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Hudson Specialty Insurance Co. v. Talex Enterprises, LLC

United States District Court, S.D. Mississippi, Western Division

March 8, 2018

HUDSON SPECIALTY INSURANCE COMPANY PLAINTIFF
v.
TALEX ENTERPRISES, LLC, JUBILEE PERFORMING ARTS CENTER, INC., TERRANCE L. ALEXANDER, and the BOARD OF MAYOR AND SELECTMEN OF MCCOMB, MISSISSIPPI, et al. DEFENDANTS

          ORDER AND OPINION

          DAVID BRAMLETTE UNITED STATES DISTRICT JUDGE.

         Before the Court is a Motion to Dismiss [Doc. 10] filed by Defendant Board of Mayor and Selectmen of McComb, Mississippi (the “City”).

         Background

         A downtown McComb building collapsed because too much water gathered on its roof. This declaratory judgment action asks whether two insurance policies that might otherwise cover damage caused by the collapse are void due to an insured's misrepresentations to his insurer, Hudson Specialty Insurance Company (“Hudson”).[1]

         The City -- citing no authority -- asks the Court to decline jurisdiction and dismiss this declaratory action because it duplicates another action pending in Pike County Circuit Court.[2]

         In that action, the City sued Hudson and its insureds, alleging the negligence of both caused the building's collapse. The coverage and policy-validity issues raised here were not raised there.

         I

         The Declaratory Judgment Act gives the Court discretion to declare the rights of litigants. 28 U.S.C. § 2201(a). But before it decides whether it should exercise that discretion, the Court must find two things: that this case is justiciable and that the Court may grant the declaratory relief Hudson requests. Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000). The Court so finds here.

         This suit presents a live dispute between Hudson and the City. One party supports coverage, the other opposes it. The case is therefore justiciable. See Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941).

         The Court also finds that it has authority to rescind Hudson's insurance policies and to declare Hudson's obligations under those policies - the relief Hudson seeks in this suit. See Massachusetts Mut. Life. Ins. Co. v. Nicholson, 775 F.Supp. 954, 962 (N.D. Miss. 1991).

         Next, the Court considers the more involved question. Should the Court exercise its discretion to decide this declaratory action? The answer depends on seven factors:

1) Pendency of a state-court action in which all of the disputed issues may be litigated;
2) Whether Hudson filed this action in anticipation of a declaratory action ...

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