Star Ins. Co. v. Cont'l Servs., Inc.

• Court: U.S. District Court — District of North Dakota
• Writing for the Court: DANIEL L. HOVLAND
• Citation: Star Ins. Co. v. Cont'l Servs., Inc., 916 F.Supp.2d 936 (D. N.D. 2013)
• Decision Date: 17 January 2013
• Docket Number: Case No. 4:12–cv–121.
• Parties: STAR INSURANCE COMPANY, Plaintiff, v. CONTINENTAL SERVICES, INC., Cyclone Drilling, Inc., Plaster & Wald Consulting Corp., Torus Specialty Insurance Group, M–I, LLC, Zurich American Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA, and Travelers Property Casualty Company of America, Defendants.

916 F.Supp.2d 936

STAR INSURANCE COMPANY, Plaintiff,

v.CONTINENTAL SERVICES, INC., Cyclone Drilling, Inc., Plaster & Wald Consulting Corp., Torus Specialty Insurance Group, M–I, LLC, Zurich American Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA, and Travelers Property Casualty Company of America, Defendants.

Case No. 4:12–cv–121.

United States District Court,

D. North Dakota,

Northwestern Division.

Jan. 17, 2013.

Scott K. Porsborg, Smith Bakke Porsborg & Schweigert, Bismarck, ND, Syed S. Ahmad, Walter J. Andrews, Hunton & Williams LLP, McLean, VA, for Plaintiff.

Lawrence Bender, Michael D. Schoepf, Fredrikson & Byron, PA, Bismarck, ND, Joseph A. Wetch, Jr., Ronald H. McLean, Serkland, Lundberg, Erickson, Marcil & McLean, Ltd., Fargo, ND, Steven J. Adams, Fellers Snider Blankenship Bailey & Tippens, P.C., Reagan L. Madison, William D. Perrine, Perrine, Redemann, Berry, Taylor & Sloan, P.L.L.C., Tulsa, OK, Tamara L. Novotny, Cousineau McGuire Chartered, Minneapolis, MN, Richard P. Olson, Olson Burns Lee, Minot, ND, Paul F. Ebeltoft, Ebeltoft Sickler Kolling Grosz Bouray, PLLC, Dickinson, ND, Troy A. Wolf, Oppegard Wolf & Quinton, Moorhead, MN, for Defendants.

ORDER DENYING MOTION TO DISMISS

DANIEL L. HOVLAND, District Judge.

Before the Court is Defendant Continental Services, Inc., (“Continental”) motion to dismiss or, in the alternative, to stay filed on July 19, 2012. See Docket No. 25. Defendant Travelers Property Casualty Company of America (“Travelers”) joined in the motion on November 1, 2012. See Docket No. 41. The plaintiff, Star Insurance Company (“Star Insurance”), filed a response in opposition to the motion on November 6, 2012. See Docket No. 48. Continental filed a reply brief on November 19, 2012. See Docket No. 58. For the reasons set forth below, the motion is denied.

I. BACKGROUND

This is a declaratory judgment action filed pursuant to 28 U.S.C. §§ 2201–2202. The case involves four oil and gas companies, five insurance companies and seven insurance policies. The underlying dispute arises out of an explosion at an oil and gas well located near Beach, North Dakota, on July 25, 2011, which severely injured three employees of Cyclone Drilling, Inc. (“Cyclone Drilling”). The well is known as the Beaver Creek State 1–36 H well. The Cyclone Drilling employees sued Continental and a number of other oil service companies in an action captioned Morton et al. v. Continental Resources, Inc., et al., Case No. 53–2011–CV–00698, in the District Court for the Northwest Judicial District of North Dakota, Williams County (the “Williams County action”). There is a related action pending in a state court in Oklahoma captioned Continental Resources, Inc. v. Plaster and Wald Consulting Corp., Case No. CJ–2012–3033 (the “Oklahoma action”). Cyclone Drilling has been added to the Oklahoma action as a third-party defendant. Continental asserts claims for breach of contract and declaratory relief and seeks indemnity from Plaster & Wald Consulting Corp. (“P & W”) for claims relating to the explosion and fire at the Beaver Creek well.

Continental is a corporation organized under Oklahoma law with its principle place of business in Oklahoma. Continental is engaged in the oil and gas business in North Dakota. Continental executed master service contracts with P & W and M–I relating to oil and gas drilling activities in North Dakota. The litigation in Oklahoma concerns these contracts.

Cyclone Drilling is a corporation organized under Wyoming law with its principleplace of business in Wyoming. Cyclone Drilling is engaged in the oil and gas business in North Dakota. Cyclone Drilling agreed to provide services to Continental related to the drilling of oil and gas in North Dakota. Cyclone Drilling has yet to file an answer or otherwise appear in this action.

P & W is a corporation organized under Oklahoma law with its principle place of business in Oklahoma. P & W is engaged in the oil and gas business in North Dakota. P & W agreed to provide services to Continental related to the oil and gas drilling in North Dakota.

M–I, LLC (“M–I”) is a corporation organized under Texas law with its principle place of business in Texas. M–I is engaged in the oil and gas business in North Dakota. M–I agreed to provide services to Continental related to oil and gas drilling in North Dakota.

Star Insurance is a corporation organized under Michigan law with its principal place of business in Michigan. Star Insurance issued a commercial general liability policy to Cyclone Drilling. Star Insurance also issued a commercial liability umbrella policy to Cyclone Drilling.

Torus Specialty Insurance Group (“Torus”) is a corporation organized under Delaware law with its principle place of business in New Jersey. Torus issued general liability policies (primary and excess) to P & W. Continental is named as an additional insured under these policies.

Zurich American Insurance Company (“Zurich”) is a corporation organized under Illinois law with its principle place of business in Illinois. Zurich issued a commercial general liability policy to Continental.

National Union Fire Insurance Company of Pittsburgh, Pa. (“National Union”) is a corporation organized under Pennsylvania law with its principle place of business in New York. National Union issued an umbrella policy to Continental.

Travelers Property Casualty Company of America is a corporation organized under Connecticut law with its principle place of business in Connecticut. Travelers issued a commercial general liability policy to M–I. Continental is named as an additional insured under this policy.

Continental requested that Star Insurance defend and indemnify it in connection with the Williams County litigation in North Dakota, as an additional insured under the Star Insurance policies. Continental has also requested that Cyclone Drilling defend and indemnify it in connection with the Williams County action. M–I has requested that Continental defend and indemnify it in connection with the Williams County action. Continental and M–I have requested coverage from Star Insurance for M–I liabilities in the Williams County action. P & W has requested defense and indemnification from Star Insurance as an additional insured under the Star Insurance policies issued in connection with the Williams County action. P & W has requested that Cyclone Drilling defend and indemnify it in connection with the Williams County action. P & W has also requested that Star Insurance defend and indemnify it in connection with the Oklahoma state action. Star Insurance denies any obligation to defend or indemnify M–I or P & W. Star Insurance is providing a defense to Continental under its primary policy subject to a full reservation of rights.

Star Insurance seeks a determination of its obligation to provide insurance coverage to Continental, P & W and M–I. Star Insurance also seeks a determination regarding the obligations of Torus, National Union, Travelers, and Zurich to provide insurance coverage. In addition, Star Insurance seeks a priority of coverage determination.Continental is the only party insured or listed as an additional insured under the seven insurance policies at issue.

II. LEGAL DISCUSSION

Continental has moved to dismiss the action based upon the common law doctrine of forum non conveniens. In the alternative, Continental requests this action be stayed in favor of the Oklahoma state court action.

A. FORUM NON CONVENIENS

In the seminal case discussing the forum non conveniens doctrine, the United States Supreme Court explained that the doctrine gives courts the power, in exceptional cases, to decline jurisdiction even when jurisdiction exists and venue is proper. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 506–07, 67 S.Ct. 839, 91 L.Ed. 1055 (1947). A motion to dismiss based on the doctrine of forum non conveniens is available to a defendant in a case commenced in federal court if the case cannot be transferred to another federal court under 28 U.S.C. § 1404(a) because the alternate forum is a state court. See TUC Elec., Inc. v. Eagle Tel., Inc., 698 F.Supp. 35, 37–38 (D.Conn.1988). It is a discretionary doctrine which vests in the district courts the power to abstain from the exercise of jurisdiction even where authorized by statute if the litigation can be more appropriately conducted in a foreign tribunal. The doctrine presupposes the existence of an adequate alternative forum where the matter can be resolved. Id.;Cent. States Indus. Supply, Inc. v. McCullough, 218 F.Supp.2d 1073, 1081 (N.D.Iowa 2002). If such a forum exists, the trial court must balance a number of non-exhaustive “public interest” and “private interest” factors first set forth in Gilbert in making the forum determination. The “private interest” factors consist of the following:

1) the relative ease of access to sources of proof;

2) the availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses;

3) the possibility of view of the premises, if view would be appropriate to the action; and

4) all other practical problems that make trial of a case easy, expeditious and inexpensive.

McCullough, 218 F.Supp.2d at 1081. The “public interest” factors consist of the following:

1) administrative difficulties flowing from court congestion;

2) the forum's interest in having localized controversies decided at home;

3) the interest in having the trial of a diversity case in a forum that is at home with the law that must govern the action;

4) the avoidance of unnecessary problems in conflict of laws, or in the application of foreign law; and

5) the unfairness of burdening citizens in an unrelated forum with jury duty.

Id.

It is well-established that the defendant has the burden of persuasion in demonstrating these factors warrant a dismissal in favor of the alternate forum. Reid–Walen v. Hansen, 933 F.2d 1390, 1393 (8th Cir.1991). Trial courts are...