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Selective Insurance Company of America v. The Cincinnati Insurance Co.

United States District Court, E.D. Michigan, Southern Division

July 21, 2017

Selective Insurance Company of America, Plaintiff,
v.
The Cincinnati Insurance Company, and Kemp Building and Development, Co., Defendants.

          OPINION AND ORDER DECLINING TO EXERCISE JURISDICTION OVER PLAINTIFF'S AND DEFENDANTS' ACTIONS FOR DECLARATORY JUDGMENTS

          TERRENCE G. BERG, UNITED STATES DISTRICT JUDGE

         I. Introduction

         This case involves the duty of an excess insurer to indemnify and defend the insured. Plaintiff Selective Insurance Company of America (“Selective”) seeks a judgment declaring that it does not have a duty to defend Defendant Kemp Building and Development Company (“Kemp”) in an ongoing, Michigan state court lawsuit filed by an employee injured on a construction job. Defendants-Kemp and Cincinnati Insurance Company (“Cincinnati”), Kemp's primary in- surer-seek a judgment declaring the opposite; that is, that Plaintiff does have a duty to indemnify and defend Kemp in the underlying Michigan lawsuit.

         Plaintiff has filed a motion for partial judgment on the pleadings. Dkt. 7. Defendants oppose this motion and have filed a counter motion for summary judgment. Dkt. 9.

         The Court heard oral argument on this matter on July 19, 2017, in Detroit, Michigan.

         This Court has discretionary jurisdiction over actions for a declaratory judgment, pursuant to the Declaratory Judgment Act. 28 U.S.C. § 2201(a). For the reasons outlined below and stated on the record at oral argument, the Court declines to exercise its jurisdiction over this matter. Accordingly, Plaintiff's motion for partial judgment on the pleadings is DENIED, Defendants' motion for partial summary judgment is DENIED, and this case is DISMISSED.

         II. Background

         Defendant Kemp was hired as the general contractor for a construction project (“the project”), Dkt. 7, Pg. ID 345, and Defendant Cincinnati issued a primary insurance policy to Kemp. Kemp then hired Kehrig Steel, Inc. (“Kehrig”) as a steel subcontractor for the project, Dkt. 9, Pg. ID 375, and Plaintiff Selective issued a primary insurance policy to Kehrig. Dkt. 9, Pg. ID 376. Then, Kemp and Kehrig entered into a contract stating that Kehrig's primary in-surer-that is, Plaintiff Selective-would insure Kemp as an additional insured for the work Kehrig performed. Dkt. 9, Pg. ID 375. The practical result of this contract was that Plaintiff became Kemp's excess insurer (and Cincinnati remained Kemp's primary insurer). Dkt. 9, Pg. ID 380.

         While working on site of the project, an ironworker working for Kehrig was injured. Dkt. 9, Pg. ID 379; Dkt. 9-8, Pg. ID 760. He sued Kehrig and Kemp. Dkt. 9, Pg. ID 379. The lawsuit is currently pending in Macomb County Circuit Court, case number 14-3846-NI. Dkt. 7, Pg. ID 344. After the lawsuit was initiated, Cincinnati contacted Plaintiff, requesting that it defend Kemp in the case. Dkt. 1-3, Pg. ID 287. Plaintiff responded, declining, and denying that it has any duty to do so. Dkt. 1-4, Pg. ID 304.

         Plaintiff then brought this action, seeking a declaration that it has no duty to defend Kemp. Dkt. 1, Pg. IDs 1-2. Since this lawsuit was filed, the parties have stipulated to several issues, including that: Plaintiff will insure Kemp as an additional insured, Plaintiff's insurance of Kemp is in excess, and Plaintiff will indemnify Kemp if and when Cincinnati's policy is exhausted. Dkt. 11, Pg. ID 938. The only issue remaining is whether Plaintiff has a duty to defend Kemp. Dkt. 1, Pg. ID 18.

         At oral argument, the parties altered their positions somewhat. Defendant Cincinnati revised its position by stating that it was no longer asking this Court for summary judgment, but rather stated its preference for the Macomb County Circuit Court to resolve this issue. Plaintiff, when asked by the Court how this question met the applicable factors for exercising declaratory judgment authority required by the Sixth Circuit, discussed in greater detail below, conceded that the case was not a good fit.

         III. Jurisdiction

         1. Legal Standards

         A district court's exercise of jurisdiction under the Declaratory Judgment Act is discretionary. Brillhart v. Excess Ins. Co., 316 U.S. 491, 494 (1942). The Sixth Circuit has articulated five factors for district courts to balance in ...


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