Fortenberry v. Scottsdale Ins. Co.
| Decision Date | 13 October 2016 |
| Docket Number | CIVIL ACTION NO. 16-11309 SECTION "L" (2) |
| Parties | FORTENBERRY, ET AL. v. SCOTTSDALE INSURANCE CO, ET AL. |
| Court | U.S. District Court — Eastern District of Louisiana |
Before the Court are Plaintiffs' Dotty and Alvin Fortenberrys' ("Fortenberrys") Motions to Strike the Defendants' Answers and Counterclaims. R. Docs. 13, 30. Defendant Liberty Mutual Fire Insurance Company ("Liberty Mutual"), has filed an Opposition. R. Doc. 17. Defendant United Services Automobile Association ("USAA") has adopted Liberty Mutual's arguments. R. Doc. 36. The Court has reviewed the extensive briefing on these issues and the applicable law and now issues this Order & Reasons.
This case involves an insurance coverage dispute for damages arising out of a car accident. On November 15, 2013, Plaintiffs Dotty and Alvin Fortenberry were injured when their vehicle was struck by a commercial delivery truck operated by David Scott in East Baton Rouge Parish, Louisiana. R. Doc. 13-1 at 2-3. Mr. Scott was operating the truck on behalf of either JYD Trucking ("JYD"), a Louisiana limited liability company, or B&R Hot Shot Logistics ("B&R").1 Mr. Scott, the truck, and JYD were insured by a Scottsdale Insurance Company policy which provided$100,000 of liability coverage per injured person. B&R had a one million dollar liability policy with Western World Insurance Company ("Western World"). The Western World policy includes a MCS-90 endorsement, which assures compliance with federal minimum levels of responsibility for motor carriers. See Canal Ins. Co. v. Coleman, 625 F.3d 244, 247 (5th Cir. 2010)
At the time of the accident, Mr. Fortenberry was driving a 2013 Ford Fusion, provided by his employer, United Services Automobile Association ("USAA"). According to Plaintiffs', the Fusion and driver were insured by a under/uninsured motorist ("UM/UMI") Liberty Mutual policy which provided two million dollars of coverage. The Plaintiffs also had a personal UM/UMI policy with USAA providing $500,000 in coverage. R. Doc. 13-1 at 3. As a result of the accident, Mr. Fortenberry sustained serious injuries, which required extensive medical treatment. According to the Plaintiffs, Mr. Fortenberry is now permanently disabled.
On May 27, 2014, Plaintiffs filed suit in state court seeking damages against Scott, JYD Trucking, B&R, Scottsdale, and Western World. Western World denied coverage, as the vehicle involved in the accident was not listed on the policy. After exhausting the Scottsdale $100,000 policy limits, Plaintiffs then filed a claim for UM coverage under both the USAA and Liberty Mutual policies. R. Doc. 13-1 at 4. Liberty Mutual denied the claim, contending that the policy did not provide coverage because USAA, the policy holder, validly waived UM coverage. R. Doc. 9 at 11. USAA denied coverage, arguing that the Liberty Mutual coverage is primary, and must be exhausted before coverage is triggered under the USAA policy. R. Doc. 13-1 at 4. USAA alsoargues that Western World's MCS-90 endorsement2 constitutes insurance coverage which must be exhausted before triggering either of the UM Policies.3 R. Doc. 13-1 at 5.
The parties have filed multiple motions for summary judgment and engaged in extensive discovery in the state court proceeding. See R. Docs. 17 at 3-4; 13-1 at 6-7. Of note is Liberty Mutual's Motion seeking summary judgment that the Plaintiffs were not covered under a Liberty Mutual UM/UMI policy because USAA validity waived UM coverage to reduce its policy premiums. R. Doc. 17 at 3. Plaintiffs filed a cross Motion seeking summary judgment that the Liberty Mutual policy did provide UM/UMI coverage to Plaintiffs. These Motions were denied, because the state court found there were outstanding issues of material fact. R. Doc. 17 at 3. Plaintiff contends that not only was Liberty Mutual's Motion denied, but both the Louisiana Fifth Circuit and the Louisiana Supreme Court denied writs. R. Doc. 13-1 at 6.
On June 22, 2016, more than two years after the initial lawsuit was filed in state court, Plaintiffs filed a Complaint in this Court, seeking a declaratory judgement to determine whether the federally-mandated MCS-90 endorsement constitutes automotive liability insurance. R. Doc. 2 at 4. If so, Plaintiffs would need to exhaust the Western World policy limits before triggering coverage under either of the UM policies issued by Liberty Mutual or USAA. Plaintiffs contend that no other federal or Louisiana state court has yet to rule on this issue. R. Doc. 2 at 4. In addition, Plaintiffs emphasize that they only seek a declaratory judgment regarding this single issue offederal law, and do not want to litigate the entire claim in federal court. R. Doc. 2. at 6. As such, Plaintiffs' Complaint seeks a declaration that "the MCS-90 endorsement represents a surety agreement and that it is not liability 'insurance.'" R. Doc. 2 at 10.
Defendant Liberty Mutual filed an Answer denying liability and averring that the Liberty Mutual policy does not provide UM coverage to Plaintiffs because USAA, the policyholder, waived UM coverage to reduce its premiums. R. Doc. 9 at 1. This is the same issue Liberty Mutual previous raised in state court. Liberty Mutual also filed a counterclaim seeking declaratory relief that (1) it owes no obligation to plaintiffs/counter-defendants under the policy because USAA waived UM coverage and (2) that Liberty Mutual handled Plaintiffs claim in accordance with Louisiana law and did not violate either La. Rev. Stat. 22:1982 or La. Rev. Stat. 22:1973, the insurance bad faith statutes. Liberty Mutual invokes jurisdiction for its counterclaims under either 28 U.S.C. § 1367(a), claiming the counterclaims form part of the same case or controversy as the Plaintiffs' claims, or diversity jurisdiction pursuant to 28 U.S.C. § 1332. R. Doc. 9 at 10-11.
Defendant USAA also filed an Answer denying liability and asserting a counterclaim in this case. R. Doc. 24. USAA contends that the Court has jurisdiction over the counterclaim under supplemental jurisdiction pursuant to 28 U.S.C. § 1367, or in the alternative, diversity jurisdiction pursuant to 28 U.S.C. § 1332. R. Doc. 24 at 2. USAA's counterclaim is essentially the inverse to the original complaint seeking a declaratory judgment in this matter. In the counterclaim, USAA argues that the coverage provided by the MCS-90 Endorsement should prime any insurance policies potentially triggered by the accident. R. Doc. 24 at 5. USAA contends that the purpose of the MCS-90 Endorsement is R. Doc. 24 at 5. Thus, according to USAA, coverage under the USAA and Liberty Mutual Policies should only be triggered after the $750,000 limit provided in the MCS-90 Endorsement has been exhausted. USAA seeks a declaratory judgement that Western World's coverage under the MCS-90 Endorsement is primary, and any UM/UIM coverage is in excess of the endorsement. R. Doc. 24 at 5.
On August 2, 2016, Plaintiffs filed a Motion to Strike Defendant Liberty Mutual's Answer and Counterclaim. R. Doc. 13. Liberty Mutual filed an Opposition on August 23, 2016. R. Doc. 17. The Plaintiffs replied, Defendants surreplied, and Plaintiffs submitted yet another response. R. Docs. 16, 32, 35. On August 30, 2016, Plaintiffs filed a Motion to Strike Defendant USAA's Answer and Counterclaim. R. Doc. 30. Defendant USAA filed an opposition, adopting Liberty Mutual's arguments. R. Doc. 36.
In Plaintiffs' Motion to Strike they argue their complaint seeks only to determine a discrete question of federal law, while Liberty Mutual's counterclaim seeks "to complicate and delay this matter" by introducing substantive issues of Louisiana law. R. Doc. 13-1 at 1-2. Additionally, Plaintiffs aver that the questions raised in the counterclaim have already been addressed in the state court action, and while not yet resolved, should remain in state court. R. Doc. 13-1 at 2. Plaintiffs ask this Court to refuse to extend supplemental jurisdiction and strike the counterclaim under Rule 12. R. Doc. 13-1 at 2.
Plaintiffs argue that Liberty Mutual has already had an opportunity to litigate these questions in state court. R. Doc. 13-1 at 6. Specifically, they emphasize that Liberty Mutual's Motion for Summary Judgment regarding USAA's alleged waiver of UM coverage was already denied, and both the Louisiana Fifth Circuit and the Louisiana Supreme Court denied writs. R. Doc. 13-1 at 6. Plaintiff frames the counterclaim as an attempt to relitigate an argument that has already been denied in Louisiana state courts. Additionally, Plaintiffs refute Liberty Mutual's claim that diversity jurisdiction exists in this case. R. Doc. 13-1 at 8. Plaintiffs argue that this action include non-diverse defendants, as both USAA and B&R Hotshot Logistics are Louisiana citizens, thus destroying diversity. R. Doc. 13-1 at 8.
Finally, Plaintiffs argue that the Court should decline to exercise supplemental jurisdiction in this case. First, they assert that the issues in Liberty Mutual's counterclaim, namely whether USAA validly waived UM coverage and whether Liberty Mutual violated Louisiana "bad faith" statutes in handling Plaintiffs claim, are not sufficiently related to Plaintiffs' complaint for a declaratory judgment to form the same case or controversy. (citing Wisconsin Dep't of Corr. v. Schacht, 524 U.S. 381, 387 (1998)). Second, Plaintiffs argue that the counterclaim raises novel issues of state law and this Court should decline to exercise supplemental jurisdiction. ...
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