931 F.2d 744 (11th Cir. 1991), 89-3791, United States Fire Ins. Co. v. Caulkins Indiantown Citrus Co.

Docket Nº:89-3791, 89-3981.
Citation:931 F.2d 744
Party Name:UNITED STATES FIRE INSURANCE COMPANY, a New York Insurance Company, Plaintiff-Appellant, v. CAULKINS INDIANTOWN CITRUS COMPANY, Caulkins Citrus Company, Ltd., Caulkins Indiantown Groves, Ltd., Caulkins Land Development, Ltd., Venture II, Caulkins Ford Motors, Inc., all d/b/a Caulkins, individually and in his official capacity as General Partner in
Case Date:May 16, 1991
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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931 F.2d 744 (11th Cir. 1991)

UNITED STATES FIRE INSURANCE COMPANY, a New York Insurance

Company, Plaintiff-Appellant,

v.

CAULKINS INDIANTOWN CITRUS COMPANY, Caulkins Citrus Company,

Ltd., Caulkins Indiantown Groves, Ltd., Caulkins Land

Development, Ltd., Venture II, Caulkins Ford Motors, Inc.,

all d/b/a Caulkins, individually and in his official

capacity as General Partner in all the Limited Partnerships

and as President of the Corporation, Wayne Thomas,

individually and in his corporate capacity, and Palmer

Tuthill, individually and in his corporate capacity, and

Hugh Cotton Insurance, Inc., a Florida corporation,

Defendants-Crossclaim Plaintiffs-Appellees,

"J.L." Johns, individually and in his corporate capacity and

The Travelers, a Connecticut corporation, Defendants,

Florida Farm Bureau and Travelers Indemnity Company,

Crossclaim Defendants-Appellees,

The Phoenix Insurance Company, Charter Oak Fire Insurance

Company, and Travelers Indemnity Company of

America, Crossclaim Defendants.

UNITED STATES FIRE INSURANCE COMPANY, Plaintiff-Appellant,

v.

CAULKINS INDIANTOWN CITRUS CO., et al.,

Defendants-Crossclaim Plaintiffs,

The Travelers, a Connecticut corporation, Hugh Cotton

Insurance, Inc., a Florida corporation, Florida Farm Bureau

Mutual Insurance Company, a Florida corporation, and Florida

Farm Bureau Casualty Insurance Company, a Florida

corporation, Defendants-Crossclaim Plaintiffs-Appellees.

Nos. 89-3791, 89-3981.

United States Court of Appeals, Eleventh Circuit

May 16, 1991

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John A. Reed, Jr., Lowndes, Dorsdick, Doster, Kantor & Reed, P.A., Dennis J.

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Wall, Dennis J. Wall, P.A., Orlando, Fla., for plaintiff-appellant.

Donald O'Dell, Markel, McDonough & O'Neal, Orlando, Fla., for Hugh Cotton Ins., Inc.

Bernard H. Dempsey, Jr., Dempsey & Associates, P.A., Winter Park, Fla., for Caulkins, et al., Wayne Thomas, Palmer Tuthill and J.L. Johns.

Duncan B. Dowling, III, Rogers & Dowling, P.A., Orlando, Fla., for Travelers Ins. Co.

Gregor M. Gaebe, Gaebe, Murphy, Mullen & Antonelli, David Kleinberg, Coral Gables, Fla., for Florida Farm Bureau.

Appeal from the United States District Court for the Middle District of Florida, Orlando Division.

Before HATCHETT and EDMONDSON, Circuit Judges, and PECKHAM [*], Senior District Judge.

PECKHAM, Senior District Judge.

Appellant United States Fire Insurance Company ("U.S. Fire") brought suit in the District Court, seeking declaratory relief and indemnification from primary insurers The Travelers and Florida Farm Bureau for insurance coverage provided by U.S. Fire, and declaratory relief regarding the Caulkins Group of defendants. The District Court dismissed all claims against the Caulkins Group. The Court also decided that U.S. Fire had no right to pursue indemnification from the primary insurers, and thus granted summary judgment in favor of The Travelers and Florida Farm Bureau, and denied U.S. Fire's motions for partial summary judgment against these other insurers. U.S. Fire appeals these rulings.

We affirm the District Court in its dismissal of the Caulkins Group for lack of federal jurisdiction, partially affirm the summary judgment rulings, and dismiss the remainder as moot.

FACTS

The Caulkins Group has been insured under policies issued by appellee insurance companies, The Travelers and Florida Farm Bureau, as well as under an excess insurance policy issued by appellant U.S. Fire. The current dispute arises from two discrimination suits brought against the Caulkins Group in the United States District Court for the Southern District of Florida. Robinson, et al. v. Caulkins Indiantown Citrus Company, et al., No. 83-8655-CIV (S.D.Fla.), initiated in 1983 and still pending as of the date of oral argument before our court, is based upon allegations of race discrimination. Jurisdiction was conferred pursuant to 28 U.S.C. Secs. 1331 and 1343, 42 U.S.C. Sec. 1981, and 42 U.S.C. Sec. 2000e, et seq. Milord, et al. v. Caulkins Indiantown Citrus Company, et al., No. 86-8259-CIV (S.D.Fla.), filed in 1986 and settled in March of 1989, was a sex discrimination case based upon the provisions of Title VII of the Civil Rights Act of 1964 as amended, 42 U.S.C. Sec. 2000e, et seq.

In connection with the settlement of a suit brought against it by the Caulkins Group, U.S. Fire agreed in October of 1988 to pay certain defense fees and costs already incurred by the Caulkins Group with respect to Robinson and Milord, to assume the defense and pursue settlement of those underlying suits, and to indemnify the Caulkins Group "subject to the policy limits" for any settlement or judgment resulting from those actions.

Plaintiff U.S. Fire then brought suit in District Court, seeking declaratory relief on a number of questions concerning its own and the defendant insurers' obligations and coverage defenses. The Court was asked to determine which, if any, of the three insurers had a duty to defend the Caulkins Group in Robinson and Milord, and to what extent any of these insurers are obligated to pay defense costs already incurred and defense costs to be incurred in the future. In addition to this declaratory

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relief, plaintiff sought reimbursement from The Travelers and Florida Farm Bureau for expenses plaintiff had already incurred in defending the Caulkins Group in Robinson and Milord.

The District Court held that, since under the settlement agreement no case or controversy existed between U.S. Fire and Caulkins, federal jurisdiction was lacking, and all claims against Caulkins were dismissed. The Court also decided that U.S. Fire had agreed through settlement with Caulkins, to become its primary insurer with regard to Robinson and Milord. The Court found Florida law to mandate that such an agreement does not preserve a right to pursue indemnification from other primary insurers, unless such a right is agreed to by the primary insurers. U.S. Fire appeals these holdings.

DISCUSSION

A. Dismissal of Claims against Caulkins

Standard of Review

The District Court's dismissal of U.S. Fire's claims against Caulkins is reviewed de novo. Powell v. Lennon, 914 F.2d 1459, 1463 (11th Cir.1990). The court should deny dismissal "if the plaintiff alleges sufficient facts to support a reasonable inference that defendant can be subjected to jurisdiction of the court." Jackam v. Hospital Corp. of America Mideast, Ltd., 800 F.2d 1577, 1579 (11th Cir.1986). That is, a complaint against a party must not be dismissed unless plaintiff can prove no set of facts in support of any claim which would entitle them to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957).

Declaratory Judgment Act, 28 U.S.C. Sec. 2201

The only issue on appeal in this action as it relates to the Caulkins Group of defendants, is whether an actual controversy exists within the meaning of the Declaratory Judgment Act, 28 U.S.C. Sec. 2201 (1982), between U.S. Fire and the Caulkins Group.

Under the United States Constitution, the federal judicial power extends only to "cases" or "controversies". U.S. Const. art. III, Sec. 2, cl. 1. Thus, Congress confined federal jurisdiction in employing the declaratory remedy to cases of actual controversy. The Declaratory Judgment Act provides in relevant part:

In a case of actual controversy within its jurisdiction ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.

28 U.S.C. Sec. 2201 (1982). For this reason, in the instant case, as in all federal cases, a threshold question in an action for declaratory relief must be whether a justiciable controversy exists. Wendy's Int'l v. City of Birmingham, 868 F.2d 433, 435 (11th Cir.1989); Brown & Root, Inc. v. Big Rock Corp., 383 F.2d 662, 665 (5th Cir.1967).

Whether such a controversy exists is determined on a case-by-case basis. Wendy's Int'l, 868 F.2d at 435-36. However, "[t]he controversy must be definite and concrete, touching the legal relations of parties having adverse legal interests." Brown & Root, 383 F.2d at 665 (citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41, 57 S.Ct. 461, 464, 81 L.Ed. 617 (1937)). At an irreducible minimum, the party who invokes the court's authority under Article III must show: (1) that they personally have suffered some actual or threatened injury as a result of the alleged conduct of the defendant; (2) that the injury fairly can be traced to the challenged action; and (3) that it is likely to be redressed by a favorable decision. Valley Forge College v. Americans United, 454 U.S. 464, 472, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982). In addition, the controversy must be "live" throughout the case; federal jurisdiction is not created by a previously existing dispute. Chiles v. Thornburgh, 865 F.2d 1197, 1202 (11th Cir.1989).

No such defined and active controversy can be found in the instant case. On October 12, 1988, the Caulkins Group executed a "Compromise Settlement Agreement"

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with U.S. Fire, addressing the obligations of U.S. Fire to reimburse Caulkins for the expenses of their defense in the Robinson and Milord actions, as well as undertake and pay for the further defense and settlement of those suits. Caulkins now contends that this agreement dissolved any existing controversy, thus leaving U.S. Fire without standing to bring the Caulkins Group to federal court. Indeed, the settlement of a dispute generally renders a case moot. Local No. 8-6, Oil, Chemical & Atomic Workers International Union v. Missouri, 361 U.S. 363, 80 S.Ct. 391, 4 L.Ed.2d 373 (1960); ITT Rayonier Inc. v. United States, 651 F.2d 343, 345 (5th Cir.1981) (court will find mootness after settlement...

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