Opinion
Case No. 1:15-cv-00526-SAB
09-22-2015
GRANGE INSURANCE ASSOCIATION, Plaintiff, v. GULZAR SRAN, et al., Defendants.
ORDER DENYING MOTION TO STAY ECF NO. 13
On August 4, 2015, Defendant Gulzar Sran ("Sran") filed a motion to stay this action. (ECF No. 13.) Plaintiff Grange Insurance Association ("Plaintiff or "Grange") filed an opposition on September 8, 2015. (ECF No. 21.) Sran filed a reply on September 16, 2015. (ECF No. 22.)
The Court finds it appropriate for the motion to stay to be submitted upon the record and briefs on file without need for oral argument. The Court vacates the hearing set for September 23, 2015. For the reasons set forth below, the Court denies Sran's motion to stay.
I.
BACKGROUND
The complaint in this action was filed on April 2, 2015. (ECF No. 2.) Plaintiff's complaint raises four causes of action: two claims for declaratory relief and two claims for equitable reimbursement. Plaintiff names Sran and Caeden Fisher ("Fisher") as defendants.
The claims raised in Plaintiff's complaint arise from two insurance policies issued to Sran. Plaintiff issued a "FarmPak Plus Farming and Personal Liability" insurance policy effective between April 23, 2014 through April 23, 2015 ("the FarmPak policy"). Plaintiff also issued a "Farm & Commercial Liability Excess Liability insurance policy effective between November 21, 2014 through April 23, 2015 ("the Commercial Excess policy").
On or around January 20, 2015, a complaint was filed in Fresno County Superior Court entitled Caeden Fisher v. Gulzar Singh Sran, Case No. 15CECG 00197 ("the Fisher Action"). The Fisher Action was for the wrongful death of Caeden Fisher's mother, who died in a November 22, 2014 motor vehicle accident. The complaint alleged that the accident occurred when Sran was driving his truck while transporting a large forklift in a trailer. Fisher alleged that Sran was negligent in loading the forklift onto the trailer of the truck in a manner where the forklift obscured the truck's brake lights.
Plaintiff contends that the FarmPak policy and the Commercial Excess policy do not provide coverage for any losses stemming from the Fisher Action due to certain exclusions contained in those policies: "Exclusion e" and "Exclusion g" of the FarmPak policy and the "Motor Vehicle Exclusion" of the Commercial Excess policy.
"Exclusion e" of the FarmPak policy states that the policy does not apply to:
e. Aircraft, Hovercraft or Motorized Vehicles(Compl., at ¶ 8.)
Bodily injury or property damage arising out of:
(1) Ownership of any aircraft, hovercraft or motorized vehicle by any insured; or
(2) Maintenance, use, operation or loading or unloading of any aircraft, hovercraft or motorized vehicle...
...
This exclusion does not apply to:
...
(3) Parking a motorized vehicle on the ways next to an insured location, provided the motorized vehicle is not owned by or rented or loaned to an insured.
...
(6) Bodily injury or property damage arising out of:
(a) Mobile Equipment;
...
(c) The operation of any of the machinery or equipment listed in Paragraph f.(2) or f.(3) of the definition of mobile equipment.
(FarmPak policy, form F2000 1012, p. 3).
"Exclusion g" of the FarmPak policy states:
This insurance does not apply to:(Compl., at ¶ 10.)
...
g. Mobile Equipment, Contests and Livestock
Bodily injury or property damage arising out of:
(1) The transportation of mobile equipment by a motorized vehicle owned or operated by, or rented or loaned to, an insured...
(FarmPak policy, form F2000 1012, p. 4).
The "Motor Vehicle Exclusion" of the Commercial Excess policy states:
This insurance does not apply to:(Compl., at ¶ 15.)
1. The ownership of any motor vehicle, motorized bicycle or tricycle by any insured; or
2. Maintenance, use, operation or loading or unloading of any motor vehicle, motorized bicycle or tricycle by any insured or other person...
...
For the purpose of this exclusion:
1. Loading or unloading means the handling of property:
a. after it is moved from the place where it is accepted for movement into or onto a motor vehicle;
b. while it is in or on a motor vehicle;
c. while it is being moved from a motor vehicle to the place where it is finally delivered;
but loading or unloading does not include the movement of property by means of a mechanical device, other than a hand truck, that is not attached to the motor vehicle.
2. Mobile equipment means the following, including any attached machinery or equipment:
a. Bulldozers, forklifts and tractors designed for use principally off public roads...
...
3. Motor vehicle means:
a. A motorized land vehicle, trailer or semi-trailer and any machinery or equipment while attached to or being carried or towed by such vehicles;
i. designed for use on public roads; or
ii. used on public roads
unless it qualifies as mobile equipment.
Sran filed a Third Party Complaint on June 25, 2015. (ECF No. 10.) Sran named JKG Insurance Agency ("JKG") and Harry Gill ("Gill") as Third-Party Defendants. The Third Party Complaint raises claims for professional negligence, negligent misrepresentation, breach of oral contract, equitable indemnity, and equitable contribution arising from the sale of the FarmPak policy and the Commercial Excess policy. Sran alleges that Third-Party Defendants had misrepresented the coverages provided under the policies and failed to procure the requested coverage.
On August 4, 2015, Sran filed a motion to stay. (ECF No. 13.) Sran argues that there is significant factual overlap between this insurance coverage action and the underlying Fisher Action.
II.
LEGAL STANDARDS FOR MOTIONS TO STAY
"[D]istrict courts possess discretion in determining whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional prerequisites." Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995). In deciding whether to enter a stay, a district court should avoid needless determination of state law issues, discourage litigants from filing declaratory actions as a means of forum shopping, and avoid duplicative litigation. Government Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir. 1998). Other considerations include whether the declaratory action will settle all aspects of the controversy, whether the declaratory action will serve a useful purpose in clarifying the legal relations at issue, whether the declaratory action is being sought merely for the purposes of procedural fencing or to obtain a 'res judicata' advantage, or whether the use of a declaratory action will result in entanglement between the federal and state court systems. Id. at 1225 n.5. The court might also consider the convenience of the parties and the availability and relative convenience of other remedies. Id.
"If there are parallel state proceedings involving the same issues and parties pending at the time the federal declaratory action is filed, there is a presumption that the entire suit should be heard in state court." Government Employees Ins. Co., 133 F.3d at 1225 (citing Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1366-67 (9th Cir. 1991)). "The pendency of a state court action does not, of itself, require a district court to refuse federal declaratory relief. [Citation.] Nonetheless, federal courts should generally decline to entertain reactive declaratory actions." Id. (citing Chamberlain, 931 F.2d at 1367).
III.
DISCUSSION
Sran argues that this action should be stayed pending the outcome of the Fisher Action. As an initial matter, the Court notes that Grange, Sran, and Fisher have consented to the jurisdiction of a U.S. Magistrate Judge for all purposes. (ECF Nos. 15, 17, 18.) However, Third-Party Defendants JKG Insurance Agency and Harry Gill have not yet filed a responsive pleading in this action and have not consented. However, a motion to stay is regarded as nondispositive and may be heard by a magistrate judge pursuant to 28 U.S.C. § 636(b)(1)(A) if denial of the motion to stay does not operate as a denial of the ultimate relief sought. SEC v. CMKM Diamonds, Inc., 729 F.3d 1248, 1260 (9th Cir. 2013). Denial of the motion to stay in this action would not constitute denial of the ultimate relief sought in this action (declaratory relief and equitable reimbursement). Accordingly, the undersigned has authority to hear this motion.
In circumstances where an insurer seeks a declaratory judgment regarding coverage relating to a separate action against the insureds, the declaratory judgment action may be stayed when the coverage question turns on facts to be litigated in the underlying action. See, e.g., Allied Property and Cas. Ins. Co. v. Roberts, Case No. 2:11-cv-00740-MCE-KJN, 2011 WL 2495691, at *5 (E.D. Cal. Jun. 21, 2011). "Granting a stay in such cases serves to 'eliminate the risk of inconsistent factual determinations that could prejudice the insured.'" Id. (quoting Montrose Chem. Corp. v. Superior Court, 6 Cal. 4th 287, 301 (1993)). "Such factual inconsistencies may arise 'because the [insurer's] duty to defend frequently turns on coverage, and ... coverage frequently turns on factual issues to be litigated in the third party liability action.'" Id. (quoting Montrose Chem. Corp., 6 Cal. 4th at 305). However, "'when the coverage question is logically unrelated to the issues of consequence in the underlying judgment, the declaratory relief action may properly proceed to judgment.'" Id. (quoting Montrose Chem. Corp., 6 Cal. 4th at 302).
Sran argues that the coverage issue in this action turns on facts to be litigated in the Fisher Action. Specifically, Sran notes that the operative pleading in the Fisher Action alleges that Sran loaded a forklift on a trailer with knowledge that the forklift would block the truck's brake lights from the vision of approaching motorists. Sran contends that this same issue is at the forefront of this coverage dispute. However, this does not appear to be the case.
In this action, Grange seeks declaratory judgment that no coverage exists under the FarmPak policy or the Commercial Excess policy based upon "Exclusion e" and "Exclusion g" of the FarmPak policy and the "Motor Vehicle Exclusion" of the Commercial Excess policy. However, Sran does not identify any factual issue of consequence that overlap in this action and in the Fisher Action. In this action, Grange contends that coverage does not exist under the FarmPak policy or the Commercial Excess policy because those policies exclude coverage for incidents involving the operation of motor vehicles, transporting mobile equipment, or loading or unloading mobile equipment. None of these exclusions turn on the question of whether Sran was negligent.
There appears to be no dispute in the Fisher Action that Sran had been operating a motor vehicle, transporting mobile equipment, or loading/unloading mobile equipment. It appears that the primary issue in the Fisher Action is whether Sran was negligent in loading a trailer which did not have operating brake lights and connecting the trailer and tractor in a manner which obscured vision of the truck's brake lights. These factual issues in the Fisher Action do not appear to have any relevance in this declaratory judgment action. The fact that Sran used his truck to haul a trailer and tractor is undisputed. Whether Sran did so in a negligent manner does appear to be disputed in the Fisher Action, but the issue of negligence does not appear to have any relevance in this declaratory relief action. Thus, there is no factual overlap on issues of consequence in this action and the Fisher Action.
The lack of factual overlap is reinforced by the explanation found in Sran's reply regarding the coverage issue raised in this action. Sran argues that Exclusion e does not apply to Sran's actions because Exclusion e states that the exclusion does not apply for bodily injury arising out of "mobile equipment." Sran further argues that Exclusion g does not apply to Sran's actions because, although Exclusion g states that no coverage exists for "transportation" of "mobile equipment," Sran's actions at the heart of the Fisher Action should not be considered "transportation" of "mobile equipment" but should instead be characterized as "loading" of "mobile equipment." Sran argues that "loading" is not an activity which falls within Exclusion g, and therefore Exclusion g does not apply.
The Court offers no opinion on the viability of Sran's legal theory. However, the Court notes that Sran's legal theory does not involve any overlapping factual issues of consequence with the Fisher Action. The factual foundation of Sran's legal theory appears to be based entirely upon facts which are undisputed in the Fisher Action. There is no suggestion by any party that there is any material dispute regarding whether Sran was hauling a trailer and tractor with his truck when the accident occurred. As discussed above, the factual issues of consequence in the Fisher Action appear to be whether Sran was negligent in the manner in which he hauled the trailer and truck, but any negligence on Sran's part does not appear to have any relevance in this declaratory relief action regarding coverage. Thus, there is no overlap.
The coverage issue raised in this case is logically unrelated to the issues of consequence in the Fisher Action. Sran fails to identify any discrete fact in this action which could result in an inconsistent factual determination which would prejudice Sran. At this stage in litigation, it appears that the issues raised in this action may be appropriate for adjudication on a motion for summary judgment because there is no genuine issue of material fact and the issue is purely a legal question regarding the proper interpretation of the FarmPak policy and the Commercial Excess policy.
Several other factors weigh against granting a stay. Sran does not identify any unsettled issues of state law raised in this action which would be resolved in the Fisher action. See Government Employees Ins. Co., 133 F.3d at 1225. There appears to be little risk of duplicative litigation, as Grange is not a party to the Fisher action and there is no other state court proceedings addressing the coverage issues raised in this action. See id. There is no evidence of forum shopping or procedural fencing. See id. This declaratory relief action would serve a useful purpose with respect to the relationship between Grange and Sran, as it will determine whether Grange is obligated to provide coverage for Sran in the Fisher Action. See id. There appears to be little entanglement between the federal and state court systems. See id.
Based upon the foregoing, the Court finds that a stay is not warranted in this action.
IV.
CONCLUSION AND ORDER
The Court finds that a stay of this action is not warranted because there is no overlapping factual issues of consequence in this action and in the Fisher Action.
Accordingly, it is HEREBY ORDERED that Defendant Sran's Motion to Stay is DENIED. The hearing on the motion to stay set for September 23, 2015 is VACATED. IT IS SO ORDERED. Dated: September 22 , 2015
/s/_________
UNITED STATES MAGISTRATE JUDGE