State Farm Fire & Cas. Co. v. Hardy

• Decision Date: 06 February 2020
• Docket Number: CASE NO. 2:19-cv-68-TFM-B
• Parties: STATE FARM FIRE AND CASUALTY COMPANY, Plaintiff, v. JIMMIE HARDY, as Personal Representative of the Estate of Theoore Hardy, deceased, et al. Defendants.
• Court: U.S. District Court — Southern District of Alabama

STATE FARM FIRE AND CASUALTY COMPANY, Plaintiff, v. JIMMIE HARDY, as Personal Representative of the Estate of Theoore Hardy, deceased, et al. Defendants.

CASE NO. 2:19-cv-68-TFM-B

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA NORTHERN DIVISION

February 6, 2020

MEMORANDUM OPINION AND ORDER

Now pending before the Court are: (1) a motion to dismiss filed by Defendant J.S. Wallace Trucking, Inc. ("Wallace") (Doc. 15, filed April 12, 2019), (2) a motion to dismiss filed by Defendants Erosion Management, LLC ("Erosion Management") and the Estate of Robert Samuel Dunkin ("Dunkin") (Doc. 17, filed April 20, 2019), and (3) a joinder in his co-defendants' motions to dismiss filed by Defendant Jimmie Hardy, as personal representative of the Estate of Theodore Hardy ("Hardy") (Doc. 18, filed April 22, 2019). The Plaintiff, State Farm Fire and Casualty Company ("State Farm" or "Plaintiff") filed a combined response to the motions (Doc. 22, filed May 6, 2019). The defendants timely filed their various replies on May 13, 2019 (Docs. 25-28).¹ Accordingly, the motions are fully submitted and ripe for review. After a careful review of the motions, responses, replies, the pleadings and other documents, and the relevant case law, the Court GRANTS the motions to dismiss for the reasons articulated below.

I. PARTIES AND JURISDICTION

State Farm brings this action for declaratory judgment pursuant to Fed. R. Civ. P. 57 and the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202. The federal Declaratory Judgment Act does not provide an independent basis for this Court's subject matter jurisdiction. See Household Bank v. JFS Grp., 320 F.3d 1249, 1253 (11th Cir. 2003) ("If there is an underlying ground for federal court jurisdiction, the Declaratory Judgment Act allow[s] parties to precipitate suits that otherwise might need to wait for the declaratory relief defendant to bring a coercive action.") (internal quotations omitted). Accordingly, State Farm brings this suit pursuant to this Court's diversity jurisdiction under 28 U.S.C. § 1332.

A federal court has diversity jurisdiction over a civil action between citizens of different states where the amount in controversy exceeds $75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a)(1). In a declaratory judgment action, the amount in controversy is "the monetary value of the benefit that would flow to the plaintiff if the relief he is seeking were granted." First Mercury Ins. Co. v. Excellent Computing Distrib., Inc., 648 F. App'x 861, 865 (11th Cir. 2016) (internal quotation marks omitted) (quoting S. Fla. Wellness, Inc. v. Allstate Ins. Co., 745 F.3d 1312, 1316 (11th Cir. 2014)). In other words, when parties seek a judgment declaring whether an insurer is liable under a policy, the value of the declaratory relief is the amount of potential liability. Id. (citing Stonewall Ins. Co. v. Lopez, 544 F.2d 198, 199 (5th Cir. 1976)).²

Here, State Farm asserts that it is an Illinois corporation with its principal place of business in Illinois. Defendant Jimmie Hardy is an Alabama resident and personal representative of theEstate of Theodore Hardy, the deceased, who also was an Alabama resident before his death. Wallace is an Alabama corporation with its principal place of business in Alabama, and Erosion Management is an Alabama limited liability company with its principal place of business in Alabama. Moreover, Erosion Management's sole member, Robert Samuel Dunkin, was an Alabama resident before his death. Heather Marie Desmond, the personal representative of Dunkin's estate, also is an Alabama resident. Thus, the parties are diverse.

Additionally, State Farm asserts that the insurance policy in question has a liability limit of $1,000,000. Given the fact that the underlying lawsuit involves a claim of wrongful death and the liability limit is $1,000,000, the Court finds that the amount in controversy exceeds the $75,000 threshold for diversity jurisdiction.

II. FACTUAL AND PROCEDURAL BACKGROUND

In this declaratory judgment action, State Farm asks the Court to declare the rights and legal relations between the parties with respect to the liability coverage of an automobile insurance policy issued by State Farm to Wallace Trucking. Specifically, State Farm seeks a declaration regarding (1) whether it has a duty under the policy to defend and indemnify Wallace Trucking and/or Erosion Management in an underlying wrongful death lawsuit pending in Alabama state court, Jimmie Hardy v. J.S. Wallace Trucking, Inc., Civ. Act. No. 27-CV-2015-900330 (27th Jud. Cir. Ala.) ("Hardy case"); and (2) whether Dunkin has a claim under the State Farm policy for medical payments and uninsured motor vehicle coverage, as alleged in a separate state court lawsuit, Estate of Samuel Dunkin v. State Farm Casualty Co., Civ. Act. No. 27-CV-2019-900110 (27th Jud. Cir. Ala.) ("separate state court action"). Doc. 4.

The underlying state court litigation involves a 2015 motor vehicle collision that caused the deaths of Theodore Hardy and Robert Samuel Dunkin. Hardy's estate brought a wrongful death suit in Dallas County Circuit Court against both Wallace Trucking and Erosion Management, asserting that Dunkin was negligently and wantonly operating a vehicle owned by Wallace Trucking when the collision occurred, and that both Wallace Trucking and Erosion Management are vicariously liable by way of respondeat superior. According to the parties' most recent filings, the Hardy case remains pending.

According to the filings, State Farm has been defending Wallace and Erosion Management in the state court suit under a full reservation of rights. State Farm filed its complaint for declaratory judgment in this Court on February 19, 2019, naming Hardy, Wallace Trucking, and Erosion Management as defendants. Doc. 1. State Farm amended its complaint on March 1, 2019, to add Dunkin as a defendant. Doc. 4. Subsequently, on April 9, 2019, Wallace Trucking filed its Third-Party Complaint/Complaint for Declaratory Judgment against State Farm in the Hardy case, seeking (1) a declaration that State Farm has a duty to defend and indemnify Wallace Trucking in the suit and (2) damages for breach of contract and bad faith. Doc. 17-4. On April 12, 2019, Erosion Management and Dunkin's estate filed their separate state court action, seeking declaratory judgment that Dunkin is entitled to recover from State Farm both uninsured motorist benefits, and the payment of defense costs and indemnification of Erosion Management. Doc. 17-5. The amended state court complaint also seeks damages for breach of contract and fraud and payment of uninsured motorist benefits. Id.

In its motion to dismiss, Wallace argues that this Court should dismiss the declaratory action brought here pursuant to the Brillhart/Wilton doctrine³ because parallel proceedings are pending in state court and the factors set out by the Eleventh Circuit in Ameritas Variable LifeInsurance Co. v. Roach, 411 F.3d 1328 (11th Cir. 2005) ("Ameritas"), weigh in favor of abstention.

Specifically, Wallace argues that the state has a strong interest in resolving the controversy because it is a matter of state law involving insurance coverage of an Alabama business for a car accident that occurred in Alabama and injured an Alabama citizen, that a complete resolution of the controversy can be reached only in state court, and that maintaining the action here would only increase friction between the state and federal courts. Wallace asserts that the underlying state court action lacks diversity jurisdiction and thus is not removable to federal court, rendering the instant action an exercise in procedural fencing. It asserts that the state court is better positioned to evaluate the factual issues underlying these declaratory judgment claims, and judgment here could result in piecemeal litigation. Wallace argues that the state court could more efficiently decide all of the issues without federal interference.

Wallace also argues that dismissal, not a stay, is the appropriate action in this case because there is no reasonable risk that a time bar would deter State Farm from filing this declaratory judgment action should the state court fail to resolve the matter, and a stay would promote forum shopping and piecemeal litigation by creating an incentive to thwart resolution of a third-party complaint for declaratory relief in state court in order to lift the stay and litigate in federal court.

Wallace attaches to its motion two documents from the underlying action in Dallas County Circuit Court: (1) the First Amended Complaint filed by Hardy on August 4, 2016, and (2) the Third-Party Complaint/Complaint for Declaratory Judgment filed by Wallace on April 9, 2019. Doc. 15 at 15-23.

In their separate motion to dismiss, Dunkin and Erosion Management join in the arguments raised by Wallace under Brillhart/Wilton. Doc. 17. They note that State Farm had been defending Wallace and Erosion Management in the underlying state court action for three years before filing the instant case, and that State Farm's filing in federal court constitutes a "race to the courthouse" and forum shopping. They argue that the state court has been handling the underlying action for several years, the action involves only "garden variety Alabama tort law," with no diverse parties or federal questions, and maintaining the declaratory judgment action in state court would prevent disparate rulings by the state and federal courts.

Dunkin and Erosion Management attach to their motion (1) the initial complaint filed by Hardy against Wallace in Dallas County Circuit Court on December 3, 2015; (2) an affidavit by Mike Comer, counsel for Dunkin and Erosion Management, stating that he notified State Farm on February 19, 2019, of Dunkin's claim for uninsured motorist benefits, that he mailed written notification of such on February 20, 2019, and that State Farm filed its declaratory judgment action against his clients on ...