United States District Court, M.D. Alabama, Northern Division
MEMORANDUM OPINION AND ORDER
KEITH WATKINS CHIEF UNITED STATES DISTRICT JUDGE
consolidated action, Plaintiffs Associated Industries
Insurance Company (“Associated”), United
Specialty Insurance Company (“United”), and
Maiden Insurance Company (“Maiden”) seek a
declaratory judgment that they do not owe a duty to defend or
indemnify their insured, Defendant Four Four, LLC, in an
underlying lawsuit in Alabama state court. (Doc. #
The individual Defendants - who are plaintiffs in the state
court action against Four Four - move to dismiss or, in the
alternative, stay the actions brought by Associated and
United as unripe for adjudication. (Doc. # 41.)
motion will be granted in part and denied in part. While it
is indeed premature to determine whether and to what extent
the insurers must provide coverage if their insured is one
day found liable, the question of the insurers' duty to
defend is a live controversy properly before the court.
Accordingly, the individual Defendants' motion to dismiss
will be denied, and their motion to stay will be granted with
respect to the duty to indemnify and denied with respect to
the duty to defend.
JURISDICTION AND VENUE
call on the court to exercise jurisdiction pursuant to the
Declaratory Judgment Act (“DJA”), 28 U.S.C.
§ 2201. That Act does not itself confer jurisdiction
upon the courts. “[A] suit brought under the Act must
state some independent source of jurisdiction, such as the
existence of diversity or the presentation of a federal
question.” Borden v. Katzman, 881 F.2d 1035,
1037 (11th Cir. 1989) (citing Skelly Oil Co. v. Phillips
Co., 339 U.S. 667 (1950)). Here, that source is
diversity jurisdiction pursuant to 28 U.S.C. § 1332.
Plaintiffs are citizens of Florida, Texas, and New Jersey;
Defendant Four Four is a citizen of Alabama (see
Doc. # 11); the individual Defendants are also citizens of
Alabama; and the amount in controversy exceeds $75, 000. The
parties do not contest personal jurisdiction or venue.
course, diversity alone is not enough; as the DJA itself
makes clear, jurisdiction is proper only if there exists an
“actual controversy.” 28 U.S.C. § 2201(a).
As pertinent here, that requires the dispute to be ripe for
adjudication. See Lake Carriers' Ass'n v.
MacMullan, 406 U.S. 498, 505 (1972). The individual
Defendants dispute that the litigation is ripe and move for
dismissal pursuant to Federal Rule of Civil Procedure
12(b)(1). (They also move for Rule 12(b)(6) dismissal, though
that argument is based on lack of ripeness as well. (Doc. #
41, at 1-2.)) The question for the court is “whether
the facts alleged, under all the circumstances, show that
there is a substantial controversy, between parties having
adverse legal interests, of sufficient immediacy and reality
to warrant the issuance of a declaratory judgment.”
Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S.
270, 273 (1941).
various periods of time between 2011 and 2015, each of the
plaintiff insurance companies issued a commercial general
liability insurance policy to a non-party company called
Ballard Realty. In those policies, Ballard listed Defendant
Four Four as an additional insured. Four Four was in the
apartment business and owned the Eagle Landing Apartments in
Montgomery, Alabama. In April 2016, residents of the complex
sued Four Four in Alabama state court, claiming damages from
mold, pest infestations, and various other conditions at
Eagle Landing. That action is ongoing in the Circuit Court of
Montgomery County. See Addams, . v. CityR Eagle Landing,
LLC, ., Circuit Court of Montgomery County, No.
individual Defendants here are some, though not all, of the
plaintiffs there. (It depends whether they were residents of
the complex during a period of coverage by a plaintiff.) Four
Four is a defendant in both actions. None of the insurance
companies is a party to the state-court proceeding. They were
notified of the suit on April 12, 2016, and within a month
advised Ballard Realty and Four Four that they disputed
coverage. They are providing Four Four with a defense
pursuant to a reservation of rights. (Doc. # 19, at 14.)
and United filed suit against Four Four in separate actions
in federal court on February 21, 2017. Both sought
declaratory judgments that they had “no duty to defend
or indemnify Four Four from the allegations of the underlying
complaint.” (Doc. # 19, at 22.) They amended their
complaints to include the individual Defendants on November
28, 2017 (Associated) and November 17, 2017 (United). Maiden
filed its suit on November 8, 2017, and the three actions
were consolidated on January 11, 2018.
to amending their federal-court claims, but after initially
filing suit, Associated and United moved to intervene in the
state-court proceeding. (See Doc. # 67-1, at 26.) As
they wrote there, they did so “for the limited purpose
of participating in discovery and submitting special
interrogatories and/or a special verdict form to the jury
only after the jury has deliberated and returned a verdict in
this case and only if the jury returns a verdict in favor of
the Plaintiff[s] in this case against Defendant Four Four,
LLC.” (Doc. # 67-1, at 26.) The insurers clarified that
they were not seeking a bifurcated trial proceeding, as
allowed by the Alabama Supreme Court in Universal
Underwriters Insurance Co. v. Anglen, 574 So.2d 716
(Ala. 1990) (“Universal I”), but were
requesting the opportunity to participate in discovery and
submit special interrogatories to the jury as needed. (Doc. #
67-1, at 31.)
state-court plaintiffs opposed the intervention. They argued
(1) that the issue of coverage and the issue of liability
were wholly separate and should not be combined; (2) that the
insurers had rejected the Universal I bifurcated
trial alternative and should not be able to proceed under a
different theory; and (3) that the insurers should be
estopped from intervening because their declaratory judgment
actions were pending in federal court. (Doc. # 67-1, at
36-41.) The state court denied intervention.
individual Defendants now move to dismiss the insurers'
declaratory judgment actions.
individual Defendants make three arguments in their motion to
dismiss. First and second, they assert that the court lacks
subject-matter jurisdiction because the indemnification issue
is unripe and the duty to defend issue is moot. And third,
they contend that, even if the court does have jurisdiction,
it should decline to exercise it. Each of these arguments
will be addressed in turn.