United States District Court, W.D. Arkansas, El Dorado Division
FIRST STATE INSURANCE COMPANY and NEW ENGLAND REINSURANCE CORPORATION PLAINTIFFS
v.
PULMOSAN SAFETY EQUIPMENT CORPORATION, et al. DEFENDANTS/ THIRD-PARTY PLAINTIFFS
v.
LEXINGTON INSURANCE COMPANY, et al. THIRD-PARTY DEFENDANTS
ORDER
SUSAN
O. HICKEY UNITED STATES DISTRICT JUDGE
Before
the Court is the issue of whether this case is moot and
should be dismissed for lack of justiciability. Following the
Court's directive to brief the issue, Third-Party
Plaintiffs Vickie Bell; Jonathan Bell; and Phillip B. Bell,
Jr. (“the Bells”); Third-Party Defendants
Patricia Weiss, Ellen Weiss, and Judith Sue Weiss (“the
Weisses”); Third-Party Defendant Lexington Insurance
Company (“Lexington”); and Plaintiffs First State
Insurance Company and New England Reinsurance Corporation
separately filed briefs regarding justiciability. (ECF Nos.
90, 91, 92, 93). The Court finds the matter ripe for
consideration.
I.
BACKGROUND
On
October 17, 2013, the Bells filed a separate
products-liability suit in this Court[1] against multiple defendants,
including Defendant Pulmosan Safety Equipment Corporation
(“Pulmosan”).
On
August 29, 2016, the Court entered default judgment in
Bell in favor of the Bells and against Pulmosan in
the amount of $1, 327, 569.00 (“the Default
Judgment”). The Court denied Pulmosan's subsequent
motion to vacate the Default Judgment on the ground that the
Bells improperly served Pulmosan. Pulmosan then appealed that
ruling to the United States Court of Appeals for the Eighth
Circuit.
On June
5, 2017, Plaintiffs filed this declaratory-judgment action
pursuant to the Declaratory Judgment Act, 28 U.S.C.
§§ 2201, et seq., seeking declarations
that they have exhausted the applicable aggregate limits of
certain insurance policies issued to Pulmosan and that they
have no further defense or indemnity obligations under those
insurance policies for certain products-liability lawsuits
filed against Pulmosan, including Bell. The Bells
answered Plaintiffs' complaint and filed various
counterclaims, crossclaims, and third-party claims pursuant
to the Declaratory Judgment Act, seeking declarations that
Plaintiffs' insurance policies are not exhausted or,
alternatively, that various third-party insurance companies
improperly exhausted the limits of Plaintiffs' policies
and thus should defend and indemnify said policies. On
January 23, 2018, the Court stayed the case at bar pending
the Eighth Circuit's resolution of the appeal taken in
Bell.
On
October 9, 2018, the Eighth Circuit issued its opinion and
judgment in Bell, reversing the Court's order
denying Pulmosan's motion to vacate the Default Judgment
and remanding Bell to this Court for further
proceedings. On November 16, 2018, the Court granted
Pulmosan's motion to vacate in Bell, in
accordance with the Eighth Circuit's instructions, and
vacated the Default Judgment. On December 11, 2018, the Court
in Bell dismissed the Bells' claims against
Pulmosan without prejudice pursuant to Federal Rule of Civil
Procedure 4(m) and closed that case.
Also on
December 11, 2018, the Court ordered the parties to this
action to submit briefs discussing whether this case is now
moot and should be dismissed for lack of jurisdiction in
light of the Court's vacatur of the Default Judgment and
subsequent dismissal of Bell. On January 18, 2019,
the Bells, the Weisses, Lexington, and Plaintiffs separately
filed briefs regarding this issue. (ECF Nos. 90, 91, 92, 93).
Plaintiffs maintain that a justiciable controversy still
exists and, thus, this case should not be dismissed as moot.
The other parties, to the extent that their briefs are
responsive, [2] argue that this case is now moot and
should be dismissed.
II.
DISCUSSION
Plaintiffs
argue that, despite the vacatur of the Default Judgment and
the dismissal of Bell, a justiciable controversy
still exists in this matter and, thus, this case should not
be dismissed as moot. The other parties assert that this case
is now moot and should be dismissed.
“Federal
courts are courts of limited jurisdiction and can only hear
actual ‘cases or controversies' as defined under
Article III of the Constitution.” Neighborhood
Transp. Network, Inc. v. Pena, 42 F.3d 1169, 1172 (8th
Cir. 1994). “When a case . . . no longer presents an
actual, ongoing case or controversy, the case is moot and the
federal court no longer has jurisdiction to hear it.”
Id.; see also GMAC Commercial Credit LLC v.
Dillard Dep't Stores, Inc., 357 F.3d 827, 828 (8th
Cir. 2004) (instructing that “[a]ny party or the court
may, at any time, raise the issue of subject matter
jurisdiction”). This requirement applies to all stages
of the litigation, Pena, 42 F.3d at 1172, and
“applies with equal force to actions for declaratory
judgment as it does to actions seeking traditional coercive
relief.” Marine Equip. Mgmt. Co. v. United
States, 4 F.3d 643, 646 (8th Cir. 1993); see also
Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270,
272 (1941) (holding that, under the Declaratory Judgment Act,
28 U.S.C. §§ 2201-2202, a district court is
“without power to grant declaratory relief unless [an
actual] controversy exists.”).
“The
test to determine whether there is an actual controversy
within the meaning of the Declaratory Judgment Act is whether
there is a substantial controversy between the parties having
adverse legal interests, of sufficient immediacy and reality
to warrant the issuance of a declaratory judgment.”
Marine Equip. Mgmt. Co., 4 F.3d at 646 (internal
quotation marks omitted). “A justiciable controversy is
thus distinguished from a difference or dispute of a
hypothetical or abstract character; from one that is academic
or moot.” Cass Cnty. v. United States, 570
F.2d 737, 739 (8th Cir. 1978).
The
determination of whether an actual controversy exists is made
on a case-by-case basis. Marine Equip. Mgmt. Co., 4
F.3d at 646. “The controversy must be live throughout
the course of the litigation and must exist at the time of
the district court's hearing of the matter and not simply
when the case is filed.” Id. Accordingly,
federal jurisdiction is not created by a previously existing
dispute but, rather, “[t]o present an actual
controversy sufficient to justify the exercise of
jurisdiction, the threat of enforcement must have some sort
of immediate coercive consequences.” Id. at
647.
“An
Article III case or controversy may exist where a private
party threatens an enforcement action that would cause an
imminent injury.” McLeod v. Gen. Mills, Inc.,
856 F.3d 1160, 1166 (8th Cir. 2017). In this case, the Bells
do not appear to presently threaten any enforcement action
that would cause Plaintiffs imminent injury. As previously
discussed, a live controversy undoubtedly existed between the
parties until the Court vacated the Default Judgment in
Bell and dismissed that case. Plaintiffs sought a
declaratory judgment that they exhausted the applicable
aggregate limits of certain insurance policies issued to
Pulmosan and that they have no further defense or indemnity
obligations under those policies for certain
products-liability lawsuits filed against Pulmosan, including
Bell. Likewise, the Bells contended that the
policies were either not exhausted or were improperly
exhausted, and sought a declaratory judgment holding one or
more of the parties to this case liable for the amount of the
Default Judgment. However, the Court subsequently vacated the
Default Judgment in accordance with the Eighth Circuit's
instruction and dismissed Bell based on the
Bells' failure to timely serve Pulmosan in that case. The
Bells have ...