The opinion of the court was delivered by: (Judge Conner)
This is an insurance declaratory judgment action filed by plaintiff Bituminous Casualty Corp. ("Bituminous"). Bituminous seeks a declaration that it owes no duty to defend or indemnify defendant John W. Gleim, Jr., Inc. ("Gleim") in an arbitration proceeding instituted by defendant Crossgates, Inc. ("Crossgates").
Presently before the court is Crossgates' motion to dismiss the claims asserted against it by Bituminous. Crossgates argues that the court lacks subject matter jurisdiction over Bituminous' claims because no case or controversy exists between the two entities. For the reasons that follow, the motion will be denied.
Crossgates and Gleim entered into a construction contract, which Gleim allegedly breached. Accordingly, Crossgates instituted an arbitration proceeding seeking damages from Gleim. (Doc. 1 at 2, 3.) Gleim is insured via four commercial general liability insurance policies issued by Bituminous. (Id. at 1.) Believing that the underlying arbitration dispute fell outside of the scope of Gleim's insurance policies, Bituminous filed the instant action seeking a declaration that it owed no duty to defend or indemnify Gleim in the underlying arbitration. (Id. at 4.)
On January 28, 2008, Crossgates filed the instant motion to dismiss, arguing that this court lacks subject matter jurisdiction over Bituminous' claims against it. Specifically, Crossgates argues that Bituminous has failed to assert any claims or allegations against it or to allege the existence of any legal relationship between the two companies. (Doc. 7 at 2.) The motion has been fully briefed and is ripe for disposition.
A motion to dismiss under Rule 12(b)(1) challenges the power of a federal court to hear a claim or case. Gould Elecs. Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000). In the face of a 12(b)(1) motion, the plaintiff "will have the burden of proof that jurisdiction does in fact exist." Petruska v. Gannon Univ., 462 F.3d 294, 302 (3d Cir. 2006).
Motions under 12(b)(1) may take one of two forms. A "facial" attack assumes the veracity of the allegations in the complaint but argues that the pleadings fail to present an action within the court's jurisdiction. Tolan v. United States, 176 F.R.D. 507, 509 (E.D. Pa. 1998). The court should grant such a motion only if it appears with certainty that assertion of jurisdiction would be improper. Id.; Carpet Group, 227 F.3d at 69. If the complaint is merely deficient as pleaded, the court should grant leave to amend before dismissal with prejudice. See Shane v. Fauver, 213 F.3d 113, 116-17 (3d Cir. 2000). In contrast, a "factual" attack argues that, although the pleadings facially satisfy jurisdictional prerequisites, one or more of the allegations is untrue, rendering the controversy outside of the court's jurisdiction. Tolan, 176 F.R.D. at 510; see also Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). In such circumstances, the court is both authorized and required to evaluate the merits of the disputed allegations because "the trial court's . . . very power to hear the case" is at issue. Id.; Carpet Group Int'l v. Oriental Rug Imps. Ass'n, Inc., 227 F.3d 62, 69 (3d Cir. 2000). Because the instant 12(b)(1) motion presents a facial attack on this court's subject matter jurisdiction, the former standard will be used.
The question presented by the instant motion is whether an actual case or controversy exists between Crossgates and Bituminous as required by Section 2 of Article III of the United States Constitution and by the Declaratory Judgment Act, 28 U.S.C. § § 2201-2202. The existence of a case or controversy is a prerequisite in all federal actions, including declaratory judgments. See Cardinal Chem. Co. v. Morton Int'l, Inc., 508 U.S. 83, 94 (1950). The Declaratory Judgment Act dictates that "[i]n a case of actual controversy within its jurisdiction . . . any court of the United States . . . 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) (emphasis added). In Aetna Life Insurance Company v. Haworth, 300 U.S. 227 (1937), the United States Supreme Court articulated a test for determining whether a case or controversy exists:
A "controversy" . . . must be one that is appropriate for judicial determination. A justiciable controversy is thus distinguished from a difference of dispute of a hypothetical or abstract character; from one that is academic or moot. The controversy must be definite and concrete, touching upon the legal relations of parties having adverse legal interests. It must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.
Id. at 240-41 (citations omitted); see also MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 S.Ct. 764, 777-78 (2007) (citing and reaffirming the validity of the test articulated in Aetna).
Applying this test to the instant case, the court finds that Bituminous has established that there is a case or controversy present between it and Crossgates. The United States Supreme Court and the United States Court of Appeals for the Third Circuit have held that a case or controversy may exist between an insurance company and the injured party in a declaratory judgment action brought by the insurance company against the insured party. See Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941) (stating that an insurance company could include the injured party in a declaratory judgment action in order to bind the injured party to the decision of the federal court); Fed. Kemper Ins. Co. v. Rauscher, 807 F.2d 345, 352 (3d Cir. 1986) (holding that a declaratory judgment action gave rise to a case or controversy not only between an insurance company and the insured, but between an insurance company and a party injured by the insured). In the ...