Great W. Cas. Co. v. Packaging Corp.

• Citation: 444 F.Supp.3d 664
• Decision Date: 13 March 2020
• Docket Number: 1:18CV1026
• Court: United States District Courts. 4th Circuit. Middle District of North Carolina
• Parties: GREAT WEST CASUALTY COMPANY, Plaintiff, v. PACKAGING CORPORATION OF AMERICA, Salem Carriers, Inc., and Kellie S. Wallace, Defendants.

444 F.Supp.3d 664

GREAT WEST CASUALTY COMPANY, Plaintiff,

v.PACKAGING CORPORATION OF AMERICA, Salem Carriers, Inc., and Kellie S. Wallace, Defendants.

1:18CV1026

United States District Court, M.D. North Carolina.

Signed March 13, 2020

William A. Bulfer, Teague Campbell Dennis & Gorham, LLP, Asheville, NC, Brian M. Love, Teague Campbell Dennis & Gorham, LLP, Raleigh, NC, for Plaintiff.

Alan W. Duncan, Leslie Cooper Harrell, Mullins Duncan Harrell & Russell, PLLC, Greensboro, NC, Thomas A. Marrinson, Adrienne N. Kitchen, Reed Smith LLP, Chicago, IL, Thomas Joseph Doughton, Doughton Blancato PLLC, Winston-Salem, NC, for Defendants.

MEMORANDUM OPINION AND ORDER

OSTEEN, JR., District Judge Presently before the court is Defendant Packaging Corporation of America's ("PCA") Motion to Dismiss or Stay Plaintiff's Declaratory Judgment Action. (Doc. 10.) PCA has filed a brief in support of its motion, (Doc. 11), Plaintiff Great West Casualty Company ("Great West") has responded in opposition, (Doc. 16), and PCA has replied, (Doc. 18). For the reasons set forth herein, PCA's motion will be granted in part and denied in part.

I. BACKGROUND

Defendant's motion, in part, challenges the ripeness of Plaintiff's claims and Plaintiff's standing. (See Def. Packaging Corporation of America's Mem. of Law in Supp. of Mot. to Dismiss or Stay ("Def.'s Br.") (Doc. 11) at 12-13.) Generally, challenges to standing and ripeness are addressed under Rule 12(b)(1) for lack of subject matter jurisdiction. CGM, LLC v. BellSouth Telecomms., Inc., 664 F.3d 46, 52 (4th Cir. 2011) (distinguishing statutory standing from Article III and prudential standing); Maryland v. United States, 360 F. Supp. 3d 288, 305 (D. Md. 2019) ("Like standing, ripeness is an issue of subject matter jurisdiction."); see also Pitt Cty. v. Hotels.com, L.P., 553 F.3d 308, 311 (4th Cir. 2009) (noting that the district court recharacterized a defendant's challenge to standing from a motion to dismiss for failure to state a claim under Rule 12(b)(6) to a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1)). When resolving a motion under Rule 12(b)(1), "the district court is to regard the pleadings as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment." Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999) (quoting Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991) ).

Defendant has also moved to stay the case and has submitted affidavits in support. "The party seeking a stay must justify it by clear and convincing circumstances outweighing potential harm to the party against whom it is operative." Williford v. Armstrong World Indus., Inc., 715 F.2d 124, 127 (4th Cir. 1983).

This factual section will thus address the relevant facts from both the Complaint and any affidavits filed.

A. Parties

Plaintiff Great West is an insurance company organized under the laws of Nebraska with its principal place of business there as well. (Complaint for Declaratory Judgment ("Compl.") (Doc. 1) ¶ 1). Defendant PCA is a manufacturing company organized under the laws of Delaware with its principal place of business in Illinois. (Id. ¶ 2.) Defendant Salem Carriers, Inc., is a transportation company organized under the laws of North Carolina with its principal place of business there as well. (Id. ¶ 3.) Defendant Kellie S. Wallace is a citizen and resident of North Carolina who was employed by Defendant Salem Carriers during the relevant time and remains employed by Salem Carriers. (See id. ¶¶ 4, 51.)

B. The Underlying Contracts

On or around October 4, 2009, Defendants PCA and Salem Carriers entered into a "Transportation Agreement" whereby Salem Carriers agreed to provide transportation services to PCA. (Id. ¶ 25; Ex. C (Doc. 1-3).) Great West alleges that Salem Carriers agreed in the Transportation Agreement to "defend, indemnify, and hold PCA harmless for liability claims arising from Salem Carriers' performance of services for PCA." (Compl. (Doc. 1) ¶ 27.) Salem Carriers allegedly is not obligated to defend, indemnify, or hold PCA harmless where liability results solely from PCA's negligence. (Id. ¶ 28.) The PCA Transportation Agreement is governed by Illinois law. (Id. ¶ 29.)

Great West insured Salem Carriers under insurance policy no. MCP19530A for the period between October 1, 2015, and October 1, 2016 (the "Insurance Policy"). (Id. ¶ 34.)

C. The Underlying Lawsuit

On October 2, 2015, Defendant Wallace was injured after opening a cargo trailer's rear door and being struck by a pallet. (Id. ¶ 8.) Great West alleges that "PCA was responsible for loading and in fact loaded the pallet in question into the trailer." (Id. ¶ 10.) After settling her workers' compensation claim before the North Carolina Industrial Commission with Salem Carriers, Defendant Wallace filed a negligence lawsuit against PCA in a North Carolina state court sometime between August 3, 2018, and August 13, 2018 (the "Underlying Lawsuit"). (See id. ¶¶ 13, 15; see also Ex. B (Doc. 1-2).) As a result of PCA's relationship with Salem Carriers under the Transportation Agreement, PCA sought coverage from Salem Carriers' insurer, Plaintiff Great West, for PCA's defense of the Underlying Lawsuit. (See id. ¶ 37.) That coverage is the subject of Great West's lawsuit here.

On November 8, 2018, Great West appears to have denied coverage to PCA in the Underlying Lawsuit. (See Declaration of Thomas Marrinson ("Marrinson Decl.") (Doc. 12), Ex. A to Marrinson Decl. at 5-10.)¹ On December 12, 2018, PCA requested, in a letter from its counsel to Great West's counsel, that Great West reconsider its coverage position. (Id. at 5.) In that letter, PCA notified Great West that, if Great West did not agree to provide PCA with defense coverage in the Underlying Lawsuit, then PCA intended to file a third-party complaint against Great West's insured, Salem Carriers, in the Underlying Lawsuit and file a declaratory judgment and breach of contract action against Great West in the United States District Court for the Northern District of Illinois. (See id. at 9.) PCA attached drafts of both complaints to its letter to Great West. (See id. at 11-25.) PCA requested that Great West respond by December 21, 2018, as to whether it would reconsider its coverage position in the Underlying Lawsuit. (Id. at 9.)

D. The Present Lawsuit

On December 18, 2018, Great West filed a declaratory judgment action in this court under 28 U.S.C. § 2201, asking this court to declare that Great West does not afford any coverage to PCA under the Insurance Policy in connection with the Underlying Lawsuit and that Salem Carriers does not have any obligation to defend or indemnify PCA under the Transportation Agreement in connection with the Underlying Lawsuit. (Compl. (Doc. 1) ¶¶ 57–61.) Also on December 18, 2018, Great West notified PCA through a letter that it would provide for PCA's defense in the Underlying Lawsuit subject to a reservation of its rights under the Insurance Policy to later disclaim such coverage. (Ex. B to Marrinson Decl. (Doc. 12) at 28.) Great West's counsel stated in that letter that it was attaching a copy of the complaint for declaratory relief it had just filed in this court to its letter to PCA. (Id. )

E. PCA's Northern District of Illinois Lawsuit Against Great West

On December 21, 2018, PCA filed its complaint for declaratory judgment, breach of contract, and extra-contractual relief in the United States District Court for the Northern District of Illinois against Great West alone (the "Illinois Lawsuit"). (See Def.'s Br. (Doc. 11) at 3; Packaging Corp. of Am. V. Great West Cas., 1:18-CV-08400 (N.D. Ill. Dec. 21, 2018). It appears that PCA has not filed the third-party complaint against Salem Carriers in the Underlying Lawsuit seeking indemnification owed under the Transportation Agreement or contribution from Salem Carriers. (See Docket No. 18-CVS-1944, Wallace v. Packaging Corp. of America, filed in Superior Court in Rowan County, North Carolina.)

On February 27, 2019, Great West moved to stay the Illinois Lawsuit in favor of its first-filed action in this court. (See Ex. D to Marrinson Decl. (Doc. 12) at 497.) On April 8, 2019, PCA moved to dismiss or stay this action in favor of the Illinois Lawsuit. (Doc. 10 at 1.) PCA argues that the second-filed Illinois Lawsuit is entitled to priority because Great West's action here is an improper anticipatory filing; that this action is not ripe and Great West lacks standing for certain claims; and that this action is less comprehensive than the Illinois Lawsuit. (Id. at 2.) On May 2, 2019, Defendant Salem Carriers filed its Answer in this action, admitting that Great West is providing coverage on behalf of PCA in the Underlying Lawsuit under a reservation of rights and, therefore, that "Salem Carriers is directly funding PCA's defense, causing Salem Carriers to suffer ongoing financial harm." (Doc. 17 ¶ 38.)

On July 9, 2019, the district court presiding over the Illinois Lawsuit granted Great West's motion to stay that proceeding. (Notice of Ruling (Doc. 21) and Ex. A (Doc. 21-1) at 1-2.) The district judge ruled from the bench that the applicable factors weighed in favor of prioritizing the action before this court over the Illinois Lawsuit. (Notice of Ruling (Doc. 21) at 1.) The parties informed this court that the district judge will not issue a written order. (Id. )

II. STANDARD OF REVIEW

"When ... a defendant challenges the existence of subject matter jurisdiction in fact, the plaintiff bears the burden of proving the truth of such facts by a preponderance of the evidence." United States ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 347 (4th Cir. 2009) (citation omitted). "[T]he district court may then go beyond the allegations of the complaint and resolve the jurisdictional facts in dispute by considering evidence outside the pleadings ...." Id. at 348 (...