United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT December 6, 2004
Charles R. Fulbruge III
Clerk
No. 03-31129
AMERICAN EMPLOYERS’ INSURANCE CO, a Massachusetts Corporation;
ONEBEACON AMERICA INSURANCE COMPANY, as Successor to Commercial
Union Insurance Company and Employers Commercial Union Insurance
Company a Massachusetts Corporation
Plaintiffs-Appellants,
versus
EAGLE INC, a Louisiana Corporation, formerly known as Eagle
Asbestos & Packing Company,
Defendant-Appellee.
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Appeal from the United States District Court
for the Eastern District of Louisiana, New Orleans
03-CV-2224
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Before BENAVIDES, DENNIS, and CLEMENT, Circuit Judges.
PER CURIAM:*
Appellants American Employers’ Insurance Co. and OneBeacon
America Insurance Co. appeal the district court’s order granting
Appellee Eagle, Inc.’s motion to stay Appellants’ declaratory
judgment action and denying Appellants’ motion for summary
judgment. We affirm the district court’s order in both respects.
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
I. INTRODUCTION
This action arises from an insurance coverage dispute. In
the past several years, thousands of lawsuits have been filed
against Eagle, Inc. (“Eagle”) by individuals alleging bodily
injuries as a result of exposure to asbestos from insulation
products allegedly sold and installed by Eagle. Appellants
American Employers’ Insurance Co. (“American Employers”) and
OneBeacon America Insurance Co. (“OneBeacon”) issued general
commercial liability policies to Eagle from 1959 to 1976. The
parties now disagree about the extent to which the insurance
policies cover the asbestos claims against Eagle. On January 7,
2003, after several months of negotiation, Appellants sued Eagle
in federal court for a declaratory judgment. In May 2003, Eagle
filed a third-party demand against Appellants in one of the state
court asbestos actions. In addition, numerous individual
plaintiffs have brought direct actions against Appellants in
state courts.
II. FACTS AND PROCEEDINGS
Eagle is a defendant in approximately 2,000 personal injury
lawsuits filed in Louisiana and other state courts on behalf of
approximately 12,000 claimants for bodily injuries allegedly
resulting from the sale and installation of defective asbestos-
containing insulation. Eagle purchased comprehensive general
liability insurance from American Employers from 1959 to 1968 and
from OneBeacon from 1968 to 1976. The insurance policies have
two relevant components: (i) general liability or
“premises/operations coverage” and (ii) products hazard/completed
operations coverage.1 The basic dispute is over which claims
resulting from the asbestos lawsuits filed against Eagle, if any,
can be allocated to the products hazard/completed operations part
of the policies.
The products hazard/completed operations provisions
encompass injuries caused by Eagle’s products after Eagle has
relinquished possession of the product, or by Eagle’s operations,
if the injury occurs after the operations have been completed and
after Eagle has left the jobsite.
The general liability portion of the policies covers, among
other things, injuries that occur as a result of exposure during
installation.
The products hazard/completed operations coverage under the
policies is subject to certain monetary per-occurrence limits, as
well as yearly aggregate limits. The general liability coverage
under the policies, by contrast, has no such limit.
Because of the insurance coverage dispute, American
Employers has refused to defend Eagle in the personal injury
lawsuits, or to indemnify Eagle for any claims. OneBeacon, along
1
Prior to the introduction of comprehensive general
liability (“CGL”) insurance policies in 1941, the insured had to
buy insurance for each particular risk individually. However,
CGL policies shifted the burden of deciding what to insure and
what not to insure from the insured to the insurance company.
CGL policies insure against all risks, subject to exceptions. In
the instant case, the exception at issue is the exception for
products hazard and completed operations.
with other insurers, entered into an Agreement for Defense and
Indemnification of Asbestos Bodily Injury Claims Pending Against
Eagle, Inc. in 1996. Since that time, OneBeacon has allocated
all claims against Eagle to the products hazard/completed
operations provision of the policies. In the summer of 2002,
OneBeacon informed Eagle that the coverage offered under its
policies for products hazard/completed operations had been
exhausted and that OneBeacon would no longer defend or indemnify
asbestos claims against Eagle.
After OneBeacon informed Eagle of its position that coverage
had been exhausted, the parties engaged in lengthy settlement
negotiations. When those negotiations proved fruitless,
Appellants filed an action in federal court for declaratory
relief.
Appellants filed a motion for partial summary judgment on
two issues. First, Appellants asked the district court to
determine whether any liability for indemnity and defense costs
should be determined on a pro-rata basis determined by the usual
exposure during the policy periods as compared to the total years
of exposure. Second, Appellants asked the court to determine
whether certain claims asserted by the Appellants fall within the
completed operations and products hazards provisions of the
policies.
In response to Appellants’ motion, Eagle filed a motion to
dismiss or, in the alternative, to stay the declaratory judgment
action.
The district court denied Appellants’ motion for partial
summary judgment and granted Appellee’s motion to stay the
action. The district court held that the insurance coverage
issues should be decided in the state court proceedings that will
also address the merits of individual claims, the fault of the
parties, and the assessment of damages. Additionally, the
district court held that Appellants bore the burden of proving
that the products hazard/completed operations limits have been
exhausted. Because Appellants had not submitted any evidence
demonstrating that they had properly allocated the underlying
claims, the district court denied Appellants’ request for a
judgment that certain claims fall within the products
hazard/completed operations provisions of the policies.
III. Discussion
A. District Court’s Order to Stay
We review a district court’s decision to dismiss or stay a
federal declaratory judgment action under an abuse of discretion
standard. The Sherwin-Williams Co. v. Holmes County, 343 F.3d
383, 389 (5th Cir. 2003).
Under the Federal Declaratory Judgment Act, 28 U.S.C. §
2201(a), a district court “may declare the rights and other legal
relations of any interested party seeking such declaration.”
However, the district court is not compelled to exercise that
jurisdiction. Brillhart v. Excess Ins. Co. of America, 316 U.S.
491, 494 (1942); Wilton v. Seven Falls Co., 515 U.S. 277, 286-87
(1995). The basic question for the district court is “whether
the questions in controversy between the parties to the federal
suit ... can better be settled in the proceeding pending in state
court.” Brillhart, 316 U.S. at 495.
In St. Paul Insurance Co. v. Trejo, 39 F.3d 585 (5th Cir.
1994), we set forth seven factors for a court to apply to
determine whether or not it should exercise jurisdiction. In
Sherwin-Williams, we recognized that the Trejo factors address
three broad considerations - federalism, fairness/improper forum
shopping, and efficiency. Sherwin-Williams, 343 F.3d at 390-91.
With respect to federalism considerations, we said in
Sherwin-Williams: “[I]f the federal declaratory judgment action
raises only issues of state law and a state case involving the
same state law issues is pending, generally the state court
should decide the case and the federal court should exercise its
discretion to dismiss the federal suit.” Id. In the instant
case, the dispute involves the interpretation of an insurance
contract and interpretation of state insurance law as it relates
to asbestos claims, both of which are state law matters.
Furthermore, the parties are involved in numerous state court
actions involving the same state law issues. Eagle has filed
third-party demands in several state court lawsuits. In
addition, Appellants have been named as defendants in several of
the state court lawsuits. Thus, considerations of federalism
support the district court’s decision to stay Appellants’ federal
declaratory judgment action.
With respect to fairness considerations, in Sherwin-Williams
we recognized that the mere act of filing a federal declaratory
action in anticipation of a state lawsuit is not, in and of
itself, impermissible. Rather, we were concerned with whether
there was a legitimate reason to be in federal court. Id. at
397-99. In Sherwin-Williams, we held that the selection of a
federal forum was not impermissible for at least four reasons.
First, a desire to avoid multiple lawsuits in multiple courts is
a legitimate reason to want to be in federal court. Second,
Sherwin-Williams’ desire to avoid plaintiff-friendly state court
juries was not illegitimate, because Sherwin-Williams was an out-
of-state company. The traditional justification for diversity
jurisdiction is to ensure fairness for out-of-state litigants.
Third, the selection of a federal forum would not change the
applicable law because state law would apply in either case.
Fourth, there was no evidence that the defendant in the
declaratory judgment action had been restricted from filing a
state court action prior to the plaintiff filing the declaratory
judgment action. Id. at 399.
In the instant case there are many similarities with
Sherwin-Williams. Appellants here did file in federal court in
anticipation of involvement in a state court lawsuit, but they do
not seem to have done so for improper purposes. As in Sherwin-
Williams, Appellants in the instant case are seeking to avoid
multiple lawsuits in multiple courts to determine the same
issues. Also, as in Sherwin-Williams, Appellants here are out-
of-state corporations attempting to avail themselves of the
traditional justification for diversity jurisdiction. Third, as
in Sherwin-Williams, state law will apply in a state court action
or in a federal declaratory action. And finally, there is no
evidence that Appellee could not have filed a state court action.
Thus, with respect to fairness considerations, Appellants
did not engage in improper forum shopping, nor did they act
unfairly with respect to Appellee by filing a federal declaratory
judgment action.
With respect to efficiency, the third Sherwin-Wiiliams
consideration, Appellants claim that it would be more efficient
for one federal court to determine all of the issues between the
parties than for various state courts to decide the issues in a
piecemeal fashion. However, this supposed efficiency gain would
not actually be realized because a federal court cannot rule
conclusively on the disputed issues at this time.
Appellants have five issues for which they request
declaratory judgment. Resolution of each of the five issues
requires a determination of state law and/or resolution depends
on the factual circumstances of the underlying asbestos claims.
Thus, a federal court would not be able to conclusively resolve
the dispute between the parties involving these issues, and it
would not be more efficient for a federal court to initially hear
the claims.
In sum, the application of the considerations we identified
in Sherwin-Williams supports the district court’s order to stay
Appellants’ federal declaratory judgment action. Therefore, we
find that the district court did not abuse its discretion by
granting Eagle’s motion to stay Appellants’ declaratory judgment
action.
B. District Court’s Denial of Motion for Summary Judgment
Appellants ask us to consider the merits of their motion for
partial summary judgment despite the fact that the district
court’s denial of that motion is not a final order. See Ardoin
v. J. Ray McDermott & Co., 641 F.2d 277, 278 (5th Cir. 1981)
(denial of summary judgment motion is an interlocutory order and
unappealable). This Court generally does not have jurisdiction
to review a district court’s denial of a motion for summary
judgment because such a ruling is not a final one within the
meaning of 28 U.S.C. § 1291. Lemoine v. New Horizons Ranch and
Ctr., Inc., 174 F.3d 629, 633 (5th Cir. 1999).
Appellants do not provide any compelling reason for us to
make an exception to the general rule that only final orders are
appealable.
Accordingly, we find that the district court’s order denying
Appellants’ motion for partial summary judgment is not an
appealable order.
IV. Conclusion
For the foregoing reasons, the district court’s order is
AFFIRMED.