party Insurers timely filed a joint response in opposition to the Motion, to which the Wagner Parties timely replied.[2] 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.

         I. BACKGROUND

         The 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 entered judgment.[3]

         On 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].

         Approximately 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.[4]

         Subsequent 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.

         II. LEGAL STANDARD

         The 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).

         In 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.

         “[A] 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).

         A 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.

         III. ANALYSIS

         A. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.