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Massachusetts Bay Insurance Co. v. Usie

United States District Court, W.D. Louisiana, Lafayette Division

March 26, 2018

Massachusetts Bay Ins Co
v.
Usie, et al

          REPORT AND RECOMMENDATION

          CAROL B. WHITEHURST, UNITED STATES MAGISTRATE JUDGE.

         Before the Court is Defendant Doris Usie's (“Usie”) Motion To Dismiss Pursuant to F.R.C.P. Rules 12(b)(1) and 12 (b)(6) [Rec. Doc. 12] and Plaintiff, Massachusetts Bay Insurance Company's (“Massachusetts Bay”) Opposition [Rec. Doc. 14]. The motion was referred to the undersigned for review, report, and recommendation in accordance with the provisions of 28 U.S.C. § 636 and the standing orders of this court. For the reasons set forth below, the undersigned recommends that the motion be denied.

         I. Background

         This declaratory judgment action filed by Massachusetts Bay arises out of an underlying action filed in Louisiana state court by Usie against Royer Mobile Homes of Opelousas, Inc. (“Royer”), Doris H. Usie v. Sunshine Homes, Inc. and Royer Mobile Homes of Opelousas, Inc., No. 82841, 16th Judicial District Court for the Parish of St. Martin, State of Louisiana (“the underlying action”). R. 1-3. In the underlying action Usie alleges the design and construction of the mobile home she purchased from Royer allowed water to infiltrate its walls and cause mold infestation which in turn caused her to suffer “mold sickness.” She filed suit against Royer and the manufacturer[1] for damages in redhibition and in tort.

         In the case at bar, Massachusetts Bay seeks Declaratory Judgment pursuant to 28 U.S.C. § 2201 and Rule 57 of the Federal Rules of Civil Procedure against defendants, Usie and Royer, regarding the parties' respective rights and obligations under a certain policy of insurance issued by Massachusetts Bay to Royer as the named insured, specifically, Policy No. LDS 8888387 (“the Policy”). R. 1-2. Massachusetts Bay seeks a judgment declaring that it has no duty to provide coverage, and no duty to defend or indemnify Royer, under the Policy with respect to the claims asserted by Usie against Royer in her Petition for Damages in the underlying state court litigation.

         II. The Parties' Contentions

         Usie filed this motion seeking dismissal on three grounds: (1) pursuant to Rule 12(b)(1), based on lack of diversity jurisdiction, claiming the amount in controversy is not met and the parties are not truly diverse; (2) pursuant to Rule 12(b)(6), on the ground that Massachusetts Bay's claims are not ripe for resolution since the underlying liability action has not proceeded to judgment; and (3) even if the Court has subject matter jurisdiction and the coverage issues are ripe for adjudication, the Court should nevertheless abstain from hearing the action in deference to the pending state court liability action.

         Massachusetts Bay refutes Usie's arguments as to diversity of the parties and amount in controversy contending that Usie alleges more than $200, 000 in damages and Massachusetts Bay and defendants are citizens of different states. Massachusetts also refutes lack of justiciability asserting the United States Supreme Court has resolved the issue in favor of the insurer, in this case Massachusetts Bay. As to Usie's contention that the Court should abstain from hearing this action in deference to the pending state court action, Massachusetts Bay contends that all of the factors in St. Paul Ins. Co. v. Trejo, 39 F.3d 585 (5th Cir. 1994) weigh in favor of this Court maintaining the declaratory judgment action.

         III. Law and Analysis

         The Declaratory Judgment Act, at 28 U.S.C. § 2201(a), provides that

... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.

         The Act “is an enabling act, which confers discretion on the courts rather than an absolute right on a litigant.” Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995). When “considering a declaratory judgment action, a district court must engage in a three-step inquiry.” Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000). First, the court must determine whether the declaratory action is justiciable. Or, in other words, whether an “actual controversy” exists between the parties to the action. Id. Second, if the court has jurisdiction, it must determine whether it has the “authority” to grant declaratory relief. Id. Finally, the court must determine whether to exercise its discretion to decide or dismiss the declaratory action. Id. The Court will address the foregoing issues in turn.

         A. Amount in Controversy

         Usie contends, without support, that jurisdiction is lacking because the amount in controversy is not met. “[T]here is no actual amount in controversy between [Massachusetts Bay] and Doris Usie, ” and it would be “impossible” for the dollar amounts in controversy between Usie and Royer in the state court suit “to also be in controversy in the instant federal court matter.” R. 12, p. 7.

         The Fifth Circuit jurisprudence is clear that, in a declaratory judgment action, the amount in controversy is measured by the value of the underlying claim. See Hartford Ins. Group v. Lou-Con, Inc., 293 F.3d 908, 911 (5th Cir. 2002) (explaining that in declaratory judgment cases that involve the question of whether an insurance policy applies to a particular loss, the amount in controversy is determined by the value of the underlying claim against the insured); Great American Ins. Co. of New York v. L.D. Marine, LLC, 2009 WL 2019994 at *2 (W.D. La. 2009) (“In declaratory judgment cases that involve the applicability of an insurance policy to a particular occurrence, the jurisdictional amount in controversy is measured by the value of the underlying claim.”).

         Usie's state court petition in the underlying suit provides that she seeks to recover the $39, 500 purchase price of her manufactured home, R. 1-3, ¶¶ 6, 44, $15, 000 in repair expenses, Id. ¶¶ 26, 43, $100, 000 in medical expenses, Id. ¶¶ 27, 43, $51, 000 per year in lost income, Id. ¶¶ 28, 43, as well as unspecified damages for loss of use and inconvenience, pain, and suffering. Id. ¶ 44. Thus, Usie alleges over $200, 000 in damages.[2] Because the amount in controversy is facially apparent from Usie's underlying petition, the Court finds that the value of the claims at issue exceed $75, 000. See First Specialty Ins. Co. v. Arkel Sugar, Inc., 2008 WL 762079 (W.D. La. 2008) (in insurer's declaratory judgment action against policyholder and underlying state court plaintiff, court found that it need not consider summary judgment-type evidence because the requisite amount in controversy was facially apparent from underlying petition); Petrohawk Energy Corp. v. Raceland Raw Sugar Corp., 2007 WL 1551061 (E.D. La. 2007) (denying defendant's Rule 12(b)(1) motion to dismiss declaratory judgment action, finding it facially apparent that value of claims at issue exceeded $75, 000).

         B. Diversity of Citizenship

         Usie argues that the parties are not diverse because the real controversy is between Usie and Royer, who are both Louisiana citizens. Here, the record establishes that Plaintiff, Massachusetts Bay, is a Connecticut corporation with its principal place of business in Connecticut. R. 1, ¶1. Defendant, Usie, is an individual domiciled in Louisiana, R. 1-3, and Defendant, Royer, is a Louisiana corporation with its principal place of business in Louisiana. Id. at ¶ 2. As Plaintiff and Defendants are not citizens of the same state, complete diversity exists between them. See First Specialty Ins. Co. v. Arkel Sugar, Inc., et al., 2008 WL 762079 (W.D. La. 2008) (exercising diversity jurisdiction over declaratory judgment action filed by out-of-state insurer against Louisiana policyholder and Louisiana state-court plaintiff); ...


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