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Victoria Insurance Co. v. Mincin Insulation Services

January 14, 2009

VICTORIA INSURANCE COMPANY, PLAINTIFF,
v.
MINCIN INSULATION SERVICES, INC., DEFENDANT.



The opinion of the court was delivered by: Ambrose, Chief District Judge.

OPINION AND ORDER OF COURT

The Plaintiff, Victoria Insurance Company, ("Victoria"), with its principal place of business in Michigan, brings this declaratory judgment action against the Defendant, Mincin Insulation Services Inc., ("Mincin"), a Pennsylvania corporation. Subject matter jurisdiction over this case is pursuant to diversity of citizenship, 28 U.S.C. §1332. Mincin moves to dismiss the Complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted due to lack of ripeness and pursuant to Fed.R.Civ.P. 12(b)(7) for failure to join a required party under Fed.R.Civ.P. 19. Since Victoria's declaratory judgment action does not present a ripe case with respect to the question of Victoria's duty to indemnify, but does present a ripe case with respect to the duty to defend, Mincin's motion is granted in part and denied in part. Additionally, there are not any absent parties with a legal interest that are required under Fed.R.Civ.P. 19, thus Mincin's motion to dismiss under 12(b)(7) is denied.

FACTUAL BACKGROUND

This dispute arises out of an underlying case in the Court of Common Pleas of Allegheny County wherein Mincin was sued by Michael McHugh ("Injured Party"), for negligent hiring, supervising and training of its employees that resulted in the beating of the Injured Party, an employee of Mincin, by two fellow employees of Mincin. Victoria insured Mincin under a Commercial General Liability Coverage Policy during the time of the incident that gave rise to the underlying case. Upon receiving the underlying complaint Victoria advised Mincin that coverage would be excluded because the Injured Party was an employee of Mincin working in the course of his employment when the injury occurred, that punitive or exemplary damages served as a basis for limiting indemnity obligations and the assault and battery exclusion specifically excluded defense and indemnification obligations of Victoria for the allegations contained in the complaint. On or about January 8, 2008, Mincin requested reconsideration of Victoria's position to defend and indemnify due to new information. Victoria reiterated its position regarding the excluded coverage, however, in light of the new information Victoria informed Mincin that it would undertake a defense of the case under a reservation of rights. Victoria seeks a declaratory judgment that they do not have a duty to defend or a duty to indemnify Mincin in the underlying lawsuit.

LEGAL STANDARD

Mincin's motion to dismiss states that the motion is being brought pursuant to Fed.R.Civ.P. 12(b)(6) and 12(b)(7). However, the basis for Mincin's motion under Rule 12(b)(6) is that the declaratory judgment action is not ripe. The Third Circuit in discussing ripeness has said that "it seems clear that [ripeness] is at least partially grounded in the case or controversy requirement." Armstrong World Industries, Inc. by Wolfson v. Adams, 961 F.2d 405, 411 n. 12 (3d Cir. 1992).

Ripeness thus affects justiciability and a motion to dismiss an unripe claim should be presented pursuant to Fed.R.Civ.P. 12(b)(1). Taylor Investment, LTD. v. Upper Darby Township, 983 F.2d 1285, 1290 (3d Cir. 1993), see 13B C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure §3532.7 (3d ed. 2008). As a result, I shall treat Mincin's motion as a motion under Rule 12(b)(1) with respect to the arguments concerning lack of ripeness.

A motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) may be made as either a facial attack that contests the sufficiency of the pleadings to allege subject matter jurisdiction or a factual attack that seeks to prove that the court lacks subject matter jurisdiction regardless of what the complaint alleges. Mortensen v. First Federal Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977); NE Hub Partners, L.P. v. CNG Transmission Corp., 239 F.3d 333, 341 n.7 (3d Cir. 2001). Akin to a motion to dismiss under Rule 12(b)(6), a facial attack under 12(b)(1) requires the court to accept the complaint's allegations as true and afford the plaintiff all favorable inferences drawn therefrom. Mortensen, 549 F.2d at 891. With a factual attack, however, "no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims." Id. Under either attack, it is the plaintiff that bears the ultimate burden to prove that jurisdiction does in fact exist. Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)(citing Mortensen, 549 F.2d at 891).

Since Mincin's 12(b)(1) argument is that the complaint as alleged lacks ripeness , I find this to be a facial attack to subject matter jurisdiction. Although I do recognize that deciding Mincin's motion under Rule 12(b)(1) instead of 12(b)(6) shifts the burden upon Victoria whereas it would be on Mincin if the motion remained under 12(b)(6), see Fidelcor, 926 F.2d at 1409, I find that Victoria will not be prejudiced as they have briefed the ripeness issue such that their interests are protected.

As to Mincin's claim that the complaint must be dismissed for failure to join a required party, Fed.R.Civ.P. 19 provides an analytical framework for determining when the joinder of a particular party is compulsory. Janney Montgomery Scott, Inc. v. Shepard Niles, Inc., 11 F.3d 399, 404 (3d Cir. 1993) The analysis is comprised of two distinct inquiries. The first inquiry addresses whether the party sought to be joined is "required":

(1) Required Party. A person who is subject to service or process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if:

(A) in that person's absence, the court cannot accord complete relief among existing parties; or

(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may: (i) as a practical matter impair or impede the person's ability to protect the interest; or

(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.

Fed.R.Civ.P. 19(a) (2007). Notably, "[c]lauses [(A) and (B)] of Rule 19(a) are phrased in the disjunctive and should be so treated." Janney, 11 F.3d at 405 (citations omitted).

If a party is deemed to be "required," the court must then determine "whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed." Fed. R. Civ. P. 19(b) (2007). The court should consider the following four factors in making this assessment:

(1) the extent to which a judgment rendered in the person's absence might prejudice that ...


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