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Charter OAK Fire Insurance Co. v. G&R Mineral Services, Inc.

United States District Court, N.D. Alabama, Southern Division

February 9, 2018




         This is a declaratory judgment action filed by the Charter Oak Fire Insurance Company (“Charter Oak”) against two defendants: G&R Mineral Services, Inc. (“G&R”) and Lhoist North America of Alabama, LLC (“Lhoist”). (See Docs.[1] 1, 20). The cause comes to be heard on a motion filed by Lhoist, joined by G&R, asking the court to dismiss the action based on abstention principles recognized in Ameritas Variable Life Ins. Co. v. Roach, 411 F.3d 1328 (11th Cir. 2005) (“Ameritas”) (Docs. 9, 14). Upon consideration, the court[2] concludes that the motion to dismiss is due to be granted.


         According to Charter Oak's latest pleading and the submissions on the motion to dismiss, the salient facts, assumed to be true for present purposes, are these: Lhoist owns and operates a lime quarry in Shelby County, Alabama (the “Quarry”). In April 2009, Lhoist entered into a Master Agreement for Services with G&R (“Master Agreement”), pursuant to which G&R performed contract work at the Quarry.[3] On August 28, 2010, David Vinson, Jr., a temp service employee assigned to work for G&R, filed a lawsuit in the Circuit Court of Shelby County, Alabama, against both G&R and Lhoist (the “Vinson Lawsuit”). Vinson there raised tort claims alleging he suffered personal injuries as a result of being exposed to lime dust while working for G&R at the Quarry on March 5, 2010. (See Doc. 9-1). In April 2013, G&R was dismissed from the Vinson Lawsuit on summary judgment, an order the Alabama Supreme Court affirmed on interlocutory appeal in January 2014. Vinson v. G&R Mineral Services, Inc., 150 So.3d 749 (Ala. 2014). Vinson's claims against Lhoist thereafter went to trial, resulting in a defense verdict on May 23, 2017. Vinson appealed the final judgment to the Alabama Supreme Court, and that appeal remains pending.

         Meanwhile, on March 24, 2017, Lhoist filed a separate lawsuit, also in the Circuit Court of Shelby County, against G&R and a number of insurance carriers, including Charter Oak, seeking insurance coverage and indemnity for amounts Lhoist spent defending itself in the Vinson Lawsuit (hereinafter the “State-Court Insurance Lawsuit”; see Doc. 9-2 (“State-Ct. Ins. Lawsuit Compl.”)). With regard to G&R, Lhoist there demands a declaratory judgment and damages for breach of contract under Alabama law based on allegations that G&R has a duty under the Master Agreement to indemnify Lhoist for its defense in the Vinson Lawsuit. (State-Ct. Ins. Lawsuit Compl., Counts One & Two). Lhoist also brings state-law claims against Charter Oak and other insurers, seeking a declaratory judgment and damages for breach of contract and the tort of bad faith. (Id., Counts Three, Four, and Five). As it relates to Charter Oak, those claims are based on a Commercial General Liability (“CGL”) insurance policy (hereinafter the “Policy”) that Charter Oak issued to G&R that provides occurrence-based coverage from September 30, 2009, through September 30, 2010, and includes coverage for Lhoist as an additional insured. (Id., ¶¶ 19(d), 31). In support, Lhoist says it demanded indemnity under the Policy for amounts spent defending itself in the Vinson Lawsuit and that that Charter Oak's ensuing denial of coverage based on a pollution exclusion was not even arguably justified in light of Alabama Supreme Court precedent. (Id., ¶¶ 20, 30, 32, 33; id., Counts Three, Four, and Five).

         Charter Oak, in turn, filed the instant action against G&R and Lhoist on May 10, 2017, pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq., founding jurisdiction on the diversity statute, 28 U.S.C. § 1332. (Doc. 1). In its now-governing, first amended pleading, Charter Oak demands relief in the form of a declaration that it has no duty under the Policy to either defend (Count I) or indemnify (Count II) G&R with respect to the declaratory-judgment and breach-of-contract claims that Lhoist makes against G&R in the State-Court Insurance Lawsuit. (Doc. 20 (hereinafter “Complaint” or “Compl.”)). In particular, Charter Oak maintains that those legal claims against G&R do not constitute “bodily injury” or “property damage” that occurred during the policy period and were not caused by an “occurrence, ” as those terms are defined in the Policy. (Compl. ¶ 32). Charter Oak also insists that there is no coverage for Lhoist's claims against G&R because of enumerated exclusions in the Policy. Specifically, Charter Oak cites exclusions for “pollution injury or damage” (id. ¶¶ 34-37), for bodily injury or property damage that is either related to silica exposure (id. ¶¶ 38-39), for “expected or intended [injury] from the standpoint of the insured, ” “by reason of the assumption of liability in a contract or agreement, ” as well as an exclusion for bodily injury to an “employee of the insured arising out of and in the course of … [e]mployment by the insured.” (Id. ¶¶ 40-41). Charter Oak has named Lhoist as a co-defendant in this action because Lhoist's interests would be adversely affected by a declaration that Charter Oak is not required to defend or indemnify G&R with respect to Lhoist's claims. (See Compl. ¶ 24; see also Doc. 29 at 2 & n. 2).

         Lhoist has moved to dismiss this action based on the abstention doctrine recognized by the Eleventh Circuit in Ameritas. (Doc. 9). G&R has joined in that motion. (Doc. 14). Charter Oak filed a response in opposition (Doc. 29), and G&R (Doc. 30) and Lhoist (Doc. 31) have each filed a reply thereto. Incorporated in G&R's reply is a motion to stay these proceedings in relation to Count Two of Charter Oak's pleading, which seeks a declaratory judgment with respect to Charter Oak's potential duty to indemnify G&R with respect to any judgment or settlement G&R might pay in the State-Court Insurance Lawsuit. (Doc. 30 at 4-6). Charter Oak has opposed that motion to stay. (Doc. 32).

         On September 18, 2017, G&R filed a “Supplemental Document” in support of its motion asking the court to abstain, attaching a copy of a pleading that G&R had filed in the State-Court Insurance Lawsuit several days earlier on September 13th. (Doc. 35). By that pleading, G&R asserts cross-claims against Charter Oak for a declaratory judgment, breach of contract, and fraud. (Doc. 35 at 5-18 (“G&R Cross-Claim”)). Those are based on allegations that Charter Oak breached the Policy by refusing to pay (1) an insurance claim that G&R submitted on behalf of Lhoist as an additional insured for amounts Lhoist paid defending itself in the Vinson Lawsuit (G&R Cross Claim, Counts One, Two, and Three) and (2) an insurance claim that G&R submitted on its own behalf in connection with defending itself in the Lhoist Lawsuit. (Id., Counts Four and Five).

         On October 16, 2017, Charter Oak responded to G&R's “Supplemental Document.” (Doc. 36). Charter Oak advises therein that it filed a motion in the State-Court Insurance Lawsuit on October 12th asking that court to dismiss G&R's cross-claims against Charter Oak. In support, Charter Oak argues that G&R's cross-claims would be compulsory counterclaims in this federal declaratory judgment suit and that, as such, the cross-claims are subject to dismissal under Ala. Code § 6-5-440. (Doc. 36-1). That provision, often referred to as Alabama's “abatement statute, ” states:

No plaintiff is entitled to prosecute two actions in the courts of this state at the same time for the same cause and against the same party. In such a case, the defendant may require the plaintiff to elect which he will prosecute, if commenced simultaneously, and the pendency of the former is a good defense to the latter if commenced at different times.

         A review of court records available on, indicates that the state trial court was to hear oral arguments on the motion to dismiss G&R's cross-claims and that the motion remains pending at this time.

         II. A.

         There is no dispute that this declaratory judgment action comes within the court's subject-matter jurisdiction. The diversity statute gives the district courts original jurisdiction over civil actions that are (1) between citizens of different States and (2) the amount in controversy exceeds $75, 000, exclusive of interests and costs. 28 U.S.C. § 1332(a)(1). Charter Oak's pleading supports the existence of both elements. First, the statute requires complete diversity, i.e., no plaintiff can share citizenship with any defendant. See Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998). To that end, Charter Oak alleges that, for purposes of 28 U.S.C. § 1332(c)(1), it is a Connecticut citizen and that G&R is an Alabama citizen. (Compl, ¶¶ 1, 2). Charter Oak also sufficiently alleges that Lhoist is a citizen of both Delaware and Mississippi, because it is a limited liability company whose sole member is a corporation that is a citizen of those states. (Id. ¶ 3); see also Rolling Greens MHP v. Comcast SCH Holdings, LLC, 374 F.3d 1020, 1021-22 (11th Cir. 2004).

         Charter Oak further alleges that the amount in controversy exceeds $75, 000. (Compl. ¶ 6). No one seriously disputes that is so given the pled coverage limits of the Policy, $1, 000, 000 for “each occurrence” and a $2, 000, 000 “general aggregate limit” (id. ¶ 9), and the nature of G&R's demands for indemnity for its defense in the State-Court Insurance Lawsuit. See also generally First Mercury Ins. Co. v. Excellent Computing Distributors, Inc., 648 F. App'x 861, 865 (11th Cir. 2016) (“[W]hen an insurer seeks a judgment declaring the absence of liability under a policy, the value of the declaratory ...

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