United States District Court,

S.D. Ohio,

Western Division.

Alaa Aladin CHKIR, Plaintiff

v.

BRENDAMOUR MOVING & STORAGE, INC., et al., Defendants.

ORDER

SUSAN J. DLOTT, Chief Judge.

Plaintiff, an inmate at the Federal Correctional Institution in Ashland, Kentucky, brings this action pro se against Cincinnati, Ohio residents Brendamour Moving & Storage, Inc., Mike Brendamour, and Lynn A. Grau, and Fenton, Missouri residents Unigroup Worldwide, UTS, Inc., Michele Robbins, Cindy Gallow, and Mayflower Transit, LLC. By separate Order issued this date, plaintiff has been granted leave to proceed in forma pauperis pursuant to 28 U.S.C. § 1915. This matter is before the Court for a sua sponte review of plaintiff’s complaint to determine whether the complaint, or any portion of it, should be dismissed because it is frivolous, malicious, fails to state a claim upon which relief may be granted or seeks monetary relief from a defendant who is immune from such relief. See Prison Litigation Reform Act of 1995 § 804, 28 U.S.C. § 1915(e)(2)(B); § 805, 28 U.S.C. § 1915A(b).

In enacting the original in forma pauperis statute, Congress recognized that a “litigant whose filing fees and court costs are assumed by the public, unlike a paying litigant, lacks an economic incentive to refrain from filing frivolous, malicious, or repetitive lawsuits.” Denton v. Hernandez, 504 U.S. 25, 31, 112 S.Ct. 1728, 118 L.Ed.2d 340 (1992) (quoting Neitzke v. Williams, 490 U.S. 319, 324, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989)). To prevent such abusive litigation, Congress has authorized federal courts to dismiss an in forma pauperis complaint if they are satisfied that the action is frivolous or malicious. Id.; see 28 U.S.C. §§ 1915(e)(2)(B)(i). A complaint may be dismissed as frivolous when the plaintiff cannot make any claim with a rational or arguable basis in fact or law. Neitzke v. Williams, 490 U.S. 319, 328-29, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989); see also Lawler v. Marshall, 898 F.2d 1196, 1198 (6th Cir.1990). An action has no arguable legal basis when the defendant is immune from suit or when plaintiff claims a violation of a legal interest which clearly does not exist. Neitzke, 490 U.S. at 327. An action has no arguable factual basis when the allegations are delusional or rise to the level of the irrational or “wholly incredible.” Denton v. Hernandez, 504 U.S. 25, 32, 112 S.Ct. 1728, 118 L.Ed.2d 340 (1992); Lawler, 898 F.2d at 1199.

Congress has also authorized the dismissal of complaints which fail to state a claim upon which relief may be granted. 28 U.S.C. §§ 1915(e)(2)(B)(ii); 1915A(b)(1). Plaintiff’s pro se complaint must be liberally construed and “held to less stringent standards than formal pleadings drafted by lawyers.”   Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (quoting Estelle v. Gamble, 429 U.S. 97, 106, 97 S.Ct. 285, 50 L.Ed.2d 251 (1976)). Plaintiff’s complaint must “give the defendant fair notice of what the … claim is and the grounds upon which it rests,” Erickson, 551 U.S. at 93 (citations omitted); Wysong v. Dow Chemical Co., 503 F.3d 441, 446 (6th Cir.2007), and provide “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is facially plausible when the plaintiff “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”   Ashcroft v. Iqbal, — U.S. —-, —-, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citing Twombly, 550 U.S. at 556). The standard for plausibility is not akin to a “probability requirement,” but it requires “more than a sheer possibility that a defendant has acted unlawfully.” Id. (citing Twombly, 550 U.S. at 556). Thus, when “a complaint pleads facts that are merely consistent with a defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Id. (citing Twombly, 550 U.S. at 557) (internal quotations omitted)).

The complaint alleges that plaintiff is a “Syrian/American citizen” who was born in Damascus, Syria. Plaintiff alleges that after living in the United States for thirteen years with his wife and two children, he decided to move his family back to Syria to pursue a business venture. Plaintiff contracted with the defendants to ship his furniture, appliances, electronics and personal possessions from Cincinnati to Syria for $23,000.00. In December 2007, plaintiff paid Brendamour Moving & Storage, Inc. $23,000.00 using three different credit cards. In January 2008, Brendamour retrieved and transported plaintiff’s property to Brendamour’s warehouse pending plaintiff’s anticipated departure to Syria in March 2008. Plaintiff alleges that defendant Brendamour notified the Evandale, Ohio Police Department of “suspicious activity” involving plaintiff and his wife. In turn, the Evandale Police notified federal authorities who investigated. Two days before their scheduled departure date, plaintiff and his wife were arrested by the Department of Homeland Security. Plaintiff and his wife were subsequently charged with conspiracy to commit bank fraud. See United States v. Alaa Aladin Chkir, Case No. 1:08-cr-21 (S.D.Ohio). Plaintiff pled guilty and was sentenced to 27 months imprisonment and three years of supervised release, and was ordered to pay restitution in the amount of $96,360.07. Id. (Doc. 40). Plaintiff alleges that his personal property remained in defendants’ possession at the warehouse during the pendency of his criminal case and that defendants charged plaintiff excessive storage fees without his knowledge or consent. He also alleges that the moving company charged him for delivery of furniture and other items to his home without advising him of the cost. The storage and other fees were subsequently deducted by the moving company from the $23,000.00 already paid by plaintiff, leaving a balance of $11,763.12. Plaintiff requested a refund of the balance, but defendants have failed to return the money despite plaintiff’s repeated requests. The complaint alleges that defendants caused plaintiff and his family to lose employment in Syria and to pay an excessive amount for storage and other fees. As relief, plaintiff seeks compensatory and punitive damages.

In this case, plaintiff has failed to assert any claim with an arguable basis in law over which this Court has subject matter jurisdiction. To the extent plaintiff may be seeking to invoke the diversity jurisdiction of the Court, his complaint reveals such jurisdiction is lacking. A district court has jurisdiction over a suit between citizens of a State and citizens or subjects of a foreign state when the amount in controversy “exceeds the sum or value of $75,000, exclusive of interest and costs.” 28 U.S.C. § 1332(a). Plaintiff fails to allege facts showing his claim satisfies the $75,000.00 amount-in-controversy requirement for this Court’s exercise of diversity jurisdiction.

In determining the amount in controversy, the Court “should consider the amount alleged in a complaint and should not dismiss a complaint for lack of subject matter jurisdiction unless it appears to a legal certainty that the plaintiff in good faith cannot claim the jurisdictional amount.”   Massachusetts Casualty Ins. Co. v. Harmon, 88 F.3d 415, 416 (6th Cir.1996) (quotation omitted); see also St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 82 L.Ed. 845 (1938). In applying the legal certainty test, courts have found that where the applicable state law barred the type of damages sought by the plaintiff then more than the jurisdictional amount could not be recovered to a legal certainty. See Sellers v. O’Connell, 701 F.2d 575, 579 (6th Cir.1983); Wood v. Stark Tri-County Building Trades Council, 473 F.2d 272, 274 (6th Cir.1973) (citing Vance v. Vandercook Co., 170 U.S. 468, 18 S.Ct. 645, 42 L.Ed. 1111 (1898); Parmalee v. Ackerman, 252 F.2d 721 (6th Cir.1958)).

In this case, the complaint fails to allege the amount in controversy exceeds the $75,000.00 jurisdictional amount. The complaint alleges facts from which the Court could infer that plaintiff, if successful on his breach of contract action, could recover an amount of compensatory damages of not more than $23,000.00, the amount paid by plaintiff to defendants under the contract. To meet the jurisdictional amount to confer diversity jurisdiction, therefore, plaintiff would have to recover at least $52,000.00 in punitive damages. However, as explained below, it appears to a legal certainty that plaintiff cannot obtain punitive damages in this matter.

Plaintiff essentially alleges a cause of action for breach of contract. However, under Ohio law punitive damages are not recoverable on a claim for breach of contract. See Klusty v. Taco Bell Corp., 909 F.Supp. 516, 522 (S.D.Ohio 1995) (collecting cases); Saberton v. Greenwald, 146 Ohio St. 414, 426, 66 N.E.2d 224, 229 (1946); Ketcham v. Miller, 104 Ohio St. 372, 136 N.E. 145 (1922). Furthermore, punitive damages may not be awarded on a claim for breach of contract “irrespective of the motive on the part of the defendant and no matter how willful the breach.” Kruse v. Vollmar, 83 Ohio App.3d 378, 386, 614 N.E.2d 1136, 1141-1142 (1992) (citing Digital & Analog Design Corp. v. North Supply Co., 44 Ohio St.3d 36, 45-46, 540 N.E.2d 1358, 1366-1367 (1989)). See also Saberton, 146 Ohio St. at 426, 66 N.E.2d at 229; Ketcham, 104 Ohio St. at 377-78, 136 N.E. at 146. The exception to the rule prohibiting the recovery of punitive damages on a breach of contract claim is when the actions giving rise to the breach of contract also constitute a separate, willful tort. Spalding v. Coulson, 104 Ohio App.3d 62, 78, 661 N.E.2d 197, 207 (1995). See also PTG Logistics, LLC v. Bickel’s Snack Foods, Inc., 196 F.Supp.2d 593, 607 (S.D.Ohio 2002) (punitive damages are not available in an action for breach of contract except when pled in connection with a separate tort arising from the breach) (citing R & H Trucking, Inc. v. Occidental Fire & Cas. Co., 2 Ohio App.3d 269, 441 N.E.2d 816, 819 (1981)). Punitive damages for the independent, willful tort may be recovered on a showing of malice. Spalding, 104 Ohio App.3d at 78, 661 N.E.2d at 207. See also Kruse, 83 Ohio App.3d at 386, 614 N.E.2d at 1141-1142; Ali v. Jefferson Ins. Co., 5 Ohio App.3d 105, 107, 449 N.E.2d 495, 497-498 (1982); Sweet v. Grange Mut. Cas. Co., 50 Ohio App.2d 401, 406-407, 364 N.E.2d 38, 41-42 (1975). “Actual malice consists of either a state of mind characterized by hatred, ill will or a spirit of revenge or a conscious disregard for the rights and safety of others which results in a strong probability of substantial harm to the affected persons.” Spalding, 104 Ohio App.3d at 78, 661 N.E.2d at 207. See also Arthur Young & Co. v. Kelly, 88 Ohio App.3d 343, 352, 623 N.E.2d 1303, 1308-1309 (1993). Likewise, punitive damages may be awarded in tort cases upon a showing of fraud or insult. Ali, 5 Ohio App.3d at 107, 449 N.E.2d at 497-498.

Although the complaint in the instant case contains allegations of breach of contract, plaintiff has failed to plead any facts showing actual malice or fraud. Plaintiff has failed to allege, and the Court is unable to discern from the complaint, any misrepresentations made by the defendants upon which plaintiff relied to his detriment for purposes of a common law fraud claim. See Russ v. TRW, Inc., 59 Ohio St.3d 42, 49, 570 N.E.2d 1076, 1083 (1991). Nor has plaintiff alleged any facts tending to show the existence of an independent tort which would justify an award of punitive damages in this case.  Accordingly, it appears to a legal certainty that plaintiff cannot in good faith claim the jurisdictional amount because there is no basis in Ohio law for the recovery of punitive damages in this case. Therefore, the Court lacks subject matter jurisdiction on the basis of diversity of citizenship.

The complaint fails to state a claim for conversion under Ohio law because such an action “requires that the defendant have an obligation to deliver specific money as opposed to merely a certain sum of money.”   NPF IV, Inc. v. Transitional Health Services, 922 F.Supp. 77, 82 (S.D.Ohio 1996) (citing Haul Transport of VA, Inc. v. Morgan, No. CA 14859, 1995 WL 328995, at(Ohio App. 2nd Dist. June 2, 1995) (no conversion where defendant not contractually obligated to remit specific funds collected to the plaintiff as opposed to paying plaintiff money generally, or to hold collected funds in trust)). “An action alleging conversion of cash lies only where the money involved is ‘earmarked’ or is specific money capable of identification, e.g., money in a bag, coins or notes that have been entrusted to the defendant’s care, or funds that have otherwise been sequestered, and where there is an obligation to keep intact and deliver this specific money rather than to merely deliver a certain sum.” Haul Transport, 1995 WL 328995 at * 4. See also Wiltberger v. Davis, 110 Ohio App.3d 46, 55, 673 N.E.2d 628, 634 (10th App. Dist.1996) (noting that the current authority in Ohio holds that generally there can be no cause of action for conversion of money).

In addition, the Court lacks subject matter jurisdiction on the basis of a federal question. District courts have original federal question jurisdiction over cases “arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. In order to invoke the Court’s federal question jurisdiction pursuant to 28 U.S.C. § 1331, plaintiff must allege facts showing his claim arises under federal law. A case arises under federal law when an issue of federal law appears on the face of a well-pleaded complaint.   Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).

Plaintiff’s complaint fails to allege any claims under federal law. Even if the complaint is liberally construed as asserting a violation of plaintiff’s civil rights, the complaint nevertheless fails to state a claim for relief. Under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388, 389, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), the Supreme Court held that a plaintiff could bring a cause of action against a federal agent “acting under color of his authority” for damages due to the agent’s unconstitutional actions. To state a claim for relief under Bivens, plaintiff must allege facts showing defendants acted under color of federal authority and personally deprived plaintiff of his constitutional rights. Mueller v. Gallina, 137 Fed. Appx. 847, 850 (6th Cir.2005) (citing Browning v. Clinton, 292 F.3d 235, 250 (D.C.Cir.2002); Gossmeyer v. McDonald, 128 F.3d 481, 495 (7th Cir.1997)).

In this case, plaintiff has not alleged facts showing defendants acted under color of federal law. “Providing information to the police, responding to questions about a crime, and offering witness testimony at a criminal trial does not expose a private individual to liability for actions taken ‘under color of law.’ “ Moldowan v. City of Warren, 578 F.3d 351, 399 (6th Cir.2009) (citations omitted). Thus, to the extent plaintiff’s complaint suggests that defendants provided false or misleading information to the police concerning plaintiff’s “suspicious activities,” that action in itself fails to show the individual defendants acted under color of law for purposes of a viable Bivens claim.

The analysis employed in cases involving violations of 42 U.S.C. § 1983 is equally applicable to claims under Bivens. See Hays v. Jefferson County, Ky., 668 F.2d 869, 874 (6th Cir.1982); see also, Ruff v. Runyon, 258 F.3d 498, 502 (6th Cir.2001).

In addition, the Supreme Court has declined to extend Bivens to actions for damages against private entities acting under color of federal law. See Correctional Servs. Corp. v. Malesko, 534 U.S. 61, 63, 122 S.Ct. 515, 151 L.Ed.2d 456 (2001). Therefore, the corporate defendants named by plaintiff cannot be held liable for a civil rights violation under Bivens.

The Court cannot discern any other possible federal claim stemming from plaintiff’s allegations. Therefore, this Court lacks original federal question jurisdiction over plaintiff’s complaint.

Accordingly, the Court concludes that plaintiff’s complaint is subject to dismissal as frivolous under 28 U.S.C. § 1915(e)(2)(B) for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(h) (3), and for failure to state a claim for relief under federal law. The complaint is hereby DISMISSED pursuant to 28 U.S.C. §§ 1915(e)(2)(B) and 1915A(b).

The Court certifies pursuant to 28 U.S.C. § 1915(a)(3) that for the foregoing reasons an appeal of this Court’s Order would not be taken in good faith. See McGore v. Wrigglesworth, 114 F.3d 601 (6th Cir.1997).

IT IS SO ORDERED.

United States District Court,

S.D. Mississippi,

Hattiesburg Division.

CANAL INDEMNITY COMPANY, Plaintiff

v.

Tammy L. DAUMA, et al, Defendants.

Civil Action No. 2:07cv351KS-MTP.

Oct. 30, 2009.

MEMORANDUM OPINION AND ORDER

KEITH STARRETT, District Judge.

This matter is before the court on a Motion for Summary Judgment [# 110] filed on behalf of the plaintiff, Canal Indemnity Company (“Canal”). The court, having reviewed the motion, the response, the pleadings and exhibits on file, the briefs of counsel, the authorities cited, and being otherwise fully advised in the premises finds that the motion is well taken and should be granted. The court specifically finds as follows:

FACTUAL BACKGROUND

Canal filed this interpleader action and suit for declaratory relief against a number of defendants regarding a motor vehicle accident which occurred on July 20, 2006. The collision involved a U.S. military Humvee driven by the Sergeant First Class George Dauma, Jr. and a tractor-trailer owned by defendant Cox and operated by Rodney Brown. Also in the Humvee were Staff Sgt. William Schultz, Second Lt. Pritpal Aujla, and Staff Sgt. William Brown. These four were active-duty Alaska Army National Guardsmen assigned to the Camp Shelby Joint Forces Training Center. The collision occurred on Highway 98 near New Augusta, Mississippi. As a result of this collision, Staff Sgt. Brown and Sgt. First Class Dauma were killed. Staff Sgt. Schultz and Second Lt. Aujla received various injuries.

On December 12, 2005, Canal had issued Basic Automobile Liability Policy No. L045430 with Mike Cox d/b/a Cox Cattle Co. as the name insured. The policy was effective from December 12, 2005 until December 12, 2006. The policy provided combined single limits liability coverage for bodily injury and property damage in the amount of $750,000 for each occurrence.

As a result of the accident, the Guardsmen or their estates filed various lawsuits in the Circuit Court of Perry County, Mississippi against Cox Cattle and Rodney Brown. These lawsuits seek damages in an amount well over $750,000. At least two of the suits (Aujla and Schultz) were removed here and, ultimately, remanded. Canal is currently defending Cox Cattle and Rodney Brown in these lawsuits.

On December 11, 2007, Canal filed this statutory interpleader action in this court. On December 18, 2007, this court entered and order authorizing Canal to deposit its entire policy limits of $750,000 into the Registry of this court. One year later, on December 18, 2008, this court entered an order authorizing the disbursement of all of the interpled funds to the Schultz, Dauma, Brown and Aujla claimants pursuant to an agreement among the claimants as to how those funds would be divided.

On February 14, 2008, Rodney Brown pled guilty to two counts of DUI causing death and two counts of mayhem in the Perry County Circuit Court. He was sentenced to serve sixty (60) years in the custody of the Mississippi Department of Corrections.

On October 28, 2008, Cox Cattle filed for bankruptcy protection in the United States Bankruptcy Court for the Eastern District of Texas, Tyler Division. Those proceedings are still pending. On January 29, 2009, the Bankruptcy Court in Tyler partially lifted the automatic stay for a period of ninety (90) days to allow limited discovery in the underlying state court proceedings in Mississippi. That ninety days has now expired. Canal now asserts that it has fulfilled all of its obligations under its policy and seeks to be discharged from any further liability for indemnity or duty to defend.

STANDARD OF REVIEW

The Federal Rules of Civil Procedure, Rule 56(c) authorizes summary judgment where “the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law .” Celotex Corporation v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The existence of a material question of fact is itself a question of law that the district court is bound to consider before granting summary judgment. John v. State of La. (Bd. of T. for State C. & U.), 757 F.2d 698, 712 (5th Cir.1985).

A Judge’s function at the summary judgment stage is not himself to weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial. There is no issue for trial unless there is sufficient evidence favoring the non-moving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment is appropriate. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

Although Rule 56 is peculiarly adapted to the disposition of legal questions, it is not limited to that role. Professional Managers, Inc. v. Fawer, Brian, Hardy & Zatzkis, 799 F.2d 218, 222 (5th Cir.1986). “The mere existence of a disputed factual issue, therefore, does not foreclose summary judgment. The dispute must be genuine, and the facts must be material.” Id. “With regard to ‘materiality’, only those disputes over facts that might affect the outcome of the lawsuit under the governing substantive law will preclude summary judgment.” Phillips Oil Company v. OKC Corporation, 812 F.2d 265, 272 (5 th Cir.1987). Where “the summary judgment evidence establishes that one of the essential elements of the plaintiff’s cause of action does not exist as a matter of law, … all other contested issues of fact are rendered immaterial. See Celotex, 477 U.S. at 323, 106 S.Ct at 2552.” Topalian v. Ehrman, 954 F.2d 1125, 1138 (5th Cir.1992). In making its determinations of fact on a motion for summary judgment, the Court must view the evidence submitted by the parties in a light most favorable to the non-moving party.   McPherson v. Rankin, 736 F.2d 175, 178 (5th Cir.1984).

The moving party has the duty to demonstrate the lack of a genuine issue of material fact and the appropriateness of judgment as a matter of law to prevail on his motion. Union Planters Nat. Leasing v. Woods, 687 F.2d 117 (5th Cir.1982). The movant accomplishes this by informing the court of the basis of its motion, and by identifying portions of the record which highlight the absence of genuine factual issues. Topalian, 954 F.2d at 1131.

“Rule 56 contemplates a shifting burden: the nonmovant is under no obligation to respond unless the movant discharges [its] initial burden of demonstrating [entitlement to summary judgment].” John, 757 F.2d at 708. “Summary judgment cannot be supported solely on the ground that [plaintiff] failed to respond to defendants’ motion for summary judgment,” even in light of a Local Rule of the court mandating such for failure to respond to an opposed motion. Id. at 709.

However, once a properly supported motion for summary judgment is presented, the nonmoving party must rebut with “significant probative” evidence. Ferguson v. National Broadcasting Co., Inc., 584 F.2d 111, 114 (5th Cir.1978). In other words, “the nonmoving litigant is required to bring forward ‘significant probative evidence’ demonstrating the existence of a triable issue of fact.” In Re Municipal Bond Reporting Antitrust Lit., 672 F.2d 436, 440 (5th Cir.1982). To defend against a proper summary judgment motion, one may not rely on mere denial of material facts nor on unsworn allegations in the pleadings or arguments and assertions in briefs or legal memoranda. The nonmoving party’s response, by affidavit or otherwise, must set forth specific facts showing that there is a genuine issue for trial. Rule 56(e), Fed.R.Civ.P. See also, Union Planters Nat. Leasing v. Woods, 687 F.2d at 119.

While generally “ ‘[t]he burden to discover a genuine issue of fact is not on [the] court,’ (Topalian 954 F.2d at 1137), ‘Rule 56 does not distinguish between documents merely filed and those singled out by counsel for special attention-the court must consider both before granting a summary judgment.’ ”   John, 757 F.2d at 712 (quoting Keiser v. Coliseum Properties, Inc., 614 F.2d 406, 410 (5th Cir.1980)).

CHOICE OF LAW ANALYSIS

In a diversity action this court is bound to apply the law of the forum state. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). This includes Mississippi’s conflict-of-law rules. Klaxon v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Since Mississippi is the forum state for this lawsuit, Mississippi’s choice of law rules apply. Hartford Underwriters Ins. Co. v. Foundation Health Services, Inc., 534 F.3d 588, 593 (5th Cir.2008).

The question of choice of law is and always has been one for the court in the first instance. See, Trijec Properties, Inc. v. U.S. Mineral Products, 974 F.2d 602 (5th Cir.1992); and Walls v. General Motors, Inc., 906 F.2d 143 (5th Cir.1990). If and only if there is a genuine issue of material fact regarding the application of the appropriate choice of law rules to the particular facts of the case is the issue properly submitted to the trier of fact. In this case, there is no such dispute.

In determining substantive choice of law questions, Mississippi relies on the “center of gravity”/“most significant relationship” test as set forth in the Restatement (Second) of Conflicts of Law. See, Craig v. Columbus Compress & Warehouse Co., 210 So.2d 645, 649 (Miss.1968); and Mitchell v. Craft, 211 So.2d 509 (Miss.1968). Mississippi courts apply the principles set out in Restatement (Second) of Conflicts of Laws § 188 to choice of laws disputes rooted in contract. Powe v. Roy Anderson Constr. Co., 910 So.2d 1197, 1202 (Miss.Ct.App.2006)(noting that § 188 sets forth principles to be applied in contract actions generally). Section 188 provides that:

In the absence of an effective choice of law by the parties … the contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include: (a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter, and (e) the domicile, residence, nationality, place of incorporation and place of business of the parties.

Id. These contacts are evaluated according to their relative importance with respect to the particular legal issue in dispute. Powe, 910 So.2d at 1202.

In this case, the place of contracting and the place of negotiation of the subject Canal policy was in Texas. Mike Cox d/b/a Coss Cattle Co. has his place of business in Texas and is involved in interstate trucking. Therefore, the place of performance would be nationwide. The accident occurred in Mississippi and involved parties from various states, including Alaska, Hawaii, Texas and Alabama. Under this set of factual circumstances, the court deems the State of Texas to have the most substantial contacts and thus it appears that the court should apply Texas law to the contractual issues presented.

However, after applying the § 188 factors, the court must consider Restatement (Second) of Conflict of Laws § 6. Section 6 is ancillary to the court’s determination of whether Texas has a more significant relationship to the occurrence in question. See Goodwin, supra. That section provides:

(1) A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law.

(2) When there is no such directive, the factors relevant to the choice of the applicable rule of law include:

(a) the needs of the interstate and international systems,

(b) the relevant policies of the forum,

(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,

(d) the protection of justified expectations,

(e) the basic policies underlying the particular field of law,

(f) certainty, predictability and uniformity of result, and

(g) ease in the determination and application of the law to be applied.

Restatement (Second) of Conflicts of Law § 6(2) (1971).

Applying these factors, the court finds that Texas is indeed the state with the most significant interest in determining the issues presented in interpreting this Texas insurance policy. Nor does applying Texas law run afoul of the policies advanced by Mississippi. Thus, pursuant to the principals set out in Restatement (Second) of Conflict of Laws § 188 and the ancillary considerations expressed in § 6, the court concludes that Texas law should be applied in interpreting the insurance policy issued by Canal to Cox.

RULES OF CONSTRUCTION

Under Texas law, familiar rules of contract construction apply to insurance policies. Balandran v. Safeco Ins. Co. of America, 972 S.W.2d 738, 740-41 (Tex.1998). Thus, when interpreting an insurance contract, the court is to ascertain the true intent of the parties as expressed in the policy itself.   Kelley-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex.1998). The unambiguous terms of the contract are to be given their plain, ordinary, and generally accepted meaning. Heritage Res., Inc. v. National Bank, 939 S.W.2d 118, 121 (Tex.1996). If, however, the parties take conflicting views of coverage, “neither conflicting expectations nor disputation is sufficient to create an ambiguity.” Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 134 (Tex.1994). Nor is “one phrase, sentence, or section [to] be isolated from its setting and considered apart from the other provisions.” Id.

ANALYSIS

An interpleader is a suit in equity. First National Bank of Ft. Worth v. United States, 633 F.2d 1168 (5th Cir.1981). Generally stated, the purpose of an interpleader action is to protect a stakeholder, most typically an insurance company, from liability when faced with the threat of multiple inconsistent claims to a single fund by allowing the stakeholder to tender the contested funds to the court in lieu of defending against multiple possible lawsuits. Tittle v. Enron Corp., 463 F.3d 410 (5th Cir.2006). In essence, the interpleader action allows the stakeholder to pay the money in dispute into court, withdraw from the proceeding, and leave the claimants to litigate between themselves their entitlement to the funds. Hussain v. Boston Old Colony Ins. Co., 311 F.3d 623 (5th Cir.2002).

An interpleader action generally proceeds in two stages. Mid-America Indemnity Company v. McMahan, 666 F.Supp. 926, 928 (S.D.Miss.1987). First, the court determines the right of a party invoking the interpleader to compel the claimants to litigate their claims to the fund in one proceeding. Id. Once the court determines the interpleader is proper, the court may discharge the interpleading plaintiff if it is disinterested and seeks no part of the funds.   Southtrust Bank of Florida N.A. v. Wilson, 971 F.Supp. 539, 542 (M.D.Fla.1997); 28 U.S.C. § 2361. In the second stage of the interpleader action, the court determines the respective rights of the various claimants to the fund. Mid-Ameirca, 666 F.Supp. at 928.

The Canal policy’s declaration page provides that the liability limit for any one accident is $750,000. In regard to coverage, the Policy contains the following:

IV. LIMITS OF LIABILITY: Regardless of the number of (1) insureds under this policy, (2) persons or organizations who sustain bodily injury or property damage, (3) claims made or suits brought on account of bodily injury or property damage or (4) automobiles to which this policy applies, the company’s liability is limited as follows:

Coverage A-The limit of bodily injury liability stated in the declarations as applicable to “each person” is the limit of the company’s liability for all damages, including damages for care and loss of services, because of bodily injury sustained by one person as the result of any on occurrence; but subject to the above provision respecting “each person”, the total liability of the company for all damages for care and loss of service, because of bodily injury sustained by two or more persons as the result of any one occurrence shall not exceed the limit of bodily injury liability stated in the declarations as applicable to “each occurrence”.

Section A, Basic Automobile Liability Policy, Page 2, Paragraph IV.

Thus, it is undisputed that the clear, unambiguous language of the Canal policy limits it total liability for the subject accident to $750,000. Additionally, the Policy contains an MCS-90 endorsement which provides: “This insurance is primary and the company shall not be liable for amounts in excess of $750,000 for each accident.”

Canal’s liability limits of $750,000 was deposited with the Clerk of this court pursuant to an Order dated December 18, 2007. Pursuant to an agreement of the parties, the full amount was disbursed to the claimants by Order of December 18, 2008. The defendants (claimants) do not dispute that Canal has paid it limits of liability. Thus, because Canal has paid its maximum liability limits under the subject Policy, the court finds that it is now entitled to a discharge from any further duty of indemnification, and it will be so ordered.

Canal also seeks to be discharged from any further duty to defend Cox Cattle and/or Rodney Brown in the state court actions. To this request, the defendants (claimants), or at least some of them, do object. In that regard, the Canal Policy provides:

The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

bodily injury or property damage

to which this insurance applies, caused by an occurrence and arising out of the ownership, maintenance or use; including loading and unloading for the purposes stated as applicable thereto in the declarations, of an owned automobile or a temporary substitute automobile, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company’s liability has been exhausted by payment of judgments or settlements.

Section A, Basic Automobile Liability Policy, Page 1, Paragraph I.

Because Canal has paid its liability limits under the Policy, and its duty to indemnify has been satisfied, it now seeks, based on the above policy language, to have the court declare that its duty to defend its insured has been fulfilled and to be discharged from any further such duty.

The plaintiff candidly admits that no Texas case has specifically held that an insurance company’s filing of an interpleader action and depositing its policy limits into the registry of the court with a subsequent disbursement of those funds by agreement of the claimants extinguishes the company’s duty to defend. However, Canal cites several Texas cases which address related issues and seem to suggest that such actions would indeed terminate a duty to defend.

For instance, the Texas Court of Appeals addressed an insurer’s duty to defend after exhaustion of it policy’s liability limits in American States Insurance v. Arnold, 930 S.W.2d 196 (Tex.App.1996). The policy at issue contained a provision which stated that the insurer’s duty to defend ended upon exhaustion of policy limits. The Arnold court examined the contract language and concluded that it indeed “manifests the parties’ intent to limit the duty to defend to the time before policy limits are exhausted.” Id. at 201 (citing Forbau, 876 S.W.2d at 133). As a result, the insurer was relieved of its duty to defend.

In Baucum v. Great American Insurance, 370 S.W.2d 863 (Tex.1963), the Texas Supreme Court held that the mere delivery of a check to a court clerk did not relieve the insurer of its duty to defend. The holding was based on the court’s finding that the check was not validly tendered to the court clerk because it was not an unconditional relinquishment of the proceeds as it contained a requirement that the insured execute a release to receive the funds. Id. at 865-66. The Texas Court did note that such an insurer would have been discharged from it’s obligations under the policy by depositing the money into the registry of the court without such limitations. Id.

Relying on the holding in Baucum, a federal district court in Texas Employers Insurance v. Underwriting Members of Lloyds, 836 F.Supp. 398 (S.D.Tex.1993), discussed an insurer’s duty to defend under Texas law after exhaustion of policy limits. The Texas Employers court determined that an insurer does not exhaust its policy limits by merely offering it to a claimant. Id. at 409. The district court held that there must be a valid tender of the limits which is an unconditional offer, and actual production of the funds, by a debtor to pay a sum of money not less than the amount due on the obligation. Id., citing Baucum, 866 S.W.2d at 866.

Other jurisdictions have developed similar jurisprudence. See, e.g., Commercial Union Insurance Company v. Adams, 281 F.Supp. 860 (N.D.Ind.1964)(duty to defend terminated when policy limits tendered into registry of court under policy provision similar to the one in this case); Abstract & Title Guaranty Company, Inc. v. Chicago Insurance Company, 2006WL134860 (S.D.Ind. May 12, 2006), affirmed 489 F.3d 808 (7th Cir.2007)(holding that duty to defend ends with payment of policy limits into registry of court); Zurich Insurance Company v. Raymark Industries, Inc., 118 Ill.2d 23, 112 Ill.Dec. 684, 514 N.E.2d 150 (Ill.1987)(duty to defend ends with exhaustion of indemnity limits); Country Mutual Insurance Company v. Anderson, 257 Ill.App.3d 73, 195 Ill.Dec. 35, 628 N.E.2d 499 (Ill.Ct.App.1994)(same); General Casualty Company of Wisconsin v. Whipple, 328 F.2d 353 (7th Cir.1964)(duty to defend ends with payment of full policy limits into registry of court); and Denham v. LaSalle-Madison Hotel Company, 168 F.2d 576 (7th Cir.1948), cert. den. 335 U.S. 871, 69 S.Ct. 167, 93 L.Ed. 415 (1948) (duty to defend ends when liability limits have been exhausted).

In this case, Canal has paid its undisputed maximum limits of liability into the registry of this court and those funds have now been paid out to the claimants pursuant to an agreement among the claimants. The court finds that there is no just reason, after considering the policy language at issue under Texas law, not to find that Canal’s duty to defend in this case has terminated.

The Schultz claimants, as the only ones to object to Canal’s motion, respond by asserting that the Motor Vehicle Carrier Act endorsement attached to the subject Policy limits the exclusions that may be used by Canal or other insurance companies pursuant to the Motor Vehicle Carrier Act 1980. Specifically, the claimants contend that the endorsement modifies the policy and limits the exclusions or language limiting the exclusions or placing limits on the defense that may be contained in the policy by substituting the language contained in the endorsement for the language in the policy and substitutes language in the endorsement for the exclusions or limitations on the defense that may be set out in the policy. Thus, according to the claimants, the Motor Vehicle Carrier Act endorsement does not make any provision for limiting the defense and specifically does not authorize Canal to terminate its defense of its insureds, Mike Cox d/b/a Cox Cattle Company and Rodney Brown, after paying the undisputed limits of the policy.

Canal responds to this argument by pointing out that the exhibit attached to the claimant’s response and referred to as the Motor Vehicle Carrier Act Endorsement is actually a Form “F” controlled by state law, not federal law. Canal further points out that the MCS-90 Endorsement previously referenced is the one promulgated pursuant to regulations governed by the Motor Vehicle Carrier Act of 1980.

The Form “F” Endorsement referred to by the claimants is limited by its very terms to instances where the state commission has jurisdiction over the mode of transportation. See T.H.E. Ins. Co. v. Larsen Intermodal Services, 242 F.3d 667 (5th Cir.2001). The endorsement provides:

The certification of the policy, as proof of financial responsibility under the provisions of and State motor carrier law or regulations promulgated by any State Commission having jurisdiction with respect thereto, amends the policy to provide insurance for automobile bodily injury and property damage liability in accordance with the provisions of such law or regulations to the extent of the coverage and limits of liability required thereby, provided only that the insured agrees to reimburse the company for any payment made by the company which it would not have been obligated to make under the terms of this policy except by reason of the obligations assumed in making such certification.

The evidence shows that the transportation on the date of the accident was interstate in nature and no state commission would have jurisdiction. Further, the Form F attached shows clearly that the Canal Policy was not filed with Mississippi as proof of financial responsibility. Thus, the claimants’ reliance on Mississippi law which they insist enlarges the obligation of Canal’s duty to defend, is misplaced. See Occidental Fire and Casualty Co. of North Carolina v. Bankers and Shippers Insurance Co. of New York, 564 F.Supp. 1501 (W.D.Va.1983); Foster v. Commercial Standard Ins. Co. of Fort Worth, Tex., 121 F.2d 117 (10th Cir.1941); Hawkeye Casualty Co. v. Halferty, 131 F.2d 294 (8th Cir.1942), cert. den. 318 U.S. 758, 63 S.Ct. 533, 87 L.Ed. 1131 (1942); and Simon v. American Casualty Co. of Reading, Pa., 146 F.2d 208 (4th Cir.1945).

Regardless of the foregoing inapplicability of it under the facts of this case, Form F accomplishes its purpose by reading out only those clauses of the policy that would limit the ability of a third party victim to recover for his loss. See Carolina Cas. Ins. Co. v. Underwriters Ins. Co., 569 F.2d 304 (5th Cir.1978). That is not the case here and Form F, even if applicable, would have no effect on these proceedings.

IT IS THEREFORE ORDERED AND ADJUDGED that the Motion for Summary Judgment [# 110] filed by the plaintiff, Canal Indemnity Company is granted and this action is dismissed with prejudice.

IT IS FURTHER ORDERED AND ADJUDGED that Canal Indemnity Company is fully and finally discharged from all further liability under it Basic Automobile Liability Policy No. L045430 with Mike Cox d/b/a Cox Cattle Co., including the duty to defend any action that has been or may be brought against any of its insured or alleged insureds, including Mike Cox d/b/a Cox Cattle and/or Rodney Brown, as a result of the July 20, 2006 accident.

IT IS FURTHER ORDERED AND ADJUDGED any other pending motion is denied as moot. A separate judgment shall be entered herein in accordance with Rule 58, Federal Rules of Civil Procedure.

SO ORDERED AND ADJUDGED