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Colony Insurance Co. v. Hucks Pool Co. Inc.

United States District Court, D. South Carolina, Florence Division

February 15, 2018

Colony Insurance Company, Plaintiff,
v.
Hucks Pool Company, Inc. and Jeffrey Mann, Defendants.

          ORDER

          R. Bryan Harwell United States District Judge.

         This matter is before the Court on Defendant Hucks Pool Company, Inc.'s [ECF No. 7] motion to dismiss. For the reasons stated below, the Court grants in part and denies in part Hucks Pool Company's motion to dismiss.[1]

         Factual and Procedural Background

         Colony issued Hucks Pool Company a Commercial General Liability Policy for the period of June 21, 2016 through June 21, 2017. On or about July 11, 2016, Defendant Jeffrey Mann ("Mann") was allegedly injured at the Hucks Pool Company facility when a Hucks Pool Company employee or associate activated a pressurized gun and shot Mann in the ear with a bleach solution. Following the incident, Mann retained counsel.

         In a letter dated November 23, 2016, Mann's counsel placed Hucks Pool Company on notice of Mann's claim. The letter, addressed to Hucks Pool Company, stated:

As you know, on July 11, 2016 Mr. Jeffrey Mann was at your facility when one of your associates activated a pressurized gun and shot him in the ear with a bleach solution. Due to this incident my client had to seek medical attention and may possibly sustain permanent hearing loss. Given the accident was due to the negligent operation of equipment by one of your employees we are placing you on notice that we are representing client for this incident and shall submit our demand package accordingly. Please contact me and provide me with the information regarding who your general liability insurance carrier is.

[ECF No. 14-1]. Mann has not yet filed a lawsuit based on this claim.

         On July 31, 2017, Colony filed the instant declaratory judgment action seeking a declaration as to: 1) whether Colony's policy provides coverage for the July 11, 2016 incident involving Jeffrey Mann; 2) whether Colony has a duty to indemnify Hucks Pool Company for the July 11, 2016 incident; and 3) whether Colony has a duty to defend Hucks Pool Company for the July 11, 2016 incident. [Complaint, ECF No. 1 at 4].

         Hucks Pool Company filed a motion to dismiss [ECF No. 7] arguing that this matter is not ripe for adjudication because Mann has not yet filed a complaint related to the underlying claim. Hucks Pool Company also argues the amount in controversy is not met for purposes of diversity jurisdiction under 28 U.S.C. § 1332.

         Discussion

         Article III of the United States Constitution limits the exercise of judicial power to “cases” and “controversies.” U.S. CONST. art. III, § 2, cl. 1. In accordance with this constitutional mandate, the Federal Declaratory Judgment Act provides that, “[i]n a case of actual controversy within its jurisdiction...any court of the United States...may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a).

         A court's discretion to grant declaratory relief “should be liberally exercised to effectuate the purposes of the [Declaratory Judgment Act] and thereby afford relief from uncertainty and insecurity with respect to rights, status and other legal relations.” Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 324 (4th Cir.1937). The Supreme Court has stated that the case or controversy requirement will be met where "the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Medimmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). "[A] declaratory judgment action is appropriate when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and...when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding." Penn-America Ins. Co. v. Coffey, 368 F.3d 409, 412 (4th Cir.2004).

         Relying on Union Ins. Co. v. Soleil Group, Inc., 465 F.Supp.2d 567 (D.S.C. 2006), Hucks Pool Company argues that this case is not ripe for adjudication because no complaint has been filed on behalf of Jeffrey Mann against Hucks Pool Company.

         In Union Ins. Co. v. Soleil Group, Inc., the court dismissed a declaratory judgment action for lack of subject matter jurisdiction on ripeness grounds. 465 F.Supp.2d at 574-75. First, the court noted that in South Carolina "an insurer's duty to defend is determined by the allegations of the underlying complaint." Id. at 572. The court then held the duty to defend issue was not ripe because no complaint had been filed against the Soleil Group and with no complaint, the court could not "compare the allegations in the complaint to the policy language in order to determine whether Plaintiff has a duty to defend the Soleil Group." Id. at 574. As to the duty to indemnify, the court noted that the duty to indemnify is "based on evidence found by the factfinder" in ...


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