Capitol Specialty Ins. Corp. v. Tayworsky LLC
| Decision Date | 06 June 2017 |
| Docket Number | CIVIL ACTION NO. 2:16-cv-11340 |
| Parties | CAPITOL SPECIALTY INSURANCE CORPORATION, Plaintiff, v. TAYWORSKY LLC, et al, Defendants. |
| Court | U.S. District Court — Southern District of West Virginia |
Pending before the Court are Motions to Dismiss filed by Defendant Tayworsky LLC, (ECF No. 14), and Defendant Keona Brock, (ECF No. 20). For the reasons that follow, both motions are DENIED.
This is a declaratory judgment action, in which Plaintiff Capitol Specialty Insurance Corporation seeks a determination of its liability insurance coverage with respect to Defendant Keona Brock's state tort suit pending against Defendant Tayworsky LLC, d/b/a/ Monkey Barrel Bar ("Tayworsky"). Plaintiff seeks a declaration that it has no duty to defend or indemnify Tayworsky in that related litigation.
Tayworsky operates a bar in downtown Charleston, West Virginia. Brock's claims against Tayworsky arise from a gunshot wound she suffered while patronizing the bar on July 4, 2015.1 In a civil action pending in the Circuit Court of Kanawha County, West Virginia, Brock alleges that Tayworksy proximately caused her injury by failing to provide adequate security. At the time of the shooting, Tayworsky was covered by a general commercial liability insurance policy issued by Plaintiff. Tayworsky has requested that Plaintiff provide a defense and indemnification under the policy and Plaintiff has done so, subject to a reservation of rights.
On November 23, 2016, Plaintiff initiated this proceeding under the federal Declaratory Judgment Act ("DJA"). Plaintiff invokes the Court's diversity jurisdiction by alleging complete diversity and an amount in controversy exceeding $75,000.2 An Amended Complaint filed January 3, 2017 is now the operative pleading in this matter. Plaintiff claims that two clauses in the policy—an assault and battery exclusion and a liquor liability exclusion—exclude coverage for any injuries suffered by Brock and Tate. Tayworsky moved to dismiss on January 12, 2017, arguing that Plaintiff fails to establish the requisite amount in controversy and, alternatively, that the Court should abstain from hearing this dispute. Plaintiff responded in opposition to the motion and Tayworsky elected not to file a reply. On January 30, 2017, Brock filed a separate motion for dismissal. In a single-page motion lacking a supporting memorandum, Brock joins in Tayworksy's request for abstention.3 Plaintiff filed a memorandum opposing Brock's motion. The deadline for Brock's reply having expired, both motions are ready for disposition.
The Court addresses Tayworsky's challenge to subject matter jurisdiction before considering its arguments in support of abstention. Though Brock also moves for dismissal on abstention grounds, she simply incorporates Tayworsky's arguments by reference and offers none of her own. The Court thus disregards Brock's motion for purposes of its analysis.
A motion to dismiss an action under Rule 12(b)(1) raises the question of the federal court's subject matter jurisdiction over the action. Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). "Challenges to jurisdiction under Rule 12(b)(1) may be raised in two distinct ways: 'facial attacks' and 'factual attacks.'" Adkins v. United States, 923 F. Supp. 2d 853, 856 (S.D. W. Va. 2013) (citing Thigpen v. United States, 800 F.2d 393, 401 n. 15 (4th Cir. 1986)). A "facial attack" questions whether "the allegations of the complaint are facially []sufficient to sustain the court's jurisdiction." Thigpen, 800 F.2d at 401 n. 15. In such a case, the court must accept the allegations as true and proceed to consider the motion as it would a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Id.
Tayworsky argues that Plaintiff fails to allege facts sufficient to establish subject matter jurisdiction, not that Plaintiff's jurisdictional allegations are untrue. See Adams, 697 F.2d at 1219 (). The Court construes Tayworsky's challenge to subject matter jurisdiction as a facial attack.
Plaintiff's Amended Complaint invokes the Court's diversity jurisdiction under 28 U.S.C. § 1332. In this context, district courts may exercise diversity jurisdiction over a case if "the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs . . . and isbetween citizens of different States." 28 U.S.C. § 1332(a)(1). Complete diversity exits under § 1332 if no plaintiff is a citizen of the same state as any defendant. See Rosmer v. Pfizer, 263 F.3d 110, 123 (4th Cir. 2001). Tayworsky does not challenge the existence of complete diversity.
In the typical case, "the 'sum claimed by the plaintiff controls the amount in controversy.'" JTH Tax, Inc. v. Frashier, 624 F.3d 635, 638 (4th Cir.2010) (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938)). Where a plaintiff claims a sum sufficient to meet the statutory threshold, dismissal is appropriate "only if 'it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed." Id. (citing Red Cab Co. at 289) (emphasis in original). In such a case, the burden is on the defendant to show "the legal impossibility of recovery [to] be so certain as virtually to negative the plaintiff's good faith in asserting the claim." Wiggins v. N. Am. Equitable Life Assur. Co., 644 F.2d 1014, 1017 (citation and internal quotation marks omitted).
The Court's evaluation of the amount in controversy begins with reference to Plaintiff's Amended Complaint. JTH Tax, 624 F.3d at 638 (citation omitted). The Amended Complaint states, without elaboration, that the amount in controversy is greater than $75,000. (Am. Compl. ¶ 5.) Tayworsky challenges that assessment for two reasons. First, Tayworsky claims that liability for Brock's injuries will fall principally on the two assailants involved in the shooting at the bar. Because West Virginia law prohibits joint liability, W. Va. Code § 55-7-13c(a), and noting that the assailants are primarily responsible for Brock's injuries, Tayworsky suggests that the amount of damages for which it will personally be liable is far less than $75,000. Second, Tayworsky argues generally that because Brock's medical expenses do not exceed $75,000, theamount in controversy falls below the statutory threshold. As explained below, resolution of the first argument puts an end to the second.
Tayworsky's contention that nonparties may be liable for the majority of Brock's damages is speculative and insufficient to disprove Plaintiff's amount in controversy allegation by a legal certainty. In any event, the Court's task is to assess the value of the underlying claim, not the strength of Brock's case against Tayworsky. Darbet, Inc. v. Bituminous Cas. Corp., 792 F. Supp. 487, 489 (S.D. W. Va. 1992) ().
In making that assessment, the Court must consider the "pecuniary result to either party which th[e] judgment may produce." Gov't Emp.'s Ins. Co. v. Lally, 327 F.2d 568, 570 (4th Cir. 1964) (emphasis added). The Brock Complaint seeks damages for medical expenses, pain and suffering, annoyance and inconvenience, loss of enjoyment of life, emotional distress, costs, attorney's fees, and pre- and post-judgment interest. Tayworsky represents that Brock's medical expenses, though not specified in her Complaint, total less than $65,000. (Tayworsky Mem. in Supp. Mot. to Dismiss at 3 n. 1.) That fact only strengthens Plaintiff's position. Tayworsky has made no attempt to disprove Plaintiff's assertion that Brock's various other damages could exceed $10,000. Further, the costs incurred by Plaintiff for defending the Brock lawsuit can also be included in determining whether Plaintiff sufficiently alleges amount in controversy. Erie Ins. Property and Cas. Co. v. Smith, No. 5:05-cv-01137, 2006 WL 2591127, at *4 (S.D. W. Va. Sept. 8, 2006).
Given Brock's medical expenses, her claim for general damages, and the typical costs associated with litigation, the Court cannot find to a "legal certainty" that the value of Tayworsky's underlying claim is below the statutory threshold of $75,000. On this basis, Tayworsky's Motion to Dismiss is DENIED.
Defendants move the Court to abstain from exercising jurisdiction over this declaratory judgment action. As the Supreme Court has long recognized, "federal courts have a strict duty to exercise the jurisdiction that is conferred upon them by Congress." Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996) (citation omitted). The duty is not absolute, however, and a declaratory judgment action presents one circumstance where a federal court may decline to exercise jurisdiction. The DJA provides that federal courts "may declare the rights and other legal relations of any interested party seeking such declaration." 28 U.S.C. § 2201 (emphasis added). The language is permissive, not mandatory, thereby endowing federal courts with the discretion to adjudicate claims in the declaratory judgment context. Centennial Life Ins. Co. v. Poston, 88 F.3d 255, 257 (4th Cir. 1996) (citing Wilton v. Seven Falls Co., 515 U.S. 277, 289 (1995)).
The Court's discretion is not unfettered, however. As the Fourth Circuit has explained, "a district court may not refuse to entertain a declaratory judgment action out of whim or personal disinclination . . . but may only do so for good reason." Nautilus Ins. Co. v. Winchester Homes, Inc., 15 F.3d 371, 375 (4th Cir. 1994), abrogated on other grounds by Centennial Life, 88 F.3d at 257-58 (internal quotation marks and citations omitted). While "a declaration of parties' rights under an insurance policy is an appropriate use of the...
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