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Landmark American Insurance Co. v. AJ Constructors, Inc.

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

September 19, 2019

LANDMARK AMERICAN INSURANCE COMPANY AND RSUI INDEMNITY COMPANY, Plaintiffs,
v.
AJ CONSTRUCTORS, INC., et al., Defendants.

          MEMORANDUM OPINION

          NANCY K. JOHNSON, UNITED STATES MAGISTRATE JUDGE

         Pending before the court[1] is Defendants Woodsboro Farmers Cooperative (“Woodsboro”) and E.F. Erwin, Inc.’s (“Erwin”) Motion to Dismiss (Doc. 13). The court has considered the motion, the response, all other relevant filings, and the applicable law. For the reasons set forth below, the court GRANTS Defendants’ motion.

         I. Case Background

         Plaintiffs filed this suit seeking a declaratory judgment that they are not required to indemnify Defendants AJ Constructors, Inc. (“AJC”), and Erwin for damages awarded against them in a state court lawsuit filed by Defendant Woodsboro (the “Woodsboro Lawsuit”).

         Plaintiff Landmark American Insurance Company (“Landmark”) issued a general liability policy to AJC with an effective period of October 28, 2012, to October 28, 2013.[2] Plaintiff RSUI Indemnity Company (“RSUI”) issued a commercial excess liability policy to AJC with the same effective period.[3] Both policies were cancelled on May 31, 2013.[4]

         On March 1, 2013, Erwin entered into an agreement with Woodsboro to construct two grain silos at Woodsboro’s grain-handling facility.[5] On March 2, 2013, Erwin and AJC entered into a subcontract agreement obligating AJC to construct the silos.[6] The silos were completed on November 1, 2013, but the work was allegedly defective.[7]

         On November 25, 2013, Woodsboro and Erwin entered into an addendum to their contract.[8] Per the addendum, Erwin was obligated to remedy a specific list of defects with the silos.[9] Erwin was purportedly unable to remedy those defects and the Woodsboro Lawsuit was filed against Erwin on August 29, 2014, in Texas state court.[10] At some unspecified time, AJC was added to the the Woodsboro Lawsuit by Erwin.[11]

         On May 8, 2017, the state court sent the Woodsboro Lawsuit to arbitration.[12] On October 10, 2018, the arbitration panel entered its final award in the Woodsboro Lawsuit.[13] The arbitration panel awarded damages against Erwin in favor of Woodsboro and against AJC in favor of Erwin.[14]

         On October 24, 2018, Landmark and RSUI (collectively, the “Plaintiffs”) filed this lawsuit against Erwin, AJC, and Woodsboro, seeking a declaratory judgment that they do not have to indemnify either Erwin or AJC for damages awarded in the Woodsboro lawsuit.[15]On December 21, 2018, in lieu of an answer, Erwin and Woodsboro filed their pending motion to dismiss, arguing that this declaratory action is not ripe for a decision and should be dismissed pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(1).[16] Also on December 21, 2018, Woodsboro filed a motion to confirm the arbitration award in state court.[17]

         On January 4, 2019, Plaintiffs filed a response to the motion to dismiss.[18] On January 11, 2019, Erwin and Woodsboro filed a reply in support of their motion to dismiss.[19] On January 16, 2019, Erwin and Woodsboro filed a supplement to their motion to dismiss.[20]On January 17, 2019, Plaintiffs filed a supplemental response to the motion to dismiss.[21]

         On September 12, 2019, the court held a status conference to determine the status of the motion to confirm the arbitration award. At the hearing, the parties represented that the confirmation of the arbitration award was continued by the state court until approximately June 2020, and the case was sent back to the arbitration panel for the panel to consider modifying the amount of fees awarded. The parties also represented that a modification of the fees was the only issue remaining and that there was no reason that the arbitration award would not be confirmed after the arbitration panel’s resolution of the fees issue.

         II. Legal Standard

         Pursuant to Rule 12(b)(1), dismissal of an action is appropriate whenever the court lacks subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1), 12(h)(3). The party asserting jurisdiction bears the burden of proof to show that jurisdiction does exist. Gilbert v. Donahoe, 751 F.3d 303, 307 (5th Cir. 2014)(citing Ramming v. United States, 281 F.3d 158, 161 (5thCir.2001)).

         The court may decide a motion to dismiss for lack of jurisdiction on any of three bases: “(1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.” Ramming, 281 F.3d at 161 (citing Barrera-Montenegro v. United States, 74 F.3d 657, 659 (5th Cir. 1996)). The court, in determining whether it is properly vested with subject matter jurisdiction, is “free to weigh the evidence and resolve factual disputes in order to satisfy itself that it has the ...


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