Opinion
EP-04-CA-432-DB.
March 2, 2005
MEMORANDUM OPINION AND ORDER
On this day, the Court considered Defendant Great West Casualty Company's ("Great West") "Motion To Dismiss And, In The Alternative, To Transfer Venue" ("Motion to Dismiss" and "Motion To Transfer Venue," respectively), filed in the above-captioned cause on January 10, 2005. On January 21, 2005, Plaintiff Gulf Underwriters Insurance Company ("Gulf") filed a "Response Of Gulf Underwriters Insurance Company In Opposition To Great West Casualty Company's Motion To Dismiss And, In The Alternative, To Transfer Venue." On February 1, 2005, Great West filed a Reply. For the reasons that follow, the Court is of the opinion that both of the instant Motion should be denied.
BACKGROUND
On November 22, 2004, Gulf filed a petition seeking a declaratory judgment against another liability insurer. Therein, Gulf asks the Court to declare the extent to which Great West must respond on behalf of a named defendant in an underlying tort suit. Since the details surrounding the underlying tort suit served as the impetus to Gulf's action seeking a declaratory judgment, the Court is of the opinion that a brief recitation of the background in the underlying tort suit is in order.
On December 11, 2002, Arturo B. and Maria De Lourdes Garcia filed a suit in the 41st Judicial District, El Paso County, Texas, against the Hammerblow Corporation ("Hammerblow") and other defendants to recover damages from injuries sustained by Arturo Garcia when steel rods fell on him from a flat-bed trailer. At the time of the accident, the flatbed trailer was owned by Roehl Transport, Inc. ("Roehl"), but was being used by Hammerblow.
Great West issued a Commercial Auto Policy to Roehl for the policy period between December 1, 2002 to December 1, 2003. Said policy provided primary liability coverage to anyone permissibly using a covered auto owned by Roehl. In the underlying tort suit, the Garcias contend that the flat-bed trailer was a covered auto owned by Roehl, and that Hammerblow was a permissive user. Great West recently issued a reservation of rights to Hammerblow in the underlying tort suit.
Gulf issued a Commercial Excess Liability Insurance Policy to Hammerblow for the policy period of December 19, 2001 to December 19, 2002, the same coverage period of the Great West policy. Said policy provided that Gulf's obligation to indemnify is limited to "ultimate net loss" in excess of the amount of insurance provided by policies of "underlying insurance," and that it was insurance covering "excess over any other valid and collectible insurance whether such other insurance stated to be primary, contributing, excess, contingent, or otherwise."
On November 22, 2004, Gulf filed this suit based on diversity jurisdiction, which seeks a declaration from the Court that Great West's policy is the "underlying insurance" policy, while its policy is the "excess policy." On January 10, 2005, the instant Motion followed. Therein, Great West lists a sundry of reasons why the Court should either dismiss the cause or transfer it to a different venue.
Finally, Great West requests that the Court dismiss this cause under Rule 12(b)(3) and 28 U.S.C. § 1406(a) because it was filed in an improper venue, or in the alternative, that the Court transfer this cause to the State of Wisconsin.
DISCUSSION
The Court construes the instant Motion to serve as both a Motion to Dismiss and a Motion to Transfer Venue. Since the ultimate result from a request to dismiss is distinct from one to transfer, the Court elects to dichotomize the instant Motion into two separate Motions. Within the Motion to Dismiss, Great West launches three attempts to dismiss the instant cause of action. Great West first prays that the Court dismiss this cause, arguing that Gulf lacks standing to seek a judicial declaration pursuant to U.S. Const. art. III, § 1. Great West also argues that this cause should be dismissed for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6), since Gulf's sole purpose is to seek declaratory judgment, which Great West avers that Gulf does not have standing to pursue under the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202. The Court addresses the issues of standing and failure to state a claim individually. However, since Great West disputes proper venue in various forms, the Court bundles its discussion on the topic.
I. Standing — U.S. Const. art. III, § 1
Great West avers that Gulf does not allege any basis for its ability to bring this lawsuit regarding coverage under the Great West policy. It goes on to argue that since Gulf does not request insured status itself under the Great West policy, and does not allege the existence of privity-of-contract between it and Great West, Gulf does not have standing to request a judicial declaration of Great West's obligations under the Great West policy. For its part, Gulf counters that Great West's suppositions lack a legal basis. Gulf adds that the analysis advanced by Great West is not congruent with the analysis required in an action seeking declaratory judgment. The Court agrees with Gulf.
Cases between liability insurers, such as the present dispute, involve an "actual controversy" within the jurisdiction of federal courts. American Fidelity Cas. Co. v. United States Fidelity Guaranty Co. 305 F.2d 633, 634 (5th Cir. 1962). Indeed, declaratory judgment actions between liability insurers have long been embraced by the Fifth Circuit. Id.; West Am. Ins. Co. v. Allstate Ins. Co., 295 F.2d 513, 516 (10th Cir. 1961). It is not essential for a liability insurer to have privity-of-contract, with the other liability insurer, in order to have standing in a declaratory judgment action. American Fidelity Cas. Co., 305 F.2d at 634.
Here, as in American Fidelity Cas. Co., the declaratory judgment action involves a dispute between two insurers. It is well settled that liability insurers can seek a judicial declaration when there is a need to set the record straight on policy coverage. American Fidelity Cas. Co., 305 F.2d at 635. Great West fails to address Fifth Circuit precedent governing suits of this nature. Indeed, legal precedent encourages Gulf to utilize a declaratory judgment action to untangle the twine prior to the resolution of the underlying tort suit. Id. As such, the Court is of the opinion that Gulf does, in fact, have standing to bring this declaratory judgment to determine if the policy it issued is "excess" insurance secondary to the "underlying insurance" policy issued by Great West. Therefore, the Court is of the opinion that Great West's Motion to Dismiss on the basis that Gulf lacks standing should be denied. II. Failure To State A Claim — FED. R. CIV. P. 12(b)(6)
Rule 12(b)(6) allows dismissal of a case when the plaintiff fails to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). Under Rule 12(b)(6), a court must decide whether the facts alleged, if true, would entitle the plaintiff to some legal remedy. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 102, 2 L. Ed. 2d 80 (1957). Dismissal for failure to state a claim is highly disfavored and is not granted routinely because of the liberal "notice pleading" requirements of the Federal Rules. FED. R. CIV. P. 8(a); Shipp v. McMahon, 199 F.3d 256, 260 (5th Cir. 2000). In short, a court should not dismiss a claim under Rule 12(b)(6) "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley, 355 U.S. at 45-46, 78 S. Ct. at 102.
When considering a motion under Rule 12(b)(6), the court must limit its inquiry to facts stated in the plaintiff's complaint and the documents either attached to or incorporated therein. Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1017 (5th Cir. 1996). Further, the court must accept as true all material allegations in the complaint, as well as any reasonable inferences to be drawn from them, Kaiser Aluminum Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982), and must review those facts in a light most favorable to the plaintiff. Piotrowski v. City of Houston, 51 F.3d 512, 514 (5th Cir. 1995).
Once again, Great West raises the scepter of immunity from Gulf's prayer for judicial declaration by maintaining that Gulf does not possess rights under a contractual relationship. Great West contends that absent privity-of-contract, Gulf does not have a legal right to undertake this cause of action, thus Gulf's effort to seek a judicial declaration fails. Great West suggests that Gulf, as a liability insurer, is obligated to have first paid a claim before it may seek a declaratory judgement against it. The theme of Great West's argument is that Gulf cannot pursue an action when it lacks a bona fide entitlement.
Gulf retorts that Great West's position is a "repackaging" of its proposition that since Gulf is not a party to the Great West policy, it cannot seek declaratory judgment in federal court. Gulf reiterates that the basis for its claim is rooted in the need for a judicial determination of whether the limits of the Great West policy forces Great West to respond on behalf of Hammerblow ahead of the Gulf policy.
The Court must accept as true all material allegations in Gulf's complaint, as well as any reasonable inferences to be drawn from them, Kaiser Aluminum Chem. Sales, Inc., 677 F.2d at 1050, and must review those facts in a light most favorable to Gulf. Piotrowski v. City of Houston, 51 F.3d at 514. The Court should not dismiss Gulf's claim under Rule 12(b)(6) unless it appears beyond doubt that Gulf can prove no set of facts in support of its claim which would entitle it to relief. See Conley, 355 U.S. at 45-46, 78 S. Ct. at 102. Great West fails to produce any facts which evinces that Gulf cannot prove its claim, thus making its accusation that Gulf is not entitled to some legal remedy fail. Therefore, the Court is of the opinion that Great West's Motion To Dismiss for failure to state a claim should also be denied.
III. Venue — FED. R. CIV. P. 12(b)(6) and 28 U.S.C. § 1406(a)
In its Motion To Dismiss, Great West moves for dismissal pursuant to Federal Rule of Civil Procedure 12(b)(3) on the grounds that this suit was filed in an improper venue. Alternatively, Great West moves under 28 U.S.C. § 1406(a) to transfer venue to the state of Wisconsin. The Court discusses each in turn.
When a federal district court's jurisdiction is premised solely on diversity of citizenship, as in this case, 28 U.S.C. § 1391(a) controls venue, establishing three places where venue is proper:
(1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought."28 U.S.C.A. § 1391(a) (West 2004).
Since the Court's jurisdiction over the instant cause is founded solely on diversity of citizenship, 28 U.S.C. § 1391(a) controls venue. See 28 U.S.C.A. § 1391(a) (West Supp. 2004). The bedrock of Great West's contention fixates on the insurance contract that it entered into with Roehl, in the State of Wisconsin. To buttress this position, it identifies the contractual obligations to Hammerblow, which happens to be a company owned and operated in Wisconsin. Great West attempts to clasp its chain of attenuated logic by surmising that both the aforementioned insurance policies are likely to be interpreted according to Wisconsin law. In essence, Great West offers these contractual relationships in Wisconsin as the "events" that gave rise to this cause of action, and concludes that venue is proper in Marathon County, Wisconsin.
For its part, Gulf counters by directing the Court's attention to the underlying tort suit currently pending in El Paso County, Texas, and that the underlying tort suit, in turn, birthed the instant suit that seeks declaratory judgment. Gulf emphasizes that the "events and injury," which served as the impetus for the underlying tort suit, also occurred in El Paso County. Gulf offers the details behind Mr. Garcia's accident on December 11, 2002 to bolster its position. In said accident, Gulf avers that the trailer was located in El Paso, and the circumstances and knowledge about the trailer's use were impacted by persons and events in El Paso. Gulf argues that the location of said accident gave rise to the instant cause being "properly" filed in the Western District of Texas, El Paso Division.
To demonstrate that venue is proper in the Western District of Texas, Gulf also showcases the "Movement of Property By Mechanical Device" exclusion invoked by Great West. Said exclusion applies to "bodily injury or property damage resulting from the movement of property by a mechanical device (other than a hand truck) unless the device is attached to the covered auto." Gulf posits that the facts and conduct germane to the applicability of this exclusion invoked by Great West are indisputably connected to this judicial district. The Court agrees with all the points laid out by Gulf.
Here, the events surrounding Mr. Garcia's alleged injuries are at the heart of the underlying tort suit currently pending in the state court of El Paso County. This accident occurred on December 11, 2002 in El Paso County, Texas, which lies within the Western District of Texas, El Paso Division. Venue is proper in this judicial district because a substantial part of the events or omissions giving rise to Mr. and Mrs. Garcia's underlying claim, which gave rise to the instant petition for declaratory judgment, occurred in the Western District of Texas. It is clear that the location where Mr. Garcia's accident occurred is more than tangential to the dispute. Britamco Underwriters, Inc. v. Raymond E. Wallace Special Prods. Inc., 56 F. Supp. 2d 542, 545 (E.D. Penn. 1999).
Alternatively, Great West requests that the Court transfer this cause pursuant to § 1406. When a case is filed laying venue in the wrong division or district, 28 U.S.C. § 1406(a) instructs a district court to either dismiss or transfer that case. 28 U.S.C.A. § 1406(a) (West 1993). A district court should transfer the case if the transfer is in the interest of justice, and may only transfer the case to a district in which the case could have been brought. Id.
Section 1406(a) states:
"The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought."28 U.S.C.A. § 1406(a) (West 1993).
As stated above, the Court is of the opinion that venue is proper pursuant to § 1391(a). Therefore, Great West's attempt to transfer venue under § 1406 is not permissible because § 1406 is intended to cure laying venue in the wrong division or district, which is not the case here. See 28 U.S.C.A. § 1406(a). As a result, the Court is of the opinion that Great West's Motion to Dismiss and Motion To Transfer Venue should both be denied.
CONCLUSION
For the reasons stated, the Court finds that Gulf possesses the necessary standing to seek a declaratory judgment against Great West. The Court also finds that Great West's accusation that Gulf failed to state a claim for which relief can be granted is unfounded. The Court further finds that venue is proper in the Western District of Texas, El Paso Division. Therefore, the Court is of the opinion that Great West's "Motion to Dismiss" and "Motion To Transfer Venue" should both be denied.
Accordingly, IT IS HEREBY ORDERED that Defendant Great West Casualty Company's "Motion to Dismiss" is DENIED. IT IS FURTHER ORDERED that Defendant Great West Casualty Company's "Motion To Transfer Venue" is DENIED.