Opinion
No. 00-3244
March 6, 2001
Before the Court is defendants' motion to dismiss, or in the alternative to stay plaintiffs declaratory judgment action (doc. 4) to allow pending state court proceedings, "Christopher M. Ieva, et. al. v. Roger L. Thayer, State Farm Mutual Automobile Insurance Company, et. al.", Docket No. 45-612, Division "B," Twenty Fifth Judicial District Court for the Parish of Plaquemines, State of Louisiana, to be resolved and to avoid duplicative proceedings and the possibility of conflicting judgments. Having reviewed the pleadings, the memoranda and the applicable law, the Court shall grant the motion to dismiss for the reasons explained below.
I. Background
On or about December 28, 1999, the defendant, Roger Thayer ("Thayer"), was involved in an automobile accident with a vehicle operated by Christopher Ieva. At the time of the accident, Thayer had an automobile liability insurance policy issued by State Farm Mutual Automobile Insurance Company ("State Farm"). Thayer was the majority shareholder of two corporations, defendants Trans Atlas Boat Service, Inc. ("Trans Atlas"), and Champion Offshore Boat Services, Inc. ("Champion"). There were also two State Farm automobile insurance policies providing coverage to Trans Atlas and Champion. Those corporate defendants maintain that these policies provide coverage to Roger Thayer under the "non-owned automobile" provisions. Plaintiff, State Farm, contends that these policies do not provide coverage for the December 1999 accident.
On February 16, 2000, Christopher Ieva and the parents of Caitlin Kenney filed a suit for damages in the 25th Judicial District Court for Plaquemines Parish in the State of Louisiana against Roger Thayer and State Farm for injuries their children allegedly sustained in the December 1999 automobile accident. On February 23, 2000, State Farm notified Thayer that the amount claimed in the state court lawsuit could be in excess of his personal State Farm Insurance Policy. Then, on or about July 28, 2000, Thayer received another letter from State Farm, informing him that he may not be covered under the State Farm "Non-Owned Automobile" policies issued to Trans Atlas and Champion, and that State Farm reserved its rights to deny Thayer coverage under those policies.
Throughout October, Thayer asserted to State Farm that he was covered by the Trans Atlas and Champion policies. On October 27, 2000, Thayer's counsel sent a letter to William Aycomb, counsel for State Farm, requesting that State Farm provided a definitive answer as to whether State Farm would provide a defense and coverage to Thayer in the state court proceedings under the Trans Atlas and Champion policies. Plaintiff in the action before this Court, State Farm, then filed this Declaratory Judgment Action on November 1, 2000. The Declaratory Judgment Action seeks a determination as to whether State Farm has an obligation to provide indemnity and defense to Roger Thayer in the state court proceedings under the Trans Atlas and Champion policies for the December 1999 accident. On November 14, 2000 Thayer filed a Cross Claim in the state court proceeding in the 25th Judicial District Court for Plaquemines Parish against State Farm alleging that he is entitled to defense and indemnity from State Farm under the Trans Atlas and Champion policies.
II. Standard With Regard To Declaratory Judgments
State Farm has brought this action under the Declaratory Judgment Act, 28 U.S.C. § 2201. "Since its inception, the Declaratory Judgment Act has been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants." Agora Syndicate, Inc. v. Robinson Janitorial Specialists, Inc., 149 F.3d 371 (5th Cir. 1998) (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 286, 115 S.Ct. 2137, 2142 (1995)). As such, "[i]t is well settled . . ., that the granting of a declaratory judgment rests in the sound discretion of the trial court exercised in public interest." Wright, Miller Kane, Federal Practice and Procedure, Civil 3d, § 2759; Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 604 (5th Cir. 1983). The Supreme Court has held that the Declaratory Judgment Act "created an opportunity, rather than a duty, to grant a new form of relief to qualifying litigations [; therefore,] . . . a district court is authorized in the sound exercise of its discretion, to stay or to dismiss an action seeking a declaratory judgment before trial . . ." Wilton v. Seven Falls Co., 515 U.S. 277, 115 S.Ct. 2137, 2143 (1995).
The Wilton Court instructed district courts to consider whether the clams of all parties in interest can satisfactorily be adjudicated in a pending state court proceeding. Id. at 2141. Prior to the Wilton decision, the United States Court of Appeals for the Fifth Circuit set forth several factors for a court to consider in deciding whether to abstain from exercising jurisdiction. Those factors include, but are not limited to, 1) whether there is a pending state action in which all of the matters in controversy can be fully litigated; 2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant; 3) whether the plaintiff engaged in forum shopping in bringing this suit; 4) whether possible inequities in allowing the declaratory judgment action plaintiff to gain precedence in time or to change forum exist; 5) whether the Federal Court is a convenient forum for the parties and for the witnesses; and 6) whether retaining the lawsuit in Federal Court would serve the purpose of judicial economy. Travelers Insurance Company v. Louisiana Farm Bureau Federation, Inc., 996 F.2d 774, 778 (5th Cir. 1993).
III. Analysis
The first factor is of paramount concern. American Fidelity Insurance Co. v. Acadian Geophysical Services, Inc., 1997 WL 786233 (E.D. La. 1997). Indeed, "it is well recognized that unnecessary interference with state court litigation should be avoided." Wright, Miller Kane, Federal Practice and Procedure, Civil 3d, § 2758. To put it another way, "where another suit involving the same parties and presenting opportunity for ventilation of the same state law issues is pending in state court, a district court [entertaining the declaratory judgment action] might be indulging in "[g]ratuitous interference."' Wilton v. Seven Falls Co., 515 U.S. 277, 283, 115 S.Ct. 2137, 2141 (1995) (citing Brillhart v. Excess Insurance Co. of America, 316 U.S. 491, 62 S.Ct. 1173 (1942)). In this case, there is a pending state court action to which State Farm is already a party and, in which the instant coverage issues can be fully adjudicated via Thayer's cross claim against State Farm, alleging that he is entitled to a defense and indemnity under the corporate policies. With respect to that issue, the United States Court of Appeals for the Fifth Circuit has stated that "declaratory judgment relief may be denied . . . because of a pending state court proceeding in which the matters in controversy may be fully litigated . . ." Torch, Inc. v. LeBlanc, 947 F.2d 193, 194 (5th Cir. 1991); See e.g., Omega Protein, Inc. v. Briscoe, 2000 WL 777910 (E.D. La 2000) (existence of a pending state court proceeding weighs heavily in favor of dismissal); First Financial Insurance Co. v. Delta Contracting Enterprises, Inc., 1999 WL 1021440 (E.D. La. 1999) (declaratory judgment action dismissed when all matters can be fully litigated in state court proceedings). This Court's satisfaction that adjudication of all parties' claims can occur in the state court proceeding is sufficient for the Court to decline to hear the declaratory judgment suit.
Nevertheless, the remaining five factors set forth in Travelers support dismissal as well. First, as to anticipatory filing, the Court has no reason to doubt that plaintiff's declaratory judgment action is in fact just that. State Farm only filed this declaratory judgment action after it became aware that Thayer demanded coverage under the corporate policies. Thayer himself had no reason to file a cross claim against State Farm at an earlier time because he was unaware that coverage under the corporate policies would be denied. Indeed, State Farm filed this Declaratory Action two days after receiving a letter from Thayer's counsel demanding a definitive response as to whether State Farm would provide coverage under the corporate policies.
Second, it is likely that State Farm engaged in forum shopping. The Declaratory Judgment Act is not to be used to bring into the Federal courts an affirmative defense which can be asserted in a pending State Court action. International Association of Entrepreneurs of America v. Angoff, 58 F.3d 1266 (8th Cir. 1995); See also Wright, Miller Kane,Federal Practice and Procedure, Civil 3d, § 2758, at 521 (it is not the function of the federal declaratory action merely to anticipate a defense that otherwise could be presented in the state action). State Farm could have easily raised its affirmative defense of non-coverage in the pending state law tort suit.
Third, possible inequities exist in allowing State Farm to bring this declaratory judgment action since a decision of this Court on the coverage issue will have an effect on the state court action. Fourth, the state court in Plaquemines Parish is a more convenient forum for all parties involved, since all of the parties, and presumably a majority of the witnesses, are domiciled or located on the Westbank of Jefferson and/or Plaquemines Parish. Finally, there are issues of judicial economy since there is a pending state court action in which the coverage issues could be fully adjudicated. Indeed, State Farm is already a defendant in the state court law suit, and that court can determine fault, damages, and coverage in one proceeding whereas this Court's energies could only be directed to the coverage issues. Accordingly,
IT IS ORDERED that the defendants' Motion to Dismiss is GRANTED.