DAVID J. HALE, District Judge.
Plaintiff Interstate Fire & Casualty Co. filed this action seeking a declaratory judgment that it has no duty to defend or indemnify Defendant BFK, Inc. for certain claims asserted against BFK in Ohio state court. (See Docket No. 1) BFK has moved to dismiss the case for lack of subject matter jurisdiction, arguing that there is no live controversy for the Court to resolve. (Docket No. 17) Because the Court concludes that Interstate's petition does not present an actual controversy for purposes of the Declaratory Judgment Act, the motion to dismiss will be granted.
This case is part of a complex web of litigation and business transactions. Defendant BFK was formerly known as Fisher-Klosterman, Inc. In February 2008, some of the old Fisher-Klosterman's assets and liabilities, including its name, were purchased by FKI Acquisition Corp. (D.N. 1, PageID # 3 ¶ 6) The asset purchase agreement provided that BFK would indemnify the new Fisher-Klosterman for costs and expenses incurred in defending claims against Fisher-Klosterman arising out of liabilities it had not assumed. (Id.)
Pursuant to a general liability policy issued by Admiral Insurance Company, BFK had products liability coverage with limits of $1,000,000 per occurrence and $2,000,000 aggregate for the period February 29, 2008, to February 29, 2012. (Id. ¶ 8) Interstate Fire & Casualty provided excess coverage for the same four-year period in the amounts of $5,000,000 per occurrence and $5,000,000 aggregate. (Id., PageID # 4 ¶ 9) The Interstate policy was subject to the same coverages and exclusions as the Admiral policy except where otherwise indicated. (Id.)
In August 2010, Fisher-Klosterman, Inc. was sued in Texas state court by several Valero Refining entities. Valero alleged that it had suffered damages caused by defective Fisher-Klosterman products that were used at Valero refineries. (Id. ¶ 7) At the inception of the Valero lawsuit, Admiral provided a defense to Fisher-Klosterman based on the mistaken belief that its insured, BFK (formerly Fisher-Klosterman, Inc.) had been sued. (Id. ¶ 10) When the mistake was realized, Valley Forge Insurance Company took over the defense on Fisher-Klosterman's behalf. (Id.)
Fisher-Klosterman ultimately settled the Valero suit. (Id. ¶ 11) Along with its subsidiary CECO Environmental Corp., Fisher-Klosterman has since filed suit against BFK in Ohio state court, asserting that it is entitled to indemnity under the asset purchase agreement for defense and settlement costs associated with the Valero case. (Id.; see D.N. 19, PageID # 287-88) Admiral is defending BFK against CECO/Fisher-Klosterman's claims. (D.N. 17-1, PageID # 143)
The Ohio state court case is currently stayed pending resolution of a third lawsuit arising out of the Valero litigation, a declaratory judgment action in the U.S. District Court for the Southern District of Ohio. See Valley Forge Ins. Co. v. Fisher Klosterman, Inc., No. 1:14-cv-792 (S.D. Ohio). In that case, Valley Forge seeks a declaration that it had no duty to defend or indemnify Fisher-Klosterman in the Valero litigation. (D.N. 17-1, PageID # 143-44)
The present action was filed on February 17, 2015. In its petition, Interstate asks the Court to declare that it has no obligation to defend or indemnify BFK for the indemnity claim asserted by Fisher-Klosterman in Ohio state court. (See D.N. 1, PageID # 14) BFK maintains that Interstate's petition is premature. The Court agrees.
This action was brought pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201. The Act provides:
28 U.S.C. § 2201(a). As in any case, "the first requirement of justiciability is that a claim satisfy the `case or controversy' requirement of Article III of the Constitution." Kelley v. E.I. DuPont de Nemours & Co., 17 F.3d 836, 844 (6th Cir. 1994) (quoting Mich. State Chamber of Commerce v. Austin, 788 F.2d 1178, 1181 (6th Cir. 1986)); see also MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) ("[T]he phrase `case of actual controversy' in the Act refers to the type of `Cases' and `Controversies' that are justiciable under Article III." (quoting Maryland Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941))). Where a party seeks declaratory relief, the Court must determine "whether 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, 549 U.S. at 127 (quoting Maryland Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)). The dispute must be "definite and concrete"—that is, "a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts." Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41 (1937) (citations omitted); see also Am. Zurich Ins. Co. v. Cooper Tire & Rubber Co., 465 F.Supp.2d 827, 831 (N.D. Ohio 2006) ("[A] controversy, to be justiciable, must be such that it can presently be litigated and decided and not hypothetical, conjectural, conditional or based upon the possibility of a factual situation that may never develop." (quoting Hilliard v. First Fin. Ins. Co., No. 91-6238, 1992 U.S. App. LEXIS 17386, *4 (6th Cir. July 16, 1992))).
The Court finds no such controversy between Interstate and BFK here. Whether a live dispute will come into existence is contingent upon a series of variables. First, the declaratory judgment action pending in the Southern District of Ohio must be resolved in Valley Forge's favor—i.e., the court must find that Valley Forge has no duty to defend or indemnify Fisher-Klosterman. Although Interstate asserts that the state court action could proceed with respect to settlement costs even if the federal court found that Valley Forge must indemnify CECO/Fisher-Klosterman for those costs (D.N. 19, PageID # 288), as BFK observes, the logical option for CECO/Fisher-Klosterman in that scenario would be to seek reimbursement from Valley Forge, not BFK. (D.N. 20, PageID # 388) At best, the possibility that CECO/Fisher-Klosterman would continue to pursue indemnity from BFK for the Valero settlement adds yet another layer of uncertainty to BFK's already hypothetical claim.
Next, the Ohio state court must find that BFK is obligated to indemnify CECO/Fisher-Klosterman for the costs of defending and settling the Valero suit. If BFK has no such obligation, the basis for the instant action evaporates. And no decision in the state court case is imminent, as that case is currently stayed pending resolution of Valley Forge v. Fisher Klosterman.
Finally, the limits of the Admiral policy must be exhausted to trigger any liability on Interstate's part. Interstate insists that there is "potential coverage" under its excess policy in light of Admiral's assertion in a reservation-of-rights letter to BFK that it has exhausted the Admiral policy's $1,000,000 per-occurrence limit by paying $394,044.46 in defense costs and $605,955.54 in settlement.
Any controversy between Interstate and BFK is not substantial and lacks "sufficient immediacy and reality to warrant" declaratory relief. MedImmune, 549 U.S. at 127 (quoting Maryland Cas. Co., 312 U.S. at 273). In the absence of an "actual controversy," the Court has no jurisdiction over Interstate's claim. 28 U.S.C. § 2201(a); see Kelley, 17 F.3d at 844. Accordingly, it is hereby