Opinion
CASE NO. 2:09-cv-903-MEF-SRW.
April 7, 2010
MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
Southern Pioneer Property Casualty Insurance Company ("Southern Pioneer") brought this case against Jeffery Bennett ("Bennett"), Joseph Russell ("Russell"), and Franklin Mount and Novella Mount (collectively, the "Mounts"), doing business as Little Harlem Club ("Little Harlem"). (Doc. #1). Southern Pioneer seeks a declaratory judgment that it does not owe a duty to defend and/or indemnify its insureds Franklin and Novella Mount in a state court action brought by Bennett (the "state suit"). As part of his amended answer, Bennett asserted counterclaims against Southern Pioneer for breach of contract, bad faith duty to investigate, and bad faith duty to pay. (Doc. #9). Now pending before this Court is Southern Pioneer's Motion to Dismiss Counterclaim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. #10). As part of his opposition to that motion, Bennett moved for a stay of these proceedings until the underlying state litigation has been resolved. (Doc. #13). For the reasons set forth in this Memorandum Opinion and Order, the motion to stay is due to be DENIED and the motion to dismiss is due to be GRANTED.
Bennett also filed a Brief in Support of Response to Motion to Dismiss Counterclaim. (Doc. #14). It merely repeats arguments from Bennett's initial motion to stay and opposition to Southern Pioneer's motion to dismiss.
II. JURISDICTION AND VENUE
Jurisdiction over Plaintiff's claims is proper under 28 U.S.C. §§ 1332(a) (diversity) and 1367 (supplemental). The parties do not contest personal jurisdiction or venue, and the Court finds adequate allegations in support of both personal jurisdiction and venue.
III. LEGAL STANDARD
A Rule 12(b)(6) motion tests the legal sufficiency of the pleading sought to be dismissed. Therefore, for the purposes of adjudging a Rule 12(b)(6) motion to dismiss, the court will accept as true all well-pleaded factual allegations and view them in the light most favorable to the claimant. See Pielage v. McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008); Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1057 (11th Cir. 2007). While Federal Rule of Civil Procedure 8(a)(2) requires only that a pleading stating a claim for relief contain "a short and plain statement of the claim showing that the pleader is entitled to relief," as a general matter, to survive a motion to dismiss for failure to state a claim, the claimant must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 570 (2007). The claimant's "[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true." Id. at 555 (internal citations omitted). It is not sufficient that the pleadings merely leave "open the possibility that a [claimant] might later establish some set of undisclosed facts to support recovery." Id. at 561 (internal quotation and alteration omitted).
IV. FACTUAL AND PROCEDURAL BACKGROUND
Bennett filed suit on February 10, 2009 in the Circuit Court of Covington County, Alabama. In the state suit, Bennett alleges that on November 1, 2008, both he and Russell patronized Little Harlem, a business owned and/or operated by the Mounts. Bennett alleges that Russell, though visibly intoxicated, was served alcohol at Little Harlem, resulting in injuries to Bennett from a physical attack committed by Russell. Bennett brought claims in the state suit against the Mounts for violation of the Dram Shop Act and failure to provide proper security at Little Harlem. He also brought a claim against Russell for assault and battery.
The suit is styled Jeffery Bennett v. Joseph Russell, et al., Civil Action No. CV-09-25.
From August 12, 2008 to August 12, 2009, Southern Pioneer insured Little Harlem under a Liquor Liability Insurance policy, bearing policy number LL-10192-08-01. On September 23, 2009, Southern Pioneer filed its complaint for declaratory judgment in this Court, asserting that it has no duty to defend or indemnify Little Harlem and/or the Mounts in the state suit under this insurance policy.
As part of his amended answer to the declaratory judgment action, filed on October 19, 2009, Bennett filed a counterclaim. Under the assertion that he is a third party beneficiary of policy number LL-10192-08-01, Bennett asserted claims of breach of contract, bad faith duty to investigate, and bad faith duty to pay.
On October 22, 2009, Southern Pioneer filed a motion to dismiss Bennett's counterclaim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief may be granted. As part of his response in opposition to Southern Pioneer's motion to dismiss, Bennett filed a motion to stay this action pending resolution of the state suit.
V. DISCUSSION
A. Motion to Stay
Bennett argues that a stay is preferable in this action because it could proceed on all claims and counterclaims if he wins the state suit and be immediately dismissed in full if he loses the state suit. Bennett states that no party would be prejudiced by a stay because Southern Pioneer would continue to defend the insured in the state suit regardless of whether this case is stayed. Southern Pioneer responds that it will be prejudiced by a stay because it is only conditionally defending the insured in the state suit and is asking this Court to find that it has no such duty to defend.
A justiciable controversy exists when the insurance company denies it has an obligation to defend its insured under the policy. See Am. Fid. Cas. Co. v. Pennsylvania Threshermen Farmers' Mut. Cas. Ins. Co., 280 F.2d 453, 461 (5th Cir. 1960). This is because the insurance company must decide at a preliminary stage of the proceedings whether to provide a defense. See Auto-Owners Ins. Co. v. Toole, 947 F. Supp. 1557, 1566 n. 25 (M.D. Ala. 1996). Southern Pioneer is entitled to these declaratory judgment proceedings to determine whether or not it must continue the defense of its insured in the state suit. Therefore, Bennett's motion to stay is due to be DENIED.
In Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1209 (11th Cir. Nov. 3, 1981) (en banc), the Eleventh Circuit adopted as binding precedent all Fifth Circuit decisions handed down prior to the close of business on September 30, 1981.
B. Motion to Dismiss Counterclaim
Southern Pioneer argues that Alabama law prevents a third party to an insurance contract from bringing a claim against the insurer in the absence of a final judgment against the insured. Therefore, Bennett could not bring a claim against Southern Pioneer until he has a final judgment against Little Harlem, Southern Pioneer's insured. Because the state suit is still pending, Southern Pioneer states that Bennett cannot pursue his counterclaims against it in this case. Bennett responds that cases apply this law generally to declaratory judgment claims rather than the "derivative tort and contract" counterclaims he asserts against Southern Pioneer.
Alabama Code §§ 27-23-1 and 27-23-2 deal "with the substantive rights of injured parties with respect to insurance policies issued to a tortfeasor." Knox v. W. World Ins. Co., 893 So. 2d 321, 323 (Ala. 2004). In applying these statutory sections, the Alabama Supreme Court has consistently held that "under Alabama law . . . an injured party cannot bring a direct action against the insurance carrier, absent a final judgment against its insured." Maness v. Ala. Farm Bureau Mut. Cas. Ins. Co., Inc., 416 So. 2d 979, 982 (Ala. 1982) (emphasis added), not followed on other grounds by Woodall v. Alfa Mut. Ins. Co., 658 So. 2d 369, 373 (Ala. 1995). See also, e.g., State Farm Mut. Auto. Ins. Co. v. Brown, 894 So. 2d 643, 650 (Ala. 2004); Knox, 893 So. 2d at 324-25; Hicks v. Ala. Pest Servs., Inc., 548 So. 2d 148, 150 (Ala. 1989); Stewart v. State Farm Ins. Co., 454 So. 2d 513, 514 (Ala. 1984).
The parties agree that no insurance contract exists between Bennett and Southern Pioneer and that no final judgment has been entered in the state suit. Therefore, Bennett cannot yet bring his claims of breach of contract and bad faith, asserted here as counterclaims, against Southern Pioneer. Bennett's argument that he does not present a claim for declaratory judgment is unavailing, as this well-settled Alabama law applies to all "direct action[s]" against the insurance carrier. Maness, 416 So. 2d at 982. Furthermore, the Alabama Supreme Court has applied the holding from Maness to the types of claims asserted by Bennett. See Hicks, 548 So.2d at 149-50 (finding that plaintiff had no bad faith claims against the insurers named as defendants absent a judgment against their insureds); Stewart, 454 So. 2d at 514 (citing to Maness in finding that plaintiff could not maintain a direct claim of bad faith against the insurer under a third party beneficiary theory).
Therefore, Southern Pioneer's motion to dismiss Bennett's counterclaims is due to be GRANTED.
VI. CONCLUSION
For the foregoing reasons, it is hereby ORDERED that Bennett's Motion to Stay (Doc. #13) is due to be DENIED. It is further ORDERED that Southern Pioneer's Motion to Dismiss (Doc. #10) is GRANTED. Bennett's counterclaims (Doc. #9) are DISMISSED. A copy of this checklist is available at the website for the USCA, 11th Circuit at www.ca11.uscourts.gov Effective on April 9, 2006, the new fee to file an appeal will increase from $255.00 to $455.00. CIVIL APPEALS JURISDICTION CHECKLIST1. Appealable Orders : Appeals from final orders pursuant to 28 U.S.C. § 1291: 28 U.S.C. § 158Pitney Bowes, Inc. v. Mestre 701 F.2d 1365 1368 28 U.S.C. § 636 In cases involving multiple parties or multiple claims, 54Williams v. Bishop 732 F.2d 885 885-86 Budinich v. Becton Dickinson Co. 108 S.Ct. 1717 1721-22 100 L.Ed.2d 178LaChance v. Duffy's Draft House, Inc. 146 F.3d 832 837 Appeals pursuant to 28 U.S.C. § 1292(a): Appeals pursuant to 28 U.S.C. § 1292(b) and Fed.R.App.P. 5: 28 U.S.C. § 1292 Appeals pursuant to judicially created exceptions to the finality rule: Cohen v. Beneficial Indus. Loan Corp. 337 U.S. 541 546 93 L.Ed. 1528Atlantic Fed. Sav. Loan Ass'n v. Blythe Eastman Paine Webber, Inc. Gillespie v. United States Steel Corp. 379 U.S. 148 157 85 S.Ct. 308 312 13 L.Ed.2d 199 2. Time for Filing Rinaldo v. Corbett 256 F.3d 1276 1278 4 Fed.R.App.P. 4(a)(1): 3 THE NOTICE MUST BE RECEIVED AND FILED IN THE DISTRICT COURT NO LATER THAN THE LAST DAY OF THE APPEAL PERIOD — no additional days are provided for mailing. Fed.R.App.P. 4(a)(3): Fed.R.App.P. 4(a)(4): Fed.R.App.P. 4(a)(5) and 4(a)(6): Fed.R.App.P. 4(c): 28 U.S.C. § 1746 3. Format of the notice of appeal : See also 3pro se 4. Effect of a notice of appeal : 4
Courts of Appeals have jurisdiction conferred and strictly limited by statute: (a) Only final orders and judgments of district courts, or final orders of bankruptcy courts which have been appealed to and fully resolved by a district court under , generally are appealable. A final decision is one that "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." , , (11th Cir. 1983). A magistrate judge's report and recommendation is not final and appealable until judgment thereon is entered by a district court judge. (c). (b) a judgment as to fewer than all parties or all claims is not a final, appealable decision unless the district court has certified the judgment for immediate review under Fed.R.Civ.P. (b). , , (11th Cir. 1984). A judg ment which resolves all issues except matters, such as attorneys' fees and costs, that are collateral to the merits, is immediately appealable. , 486 U.S. 196, 201, , , (1988); , , (11th Cir. 1998). (c) Appeals are permitted from orders "granting, continuing, modifying, refusing or dissolving injunctions or refusing to dissolve or modify injunctions . . ." and from "[i]nterlocutory decrees . . . determining the rights and liabilities of parties to admiralty cases in which appeals from final decrees are allowed." Interlocutory appeals from orders denying temporary restraining orders are not permitted. (d) The certification specified in (b) must be obtained before a petition for permission to appeal is filed in the Court of Appeals. The district court's denial of a motion for certification is not itself appealable. (e) Limited exceptions are discussed in cases including, but not limited to: , , , 69S.Ct. 1221, 1225-26, (1949); , 890 F.2d 371, 376 (11th Cir. 1989); , , , , , (1964). Rev.: 4/04 : The timely filing of a notice of appeal is mandatory and jurisdictional. , , (11th Cir. 2001). In civil cases, Fed.R.App.P. (a) and (c) set the following time limits: (a) A notice of appeal in compliance with the requirements set forth in Fed.R.App.P. must be filed in the district court within 30 days after the entry of the order or judgment appealed from. However, if the United States or an officer or agency thereof is a party, the notice of appeal must be filed in the district court within 60 days after such entry. Special filing provisions for inmates are discussed below. (b) "If one party timely files a notice of appeal, any other party may file a notice of appeal within 14 days after the date when the first notice was filed, or within the time otherwise prescribed by this Rule 4(a), whichever period ends later." (c) If any party makes a timely motion in the district court under the Federal Rules of Civil Procedure of a type specified in this rule, the time for appeal for all parties runs from the date of entry of the order disposing of the last such timely filed motion. (d) Under certain limited circumstances, the district court may extend the time to file a notice of appeal. Under Rule 4(a)(5), the time may be extended if a motion for an extension is filed within 30 days after expiration of the time otherwise provided to file a notice of appeal, upon a showing of excusable neglect or good cause. Under Rule 4(a)(6), the time may be extended if the district court finds upon motion that a party did not timely receive notice of the entry of the judgment or order, and that no party would be prejudiced by an extension. (e) If an inmate confined to an institution files a notice of appeal in either a civil case or a criminal case, the notice of appeal is timely if it is deposited in the institution's internal mail system on or before the last day for filing. Timely filing may be shown by a declaration in compliance with or a notarized statement, either of which must set forth the date of deposit and state that first-class postage has been prepaid. Form 1, Appendix of Forms to the Federal Rules of Appellate Procedure, is a suitable format. Fed.R.App.P. (c). A notice of appeal must be signed by the appellant. A district court loses jurisdiction (authority) to act after the filing of a timely notice of appeal, except for actions in aid of appellate jurisdiction or to rule on a timely motion of the type specified in Fed.R.App.P. (a)(4).