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Zurich American Insurance Co. v. Southern-Owners Insurance Co.

United States District Court, M.D. Florida, Jacksonville Division

February 26, 2018

ZURICH AMERICAN INSURANCE COMPANY, Plaintiff,
v.
SOUTHERN-OWNERS INSURANCE COMPANY, Defendant.

          ORDER

          MARCIA MORALES HOWARD, United Slates District Judge.

         THIS CAUSE is before the Court on Defendant Southern-Owners Insurance Company's Motion to Dismiss Plaintiff's Third Amended Complaint for Lack of Subject Matter Jurisdiction (Doc. 79; Motion), filed on June 14, 2017. Plaintiff, Zurich American Insurance Company (Plaintiff or ZAIC), filed a response on June 28, 2017. See Plaintiff, Zurich American Insurance Company's, Response to Defendant, Southern-Owners Insurance Company's, Motion to Dismiss Zurich's Third Amended Complaint [sic] (Doc. 80; Response). On July 5, 2017, Defendant, Southern-Owners Insurance Company (Defendant or SOIC), sought leave to file a reply, see Defendant, Southern-Owners Insurance Company's Motion for Leave to File Reply to Plaintiff's Response to Defendant's Motion to Dismiss (Doc. 81; Motion for Leave), which ZAIC opposed, see Plaintiff, Zurich American Insurance Company's, Response in Opposition to Defendant, Southern-Owners Insurance Company's, Motion for Leave to File Reply Briefing (Doc. 82). The Court entered an order denying the Motion for Leave on July 11, 2017. See Order (Doc. 83). Accordingly, this matter is ripe for review.

         I. Procedural History

         This dispute between two insurers arises from an underlying premises liability action, Case No. 2012-CA-13359, filed by Charles McMillan (McMillan) in the Circuit Court, Fourth Judicial Circuit, In and For Duval County Florida (Underlying Action). See Plaintiff, Zurich American Insurance Company's, Third Amended Complaint (Doc. 77; Third Amended Complaint), Ex. D: McMillan's Third Amended Complaint in the Circuit Court, Fourth Judicial Circuit, in and for Duval County, Florida, Case No. 2012-CA-13359 (Underlying Complaint). In the Underlying Action, McMillan asserted negligence claims against Catamount Constructors, Inc. (Catamount) and its subcontractor, Duval Concrete Contracting, Inc. (Duval; collectively, Underlying Defendants). See generally Underlying Complaint. After SOIC declined to defend and indemnify ZAIC's insured, Catamount, under a provision of the subcontract agreement between Catamount and Duval, ZAIC “resolved the Underlying Action on behalf of Catamount.” See Third Amended Complaint ¶ 22.

         On August 21, 2015, ZAIC initiated this action by filing a complaint against SOIC and McMillan. See Plaintiff, Zurich American Insurance Company's Complaint for Declaratory Judgment (Doc. 1; Initial Complaint). ZAIC filed an amended complaint against both Defendants on September 14, 2015. See Plaintiff, Zurich American Insurance Company's Amended Complaint for Declaratory Judgment (Doc. 5; Amended Complaint). After ZAIC resolved the Underlying Action on behalf of Catamount, ZAIC filed a second amended complaint on August 16, 2016, in which it dropped McMillan as a Defendant in this action. See Plaintiff, Zurich American Insurance Company's, Second Amended Complaint (Doc. 42; Second Amended Complaint). SOIC moved to dismiss the Second Amended Complaint on September 1, 2016. See Defendant, Southern-Owners Insurance Company's Motion to Dismiss Zurich American Insurance Company's Second Amended Complaint for Failure to State a Cause of Action (Doc. 49; First Motion to Dismiss). After thorough briefing[1], on March 30, 2017, the Court entered an order granting in part, and denying in part, the First Motion to Dismiss. See Order (Doc. 67; Dismissal Order)

         In the Dismissal Order the Court dismissed, for lack of subject matter jurisdiction, Count I of the Second Amended Complaint, in which ZAIC sought a declaration pursuant to 28 U.S.C. § 2201 that the insurance policy SOIC issued to Duval provided primary insurance coverage for Catamount, and as such, SOIC had a duty to defend and indemnify Catamount in the Underlying Action. Id. at 12-23. Additionally, the Court dismissed the portion of Count II of the Second Amended Complaint for equitable subrogation in which ZAIC sought attorney's fees and costs incurred in defending Catamount, id. at 23-30, but declined to dismiss Count III of the Second Amended Complaint in which ZAIC alleged a claim for common law contribution, id. at 30-34. However, on June 7, 2017, upon review of Zurich American Insurance Company's Motion for Rehearing and/or Reconsideration of the Court's Dismissal of its Fee Claim and Supporting Memorandum of Law (Doc. 71), the Court vacated the Dismissal Order “to the extent that it dismissed ZAIC's claim in Count II of the Second Amended Complaint (Doc. 42) for equitable subrogation for defense attorney's fees and costs incurred in the underlying action.” See Order (Doc. 78; Vacating Order).

         In the Third Amended Complaint, which is now the operative pleading in this action, ZAIC seeks reimbursement for all defense costs and indemnity payments made in resolving the Underlying Action from SOIC on a theory of equitable subrogation (Count I), see Third Amended Complaint at ¶¶ 23-30, or in the alternative, on a theory of equitable contribution (Count II), id. at ¶¶ 31-36. In the Motion, SOIC argues that both counts of the Third Amended Complaint are due to be dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure (Rule(s)). See generally Motion. Because the factual background of these claims is set forth in full in the Dismissal Order, the Court will not restate it here, and instead turns directly to the merits of the current Motion.

         II. Standard of Review

         Attacks on subject matter jurisdiction based on Rule 12(b)(1) come in two forms- facial attacks and factual attacks. Morrison v. Amway Corp., 323 F.3d 920, 924 n.5 (11th Cir. 2003) (citing Lawrence v. Dunbar, 919 F.2d 1525, 1528-29 (11th Cir. 1990)). Facial attacks challenge subject matter jurisdiction based on the allegations in a complaint, and the Court takes those allegations as true in reviewing the motion to dismiss. Id. Factual attacks challenge subject matter jurisdiction based on the actual facts, and the Court may consider extrinsic evidence, such as testimony and affidavits. Id. In the Motion, SOIC's challenge focuses on the allegations in the Third Amended Complaint and the attached exhibits. Accordingly, the Court views this as a facial attack, and will limit the scope of its review to the allegations contained in the Third Amended Complaint and the attached exhibits, and accept those factual allegations as true. As such, the Court will not consider the documents attached to the Response.

         III. Discussion

         In the Motion, SOIC contends that the Third Amended Complaint “is nothing more than a prayer for declaratory judgment disguised as a claim for equitable subrogation and contribution.” See Motion at 3-4. Because the Court determined that ZAIC's claim for declaratory judgment failed to present a case or controversy sufficient to satisfy Article III, SOIC contends that the remaining equitable subrogation and contribution claims similarly fail to present a case or controversy. See generally id. “Article III of the U.S. Constitution limits the judicial power of the federal courts so that they may only exercise jurisdiction over ‘Cases' and ‘Controversies.' Accordingly, subject matter jurisdiction requires a justiciable case or controversy within the meaning of Article III.” L.M.P. ex rel. E.P. v. Sch. Bd. of Broward Cnty., Fla., 879 F.3d 1274, 1280 (11th Cir. 2018) (internal citations omitted). Here, SOIC argues that the claims in the Third Amended Complaint are simply an attempt to recast ZAIC's request for declaratory relief as claims for equitable subrogation and contribution, and as such, the Court lacks subject matter jurisdiction. See Motion at 8. SOIC characterizes the Third Amended Complaint as a request for declaratory relief because ZAIC fails to request monetary damages in the “Wherefore” clause, and instead “seeks a ‘judgment finding' various rights under the SOIC policy.” Id. at 4 (citing the Third Amended Complaint at 9-10).

         In the Response, ZAIC argues that “even a cursory reading of ZAIC's Third Amended Complaint makes clear that money damages are sought by ZAIC against SOIC.” See Response at 7. First, ZAIC contends that its “Wherefore” clause, properly interpreted, contains a request for monetary relief. Id. at 8. Specifically, in the “Wherefore” clause, ZAIC seeks:

a judgment finding that (1) CATAMOUNT is an additional insured on the SOIC Policy and that SOIC is the primary insurer for CATAMOUNT for the Underlying Action; (2) that the ZAIC Policy is excess to the SOIC Policy and that the ZAIC Policy is non-contributory to the SOIC Policy with respect to the claims asserted in the Underlying Action; (3) that SOIC was obligated to defend and indemnify CATAMOUNT with respect to the Underlying Action; and (4) that SOIC is obligated to reimburse ZAIC with respect to sums spent in defense and settlement of the Underlying Action as well as the payment of all costs and expenses related to this action and granting ZAIC such further and other relief as the Court may determine to be just and proper.

         See Third Amended Complaint at 9-10 (emphasis added). Next, ZAIC highlights its requests throughout the Third Amended Complaint for reimbursement from SOIC for the sums ZAIC expended in defending Catamount. See Response at 7-8 (citing the Third Amended Complaint ¶¶ 4, 24, 29, 32, 36). Further, ZAIC points to the allegation in which ZAIC asserts that it would submit papers for the Court's in camera ...


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