United States District Court, W.D. Washington, Tacoma
ORDER ON DEFENDANT EMPLOYERS INSURANCE OF
WAUSAU'S MOTION TO DISMISS AMENDED COMPLAINT
J. BRYAN United States District Judge
MATTER comes before the Court on Defendant Employers
Insurance of Wausau's Motion to Dismiss Amended
Complaint. Dkt. 31. The Court has considered the amended
complaint (“Complaint”), USNR's Response,
Wausau's Reply, and the remainder of the file herein.
Dkts. 23, 33, 35.
parties have opposing views about the legal sufficiency of
the Complaint, pursuant to Fed.R.Civ.P. 12(b)(1) and (6). The
parties agree that the Complaint seeks declaratory relief
under the Declaratory Judgment Act, 28 U.S.C. § 2201,
Dkt. 23 at ¶¶6, 7, but the parties disagree about
whether the Complaint alleges an actual, cognizable case or
controversy and whether the Court should exercise its
discretion to extend jurisdiction pursuant to
Brillhart and Drizol.
Complaint begins with Section I, “Nature of the Case,
” which introduces the case as follows:
1. USNR . . . brings this action for declaratory relief
against . . . [the Hartford] and [Wausau] and breach of
contract against the Hartford.
2. USNR asks the Court to find that: (1) Washington or Oregon
law governs the interpretation of the insurance policies at
issue and (2) that the Hartford has breached its contractual
duty to defend USNR by refusing to defend USNR under certain
policies identified below.
Dkt. 23 at ¶¶1, 2. In Section II, the Complaint
introduces the parties, and in Section III, the Complaint
states the venue and basis for jurisdiction, diversity
jurisdiction. Id. at ¶¶3-7.
VI, General Allegations, alleges facts pertaining to the
Underlying Lawsuit. The Underlying Lawsuit was filed on
November 15, 2016 in Texas and named USNR as a defendant. The
lawsuit involves USNR's liability for industrial
contamination to a business property in San Antonio, Texas,
where USNR's corporate predecessor owned an air
conditioning manufacturing business reliant on chlorinated
solvents. USNR or its predecessor owned the property from
approximately 1971 to 2008. The Underlying Lawsuit alleges
damages over $4 million. Dkt. 23 at ¶¶8-16.
IV, General Allegations, also alleges facts particular to
insurance policies of Wausau and the Hartford. Dkt. 23 at
¶¶17-43. USNR tendered the Underlying Lawsuit to
Wausau on March 30, 2017, and USNR conditionally accepted
coverage to defend USNR on April 4, 2017. Id. at
¶¶37, 38. According to the Complaint, although
Wausau agreed to defend USNR, Wausau reserved the right to
recover defense costs “in the event of a judicial
determination” that Wausau was not obligated to provide
a defense, and Wausau cited exclusions of its duty to defend,
including a “pollution exclusion.” Id.
at ¶¶40-42. The parties have agreed that, beyond
the Complaint itself, the Court may consider Wausau's
V, Causes of Action, enumerates two causes of action. The
First Cause of Action, alleged against both defendants, is
entitled, “Declaratory Judgment: Washington or Oregon
law applies in the interpretation of the Hartford Policies
and the Wausau Policy.” Dkt. 23 at 7. The Second Cause
of Action, alleged against the Hartford only, is entitled,
“Breach of Contract: Refusal to Defend Under pre-1981
policies.” Id. at 8.
Wausau, the First Cause of Action alleges the following, in
• USNR is entitled to coverage and a defense
“including reimbursement of all costs for work
performed in USNR's defense . . . including costs
incurred before the date of USNR's tender”;
• Wausau conditioned its acceptance of its duty to
defend on reservations, including the right to recover
defense costs in the event of a judicial determination;
• the Wausau policy cites the “pollution
exclusion” as a potential basis for denying coverage;
• Wausau's “reservation of rights
threaten[s] to limit the extent of coverage ...