Opinion
Case No. C2-01-698
September 19, 2002
OPINION AND ORDER
This matter is before the Court for consideration of Defendant Renee Touvell's Motion to Dismiss and/or Stay. (Doc. # 6). Plaintiff Gulf Insurance brings this action pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, asking the Court to declare the rights and obligations of the parties under an umbrella excess insurance policy. The Court exercises jurisdiction under 28 U.S.C. § 1332. For the reasons set forth below, Defendant Touvell's Motion to Stay is GRANTED.
I. BACKGROUND
On August 5, 1999, Defendant Touvell's son sustained serious injuries while he was a passenger in an automobile being driven by Kyle Hoag. Complaint ¶ 9. Hoag's automobile liability insurance policy had only the Ohio statutory minimum amounts of coverage. Id. ¶ 11. Touvell contends that Hoag's insurance coverage is insufficient to compensate her for losses and damages she sustained as a result of the accident involving her son. Id.Defendant Touvell was an employee of Genesis Health Care System at the time of her son's accident. Id. 12. Touvell sought underinsured motorist ("UIM") coverage under the provisions of her employer's automobile insurance policy and under her employer's umbrella excess insurance policy. Id. 13, 14. The umbrella policy was issued by Plaintiff Gulf Insurance. Id. Gulf denied coverage to Touvell. Id. 15.
Gulf brought a declaratory judgment action in this Court. One week later, Touvell brought a declaratory judgment action in the Muskingum County Court of Common Pleas (the "Muskingum Case"). Touvell v. Gulf Insurance Company, Case No. CH2001-0711. Both actions have the same parties and involve the same claim for UIM coverage under the same policy of insurance. Both actions seek the same relief which is a declaration of the rights of the parties under the Gulf umbrella excess insurance policy. Defendant Touvell's Memorandum in Support of Motion to Dismiss or Stay, at 2; Plaintiff Gulf Insurance's Memorandum in Opposition to Defendant Touvell's Motion to Dismiss, at 2.
II. STANDARD
The Declaratory Judgment Act, 28 U.S.C. § 2201, confers unique and substantial discretion upon district courts to decide whether to declare the rights of litigants. Wilton v. Seven Falls Co, 515 U.S. 277, 286-87 (1995) (Act's textual commitment to discretion and breadth of leeway traditionally assumed distinguish declaratory judgment context from other areas of law in which discretion issues arise); Green v. Mansour, 474 U.S. 64, 72 (1985) (Act imposes no "unflagging duty" on federal courts to decide declaratory relief actions and creates no "entitlement" to declaratory relief); Brillhart v. Excess Ins. Co., 316 U.S. 491, 494 (1942) (use of permissive language is inferential authority for exercise of judicial discretion). The Supreme Court has repeatedly recognized the Declaratory Judgment Act as an enabling Act that grants discretion to the district courts to entertain declaratory relief actions rather than an absolute right to the litigant. Cardinal Chemical Co. v. Morton Int'l, Inc., 508 U.S. 83, 95 n. 17 (1993); Mansour, 474 U.S. at 72 (1985);Public Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 241 (1952). Recently, the Supreme Court noted the "unique breadth" of a district court's discretion in declaratory judgment actions, explaining that:
By the Declaratory Judgment Act, Congress sought to place a remedial arrow in the district court's quiver; it created an opportunity, rather than a duty, to grant a new form of relief to qualifying litigants. Consistent with the nonobligatory nature of the remedy, 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 or after all arguments have drawn to a close. In the declaratory judgment context, the normal principle that federal courts should adjudicate claims within their jurisdiction yields to considerations of practicality and wise judicial administration.Wilton, 515 U.S. at 288 (footnote omitted).
When a declaratory action is brought in a district court and there is a parallel state proceeding, the district court must decide "whether the questions in controversy between the parties to the federal suit. . . can be better settled in the state court." Id. at 282 (quoting Brillhart, 316 U.S. at 495). This decision is within the sound discretion of the district court. Id.
III. ANALYSIS
Defendant Touvell requests the Court to dismiss, or in the alternative to stay, this proceeding pending the outcome of the parallel case pending in the Muskingum County Court of Common Pleas. In deciding whether to accept jurisdiction in a declaratory judgment case the Court must weigh:
In the Sixth Circuit, "the mere existence of a state court proceeding is not determinative of improper federal encroachment upon a state court jurisdiction." Allstate Ins. Co. v. Green, 825 F.2d 1061, 1067 (6th Cir. 1987). Instead, the state proceeding must be determined to be "parallel, " i.e., the controversy between the parties to the declaratory judgment action could be fully adjudicated in the state proceeding. Id. at 1065-67. The parties in the case at bar agree that this case and the Muskingum case are "parallel" proceedings.
1) whether the judgment would settle the controversy;
2) whether the declaratory judgment action would serve a useful purpose in clarifying the legal relations at issue;
3) whether the declaratory remedy is being used merely for the purpose of "procedural fencing" or "to provide an arena for a race for res judicata;"
4) whether the use of a declaratory action would increase the friction between federal and state courts and improperly encroach on state jurisdiction; and
5) whether there is an alternative remedy that is better or more effective.Omaha Prop. Cas. Ins. Co. v. Johnson, 923 F.2d 446, 447-48 (6th Cir. 1991). More recently, in Scottsdale Ins. Co. v. Roumph 211 F.3d 964 (6th Cir. 2000) the Sixth Circuit recognized three additional factors to consider when a district court is asked to accept jurisdiction when there is a parallel action pending in state court:
1. whether the underlying factual issues are important to an informed resolution of the case;
2. whether the state trial court is in a better position to evaluate those factual issues than is the federal court;
3. whether there is a close nexus between the underlying factual and legal issues and state law and/or public policy, or whether federal common or statutory law dictates a resolution of the declaratory judgment action.211 F.3d at 968.
In the case sub judice, the majority of the above-referenced factors can be addressed by considering the procedural posture of the Muskingum Case. In that case, Gulf Insurance motioned to stay or dismiss pending the outcome of the case in this Court case. Judge Fleegle denied the motion and accepted state court jurisdiction over the declaratory action. The judge then set a scheduling order for proceeding with the declaratory action in the Muskingum County court, allowed full dispositive motion briefing, and set a hearing date for oral argument on the summary judgment motions. In all, the Muskingum Case docket has twenty-two entries. This Court, however, has only been asked to either accept or decline jurisdiction under the Declaratory Judgment Act. Thus, it is unlikely that a future judgment from this Court will settle the controversy or serve a useful purpose. Also, the state trial court is currently in a better position to evaluate the case and to provide a more effective remedy. There is no reason for this Court to cause friction between the state and federal court system by encroaching on the jurisdictional decision of the Muskingum County court.
In addition, this case is based on the law of Ohio. The Supreme Court of the United States has recognized that "ordinarily it would be uneconimical as well as vexatious for a federal court to proceed in a declaratory judgment suit where another suit is pending in a state court presenting the same issues, not governed by federal law, between the same parties." Brillhart, 316 U.S. at 495. Finally, the Court notes that "[i]n the insurance arena, the most common factor causing courts to refuse to entertain declaratory judgment suits is whether parallel state court proceedings are pending. Moores Federal Practice, § 57.82[4] (3rd ed. 2002) (citations omitted).
In addition to factors of judicial economy and comity, there is no indication that the Muskingum Case or this case is being used for procedural fencing purposes. Such a situation usually arises when a party has been sued for alleged tort liability in state court and a declaratory action is brought in federal court regarding the duty to defend or the limits of coverage. That is not the situation here.
The Court concludes that all the factors it is required to consider lean toward declining jurisdiction in this declaratory judgment action. The only issue left before this Court is whether to stay this case or to dismiss it. The Supreme Court has instructed that "where the basis for declining to proceed is the pendency of a state proceeding, a stay will often bc 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, 515 U.S. at 288 n. 2. Accordingly, this action is stayed pending the outcome of the Muskingum Case.
IV. CONCLUSION
Based upon the foregoing, Defendant Renee Touvell's Motion to Stay is GRANTED. The Court retains jurisdiction based on the unlikely event the Muskingum County court does not resolve this matter. If the Muskingum County rules on merits of this case, that opinion may be raised as res judicata as to this case.