IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

NEW HAMPSHIRE INSURANCE )

COMPANY, )

 )

Plaintiff, )

 )

v. ) CIVIL ACTION 09-0489-WS-B

 )

WIREGRASS CONSTRUCTION CO. )

INC., )

 )

Defendant. )

ORDER

This matter is before the Court on the defendant’s motion to dismiss and the

defendant’s alternative motion to stay. (Docs. 13, 31). The parties have filed briefs in

support of their respective positions, (Docs. 14, 21, 25, 30, 31, 33), and the motions are

ripe for resolution. After carefully considering the foregoing and other relevant material

in the file, the Court concludes that both motions are due to be denied.

BACKGROUND

Blue Water Off Shore, LLC (“Blue Water”) owned the TAR BABY, a 61-foot

yacht (“the Vessel”). Blue Water obtained a policy of insurance on the Vessel (“the

Policy”), with New Hampshire Insurance Company (“New Hampshire”) as the insurer. 

On the night of August 1, 2007, with Captain James Cooper, an employee of Wiregrass

Construction Co. (“Wiregrass”), at the helm, the Vessel allided with a submerged wall,

was towed to port, and was judged a total loss. 

New Hampshire filed a declaratory judgment action in this Court, seeking a

declaration that coverage is excluded because Cooper was operating the Vessel under the

influence of alcohol at the time of the allision. Blue Water counterclaimed for breach of

contract and bad faith, seeking policy limits of $1.75 million and additional damages. 

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The jury awarded Blue Water $1.75 million for breach of contract. New Hampshire

appealed in August 2009, and the case remains before the Eleventh Circuit. New

Hampshire filed this action against Wiregrass in July 2009. 

All three counts of the amended complaint allege that Cooper acted negligently,

recklessly or wantonly. Count One alleges that Wiregrass is vicariously liable for

Cooper’s negligence. Count Two alleges that Wiregrass negligently (or wantonly)

entrusted the Vessel to Cooper, and Count Three alleges that Wiregrass negligently (or

wantonly) hired, trained, supervised, managed or instructed Cooper concerning operation

and navigation of the Vessel.

DISCUSSION 

I. Motion to Dismiss.

Wiregrass asserts that the Court lacks subject matter jurisdiction, both because

New Hampshire lacks standing and because its claim is not ripe. Wiregrass also asserts

that New Hampshire is precluded from pursuing Wiregrass based on collateral estoppel

and estoppel. 

A. Subject Matter Jurisdiction.

Wiregrass claims that New Hampshire lacks standing both because it is not the real

party in interest and because it has suffered no injury, and it argues that New Hampshire’s

claim is not ripe because it is based upon a contingent future event. (Doc. 14 at 5-10). 

Wiregrass’ jurisdictional arguments all hinge on a single point: that New Hampshire has

not paid Blue Water the $1.75 million awarded by the jury. This is correct as far as it

goes, but it does not go far enough. New Hampshire may not have paid that judgment,

but it has satisfied a different judgment, entered against Blue Water in favor of the entity

that towed the Vessel, by paying $27,379.03 to the prevailing salvor. (Doc. 21, Exhibit 4,

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Wiregrass acknowledges that the Court may consider such evidence. (Doc. 14 at

4 n.1).

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¶ 5; id., Exhibit 5).1 As to this payment, New Hampshire has suffered injury, its loss is

not contingent on any future event, and it is the real party in interest to recover the

amount of the judgment. 

Wiregrass disputes none of these points. Instead, it insists that New Hampshire’s

payment is irrelevant because the amended complaint does not seek recovery of this sum

but only of the $1.75 million. (Doc. 25 at 3). The amended complaint, however, alleges

that the misconduct of Wiregrass and Cooper caused the Vessel “to be damaged, sunk and

lost,” notes the subsequent towing of the disabled Vessel, and demands judgment of

Wiregrass “for compensatory and punitive damages in an amount to be demonstrated at

the trial of this cause.” (Doc. 6 at 3, 4 (emphasis added)). Wiregrass has not explained

how such allegations can be construed as limiting the compensatory relief sought to $1.75

million. 

New Hampshire identifies other elements of out-of-pocket expenses it has incurred

due to the alleged wrongdoing of Wiregrass and Cooper: (1) attorney’s fees defending the

salvage suit ($59,218.75); (2) supersedeas bond premium in the declaratory judgment

action ($21,875); (3) Vessel storage fees in an unspecified amount; and (4) attorney’s fees

and costs in defense of the declaratory judgment action, also in an unspecified amount. 

(Doc. 21 at 4-6; id., Exhibit 4, ¶¶ 4-6). Given the open-ended demand for compensatory

damages in the amended complaint, Wiregrass cannot prevail simply by insisting that

New Hampshire does not seek recovery of these elements of damage.

In its reply brief, Wiregrass appears to suggest that, despite the clear ripeness of

the claim as discussed above, the action must be dismissed because that portion of the

claim concerning the $1.75 million depends on a future contingent event, i.e., the

outcome of New Hampshire’s appeal. (Doc. 25 at 6). Wiregrass offers no authority or

other support for the proposition that a ripe claim must nevertheless be dismissed as

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District courts, including this one, ordinarily do not consider arguments raised for

the first time on reply. See Park City Water Authority v. North Fork Apartments, L .P.

2009 WL 4898354 at *1 n.2 (S.D. Ala. 2009) (citing cases from over 40 districts applying

the rule in 2009 alone). However, because the issue goes to the Court’s subject matter

jurisdiction, Elend v. Basham, 471 F.3d 1199, 1206 (11th Cir. 2006), the Court addresses

the argument.

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unripe if additional damages may accrue in the future, and the Court will not endeavor to

supply the deficiency. 

In its reply brief, Wiregrass also introduces a new argument: that New Hampshire

lacks standing because its losses are not “fairly traceable” to Wiregrass’ alleged conduct. 

(Doc. 25 at 4-5).2

 Cooper, who wrecked the Vessel, was Wiregrass’ employee, and the

amended complaint alleges that Wiregrass is liable: (1) vicariously, as the employer; (2)

directly, for negligently entrusting the Vessel to Cooper; and (3) directly, for negligently

training, supervising, etc. its employee. All of New Hampshire’s damages flow directly

from the loss of the Vessel, and those losses are far more than “fairly traceable” to

Wiregrass’ alleged actions and omissions as described above. That Cooper, the local

agency that allegedly failed to deliver the Policy, and New Hampshire itself may have

contributed to those losses does not, as Wiregrass believes, (id.), sever the causal

connection for purposes of standing analysis. 

B. Collateral Estoppel.

All three counts of the amended complaint depend upon the allegation that Cooper

negligently or wantonly operated the Vessel, resulting in its destruction. Wiregrass

argues that the verdict in the declaratory judgment action definitively resolved the issue

of Cooper’s negligence vel non and that New Hampshire is collaterally estopped from

revisiting that issue in this lawsuit.

As Wiregrass acknowledges, one element of collateral estoppel or issue preclusion

is that “the determination of the issue in the prior litigation must have been a critical and

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necessary part of the judgment in that action.” CSX Transportation, Inc. v. Brotherhood

of Maintenance of Way Employees, 327 F.3d 1309, 1317 (11th Cir. 2003) (internal quotes

omitted). An issue is “determin[ed]” only if it is resolved in the prior litigation, and it is

“critical and necessary” to the judgment only if it is the central holding and not an

alternative holding or something short of a holding. E.g., Pleming v. Universal-Rundle

Corp., 142 F.3d 1354, 1359 (11th Cir. 1998) (issue must be “resolved”); S.E.L. Maduro,

Inc. v. M/V Antonio de Gastaneta, 833 F.2d 1477, 1483 (11th Cir. 1987 (issue must be

“adjudicated”); Dennis v. United States Bureau of Prisons, 325 Fed. Appx. 744, 747 (11th

Cir. 2009) (an alternate holding does not support collateral estoppel).

Wiregrass argues that the jury necessarily found that Cooper was not negligent,

because New Hampshire asserted that coverage was excluded by his negligence and New

Hampshire lost the case. Wiregrass’ position misapprehends what occurred in the

declaratory judgment action. Having presided over the trial of that action, the Court

knows the accuracy of New Hampshire’s characterization of the issues presented to the

jury. New Hampshire argued that coverage was precluded by two specific exclusions,

one of which was for lack of reasonable care in the operation of the Vessel. Blue Water

responded that the exclusions did not apply, but it also argued that New Hampshire could

not rely on the exclusions even if they did apply, due to New Hampshire’s failure to

deliver the Policy. The jury charges instructed the jury as to these alternate theories. The

general verdict form contained no special interrogatories asking the jury to explain the

reasoning behind its decision; instead, it asked only whether New Hampshire or Blue

Water prevailed as to the contract claim. 

The verdict form thus reveals nothing of the issue or issues the jury decided. It is

possible the jury found that Cooper was not negligent, but it is equally possible the jury

found that New Hampshire was estopped to rely on Cooper’s negligence, due to a failure

to deliver the Policy. The jury could also have found estoppel without reaching any

decision on whether Cooper was negligent. Even if the jury found that Cooper was not

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Wiregrass appears to argue that, even if collateral estoppel does not apply, it is

somehow not “fai[r]” for New Hampshire to litigate the issue of Cooper’s misconduct

herein. (Doc. 25 at 8). This argument is inadequately developed to allow its

consideration. See, e.g., Transamerica Leasing, Inc. v. Institute of London Underwriters,

430 F.3d 1326, 1331 n.4 (11th Cir. 2005) (“[A] passing reference to an issue in a brief [is]

insufficient to properly raise that issue.”). 

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negligent, if it also found New Hampshire to be estopped, the former finding would still

be no more than an alternate holding and thus insufficient to support collateral estoppel. 

All this is of course idle speculation concerning what the jury might have found, and

speculation does not meet Wiregrass’ stiff burden.

In its reply brief, Wiregrass suggests that, although New Hampshire is not

presently collaterally estopped to assert Cooper’s negligence, it could become collaterally

estopped at some point in the future, should the Eleventh Circuit reverse the judgment,

the case be remanded for retrial, and a jury on retrial (unlike the first jury) unequivocally

decide that Cooper was not negligent. Because this could possibly occur one day,

Wiregrass concludes this case is not ripe. (Doc. 25 at 8). Wiregrass identifies no

authority or other support for the proposition that the possibility of another court someday

deciding an issue relevant to a case in which the plaintiff has already suffered injury

prevents that case from being ripe. Again, the Court will not construct or support an

argument on Wiregrass’ behalf.3

C. Estoppel. 

Wiregrass suggests that New Hampshire should be estopped from prosecuting this

action because it obtained a supersedeas bond that operates to stay Blue Water’s

enforcement of the $1.75 million judgment. (Doc. 14 at 14). Wiregrass does not even

identify the elements of an estoppel, much less apply them, and the Court will not do so

on its own. In any event, the argument extends only to the $1.75 million judgment and

thus does not touch the other elements of damage discussed in Part I.A.

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As noted in Part I.A, this Court does not sanction the practice of introducing new

arguments in a reply brief. Because, and only because, New Hampshire sought and

obtained permission to file a sur-reply brief to address this argument, (Docs. 26-27), the

Court addresses the argument.

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D. Policy Provisions. 

In its reply brief, Wiregrass for the first time argues that it is an insured under the

Policy and that Alabama precludes New Hampshire from obtaining subrogation from its

insured. (Doc. 25 at 9-10).4

 The definitional and factual issues identified by New

Hampshire, (Doc. 30 at 4-6), none of which are addressed by Wiregrass, are sufficient to

require rejection of its argument at this time.

II. Motion to Stay.

Should its motion to dismiss be denied, Wiregrass requests the Court to stay

proceedings in this case pending resolution of the appeal in the declaratory judgment

action. Most of New Hampshire’s alleged damages from Wiregrass’ alleged misconduct

are tied up in the appeal, and an appellate decision reversing the Blue Water judgment

would greatly reduce the amount in controversy here. Wiregrass urges that

considerations of judicial economy counsel a stay. (Doc. 31 at 1-3).

“[A] district court [has] discretion to stay a case pending the resolution of related

proceedings in another forum.” Ortega Trujillo v. Conover & Co. Communications, Inc.,

221 F.3d 1262, 1264 (11th Cir. 2000). However, a stay that is “immoderate” abuses that

discretion. Id. “In considering whether a stay is ‘immoderate,’ we examine both the

scope of the stay (including its potential duration) and the reasons cited by the district

court for the stay.” Id. New Hampshire relies on Ortega Trujillo to oppose Wiregrass’

motion. 

As to the scope of the stay, Wiregrass proposes that it last “until the Eleventh

Circuit disposes of New Hampshire’s appeal.” (Doc. 31 at 3). As of this date, briefing

before the Eleventh Circuit has not concluded. Once it has, a panel will review the appeal

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See Ortega Trujillo, 221 F.3d at 1264 (a stay in place “until the Bahamian Courts

conclude their review” is indefinite); CTI-Container Leasing Corp. v. Uiterwyk Corp.,

685 F.2d 1284, 1286, 1288 (11th Cir. 1982) (a stay “pending determination by the IranUnited States Claims Tribunal of its jurisdiction to hear these [third-party] claims” is

indefinite); Hines v. D’Artois, 531 F.2d 726, 728, 733 (5th Cir. 1976) (a stay pending the

filing of an EEOC charge and the final conclusion of EEOC proceedings is indefinite).

6

The Eleventh Circuit may address whether the evidence was sufficient to support

a finding that Cooper was not negligent, but it could not, in view of the general verdict,

hold that the jury in fact found that Cooper was not negligent.

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and determine whether oral argument is appropriate. If the case is sent to oral argument,

it will be several months before the case can be heard. With or without oral argument, it

may be a number of months after presentation of briefs and/or oral argument before an

opinion is released. Because one of New Hampshire’s primary issues on appeal concerns

the proper construction of an Alabama statute, the Eleventh Circuit may elect to submit a

certified question to the Alabama Supreme Court, and this process could consume an

unquantifiable but significant additional number of months. After the Eleventh Circuit

issues a decision, the parties may seek rehearing and may even seek rehearing en banc. 

The proposed stay is, in a word, indefinite,5

 and “[t]he case law illustrates that, in a case

like this one, the interests of judicial economy alone are insufficient to justify such an

indefinite stay.” Ortega Trujillo, 221 F.3d at 1265. 

Perhaps anticipating this result, Wiregrass suggests that, in addition to judicial

economy, a stay should be ordered because “New Hampshire’s appeal involves issues

which are critical to the determination of this action and should be decided prior to

proceeding with this action.” (Doc. 31 at 2). There is no reason to believe the Eleventh

Circuit will determine whether Cooper was negligent.6

 The only issue Wiregrass

identifies is whether the $1.75 million judgment will be upheld, but that issue does not

impact Wiregrass’ potential liability in this action, only the scope of the damages to be

awarded should New Hampshire prevail herein. The extent of damages may impact

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Even ignoring the $1.75 million, Wiregrass has plenty of dollars to fight about. 

The damages identified by New Hampshire in Part I.A exceed $108,000, and New

Hampshire also seeks attorney’s fees expended in its third-party litigation with Blue

Water, which likely are in the same ballpark.

8

Wiregrass relies on United Gas Pipe Line Co. v. Tyler Gas Service Co., 247 F.2d

681 (5th Cir. 1957). That case upheld a stay pending the resolution of related

administrative proceedings “which may be decisive.” Id. at 684. As discussed above, the

appeal of the declaratory judgment action cannot be decisive of the instant action.

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Wiregrass’ interest in the case,7 but it is not an issue antecedent to a determination of its

liability.8

 

CONCLUSION

For the reasons set forth above, Wiregrass’ motions to dismiss and to stay are

denied. 

 

DONE and ORDERED this 20th day of May, 2010.

s/ WILLIAM H. STEELE

CHIEF UNITED STATES DISTRICT JUDGE

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