Zurich Am. Ins. Co. v. Cabot Oil & Gas Corp.

ZURICH AMERICAN INSURANCE COMPANY, Plaintiff, v. CABOT OIL & GAS CORPORATION, Defendant.

CIVIL ACTION NO. 4:14-CV-2735

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

September 23, 2015

OPINION AND ORDER

Pending before the Court is Plaintiff Zurich American Insurance Company's ("Zurich") Motion for Summary Judgment, Doc. 17. Also pending before the Court are Defendant Cabot Oil & Gas Corporation's ("Cabot") Motion to Dismiss or Stay, or, in the Alternative, Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a), Doc. 12; Cabot's Motion to Stay Summary Judgment Proceedings, Doc. 19; Zurich's Motion for Leave to File Sur-Reply in Opposition to Defendant's Motion to Dismiss, Doc. 21; Cabot's Motion to Strike Exhibits to Plaintiff's Reply in Support of its Motion for Summary Judgment, Doc. 26; and Cabot's Motion for Leave to File Sur-Reply in Opposition to Plaintiff's Motion for Summary Judgment. Doc. 26. Having considered the motions, responses, replies, the facts in the record, and the applicable law, the Court grants Zurich's Motion for Summary Judgment. Doc. 17.

I. Background

On April 1, 2011, Zurich issued a Workers Compensation and Employers Liability Insurance Policy ("the Policy") to Cabot, effective until April 1, 2012. Doc. 1-2. On December 15, 2011, Juston O. Taylor, a welder employed by Cabot in West Virginia, was injured on the job by a ruptured oil-gas separator on an oil well. Doc. 1-1 at 3. On July 23, 2013, Taylor filed apersonal injury lawsuit ("the Underlying Lawsuit") against Cabot in the Boone County Circuit Court of West Virginia. Docket at 1, Taylor v. Cabot Oil & Gas Corp., No. 13-C-155 (W. Va. Cir. Ct. filed Jul. 23, 2013). Zurich filed a motion to intervene, and Cabot responded with a motion for declaratory judgment that Zurich owed Cabot a duty to defend and a duty of indemnification. On November 19, 2014, the West Virginia State Court granted both motions. Doc. 12-1, Ex. 2. The Underlying Lawsuit is set for trial on November 17, 2015. Docket at 4, Taylor (No. 13-C-155). On September 24, 2014, Zurich filed suit in this Court for a declaratory judgment that the Policy does not cover Taylor's claims in the Underlying Lawsuit. Doc. 1.

II. Cabot's Motion to Dismiss

Under the Declaratory Judgment Act, "any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201. In St. Paul Ins. Co. v. Trejo, the Fifth Circuit set forth factors a district court must consider in determining whether to dismiss a declaratory judgment:

"1) whether there is a pending state action in which all of the matters in controversy may be fully litigated, 2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant, 3) whether the plaintiff engaged in forum shopping in bringing the suit, 4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist, 5) whether the federal court is a convenient forum for the parties and witnesses, and 6) whether retaining the lawsuit in federal court would serve the purposes of judicial economy," and, we hold, whether the federal court is being called on to construe a state judicial decree involving the same parties and entered by the court before whom the parallel state suit between the same parties is pending.

39 F.3d 585, 590-91 (5th Cir. 1994) (citation omitted). These factors apply to Zurich's claim for declaratory judgment as follows:

1. Whether there is a pending state action in which all of the matters in controversy can be fully litigated The trial in the Underlying Lawsuit is currently set for November 17, 2015. Docket at 4, Taylor (No. 13-C-155). In regard to the matter before this Court, Zurich's liability, the state court granted Zurich's motion to intervene subject to certain limitations. Doc. 12-1, Ex. 2 at 13 ("Zurich is permitted to intervene in this action for the sole purpose of submitting, subject to the Court's approval, special interrogatories to the jury. Zurich will not participate in discovery, nor will it sit at counsel table or be identified to the jury at trial."). Arguably, the matter of Zurich's liability can be fully litigated in the Underlying Lawsuit.

2. Whether the plaintiff filed in anticipation of a lawsuit by the defendant

Zurich did not file this suit in anticipation of a lawsuit by Cabot. Rather, Zurich filed this suit in response to the Underlying Lawsuit.

3. Whether the plaintiff engaged in forum shopping

"[A] court is more likely to find a plaintiff engaged in impermissible forum shopping where the federal action would change the applicable law." AXA Re Prop. & Cas. Ins. Co. v. Day, 162 Fed. Appx. 316, 321 (5th Cir. 2006). The parties disagree as to which state's law applies and on whether there is a difference between the respective laws that each party argues would apply. Because this suit was filed in the U.S. District Court for the Southern District of Texas, Texas's choice-of-law rules apply. Atl. Marine Constr. Co. v. U.S.D. for W. Dist. of Tex., 134 S. Ct. 568, 582 (2013). The parties disagree as to which substantive law applies. Zurich is not liable under either Texas or West Virginia law. See infra.

4. Whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist

As the Fifth Circuit has noted, this factor overlaps with the second and third factors. Together, these three factors address "whether the plaintiff is using the declaratory judgmentprocess to gain access to a federal forum on improper or unfair grounds." Sherwin-Williams Co. v. Holmes Cnty., 343 F.3d 383, 391 (5th Cir. 2003). Zurich did not file this suit in anticipation of the state action, and Zurich has not engaged in forum shopping. Supra II 2, 3.

5. Whether the federal court is a convenient forum for the parties and witnesses

Cabot concedes that this venue is proper under 28 U.S.C. § 1391(b)(1). Cabot speculates that "a more convenient forum may exist," Doc. 11 ¶ 4, but does not argue it would be "unduly burdensome" to litigate here. Sherwin-Williams Co., 343 F.3d at 400 ("The fact that it would not be as convenient for all the declaratory judgment defendants to litigate in federal district court as it would be for them to litigate in the nearest state courthouse does not mean that it is unduly burdensome for them to do so.").

6. Whether retaining the lawsuit in federal court would serve the purposes of judicial economy

In Travelers Ins. Co. v. La. Farm Bureau Fed'n, Inc., the Fifth Circuit found the judicial economy factor "overwhelmingly" supported retention of a similar suit for declaratory judgment of noncoverage:

[T]he parties here have completed discovery and have resolved all material fact issues. All that remains in this case is the resolution of one, solitary, legal question on which the district court has already been thoroughly briefed. The district court simply needs to make a decision. However, as has been noted repeatedly, if this case were dismissed, the state court, duplicating the work already done in the federal court, would have to "start from scratch." Its resolution of this case would necessarily be significantly delayed.

996 F.2d 774, 779 (5th Cir. 1993). On balance, none of the other factors weigh strongly in favor of dismissal, while resolving the solitary issue of Zurich's liability in this Court would better serve the purposes of judicial economy. For this reason, the Court denies Cabot's Motion to Dismiss. Doc. 12.

III. Cabot's Motion to Transfer under 28 U.S.C. § 1404(a)

As an alternative to dismissal, Cabot moves to transfer the case to the United States District Court for the Southern District of West Virginia.¹ 28 U.S.C. § 1404(a) provides, "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." The Fifth Circuit has set forth private and public interest factors for determining whether a § 1404(a) venue transfer is "for the convenience of parties and witnesses and in the interest of justice." In re Volkswagen of Am., Inc., 545 F.3d 304, 315 (5th Cir. 2008) (en banc). The private interest factors are:

(1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make trial of a case easy, expeditious and inexpensive.

Id. The public interest factors are:

(1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflict of laws [or of] the application of foreign law.

Id. The factors are "not necessarily exhaustive or exclusive." Id. Because the matter before the Court can be resolved without any further discovery based on the terms of the Policy, the private interest factors do not apply. Regarding the first public interest factor, court congestion would arguably be reduced by retention in this Court, since the parties have fully briefed the matter. As for the other three public factors, the issue involves only limited application of foreign law. As noted above, Cabot has conceded this forum is not "unduly burdensome." Doc. 11 ¶ 4. For these reasons, the Court denies the Motion for Transfer. Doc. 12.

IV. Zurich's Motion for Summary Judgment

Summary judgment is proper if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A dispute over such a fact is genuine if the evidence presents an issue "that properly can be resolved only by a...