Johnson Controls v. Irving Rubber & Metal Co.

• Decision Date: 21 March 1996
• Docket Number: No. 4:CV-95-0825.,4:CV-95-0825.
• Citation: 920 F. Supp. 612
• Parties: JOHNSON CONTROLS, INC., et al., Plaintiffs, v. IRVING RUBBER & METAL CO., INC., Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

920 F. Supp. 612

JOHNSON CONTROLS, INC., et al., Plaintiffs, v. IRVING RUBBER & METAL CO., INC., Defendants.

No. 4:CV-95-0825.

United States District Court, M.D. Pennsylvania.

March 21, 1996.

COPYRIGHT MATERIAL OMITTED

Jay M. Brody, Patricia Polis McCrory, Jeffrey W. Scripture, Harrison & Moberly, Indianapolis, Indiana, for Third-party plaintiff Ace Battery Inc.

Katherine L. Shelby, Wooden McLaughlin & Sterner, Indianapolis, Indiana, for Third-party defendant Monroe.

MEMORANDUM

McCLURE, District Judge.

BACKGROUND:

Before the court is a motion by third party defendant Monroe Guaranty Insurance Company (Monroe) to dismiss the claims against it for lack of subject matter and personal jurisdiction.¹ For the reasons which follow, the motion will be granted.

DISCUSSION:

Allegations against Monroe

Battery Salvage, a division of Ace Battery, Inc. (Ace), a defendant in this CERCLA action,² filed a third party complaint against Monroe Guaranty Insurance Company (Monroe) on October 19, 1995. Ace alleges in its complaint that: 1) it is an Indiana corporation with its principal place of business in Indiana; 2) Monroe is an Indiana corporation with its principal place of business in Indiana; 3) Johnson Controls, Inc., et. al. (hereafter collectively Johnson Controls), plaintiffs in the underlying CERCLA action, allege that Ace sold parts from lead acid batteries to the Tonolli Corporation (Tonolli) which Tonolli then disposed of at the Tonolli Pennsylvania site which is the subject of this action; 4) Johnson Controls alleges that Ace is jointly and severally liable under 42 U.S.C. § 9607(a) for past and future response and clean-up costs incurred in connection with the government-mandated clean-up of the Tonolli site; 5) Monroe is contractually obligated under a Comprehensive General Liability Policy (Policy No. SMP-329-3-3) issued and in effect during the period materials were disposed of at the Tonolli site to defend and indemnify Ace from all costs incurred in connection with this action, up to policy limits; 6) Ace has formally notified Monroe of its alleged duty to defend and indemnify; 7) Ace denies responsibility on the grounds that no coverage exists under the terms of the alleged policy and on the further ground that no policy was in effect during the relevant period; and 8) Monroe has filed a declaratory judgment action in Marion County, Indiana, Superior Court Case No. 49D12-9508-CP-1319, requesting a ruling on its alleged obligation to defend and indemnify Ace in this action.

Subject matter jurisdiction

Ace asserts that this court has supplemental jurisdiction over its third party complaint against Monroe. Under 28 U.S.C. § 1367(a), in any civil action of which the district court has original jurisdiction, the district court has supplemental jurisdiction "over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." Supplemental jurisdiction includes "claims that involve the joinder or intervention of additional parties." Id.

Citing LaSalle National Trust v. Schaffner, 818 F.Supp. 1161 (N.D.Ill.1993), Ace argues that this court's undisputed original jurisdiction over the CERCLA claims asserted against it by Johnson Controls based on 42 U.S.C. § 9613, confers supplemental jurisdiction over the claims asserted against Monroe. In LaSalle, the district court noted that "only a loose factual connection" is needed to support a finding of supplemental jurisdiction under section 1367(a). Id., at 1165. The court found the allegations in the action before it more than sufficient to satisfy that criteria. There, just as in the case before this court, the underlying action was a CERCLA claim for response costs incurred in cleaning up a contaminated site.

Plaintiff LaSalle National Trust (LaSalle), the current owner of the property, sought to recover its response costs from defendants Jerry Schaffner and Martin Schaffner, former owners of the site, who were alleged to be responsible for disposing of toxic substances on site. Also named as a defendant in the suit was Chicagoland Laundry and Cleaners, Inc. (Chicagoland) an Illinois corporation owned and operated by the Schaffners. Chicagoland and the Schaffners filed an amended third-party complaint against Illinois Employers Insurance of Wausau (Wausau), alleging an obligation to defend and indemnify them against the claims brought by LaSalle. The district court ruled that it had supplemental jurisdiction under section 1367(a) over the third party action filed against Wausau, because it arose out of the same facts as the CERCLA claims asserted against Chicagoland and the Schaffners.

We disagree with the analysis of LaSalle on this point, on the ground that it is not consistent with the application of section 1367(a) in this circuit. The United States District Court for the Eastern District of Pennsylvania rejected the application of supplemental jurisdiction on a fact pattern nearly identical to the one before this court. Bunzl Pulp & Paper Sale, Inc. v. Golder, 1995 WL 89026 (E.D.Pa. March 2, 1995) was a CERCLA action filed by Bunzl Pulp & Paper Sale, Inc. (Bunzl) to recover its environmental cleanup costs from allegedly responsible parties. One of the defendants named in the action was the Federation of Jewish Agencies of Greater Philadelphia (the Federation). The Federation joined its insurer, Pennsylvania National Mutual Casualty Insurance Company (Penn National) as a third party defendant, claiming a right to a defense and to indemnification.

In concluding that supplemental jurisdiction was lacking, the district court relied upon recent Third Circuit authority. The court cited Lyon v. Whisman, 45 F.3d 758 (3d Cir.1995), in which the Third Circuit "cast doubt on the appropriateness of the `loose nexus' test," the test which the district court relied upon in LaSalle.

The district court in Bunzl then went on to cite and follow, as persuasive authority, the Pennsylvania Supreme Court decision in Stokes v. Loyal Order of Moose Lodge # 696, 502 Pa. 460, 466 A.2d 1341 (1983). In Stokes, the Pennsylvania Supreme Court interpreted Pennsylvania's joinder rule, a rule similar to the federal rule. Pennsylvania Rule of Civil Procedure 2229, governing permissive joinder of parties, provides that a plaintiff may join "as defendants persons against whom he asserts any right to relief ... in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences if any common question of law or fact affecting the liabilities of all such persons will arise in the action." 42 Pa.Cons.Stat.Ann., Pa.R.Civ.P. 2229. The Pennsylvania Supreme Court held in Stokes that a coverage dispute between a defendant and its insurer does not arise out of the same transaction or occurrence as the original injury sustained by the plaintiff.

Applying the logic of Stokes to the case before it, the district court held in Bunzl, that:

Federation's claims against Penn National do not arise from the same nucleus of operative facts such that they are part of the same case or controversy and within this court's supplemental jurisdiction.... Footnote omitted..... Despite the fact that the parties seem to want to bring in Penn National in order to deal with the question of liability for the contamination of the Hancock and Senn Properties in one unified suit, and despite the practical appeal of such a procedure, this court lacks subject matter jurisdiction over the third party claims, as they do not arise out of the same nucleus of operative facts as the underlying suit. The Federation's third party claim against Penn National must be dismissed for lack of subject matter jurisdiction.

Bunzl, 1995 WL 89026 at *5. The district court ruling Bunzl is consistent with the treatment of this issue and related issues by other courts.

The decisions of other courts have made clear that not only is supplemental jurisdiction lacking for claims against insurers of potentially responsible parties, such claims do not arise under CERCLA. In Allied Corporation v. Environmental Purification Advancement Corporation, 848 F.Supp. 67 (M.D.La.1994), the United States District Court for the Middle District of Louisiana rejected the contention that CERCLA confers federal subject matter jurisdiction over claims for contribution asserted against the insurer of a potentially responsible party. The court held that neither 42 U.S.C. § 9607(a) nor 42 U.S.C. § 9613(f)(1) confers subject matter jurisdiction over such claims. On that basis, the district court dismissed the federal claims alleged against the insurers. The court then declined to exercise supplemental jurisdiction over the remaining state law claims asserted against the insurers on the ground that such claims raised "complex issues of state law which should be tried in state court." Id. at 70.

The ruling by the Eleventh Circuit Court of Appeals in Hudson Insurance Co. v. American Electric Corp., 748 F.Supp. 837 (M.D.Fla.1990), is also consistent with the conclusion which we reach here. Hudson Insurance Co. (Hudson) filed a declaratory judgment action in federal court seeking an order declaring that it had no obligation to cover a verdict rendered against its insured for cleanup costs. The district court dismissed the case for lack of subject matter jurisdiction, holding that the cause of action asserted did not arise under federal law, and therefore no jurisdiction existed under 28 U.S.C. § 1331.

Returning to the case before us, we find no basis upon which this court could legitimately exercise subject matter jurisdiction over the claims asserted by Ace against Monroe. The claims are not closely enough allied to the underlying CERCLA claims to justify this court's exercise of supplemental jurisdiction over them. Nor is there any viable federal cause of action assertable under CERCLA...