Am. Nat'l Prop. & Cas. Com. v. Whisenant
| Decision Date | 08 September 2020 |
| Docket Number | Civ. No. 19-1024 KG/KK |
| Court | U.S. District Court — District of New Mexico |
| Parties | AMERICAN NATIONAL PROPERTY AND CASUALTY COMPANY, a foreign insurer, Plaintiff, v. JOHN HAROLD WHISENANT, individually and as THE PERSONAL REPRESENTATIVE OF THE ESTATE OF JOYCE MOWERY WHISENANT, the ESTATE OF JOYCE MOWERY WHISENANT, WHIZ REALTY, LLC, a New Mexico Limited Liability Company, and WHIZWAY FARM, L.L.C., a New Mexico Limited Liability Company, WHIZ FAMILY, LLC, a New Mexico Limited Liability Company, WHIZWAY INVESTMENT & FACILITY DEVELOPMENT, LLC, a New Mexico Limited Liability Company, ELIAS BARELA, individually and as assignee and successor in interest to JANICE WITTROCK, an Involuntary Defendant, Defendants. |
This matter comes before the Court upon Defendants John Harold Whisenant and Estate of Joyce Mowery Whisenant's (collectively, the Whisenants) Motion to Dismiss and to Abstain, filed on December 18, 2019.1 (Doc. 11). Plaintiff responded on January 9, 2020, and the Whisenants replied on January 23, 2020. (Docs. 17 and 19). Having reviewed the Motion to Dismiss and to Abstain, the accompanying briefing, and American National Property and Casualty Company's Complaint for Declaratory Judgment and Relief (Federal Complaint)(Doc.1), the Court grants the Motion to Dismiss and to Abstain in that it will dismiss this lawsuit without prejudice for lack of federal subject matter jurisdiction.
This insurance declaratory judgment lawsuit arises from a state lawsuit concerning a real estate dispute. In November 2018 Defendant Elias Barela, individually and as the assignee and successor in interest to Janice Wittrock, an involuntary Defendant, (Barela) filed the underlying state lawsuit in the Thirteenth Judicial District Court, County of Valencia, State of New Mexico. In September 2019 Barela filed a Second Amended Civil Complaint for Damages (Second Amended State Complaint) in that lawsuit. (Doc. 1-1) (attached to Federal Complaint).
Barela alleges that Mr. and Mrs. Whisenant owned the following limited liability companies: Whiz Realty, LLC; Whizway Farm, LLC; Whiz Family, LLC; and Whizway Investment & Facility Development LLC (collectively, the LLCs, and now Defendants in this federal lawsuit). Barela alleges that "Mr. Whisenant and/or Mrs. Whisenant" acted individually as well as alter egos of the LLCs. (Doc. 1-1) at ¶ 8. Indeed, Barela alleges that "Mr. Whisenant and/or Mrs. Whisenant dominated and controlled" the LLCs. Id. Mrs. Whisenant was also a qualified broker for Whiz Realty, LLC. See id. at ¶ 60.
Barela alleges that in 2007 he owned a parcel of land in Valencia County located next to two parcels of land owned by the LLCs. Id. at ¶¶ 8, 16-18. The three parcels of land were zoned as Agricultural Reserve. Id. at ¶ 29. Barela asserts that in 2007 he and Mr. Whisenant entered into an agreement to combine the parcels of land to create the Rancho De Los Chavez subdivision. Id. at ¶¶ 20-27.
To create the subdivision, Barela and Mr. Whisenant submitted a 2008 request to the Board of County Commissioners of Valencia County to amend the zoning of the parcels of land to Rural Residential. Id. at ¶¶ 29 and 31. According to Barela, the Board of County Commissioners of Valencia County approved the zoning change in 2009. Id. at ¶ 34.
Several persons, however, sued the Board of County Commissioners of Valencia County, Barela, and Mr. Whisenant in state court over the zoning change. Id. at ¶ 36. After that litigation terminated, the Board of County Commissioners of Valencia County conditionally approved the Rancho De Los Chavez Preliminary Plat in 2016. Id. at ¶¶ 42-43, 46.
Despite the approval of the preliminary plat, Barela alleges that "Mr. Whisenant refused to go forward with the agreement to create the Rancho De Los Chavez Subdivision." Id. at ¶ 49. According to Barela, in 2017, Mr. Whisenant, acting individually and as a representative of the LLCs, advertised that the two parcels of land owned by the LLCs were for sale as agricultural land. Id. at ¶¶ 50-51. Barela asserts that in June 2018 Mr. Whisenant entered into an agreement with Joseph Gallegos to purchase the two parcels of land owned by the LLCs. Id. at ¶¶ 53-54.
In November 2018, prior to the completion of that purchase agreement, Barela filed his state lawsuit in which he sued Mr. and Mrs. Whisenant and the LLCs for failure to abide by the agreement to create the Rancho De Los Chavez subdivision. Gallegos then temporarily halted the sale of the two parcels of land due to a lis pendens related to Barela's state lawsuit. Id. at ¶¶ 55-58. Although Barela's state lawsuit was still pending, Barela alleges that in May 2019 "Mr. Whisenant and Mrs. Whisenant, as the qualified broker for Defendant Whiz Realty, LLC," sold the two parcels of land to Gallegos. Id. at ¶ 60. In September 2019 Barela filed the Second Amended State Complaint to add Gallegos as a Defendant. See (Doc. 11) at 2.
Barela brings numerous claims in his lawsuit but does not seek a sum certain for damages. Id. at ¶¶ 64-124. Pertinent to this Motion to Dismiss and to Abstain, Barela brings a negligent misrepresentation claim against Mr. Whisenant, individually.2 Id. at ¶¶ 94-99.
Barela attached to the Second Amended State Complaint a "Total Project Budget for RANCHO DE LOS CHAVEZ 2-2-17." (Doc. 1-6). That document indicates that Barela and Janice Wittrock would pay an estimated $95,944.62 to create the Rancho De Los Chavez subdivision while Mr. Whisenant would pay an estimated $413,857.50. Id. at 2-3. Mr. Whisenant already paid $63,807.41 toward creating the Rancho De Los Chavez subdivision. Id. at 2. The total estimated cost of the project was $573,609.43. Id. at 1.
Barela also attached to the Second Amended State Complaint a portion of an American Land Title Association (ALTA) title insurance commitment form. Id. at 4. That form indicates that Whiz Farm, LLC owned the two parcels of land that Gallegos purchased. Id.
The Court takes judicial notice that in April 2020 the Whisenants and Whiz Realty, LLC, filed in Barela's state lawsuit a third-party complaint against American National Property and Casualty Company (Plaintiff in this federal lawsuit), Continental Casualty Company (CCC), and Rice Insurance Services Company, LLC (Rice).3 New Mexico Case Lookup, Thirteenth JudicialDistrict Court, Valencia County, Case No.: D-1314-CV-2018-01322; see also Binford v. United States, 436 F.3d 1252, 1256 n. 7 (10th Cir. 2006) (). Barela's state lawsuit remains pending.
The Whisenants state that after Barela filed the Second Amended State Complaint, Mr. and Mrs. Whisenant "requested that [Plaintiff] provide a defense for the negligence claim under their homeowner and umbrella policy." (Doc. 11) at 2. The Court assumes that the Whisenants refer to the negligent misrepresentation claim against Mr. Whisenant, individually, the only negligence claim raised in the state lawsuit. According to the Whisenants, Plaintiff "provided a defense under a reservation of rights" and subsequently filed this federal declaratory judgment action against the Whisenants, the LLCs, and Barela. See Id. at 3. Plaintiff seeks a declaration that the homeowner and umbrella insurance policies, both issued to Mr. and Mrs. Whisenant and naming only Mr. and Mrs. Whisenant as insureds, do not provide coverage for the Whisenants, the LLCs, or Barela.
Plaintiff alleges that the Court has diversity subject matter jurisdiction over this lawsuit. To establish diversity subject matter jurisdiction, Plaintiff alleges both diversity of citizenship and an amount in controversy in excess of $75,000. See 28 U.S.C. § 1332(a)(1). More particularly, Plaintiff alleges diversity of citizenship between it, a foreign corporation with its principal place of business in Missouri, and Defendants, all New Mexico citizens. (Doc. 1) at ¶¶ 1-8. With respect to the $75,000 amount in controversy, Plaintiff contends that the "aggregate liability limits" of the homeowner and umbrella insurance policies exceed $75,001. Id. at ¶ 9.Plaintiff also contends that "Defendants have made a demand upon Plaintiff in excess of $75,001.00, exclusive of interests and costs, but including attorney's fees, punitive damages, reimbursement for damages already paid and damages for future expenses." Id. at ¶ 10. Finally, Plaintiff contends that the total estimated project cost to create the Rancho De Los Chavez subdivision, $573,609.43, demonstrates that the amount in controversy exceeds $75,001. Id.
The Whisenants move under Fed. R. Civ. P. 12(b)(1) to dismiss this lawsuit for lack of federal subject matter jurisdiction. The Whisenants specifically contend that Plaintiff "has failed to allege facts sufficient to meet its burden of proof that the amount in controversy exceeds $75,000." (Doc. 11) at 1. The Whisenants also move under Fed. R. Civ. P. 12(b)(6) to dismiss all Defendants, except the Whisenants. (Doc. 11) at 3-4. Finally, if the Court does not dismiss this lawsuit, the Whisenants "request[] that the Court abstain from hearing this matter or stay this action until the conclusion of the underlying lawsuit." Id. at 1. Plaintiff opposes the Motion to Dismiss and to Abstain in its entirety.
The Court must decide whether it has federal subject matter jurisdiction over this lawsuit before it can decide the Rule 12(b)(6) and abstention/stay issues. Hence, the Court addresses the Rule 12(b)(1) motion to dismiss first.
Rule 12(b)(1) empowers a court to dismiss a complaint for "lack of subject matter jurisdiction." Fed. R. Civ. P. 12(b)(1). It is well-established that "[f]ederal courts are courts of limited jurisdiction; they are empowered to hear only those cases authorized and defined...
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