Nationwide Gen. Ins. Co. v. Caudill

• Decision Date: 30 November 2020
• Docket Number: 2:19-CV-00192-JRG-CRW
• Parties: NATIONWIDE GENERAL INSURANCE COMPANY, Plaintiff, v. HIRAM CAUDILL, TRIPLE LEE CONTRACTING, LLC, and MELISSA STURGILL Defendants.
• Court: U.S. District Court — Eastern District of Tennessee

NATIONWIDE GENERAL INSURANCE COMPANY, Plaintiff, v. HIRAM CAUDILL, TRIPLE LEE CONTRACTING, LLC, and MELISSA STURGILL Defendants.

2:19-CV-00192-JRG-CRW

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TENNESSEE GREENEVILLE DIVISION

November 30, 2020

MEMORANDUM OPINION

This matter is before the Court pursuant to Defendants' motion to dismiss [Doc. 9] Plaintiff's complaint seeking a declaratory judgment. [Doc. 1]. Specifically, Plaintiff Nationwide General Insurance Company, ("Nationwide"), has sought from this Court "a determination that it has no duty to defend or indemnify Mr. Caudill under two liability insurance policies issued to Mr. Caudill by Nationwide." [Doc. 1, pg. 1]. Defendants Hiram Caudill, Triple Lee Contracting, LLC, and Melissa Sturgill, ("Defendants"), move this Court for a dismissal of the action "for two reasons: (1) this Court should exercise its discretion under 28 U.S.C. §§ 2201 and 2202 and decline adjudication, and (2) this Court should abstain from hearing the matter." [Doc. 10, pg. 2]. As the subsequent analysis will explain, Defendants' motion to dismiss is GRANTED.

I. BACKGROUND

A. Events Giving Rise to this Action

This matter reaches the Court by way of Letcher County, Kentucky. [Doc. 10-1]. "[O]n or about April 10, 2018," Defendants Melissa Sturgill and Hiram Caudill came into contact with one another, quite literally. Id. While Ms. Sturgill and Mr. Caudill were operating their respective vehicles "near Industrial Park Drive and the intersection of KY 000015 - Hazard Road, in Whitesburg," they collided. Id. As Nationwide explains in their complaint for declaratory judgment, "Ms. Sturgill alleges that at the time of the Motor [sic] vehicle accident . . . Mr. Caudill was operating a 1992 Peterbilt tractor-trailer owned by Triple Lee." [Doc. 1, pg. 4].

B. Procedural History

Nationwide's complaint alludes to Ms. Sturgill's allegations because she sued Mr. Caudill and Triple Lee in a Kentucky state court for "damages for personal injuries she allegedly sustained in the Motor [sic] vehicle accident." Id. at 2. More specifically, Ms. Sturgill filed her complaint in Letcher County Circuit Court, in October of 2018. [Doc. 10, Exhibit A]. Her lawsuit has the makings of a classic common law negligence action, and all parties agree that the state-level matter is still in process. Unfortunately, few other details in this action involve an agreement among the parties.

Approximately one year later, and "in the same lawsuit, Defendant Sturgill amended to add a Petition for Declaratory Judgment." [Doc. 10, pg. 1]. "The purpose of that state court petition is to adjudicate whether there is coverage for the motor vehicle accident under . . . Caudill's personal auto insurance policies issued by Nationwide." Id. One month later, in October of 2019, "Nationwide then filed this declaratory judgment action in this Court." [Doc. 18, pg. 5]. And one month after that, Nationwide took further action in the Kentucky case, by filing "a motion in the state court action to strike the 'Petition for Declaratory Relief.'" Id. (citation omitted).

In other words, and all at once, the matter before this Court is essentially a reciprocal image of an action that predates this one and is currently playing out in a Kentucky state court. Whereas Nationwide stands as a plaintiff before this court, they do so as a defendant before the LetcherCounty Circuit Court. The same dynamic is mostly true of Defendants, aside from the obvious distinction that Mr. Caudill and Triple Lee are being sued no matter how this Court dices the details.

In any case, one key difference can be drawn between these two actions. In the lawsuit commenced by Ms. Sturgill in Letcher County, the case involves a matter of contract dispute, but also more—namely a negligence claim. In this case, the only issue is a question of whether or not Nationwide has any duties at all with respect to the automobile accident giving rise to both of these lawsuits.

C. The Insurance Policies at Issue

According to Nationwide, "[t]he tractor-trailer was insured under a separate liability policy issued by another insurance company and coverage under that policy is not at issue in this action." [Doc. 18, pg. 2 n.1]. One might wonder, then, how Nationwide ever ended up in this lawsuit in the first place. To that point, Nationwide previously issued two discrete insurance policies to Mr. Caudill, one of them in relation to two pickup trucks and the other providing coverage with regard to one additional truck and an SUV. [Doc. 1, pg. 4]. Nationwide's filings establish that each of these policies remained in effect during April of 2018, when Ms. Sturgill and Mr. Caudill converged. Id.

As Nationwide sees things, they "[have] no duty to defend or indemnify Mr. Caudill . . . because they are excluded from coverage under the terms of the two Personal Auto Policies." [Doc. 18, pg. 3]. Defendants doubt Nationwide's confidence, and argue that resolution of this dispute is already underway via the Letcher County Circuit Court action. [Doc. 10]. It is precisely for this reason that Defendants have filed their motion to dismiss the action in this Court. Id.

II. ANALYSIS

A. Declaratory Judgment Act and Judicial Discretion

1. Legal Background

The Declaratory Judgment Act provides that "[i]n a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). Likewise, the law contemplates that parties to a lawsuit may not fully grasp the details of their contractual obligations. Accordingly, the Declaratory Judgment Act permits parties to "avoid accrual of avoidable damages" through "early adjudication," so that they do not have to "wait[] until [an] adversary should see fit to begin suit." Blakely v. United States, 276 F.3d 853, 872 (6th Cir. 2002) (quotation omitted); see Ragen v. Hancor, Inc., 920 F. Supp. 2d 810, 843 (N.D. Ohio 2013) (observing that the Declaratory Judgment Act is "a means for clarifying contractual obligations"). When a court issues a declaratory judgment under the Declaratory Judgment Act, it "ha[s] the force and effect of a final judgment." 28 U.S.C. § 2201(a).

2. Jurisdictional Requirements

"The Declaratory Judgment Act does not create an independent basis for federal subject matter jurisdiction." Heydon v. MediaOne of Southeast Michigan, Inc., 327 F.3d 466, 470 (6^th Cir. 2003) (citing Skelly Oil Co. v. Phillips Petroleum Co., 399 U.S. 667, 671-72 (1950); Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240 (1937)). "Thus, before invoking the Act, the court must have jurisdiction already." Id. (citing Public Serv. Comm'n v. Wycoff Co., 344 U.S. 237, 241 (1952)). To establish federal subject matter jurisdiction, pursuant to the Declaratory Judgment Act but in recognition of the reality that this federal enactment does not, itself, provide as much, partiesmust establish either diversity jurisdiction pursuant to 18 U.S.C. § 1332(a), or federal question jurisdiction under 28 U.S.C. § 1331. Id. at 469-70 (explaining that plaintiff failed to establish diversity among the parties and therefore could only prevail upon a showing that federal question jurisdiction was present).

Accordingly, and when presented with an action under the Declaratory Judgment Act, this Court's first task is to identify an independent jurisdictional basis on which the case may proceed. See Bhd. Mut. Ins. Co. v. United Apostolic Lighthouse, Inc., 200 F. Supp. 2d 689, 691 (E.D. Ky. 2002) ("[T]he plaintiff must establish that the district court has either diversity jurisdiction or federal question jurisdiction before the Court will entertain a declaratory action."). Nationwide easily satisfies this initial requirement, as their complaint contains sufficient factual pleadings to establish diversity of citizenship among the involved parties. [Compl. at 2].

3. Judicial Discretion

The first step in this process may have been an easy one to clear, but the path forward for Plaintiff's Declaratory Judgment Act claim is far from preordained. To the contrary, and jurisdictional requirements notwithstanding, "district courts possess discretion in determining whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional prerequisites." Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995); see also Am. Home Assurance Co v. Evans, 791 F.2d 61, 64 (6th Cir. 1986) ("[The] Declaratory Judgment Act confers discretion on courts, not right on litigants[.]" (citing Green v. Mansour, 474 U.S. 64, 72 (1985))); United Apostolic Lighthouse, 200 F. Supp. 2d at 692 ("Once the Court has determined that subject matter jurisdiction exists, it must evaluate whether this case is appropriate for declaratory judgment pursuant to the Declaratory Judgment Act." (citing 28 U.S.C. § 2201; Wilton, 515 U.S. at 282-83)); see also 28 U.S.C. § 2201(a) (stating thatcourts "may declare the rights and other legal relations of any interested party seeking such declaration" (emphasis added)).

This Court's inquiry is guided by a series of factors laid out by the Sixth Circuit, which provide that a court should consider:

(1) whether the declaratory action would settle the controversy; (2) whether the declaratory action would serve a useful purpose in clarifying the legal relations in issue; (3) whether the declaratory remedy is being used merely for the purpose of "procedural fencing" or "to provide an arena for a race for res judicata;" (4) whether the use of a declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction; and (5) whether there is an alternative remedy which is better or more effective.

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