Court Opinion

ID: 37110
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:49:07+00
Date Added: 2024-06-11T17:15:33.759605
License: Public Domain

United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
               IN THE UNITED STATES COURT OF APPEALS
                       FOR THE FIFTH CIRCUIT                December 6, 2004

                                                          Charles R. Fulbruge III
                                                                  Clerk
                            No. 03-31129

AMERICAN EMPLOYERS’ INSURANCE CO, a Massachusetts Corporation;
ONEBEACON AMERICA INSURANCE COMPANY, as Successor to Commercial
Union Insurance Company and Employers Commercial Union Insurance
Company a Massachusetts Corporation

                                    Plaintiffs-Appellants,

versus

EAGLE INC, a Louisiana Corporation, formerly known as Eagle
Asbestos & Packing Company,

                                    Defendant-Appellee.

                        --------------------
            Appeal from the United States District Court
         for the Eastern District of Louisiana, New Orleans
                             03-CV-2224
                        --------------------

Before BENAVIDES, DENNIS, and CLEMENT, Circuit Judges.

PER CURIAM:*

     Appellants American Employers’ Insurance Co. and OneBeacon

America Insurance Co. appeal the district court’s order granting

Appellee Eagle, Inc.’s motion to stay Appellants’ declaratory

judgment action and denying Appellants’ motion for summary

judgment.   We affirm the district court’s order in both respects.

     *
          Pursuant to 5TH CIR. R. 47.5, the Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
                          I.   INTRODUCTION

     This action arises from an insurance coverage dispute.     In

the past several years, thousands of lawsuits have been filed

against Eagle, Inc. (“Eagle”) by individuals alleging bodily

injuries as a result of exposure to asbestos from insulation

products allegedly sold and installed by Eagle.    Appellants

American Employers’ Insurance Co. (“American Employers”) and

OneBeacon America Insurance Co. (“OneBeacon”) issued general

commercial liability policies to Eagle from 1959 to 1976.     The

parties now disagree about the extent to which the insurance

policies cover the asbestos claims against Eagle.    On January 7,

2003, after several months of negotiation, Appellants sued Eagle

in federal court for a declaratory judgment.    In May 2003, Eagle

filed a third-party demand against Appellants in one of the state

court asbestos actions.    In addition, numerous individual

plaintiffs have brought direct actions against Appellants in

state courts.

                    II. FACTS AND PROCEEDINGS

     Eagle is a defendant in approximately 2,000 personal injury

lawsuits filed in Louisiana and other state courts on behalf of

approximately 12,000 claimants for bodily injuries allegedly

resulting from the sale and installation of defective asbestos-

containing insulation.    Eagle purchased comprehensive general

liability insurance from American Employers from 1959 to 1968 and

from OneBeacon from 1968 to 1976.    The insurance policies have
two relevant components: (i) general liability or

“premises/operations coverage” and (ii) products hazard/completed

operations coverage.1   The basic dispute is over which claims

resulting from the asbestos lawsuits filed against Eagle, if any,

can be allocated to the products hazard/completed operations part

of the policies.

     The products hazard/completed operations provisions

encompass injuries caused by Eagle’s products after Eagle has

relinquished possession of the product, or by Eagle’s operations,

if the injury occurs after the operations have been completed and

after Eagle has left the jobsite.

     The general liability portion of the policies covers, among

other things, injuries that occur as a result of exposure during

installation.

     The products hazard/completed operations coverage under the

policies is subject to certain monetary per-occurrence limits, as

well as yearly aggregate limits.    The general liability coverage

under the policies, by contrast, has no such limit.

     Because of the insurance coverage dispute, American

Employers has refused to defend Eagle in the personal injury

lawsuits, or to indemnify Eagle for any claims.   OneBeacon, along

     1
      Prior to the introduction of comprehensive general
liability (“CGL”) insurance policies in 1941, the insured had to
buy insurance for each particular risk individually. However,
CGL policies shifted the burden of deciding what to insure and
what not to insure from the insured to the insurance company.
CGL policies insure against all risks, subject to exceptions. In
the instant case, the exception at issue is the exception for
products hazard and completed operations.
with other insurers, entered into an Agreement for Defense and

Indemnification of Asbestos Bodily Injury Claims Pending Against

Eagle, Inc. in 1996.    Since that time, OneBeacon has allocated

all claims against Eagle to the products hazard/completed

operations provision of the policies.    In the summer of 2002,

OneBeacon informed Eagle that the coverage offered under its

policies for products hazard/completed operations had been

exhausted and that OneBeacon would no longer defend or indemnify

asbestos claims against Eagle.

     After OneBeacon informed Eagle of its position that coverage

had been exhausted, the parties engaged in lengthy settlement

negotiations.    When those negotiations proved fruitless,

Appellants filed an action in federal court for declaratory

relief.

     Appellants filed a motion for partial summary judgment on

two issues.    First, Appellants asked the district court to

determine whether any liability for indemnity and defense costs

should be determined on a pro-rata basis determined by the usual

exposure during the policy periods as compared to the total years

of exposure.    Second, Appellants asked the court to determine

whether certain claims asserted by the Appellants fall within the

completed operations and products hazards provisions of the

policies.

     In response to Appellants’ motion, Eagle filed a motion to

dismiss or, in the alternative, to stay the declaratory judgment
action.

     The district court denied Appellants’ motion for partial

summary judgment and granted Appellee’s motion to stay the

action.   The district court held that the insurance coverage

issues should be decided in the state court proceedings that will

also address the merits of individual claims, the fault of the

parties, and the assessment of damages.       Additionally, the

district court held that Appellants bore the burden of proving

that the products hazard/completed operations limits have been

exhausted.   Because Appellants had not submitted any evidence

demonstrating that they had properly allocated the underlying

claims, the district court denied Appellants’ request for a

judgment that certain claims fall within the products

hazard/completed operations provisions of the policies.

                            III. Discussion

     A. District Court’s Order to Stay

     We review a district court’s decision to dismiss or stay a

federal declaratory judgment action under an abuse of discretion

standard.    The Sherwin-Williams Co. v. Holmes County, 343 F.3d

383, 389 (5th Cir. 2003).

     Under the Federal Declaratory Judgment Act, 28 U.S.C. §

2201(a), a district court “may declare the rights and other legal

relations of any interested party seeking such declaration.”

However, the district court is not compelled to exercise that

jurisdiction.    Brillhart v. Excess Ins. Co. of America, 316 U.S.
491, 494 (1942); Wilton v. Seven Falls Co., 515 U.S. 277, 286-87

(1995).   The basic question for the district court is “whether

the questions in controversy between the parties to the federal

suit ... can better be settled in the proceeding pending in state

court.”   Brillhart, 316 U.S. at 495.

     In St. Paul Insurance Co. v. Trejo, 39 F.3d 585 (5th Cir.

1994), we set forth seven factors for a court to apply to

determine whether or not it should exercise jurisdiction.     In

Sherwin-Williams, we recognized that the Trejo factors address

three broad considerations - federalism, fairness/improper forum

shopping, and efficiency.   Sherwin-Williams, 343 F.3d at 390-91.

     With respect to federalism considerations, we said in

Sherwin-Williams: “[I]f the federal declaratory judgment action

raises only issues of state law and a state case involving the

same state law issues is pending, generally the state court

should decide the case and the federal court should exercise its

discretion to dismiss the federal suit.”   Id.    In the instant

case, the dispute involves the interpretation of an insurance

contract and interpretation of state insurance law as it relates

to asbestos claims, both of which are state law matters.

Furthermore, the parties are involved in numerous state court

actions involving the same state law issues.     Eagle has filed

third-party demands in several state court lawsuits.     In

addition, Appellants have been named as defendants in several of

the state court lawsuits.   Thus, considerations of federalism
support the district court’s decision to stay Appellants’ federal

declaratory judgment action.

     With respect to fairness considerations, in Sherwin-Williams

we recognized that the mere act of filing a federal declaratory

action in anticipation of a state lawsuit is not, in and of

itself, impermissible.   Rather, we were concerned with whether

there was a legitimate reason to be in federal court.     Id. at

397-99.   In Sherwin-Williams, we held that the selection of a

federal forum was not impermissible for at least four reasons.

First, a desire to avoid multiple lawsuits in multiple courts is

a legitimate reason to want to be in federal court.   Second,

Sherwin-Williams’ desire to avoid plaintiff-friendly state court

juries was not illegitimate, because Sherwin-Williams was an out-

of-state company.   The traditional justification for diversity

jurisdiction is to ensure fairness for out-of-state litigants.

Third, the selection of a federal forum would not change the

applicable law because state law would apply in either case.

Fourth, there was no evidence that the defendant in the

declaratory judgment action had been restricted from filing a

state court action prior to the plaintiff filing the declaratory

judgment action.    Id. at 399.

     In the instant case there are many similarities with

Sherwin-Williams.   Appellants here did file in federal court in

anticipation of involvement in a state court lawsuit, but they do

not seem to have done so for improper purposes.   As in Sherwin-
Williams,    Appellants in the instant case are seeking to avoid

multiple lawsuits in multiple courts to determine the same

issues.     Also, as in Sherwin-Williams, Appellants here are out-

of-state corporations attempting to avail themselves of the

traditional justification for diversity jurisdiction.    Third, as

in Sherwin-Williams, state law will apply in a state court action

or in a federal declaratory action.    And finally, there is no

evidence that Appellee could not have filed a state court action.

     Thus, with respect to fairness considerations, Appellants

did not engage in improper forum shopping, nor did they act

unfairly with respect to Appellee by filing a federal declaratory

judgment action.

     With respect to efficiency, the third Sherwin-Wiiliams

consideration, Appellants claim that it would be more efficient

for one federal court to determine all of the issues between the

parties than for various state courts to decide the issues in a

piecemeal fashion.    However, this supposed efficiency gain would

not actually be realized because a federal court cannot rule

conclusively on the disputed issues at this time.

     Appellants have five issues for which they request

declaratory judgment.    Resolution of each of the five issues

requires a determination of state law and/or resolution depends

on the factual circumstances of the underlying asbestos claims.

Thus, a federal court would not be able to conclusively resolve

the dispute between the parties involving these issues, and it
would not be more efficient for a federal court to initially hear

the claims.

     In sum, the application of the considerations we identified

in Sherwin-Williams supports the district court’s order to stay

Appellants’ federal declaratory judgment action.   Therefore, we

find that the district court did not abuse its discretion by

granting Eagle’s motion to stay Appellants’ declaratory judgment

action.

     B. District Court’s Denial of Motion for Summary Judgment

     Appellants ask us to consider the merits of their motion for

partial summary judgment despite the fact that the district

court’s denial of that motion is not a final order.   See Ardoin

v. J. Ray McDermott & Co., 641 F.2d 277, 278 (5th Cir. 1981)

(denial of summary judgment motion is an interlocutory order and

unappealable).   This Court generally does not have jurisdiction

to review a district court’s denial of a motion for summary

judgment because such a ruling is not a final one within the

meaning of 28 U.S.C. § 1291.   Lemoine v. New Horizons Ranch and

Ctr., Inc., 174 F.3d 629, 633 (5th Cir. 1999).

     Appellants do not provide any compelling reason for us to

make an exception to the general rule that only final orders are

appealable.

     Accordingly, we find that the district court’s order denying

Appellants’ motion for partial summary judgment is not an

appealable order.
                        IV. Conclusion

    For the foregoing reasons, the district court’s order is

AFFIRMED.