United States Fire Insurance v. Goodyear Tire & Rubber Co.

920 F.2d 487, 1990 WL 186243
CourtCourt of Appeals for the Eighth Circuit
DecidedNovember 30, 1990
DocketNo. 90-5022
StatusPublished
Cited by54 cases

This text of 920 F.2d 487 (United States Fire Insurance v. Goodyear Tire & Rubber Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States Fire Insurance v. Goodyear Tire & Rubber Co., 920 F.2d 487, 1990 WL 186243 (8th Cir. 1990).

Opinion

BOWMAN, Circuit Judge.

Goodyear Tire & Rubber Company appeals from the holding of the District [488]*488Court1 that punitive damages are not covered by the insurance policies issued by the appellees. We affirm.

I.

In 1980, Goodyear obtained liability insurance from United States Fire Insurance Company, Evanston Insurance Company, First State Insurance Company, and Old Republic Insurance Company (hereinafter “the insurers”).2 This insurance included coverage of product liability claims. In 1981, Dale Hodder, a resident of Minnesota, was seriously injured in an accident involving a tire rim manufactured by Goodyear. In the lawsuit that followed,3 Hod-der was awarded compensatory damages of over $3.3 million and punitive damages of $12.5 million by a Minnesota jury. On appeal, the Minnesota Supreme Court upheld the compensatory damages award, but reduced the punitive damages award to $4 million.

During the course of the appeals process, in 1986, United States Fire notified Goodyear of the insurers’ position that punitive damages are not insurable in Minnesota. After the Hodder case became final in June 1989, Goodyear requested that the insurers reimburse Goodyear for the punitive damages award. Negotiations among the parties, which had begun earlier on other unresolved disputes, continued until the insurers filed a declaratory judgment action in Minnesota state court on July 13, 1989. The subject of the action was the insurability of punitive damages under the policies taken out by Goodyear. Goodyear removed the action to the District Court and also filed suit in federal court in Georgia,4 seeking a resolution of the punitive damages issue and other coverage disputes.5

Claiming that Georgia was the appropriate forum, Goodyear moved the District Court to stay or dismiss the declaratory judgment action. The District Court denied the motion. Goodyear then filed a counterclaim, raising the issues contained in its Georgia action, and the insurers moved for summary judgment on their claim that punitive damages were not covered by the policies. The court granted this motion. In deference to the Georgia action, the court dismissed Goodyear’s counterclaim regarding other coverage disputes without prejudice.

On appeal, Goodyear raises four issues: 1) the District Court abused its discretion in not staying or dismissing the declaratory judgment action in deference to the Georgia action; 2) the District Court erred in ruling that punitive damages are not insurable under Minnesota law; 3) the court erred in applying Minnesota substantive law instead of Georgia law to the coverage question concerning the insurability of punitive damages; and 4) the court erred in ruling that the vicarious liability exception to the rule prohibiting insurance coverage for punitive damages does not apply.

II.

The first question raised by Goodyear is whether the insurers’ declaratory judgment action, which was the first suit filed, should proceed in the face of the second-filed action brought by Goodyear. The well-established rule is that in cases of concurrent jurisdiction, “the first court in which jurisdiction attaches has priority to consider the case.” Orthmann v. Apple River Campground Inc., 765 F.2d 119, 121 (8th Cir.1985). This first-filed rule “is not intended to be rigid, mechanical, or inflexible,” Orthmann, 765 F.2d at 121, but is to be applied in a manner best serving the interests of justice. The preváiling standard is that “in the absence of compelling circumstances,” Merrill Lynch, Pierce, [489]*489Fenner & Smith, Inc. v. Haydu, 675 F.2d 1169, 1174 (11th Cir.1982), the first-filed rule should apply. Orthmann, 765 F.2d at 121. The District Court found no such compelling circumstances. We hold that the District Court did not abuse its discretion in applying the first-filed rule. E.E.O.C. v. University of Pa., 850 F.2d 969, 972 (3rd Cir.1988), aff'd on other grounds, _ U.S. _, 110 S.Ct. 577, 107 L.Ed.2d 571 (1990).6

While it might be true that Goodyear could be considered the “true plaintiff” in this dispute, and that the insurers’ motive in filing this action in Minnesota was to avoid the application of Georgia law, Goodyear did have almost three years notice of the insurers’ position on the issue of insurance coverage for punitive damages under Minnesota law. Further, while Goodyear claims that it was misled by the insurers’ agreements to negotiate differences in policy interpretations, the record indicates that the correspondence concerning possible negotiations dealt exclusively with another disputed coverage issue, the “allocated expense” issue. It is not an abuse of discretion to find these circumstances less than “compelling.”7

Goodyear’s reliance on two cases, Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599 (5th Cir.1983) and E.E.O.C. v. University of Pa., supra, is misplaced. Most importantly, these two cases affirmed a district court’s discretionary decision concerning an exception to the first-filed rule, while Goodyear is asking for a reversal of the court’s discretionary action. In Mission Insurance the insurer gave the insured an extension of the time within which the insured could sue and stated that it would give the insured a written statement of its position on the coverage issue. Mission Ins., 706 F.2d at 600. Instead, after telling the insured that the insured could postpone filing suit until after receiving the written statement, the insurer filed a declaratory judgment action without ever providing the written statement. Mission Ins., 706 F.2d at 600. There is no record of such misleading, egregious actions taken by the insurers in this case.

In E.E.O.C., the EEOC issued a subpoena to the University of Pennsylvania, but gave the University a grace period, during which time the EEOC would not seek to enforce the subpoena. E.E.O.C., 850 F.2d at 972-73. Three days before the grace period was to expire, the University filed suit in the District Court for the District of Columbia, challenging the validity of the subpoena. E.E.O.C., 850 F.2d at 973. The EEOC then sought to enforce the subpoena in the Eastern District of Pennsylvania, where the subpoena had been issued. E.E.O.C., 850 F.2d at 973. The District Court in Pennsylvania held that the second-filed suit (the subpoena enforcement) should proceed, rather than defer to the first-filed suit in the D.C. court. E.E.O.C., 850 F.2d at 973-74. Such a fact pattern does not exist in the case at hand. Here, the second-filed suit is not an enforcement of an already-issued subpoena, but is a completely separate suit filed in a different court. It is not a continuance of a legal process already underway.

We hold that the District Court did not abuse its discretion by proceeding with the first-filed Minnesota action.

III.

A.

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Bluebook (online)
920 F.2d 487, 1990 WL 186243, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-fire-insurance-v-goodyear-tire-rubber-co-ca8-1990.