Csx Transp. Inc v. Barber

CSX TRANSPORTATION, INC., a corporation, Plaintiff,

v. KAREN S. BARBER, Individually andas Administratrix of the Estate of James M. Siple, Deceased, Defendant.

CIVIL ACTION NO. 3:10-1098

UNITED STATES DISTRICT COURT FOR

THE SOUTHERN DISTRICT OF WEST VIRGINIA

HUNTINGTON DIVISION

Filed: January 18, 2011

MEMORANDUM OPINION AND ORDER

This is an action for declaratory relief brought by the plaintiff CSX Transportation, Inc. ("CSX") against the defendant Karen Barber as the administratrix and personal representative of the estate of James M. Siple, pursuant to 28 U.S.C. § 2201 and 28 U.S.C. § 1332. Specifically, CSX seeks a declaration that the defendant must indemnify it for any costs and expenses it incurs as a result of her decision to file a concurrent Kentucky lawsuit on behalf of the decedent. Further, CSX seeks a declaration that the State court lawsuit is precluded by a release clause signed by the decedent.

Currently pending is the defendant's Motion to Dismiss. [Doc. 3] For the reasons that follow, the Court GRANTS the motion and DISMISSES this action WITHOUT PREJUDICE.

I. Background and Procedural History

The defendant Karen Barber is the administratrix and personal representative of the estate of James Siple. James Siple was employed as a brakeman and conductor by the Chesapeake and Ohio Railway Company and its successor in interest, the plaintiff CSX, from 1948 to 1979. During his employment, James Siple was exposed to asbestos and other toxic substances, which ultimately led to a diagnosis of a non-malignant, asbestos-related lung disease. As a result, in 1992, he filed a claim against CSX in the Circuit Court of Kanawha County, West Virginia under the Federal Employers Liability Act ("FELA"), 45 U.S.C. § 51, et seq.

The Kanawha County action was settled for a sum of $48,000. As a condition of the settlement, James Siple signed a full release of related future tort claims he could later have against CSX. The release provides in pertinent part:

It is the intent of the parties to release any and all claims described herein against those herein named for personal injury and occupational disease, sustained by THE UNDERSIGNED, however incurred, which might form the basis of any action under... [FELA], the Boiler Inspection Act, or any other law or laws, either state or federal, or any action at common law, and any derivative claims of the heirs, personal representatives, or assigns of THE UNDERSIGNED, beneficiaries of THE UNDERSIGNED, THE UNDERSIGNED'S estate, dependent children, dependent next-of-kin, those suffering pecuniary loss, or others claiming an interest therein. Such claims are by this understanding and agreement expressly released.

Pl.'s Compl. Ex. A, at 1. The release purportedly covers all claims for "known and unknown, manifested and unmanifested, suspected and unanticipated diseases or injuries to the respiratory system... [including those] arising from or contributed to by asbestos." Id. at 1. Further, the release contains an indemnity provision which essentially obligates Mr. Sipple to compensate CSX for any expenses it incurs in defending against claims related to covered injuries. Id. at 4.

A few years after settling his Kanawha County action with CSX, James Siple was diagnosed with lung cancer. He passed away on February 19, 2008. Thereafter, Karen Barber, as the administratrix and personal representative of his estate, instituted an action against CSX in Greenup County Kentucky Circuit Court for violations of FELA. Among her claims is a wrongful deathcount. CSX answered the complaint, attaching the settlement agreement and raising the release clause as an affirmative defense. Def.'s Reply to Pl.'s Resp. Opp'n Ex. A, at 5, 10-11. The Kentucky action is still in the midst of discovery.

On September 13, 2010, CSX initiated the instant action in this Court under the Declaratory Judgment Act, 28 U.S.C. § 2201, to declare valid the provisions of the release and indemnity clauses signed by the decedent in 1998. The defendant has filed a Motion to Dismiss CSX's request for declaratory relief.

II. Discussion

The defendant's Motion to Dismiss is based upon several grounds. First, the defendant contends that this Court lacks subject matter jurisdiction and personal jurisdiction to hear the complaint. Second, she argues that venue is improper in this Court. Third, she contends that, because the Kentucky court now has concurrent jurisdiction over a case where the issue of the release clause's validity will necessarily have to be decided, this Court should effectively abstain from deciding this case. Finally, in the alternative, the defendant contends that the complaint fails to state a substantive claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure in light of the fact that the release in question does not preclude future FELA claims for lung cancer.

The Court does not address the last ground in this opinion.

A. Subject Matter Jurisdiction

Federal courts possess limited subject matter jurisdiction, and the party seeking to invoke that jurisdiction bears the burden of proving its existence. See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). The Declaratory Judgment Act itself does not provide a basis for subject matter jurisdiction. See Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671-72 (1950); Galloway and Associates, PLLC v. Fredeking & Fredeking Law Offices, LC, No. 3:10-0830, 2010 WL 3955790, at *2 (S.D. W. Va. Oct. 8, 2010). That act merely permits the district court to "declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought, " in a case or controversy that is otherwise properly within its jurisdiction. 28 U.S.C. § 2201(a). In that vein, CSX seeks to meet its jurisdictional burden by contending that this Court may hear its case under 28 U.S.C. § 1332(a) because the parties are completely diverse and the amount in controversy exceeds $75,000.

The parties agree that complete diversity exists in this case. CSX is a Virginia corporation with its principal place of business in Florida. The defendant, sued in her capacity as administratrix of James Siple's estate, is a citizen and resident of the State of Kentucky. What is contested, however, is whether CSX's request for relief satisfies the amount in controversy. "If the plaintiff claims a sum sufficient to satisfy the statutory requirement [for the amount in controversy], a federal court may dismiss only if 'it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed.'" JTH Tax, Inc. v. Frashier, 624 F.3d 635, 638 (4th Cir. 2010) (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938)) (emphasis in original).

The defendant contends that CSX cannot satisfy the amount in controversy requirement in this case because there are only two mutually exclusive results possible from an ultimate disposition: (1) the release clause, as a general matter, is invalid in light of 45 U.S.C. § 55 and therefore CSX would not be entitled to indemnification for failing to state a claim; or (2) the release is permitted, barring the defendant's state court claims and entitling CSX to indemnification for litigation expenses. Under either result, the defendant submits, CSX cannot establish that its costs and expenses in this matter would exceed $75,000.

Where a plaintiff seeks declaratory relief, the "amount in controversy is measured by the value ofthe object of the litigation." Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977). In the Fourth Circuit, this value may be determined by the amount a potential judgment could mean to either party. McCoy v. Erie Ins. Co., 147 F. Supp. 2d 481, 492 (S.D. W. Va. 2001) ("[O]ur Court of Appeals [has] adopted the either-viewpoint rule, concluding the value of injunctive [or declaratory] relief is properly judged from the viewpoint of either party." (citation omitted)); Moore v. Cabot Oil & Gas Corp., No. 2:06-0538, 2007 Dist. LEXIS 32503, at *14-15 (S.D. W. Va. May 2, 2007) (citing Dixon v. Edwards, 290 F.3d 699, 710 (4th Cir. 2002)). Here, the result of a decision favorable to CSX would establish that CSX must be indemnified for the costs and expenses of litigation that it incurs in defending the defendant's claims in State court. See Gov't Employees Ins. Co. v. Lally, 327 F.2d 568, 569 (4th Cir. 1964). In that respect, the defendant is perhaps correct that, at this point, CSX unlikely has incurred over $75,000 in legal fees and expenses. However, this characterization of the jurisdictional inquiry is too narrow in that it fails to consider that a favorable decision for CSX would also likewise preclude the Kentucky action by establishing the validity of the release clause at issue in this case. Consequently, CSX would avoid the effects of an adverse judgment in state court. Cf. Erie Ins. Prop. & Cas. Co. v. Smith, No. 5:05-01137, 2006 U.S. Dist. LEXIS 64599, at *8-9 (S.D. W. Va. Sept. 8, 2006) (finding that the amount in controversy for an insurer's request for a declaration that an insured was exempted from coverage is the value of the insured's underlying claim).

In light of the defendant's claims in Kentucky, the potential pecuniary losses to CSX—and the potential gains by the defendant—exceed the jurisdictional amount, and the defendant has not shown to a legal certainty that this conclusion is in error. While the defendant does not request aspecific amount of damages in state court, she asserts FELA occupational negligence and wrongful death counts against CSX. The wrongful death count itself seeks to recover the value of James Siple's life in an amount permitted under FELA. Wrongful death damages under FELA "flow from the deprivation of the pecuniary benefits which... beneficiaries might have reasonably received" if the deceased had not died from his injuries. In re Air Crash Disaster Near Chicago, Ill., 701 F.2d 1189, 1193 n. 4 ...