United States Fire Insurance v. Housing Authority

917 F. Supp. 2d 581, 2013 WL 144043, 2013 U.S. Dist. LEXIS 4592
CourtDistrict Court, E.D. Louisiana
DecidedJanuary 11, 2013
DocketCivil Action No. 12-2394
StatusPublished
Cited by4 cases

This text of 917 F. Supp. 2d 581 (United States Fire Insurance v. Housing Authority) is published on Counsel Stack Legal Research, covering District Court, E.D. Louisiana 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. Housing Authority, 917 F. Supp. 2d 581, 2013 WL 144043, 2013 U.S. Dist. LEXIS 4592 (E.D. La. 2013).

Opinion

ORDER AND REASONS

MARTIN L.C. FELDMAN, District Judge.

Before the Court is the motion of the Housing Authority of New Orleans to dismiss. For the reasons that follow, the motion is DENIED.

Background

United States Fire Insurance Company seeks to enforce a 2009 settlement agreement that was executed during prior litigation in this Court. The settlement agreement resolved U.S. Fire’s contribution [584]*584claim and the Housing Authority of New Orleans’ defense cost and penalties claim arising from underlying, and still ongoing, state court litigation entitled John Johnson, et al. v. Orleans Parish School Board, et al., Nos. 93-14333 c/w 94-12996 c/w 94-13271, which is pending in Civil District Court for the Parish of Orleans. The Johnson litigation saga began when a class composed of residents, students, workers, and property owners in the Agriculture Street Landfill neighborhood in the Upper Ninth Ward of New Orleans sued the City of New Orleans, HANO, and HANO’s four insurers, including U.S. Fire, for environmental damage and exposure claims.

Many years ago in the Johnson litigation, HANO sought leave to file cross-claims against its former insurers, including U.S. Fire, to recover the defense costs HANO incurred in connection with the Johnson litigation. The Johnson trial court denied HANO’s request more than once.

Thereafter, on January 12, 2006, the Johnson trial court entered judgment against all defendants and in favor of nine class members; the judgment provided that the defendants could seek contribution against each other. On September 30, 2008, HANO’s insurers, with a partial contribution from HANO, satisfied their obligations under the January 12, 2006 state court judgment, reserving the right to seek full contribution from HANO. U.S. Fire had paid $120,333.98 to satisfy the state court judgment.

On October 28, 2008, U.S. Fire filed a complaint for declaratory judgment and contribution against HANO in another Section of this Court. See United States Fire Ins. Co. v. Housing Authority of New Orleans, No. 08-4756, Section D.1 U.S. Fire contended that HANO was responsible for paying part of the amount that U.S. Fire paid because U.S. Fire’s payment covered damages for alleged years of exposure that did not fall within the U.S. Fire/HANO policy period of May 30, 1978 through May 30, 1981. In its answer to U.S. Fire’s suit, HANO asserted a defense cost claim. By a confidential settlement [585]*585and release agreement in the Section D case, U.S. Fire and HANO settled U.S. Fire’s contribution claim against HANO, and resolved HANO’s claims against U.S. Fire “relating to a duty to defend, for reimbursement of past defense costs and coverage for future defense costs, statutory penalties and bad faith” regarding the Johnson litigation. In addition to an extensive release of claims provision, HANO and U.S. Fire agreed that their settlement agreement would be governed by Louisiana law and further “agree[d] that the United States Eastern District Court for the State of Louisiana will retain jurisdiction in the event any dispute arises concerning this Agreement.” After the settlement agreement was executed by the parties on June 9, 2009, U.S. Fire moved to dismiss its coercive contribution claim against HANO, with prejudice, on September 3, 2009; its motion to dismiss was granted the next day.2 On October 7, 2009, the Court dismissed the remaining declaratory judgment claim as to policy limits, choosing to abstain pursuant to Brillhart abstention.3

On August 22, 2012 HANO filed in the Johnson state court litigation a motion for leave to file a second supplemental and amended cross-claim against its former insurers, including U.S. Fire. In the proposed cross-claims, HANO alleged that its June 2009 Settlement Agreement with U.S. Fire is “void for lack of consideration and lesion beyond moiety,” is “null and contrary to public order (contra bonos mores),” and “contained potestative, resolutory and/or suspensive conditions.” HANO also asserted that U.S. Fire must “reimburse HANO for past attorneys’ fees, costs and expenses incurred by HANO since 2009 to defend itself’ in the Johnson litigation, and seeks to recover from U.S. Fire “statutory penalties, pursuant to La. R.S. 22:1892 and/or La.R.S. 22:1973 (formerly La.R.S. 22:658 and 22:1220).” All claims that U.S. Fire contends were released.

In response to HANO’s application in state court, on September 28, 2012 U.S. Fire sued HANO in this Court, seeking damages for HANO’s breach of the June 2009 Section D settlement agreement; U.S. Fire also seeks a declaratory judgment4 and injunctive relief.5 As in the prior litigation between these parties in [586]*586federal court, jurisdiction is based on diversity, 28 U.S.C. § 1332.

HANO now urges this Court to abstain from considering U.S. Fire’s case, and to dismiss it, in deference to the on-going Johnson state court litigation. The muddle this Court has recited would seek to counsel for abstention. But the precedent, such as it is, seems not to favor abstention.

I.

A lawsuit must be dismissed if it appears that the Court lacks subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1), (h)(3). The party asserting jurisdiction bears the burden of establishing the Court’s subject matter jurisdiction. Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377, 114 S.Ct. 1673, 1675, 128 L.Ed.2d 391 (1994). The Court may base its decision on: “(1) the complaint alone; (2) the complaint supplemented by undisputed facts; or (3) the complaint supplemented by undisputed facts and the court’s resolution of disputed facts.” Barrera-Montenegro v. United States, 74 F.3d 657, 659 (5th Cir.1996).

HANO suggests that it presents its motion to dismiss “pursuant to Rule 12(b)(1) ... to dismiss this federal court action, in the interests of comity, federalism and judicial efficiency, so that the state court may continue to exercise its authority and jurisdiction” in the Johnson litigation. In support of its motion to dismiss, HANO first contends that because the dismissal order entered in the prior Section D dispute, Case Number 08-4765, did not contain the terms of the settlement agreement, the settlement agreement must be interpreted by the state court. In particular, in ostensibly challenging this Court’s subject matter jurisdiction over the enforcement of the U.S. Fire/HANO Section D settlement agreement, HANO invokes Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). But HANO’s reliance on Kokkonen is misplaced.

In Kokkonen, the Supreme Court observed that:

Enforcement of [a] settlement agreement ...

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Bluebook (online)
917 F. Supp. 2d 581, 2013 WL 144043, 2013 U.S. Dist. LEXIS 4592, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-fire-insurance-v-housing-authority-laed-2013.