Atlantic Casualty Insurance Company v. North Freeway Auto Storage and Sales Inc. et al

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ATLANTIC CASUALTY
INSURANCE COMPANY,
Plaintiff,
v.
NORTH FREEWAY AUTO
STORAGE AND SALES, INC., et.
al.,
Defendants.
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§ 	Civil Action No. H-26-0416
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ORDER
Pending before the Court are Defendants' Cisneros and Ortiz's Combined
Rule 	12(b)(l) Motion to 	Dismiss 	or 	Stay, 	Alternative 	Motion, 	Answer, 	and
Counterclaim for Declaratory Judgment (Document No. 10), and Atlantic Casualty
Insurance Company's Motion to Dismiss Defendants Marselina Cisneros and Erica
Ortiz's 	Counterclaim 	(Document 	No. 	13). 	Having 	considered 	the 	motion,
submissions, and applicable law, the Court determines that Defendants' motion
should be denied and Plaintiffs motion should be granted.
I. 	BACKGROUND
This is a declaratory judgment matter involving an underlying State Court
Case, Cause No. 2025-75646 in the 234th District Court of Harris County, Texas
(the "State Court Case"). The State Court Case involves the fatal shooting of
Christian Segundo ("Segundo"), who was dropping off a towed vehicle at Defendant
United States District Court
Southern District of Texas
ENTERED
July 31, 2026
Nathan Ochsner, Clerk
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North Freeway Auto Storage and Sales ("North Freeway Auto Storage") when he
was killed. Plaintiff Atlantic Casualty Insurance Co. ("Plaintiff') insured North
Freeway Auto Storage at the time of Segundo's killing.- Defendants Marselina
Cisneros ("Cisneros"), individually and as administrator of the estate of Segundo,
and Erica Ortiz ("Ortiz"), individually and as next friend of C.S.J. and N.S. appear
in this matter as interested parties.
On January 20, 2026, Plaintiff filed the current matter seeking a declaration
that it has no duty to indemnify North Freeway Auto Storage or pay insurance
proceeds to Cisneros or Ortiz for the death of Segundo.1 On February 19, 2026,
Cisneros and Ortiz (collectively "Individual Defendants") answered, moving to
dismiss Plaintiffs Complaint and asserting a counterclaim for declaratory judgment
(the "Counterclaim").2 On March 12, 2026, Plaintiff responded in opposition to the
Individual Defendants' motion to dismiss. 3 On that same day, Plaintiff moved to
1 See Plaintiff's Complaint, Document No. 1 at 2.
2 See Defendants' Cisneros and Ortiz's Combined Rule 12(b)(J) Motion to Dismiss
or Stay, 	Alternative Motion, 	Answer, 	and Counterclaim for 	Declaratory Judgment,
Document No. 10 at 1.
3 See Plaintiff Atlantic Casualty Insurance Company's Response to Defendants'
Motion to Dismiss, Document No. 14 at 1.
2
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dismiss the Individual Defendants' Counterclaim. 4 On April 7, 2026, the Individual
Defendants responded in opposition to Plaintiffs motion to dismiss. 5
II. LAW AND ANALYSIS
The Court will consider, in tum, the Individual Defendants' pending motion
to 	dismiss 	followed 	by 	Plaintiffs pending 	motion to 	dismiss 	the 	Individual
Defendants' Counterclaim.
A. Individual Defendants ' Motion
The Individual Defendants move to dismiss Plaintiffs Complaint contending
that: (1) this Court should abstain because proceedings simultaneously in federal and
state court risk inconsistent findings; and (2) the duty to indemnify issue is not ripe. 6
In response, Plaintiff contends that this Court should exercise jurisdiction and that
the duty to indemnify issue is ripe. 7 Having considered the motion, submissions, and
4 See Atlantic Casualty Insurance 	Company's Motion 	to 	Dismiss Defendants
Marselina Cisneros and Erica Ortiz's Counterclaim, Document No. 13 at 1.
5 See Defendants' Reply in Support of Their Counterclaims and in Opposition to
Plaintiff's Motion to Dismiss, Document No. 15 at 1.
6 See Defendants' Cisneros and Ortiz's Combined Rule 12(b)(l) Motion to Dismiss
or Stay, 	Alternative Motion, 	Answer, 	and Counterclaim for 	Declaratory Judgment,
Document No. 10 at 2-3. The Court notes the Individual Defendants' "alternative argument
regarding duty to defend." Id. at 3-4. The Court notes that this argument goes to whether
Plaintiff has a duty to defend. To the extent this is a motion to dismiss Plaintiffs
declaratory judgment claim as to the duty to defend, that is denied. The Court will continue
this alternative argument to the extent it becomes timely and relevant in this matter.
7 See Plaintiff Atlantic Casualty Insurance Company's Response to Defendants'
Motion to Dismiss, D9cument No. 14 at 3, 11.
3
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applicable law, the Court elects to exercise jurisdiction and finds that the duty to
indemnify issue is ripe. 8 Based on the foregoing, the Court finds that the Individual
Defendants' motion to dismiss should be denied. The Court will now consider
Plaintiffs pending motion to dismiss the Individual Defendants' Counterclaim.
B. Plaintiff's Motion
The Individual Defendants bring a Counterclaim against Plaintiff seeking "a
declaration that Atlantic Casualty owes a duty to defend and that indemnity cannot
be 	adjudicated until liability 	is 	determined." 9 Plaintiff moves to 	dismiss 	the
Counterclaim contending, in relevant part, that the Individual Defendants lack
standing. 10 In response, the Individual Defendants contend that they have standing.
To establish standing, a party must show an injury in fact, "a causal connection
between the injury and the conduct complained ofl,]" and it must be likely "as
8 The Court notes that this matter concerns the contractual relationship between
insurer and insured. The parallel State Court Case concerns liability for a shooting.
Accordingly, the Court finds there is no risk of contradictory findings. With respect to
ripeness of the duty to indemnify issue, the Court notes Farmers Texas County Mut. Ins.
Co. v. Griffin, 955 S.W.2d 81, 84 (holding that ''the duty to indemnify is justiciable before
the insured's liability is determined in the liability lawsuit when the insurer has no duty to
defend and the same reasons that negate the duty to defend likewise negate any possibility
the insurer will ever have a duty to indemnify."). The Court notes that the same policy
exclusion could preclude both the duty to defend and duty to indemnify. As such, the issue.
is ripe.
9 Defendants' Cisneros and Ortiz's Combined Rule J2(b)(l) Motion to Dismiss or
Stay, Alternative Motion, Answer, and Counterclaim for Declaratory Judgment, Document
No. 10 at 5.
10 See Atlantic Casualty Insurance 	Company's Motion 	to Dismiss Defendants
Marselina Cisneros and Erica Ortiz's Counterclaim, Document No. 13 at 5.
4
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opposed to merely 'speculative' ... that the injury will be 'redressed by a favorable
decision."' Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (citation
omitted).
Plaintiff contends 	that the 	Individual 	Defendants 	cannot 	"satisfy these
requirements with respect to their Counterclaim because they are not insureds under
the Policy." 11 In response, the Individual Defendants contend, in relevant part, that
"the injury is redressable by a favorable declaration that coverage exists." 12 The
Court notes that the Individual Defendants' argument assumes success on the merits
in the underlying State Court Case. As such, the potential of "redress by a favorable
decision" is speculative. Based on the foregoing, and the clear guidance of the
Supreme Court that the alleged injury must be likely to be redressed by a decision,
not just speculative, the Court finds that the Individual Defendants lack standing as
to their Counterclaim. 13 As such, the Court finds that Plaintiffs motion should be .
granted.
11 Atlantic Casualty Insurance Company's Motion to Dismiss Defendants Marselina
Cisneros and Erica Ortiz's Counterclaim, Document No. 13 at 6.
12 Defendants' Reply in Support of Their Counterclaims and in Opposition to
Plaintiff's Motion to Dismiss, Document No. 15 at 2.
13 Considering the Court's finding that the Individual Defendants lack standing as
to their Counterclaim, the Court declines to consider Plaintiffs remaining arguments that
the Counterclaim is duplicative.
5
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III. CONCLUSION
Based on the foregoing, the Court hereby
ORDERS that Defendants' Cisneros and Ortiz's Combined Rule 12(b)(l)
Motion to Dismiss or Stay, Alternative Motion, Answer, and Counterclaim for
Declaratory Judgment (Document No. 10) is DENIED. The Court further
ORDERS that Atlantic Casualty Insurance Company's Motion to Dismiss
Defendants Marselina Cisneros and Erica Ortiz's Counterclaim (Document No. 13)
is GRANTED. The Court further
ORDERS 	that 	Defendants 	Cisneros 	and 	Ortiz's 	Counterclaim 	against
Plaintiff Atlantic Casualty Insurance Company is hereby DISMISSED.
SIGNED at Houston, Texas, on this 	;30d~y of July, 2026.
6
DAVID HITTNER
United States District Judge
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