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Great American E&S Ins. Co v. J. Nick Enterprises

April 2, 2012

GREAT AMERICAN E&S INS. CO.,
PLAINTIFF,
v.
J. NICK ENTERPRISES, D/B/A THE LIBRARY, JEFFREY M. BRUNGO, JASON SHOOK, DEFENDANTS.



The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

ELECTRONICALLY FILED

MEMORANDUM ORDER RE: DEFENDANTS' MOTION TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(1) AND 12(B)(7) (Doc. No. 7)

I.Introduction

Presently before this Court is Defendants' J. Nick Enterprises d/b/a The Library ("The Library") and Jeffrey Brungo ("Brungo") Motion to Dismiss Plaintiff, Great American E&S Insurance Company's ("Great American's") Complaint, pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(7). Doc. No. 7. Defendants seek dismissal of Plaintiff's Complaint based on the arguments that: (1) this Court should exercise its discretion and decline jurisdiction in this declaratory judgment action, and (2) the case must be dismissed pursuant to Federal Rule of Civil Procedure 19 for failure to join a necessary party. Doc. No. 8. After careful consideration of Defendants' Motion to Dismiss (Doc. No. 7) and brief in support thereto (Doc. No. 8), as well as Plaintiff's response in opposition (Doc. Nos. 10 and 11), Defendants' Motion to Dismiss (Doc. No. 7) will be GRANTED.

II.Factual Background

For the purposes of this Memorandum Order,*fn1 the Court assumes that the following facts are true. On August 13, 2009, a currently named Defendant, Jason Shook ("Shook"), initiated a lawsuit against two other named Defendants, The Library and Brungo, in the Allegheny County Court of Common Pleas. Doc. No. 1 ¶ 8. On or about September 7, 2007, Shook was on the premise of The Library bar when other patrons named Michael Kroll ("Kroll"), Dennis Green ("Green") and Michael Krenzelak ("Krenzelak") physically assaulted him. Id. at ¶ 12. Shook averred that Kroll, Green, and Krenzelak were all visibly intoxicated yet The Library continued to serve them alcohol both before and after he was attacked. Id. Thereafter, Shook sued both The Library and Brungo for negligence and gross negligence and sought punitive damages. Id. at ¶¶ 14-15.

The Library and Brungo tendered the defense of this underlying action to Plaintiff Great American. Id. at ¶ 9. The Great American insurance policy provides commercial general liability coverage and liquor liability coverage pursuant to the policy signed by The Library. Id. at ¶¶ 16-17. The policy additionally had an "Assault and/or Battery Exclusion," a "Punitive Damages Exclusion," and a "Negligent Hiring Exclusion." Id. at ¶¶ 18-20. Due to these Exclusions and to the facts, Plaintiff argued that it owed no duty to defend or indemnify the insureds under the policy for the claims raised by Shook. Id. at ¶ 21. Therefore, Plaintiff moved for a declaratory judgment. Id.

Defendants The Library and Brungo then moved the Court to dismiss Plaintiff's Complaint for declaratory judgment. Doc. No. 7. Defendants argue that Plaintiff's allegations against them are "very broad" and certain facts of the incident in question must be developed before liability can be assigned between parties. Doc. No. 8.

III.Legal Standard

a. Federal Rule of Civil Procedure 12(b)(1) Standard

Federal Rule of Civil Procedure 12(b)(1) provides that a Court may dismiss a complaint for "lack of jurisdiction over the subject matter" over a case. The plaintiff has the burden of establishing subject matter jurisdiction. Carpet Group Int'l v. Oriental Rug Imp. Ass'n, 227 F.3d 62, 69 (3d Cir. 2000) (citing Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)). "Without jurisdiction the court cannot proceed at all in any case." Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1998).

A Rule 12(b)(1) motion may present either a facial or a factual challenge to subject matter jurisdiction. "A challenge to a complaint for failure to allege subject matter jurisdiction is known as a 'facial' challenge, and must not be confused with a 'factual' challenge contending that the court in fact lacks subject matter jurisdiction, no matter what the complaint alleges . . . ." N.E. Hub Partners, L.P. v. CNG Transmission Corp., 239 F.3d 333, 341 n. 7 (3d Cir. 2001) (citing Mortensen, 549 F.2d at 891. Defendants' Motion presents a factual challenge to jurisdiction.

A court deciding a factual Rule 12(b)(1) challenge to jurisdiction is "free to weigh the evidence and satisfy itself as to the existence of its power to hear the case . . . . [N]o 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." Carpet Group ...


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