Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-1_11-cv-00673/USCOURTS-almd-1_11-cv-00673-2/pdf.json

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

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IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

SOUTHERN DIVISION

TITLE PRO CLOSINGS, L.L.C.,

Plaintiff,

v.

TUDOR INSURANCE COMPANY,

Defendant & Third-Party Plaintiff,

Case No. 1:11-cv-673-MEF

(WO—Do not publish)

v.

BRUCE R. HALL, CHICAGO TITLE

INSURANCE COMPANY, et al.,

Third-Party Defendants.

MEMORANDUM OPINION AND ORDER

I. INTRODUCTION

The Court has pending before it a bevy of motions filed by the horde of parties

pursuing this case. The pending pleadings include a Motion to Realign the Parties (Doc. #

23) filed by the defendant and third-party plaintiff, Tudor Insurance Company (“Tudor”);

a Motion to Strike Third Party Complaint (Doc. # 28) filed by the plaintiff, Title Pro

Closings, L.L.C. (“Title Pro”); a Motion to Dismiss (Doc. # 37) filed by third-party

defendant Bruce Hall (“Hall”); a Motion to Dismiss (Doc. # 48) filed by third-party

defendant Chicago Title Insurance Company (“Chicago Title”); and, finally, a Motion to

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Dismiss (Doc. # 49) filed and joined by a number of individual third-party defendants.

Because the Court warned Tudor that adding new claims or parties would cause the Court

to revisit its earlier decision to exercise its discretionary authority to hear the parties’

declaratory judgment actions (see Doc. # 21), Title Pro’s motion to strike and the motions

to dismiss filed by the third-party defendants will be GRANTED IN PART and

DENIED IN PART. They will be granted to the extent necessary to return the claims and

parties to state court, which is the more appropriate venue. The motions will otherwise be

denied as moot.

II. BACKGROUND

This case had a thorny procedural history before the filing of the five motions now

before the Court. Yet even further into the briar patch the parties have gone. Finding the

way out of the thicket will require first describing the underlying state court actions and

how they came to be in federal court. Next, it will be necessary to discuss a related action

that Tudor filed in federal court and has since dismissed. And finally, a brief description

of the posturing in the case at hand, along with an overview of the pending motions, will

be necessary too.

A. The Peterses’ state court lawsuit

This adventure began on April 27, 2010, when Robert and Bethanie Peters (“the

Peterses”) filed suit against Title Pro and another defendant, Tammy Peters,1

 in the

1

 It is unclear whether Robert and Bethanie Peters are related to Tammy Peters.

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Circuit Court of Houston County, Alabama.2

 The Peterses’ various claims against Title

Pro and Tammy Peters sounded in negligence, breach of contract, and fraud. Shortly after

the Peterses filed suit, Title Pro sent its insurer, Tudor Insurance Company, a letter

informing Tudor about the Peterses’ claims. Even though the insurer had not been joined

in the action, Tudor filed a motion to stay the proceedings, which the state court denied.

But Tudor would get to participate soon enough: Title Pro filed a misnamed “CrossClaim for Declaratory Judgment” against the insurer on August 27, 2010, thereby joining

Tudor in the action as a third-party defendant.

On July 27, 2011—a little less than a year after impleading Tudor—Title Pro filed

a motion to sever its declaratory judgment action against Tudor and have it set for trial. In

effect, Title Pro’s severance motion sought to cleave its declaratory action against Tudor

from the underlying suit brought by the Peterses so as to have the question of insurance

coverage decided separately. The state circuit court granted the motion on August 7,

2011, and calendared the case for trial. Tudor then removed the now-severed case to

federal court. Title Pro moved to remand the action, but this Court denied the motion,

finding that Tudor properly removed the case and that the Court should exercise its

discretionary authority under the Declaratory Judgment Act. See Title Pro Closings,

L.L.C. v. Tudor Ins. Co., ___ F. Supp. 2d ___, No. 1:11-cv-673, 2012 WL 125117 (M.D.

Ala. Jan. 17, 2012).

2

 From as best the Court can tell, the state court case is Robert Peters v. Title Pro Closings,

L.L.C., 10-cv-144.

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B. The other state court lawsuits against Title Pro

In addition to the state court suit filed by the Peterses, a number of other plaintiffs

sued Title Pro and Tammy Peters in the Circuit Court of Houston County, Alabama, right

around the same time.3

 On May 28, 2010, Tudor filed a declaratory judgment action in

the United States District Court for the Middle District of Alabama. The case was

assigned to Judge Thompson and styled Tudor Insurance Company vs. Title Pro

Closings, L.L.C., No. 1:10-cv-483. In its complaint, Tudor joined Title Pro as a defendant

along with the Peterses, Chicago Title Insurance, and the various state court plaintiffs.

Tudor sought a declaration that it owed no duty to defend and indemnify Title Pro as to

the claims filed by the state court plaintiffs.

Meanwhile, in state court, the individual plaintiffs amended their complaints to

add attorney Bruce Hall as a defendant. They alleged that Hall, as a principal of Title Pro,

caused their losses. Hall filed a declaratory judgment action asking for a declaration that

Tudor had the duty to defend and indemnify him. But due to the pending action in Judge

Thompson’s court dealing with the same question, Tudor filed a motion to dismiss Hall’s

declaratory action, which Judge Moulton, the state court judge presiding over the case,

granted on September 1, 2011.

3

 The state court suits pending in the Circuit Court of Houston County, Alabama, are: Jacob

Alvestad v. Title Pro Closings, L.L.C., 10-cv-181; Jacqui Burgoon v. Title Pro Closings, L.L.C., 10-cv182; Chester Nolin v. Title Pro Closings, L.L.C., 10-cv-134; William Kirchner v. Title Pro Closings,

L.L.C., 10-cv-209; Ryan B. Dorminey v. Title Pro Closings, L.L.C., 10-cv-359; and Debora R. Guice v.

Title Pro Closings, L.L.C., 10-cv-301.

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Back in federal court, on November 4, 2011, Tudor asked Judge Thompson to

grant summary judgment in its favor, as did Chicago Insurance Company. Judge

Thompson denied both motions on January 9, 2012, and set a trial date. Two days later,

Tudor developed cold feet and filed a motion to dismiss its declaratory judgment action

without prejudice. Judge Thompson granted the motion.

After Tudor dismissed the case, Hall revived his state court declaratory judgment

action, asking Judge Moulton to rescind the circuit court’s previous order, which had

dismissed Hall’s claim due to the pendency of the same claim before Judge Thompson.

On February 2, 2012, Judge Moulton granted Hall’s motion and reinstated his request for

a declaration on Tudor’s duty to defend and indemnify him. Presumably Judge Moulton

reasoned that, because the claim was no longer pending in federal court, he could go

ahead and hear it in state court.

C. The posturing in this case

On February 10, 2012—less than a month after Tudor dismissed the declaratory

judgment action pending before Judge Thompson, and eight days after Hall revived his

declaratory judgment claim—the insurer attempted to assert the exact same claims in this

case by filing a third-party complaint. Tudor added as third-party defendants the various

state court plaintiffs who had sued Title Pro, Tammy Peters, and Bruce Hall. (Doc. # 22.)

He also added Hall himself and Chicago Title Insurance Company. (Id.) Tudor added

these litigants because, “the [t]hird[-][p]arty [d]efendants clearly have an interest in the

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subject of the action, and the disposition of this action in their absence may leave the

original parties to this lawsuit subject to the risk of incurring inconsistent obligations.”

(Id. at ¶ 22.) Having added all the necessary parties, Tudor sought a declaration that “it

no longer has any duty to defend Title Pro Closings . . . or R. Bruce Hall with respect to

civil litigation filed in the Circuit Court of Houston County, Alabama” and that it “has no

duty to indemnify” them. (Id. at ¶ 23.)

Tudor’s third-party complaint prompted the five motions now pending before the

Court. First, Tudor filed a Motion to Realign Parties (Doc. # 23), asking the Court to

rearrange the litigants on the side of the “v” corresponding to their respective interests.

Second, Title Pro filed an Objection To and Motion to Strike Defendant’s Third Party

Complaint (Doc. # 28) that essentially asks to have the case sent back to state court. To

support its position, Title Pro discusses how Hall revived his state court declaratory

judgment action after Tudor voluntarily dismissed its case before Judge Thompson, and

from there argues that state court is the proper place to have the insurance coverage

issues litigated due to the pendency of Hall’s motion. Third, Bruce Hall filed a Motion to

Dismiss (Doc. # 37) that incorporates the arguments in Title Pro’s Motion to Strike.

Fourth, Chicago Title Insurance Company filed a Motion to Dismiss Tudor Insurance

Company’s Third Party Complaint (Doc. # 48). Chicago Title Insurance argued, among

other things, that the Court should decline to exercise its discretionary authority to decide

Tudor’s declaratory judgment action and instead leave the resolution of the issues to

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Alabama’s state courts. Fifth, and finally, the state court plaintiffs that were joined as

third-party defendants in Tudor’s third-party complaint filed a Motion to Dismiss (Doc. #

49) adopting the arguments made by Title Pro in its Motion to Strike and by Chicago

Title Insurance in its Motion to Dismiss.

The parties raised a number of collateral issues in these various motions, but the

Court will discuss only whether it should exercise its discretionary authority to decide

Tudor’s request for a declaration that it owes neither a defense nor indemnity to Title Pro

and Bruce Hall.

III. DISCUSSION

Under the Declaratory Judgment Act, a federal court “may declare the rights and

other legal relations of any interested party seeking” such a declaration. 28 U.S.C. § 2201

(emphasis added). Given the permissive language in the Act, the Supreme Court, starting

with its decision in Brillhart v. Excess Insurance Co. of America, 316 U.S. 491 (1942),

has “repeatedly characterized the Declaratory Judgment Act as ‘an enabling Act, which

confers a discretion on the courts rather than an absolute right upon the litigant.’”

Assurance Co. of Am. v. Legendary Home Builders, 305 F. Supp. 2d 1266, 1270 (S.D.

Ala. 2003) (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995)). In other

words, when it passed the Act, “Congress sought to place a remedial arrow in the district

court’s quiver; it created an opportunity, rather than a duty, to grant a new form of relief

to qualifying litigants.” Wilton, 515 U.S. at 288. Hence “there is . . . nothing automatic or

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obligatory about the assumption of ‘jurisdiction’ by a federal court to hear a declaratory

judgment action,” and “the normal principle that federal courts should adjudicate claims

within their jurisdiction yields to considerations of practicality and wise judicial

administration.” Legendary Home Builders, 305 F. Supp. 2d at 1270 (citing Guar. Nat’l

Ins. v. Beeline Stores, 945 F. Supp. 1510, 1514 (M.D. Ala. 1996) (M. Thompson, J.)).

Comity concerns also factor into the equation. Indeed, the Brillhart Court made

clear that federal courts should defer to prior pending state court actions to avoid

“[g]ratuitous interference with the orderly and comprehensive disposition of a state court

litigation.” 315 U.S. at 495. Federal courts should therefore err on the side of dismissing

declaratory judgment actions in favor of pending state court suits involving the same

parties and the same issues of state law.

Here, the Court initially decided to exercise its discretionary authority to hear the

declaratory judgment action removed by Tudor. See Title Pro Closings, L.L.C. v. Tudor

Ins. Co., ___ F. Supp. 2d ___, No. 1:11-cv-673-MEF, 2012 WL 125117 (M.D. Ala. Jan

17, 2012). At the time, the Peterses had a pending state court action against Title Pro on

liability and damages, and Title Pro had pending a declaratory judgment action against

Tudor in federal court. Thus the two cases had different sets of adverse parties and dealt

with two different issues. Since then, however, the circumstances have changed: Tudor

has voluntarily dismissed the declaratory judgment action pending before Judge

Thompson, Hall has revived his state court declaratory judgment action, and Tudor has

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filed a third-party declaratory judgment complaint adding Hall, the state court plaintiffs,

and Chicago Title Insurance. Each one of these procedural developments favors

dismissing the actions now pending before this Court and allowing the state court to

decide the disputes.

The Court exercised its discretionary authority over the removed declaratory

judgment action because there was “no pending declaratory judgment action in the

underlying suit.” Title Pro, ___ F. Supp. 2d at ___, 2012 WL 125117 at *4. Indeed, the

Court relied on how federal courts “routinely adjudicate[] coverage disputes brought

under the Declaratory Judgment Act when there is an underlying state court cases on the

merits, which involves different issues and different parties (as is the case here).” Id. But

this is no longer the case. Once Tudor dismissed its case before Judge Thompson, it

allowed Hall to revive his state court declaratory judgment action. And Hall took full

advantage of the opportunity: he successfully revived his claim on February 2, 2012. So

by the time Tudor filed its third-party complaint in this Court ten days later, there was

already a state declaratory judgment action pending between the insurer and Hall. As a

result, this case no longer involves different issues and different parties than the

underlying state court case. These developments vitiate the Court’s reasoning for initially

deciding that the removed declaratory judgment action “falls outside of Brillhart’s

reach.” Title Pro, ___ F. Supp. 2d at ___, 2012 WL 125117 at *4.

Equally important, if Tudor is allowed to proceed with its third-party declaratory

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judgment action, it would get a second crack at a case it voluntarily dismissed before

Judge Thompson after pursuing it past the summary judgment stage. Allowing the insurer

to do this would sanction judge shopping, encourage procedural gamesmanship, and let

multiply duplicative litigation, thereby ignoring “considerations of practicality and wise

judicial administration,” Beeline Stores, 945 F. Supp. at 514, which the Court must

account for when deciding to exercise its discretionary authority. Discouraging these

inefficient litigation tactics4

 is yet another sound reason for dismissing Tudor’s claim.

Accordingly, the Court will grant the motions to dismiss so as to have the parties litigate

their disputes once and for all in state court.5

IV. CONCLUSION

Having fully considered the parties’ briefs, and for the reasons discussed above, it

is hereby ORDERED as follows:

1. Title Pro’s Motion to Strike Third Party Complaint (Doc. # 28) is

GRANTED IN PART and DENIED AS MOOT IN PART. It is

4

 The docket sheet had over 130 entries and the parties had sunk almost two years worth of

litigation costs into the matter when Tudor voluntarily dismissed the case after Judge Thompson set it for

trial.

5

 Tudor makes a number of arguments in an attempt to avoid this result, claiming that it “is

entitled” to litigate these issues in federal court; that “Title Pro would have this Court slam the doors on

Tudor,” which would “prevent Tudor[] from exercising its due process rights to have a judicial

determination as to whether . . . there is coverage under its policy of insurance”; and that “Alabama

plainly does not have a strong interest in adjudicating Tudor’s duties in state court.” (Doc. # 38 at 11–12.)

These arguments lack merit. Tudor has no right to avail itself of a discretionary remedy. Nor will the

insurer have its due process rights denied by having to litigate these claims in state court. Alabama,

moreover, has an interest in adjudicating disputes under its law, which is precisely what this case turns

on.

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granted to the extent that the motion asks for the Court to decline to

exercise its discretionary authority over the matter. It is otherwise

denied as moot as the state court will have jurisdiction to decide the

other arguments made therein.

2. Bruce Hall’s Motion to Dismiss (Doc. # 37), which incorporates

Title Pro’s Motion to Strike, is likewise GRANTED IN PART and

DENIED AS MOOT IN PART. It is granted to the extent that it

asks for Tudor’s complaint to be dismissed and for the Court to

decline to exercise its discretionary authority over the matter. It is

otherwise denied as moot.

3. Chicago Title Insurance Company’s Motion to Dismiss Tudor

Insurance Company’s Third Party Complaint (Doc. # 48) is also

GRANTED IN PART and DENIED AS MOOT IN PART. It is

granted to the extent that it asks the Court to decline to exercise its

discretionary authority over the matter. The rest of the requests for

relief found in the motion are denied as moot.

4. The assorted state court plaintiffs’ Motion to Dismiss Third-Party

Complaint (Doc. # 49) is too GRANTED IN PART and DENIED

AS MOOT IN PART. It is granted to the extent that it asks the

Court to decline to exercise its discretionary authority over the

matter; it is otherwise denied as moot.

5. Tudor Insurance Company’s Motion to Realign the Parties (Doc. #

23) is DENIED AS MOOT.

DONE this the 3rd day of July, 2012.

 /s/ Mark E. Fuller 

 UNITED STATES DISTRICT JUDGE

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