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

> District Court, M.D. North Carolina · May 1, 2020

URL: https://www.frixlaw.com/law-library/cases/10253434

## Case

- **Court:** District Court, M.D. North Carolina
- **Decided:** May 1, 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/10253434

## How later opinions describe it (automated extraction)

- noting that the courts employ the comparison test, where “the pleadings are read side-by-side with the policy to determine whether the events as alleged are covered or excluded.”

## 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 returns to this court for
the third time pursuant to Plaintiff American Millennium Insurance
Company’s motion (Doc. 25) to alter or amend and for
reconsideration of the court’s February 13, 2020 Memorandum Order
dismissing this case without prejudice (Doc. 23). For the reasons
set forth below, the motion will be denied.
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 responded to Plaintiff’s complaint in the

present action or made an appearance. Consequently, Plaintiff
requested, and the Clerk of Court entered, default. (Docs. 12,
13.)
Plaintiff then moved for summary judgment and default
judgment. (Docs. 17, 19.) 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 and allowed Plaintiff an opportunity to demonstrate why the
court should do otherwise. (Doc. 21 at 3.) Plaintiff filed a
memorandum, urging the court to grant its motions. (Doc. 22.)

After careful consideration, the court entered a Memorandum Order
denying the motions without prejudice on the grounds that the
action was not justiciable and, alternatively, that the court
should not exercise its discretion under the Declaratory Judgment
Act to entertain the motions. (Doc. 23.)
In the present motion, Plaintiff seeks reconsideration and/or
amendment of the court’s Memorandum Order pursuant to Federal Rules
of Civil Procedure 59(e) and 60(b). “A Rule 59(e) motion may only
be granted in three situations: (1) to accommodate an intervening
change in controlling law; (2) to account for new evidence not
available at trial; or (3) to correct a clear error of law or
prevent manifest injustice.” Mayfield v. Nat’l Ass’n for Stock
Car Auto Racing, Inc., 674 F.3d 369, 378 (4th Cir. 2012) (internal

quotation marks omitted) (quoting Zinkand v. Brown, 478 F.3d 634,
637 (4th Cir. 2007)). Such a motion allows a district court to
correct its own errors, but it does not serve as a vehicle for a
party to raise new arguments or legal theories that could have
been raised before the judgment. See Pac. Ins. Co. v. Am. Nat’l
Fire Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998). Rule 59(e) is
an “extraordinary remedy,” to be used only “sparingly.” Id.
(quoting 11 Wright et al., Federal Practice & Procedure § 2810.1,
at 124 (2d ed. 1995)). Rule 60(b) provides that “[o]n motion and
just terms, the court may relieve a party or its legal
representative from a final judgment, order, or proceeding for the

following reasons: (1) mistake, inadvertence, surprise, or
excusable neglect; (2) newly discovered evidence that, with
reasonable diligence, could not have been discovered in time to
move for a new trial under Rule 59(b) . . . or (6) any other reason
that justifies relief.” Fed. R. Civ. P. 60(b). The rule also
permits the court to correct clerical mistakes arising from
oversight or omission. Fed. R. Civ. P. 60(a). Like Rule 59(e),
Rule 60(b) is an extraordinary remedy that should be imposed only
in “exceptional circumstances.” Mayfield, 674 F.3d at 378.
Because Plaintiff’s motion was filed twenty-five days after this
court’s judgment, there is no timeliness issue under either ground.
See Fed. R. Civ. P. 59(e) (requiring filing within 28 days of entry
of judgment); 60(c) (requiring filing within one year of entry of

the judgment or order for subsections (1) and (2), otherwise within
a “reasonable time”). However, motions filed within 28 days are
considered under Rule 59(e). See Robinson v. Wix Filtration Corp.,
599 F.3d 403, 412 & n.11 (4th Cir. 2010); MLC Auto, LLC v. Town of
S. Pines, 532 F.3d 269, 280 (4th Cir. 2008).
Plaintiff argues first that it has a new fact: namely, a
February 21, 2020 letter from a Texas-based debt collection firm,
T.L. Thompson & Associates, Inc., addressed to Acosta, in care of
Plaintiff’s law firm, which states an intention to seek subrogation
on behalf of Chavers’s insurer, State Farm Mutual Automobile
Insurance, for $7,381.98. (Doc. 25-1.) Presumably this is what

State Farm paid Chavers. The letter states that the firm
“intend[s] to pursue all means available under the law to recover
the amount of the damages sustained in the loss.” (Id.) Plaintiff
concludes that Acosta “[a]pparently” gave Plaintiff’s name to
either the collection firm or State Farm. (Doc. 25 at 3.)
Plaintiff argues this letter demonstrates a concrete injury that
is actual and imminent. (Id.)
The letter is a new piece of evidence, but it does not create
a concrete and imminent injury. The letter directs Acosta that
“[i]f you had insurance coverage at the time of the loss, indicate
the name of your insurance carrier and the policy information in
the space provided below” and states that the collection firm “will
file a claim on your behalf with your insurance carrier for the

damages reflected above.” (Id.) In other words, in so far as the
insurance coverage question goes, the letter only requests
insurance information and suggests the collection firm will sue in
Acosta’s name for coverage. Yet there remains no legal action
against either Acosta or Plaintiff, a fact this court noted
earlier. (Doc. 23 at 2.) And there is no demand by Acosta to
defend any action. Even if there were, in North Carolina the duty
to defend arises from the language of a complaint, yet there is
none. See Westfield Ins. Co. v. Nautilus Ins. Co., 154 F. Supp.
3d 259, 264 (M.D.N.C. 2016) (“The duty to defend is generally
determined by analyzing the pleadings in the underlying

lawsuit.”); Waste Mgmt. of Carolinas, Inc. v. Peerless Ins. Co.,
340 S.E.2d 374, 378 (N.C. 1986) (noting that the courts employ the
comparison test, where “the pleadings are read side-by-side with
the policy to determine whether the events as alleged are covered
or excluded.”) Only a letter from a debt collection agency has
been sent. To state the obvious, there is no indication of any
debt owed -- no judgment that can be pursued for collection.
Thus, Plaintiff’s conclusion that Acosta has “seemingly
caused a subrogation claim to be made” is an overstatement. (Doc
25 at 4.) It is unclear what, if anything, the debt collection
agency will -- indeed can -- do. In fact, in language that parrots
a collection notice, the letter invites Acosta to dispute the
validity of the claim. (Doc. 25-1.) Yet there is no indication

whether he has done so and, if so, the debt collection agency’s
response. To the extent Plaintiff suggests that the letter should
be construed as a request by Acosta for defense or indemnity
because it was sent to Acosta but at the address of the law firm
representing Plaintiff, this is speculation. Acosta did not bother
to respond to the present lawsuit seeking a declaration of no
coverage for this very accident; it is unlikely he would claim
coverage in this fashion. Instead, the letter appears to be a
fishing expedition for insurance coverage couched in the language
of a debt collection.
Given these facts, Plaintiff’s reliance on Progressive N.

Ins. Co. v. Jones, Case No. 1:18CV00009, 2020 WL 216011, *2 n.4
(W.D. Va. Jan. 14, 2020), is misplaced. In that case, the court
decided the coverage issue where there was an actual underlying
lawsuit; here there is no such action. Similarly, Plaintiff’s
reliance on T.H.E. Ins. Co. v. Dowdy’s Amusement Park, 820 F. Supp.
238 (E.D.N.C. 1993), is unhelpful. There, the court identified
the question as “whether [the insurer]’s potential duty to defend
or settle this case [was] sufficiently at issue to constitute an
actual controversy, even though no complaint against its insured
has yet been filed.” Id. at 239. In that case, a settlement
demand had been made, and the court cited the insurer’s concern
for significant pre-litigation factual investigation that would
need to be done. No such circumstances have been raised in the

present case.
Second, Plaintiff argues that the court’s Memorandum Order
labored under a mistake of fact. In the course of its opinion,
the court stated that “Chavers has only made a demand directly to
Plaintiff, as insurer of USA Freight, for payment, which Plaintiff
has apparently simply rejected.” (Doc. 23 at 4.) The court’s
statement was based on the fact that Plaintiff nowhere indicated
that it had made any payment to Chavers. Plaintiff states now
that it never rejected Plaintiff’s demand, “cognizant of North
Carolina’s laws regarding bad faith in making an incorrect
determination to deny coverage.” (Doc. 25 at 4.) Plaintiff

concludes that a declaration from the court as to coverage would
relieve it of any concern as to a duty to defend Acosta. (Id. at
4-5.) No doubt it would be convenient for Plaintiff to have a
judicial decree that there is no coverage for Acosta for the
accident. But that is not the standard. For the reasons noted
above, the duty to defend depends on the allegations of a
complaint, and to date no complaint has been filed by anyone in
connection with the accident.
Any claim implicating Plaintiff remains purely hypothetical
and contingent. Neither USA Freight nor any alleged insured has
been found liable for Chavers’s injuries. Plaintiff is unaware of
any lawsuit involving any of the alleged parties to the accident.
Chavers only made a payment demand directly to Plaintiff, as

insurer of USA Freight, which Plaintiff has apparently not paid.1
There is no allegation that Chavers, or anyone on her behalf, has
proffered even a good faith argument that Plaintiff’s policy is in
any way implicated in this accident. Rather, Plaintiff alleges
that at the time of the accident, 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.)
And now Chavers’s insurer, State Farm, has apparently retained a
collection agency to send a letter to Acosta, even though there is
no evidence of a debt. With no pending lawsuit by anyone, no
notice by USA Freight of any litigation against it, and no demand

1 As the court noted earlier, 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).
by USA Freight or even by Acosta that Plaintiff indemnify or defend
it from a suit, Plaintiff’s alleged injury remains hypothetical.
For these same reasons, Plaintiff’s claim is not ripe. There
is neither a claim for indemnity nor a claim for defense. See
Trustgard Ins. Co. v. Collins, 942 F.3d 195, 200 (4th Cir. 2019).
And even if the claims were justiciable, the court should refrain

from exercising its discretion under the Declaratory Judgment Act
to hear this case.
For the reasons stated,
IT IS THEREFORE ORDERED that the Plaintiff’s motion to alter
and amend and for reconsideration (Doc. 25) is DENIED WITHOUT
PREJUDICE.

/s/ Thomas D. Schroeder
United States District Judge

May 1, 2020

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10253434. Public record. Not legal advice.