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refusing to assess costs where appeal time had not yet expired
Summary of this case from Harte v. Bd. of Comm'rs of Johnson Cnty.Opinion
CIVIL ACTION No. 99-2292-KHV.
November 21, 2000.
MEMORANDUM AND ORDER
Catherine E. Lappin and Thomas G. Myrick filed suit against their former employer Miller/Zoch Enterprises, Inc. ("Miller/Zoch") and several co-workers, seeking damages for religious discrimination and retaliation under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., defamation, outrage, breach of contract, promissory estoppel and conversion. After the Clerk entered judgment against defendants, plaintiffs filed a garnishment claim against American States Insurance Company ("Safeco"), which insured Miller/Zoch. This matter is before the Court on Garnishee's Motion To Dismiss (Doc. #132) filed October 5, 2000. For reasons stated below, the motion is overruled.
Factual Background
Debra (Miller) Gwartney and Peggy Zoch each owned 50 per cent of Miller/Zoch. On May 25, 2000, the Clerk entered judgment in favor of plaintiffs against Miller/Zoch, Gwartney, Roberta Bruce and Nicolina Anderson. See Judgment (Doc. #102). On September 18, 2000, the Court overruled various post-trial motions and awarded plaintiffs their attorneys' fees and expenses in the amount of $13,083.22. See Memorandum And Order (Doc. #126).
Safeco insured Miller/Zoch under one or more liability insurance policies. Safeco agreed to indemnify Miller/Zoch for claims arising from personal injuries including defamation and for damage caused to personal property while in Miller/Zoch's custody and control. Anderson, Bruce and Peggy Zoch have assigned to plaintiffs all their right, title and interest in the Safeco insurance policies.
On August 3, 2000, Safeco filed a declaratory judgment action against Lappin, Myrick, Gwartney, Bruce, Anderson and Miller/Zoch in the District Court of Leavenworth County, Kansas. In that action, Safeco asked for relief from any judgment entered against defendants in the instant action. Safeco has not served Gwartney or Anderson in the state court action. Because Bruce failed to respond to Safeco's petition, the state court entered default judgment against her. On October 5, 2000, the Honorable David King of the District Court of Leavenworth County stayed proceedings in the state case.
Lappin and Myrick had asked Safeco for copies of its policies insuring Miller/Zoch, but Safeco did not provide the copies until it filed the declaratory judgment action in state court.
Based on the judgments against Miller/Zoch, Gwartney, Bruce and Anderson, plaintiffs obtained orders of garnishment against Safeco in this case. On August 17, 2000, plaintiffs served Safeco with a copy of the orders. Safeco asks the Court to dismiss this garnishment case based on the Leavenworth County case between the same parties.
Analysis
Safeco argues that deferral is appropriate under the Colorado River doctrine. See Colo. River Water Conserv. Dist. v. United States, 424 U.S. 800 (1976). The Colorado River doctrine establishes certain factors for a district court to consider when deciding whether to stay or dismiss a federal suit that parallels a state court proceeding. See Rienhardt v. Kelly, 164 F.3d 1296, 1302 (10th Cir. 1999). Except for certain limited exceptions, a federal court should exercise the jurisdiction it is granted. See id. at 1303. The Colorado River doctrine allows a federal court, however, to defer from exercising its jurisdiction in exceptional circumstances. See Shadwick v. Butler Nat'l Corp., 950 F. Supp. 302, 304 (D.Kan. 1996).
To determine whether to dismiss a federal court action based on pending state court proceedings, the Court considers the following factors:
(1) whether either court has assumed jurisdiction over property;
(2) whether the federal forum is inconvenient to the parties;
(3) the avoidance of piecemeal litigation;
(4) the order in which the courts obtained jurisdiction and the progress of the two cases;
(5) which forum's substantive law governs the merits of the litigation; and
(6) the adequacy of the state forum to protect the rights of the parties.
See Colorado River, 424 U.S. at 819; Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 23, 26 (1983). The test is to be applied in a pragmatic, flexible manner. See Shadwick, 950 F. Supp. at 304. In applying the test, no one factor is determinative and the weight to be given any one factor may vary from case to case. See Colorado River, 424 U.S. at 818-19.
Before applying the Colorado River factors, the Court must first determine "whether the state and federal proceedings are parallel." Allen v. Bd. of Educ., Unified Sch. Dist. No. 436, 68 F.3d 401, 402 (10th Cir. 1995); Fox v. Maulding, 16 F.3d 1079, 1081 (10th Cir. 1994). "Suits are parallel if substantially the same parties litigate substantially the same issues in different forums." Allen, 68 F.3d at 402. Both parties concede that the two actions are parallel. Except for Gwartney and Anderson, who have not been served in the state case, the two cases involve the same parties. The two cases also involve the same insurance coverage issues — whether Safeco breached its duties to defend and indemnify with respect to the claims of Lappin and Myrick. The Court therefore finds that the two actions are parallel.
Because the Court finds that the actions are parallel, it must apply the Colorado River factors to decide whether "exceptional circumstances" exist to dismiss the case. The parties concede that the first factor, i.e. whether either court has assumed jurisdiction over property, does not apply. Neither court has assumed jurisdiction over any property in the lawsuits. The parties also agree that the second factor, i.e. whether the federal forum is inconvenient, is neutral. This Court and the Leavenworth County court are in close proximity to each other. Neither forum would be inconvenient for the parties or witnesses.
Next, the Court considers whether dismissal would help avoid piecemeal litigation. The issues to be resolved in the two cases are nearly identical, but Judge King has stayed the state case pending this Court's decision in the instant garnishment action. Accordingly, dismissal is not required to avoid duplicative litigation. Indeed, as suggested by Judge King, this Court may be able to resolve insurance coverage issues more expediently based on its knowledge of the underlying action. See State Court Hearing Transcript of October 5, 2000 at 20-21, attached as Exhibit A to Plaintiffs-Garnishors' Memorandum In Opposition To Garnishee's Motion To Dismiss (Doc. #138) filed October 23, 2000; Littlefield, 1991 WL 164346, at *3. In addition, all parties with an interest in the insurance dispute have been served in this case and the Court can afford complete relief to the parties. In contrast, the state court does not have jurisdiction over Gwartney or Anderson at this time. In sum, resolution of the federal case first would best promote judicial efficiency.
Safeco argues that the issue of its ongoing duty to defend is not before this Court. As Safeco noted in its reply, however, that issue is moot because the deadline to appeal the judgment in this action has expired. To the extent Safeco contends that this Court cannot decide whether Safeco has a duty to defend in a garnishment action, the Court disagrees. See State Court Hearing Transcript of October 5, 2000 at 20-21, 27-28; Littlefield v. Mack, No. 88-C-9803, 1991 WL 164346, at *2-3 (N.D.Ill. Aug. 22, 1991) (allowing garnishment action based on breach of duty to defend to go forward despite parallel state action regarding both duty to indemnify and duty to defend); see also Dyer v. Holland, No. 95-1539-JTM, 1997 WL 807866 (D.Kan. Dec. 9, 1997) (deciding duty to defend in garnishment action).
The fourth factor, i.e. the order in which the courts obtained jurisdiction and the progress of the two cases, weighs in favor of retaining the case. The state action was filed only two weeks before the instant garnishment action. As noted above, Safeco has not obtained service on all of the defendants in the state case. Moreover, on October 5, 2000, Judge King stayed proceedings in state court pending this Court's resolution of this action. See Cone, 460 U.S. at 21 ("priority should not be measured exclusively by which complaint was filed first, but rather in terms of how much progress has been made in the two actions"). Safeco notes that the state court entered default judgment on its claim against Bruce. Judge King stated, however, that (1) he may vacate the default judgment based on Bruce's assignment of her rights to Lappin and Myrick; and (2) the default judgment should not influence whether the federal court retains jurisdiction. See State Court Hearing Transcript of October 5, 2000 at 30-35. Given that neither the federal case or the state case has progressed very far and the state action is stayed, this factor slightly favors retaining the instant action. See Colorado River, 424 U.S. at 818.
Lappin and Myrick apparently did not file the garnishment action earlier because Safeco did not provide copies of its policies. As an equitable matter, Safeco should not be rewarded for its conduct.
Next, the Court evaluates which forum's substantive law governs the merits of the litigation. See Cone, 460 U.S. at 16. Kansas law will govern the insurance law questions at issue in the two cases. Because Kansas law controls the parties' dispute, this factor slightly favors a dismissal of the federal case.
In its reply, Safeco argues that one of the insurance coverage issues in dispute is one of first impression and should be decided by the state court. Safeco did not raise this argument in its original memorandum. Accordingly, the Court disregards it. See Boilermaker-Blacksmith Nat'l Pension Fund v. Gendron, 67 F. Supp. d 1250, 1257 n. 4 (D.Kan. 1999) (party is prohibited from raising new argument and issues in reply).
The sixth factor, i.e. the adequacy of the state forum to protect the parties' rights, slightly favors retaining the instant action. Safeco does not contest that in the state case, it has not served Gwartney or Anderson. See State Court Hearing Transcript of October 5, 2000 at 17. Because the state court does not currently have jurisdiction over all of the parties with an interest in the insurance coverage issues and may not be able to obtain jurisdiction over them, dismissal of the federal case is not appropriate.
Of the six factors, one weighs in favor of dismissing this action and three weigh against dismissing it, while the remaining factors are neutral. After carefully considering each factor, the Court cannot find any exceptional circumstances to depart from "the virtually unflagging obligation of the federal courts to exercise the jurisdiction given them." Colorado River, 424 U.S. at 817. Accordingly, garnishee's motion to dismiss is overruled.
IT IS THEREFORE ORDERED that Garnishee's Motion To Dismiss (Doc. #132) filed October 5, 2000 be and hereby is OVERRULED.