Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnd-2_03-cv-02602/USCOURTS-alnd-2_03-cv-02602-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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 Although Plaintiff's complaint asks this court to determine that it has no duty to defend, in the September 15, 2005

conference call, Plaintiff's counsel conceded that the duty to defend was triggered upon Brian Homes' initial demand for

coverage because at least some of the claims asserted by the Homeowners are covered by the insurance policy in this case.

Plaintiff's opposition to Defendants' motion to dismiss raises – for the first time – the argument that Plaintiff no longer has

the duty to defend Brian Homes because Brian Homes has failed to assist and cooperate in the defense of the underlying state

court actions. (Doc. # 38). This claim is not part of this case. It was not pled as part of Plaintiff's declaratory judgment

because it did not exist at the time of filing. It does not arise out of the same transaction and occurrence as the claims asserted

by Plaintiff in this case. Further, Plaintiff has not amended its complaint to include this claim, and the court indicated at the

September 15, 2005 telephone conference that it would not allow amendments at this late date -- 18 months after the deadline

to amend had expired. (Doc. # 8). While not the subject of this litigation, Plaintiff is certainly free to file another declaratory

judgment action asserting this claim. 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

HARLEYSVILLE MUTUAL

INSURANCE COMPANY,

Plaintiff,

v.

BRIAN HOMES, INC., et al.,

Defendants.

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Case No.: 2:03-CV-2602-RDP

MEMORANDUM OPINION

The court has before it the Defendant Homeowners' Motion to Dismiss (Doc. # 37). The

motion has been fully briefed, and the court heard oral argument on the motion during a telephone

conference on September 15, 2005. For the reasons outlined below, the court finds that the motion

is due to be granted. 

This is an action for declaratory judgment. Plaintiff has asked this court to determine

whether it has a duty to indemnify Brian Homes, Inc. ("Brian Homes") in the event that judgment

is rendered against Brian Homes in the underlying state court actions brought by the Homeowners

(who are Defendants in this case). Plaintiff has not challenged the duty to defend in this case,1 and

FILED

 2005 Sep-16 AM 10:26

U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 2:03-cv-02602-RDP Document 40 Filed 09/16/05 Page 1 of 3
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Plaintiff has taken up the defense of Brian Homes in the underlying state court actions. Accordingly,

the only issue before the court is whether Plaintiff has a duty to indemnify Brian Homes. 

This court's judicial authority is limited by the Constitution to resolution of "cases" and

"controversies." U.S. Const. art. III, § 2. This requirement applies equally to cases asserted under

the Declaratory Judgment Act. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41 (1937) (finding

that the Act, "in its limitation to 'cases of actual controversy,' manifestly has regard to the

constitutional provision, [and thus] is operative only in respect to controversies which are such in

the constitutional sense"). Moreover, courts have great discretion in the exercise of jurisdiction

under the Declaratory Judgment Act. The Act provides that a court "may declare the rights and other

legal relations of any interested party seeking this declaration," 28 U.S.C.A. § 2201 (emphasis

added), and therefore it is merely "an enabling Act, which confers a discretion on the courts rather

than an absolute right upon the litigant." Public Serv. Commission v. Wycoff Co., 344 U.S. 237, 241

(1952). 

Against this backdrop, this court must determine whether it is appropriate to assert

jurisdiction under the Declaratory Judgment Act over Plaintiff's duty to indemnify claims in this

case. The court agrees with the Middle District of Alabama's finding that "a determination of the

duty to indemnify cannot be made at a preliminary stage in the proceedings, when it is still possible

for the plaintiff in the underlying lawsuit to change the theory of liability and assert a claim that is

covered by the policy at issue." Guaranty Nat. Ins. Co. v. Beeline Stores, Inc., 945 F.Supp. 1510,

1514 (M.D. Ala.,1996) (citing Ladner & Co., Inc. v. Southern Guaranty Ins. Co., 347 So.2d 100, 104

(Ala.1977)). Moreover, the court notes that Brian Homes could prevail in the state court lawsuits

Case 2:03-cv-02602-RDP Document 40 Filed 09/16/05 Page 2 of 3
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underlying this case, which would render moot the issue of the duty to indemnify and result in a

waste of the judicial resources expended on this case. 

Accordingly, this court determines that the issue of indemnification – the only issue in this

case – is not sufficiently ripe to present a "case" or "controversy" and, therefore, Plaintiff's claims

are not ripe for adjudication. Alternatively, and in any event, the court declines to exercise its

discretion under the Declaratory Judgment Act to resolve this matter. See Nationwide Insurance v.

Zavalis, 52 F.3d 689, 693 (7th Cir.1995) ("[T]he duty to indemnify is not ripe for adjudication until

the insured is in fact held liable in the underlying suit."). 

Therefore, the court will dismiss this case, without prejudice to refiling if the issues presented

herein become ripe for adjudication. 

DONE and ORDERED this 16th day of September, 2005.

___________________________________

R. DAVID PROCTOR

UNITED STATES DISTRICT JUDGE 

Case 2:03-cv-02602-RDP Document 40 Filed 09/16/05 Page 3 of 3