Opinion
Civil Action No. 3:00-CV-2740-D
May 17, 2001
MEMORANDUM OPINION AND ORDER
Plaintiffs Aetna U.S. Healthcare of North Texas Inc., NYLCare Health Plans of the Southwest, Inc., and Aetna Health Management, Inc. bring this declaratory judgment action against defendant Alvin Durboraw ("Durboraw"). Durboraw moves to dismiss, contending inter alia that the court should not exercise its jurisdiction to issue a declaratory judgment. Although the court declines to dismiss the case, it stays it pending the outcome of an earlier-filed county court lawsuit and administratively closes it for statistical purposes.
I
This lawsuit arises from disputes concerning a health insurance capitated plan that places insureds in a "risk pod" and covers claims only to the extent the "risk pod" has sufficient funds. According to Durboraw, when the "risk pod" to which he was assigned exhausted its funds, he was denied necessary rehabilitation services and discharged from the hospital against the advice and approval of his physician. Durboraw brought a class action in the Eastern District of Texas against three defendants who are related to the plaintiffs in the instant case. He asserted federal-law claims under the Americans with Disabilities Act of 1990 ("ADA"), 42 U.S.C. § 12101 et seq., the Rehabilitation Act, 29 U.S.C. § 794, and the Lanham Act, 15U.S.C. § 1114, 1125(a), and state-law claims for breach of fiduciary duty, violation of the Texas Health Care Liability Act, Tex. Civ. Prac. Rem. Code Ann. § 88.001-88.003 (Vernon 2001) ("THCLA"), fraud, breach of contract, and violation of Texas Ins. Code Ann. Art. 21.21 (Vernon 2001). The defendants moved to dismiss on substantive and venue grounds. Durboraw responded by filing a Fed.R.Civ.P. 41(a)(1) notice of dismissal. He then re-filed the suit — this time based only on state-law claims for violation of the THCLA, fraud, and violation of article 21.21 — in Dallas county court. Four days later, plaintiffs filed the instant declaratory judgment action.
NYLCare Health Plans, Inc., NYLCare of Texas, Inc., and Aetna U.S. Healthcare, Inc.
II A
The federal Declaratory Judgment Act, 28 U.S.C. § 2201, does not confer subject matter jurisdiction on this court. See Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671 (1950). The Act is "an authorization, not a command." Public Affairs Assocs., Inc. v. Rickover, 369 U.S. Ill, 112 (1962) (per curiam). Federal district courts have broad discretion to grant or refuse declaratory relief. See Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494 (1942) (holding that district courts are under no compulsion to exercise jurisdiction under Declaratory Judgment Act); Vulcan Materials Co. v. City of Tehuacana, 238 F.3d 382, 390 (5th Cir. 2001). Although the discretion "is broad, it is not unfettered." St. Paul Ins. Co. v. Trejo, 39 F.3d 585, 590 (5th Cir. 1994) (citation omitted). The court must consider the Trejo factors on the record before it can dismiss a declaratory judgment action as a discretionary act. Vulcan Materials, 238 F.3d at 390. These factors include: whether (1) there is a pending state action in which all of the matters in controversy may be fully litigated, (2) the plaintiff filed suit in anticipation of a lawsuit, (3) the plaintiff engaged in forum shopping in bringing the suit, (4) possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist, (5) the federal court is a convenient forum for the parties and the witnesses, (6) retaining the lawsuit in federal court would serve the purposes of judicial economy, and (7) the federal court is being called on to construe a state judicial decree involving the same parties and entered by the court before whom the parallel state suit between the same parties is pending. Id. (quoting Trejo, 39 F.3d at 590-91).
In Vulcan Materials the panel stated what the Trejo factors "are." Id. While this is literally true, it could give the misimpression that the factors are exclusive. Trejo itself makes clear, however, that the factors are non-exclusive. See Trejo, 39 F.3d at 590-91 (stating what the relevant factors "include"). This distinction is important, because the court in today's opinion relies on other factors, in addition to those listed in Trejo, in exercising its discretion.
B
Under the first Trejo factor, the court considers whether there is a pending state court action in which all of the matters in controversy may be fully litigated. The present lawsuit includes virtually identical issues being contested by substantially related parties. Although the county court defendants are separate legal entities from the plaintiffs in the instant case, there is no indication in the record that they will not advocate the very interests that plaintiffs seek to advance by the instant declaratory judgment action. The county court defendants can defend against Durboraw's state-law claims on the merits, just as the plaintiffs in this action can seek a declaratory judgment that the claims lack merit. And the county court defendants can assert federal preemption of those claims, just as the plaintiffs in the present case can do via their declaratory judgment action. The court therefore concludes that all the matters presently in controversy may be fully litigated in county court.
Plaintiff's argue that the state and federal suits are not parallel because they present different issues argued by different parties. The two cases they cite in support of this contention, however, are easily distinguishable. In Exxon Corp. v. St. Paul Fire Marine Ins. Co., 129 F.3d 781 (5th Cir. 1997), the Fifth Circuit considered a district court's decision not to stay a declaratory judgment action by Exxon against its insurer to determine coverage under an insurance policy. Exxon was the defendant in a related state court action, to which its insurer was not a party. Id. 785. The Fifth Circuit noted the lack of a parallel state court proceeding in upholding the district court. Id. Similarly, in Agora Syndicate, Inc. v. Robinson Janitorial Specialists, Inc., 149 F.3d 371 (5th Cir. 1998), the Fifth Circuit relied on the absence of a parallel suit in reversing a district court's dismissal of an insurer's declaratory judgment action to determine coverage for a liability action pending in state court to which the insurer was not a party. Id. at 373.
To the extent that the present suit addresses federal-law claims that are not at issue in the county court case, the court declines, for the reasons set out infra at § II(C), to consider grounds for relief that Durboraw is no longer advancing.
As the court explains infra at § II(C), the court would not have subject matter jurisdiction if plaintiffs were seeking a declaratory judgment only on the basis of a federal preemption defense against state-law claims.
The second factor — whether plaintiffs filed suit in anticipation of a lawsuit filed by the defendant — also supports declining to entertain a declaratory judgment action. Plaintiffs commenced this action after Durboraw sued related defendants in the Eastern District of Texas and dismissed his suit. Although Durboraw filed his county court suit before plaintiffs filed the present case, they did not receive service of Durboraw's lawsuit until after they brought suit. Durboraw's Rule 41(a)(1) notice of dismissal, in which he dismissed his prior case without prejudice, reasonably put plaintiffs on notice that he would initiate a lawsuit in another forum.
Considering plaintiffs' anticipatory filing, the third factor — whether the plaintiff engaged in forum shopping — also militates in favor of declining to enter a declaratory judgment. The Fifth Circuit has noted that "[a]nticipatory suits are disfavored because they are an aspect of forum shopping." Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 602 n. 3 (5th Cir. 1983). Plaintiffs acknowledge that this suit is a reaction to Durboraw's dismissal of his federal lawsuit, but contend he is the one who has engaged in forum shopping. Although the actions of both sides suggest a desire to capitalize on the perceived advantages of the various fora, the court's focus under the third factor is on plaintiffs' decision to file this particular action.
The fourth factor — whether there are possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change the forums exist — also supports declining to issue a declaratory judgment. Durboraw has elected to pursue exclusively state-law claims in county court, thereby assuming the risk that any possible federal claims will ultimately be precluded. As the master of his county court petition, he is entitled to make this decision. See Medina v. Ramsey Steel Co., 238 F.3d 674, 680 (5th Cir. 2001). The court declines to compel him to litigate claims that he does not desire to prosecute, in a forum that he did not select.
The remaining Trejo factors neither favor nor disfavor the court's decision to consider or to decline to entertain plaintiffs' declaratory judgment action. This court and the Dallas county court are convenient for both sides. The interests of judicial economy may be served by either court's resolution of the claims because there will likely be issues of state law (and a federal law defense) regardless whether the dispute is resolved in federal or county court. Moreover, the actions were filed nearly simultaneously, rendering it unlikely that one has advanced more so than the other. And there is no state judicial decree for the federal court to construe.
C
Because the Trejo factors are non-exclusive, see supra at note 2, the court also addresses the following considerations in exercising its discretion. Plaintiffs seek three forms of declaratory relief: (1) that Durboraw's federal-law claims lack merit, see Am. Compl. at ¶¶ 17-19, 21; (2) that his state-law claims are preempted by federal law, see id. at ¶ 20; and (3) that his state-law claims lack merit, see id. at ¶¶ 21-23. As to the first category, Durboraw does not seek in his county court suit to assert federal-law causes of action. The court declines to issue a declaratory judgment concerning federal claims that he may never seek to prosecute. Concerning the third category, the court declines to issue a declaratory judgment concerning the viability of state-law claims. State courts are better suited to decide such issues and are the proper tribunals to interpret and apply their own law.
And if Durboraw were to add federal claims to his county court petition, the action would become removable to this court based on federal question jurisdiction.
Concerning the second category, the court declines for two reasons to exercise its declaratory judgment authority. First, the county court is fully capable of deciding whether Durboraw's state-law clams are preempted by federal law. Second, this court would not have subject matter jurisdiction if this were plaintiffs' only basis for seeking a declaratory judgment. See 10B Charles Alan Wright, et al., Federal Practice Procedure, § 2767 [at 655] (1998) ("Therefore, if, but for the availability of the declaratory-judgment procedure, the federal claim would arise only as a defense to a state-created action, jurisdiction is lacking." (emphasis added) (footnote omitted)).
The court notes that the parties to this case are not diverse citizens. Although plaintiff's assert subject matter jurisdiction based on several federal question statutory provisos, see Am. Compl. at ¶ 5, it is clear from their brief that federal question jurisdiction arises from the nature of Durboraw's coercive action in the Eastern District of Texas. See Ps. Br. at 8-9. As noted, that suit is no longer pending, and the one that has taken its place does not include federal-law causes of action.
D
Although the court declines, in its discretion, to entertain plaintiffs' declaratory judgment action, it will stay the case pending final adjudication of the county court suit. The Supreme Court has noted that "where the basis for declining to proceed is the pendency of a state proceeding, a stay will often be the preferable course, because it assures that the federal action can proceed without risk of a time bar if the state case, for any reason, fails to resolve the matter in controversy." Wilton v. Seven Falls Co., 515 U.S. 277, 288 n. 2 (1995). Accordingly, in its discretion the court stays rather than dismisses this case. In view of the stay, the court directs the clerk of court to close this case statistically for administrative purposes. Any party may move the court to reopen the case statistically for good cause shown.SO ORDERED.