Hanover Insurance Company v. Superior Labor Services, Inc. et al, No. 2:2011cv02375 - Document 426 (E.D. La. 2016)

Court Description: ORDER AND REASONS denying 375 Motion to Stay. IT IS FURTHER ORDERED that the parties may file motions for partial summary judgment on discrete issues, such as the status of Allied as an additional insured under Masse and Superior's insurance policies by January 23, 2017. Memoranda in opposition to such motions must be filed within two weeks from the date of filing any motion for partial summary judgment. Replies to opposition memoranda must be filed within one week from the filing of the opposition. Signed by Judge Susie Morgan on 12/8/2016. (Reference: all cases)(cg)

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Hanover Insurance Company v. Superior Labor Services, Inc. et al Doc. 426 U N ITED S TATES D ISTRICT COU RT EASTERN D ISTRICT OF LOU ISIAN A H AN OVER IN SU RAN CE COMPAN Y, Pla in tiff CIVIL ACTION N o . 11-2 3 75 c/ w 14 -19 3 0 , 14 -19 3 3 , 16 -2 4 9 0 VERSU S SU PERIOR LABOR SERVICES, IN C., ET AL., D e fe n d an ts SECTION “E” Ap p lie s t o : All ca s e s ORD ER AN D REAS ON S Before the Court is a m otion to stay filed by Allied Shipyard, Inc. 1 The m otion is opposed. 2 For the reasons set forth below, Allied’s m otion is D EN IED . Allied argues the Court cannot rule on its insurers’ duty to indem nify until after the conclusion of the underlying state court proceedings, and the declaratory judgm ent actions in their entireties should be stayed. 3 State National, Arch, Hanover, Clarendon, and Lloyd’s London contend the duty to indem nify is justiciable and the actions should not be stayed. The Declaratory J udgm ent Act 4 gives district courts broad discretion to abstain from hearing federal declaratory judgm ent actions while pen ding state court proceedings 1 R. Docs. 375. R. Doc. 386 (State Nation al Insurance Com pany); R. Doc. 388 (Arch Insurance Com pany); R. Doc. 390 (Hanover Insurance Com pany); R. Doc. 393 (Claren don National Insurance Com pany); R. Doc. 394 (Certain Underwriters at Lloyd’s, London). 3 R. Doc. 375-1 at 1. 4 The Declaratory J udgm ent Act provides: 2 In a case of actual controversy within its jurisdiction . . . , any court of the United States, upon the filing of an appropriate pleadin g, m ay declare the rights and other legal relations of any interested party seekin g such declaration , whether or not further relief is or could be sought. 1 Dockets.Justia.com involve related facts or issues between the sam e parties. This principle was first announced in Brillhart v. Excess Insurance Com pany of Am erica. 5 In W ilton v. Seven Falls Co., the U.S. Suprem e Court clarified that a district court’s decision to decide or dism iss a declaratory judgm ent action is discretionary. 6 There are three overarching considerations in the Suprem e Court’s analysis in Brillhart: federalism , fairness, and efficiency. 7 “Despite the circuits’ different expressions of the Brillhart factors, each circuit’s form ulation addresses the sam e three aspects of the analysis.”8 In the Fifth Circuit, a district court m ust consider the seven non-exclusive Trejo factors when determ in ing if it will decline to exercise its discretion to hear a declaratory judgm ent action. These factors include: (1) whether there is a pen ding state action in which all of the m atters in controversy m ay be fully litigated; (2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant; (3) whether the plaintiff engaged in forum shopping in bringing the suit; (4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in tim e or to chan ge forum s exist; (5) whether the federal court is a convenient forum for the parties an d witnesses; (6) whether retaining the lawsuit would serve the purposes of judicial econom y; an d 28 U.S.C. 220 1(a). The Declaratory J udgm ent Act “is an enablin g act, which confers discretion on the courts rather than an absolute right on a litigant.” W ilton v. Seven Falls Co., 515 U.S. 277, 287 (1995) (quotin g Public Serv. Com m ’n of Utah v. W y coff Co., 344 U.S. 237, 241 (1952)). 5 See Brillhart, 316 U.S. 491, 495 (1942) (“[I]t would be uneconom ical as well as vexatious for a federal court to proceed in a declaratory judgm ent suit where another suit is pendin g in a state court presentin g the sam e issues, not governed by a federal law, between the sam e parties.”). 6 515 U.S. 277, 289– 90 (1995) (“In the declaratory judgm ent context, the norm al principle that federal courts should adjudicate claim s within their jurisdiction yields to considerations of practicality and wise judicial adm inistration .”). 7 Sherw in-W illiam s Co. v . H olm es Cnty ., 343 F.3d 383, 390 (5th Cir. 20 0 3). 8 Id. 2 (7) whether the federal court is being called on to construe a state judicial decree involving the sam e parties and entered by the court before whom the parallel state suit between the sam e parties is pen ding. 9 In each of its rulings on m otions for sum m ary judgm ent in this action, this Court has analyzed the Trejo factors, finding the factors weighed in favor of exercising jurisdiction to decide the question of an insurer’s duty to defend. 10 Allied, however, argues the question of each insurer’s duty to indem nify is distinguishable from its duty to defend. The Court agrees. Under Louisiana law, an insurer’s duty to defend is broader than its obligation to indem nify for dam age claim s. 11 Louisiana courts apply the “eight-corners rule” to determ ine whether a liability insurer has the duty to defend a civil action against its insured; courts look to the “four corn ers” of the plaintiff’s petition in the civil action and the “four corners” of the insurance policy to determ ine whether the insurer owes its insured a duty to defend. 12 The duty to defend “arises whenever the pleadings again st the insured disclose even a possibility of liability under the policy.”13 The insurer has a duty to defend unless the allegations in the petition for dam ages, as applied to the policy, unam biguously preclude coverage. 14 9 Sherw in-W illiam s, 343 F.3d at 388 (citin g St. Paul Ins. Co. v. Trejo, 39 F.3d 585, 590 – 91 (5th Cir. 1994)); Vulcan Materials Co. v. City of Tehuacana, 238 F.3d 382, 390 (5th Cir. 20 0 1) (“The seven Trejo factors . . . m ust be considered on the record before a discretion ary, nonm erits dism issal of a declaratory judgm ent action occurs.” (em phasis in original)); see also RLI Ins. Co. v . W ainoco Oil & Gas Co., 131 F. App’x 970 (5th Cir. 20 0 5). 10 See R. Docs. 341, 342, 347, 418. 11 Henly v. Phillips Abita Lum ber Co., 20 0 6-1856 (La. App. 1 Cir. 10 / 3/ 0 7), 971 So. 2d 110 4, 110 9. 12 Mossy , 898 So. 2d at 60 6. 13 Steptore v. Masco Const. Co., 93-20 64 (La. 8/ 18/ 94), 643 So. 2d 1213, 1218. See also United N at’l Ins. Co. v. Paul and Mar’s Inc., No. 10 -799, 20 10 WL 2690 615, at *2 (E.D. La. J uly 11, 20 11). 14 Martco Ltd. P’ship v. W ellons, Inc., 588 F.3d 8 64, 872 (5th Cir. 20 0 9). 3 An insurer’s duty to indem nify, however, generally cannot be determ ined until after the underlying suit has been resolved and the insurer is found liable. 15 The duty to indem n ify is “triggered by actual facts that establish liability in the underlying lawsuit.”16 The exception to this general rule is that the duty to indem nify is justiciable before the insurer’s liability is determ ined if “the insurer has no duty to defend and the sam e reasons that negate the duty to defend will likewise negate any possibility the insurer will ever have a duty to indem nify.”17 The Court has found that Hanover an d Arch have a duty to defen d Masse an d Superior as insureds and to defend Allied as an additional insured in the Adam s an d St. Pierre lawsuits. 18 The Court also has found that State National owes a duty to defend Masse and Superior as insureds and to defen d Allied as an additional insured in the St. Pierre lawsuit. 19 As a result, the lim ited exception to the general rule does not apply. Because liability in the underlying cases has not yet been determ in ed, the Court cannot determ ine whether Masse and Superior as insureds or Allied as an additional insured have a right to indem nity. 20 15 Allstate Ins. Co. v . Em p. Liab. Assurance Corp., 445 F.2d 1278 , 1281 (5th Cir. 1971); see also Corgeis Ins. Co. v . Sch. Bd. of Allen Parish, No. 0 7-30 844, 20 0 8 WL 2325632, at *2– 3 (5th Cir. J un e 6, 20 0 8) (“[A]fter the district court concludes that the insurer has a duty to defend, the indem nity issue is non justiciable pending resolution of the liability suit.”). Unlike the duty to defend, the duty to indem nify “is triggered by the actual facts that establish liability in the underlyin g lawsuit. Guar. N at’l Ins. Co. v. Azrock Indus. Inc., 211 F.3d 239, 243 (5th Cir. 20 0 0 ), overruled on other grounds as recognized by OneBeacon Ins. Co. v. Don's Bldg. Supply Inc., 553 F.3d 90 1, 90 3 (5th Cir. 20 0 8) (per curiam ). 16 Guar. N at’l Ins. Co. v. Azrock Indus. Inc., 211 F.3d 239, 243 (5th Cir. 20 0 0 ), overruled on other grounds as recognized by On eBeacon Ins. Co. v . Don's Bldg. Supply Inc., 553 F.3d 90 1, 90 3 (5th Cir. 20 0 8) (per curiam ). 17 N orthfield Ins. Co. v . Loving Hom e Care, Inc., 363 F.3d 523, 529 (5th Cir. 20 0 4); Med. Protective Co. v . Turner, No. 15-0 366, 20 15 WL 363170 1, at *4 (N.D. Tex. J une 10 , 20 15). 18 See R. Docs. 341, 342, 418. 19 See R. Doc. 347. 20 Courts gen erally evaluate the insurer’s duty to indem n ify after parties have “developed the actual facts that establish liability in the underlyin g lawsuit.” LCS Corrections Servs., Inc. v . Lexington Ins. Co., 80 0 F.3d 664, 668 (5th Cir. 20 15). 4 The Court granted State National’s m otion for sum m ary judgm ent finding it had no duty to defend Masse an d Superior as insureds or to defend Allied as an additional insured in the Adam s lawsuit. 21 State National argues the duty to indem nify is ripe with respect to the claim s against Masse and Superior as insureds and Allied as an additional insured in the Adam s lawsuit because the Court has found State National has no duty to defend them in the Adam s lawsuit. The Court m ade this determ ination in the Adam s lawsuit by looking at the eight corners of the petition and insurance policy. Conversely, the determ ination of State National’s duty to indem nify requires analysis of the “actual facts that establish liability in the underlyin g lawsuit.”22 The Court declin es to rule on State National’s duty to indem nify until liability in the Adam s suit is resolved. Although the Court will not stay the consolidated cases in their entirety, the Court declin es to rule on any insurer’s duty to indem nify until the underlying state court proceedings in the Adam s and St. Pierre m atters are resolved. Any m otions for sum m ary judgm ent filed with respect to an in surer’s duty to indem nify will be dism issed without prejudice to refile after the resolution of the underlying state-court lawsuits. At the m ost recent status conference, som e parties represented they wish to file m otions for partial sum m ary judgm ent on discrete issues, such as the status of Allied as an additional insured under Masse and Superior’s insurance policies. The parties m ay file such m otions on or before Jan u ary 2 3 , 2 0 17. Mem oranda in opposition to such m otions m ust be filed within tw o w e e ks from the date of filing any m otion for partial sum m ary judgm ent. Replies to opposition m em oranda m ust be filed within o n e w e e k from the filing of the opposition. 21 R. 22 Doc. 347. Guar. N at’l Ins. Co, 211 F.2d at 243. 5 Accordingly; IT IS ORD ERED that Allied’s m otion to stay 23 is D EN IED . IT IS FU RTH ER ORD ERED that the parties m ay file m otions for partial sum m ary judgm ent on discrete issues, such as the status of Allied as an additional insured under Masse and Superior’s insurance policies by Jan u ary 2 3 , 2 0 17. Mem oran da in opposition to such m otions m ust be filed within tw o w e e ks from the date of filing any m otion for partial sum m ary judgm ent. Replies to opposition m em oranda m ust be filed within o n e w e e k from the filing of the opposition. N e w Orle a n s , Lo u is ian a, th is 8 th d ay o f D e ce m be r, 2 0 16 . _____________________ _______ S U SIE MORGAN U N ITED S TATES D ISTRICT J U D GE 23 R. Doc. 375. 6

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