United States District Court, S.D. Florida
ORDER ON MOTION TO DISMISS
N. Scola, Jr., United States District Judge
Defendant Palm Springs Investment Corporation asks this Court
to dismiss the Plaintiff Atain Specialty Insurance
Company's amended complaint, or in the alternative to
stay these proceedings during the pendency of the underlying
state-court action. (Mot., ECF No. 22). The Defendant Kenneth
Russell Roof Contracting (“KRR”) adopted Palm
Springs's motion. (ECF No. 26.) Atain responded. (Resp.,
ECF No. 29.) The time for Palm Springs to reply has passed.
This matter is ripe for the Court's decision. For the
reasons set forth in this Order, the Court denies the Motion
(ECF No. 22).
complaint for declaratory judgment arises from a state
lawsuit in which Palm Springs filed a counterclaim against
KRR, alleging claims to recover damages for allegedly
defective roofing work performed by KRR. (Am. Compl. ¶
1, ECF No. 13.) KRR held an insurance policy from Atain
providing commercial general liability coverage from June 28,
2015, to June 28, 2016. (Id. ¶ 21; Id.
Ex. 2 at 2.) KRR made a demand under that Policy seeking
coverage and defense of the counterclaims. (Am. Compl. ¶
19.) Atain seeks a declaration from this Court that the
Policy does not afford coverage for Palm Springs's
counterclaims and, therefore, Atain does not have a duty to
defend or indemnify KRR. (Am. Compl. at 12.)
Palm Springs essentially asks this Court to decline or delay
exercising jurisdiction over Atain's amended complaint,
the Court will treat the motion to dismiss as a motion under
Federal Rule of Civil Procedure 12(b)(1). Attacks on
subject-matter jurisdiction under Rule 12(b)(1) come in two
forms: “facial attacks” and “factual
attacks.” Lawrence v. Dunbar, 919 F.2d 1525,
1528-29 (11th Cir. 1990). Facial challenges to subject-matter
jurisdiction are based solely on the allegations in the
complaint, which “are taken as true for the purposes of
the motion.” Id. at 1529; see also
Carmichael v. Kellogg, Brown & Root Servs., Inc.,
572 F.3d 1271, 1279 (11th Cir. 2009).
look at only the face of the complaint to “determine
whether the plaintiff has alleged a sufficient basis for
subject matter jurisdiction.” Scelta v.
Delicatessen Support Servs., Inc., No.
98-2578-CIV-T-17B, 1999 WL 1053121, at *4 (M.D. Fla. Oct. 7,
1999) (citations omitted). On a facial challenge, the court
may consider exhibits attached to the complaint. See
Fed. R. Civ. P. 10(c) (“A copy of a written instrument
that is an exhibit to a pleading is a part of the pleading
for all purposes.”). “The complaint may be
dismissed on a facial attack only if it is clear that no
relief could be granted under any set of facts that could be
proved consistent with the allegations.” Hames v.
City of Miami, 479 F.Supp.2d 1276, 1283-84 (S.D. Fla.
2007) (Seitz, J., aff'd as modified sub nom. Hames v.
City of Miami, FL, 281 F. App'x 853 (11th Cir. 2008)
(internal citation and quotations omitted).
Defendants claim that Atain's amended complaint is not
ripe for adjudication and actually seeks an advisory opinion
because the state-court proceedings have not concluded-in
other words, because liability has not yet been determined.
(Mot. at 2-4.) Atain notes that the Court has the discretion
to declare Atain's rights and duties under the Policy
pursuant to 28 U.S.C. § 2201(a) and pursuant to Florida
law. (Resp. at 3, ECF No. 29; Am. Compl. ¶ 1, ECF No.
13.) Specifically, Atain notes that the amended complaint
asks this Court to determine that it has no duty to defend as
well as no duty to indemnify KRR. (Id. at 12; Resp.
at 2, ECF No. 29.)
request for a declaratory judgment, a federal court
“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.” 28 U.S.C. §
2201(a). A declaratory judgment is not an advisory opinion.
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118,
126 (2007). Rather, a declaratory judgment resolves an actual
case or controversy, as contemplated in Article III of the
United States Constitution. Id. “[T]he proper
test of when an action for declaratory judgment presents a
justiciable controversy 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.'” Arkema, Inc. v.
Honeywell, Int'l, Inc., No. 2012-1308, 2013 WL
425576, at *4 (Fed. Cir. Feb. 5, 2013) (quoting
MedImmune, 549 U.S. at 127).
Atain's amended complaint clearly alleges an ongoing
justiciable controversy and an immediate need for a
declaration of rights. (Am. Compl. ¶¶ 2, 9-20.) KRR
has requested a defense in the underlying state-court action,
which Atain is providing in spite of asserting that no
coverage exists under the Policy with respect to the claims
alleged against KRR. (Id. ¶¶ 19-20.) Atain
expressly reserved its right to deny coverage to KRR.
(Id. at 20.) Under similar situations, federal
district courts in this Circuit routinely find the matter
ripe for decision and exercise jurisdiction. See,
e.g., Accident Ins. Co. v. Greg Kennedy Builder,
Inc., 159 F.Supp.3d 1285, 1293 (S.D. Ala. 2016)
(“The defendants have not explained (and the Court
cannot) their odd position that an insurer with the power and
the desire to cease providing a defense fails to present an
actual controversy when it seeks a declaration that it owes
no duty to defend.”); Tower Ins. Co. of N.Y. v.
Rainbow Granite & Marble, Inc., No. 10-60052-CV,
2010 WL 1740700, at *2 (S.D. Fla. Apr. 29, 2010) (Cohn, J.)
(“Thus, there is no basis to dismiss the present
Petition with regard to resolving the duty to defend
issue.”); Smithers Const., Inc. v. Bituminous Cas.
Corp., 563 F.Supp.2d 1345, 1349 (S.D. Fla. 2008) (Moore,
J.) (“[T]his Court will retain jurisdiction over the
duty to defend and indemnification issues.”); Atl.
Cas. Ins. Co. v. GMC Concrete Co., No. CIV.A.
07-0563WSB, 2007 WL 4335499, at *5 (S.D. Ala. Dec. 7, 2007)
(“[T]here is unquestionably a ripe, live controversy on
th[e] issue. Indeed, courts have recognized a controversy
exists regarding the duty to defend when the insured seeks a
defense from an insurance company, but the insurance company
denies that it is obligated.”).
Defendants wrongly rely on Triple R Paving, Inc. v.
Liberty Mut. Ins. Co., 510 F.Supp.2d 1090 (S.D. Fla.
2007) (Cohn, J.). There, the insurer conceded that it had a
duty to defend the defendants in the state-court action, and
disputed only whether it should bear the full cost of the
defense. Id. at 1094. The court noted that the issue
of apportionment of the cost of defense “reveal[ed] the
fundamental difficulty in applying this caselaw without the
underlying liabilities of the parties having been
established.” Id. As such, it was proper for
the court in Triple R to stay any determination on
the insurer's duty to indemnify until after the state
court made a determination on liability. See also
Smithers Construction, 563 F.Supp.2d 1345, 1348 (S.D.
Fla. 2008) (“[A]n insurers['] duty to indemnify is
not ripe for adjudication until the insured is in fact held
liable in the underlying suit.”).
dispute exists over whether Atain has a duty to defend KRR in
the underlying state-court action. Thus, independent of
Atain's request for a declaration as to its duty to
indemnify, the request for a declaration on Atain's duty
to defend provides appropriate grounds for this Court to
exercise its jurisdiction under 28 U.S.C. § 2201(a).
However, the Court will not consider the duty-to-indemnify
issue until the earlier of (a) final disposition of the
underlying state-court action; or (b) a ruling on the duty to
defend, at which time the Court will entertain any motion
that the parties may wish to file concerning the duty to