Hudson Ins. Co. v. American Elec. Corp.

• Decision Date: 12 October 1990
• Docket Number: No. 89-869-Civ-J-12.,89-869-Civ-J-12.
• Citation: 748 F. Supp. 837
• Parties: HUDSON INSURANCE COMPANY, etc., Plaintiff, v. AMERICAN ELECTRIC CORPORATION, etc., et al., Defendants.
• Court: U.S. District Court — Middle District of Florida

748 F. Supp. 837

HUDSON INSURANCE COMPANY, etc., Plaintiff, v. AMERICAN ELECTRIC CORPORATION, etc., et al., Defendants.

No. 89-869-Civ-J-12.

United States District Court, M.D. Florida, Jacksonville Division.

October 12, 1990.

Jonathan L. Alpert, Robert A. Levine, Alpert, Josey & Grilli, Tampa, Fla., for plaintiff.

Jeffery Allen Tew, Kirkpatrick & Lockhart, Miami, Fla. (King & Spalding, Charles H. Tisdale, Jr., Atlanta, Ga., Vail T. Thorne, Washington, D.C., of counsel), for defendant Green River Steel Corp.

Joseph M. Glickstein, Jr., Neptune Beach, Fla., for defendant Don L. Tullis and Associates, Inc.

No appearances on behalf of the other defendants.

ORDER DISMISSING CASE

MELTON, District Judge.

This cause is before the Court on several motions. Plaintiff submitted a Motion for Summary Judgment, filed herein on April 11, 1990. Defendant Don L. Tullis and Associates, Inc. subsequently moved, on April 23, 1990, to adopt that motion. Defendant Green River Steel Corporation responded with a memorandum in opposition to the motion and a Motion for Judgment on the Pleadings, both filed herein on May 15, 1990. Plaintiff responded with a memorandum in opposition to that motion, filed herein on June 1, 1990. By leave of the Court, reply memoranda also have been filed.

A central issue raised in opposition to the summary judgment motion, and the basis for the motion for judgment on the pleadings, is this Court's jurisdiction. The Court is obligated to resolve this issue as a threshold matter. See Insurance Company of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 2104, 72 L.Ed.2d 492 (1982). "If a party raises an issue of subject matter jurisdiction on his motion for a judgment on the pleadings, the court will treat the motion as if it had been brought under Rule 12(b)(1)." 5A C. WRIGHT & A. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1367, at 516 (2d ed. 1990). Because the Court concludes that jurisdiction is lacking, this case will be dismissed.

Plaintiff Hudson Insurance Company ("Hudson") filed suit, alleging jurisdiction pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, and the Comprehensive Environmental Response Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9601, et seq., to obtain a declaration that it is not liable to defendants, in particular defendant Green River Steel Corporation ("Green River"), for response and recovery costs incurred by the Environmental Protection Agency ("EPA") for the clean-up of polychlorinated biphenyl ("PCB") contaminated transformers. Green River contracted with defendant American Electric Corporation ("AEC") for handling and disposal of PCB transformers. AEC's handling and disposal practices at a facility situated at 523 Ellis Road, Jacksonville, Florida, eventuated the EPA's response activities.

Hudson provided insurance to AEC. When EPA informed Green River that it might be liable to pay for the expenses incurred in the PCB disposal and site cleanup, Green River in turn informed Hudson that if liable it would seek payment from Hudson on AEC's insurance policy. Hudson subsequently filed this action. In the complaint, Hudson prays for the Court's declaration on two issues. First, Hudson seeks a declaration that it is not a "potentially liable party" under CERCLA. Second, Hudson asks for a declaration that the insurance policy upon which Green River made its demand does not provide coverage for the CERCLA response and recovery costs.

Green River affirmatively asserted in its answer that the Court lacked subject matter jurisdiction. Moreover, at the preliminary pretrial conference defendants' attorneys stated there is no dispute over the "potentially liable party" issue because no defendant has ever contended that Hudson fits the statutory definition of a potentially liable party. In its Memorandum of Law in Support of Motion for Summary Judgment, at 4 n. 7, Hudson concedes, "neither EPA nor any Defendant has made claim for reimbursement or contribution from HUDSON as a potentially liable party."

The Court will not consider the "potentially liable party" issue on the matter of jurisdiction. Hudson's concession must be read as an admission that no justiciable controversy existed concerning that issue. Cf. Wendy's Int'l Inc. v. City of Birmingham, 868 F.2d 433, 436 (11th Cir.1989). Subject matter jurisdiction in this case is measured exclusively by the presence or absence of a federal question in the insurance coverage issue.

The first step in evaluating jurisdiction in this declaratory judgment action is to untangle the procedural posture of the case. See Provident Life & Acc. Ins. Co. v. Transamerica-Occidental Life Ins. Co., 850 F.2d 1489, 1491 (11th Cir.1988), cert. denied, 489 U.S. 1081, 109 S.Ct. 1534, 103 L.Ed.2d 839 (1989). The declaratory judgment device allows Hudson to anticipate an action or actions against it and preemptively strike by obtaining a ruling on dispositive legal issues. The Declaratory Judgment Act, however, does not confer jurisdiction on this action. See, e.g., Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671, 70 S.Ct. 876, 878, 94 L.Ed. 1194 (1950). Rather, the Court must reconstruct the underlying action and evaluate the jurisdiction issue in that instance.

The reconstructed action must respect the well-pleaded complaint rule. Under this rule, as applied in the process of reconstruction, the Court determines whether a claim "arises under" federal law from what necessarily would appear in the statement of claim that would be set forth in the anticipated action; a defense to the anticipated action that raises a federal question is insufficient to confer federal jurisdiction. See Public Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 248, 73 S.Ct. 236, 242, 97 L.Ed. 291 (1952) ("If the cause of action, which the declaratory defendant threatens to assert, does not itself involve a claim under federal law, it is doubtful if a federal court may entertain an action for declaratory judgment establishing a defense to that claim."); see also Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 16, 19 n. 19, 103 S.Ct. 2841, 2849, 2851 n. 19, 77 L.Ed.2d 420 (1983) (jurisdiction lacking when federal question is element of defense only). An independent corollary to the well-pleaded complaint rule, the "complete preemption" doctrine, appears to be at issue here. This doctrine holds that some statutes have a preemptive force so extraordinary that it "converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule." Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542, 1547, 95 L.Ed.2d 55 (1987). "Once an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law." Caterpillar Inc. v. Williams, 482 U.S. 386, 393, 107 S.Ct. 2425, 2430, 96 L.Ed.2d 318 (1987).

Hudson's concern in filing this suit was the potential liability for payment under AEC's insurance policy that Green River might assert. Indeed, Green River counterclaimed in this action, contingent on a finding of subject matter jurisdiction for Hudson's action, for declaratory relief in its favor on the matter of insurance coverage and for attorney fees and costs pursuant to Fla.Stat. § 627.428. Simply put, the underlying action is a suit for the proceeds of an insurance policy. That kind of action is usually a matter of state law, not a federal question.

Hudson is not without theories that suggest the existence of federal question jurisdiction. Two principle arguments emerge in Hudson's response to the motion for judgment on the pleadings. One, federal law must be consulted to determine whether an insurance policy falls within the savings clause portion of 42 U.S.C. § 9607(e)(1). Therefore, a federal question is presented in the form of the interpretation of CERCLA, construction of its provisions and their application to insurance policies. Within this argument Hudson proposes that CERCLA completely preempts state law on the issue of liability under an insurance policy. Two, Hudson relies upon the grant of original exclusive jurisdiction to the district court for all controversies "arising under" CERCLA. While Hudson does not fully draw the contours of this argument, the Court infers an allusion to the "complete preemption" doctrine stemming from the preemption arguments Hudson presses in the first theory.

Hudson concedes that its theories are novel. In its review of the case law, Hudson notes,

In the nearly ten years since the adoption of CERCLA, both state and federal courts have been asked to apply state common law principles to construe insurance policies, such as commercial umbrella liability policies, in regard to CERCLA coverage. However, the fundamental analysis has been overlooked: was the policy an agreement to insure CERCLA liability under federal law?

Memorandum of Law in Support of Motion for Summary Judgment, at 8. The federal cases bear out Hudson's observation, as they uniformly predicate jurisdiction on the diversity of the parties' citizenship and apply state law.¹ Moreover, a legion of state court decisions stand in contradiction to Hudson's theory of exclusive federal jurisdiction.² Finally, informed commentary on comprehensive general liability policies, and the pollution exclusion in particular, has worked entirely within the framework of state law, as it applies to insurance policies covering CERCLA liabilities.³

On the few occasions when the choice between federal and state law has been raised in related contexts, the state law concerning insurance has prevailed.⁴ See, e.g., Intel Corp. v. Hartford Acc. & Indemn. Co., 692 F.Supp. 1171, 1186-87 (N.D.Cal.1988). As one commentator explains,

CERCLA does define certain cognizable harms for which the responsible party

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