# AMERICAN MILLENNIUM INSURANCE COMPANY v. USA FREIGHT SOLUTION, INC.

> District Court, M.D. North Carolina · February 13, 2020

URL: https://www.frixlaw.com/law-library/cases/10253383

## Case

- **Court:** District Court, M.D. North Carolina
- **Decided:** February 13, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10253383

## How later opinions describe it (automated extraction)

- finding claims of indemnity premature, noting that “[a]n important factor in considering ripeness is whether resolution of the tendered issue is based upon events or determinations which may not occur as anticipated”

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

AMERICAN MILLENNIUM INSURANCE )
COMPANY, )
)
Plaintiff, )
)
v. ) 1:18cv1023
)
USA FREIGHT SOLUTIONS, INC., )
RIDER CABALLERO ACOSTA, and )
SHEYANNE CHAVERS, )
)
Defendants. )

MEMORANDUM ORDER

This declaratory judgment action is before the court pursuant
to Plaintiff American Millennium Insurance Company’s response
(Doc. 22) to this court’s prior order (Doc. 21) directing Plaintiff
to demonstrate why its motions for summary judgment (Doc. 17) and
default judgment (Doc. 19) should not be denied and the action
dismissed. Plaintiff again urges the court not to deny its motions
and dismiss this lawsuit. (Doc. 22.) For the reasons set forth
below, the court finds Plaintiff’s arguments unpersuasive and will
dismiss this action without prejudice.
Plaintiff seeks a declaratory judgment that the insurance
policy it issued to Defendant USA Freight Solutions, Inc. (“USA
Freight”) provides no coverage for damages arising out of an
automobile accident that occurred in West Palm Beach, Florida, on
September 10, 2018. The complaint alleges that Defendant Sheyanne
Chavers, riding as a passenger in a car on Interstate 95, was
injured when her car rear-ended a truck, driven by Rider Caballero
Acosta, and swerved off the highway into a concrete barrier. (Doc.
1 ¶¶ 9-13.) Plaintiff alleges that “Chavers has made a claim to

[it] seeking to recover for the injuries she sustained during the
accident . . . under the policy issued to USA Freight.” (Id.
¶ 29.) There is no allegation of any pending lawsuit against
anyone, including any litigation by Chavers against USA Freight or
Acosta.
No Defendant has filed a response to Plaintiff’s complaint or
to Plaintiff’s pending motions. In its prior Order, this court
indicated its intention to deny the motions and to dismiss
Plaintiff’s action for lack of standing, lack of ripeness, and
lack of a persuasive reason for the court to exercise its
discretion under the Declaratory Judgment Act unless Plaintiff
timely filed additional briefing to demonstrate why the court

should not do so. (Doc. 21 at 3.)
Plaintiff argues that it has standing to bring this action
and that the controversy is ripe for decision. Specifically, it
argues that the complaint alleges a concrete injury that is actual
and imminent and contends that Trustgard Insurance Company v.
Collins, 942 F.3d 195 (4th Cir. 2019), which this court cited in
its prior Order, is distinguishable. (Doc. 22 at 1–3.)
Plaintiff’s arguments are unconvincing.
In Trustgard, an insurer sought a declaratory judgment from
a federal district court regarding a personal injury action being
litigated in state court. See Trustgard, 942 F.3d at 197–99. A
passenger in a vehicle involved in an auto accident had sued

multiple parties in state court, including a Mr. Brown, whose
Interstate Commerce Commission number appeared on the truck
plaintiff rear-ended and for whom the truck driver was allegedly
acting. As the state lawsuit proceeded, Mr. Brown’s insurer sought
a declaratory judgment in federal court that “it need not cover a
judgment against Brown for damages arising from an accident in
which neither Brown nor his insured vehicles were involved.” Id.
at 198. The Fourth Circuit, expressing deep concerns whether the
insurer had standing and whether its claim was ripe, avoided
resolving either question because it was clear that the district
court should not have exercised discretionary jurisdiction, as it
could interfere with the ongoing state court litigation. See id.

at 199-204. The court reasoned that if the state litigation found
Brown not liable, there would be no requirement for indemnity and
the federal court’s decision would amount to an advisory opinion.
Id. at 200.
The Trustgard court’s jurisdictional analysis is instructive.
As to standing, the court noted that the insurer’s alleged injury
was “of a hypothetical and contingent nature,” as it depended on
the outcome of the state court litigation. Id. As to ripeness,
the court noted its precedent finding claims unripe where liability
had yet to be determined and “indemnification turned on the
relationship and relative responsibility among the potential
wrongdoers –- facts that remained unclear.” Id. In so doing, the

court distinguished duty-to-defend cases, noting its precedents
finding that “suits about the duty to indemnify –- unlike the duty-
to-defend suits –- would ordinarily be advisory when the insured’s
liability remains undetermined.” Id.
These same concerns are present here, even more so.
Plaintiff’s claim for indemnity is purely hypothetical and
contingent. Neither USA Freight nor any alleged insured has been
found liable for Chavers’s injuries. Indeed, Plaintiff is unaware
of any lawsuit involving any of the alleged parties to the
accident. Instead, Chavers has only made a demand directly to
Plaintiff, as insurer of USA Freight, for payment, which Plaintiff
has apparently simply rejected.1 Moreover, there is no allegation

that Chavers has proffered even a good faith argument that
Plaintiff’s policy is in any way implicated in this accident. To
the contrary, Plaintiff alleges that at the time of the accident,

1 Notably, Florida, where the accident occurred, does not permit an
injured party who is not an insured to directly sue the alleged
tortfeasor’s insurer without first obtaining a settlement or verdict
against the tortfeasor. Fla. Stat. § 627.4136; see also Kong v. Allied
Prof’l Ins. Co., 750 F.3d 1295, 1300-01 (11th Cir. 2014). Neither North
Carolina nor New Jersey recognize any cause of action by a third party
against an insurer for bad faith or unfair refusal to settle. Lee v.
Mut. Cmty. Sav. Bank, SSB, 525 S.E.2d 854, 857 (N.C. Ct. App. 2000);
Murray v. Allstate Ins. Co., 507 A.2d 247, 250 (N.J. Super. Ct. App.
Div. 1986).
Acosta was not an insured, he was not USA Freight’s employee, and
the truck he was driving was not a covered auto under Plaintiff’s
policy. (Doc. 1 ¶¶ 26-28.) That Plaintiff has not withdrawn her

claim (see Doc. 22 at 5) does not elevate it to an actual injury.
With no pending lawsuit by anyone, no notice by USA Freight of any
litigation against it, and no demand by USA Freight that Plaintiff
indemnify or defend it from a suit (Doc. 22 at 3 n.1), Plaintiff’s
alleged injury appears even more hypothetical than that in
Trustgard, where the determination of liability of the insured was
ongoing in state proceedings.
For these same reasons, Plaintiff’s claim is not ripe.
Liability to USA Freight, the insured, “turn[s] on the relationship
and relative responsibility[ies] among the potential wrongdoers –
- facts that remain[] unclear.” Trustgard, 942 F.3d at 200. There
is neither a claim for indemnity nor a claim for defense. See id.

(citing cases distinguishing duty-to-defend cases prior to
judgment). See, e.g., Susan B. Anthony List v. Driehaus, 573 U.S.
149, 158 n.5 (2014) (recognizing that “[t]he doctrines of standing
and ripeness” both stem from “the same Article III limitation”);
Medimmune, Inc. v. Genentech, Inc., 549 U.S. 118, 128 n.8 (2007)
(noting that issues of standing and ripeness often “boil down to
the same question”); A/S J. Ludwig Mowinckles Rederi v. Tidewater
Const. Co., 559 F.2d 928, 932-33 (4th Cir. 1977) (finding claims
of indemnity premature, noting that “[a]n important factor in
considering ripeness is whether resolution of the tendered issue
is based upon events or determinations which may not occur as
anticipated”).

Plaintiff draws the court’s attention to a handful of cases
for a contrary position. They are unhelpful. Not only is none
controlling in this district, but many are factually
distinguishable. For example, the primary case Plaintiff cites,
Firemen’s Insurance Company v. Kline & Son Cement Repair,
Incorporated, found a justiciable controversy where an insured
demanded indemnity when a lawsuit was imminent. 474 F. Supp. 2d.
779, 785–87 (E.D. Va. 2007). Here, there is not even the threat
of litigation, and the insured has made no claim for indemnity or
defense, either; in fact, it has not even provided notice of the
accident. Apart from Chavers’s claim to Plaintiff, there is no
indication of any dispute among the parties. Indeed, in the year

this action has been pending, no other party –- including Chavers
-- has participated in this lawsuit.
Plaintiff argues that a “third party’s failure to file an
underlying lawsuit is not a per se barrier” to the existence of a
declaratory judgment action. (Doc. 22 at 3.) True. Firemen’s
Ins. Co., 474 F. Supp. 2d at 786. But Trustgard makes clear that
the filing of lawsuit by a third party likewise does not guarantee
that an insurer such as Plaintiff will have standing to seek a
declaratory judgment. Trustgard, 942 F.3d at 200. As it stands
now, a decision by this court would be merely advisory and have no
“real-world impact,” since Chavers has not filed or even threatened
litigation, Plaintiff does not know if USA Freight will demand

coverage, and it is highly speculative whether USA Freight would
even be found liable for Chavers’s injuries. Peerless Ins. Co. v.
Innovative Textiles, Inc., 1-19-cv-362, 2020 WL 137303, at *2
(M.D.N.C. Jan. 13, 2020) (quoting Molex, Inc. v. Wyler, 334 F.
Supp. 2d 1083, 1087 (N.D. Ill. 2004)). For all these reasons,
Plaintiff lacks standing and its claim in unripe. The court
therefore lacks subject-matter jurisdiction to hear the case.
Even if the claims were justiciable, “the normal principle
that federal courts should adjudicate claims within their
jurisdiction yields to considerations of practicality and wise
judicial administration” that counsel refraining from doing so
here. Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995). See

also 28 U.S.C. § 2201(a). In determining whether to entertain an
insurer’s declaratory judgment claim related to its duty to
indemnify, courts consider several factors, including whether
hearing the case would intrude on the prerogative of state courts;
whether exercising discretionary jurisdiction would raise serious
questions about Article III jurisdiction; and whether the
declaration would consume judicial time in order to produce a
decision that may turn out to be irrelevant. Trustgard, 942 F.3d
at 201–02. Although there is no ongoing state litigation here,
the other two factors weigh heavily against Plaintiff. Therefore,
even if Plaintiff had standing on a ripe controversy, the court
would decline to exercise its discretion under the Declaratory

Judgment Act to hear this case.
For the reasons stated,
IT IS THEREFORE ORDERED that the Plaintiff’s motions for
summary judgment (Doc. 17) and default judgment (Doc. 19) are
DENIED WITHOUT PREJUDICE and the case is DISMISSED WITHOUT
PREJUDICE.

/s/ Thomas D. Schroeder
United States District Judge

February 13, 2020

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10253383. Public record. Not legal advice.