Atlantic Cas. Ins. Co. v. Ramirez, No. 3:07-CV-1297-F.

CourtUnited States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Northern District of Texas
Writing for the CourtRoyal Furgeson
Citation651 F.Supp.2d 669
PartiesATLANTIC CASUALTY INSURANCE COMPANY, Plaintiff, v. Robert RAMIREZ, individually and d/b/a LBJ Trucking Co., Inc., Clem's Ye Olde Homestead Farms, Ltd., Bettye Crider Clem, Clarence Truman Clem, Kelly Clem, and Clarence T. "Casey" Clem, Jr., Defendants.
Docket NumberNo. 3:07-CV-1297-F.
Decision Date02 September 2009
651 F.Supp.2d 669
ATLANTIC CASUALTY INSURANCE COMPANY, Plaintiff,
v.
Robert RAMIREZ, individually and d/b/a LBJ Trucking Co., Inc., Clem's Ye Olde Homestead Farms, Ltd., Bettye Crider Clem, Clarence Truman Clem, Kelly Clem, and Clarence T. "Casey" Clem, Jr., Defendants.
No. 3:07-CV-1297-F.
United States District Court, N.D. Texas, Dallas Division.
September 2, 2009.

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COPYRIGHT MATERIAL OMITTED

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Camille Johnson, William A. Reece, Savrick Schumann Johnson McGarr Kaminski & Shirley, Dallas, TX, Gary N. Schumann, Savrick Schumann Johnson McGarr Kaminski & Shirley, Austin, TX, for Plaintiff.

Cody L. Towns, Amber Erin Kelm, Rodriguez Ghorayeb & Gersch LLP, Abigail B. Moore, Vincent J. Hess, Locke Lord Bissell & Liddell LLP, John W. Slates, Eric C. Lugger, Gardere Wynne Sewell, John M. Cox, John M. Cox & Associates PC, Dallas, TX, Jonathan M. Buck, Stephen C. Dickman, Kelly Hart & Hallman LLP, Austin, TX, for Defendants.

ORDER ADOPTING MAGISTRATE JUDGE'S FINDINGS, CONCLUSIONS, AND RECOMMENDATION

ROYAL FURGESON, District Judge.


BEFORE THE COURT are Magistrate Judge Paul Stickney's Findings, Conclusions, and Recommendation (Docket No. 39), filed May 12, 2008; Clem Defendants' Motion to Dismiss Plaintiff Atlantic Casualty Insurance Company's Claims Against Them, and Brief in Support (Docket No. 15), filed September 24, 2007; Atlantic Casualty's Response, and Brief in Support Thereof, to the Clem Defendants' Motion to Dismiss (Docket No. 16), filed October 14, 2007; and Clem Defendants' Response and Brief in Support of Their Motion to Dismiss Plaintiffs Claim Against Them (Docket No. 20), filed October 29, 2007. Upon consideration of the parties' briefings, the facts, and the applicable law, the Court is of the opinion that the Magistrate Judge's Findings, Conclusions, and Recommendation (Docket No. 39) should be ADOPTED and the Clem Defendants' Motion to Dismiss (Docket No. 15) should be DENIED.

Factual and Procedural Background

Plaintiff Atlantic Casualty Insurance Company ("Atlantic") has brought an action against Defendants Robert Ramirez ("Ramirez"), individually and doing business as LBJ Trucking Co., Inc. ("LBJ Trucking") (collectively, the "LBJ Defendants"), and Defendants Clem's Ye Olde Homestead Farms, Ltd., Bettye Crider Clem, Clarence Truman Clem, Kelly Clem, and Clarence T. "Casey" Clem, Jr. (collectively, the "Clem Defendants"). Atlantic seeks a declaratory judgment regarding defense and indemnity coverage under certain commercial general liability policies between Atlantic and the LBJ Defendants (the "Policies"). Atlantic insured LBJ Trucking Co., Inc., of which Ramirez is either an officer or director, under commercial

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general liability policies. Resp. at ¶ 1. The Clem Defendants contracted with Briscoe Land Reclamation to supply "clean fill material" to their property on Parker Road in Carrollton, Texas. Id. The LBJ Defendants are alleged to have transported the fill material, which the Clem Defendants allege was not clean fill material but rather foundry sand that they claim is environmentally unsuitable for their land. Id. Thereafter, the Clem Defendants filed suit ("Underlying Lawsuit") against the LBJ Defendants, amongst others, under federal pollution laws and state-law theories. Id.

This declaratory judgment action arises out of a demand by the LBJ Defendants for defense and indemnity coverage under the Policies in the Underlying Lawsuit. Id. at ¶ 2. Atlantic maintains that the Policies do not cover the alleged wrongful conduct of the LBJ Defendants as result of a pollution exclusion provision, a classification endorsement, and a claims-in-process exclusion contained within the Policies. Id. at ¶ 1. Atlantic also further maintains that the Policies do not cover Ramirez acting individually prior to the formation of LBJ Trucking Co., Inc. Id.

Although Atlantic has been paying for the defense of the LBJ Defendants in the Underlying Lawsuit, it has done so under a reservation of rights to contest coverage for the aforementioned reasons. Id. at ¶ 2. Accordingly, Atlantic seeks a declaration from this Court that the company has no duty to defend or indemnify the LBJ Defendants in the Underlying Lawsuit because of the policy exclusions, and has joined the Clem Defendants in this action given their status as potential judgment creditors against the LBJ Defendants. With the Clem Defendants joined as parties to this action, both defendant parties would be bound by this Court's resulting decision in this action. See Id. at ¶ 3.

The Clem Defendants have filed a motion to dismiss Atlantic's claims against them in this action pursuant to Federal Rules of Civil Procedure 12(b)(1), lack of subject matter jurisdiction, 12(b)(6), failure to state a claim, and/or the Court's discretionary power to decline jurisdiction over a declaratory judgment action. Mot. at ¶ 1. The Clem Defendants assert that no actual controversy currently exists between Atlantic and the Clem Defendants, and that an actual controversy, "will only exist at such time that the Clem Defendants obtain a favorable judgment in the Underlying Lawsuit." Id. at ¶ 28. As such, the Clem Defendants assert that they are not proper parties to this litigation and consequently Atlantic's claims against them should be dismissed. Id. at ¶ 4.

Standard of Review

The Clem Defendants contend that Atlantic's claims against them should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(1), lack of subject-matter jurisdiction, and 12(b)(6), failure to state a claim upon which relief can be granted. Id. at ¶ 1. When a motion to dismiss is predicated on both Rule 12(b)(1) and (6), the Court should first resolve the jurisdictional attack before addressing an attack on the merits of the claim. See Ramming v. United States, 281 F.3d 158, 161 (5th Cir.2001). When addressing a lack of subject matter defense, the Court can base its decision upon "(1) the complaint standing 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." Montez v. Dept. of Navy, 392 F.3d 147, 149 (5th Cir.2004) (citing Robinson v. TCI/US West Commc'ns, Inc., 117 F.3d 900, 904 (5th Cir.1997)). In weighing the evidence and resolving factual disputes, there is no presumption of the truthfulness of Atlantic's

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allegations in the complaint when determining whether or not the Court has jurisdiction in this case. Id.

Insofar as the Clem Defendants seek dismissal under Rules 12(b)(1) and (6), they rely primarily on the assertion that Atlantic's complaint does not present an actual case or controversy as required by the Constitution, and is therefore not within the scope of the Federal Declaratory Judgment Act. See Mot. at ¶ 12. Since the determination of whether a case or controversy exists is jurisdictional, the Court will first determine whether the Clem Defendant's 12(b)(1) motion to dismiss for lack of subject matter jurisdiction should be granted. See Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-41, 57 S.Ct. 461, 81 L.Ed. 617 (1937).

Analysis

Federal courts are courts of limited jurisdiction, and are limited under Art. Ill § 2 of the Constitution to hearing only "cases" and "controversies". Shields v. Norton, 289 F.3d 832, 834. The United States Supreme Court has distinguished between cases and controversies and has determined that in a declaratory judgment action, a controversy exists, "where the facts alleged ... show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826 (1941). (citing Aetna at 240-1). Moreover, for a Federal Court to exercise jurisdiction over a controversy, it must also be ripe, meaning that the controversy must be mature and not merely speculative. Shields at 835. The implication is that ripeness becomes a constitutional prerequisite to exercising jurisdiction. Id.

In the instant case, the Clem Defendants argue that the Court lacks jurisdiction because no controversy exists between them and Atlantic. Yet, the Supreme Court has determined that a declaratory judgment action brought by an insurance company against its insured and an injured party—a potential judgment creditor like the Clem Defendants—seeking liability determination against the insured in a state court action does constitute an actual controversy within the meaning of the Declaratory Judgment Act. Maryland Casualty at 272, 61 S.Ct. 510.

As in our present case, Maryland Casualty Co. ("Maryland Casualty") had agreed to indemnify the Pacific Coal and Oil Co. ("Pacific Coal") for third party injuries covered under the policy, and to defend Pacific Coal in any lawsuit brought by the third party as a result of alleged injuries. Id. at 271, 61 S.Ct. 510 In that case, an employee of Pacific Coal, the insured, was involved in an automobile collision with a third party, Joe Orteca ("Orteca"). Id. Orteca filed suit in state court against the insured to recover damages for injuries sustained in the collision. Id. Prior to the parties obtaining judgment in the underlying state court action, Maryland Casualty sought a determination of no duty to indemnify or defend Pacific Coal in the underlying lawsuit, and also sought a temporary injunction restraining the underlying lawsuit proceedings pending a final determination in the declaratory judgment action. Id. Orteca sought to have Maryland Casualty's complaint against him dismissed, claiming that the complaint did not state a cause of action against him. Id.

The Supreme Court found in Maryland Casualty that the facts alleged did satisfy the test for determining the existence of an `actual controversy' between Maryland Casualty and Orteca because the injured party was...

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5 practice notes
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    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
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    ...Moreover the required controversy must be ripe, not merely speculative. [884 F.Supp.2d 551]Atlantic Cas. Ins. Co. v. Ramirez, 651 F.Supp.2d 669, 673 (N.D.Tex.2009). The only parties to the Notes are Bancroft and FFD2; Ventures is not a signatory to, nor a guarantor of, the Notes and has no ......
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    • U.S. District Court — Eastern District of Texas
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    ...jurisdiction." Davis v. United States, 597 F.3d 646, 649 (5th Cir. 2009); see Ramming, 281 F.3d at 158; Atl. Cas. Ins. Co. v. Ramirez, 651 F. Supp. 2d 669, 677 (N.D. Tex. 2009). In ruling on such a motion, a court may consider "'(1) the complaint alone; (2) the complaint supplemented by und......
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    • August 1, 2012
    ...controversy."). Moreover the required controversy must be ripe, not merely speculative. Atlantic Cas. Ins. Co. v.Page 33Ramirez, 651 F. Supp. 2d 669, 673 (N.D. Tex. 2009). The only parties to the Notes are Bancroft and FFD2; Ventures is not a signatory to, nor a guarantor of, the Notes and ......
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    • United States
    • United States District Courts. 5th Circuit. Western District of Texas
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    ...v. Laminack, Pirtle & Martines, L.L.P., No. H–10–5200, 2011 WL 2174970, at *3–4 (S.D.Tex. June 3, 2011); Atl. Cas. Ins. Co. v. Ramirez, 651 F.Supp.2d 669, 674–75 (N.D.Tex.2009); Admiral Ins. Co. v. Little Big Inch Pipeline Co., 496 F.Supp.2d 787 (W.D.Tex.2007) (Cardone, J.); Sawyer, 2007 WL......
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5 cases
  • Bancroft Life & Cas. Icc, Ltd. v. FFD Res. II, LLC, Civil Action No. H–11–2384.
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • August 2, 2012
    ...Moreover the required controversy must be ripe, not merely speculative. [884 F.Supp.2d 551]Atlantic Cas. Ins. Co. v. Ramirez, 651 F.Supp.2d 669, 673 (N.D.Tex.2009). The only parties to the Notes are Bancroft and FFD2; Ventures is not a signatory to, nor a guarantor of, the Notes and has no ......
  • Akins v. Liberty County, CIVIL ACTION NO. 1:10-CV-328
    • United States
    • U.S. District Court — Eastern District of Texas
    • February 15, 2011
    ...jurisdiction." Davis v. United States, 597 F.3d 646, 649 (5th Cir. 2009); see Ramming, 281 F.3d at 158; Atl. Cas. Ins. Co. v. Ramirez, 651 F. Supp. 2d 669, 677 (N.D. Tex. 2009). In ruling on such a motion, a court may consider "'(1) the complaint alone; (2) the complaint supplemented by und......
  • Bancroft Life & Casualty ICC, Ltd. v. FFD Res. II, LLC, CIVIL ACTION H-11-2384
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • August 1, 2012
    ...controversy."). Moreover the required controversy must be ripe, not merely speculative. Atlantic Cas. Ins. Co. v.Page 33Ramirez, 651 F. Supp. 2d 669, 673 (N.D. Tex. 2009). The only parties to the Notes are Bancroft and FFD2; Ventures is not a signatory to, nor a guarantor of, the Notes and ......
  • Canal Ins. Co. v. Xmex Transp., LLC, No. EP–13–CV–156–KC.
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    • United States District Courts. 5th Circuit. Western District of Texas
    • March 4, 2014
    ...v. Laminack, Pirtle & Martines, L.L.P., No. H–10–5200, 2011 WL 2174970, at *3–4 (S.D.Tex. June 3, 2011); Atl. Cas. Ins. Co. v. Ramirez, 651 F.Supp.2d 669, 674–75 (N.D.Tex.2009); Admiral Ins. Co. v. Little Big Inch Pipeline Co., 496 F.Supp.2d 787 (W.D.Tex.2007) (Cardone, J.); Sawyer, 2007 WL......
  • Request a trial to view additional results

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