United States District Court, N.D. Alabama, Middle Division
W. Savrin Admitted Pro Hac Vice, William H. Buechner, Jr.
Admitted Pro Hac Vice FREEMAN MATHIS & GARY, LLP Kori L.
Clement (with express permission) Alabama State Bar No.
CLEMK5125 HARE & CLEMENT, P.C. Attorneys for Plaintiff
Stephen F. Casey Alabama State Bar No. CAS001, Emily Sides
Bonds Alabama State Bar No. BON014, J. David Moore Alabama
State Bar No. MOO076, JONES WALKER LLP Attorneys for
Defendant Indian Summer Carpet Mills, Inc.
MEMORANDUM OPINION AND CONSENT ORDER ENTERING
DECLARATORY RELIEF IN FAVOR OF PLAINTIFF
ANNEMARIE CARNEY AXON UNITED STATES DISTRICT JUDGE
Grange Mutual Casualty Company (“Grange”)
initiated this declaratory judgment action against defendants
Indian Summer Carpet Mills, Inc. (“Indian
Summer”), the Water Works and Sewer Board of the City
of Gadsden, (“Gadsden”) and the Water Works and
Sewer Board of the Town of Centre (“Centre”),
invoking this court's diversity jurisdiction.
(See Doc. 1). For its relief, Grange asks the court to
declare that Grange has no duty to defend or indemnify Indian
Summer for claims asserted against Indian Summer by the Water
Works Defendants in two separate underlying water pollution
lawsuits. (Docs. 1 and 28). In the two underlying lawsuits,
the Water Works Defendants allege that Indian Summer and
numerous other defendants discharged toxic chemicals that
contaminated the water in the Coosa River, causing them to
suffer damages, which include past and present monitoring and
testing expenses, lost revenue and profits, and expenses for
remediating their water systems. (Docs. 28-1 and 28-2). The
Water Works Defendants assert negligence, nuisance, trespass,
and wantonness claims against Indian Summer and other
defendants in these underlying actions, and seek punitive
damages and injunctive relief. (Docs. 28-1 and 28-2).
action is before the court on Grange and Indian Summer's
consent motion to enter declaratory relief in favor of the
plaintiff. (Doc. 25). The court, (Hopkins, J.), previously
reserved ruling on the consent motion and ordered Grange to
brief the court on various issues, including whether
Grange's indemnity claim is ripe for adjudication, and to
file an amended complaint demonstrating that the amount in
controversy meets the requirement for diversity jurisdiction.
(Doc. 26). Grange responded to the court's order by
filing an amended complaint and additional briefing on
December 18, 2017. (Docs. 27 and 28). Upon consideration of
the amended complaint, the consent motion, and Grange's
additional briefing, and for the reasons explained below, the
court finds that it has jurisdiction over Grange's
declaratory judgment claims, that Grange's indemnity
claim is ripe for adjudication, and that the consent motion
is due to be granted.
The Court's Jurisdiction Over this Action
have an independent obligation to determine whether
subject-matter jurisdiction exists, even when no party
challenges it.” Hertz Corp. v. Friend, 559
U.S. 77, 94 (2010). As the party seeking federal
jurisdiction, Grange bears the burden of establishing the
existence of subject matter jurisdiction in this action.
See Pretka v. Kolter City Plaza II, Inc., 608 F.3d
744, 752 (11th Cir. 2010).
filed this declaratory judgment action in diversity. (Doc. 1
at 3). The court has diversity jurisdiction when there is
complete diversity of citizenship and the amount in
controversy exceeds $75, 000, exclusive of costs and
interest. 28 U.S.C. § 1332(a). “In a declaratory
judgment action, ‘for amount in controversy purposes,
the value of declaratory relief is the value of the object of
the litigation measured from the plaintiff's
perspective.' . . . Thus, when an insurer seeks a
judgment declaring the absence of liability under a policy,
the value of the declaratory relief to the plaintiff-insurer
is the amount of potential liability under its policy.”
First Mercury Ins. Co. v. Excellent Computing
Distributors, Inc., 648 Fed.Appx. 861, 865 (11th Cir.
2016) (citing Morrison v. Allstate Indem. Co., 228
F.3d 1255, 1268 (11th Cir. 2000) and Stonewall Ins. Co.
v. Lopez, 544 F.2d 198, 199 (5th Cir. 1976))
(alterations and emphasis in original omitted).
amended complaint, Grange alleged facts establishing complete
diversity of citizenship. (Doc. 28 at 1-3). With respect to
the amount-in-controversy requirement, Grange asserts that
the cost of defending Indian Summer in the underlying actions
will exceed $75, 000. (Doc. 28 at 3). In support of its
assertion, Grange submitted a declaration stating that the
defense counsel retained by Grange to defend Indian Summer in
the two underlying actions estimates that the pre-trial
defense costs will be $91, 300. (Doc. 27-1 at 4). Based on
the estimated defense costs alone, Grange's potential
liability exceeds $75, 000, exclusive of costs and interest,
and the amount-in-controversy requirement is
satisfied. Thus, the court has subject matter
jurisdiction over Grange's declaratory judgment claims.
Grange's duty to indemnify claim is ripe.
asks the court to declare that it has no duty to defend or
indemnify Indian Summer for claims asserted against it in the
underlying actions. (Docs. 1 and 28). Because those
underlying actions are still pending and Indian Summer's
potential liability has not been determined, the court,
(Hopkins, J.), ordered Grange to submit briefing regarding
whether its claim is ripe with respect to its duty to
indemnify. (Doc. 26 at 7-12).
insurer's duty to defend is broader than its duty to
indemnify, and if there is no duty to defend, there is also
no duty to indemnify. Shafe v. Am. States Ins. Co.,
653 S.E.2d 870, 873-075 (Ga.App. 2007). As a result, if
an insurer has no duty to defend an insured, a declaratory
judgment claim regarding the insurer's duty to indemnify
is ripe even if the underlying action is still pending.
See, e.g., Nat'l Cas. Co. v. Pickens 582
Fed.Appx. 839, 839 (11th Cir. 2014) (affirming the district
court order finding that the insurer “did not have a
duty to defend, and thus did not have a duty to indemnify
[the insured] in the state court action”);
Auto-Owners Ins. Co. v. McMillan Trucking Inc., 242
F.Supp.3d 1259, 1266 (N.D. Ala. 2017) (citations omitted).
case, Grange and Indian Summer agree that Grange does not
have a duty to defend Indian Summer in the underlying actions
based on the pollution exclusion in Grange's Commercial
General Liability and Commercial Umbrella insurance policies.
(Doc. 25 at 3). Indeed, the insurance policies at issue do
not apply to claims of “‘[b]odily injury' or
‘property damage' arising out of the actual,
alleged or threatened discharge, dispersal, seepage,
migration, release or escape of ‘pollutants' . . .
.” (Doc. 28-3 at 28). The Supreme Court of Georgia has
held that pollution exclusions such as the exclusion
contained in the Grange policies are enforceable and apply to
environmental claims similar to the claims asserted against
Indian Summer in the underlying lawsuits. See Racetrac
Petroleum, Inc. v. Ace ...