Court of Appeals of Georgia, Fourth Division

March 9, 2022, Decided

A21A1752.

Reporter

2022 Ga. App. LEXIS 130 *

STILLWELL v. TOPA INSURANCE COMPANY.

Notice: THIS OPINION IS UNCORRECTED AND SUBJECT TO REVISION BY THE COURT.

Disposition: Judgment reversed.

Core Terms

Trucking, subject-matter, motion to dismiss, motor carrier, trial court, direct-action

Case Summary

Overview

HOLDINGS: [1]-In an action for injuries sustained when a dump truck collided with the driver’s vehicle, the trial court erred in granting the insurer’s motion for dismissal due to lack of subject-matter jurisdiction because it raised the nonjurisdictional question of whether the driver had a cause of action against it, not any issue of subject-matter jurisdiction.

Outcome

Judgment reversed.

LexisNexis® Headnotes

Civil Procedure > Appeals > Standards of Review > De Novo Review

Evidence > Burdens of Proof > Allocation

Civil Procedure > … > Responses > Defenses, Demurrers & Objections > Motions to Dismiss

 Standards of Review, De Novo Review

A motion brought under O.C.G.A. § 9-11-12(b)(1) asserts the defense of lack of jurisdiction over the subject matter. When a defendant challenges a plaintiff’s standing by bringing a § 9-11-12(b)(1) motion, the plaintiff bears the burden of establishing that jurisdiction exists. A motion to dismiss for lack of subject-matter jurisdiction can allege either a facial challenge, in which the court accepts as true the allegations on the face of the complaint or a factual challenge, which requires consideration of evidence beyond the face of the complaint. And an appellate court reviews de novo a trial court’s grant of a motion to dismiss due to lack of subject-matter jurisdiction. The appellate court also construes the pleadings in the light most favorable to the nonmoving party with any doubts resolved in that party’s favor.

Insurance Law > … > Coverage > Compulsory Coverage > Motor Carriers

Torts > … > Motor Vehicles > Particular Actors, Circumstances, & Liabilities > Motor Carriers

 Compulsory Coverage, Motor Carriers

Georgia’s direct-action statutes create standing for injured plaintiffs to sue insurers of motor carriers directly.

Constitutional Law > The Judiciary > Case or Controversy > Standing

Governments > Courts > Authority to Adjudicate

 Case or Controversy, Standing

In Georgia, constitutional standing—more precisely, Article VI standing—is a threshold jurisdictional issue to enforce traditional limits placed on a court’s judicial power, Ga. Const. art. VI, § I, para. I, as well as a question of subject-matter jurisdiction. The requirement that jurisdiction be established as a threshold matter springs from the nature and limits of the judicial power and is inflexible and without exception. As a result, an appellate court must consider whether a plaintiff has constitutional standing nostra sponte.

Constitutional Law > … > Case or Controversy > Standing > Elements

 Standing, Elements

Georgia’s constitutional-standing cases—which often rely upon the decisions of the Supreme Court of the United States —have established that the irreducible constitutional minimum of standing consists of three elements. To ensure a case is properly within the scope of a court’s judicial power, plaintiffs must allege facts sufficient to show (1) an injury in fact; (2) a causal connection between the injury and the causal conduct; and (3) the likelihood that the injury will be redressed with a favorable decision.

Governments > Legislation > Interpretation

 Legislation, Interpretation

The question of whether a plaintiff has a cause of action under a particular statute is an ordinary issue of statutory interpretation, not a jurisdictional question. It is misguided to characterize that kind of question as concerning a lack of subject-matter jurisdiction. The scope of a statutory cause of action, then, is not an appropriate inquiry to consider on a O.C.G.A. § 9-11-12(b)(1) motion to dismiss.

Headnotes/Summary

Headnotes

Georgia Advance Headnotes

GA(1) (1)

Civil Procedure.  > Pleading & Practice.  > Defenses, Objections & Demurrers.  > Motions to Dismiss.

The trial court erred in granting the insurer’s motion for dismissal due to lack of subject-matter jurisdiction because it raised the nonjurisdictional question of whether the driver had a cause of action against it, not any issue of subject-matter jurisdiction.

Judges:  [*1] DILLARD, Presiding Judge. Mercier and Pinson, JJ., concur.

Opinion by: DILLARD

Opinion

Dillard, Presiding Judge.

Following injuries sustained in an automobile collision with a dump truck driven by Curtis Jones and owned by Curtis Jones Trucking (“CJ Trucking”), Keondrae Stillwell brought a direct action against Topa Insurance Co., the alleged motor-carrier insurer of the truck at the time of the accident. In her complaint, Stillwell argued that—under Georgia’s Motor Carrier Act (GMCA)¹—Topa was responsible for any judgment she obtained against Jones and CJ Trucking. Stillwell now appeals the trial court’s dismissal of her action against Topa, arguing the court erred in finding that it lacked subject-matter jurisdiction over the case and relying on erroneous factual findings. For the reasons set forth infra, we reverse.

The record shows that on August 18, 2018, Jones—who was driving a dump truck owned by CJ Trucking—collided head on with Stillwell’s car, inflicting on her serious and permanent injuries. On February 9, 2018, Topa issued CJ Trucking a one-year commercial insurance policy for the dump truck. Stillwell’s complaint alleged that when Topa evaluated Jones’s application and issued the policy, it [*2]  was aware CJ Trucking was operating as a motor carrier (despite the application indicating otherwise). She contended, inter alia, the policy or underwriting file contained a photograph of the dump truck—which displayed a Department of Transportation number—and that Topa knew CJ Trucking was registered as a motor carrier with the Federal Motor Carrier Safety Administration. Even so, it is undisputed Topa never made any of the required regulatory filings for insurance companies under the GMCA because it accepted CJ Trucking’s representation that it was not a motor carrier.

On August 20, 2020, Stillwell filed a complaint, asserting, inter alia, a negligence claim against Jones² and, under Georgia’s direct-action statutes,³ seeking damages directly from Topa. In doing so, Stillwell argued Topa is liable for any judgment she ultimately obtains against Jones or CJ Trucking under the GMCA.⁴ Topa answered the complaint, denying many of its allegations and asserting numerous affirmative defenses. And on the same day, Topa filed an OCGA § 9-11-12 (b) (1) motion to dismiss Stillwell’s complaint for lack of subject-matter jurisdiction. Specifically, Topa claimed Stillwell did not have standing to file a direct action under [*3]  OCGA §§ 40-1-112 and 40-2-140 because (1) Jones’s policy was not a motor-carrier policy—and thus, it was not subject to liability under the GMCA; and (2) the relevant insurance policy was cancelled for non-payment on July 6, 2018 (approximately two months before the accident). Discovery ensued, and following a hearing on the matter, the trial court granted Topa’s motion to dismiss for lack of subject-matter jurisdiction. This appeal by Stillwell follows.

  party’s favor.”⁹ With this standard of review and these guiding principles in mind, we turn to Stillwell’s specific claims of error.

1. Stillwell first contends GA(1) (1) the trial court erred in granting Topa’s motion for dismissal due to lack of subject-matter jurisdiction because it raised the nonjurisdictional question of whether she had a cause of action against Topa, not any issue of subject-matter jurisdiction. We agree.

Specifically, Stillwell maintains the proper inquiry is not whether the trial court has authority to adjudicate direct actions against insurance carriers under the GMCA, but rather whether Topa is a defendant within the category of persons or entities the direct-actions statutes authorize plaintiffs to join as defendants.   necessarily jurisdictional. But this argument ignores decisions carefully distinguishing constitutional standing—which is jurisdictional¹¹—from questions about the scope of a statutory cause of action—which are not jurisdictional.¹²

from the nature and limits of the judicial power’ … and is ‘inflexible and without exception.’”¹⁵ As a result, we must consider whether a plaintiff has constitutional standing nostra sponte.

  to show “(1) an injury in fact; (2) a causal connection between the injury and the causal conduct; and (3) the likelihood that the injury will be redressed with a favorable decision.”¹⁸ Here, Stillwell satisfies constitutional standing because (1) her complaint alleges facts that, if true, show an actual injury due to defendant’s negligence; and (2) the trial court can redress that injury by awarding her damages.¹⁹

Nevertheless, the trial court concluded it lacked subject-matter jurisdiction over the case because there was no underlying motor-carrier insurance policy—i.e., Topa was not in the category of persons or entities the direct-action statutes authorized a cause of action against.^{20   21} The scope of a statutory cause of action, then, is not an appropriate inquiry to consider on a OCGA § 9-11-12 (b) (1) motion to dismiss.²² And given the trial court’s clear subject-matter jurisdiction to hear the tort and contract issues alleged in the complaint,²³ the trial court erred in holding that it lacked subject-matter jurisdiction over Stillwell’s direct action against Topa under the GMCA.²⁴

2. Given our holding in Division 1 supra, we need not address Stillwell’s argument that the trial court’s grant of Topa’s motion to dismiss her complaint was based on erroneous factual findings.

For all these reasons, we reverse the trial court’s grant of Topa’s motion for dismissal under OCGA § 9-11-12 (b) (1).

Judgment reversed. Mercier and Pinson, JJ., concur.

End of Document

---

¹ See OCGA § 40-1-50 et seq.

² Stillwell also sued several corporate entities and other individuals, but none of them are involved in this appeal.

³ See OCGA §§ 40-1-112 and 40-2-140.

⁴ See OCGA § 40-1-112 (c) (“It shall be permissible under this part for any person having a cause of action arising under this part to join in the same action the motor carrier and the insurance carrier, whether arising in tort or contract.”).

⁵ Douglas Cty. v. Hamilton State Bank, 340 Ga. App. 801, 801 (798 SE2d 509) (2017) (punctuation omitted).

⁶ See id.

⁷ Id.; accord Bobick v. Community & Southern Bank, 321 Ga. App. 855, 860 n. 4 (3) (743 SE2d 518) (2013); Pinnacle Benning v. Clark Realty Capital, 314 Ga. App. 609, 618 n. 37 (2)(a) (724 SE2d 894) (2012).

⁸ See Douglas Cty., 340 Ga. App. at 801-02; Bobick, 321 Ga. App. at 856.

⁹ Douglas Cty., 340 Ga. App. at 802.

¹⁰ See OCGA §§ 40-1-112(c) and 40-2-140; Reis v. OOIDA Risk Retention Grp., Inc., 303 Ga. 659, 664 (814 SE2d 338) (2018) (“[T]he direct[-]action statutes provide a vehicle for directly naming a risk retention group as a party in a lawsuit.”); Hartford Ins. Co. v. Henderson & Son, Inc., 258 Ga. 493, 495 (371 SE2d 401) (1988) (“We find … that because appellees’ complaint did adequately allege a direct action against [the insurance company], the Court of Appeals correctly denied appellant’s motion to dismiss.”); Nat’l Indem. Co. v. Lariscy, 352 Ga. App. 446, 449 (835 SE2d 307) (2019) (“The general rule in Georgia is that a party may not bring a direct action against the liability insurer of the party who allegedly caused the damage unless there is an unsatisfied judgment against the insured or it is specifically permitted either by statute or a provision in the policy. However, Georgia has codified statutory exceptions to this rule, the direct action statutes, which permit a direct action by an injured party against an insurance carrier which insures a motor carrier.” (punctuation and citation omitted)); Daily Underwriters of Am. v. Williams, 354 Ga. App. 551, 553 (2) (841 SE2d 135) (2020) (“OCGA § 40-1-112 (c), when read together with OCGA § 40-1-126, authorizes direct actions against insurers of motor carriers engaged in intrastate commerce . …”).

¹¹ See Sons of Confederate Veterans v. Newton Cty. Bd. of Commissioners, 360 Ga. App. 798, 803-04 (2) (861 SE2d 653) (2021) (noting that constitutional standing is “a jurisdictional issue that must be considered before reaching the merits of any case” and is a “doctrine rooted in the traditional understanding of a case or controversy.”) (punctuation and citation omitted)); Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (II) (A) (136 SCt 1540, 194 LEd2d 635) (2016) (same); Town of Chester, N.Y. v. Laroe Estates, Inc., ___ U.S. ___, ___ (II) (137 SCt 1645, 198 LEd2d 64) (2017) (same); Black Voters Matter Fund, Inc., et al. v. Kemp et al.; & vice versa (four cases), ___ Ga. ___, ___, Case Nos. S21A1261 and S21A1262, 2022 Ga. LEXIS 54, 2022 WL 677669, at *4 (1) (2022) (noting that constitutional standing is a jurisdictional issue); Perdue v. Lake, 282 Ga. 348, 348 (1) (647 SE2d 6) (2007) (“As a general rule, standing must be determined at the time at which the plaintiff’s complaint is filed in order to place an actual case or controversy within the purview of the court.” (punctuation omitted)); Bowers v. Bd. of Regents of the Univ. Sys. of Ga., 259 Ga. 221, 221-22 (378 SE2d 460) (1989) (Per Curiam) (“The existence of an actual controversy is fundamental to a decision on the merits by this court.”); U-Haul Co. of Ariz. v. Rutland, 348 Ga. App. 738, 743 (1) (824 SE2d 644) (2019) (“As it relates to standing, we view the requirement that there be an actual case or controversy at the time the complaint is filed.”); In the Interest of I. B., 219 Ga. App. 268, 269 (464 SE2d 865) (1995) (physical precedent only) (noting that “[t]hroughout Article VI of the Georgia Constitution, jurisdictional authority is given over ‘cases’ ” and “ ‘[c]ases’ are live disputes, actual controversies” (footnotes omitted)).

¹² See Ames v. JP Morgan Chase Bank, N.A., 298 Ga. 732, 740-41 (783 SE2d 614) (2016) (holding—without addressing the issue of subject-matter jurisdiction—that a plaintiff lacked the ability to bring a claim because he was unable to comply with the statute providing for the right of action at issue); N. by Nw. Civic Ass’n, Inc. v. Cates, 241 Ga. 39, 43 (3) (243 SE2d 32) (1978) (holding—without any reference to subject-matter jurisdiction—that taxpayer was not able to object to a particular tax adjustment because any objection to such an adjustment, under the relevant statute, must be made by the county tax officials and not by the individual taxpayer). Cf. Foisie v. Worcester Polytechnic Inst., 967 F3d 27, 44 (II) (C) (1st Cir. 2020) (“Arguments concerning the absence of statutory standing, unlike arguments concerning the absence of constitutional standing, do not address a court’s subject[-]matter jurisdiction but, rather, address the merits of the plaintiff’s claims … Consequently, such arguments are more appropriately evaluated under the umbrella of Federal Rule of Civil Procedure 12(b)(6)”) (citation omitted)).

¹³ See Ga. Const. art. VI, sec. I, para. I (“The judicial power of the state shall be vested exclusively in the following classes of courts . …”); Rampersad v. Plantation at Bay Creek Homeowners Ass’n, Inc., 362 Ga. App. 329, ___ (___ SE2d ___) (2022) (“Georgia’s Article VI courts are vested with the judicial power of the state.” (punctuation omitted)); see also Blackmon v. Tenet Healthsystem Spalding, Inc., 284 Ga. 369, 371 (667 SE2d 348) (2008) (holding that “the constitutional and procedural concept of ‘standing’ falls under the broad rubric of ‘jurisdiction’ in the general sense, and in any event, a plaintiff with standing is a prerequisite for the existence of subject[-]matter jurisdiction.”); Connell v. Hamon, 361 Ga. App. 830, 838 (863 SE2d 744) (2021) (same); Wallace v. Chandler, 360 Ga. App. 541, 545 (859 SE2d 100) (2021) (same); In re Haney, 355 Ga. App. 658, 660 (845 SE2d 380) (2020) (same); id. (noting that constitutional standing is a threshold jurisdictional issue); see also Parker v. Leeuwenburg, 300 Ga. 789, 793 (797 SE2d 908) (2017) (Peterson, J., dissenting) (noting that “[a] robust standing doctrine is necessary to ensure that courts remain the least dangerous branch of government, and that ”[w]hen we decide only cases brought by parties seeking redress for actual harm, we limit ourselves to exercising only that power granted us by the Georgia Constitution“).

¹⁴ See supra note 13.

¹⁵ Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94-95 (III) (118 SCt 1003, 140 LEd2d 210) (1998) (Scalia, J.) (quoting Mansfield, C. & L.M. Ry. Co. v. Swan, 111 U.S. 379, 382 (4 SCt 510, 28 LEd 462) (1884)).

¹⁶ See, e.g., Gaddy v. Ga. Dept. of Revenue, 301 Ga. 552, 555-56 (1) (a) (i) (802 SE2d 225) (2017); Parker, 300 Ga. at 792-93; Oasis Goodtime Emporium I, Inc. v. City of Doraville, 297 Ga. 513, 518 (2) (773 SE2d 728) (2015); Sons of Confederate Veterans, 360 Ga. App. at 803-04 (2). But see Black Voters Matter Fund, Inc., supra at *12-13 (Peterson, J., concurring) (offering “observations on the lack of clarity in our standing doctrine,” and noting that “[d]espite the textual differences between the United States Constitution and the Georgia Constitutions, we have frequently cited federal standing precedent in deciding Georgia cases without actually explaining why federal case law interpreting Article III of the United States Constitution should be considered persuasive authority for the different question of Georgia standing law.”); Sons of Confederate Veterans v. Henry County Board of Commissioners, Supreme Court of Georgia Case No. S22C0039 (March 8, 2022) (granting writ of certiorari and noting that “[t]o the extent that OCGA § 50-3-1 (b) (5) creates a cause of action allowing any person, group, or legal entity to seek damages without a showing of individualized injury, does the Georgia Constitution nevertheless require such plaintiffs to show individualized injury to have standing to sue?”) (emphasis supplied); Sons of Confederate Veterans v. Henry County Board of Commissioners, Supreme Court of Georgia Case No. S22C0045 (March 8, 2022) (same).

¹⁷ Spokeo, Inc., 578 U.S. at 338 (II) (A), as revised (May 24, 2016) (Alito, J.); accord Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (II) (112 SCt 2130, 119 LEd2d 351) (1992) (Scalia, J.).

¹⁸ Sons of Confederate Veterans, 360 Ga. App. at 804 (2) (quoting Granite State Outdoor Advert., Inc. v. City of Roswell, 283 Ga. 417, 418 (1) (658 SE2d 587) (2008)); accord Lujan, 504 U.S. at 560-61 (II); see also In re Haney, 355 Ga. App. at 660 (“To have standing, a party seeking relief must show: (1) he has suffered ”an injury in fact that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) a causal connection between the injury and the challenged wrong; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.“ (punctuation omitted)); Ga. Home Appraisers, Inc. v. Trintec Portfolio Servs., LLC, 349 Ga. App. 356, 362 (2) (825 SE2d 833) (2019) (same).

¹⁹ Nat’l Collegiate Student Loan Tr. 2007-3 v. Clayborn, 357 Ga. App. 353, 354 (850 SE2d 787) (2020) (“A motion to dismiss may be granted only where a complaint shows with certainty that the plaintiff would not be entitled to relief under any set of facts that could be proven in support of his or her claim.”); Ass’n of Guineans in Atlanta, Inc. v. DeKalb Cty., 292 Ga. 362, 364 (2) (738 SE2d 40) (2013) (same). OCGA § 40-1-112 (c), when read together with OCGA § 40-1-126, “authorizes direct actions against insurers of motor carriers engaged in intrastate commerce . …” Williams, 354 Ga. App. at 553 (2).

²⁰ The trial court found, and Topa argues, that it did not have subject-matter jurisdiction over Stillwell’s action “because the insurance policy at issue was not a commercial[-]carrier policy.” The court maintained that because there was no underlying motor-carrier insurance plan, the plaintiff had no standing to sue, and as a result, it lacked subject-matter jurisdiction over the case.

²¹ See Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 128 n.4, 129 (II-III) (134 SCt 1377, 188 LE2d 392) (2014) (Scalia, J.) (finding the question of whether a plaintiff “has a cause of action under the statute” is “a straightforward question of statutory interpretation,” one that “does not implicate subject-matter jurisdiction, i.e., the court’s statutory or constitutional power to adjudicate the case” (punctuation omitted)).

²² See supra notes 11-12 & accompanying text.

²³ See OCGA § 15-7-4; Thor Gallery at S. DeKalb, LLC v. Monger, 338 Ga. App. 235, 236 (1) (789 SE2d 806) (2016) (“Georgia’s state courts, created pursuant to OCGA § 15-7-2, exercise comprehensive jurisdiction over a wide range of claims, including, inter alia, … contract and tort cases, … but excluding only felony criminal cases, certain domestic cases, equity matters, and land title cases.” (punctuation omitted)).

²⁴ The decisions relied upon by Topa in its appellate brief either address the issue of constitutional standing or do not substantively address the issue of subject-matter jurisdiction at all. See, e.g., Warth v. Seldin, 422 U.S. 490, 498 (95 SCt 2197, 45 LEd2d 343) (1975); Atlantic Specialty Ins. Co. v. Lewis, 341 Ga. App. 838, 845 (802 SE2d 844) (2017); Sherman v. Dev. Auth. of Fulton Cty., 324 Ga. App. 23, 23 (749 SE2d 29) (2013).

United States District Court for the Southern District of New York

March 11, 2022, Decided; March 11, 2022, Filed

20 Civ. 9067 (ER)

Reporter

2022 U.S. Dist. LEXIS 43516 *

WESCO INSURANCE COMPANY, Plaintiff, – against – PRIME PROPERTY & CASUALTY INSURANCE, INC., Defendant.

Core Terms

coverage, abstention, indemnify, district court, declaratory, subject matter jurisdiction, insured, parties, exercise jurisdiction, declaration, endorsement, abstain, driver

Counsel:  [*1] For Wesco Insurance Company, Plaintiff: Kevin E. Wolff, Kinney Lisovicz Reilly & Wolff P.C., New York, NY.

For Prime Property & Casualty Insurance, Inc., Defendant: Bruce Strikowsky, LEAD ATTORNEY, Schnader, Harrison, Segal & Lewis, New York, NY.

Judges: Edgardo Ramos, United States District Judge.

Opinion by: Edgardo Ramos

Opinion

OPINION & ORDER

Ramos, D.J.:

Wesco Insurance Company brought this action against Prime Property & Casualty Insurance, Inc. on October 29, 2020. Doc. 1. Wesco alleges that Prime improperly declined insurance coverage for JCA, which is insured by Prime, related to a car accident between a JCA vehicle and a vehicle insured by Wesco. Prime now moves to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 12(b)(7). Doc. 14.

The Court held oral argument and requested additional briefing on the issue of abstention. Docs. 19-21. For the reasons set forth below, the Court declines to exercise jurisdiction over this action and declines to rule on the motion to dismiss.

I. BACKGROUND

The following facts, unless otherwise indicated, are based on the allegations in the complaint, which the Court accepts as true for purposes of the instant motion. See, e.g., Koch v. Christie’s Int’l PLC, 699 F.3d 141, 145 (2d Cir. 2012).

Wesco is a Delaware insurance company with its principal place of [*2]  business in New York. Doc. 1 ¶ 1. Prime is an Illinois insurance company with its principal place of business in Utah. Id. ¶ 2.

Prime issued a commercial automobile liability insurance policy to JCA Transport Auto Export LLC for coverage from February 13, 2017 to February 13, 2018. Doc. 1 ¶ 5. The policy contains an MCS-90 endorsement which states that Prime will pay “any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance, or use of motor vehicles” operated in interstate commerce. Id. ¶ 12. The policy provides for payments of up to $1,000,000 on such claims. Id. This endorsement also states that Prime is not relieved “from liability or from the payment of any final judgment, within the limits of liability herein described” by any “condition, provision, stipulation or limitation contained in the policy.” Id. ¶ 13. As also relevant to this matter, the policy contains a provision by which Cesar Aguilar, JCA’s owner, agreed to indemnify Prime from any costs expended or owed as a result of claims involving a vehicle or driver who was not properly scheduled on the policy. Doc. 16-2 at 14.

Wesco issued a commercial automobile [*3]  liability insurance policy to B&B Millwork, Inc. for coverage from June 16, 2017 to June 16, 2018. Doc. 1 ¶ 6.

On September 25, 2017, a JCA vehicle operated with permission by Lamar Booker Jerrel, a JCA employee, struck the rear of a B&B vehicle operated by Tyrone Mejias, a B&B employee, on the Deegan Expressway in the Bronx, New York. Id. ¶ 7. JCA’s vehicle was being operated in interstate commerce. Id. ¶ 8. JCA notified Prime about the accident on December 18, 2017. Id. ¶ 9. Prime advised JCA and Jerrel that it would not defend or indemnify them against claims related to Mejias’ injuries from the accident. Id. Upon information and belief, Prime’s position is based on the “Scheduled Drivers Endorsement” provision of the policy that states that only identified and scheduled drivers are insured. Id. ¶ 11. Jerrel was not a scheduled driver on the accident date. Id.

After finding out that Prime would not defend or indemnify JCA, Mejias notified Wesco that he would pursue an uninsured motorist claim under the Wesco Policy’s “New Jersey Uninsured and Underinsured Motorist Endorsement.” Id. ¶ 10. Wesco then advised Prime in writing that Prime’s denial of coverage for JCA and Jerrel violates [*4]  New York law, including New York Vehicle and Traffic Law § 388. Id. ¶ 14. Wesco also advised Prime that even if they declined to defend or indemnify JCA or Jerrel, Prime would still be obliged to indemnify JCA for liability related to Mejias’ injuries because JCA’s vehicle was operating in interstate commerce at the time of the accident, triggering the MCS-90 endorsement. Id. ¶ 15. Prime has stated that, if that is the case, their obligation is excess to any obligation of Wesco to provide uninsured motorist coverage to Mejias. Id. ¶ 16. Wesco disagrees, stating that there is no priority of coverage issue at play because the policies insure different risks, with the sole obligation to defend and indemnify JCA and Jerrel resting with Prime. Id. ¶ 17.

Prime brought an action against JCA in Utah state court on June 15, 2020 seeking a declaration that the policy did not cover the accident because it involved an unscheduled driver, or in the alternative, that JCA is required to reimburse Prime for the resultant coverage payments. Doc. 16-1.

Mejias brought a personal injury action against JCA and Jerrel in the Bronx County Supreme Court in New York on September 18, 2020. Doc. 16-4. Notwithstanding its earlier position that it would [*5]  not defend JCA or Jerrel, Prime is paying the law firm of Ehrlich Gayner, LLC to serve as counsel for them. Doc. 15 at 11; Doc. 16-4; Doc. 16-5.

Wesco then filed this action on October 29, 2020, seeking a declaration that Prime’s denial of coverage is invalid under the policy and violates New York Vehicle and Traffic Law (NYVTL) § 388, resulting in an obligation to indemnify JCA for up to $1,000,000 for any judgment entered against JCA for Mejias’ injuries. Wesco also seeks a declaration that Prime’s obligation to defend and indemnify JCA is primary, and Wesco’s policy insures a different risk than Prime’s.

II. LEGAL STANDARD

A. 12(b)(1)

Federal Rule of Civil Procedure 12(b)(1) requires that an action be dismissed for lack of subject matter jurisdiction when the district court lacks the statutory or constitutional power to adjudicate the case. Fed. R. Civ. P. 12(b)(1). The party asserting subject matter jurisdiction carries the burden of establishing, by a preponderance of the evidence, that jurisdiction exists. Morrison v. Nat’l Australia Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)). “On a Rule 12(b)(1) motion challenging the district court’s subject matter jurisdiction, the court may resolve the disputed jurisdictional fact issues by referring to evidence outside of the pleadings . . . .” Zappia Middle East Constr. Co. Ltd. v. Emirate of Abu Dhabi, 215 F.3d 247, 253 (2d Cir. 2000). When evaluating a motion to dismiss for lack [*6]  of subject matter jurisdiction, the court accepts all material factual allegations in the complaint as true but does not draw inferences from the complaint favorable to the plainti??. J.S. ex rel. N.S. v. Attica Cent. Sch., 386 F.3d 107, 110 (2d Cir. 2004) (citing Shipping Fin. Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998)).

Where, as here, a party also seeks dismissal on Rule 12(b)(6) grounds, the court must consider the Rule 12(b)(1) motion ??rst, Baldessarre v. Monroe-Woodbury Cent. Sch. Dist., 820 F. Supp. 2d 490, 499 (S.D.N.Y. 2011), a??’d, 496 F. App’x 131 (2d Cir. 2012), because “disposition of a Rule 12(b)(6) motion is a decision on the merits, and therefore, an exercise of jurisdiction.” Chambers v. Wright, No. 05 Civ. 9915 (WHP), 2007 U.S. Dist. LEXIS 92729, 2007 WL 4462181, at *2 (S.D.N.Y. Dec. 19, 2007) (quoting Magee v. Nassau Cnty. Med. Ctr., 27 F. Supp. 2d 154, 158 (E.D.N.Y. 1998)).

III. DISCUSSION

The pending Utah state action warrants dismissal of this case pursuant to the doctrine of abstention. At the request of the Court, the parties submitted supplemental briefing on this issue. Docs. 20, 21.

a. Legal Standard

Federal courts may abstain from exercising jurisdiction over an action for which there is a parallel state court proceeding based on considerations of “wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.” Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S. Ct. 1236, 47 L. Ed. 2d 483 (1976) (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183, 72 S. Ct. 219, 96 L. Ed. 200, 1952 Dec. Comm’r Pat. 407 (1952)). A district court may sua sponte challenge subject matter jurisdiction, including through abstention principles. See F.D.I.C. v. Four Star Holding Co., 178 F.3d 97, 100 n.2 (2d Cir. 1999) (finding that a district court or appellate court could sua sponte address subject matter jurisdiction and applying Colorado River abstention [*7]  principles).

“An analysis of whether a court should abstain under Colorado River begins with a determination of whether the concurrent federal and state proceedings are ‘parallel’ in nature.” Fernandez v. City of New York, 2017 U.S. Dist. LEXIS 105574, 2017 WL 2894144, at *2 (S.D.N.Y. July 7, 2017) (citing Dittmer v. Cty. of Suffolk, 146 F.3d 113, 118 (2d Cir. 1998)). Federal and state proceedings are “parallel” for abstention purposes when “substantially the same parties are contemporaneously litigating substantially the same issue in another forum.” Niagara Mohawk Power Corp. v. Hudson River-Black River Regulating Dist., 673 F.3d 84, 100 (2d Cir. 2012). “Perfect symmetry of parties and issues is not required. Rather, parallelism is achieved where there is a substantial likelihood that the state litigation will dispose of all claims presented in the federal case.” Shields v. Murdoch, 891 F. Supp. 2d 567, 2012 WL 4097199, at *5 (S.D.N.Y. 2012) (quoting In re Comverse Tech., Inc., 06 Civ. 1849 (NGG) (RER), 2006 U.S. Dist. LEXIS 80195, 2006 WL 3193709, at *2 (E.D.N.Y. Nov. 2, 2006)) (emphasis in original) (internal quotation marks omitted).

Colorado River abstention is only warranted in “exceptional circumstances.” Colorado River, 424 U.S. at 813. “The mere fact of concurrent state and federal proceedings ‘does not, without more, warrant staying exercise of federal jurisdiction.’” All. of Am. Insurers v. Cuomo, 854 F.2d 591, 602 (2d Cir. 1988) (quoting Colorado River, 424 U.S. at 816). In determining whether abstention is warranted, courts consider six factors:

(1) whether the controversy involves a res over which one of the courts has assumed jurisdiction, (2) whether the federal forum is less inconvenient than the other for the parties, (3) whether staying or dismissing the federal action will avoid piecemeal [*8]  litigation, (4) the order in which the actions were filed, and whether proceedings have advanced more in one forum than in the other, (5) whether federal law provides the rule of decision, and (6) whether the state procedures are adequate to protect the plaintiff’s federal rights.

Woodford v. Cmty. Action Agency of Greene County, Inc., 239 F.3d 517, 522 (2d Cir. 2001) (internal citations omitted). “No one factor is necessarily determinative; a carefully considered judgment taking into account both the obligation to exercise jurisdiction and the combination of factors counselling against that exercise is required.” Royal & Sun All. Ins. Co. of Canada v. Century Int’l Arms, Inc., 466 F.3d 88, 94 (2d Cir. 2006) (quoting Colorado River, 424 U.S. at 818-19). The balance of these factors is “heavily weighted in favor of the exercise of jurisdiction.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1983). “Where a Colorado River factor is facially neutral, that ‘is a basis for retaining jurisdiction, not for yielding it.’” Niagara Mohawk Power Corp. v. Hudson River-Black River Regulating Dist., 673 F.3d 84, 101 (2d Cir. 2012) (quoting Woodford, 239 F.3d at 522).

The Second Circuit has stated “the primary context in which we have affirmed Colorado River abstention in order to avoid piecemeal adjudication has involved lawsuits that posed a risk of inconsistent outcomes not preventable by principles of res judicata and collateral estoppel. The classic example arises where all of the potentially liable defendants are parties in one lawsuit, but in the other lawsuit, one defendant seeks a declaration of nonliability [*9]  and the other potentially liable defendants are not parties.” Woodford, 239 F.3d at 522 (citing De Cisneros v. Younger, 871 F.2d 305, 308 (2d Cir. 1989); General Reinsurance Corp. v. Ciba-Geigy Corp., 853 F.2d 78, 81 (2d Cir. 1988)); Lumbermens Mutual Casualty Co. v. Connecticut Bank & Trust, 806 F.2d 411, 414 (2d Cir. 1986).

A district court has greater discretion to abstain where the plaintiff seeks declaratory judgment. See Wilton v. Seven Falls Co., 515 U.S. 277, 286, 115 S. Ct. 2137, 132 L. Ed. 2d 214 (1995) (in declaratory judgment actions, district courts have greater discretion to abstain “than that permitted under the ‘exceptional circumstances’ test of Colorado River“); see also Dittmer v. Cty. of Suffolk, 146 F.3d 113, 118 (2d Cir. 1998) (in declaratory judgment actions, “the district court ha[s] somewhat greater discretion to abstain” than in Colorado River). The Second Circuit has outlined five factors to consider before entertaining a declaratory judgment action:

(i) whether the judgment will serve a useful purpose in clarifying or settling the legal issues involved; (ii) whether a judgment would finalize the controversy and offer relief from uncertainty; (iii) whether the proposed remedy is being used merely for ‘procedural fencing’ or a ‘race to res judicata’; (iv) whether the use of a declaratory judgment would increase friction between sovereign legal systems or improperly encroach on the domain of a state or foreign court; and (v) whether there is a better or more effective remedy.

The New York Times Co. v. Gonzales, 459 F.3d 160, 167 (2d Cir. 2006) (citing Dow Jones & Co., Inc. v. Harrods Ltd., 346 F.3d 357, 359-60 (2d Cir. 2003)). “In deciding whether to exercise its permissive jurisdiction, a district court may consider [*10]  equitable, prudential, and policy arguments . . . and should examine the situation in its entirety.” Fleisher v. Phoenix Life Ins. Co., 858 F. Supp. 2d 290, 301 (S.D.N.Y. 2012).

b. Analysis

The Court declines to exercise jurisdiction over this declaratory judgment action. In light of the pending Utah state court action between Prime and JCA, this judgment will not serve a useful purpose or finalize the controversy to offer relief from uncertainty, since a judgment in this action could be contradictory to a judgment in the Utah action, if, for example, this Court finds that Prime has no coverage obligations and the Utah court finds that Prime does. See Jakobovits v. All. Life Ins. Co. of N. Am., No. 15 Civ. 9977, 2017 U.S. Dist. LEXIS 111471, 2017 WL 3049538, at *8 (S.D.N.Y. July 18, 2017) (dismissing declaratory judgment claim in part because declaration would not offer relief from uncertainty). Additionally, the Utah action was filed first, Doc. 16-1 at 15, and this action deals primarily with issues of state law that can adequately be decided in Utah state court.

Further, the Court hesitates to exercise jurisdiction in JCA’s absence, since the matter primarily concerns Prime’s insurance coverage of JCA and there is a risk that JCA could be subject to contradictory judgments. JCA cannot be added to this action through conventional means, since their presence in this action would destroy diversity [*11]  were they to be added as a defendant, Doc. 20 at 3; Doc. 21 at 6, and their interests are not perfectly aligned with Wesco’s were they to be added as a plaintiff under Rule 19(a)(2), Doc. 21 at 6. The Court also would not exercise supplemental jurisdiction over JCA as a third-party defendant due to the exceptional circumstance of the risk of inconsistent rulings with the Utah action. See Philip Morris Inc. v. Heinrich, No. 95 Civ. 328, 1998 U.S. Dist. LEXIS 3258, 1998 WL 122714, at *2 (S.D.N.Y. 1998) (declining to extend supplemental jurisdiction over third-party plaintiff’s claim pursuant to § 1367(c)(4) where there was “another action in existence in a New Jersey state court, addressing the same claims as those alleged in [the] third-party complaint.”).¹ Further, Prime and JCA indicated that Utah law would apply and selected Utah as their forum in the policy at issue, Doc. 16-1 at 18, and as a policy matter, the Court does not wish to disturb those preferences. See Roby v. Corporation of Lloyd’s, 996 F.2d 1353, 1361 (2d Cir. 1993) (explaining the “strong public policy in favor of forum selection . . . clauses.”). For all these reasons, the Court believes this matter will best be resolved in Utah, where Wesco may intervene.

IV. CONCLUSION

For the foregoing reasons, the case is dismissed. The Clerk of Court is respectfully directed to terminate the case.

It is SO ORDERED.

 [*12] Dated: March 11, 2022

New York, New York

/s/ Edgardo Ramos

Edgardo Ramos, U.S.D.J.

End of Document

---

¹ For these same reasons, the Court agrees with Prime’s arguments that JCA is a necessary and indispensable party. However, the Court does not dismiss this action on those grounds because Prime could remedy JCA’s absence by bringing third-party claims against JCA. See Ruffalo v. Coffaro, No. Civ. 87-1523 (JLC), 1989 U.S. Dist. LEXIS 19307, 1989 WL 83397, at *6 n.3 (E.D.N.Y. July 11, 1989), aff’d, 898 F.2d 137 (2d Cir. 1990), and aff’d, 898 F.2d 137 (2d Cir. 1990) (denying defendants’ motion to dismiss for failure to join an allegedly indispensable third party because “had defendants believed during the course of this litigation that [the third party] was indispensable to a proper adjudication of this matter, they could have brought her in as a third-party defendant, or moved to have her joined as a party pursuant to Rule 19(b) Fed.R.Civ.P.“.