Opinion
Civil Action No. 01-2487, Section "K"(5)
November 19, 2001
ORDER AND REASONS
Before this Court are two motions: (1) Defendants' Motion to Transfer or Alternatively to Stay filed by Taira Lynn Marine, Inc., Zurich Insurance Company, XL Specialty Insurance Company, National Union Fire Insurance Company of Louisiana, and Navigators Insurance Company (rec. docs. 12 and 13) and (2) Defendant Water Quality Insurance Syndicate's Motion to Dismiss (rec. doc. 2). Both motions arise out of an allision that occurred when Taira Lynn was towing a barge owned by Kirby Inland Marine, Inc. in the Intracoastal Waterway in the Western District of Louisiana. For the reasons that follow, the Court finds that defendant's Motion to Transfer or Stay should be granted and all pending motions should be transferred to the United States District Court for the Western District of Louisiana.
Background
Taira Lynn Marine ("Taira") owned and operated the M/V MR. BARRY. On July 19, 2001, the M/V BARRY was towing Barge KIRBY 31801, owned by Kirby Inland Marine ("Kirby"), loaded with Propylene-Propane mix. The M/V Barry allided with the Louisa Bridge on the Intracoastal Waterway. As a result of the allision, Kirby's barge sustained damage to its hull, and some of its chemical cargo was discharged into the atmosphere. As a result thereof, residents and businesses in the surrounding five mile radius were ordered to evacuate. Since then, two class action lawsuits and several other claims have been lodged against Taira in the United States District Court for the Western District of Louisiana ("Western District") seeking damages.
At the time of the accident, Taira had in place certain insurance policies issued by the following insurance companies (Insurance defendants): (1) Zurich Insurance Company and XL Specialty Insurance Company (hull and PI), (2) Water Quality Insurance Syndicate ("WQIS") (pollution damages), (3) National Union Fire Insurance Company of Louisiana, Navigators Insurance Company and XL Specialty Insurance Company (excess liability), and (4) Hartford Insurance Company (general liability).
On July 30, 2001, Taira Lynn Marine Inc. No. 5, L.L.C. filed a petition for limitation of liability in the Western District, and on July 31, 2001 the court issued the standard limitation order restraining the prosecution or commencement of any action or proceeding against Taira Lynn Marine Inc. No. 5 L.L.C., the M/V BARRY, or its insurers.
On August 16, 2001, Kirby instituted a declaratory judgment action in the United States District Court for the Eastern District of Louisiana ("Eastern District") against Taira Lynn Marine Inc. and the insurance defendants seeking a declaration that Kirby is an additional assured under Taira's insurance policies. Kirby claimed that under its Charter Agreement with Taira, it was an additional assured and entitled to recognition as such as well as defense and indemnification costs.
On August 31, 2001, an amended complaint was filed in the Western District limitation naming as additional petitioners in limitation: Taira Lynn Marine Inc., Taira Lynn Inc., L.L. Maintenance Surveying, Inc., (collectively referred to throughout the pleadings as "Taira Lynn") and Larry and Sylvia Leboeuf (co-owners of all Taira corporations). The Court permitted the amendment and issued an amended order to prevent institution of any action against the newly named petitioners or their underwriters.
On September 10, 2001, Jay's Seafood, Jay Coletti and Kelly Ann Coletti on behalf of their minor son, and Mason Seafood (1) filed an answer to Taira's complaint for exoneration from or limitation of liability arising out of the accident, (2) asserted their claims for damages against Taira Lynn Marine Inc., and (3) asserted a third party claim against Kirby for damages.
On September 11, 2001, WQIS, Taira's pollution insurer, filed the pending Motion to Dismiss in the Eastern District.
Defendants Motion to Transfer or Alternatively to Stay
In the Motion to Transfer or Stay Proceedings, Taira Lynn Marine, Inc., Zurich Insurance Company, XL Speciality Insurance Company, National Union Fire Insurance Company of Louisiana and Navigator's Insurance Company claim that they are entitled to have plaintiff's Declaratory Judgement Action and all pending motions transferred to the Western District under the "first to file" rule. Specifically, defendants contend that under the Fifth Circuit's decision in Save Power Ltd. v. Syntek Find. Corp, 121 F.3d 947 (5th Cir. 1997), the court where the first action was filed is the appropriate court to determine whether subsequently filed actions involving substantially similar issues should proceed, or be transferred, dismissed or consolidated.
Initially, defendants assert that the original and amended limitation orders entered in the Western District should be considered the "first filed" pleadings. Specifically, they contend: (1) the limitation action filed by Taira Lynn Marine, No. 5 L.L.C. in the Western District was the first filed complaint and the initial limitation order protected petitioner and its insurers from suit, (2) later amendment to the limitation order to add petitioners, Taira Lynn Marine Inc., Taira Lynn Inc., L.L. Maintenance Surveying, Inc., and Larry and Sylvia Leboeuf, should "relate back" to and be considered a part of the original limitation proceeding under Federal Rule of Civil Procedure Rule 15, and (3) when considered as one petition, the limitation complaints were filed before Kirby's declaratory judgment action and WQIS's motion to dismiss in the Eastern District.
Furthermore, defendants argue there is "substantial overlap" between the issues presented in the limitation proceeding and the declaratory judgment action and motion to dismiss because: (1) Kirby will be a claimant in the limitation proceeding asserting its alleged rights against Taira in the Western District, (2) the extent of Taira's insurance coverage will be at issue in the limitation proceeding, (3) Kirby has been joined as defendant in limitation proceeding through a third-party claim, (4) Kirby's demand for defense and indemnity asserted in the declaratory action includes same claims as those asserted against it by third party claimants in Western District. (Defendants Motion to Transfer, p. 8.) Defendants also point out that "but for the allision, Kirby would not have a claim as an additional assured" and explain that the acts that give rise to Kirby's claim that is an additional assured are the very same acts which form the basis for Taira's alleged negligence in the limitation action. (Defendant's Reply Memorandum, p. 8).
Finally, defendants contend that transfer of the Declaratory Judgment Action and the Motion to Dismiss to the Western District would fulfill the purposes behind the "first to file" rule including: (1) encouragement of comity between federal courts, (2) avoidance of piecemeal litigation and duplication of proceedings that may trench on the authority of sister courts, and (3) minimization of judicial economy and minimization of embarrassing inconsistencies between different courts.
Kirby contends that: (1) its declaratory judgment action should be considered the "first filed" because it was instituted before Taira Lynn Marine Inc. amended its complaint to add its related entities to the limitation proceeding and (2) even if this Court were to find that the amended limitation order was the "first filed" through relation back, there is no "substantial overlap" of issues between the proceedings to warrant a transfer to the Western District. Specifically, plaintiff explains that the declaratory judgment action focuses on Kirby's rights and obligations under its agreement with Taira and its status as an additional assured under Taira's insurance — the resolution of which requires no more that a review of the contract between the parties, certificate of insurance and insurance policies. In contrast, the limitation proceeding encompasses, defendant's attempt to avoid or limit its own liability. Plaintiff also urges that the declaratory judgment action does not threaten defendant's assets in the limitation proceeding as the declaratory action has not been coupled with an enforcement action.
WQIS's Motion to Dismiss
In its Motion to Dismiss, WQIS claims that its insurance coverage does not extend to Kirby in this case by virtue of the towage contract between Kirby and Taira because the WQIS contract with Taira only provides coverage and costs to those "in capacity as owner and/or operator of the vessel named on the Vessel Schedule." Because Kirby was not the "owner and operator" of the M/V BARRY or listed on the "Vessel Schedule," plaintiff represents that it can not be tagged with liability.
Taira vehemently objects to WQIS's Motion to Dismiss and argues: (1) it paid premiums to WQIS for the very risk involved in this suit — the emission of hazardous chemicals on or into navigable waters involving one of Taira's insured vessels and (2) it paid an additional premium to add Kirby as an additional assured under a policy to cover any obligations it may have to plaintiff arising out of the July 19, 2001 allision involving the MR. BARRY.
Taira also seeks attorneys fees and costs against WQIS for bringing this motion "totally without merit."
Analysis
The Court's disposition of the Motion to Transfer or Stay Proceedings and the Motion to Dismiss depends on whether the "first to file" rule is triggered to mandate that they be transferred to the Western District where the limitation proceeding, arising from the same factual scenario, is pending. Therefore, this Court must determine: (1) which of the pending motions in this case was the "first filed" and (2) whether the issues addressed in the motions are "substantially similar."
In order to determine which was the "first filed" action in this case, the Court must resolve whether the amended order in the limitation proceeding relates back to the court's original order. The original complaint in the limitation proceeding in the Western District, filed by Taira Lynn Marine No. 5, L.L.C., was the first filed complaint in this case. After Kirby filed its Declaratory Judgment Action in the Eastern District, the limitation order was amended to include Taira Lynn Marine Inc. and other petitioners. However, this Court is persuaded that Federal Rule of Civil Procedure Rule 15 "relation back" principals operate in this instance and mandate that the amended limitation order naming Taira Lynn Marine, Inc. as a protected party be considered a part of the original limitation order. Federal Rule of Civil Procedure Rule 15(c)(3) provides in part that an amended pleading will relate back to an originally filed pleading when: (1) it changes the party or the naming of the party or (2) the claim arose out of the conduct, transaction, or occurrence in the original pleading. Because the "amendment back" criteria are met in this case, this Court finds that the amended limitation order relates back to the original limitation order and should be considered a part of the "first filed" complaint.
Next, this Court must determine whether the Declaratory Judgment Action and the Motion to Dismiss involve issues substantially similar to those addressed in the limitation action. As the parties correctly note, the Fifth Circuit has held that the "crucial inquiry" is one of substantial overlap of issues, but the issues presented need not be identical. Save Power Ltd. v. Syntek Finance Co., 121 F.3d 947 (5th Cir. 1997). Similarly, in Pastorek II v. Trail, 1997 WL 722956 (Shwartz, E.D. LA 1997), the Court held that two matters were subject to the "first to file" rule when the issues presented were "inextricably intertwined" and noted that it would be an abuse of discretion not to transfer a second case when the facts, witnesses, records of review and termination proceedings and evidence were the same in both matters. Finally, in Sutter Co. v. PP Industries, 125 F.3d 914 (5th Cir. 1997), the Court held that the first filed court should decide whether a second filed action must be dismissed, stayed, transferred or consolidated when the issues presented in two proceedings are substantially similar.
While the issues involved in the Declaratory Judgment Action and the Motion to Dismiss are not identical to those encompassed by the limitation proceeding, there exists enough overlap to warrant transfer to the Western District where that Court will decide which court should exercise jurisdiction over these motions. This Court is mindful that the ultimate resolution of both motions will affect Kirby's ability to recover funds in the limitation proceeding. While Kirby has not fashioned its declaratory judgment action with an enforcement action, a ruling in its favor by this Court would surely prompt such an action in this District or the Western District. Similarly, WQIS's Motion to Dismiss will require the Court to delve into coverage issues and contract interpretations that may require findings of fact inextricably related to the limitation proceeding. Thus, under the "first to file" rubric, the Western District should determine which Court should resolve these motions.
Furthermore, this Court respects the broad language of Judge Haik's order in the limitation proceeding which prohibits " any action against Petitioner, the M/V BARRY, and/or their underwriters . . . including any claim arising out of or connected in any way with the loss, damage, death, injury or destruction resulting from . . ." the underlying accident in the Western District. Both the Declaratory Judgment Action and the Motion to Dismiss are connected" to the "loss, damage, or destruction" of the underlying accident.
Finally, this Court holds that a transfer of the declaratory judgment action and the motion to dismiss to the Western District will satisfy the purposes behind the "first to file" rule including the prevention of: (1) inconsistent rulings between courts of equal power and coordinate jurisdiction, (2) wasteful duplicative litigation, and (3) piecemeal resolution of disputes that require uniform results. See also West Gulf Maritime Assn. v. ILA Deep Sea Local 24, 751 F.2d 721 (5th Cir. 1985) and Florida Marine Transporters, Inc. v. Lawson Lawson Towing Co., 2001 WL 1018364 (Barbier, E.D. La. 2001).
Accordingly, it is ORDERED that defendants' Motion to Transfer or Stay should be GRANTED and this proceeding and all pending motions should be transferred to the United States District Court for the Western District.