Crum & Forster Specialty Insurance Co. v. Creekstone Builders, Inc.

489 S.W.3d 473, 2015 Tex. App. LEXIS 10983, 2015 WL 6488276
CourtCourt of Appeals of Texas
DecidedOctober 27, 2015
DocketNO. 01-14-00907-CV
StatusPublished
Cited by6 cases

This text of 489 S.W.3d 473 (Crum & Forster Specialty Insurance Co. v. Creekstone Builders, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Crum & Forster Specialty Insurance Co. v. Creekstone Builders, Inc., 489 S.W.3d 473, 2015 Tex. App. LEXIS 10983, 2015 WL 6488276 (Tex. Ct. App. 2015).

Opinion

OPINION

Evelyn V. Keyes Justice.

This declaratory judgment action involves an insurance coverage dispute arising out of a construction-defects verdict obtained in South Carolina against appel-lee Creekstone SC I, LLC, an insured under commercial general liability insur-[476]*476anee policies issued by appellant, Crum & Forster Specialty Insurance Company (“Crum & Forster”). Prior to the trial of the construction-defects lawsuit, Crum & Forster filed the underlying declaratory judgment action in Harris County against Creekstone SC I, LLC and the four additional appellees — Creekstone Builders, Inc., Nashville Creekstone, LLC, Stephen Keller, and Everett Jackson (collectively, “Creekstone”) — seeking a declaration that it had no coverage obligation to Creek-stone under the insurance policies at issue. Creekstone moved to dismiss the underlying action, arguing that Crum & Forster had failed to join the plaintiff from the South Carolina construction-defects lawsuit, a necessary party to this suit, and that the case would more appropriately be resolved in South Carolina and thus should be dismissed on forum non conveniens grounds. The trial court expressly granted Creekstone’s motion on both grounds.

In two issues on appeal, Crum & Forster argues that (1) the trial court erroneously determined that the South Carolina plaintiff was a necessary and indispensable party to the underlying action filed in Harris County because its interests are purely derivative of Creekstone’s, and (2) the trial court erred in dismissing the case on forum non conveniens grounds because Creekstone offered no evidence to support its argument on that basis at the hearing on Creekstone’s motion and the facts of the case support retaining this suit in Texas.

We affirm.

Background

From 2004 to 2006, Creekstone Builders, as a developer, and Creekstone SC I, as general contractor, renovated and converted an apartment complex in Mt. Pleasant, South Carolina into condominium units.

In 2010, the East Bridge Lofts Property Owners Association, Inc. (“POA”) filed suit in South Carolina state court against numerous defendants, including Creekstone SC I, Everett Jackson, and Stephen Keller,1 and asserted several causes of action, including negligent construction and supervision of the condominium units (“the construction-defects suit”). Crum & Forster, which had issued commercial general liability insurance policies to Creekstone Builders, declined to defend Creekstone in the construction-defects suit.

On May 23, 2014, shortly before the trial in the construction-defects suit began in South Carolina, Crum & Forster filed the underlying declaratory judgment action in Harris County against Creekstone Builders, Nashville Creekstone, Keller, Jackson, and Creekstone SC I (“the underlying action”). Crum & Forster did not name the POA as a defendant. Crum & Forster alleged that it had issued two general liability insurance policies to Creekstone Builders in 2008 and 2009 — both of which also included Creekstone SC I, Keller, and Nashville Creekstone as named insureds on the policies — and that an exclusion contained in both policies precluded coverage for the claims asserted against Creekstone in the construction-defects suit. Crum & Forster sought a declaration that, under the two insurance policies at issue, it had no duties or obligations to Creekstone for the claims asserted against it. In its original petition, Crum & Forster alleged that its “statutory home office” was located in Arizona and that its principal place of business was located in New Jersey. It also alleged that Creekstone Builders is a Tex[477]*477as corporation and does business in Texas, that Nashville Creekstone is a Texas company with a principal place of business in Tennessee, and that Creekstone SC I is a South Carolina company with a principal place of business in Texas.

On June 9, 2014, the South Carolina state court entered judgment in favor of the POA and against Creekstone SC I for $22,000,000 in actual damages and $33,000,000 in punitive damages.2

On June 24, 2014, the POA, Creekstone SC I, and Creekstone Builders filed suit against Crum & Forster in federal district court in South Carolina (“the federal action”). The POA alleged that, as a judgment creditor of Creekstone SC I, it had standing to sue Crum & Forster to recover proceeds under the insurance policies at issue. Among other claims, the POA, Creekstone SC I, and Creekstone Builders sought a declaration that Crum & Forster was obligated to pay the full judgment in favor of the POA and that it was required to indemnify Creekstone SC I and Creek-stone Builders.

Creekstone then filed a motion to dismiss the underlying action. Creekstone first argued that the trial court should dismiss the underlying action because Crum & Forster did not join the POA as a party. It argued that as the judgment creditor in the construction-defects suit, the POA claimed an interest that would be affected by a declaration in the underlying action and thus was a necessary and indispensable party under Texas Rule of Civil Procedure 39 and the Texas Declaratory Judgment Act.

Creekstone also argued that the federal action was pending in South Carolina, that the POA was properly joined as a party to that action, and that allowing the underlying action to proceed without the POA as a party raised the risk of inconsistent resolution of the two competing declaratory judgment actions. Creekstone further argued that the POA was a South Carolina entity that had no contacts with Texas and did not do business in Texas and therefore was not amenable to service of process in Texas. Creekstone argued that because the POA was a necessary party that could not be joined in the underlying action, the trial court was required to dismiss the case.

As another basis for dismissal, Creek-stone argued that the trial court should dismiss the underlying action pursuant to the common law doctrine of forum non conveniens because the pending federal action in South Carolina “properly includes all necessary parties and serves as the ... only forum to fully, finally and conclusively resolve the underlying controversy, a controversy which originated in South Carolina.” Creekstone argued that South Carolina is an available and adequate alternate forum, as Creekstone Builders, Creekstone SC I, Crum & Forster, and the POA are all parties to the federal action and have submitted to South Carolina’s jurisdiction. Creekstone argued that retaining the case in Texas would “impose[ ] an undue burden on the parties as well as the Texas court system in deciding an action which cannot resolve the underlying controversy in one fell swoop.” It contended that South Carolina provides an adequate remedy because it is the only forum that can fully adjudicate the issues among all affected parties; retaining the case in Texas substantially prejudices Creekstone as well as the POA; the acts or omissions that led to the claims against [478]*478Creekstone in the construction defects suit occurred in South Carolina; and the federal action in South Carolina “properly included all necessary and indispensable parties.”

As supporting evidence, Creekstone attached the affidavit of Amanda Graham, the president of the POA.

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489 S.W.3d 473, 2015 Tex. App. LEXIS 10983, 2015 WL 6488276, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crum-forster-specialty-insurance-co-v-creekstone-builders-inc-texapp-2015.