Opinion
CIVIL ACTION NO. 02-CV-7986
August 7, 2003
MEMORANDUM AND ORDER
Plaintiff State Automobile Mutual Insurance Company ("State Auto") brings this diversity action against Malick Toure, Keith Engelhardt, Jean Louise Zippilli, Dawn Meyers, Audrey Geisz, and Joseph Williams seeking a declaration pursuant to 28 U.S.C. § 2201 that State Auto is not obligated to defend or indemnify Toure for any claims asserted against him by Engelhardt, Zippilli, Meyers, Geisz, or Williams arising from a March 2, 2002 motor vehicle accident. Now before the Court are Defendants' Motions to Dismiss or Stay. For the following reasons, the Motions to Stay will be granted. I. Background
Because the Court is granting the Motions to Stay, it will not address Defendants' alternative Motions to Dismiss for failure to join an indispensable party.
Viewed in the light most favorable to Plaintiff, the relevant facts are as follows. On March 2, 2002, Toure was involved in an accident while operating a Rolls Royce owned by Sullivan Management Corporation ("Sullivan Management"). (Compl. ¶ 14.) The passengers in the vehicle at the time of the accident — Engelhardt, Zippilli, Meyers, Geisz, and Williams — have notified State Auto that they have suffered personal injuries as a result of the accident and intend to assert claims against Toure. (Compl. ¶¶ 16-18.) At the time of the accident, State Auto insured the Rolls Royce under two policies, each of which provides liability coverage for persons operating the vehicle with the permission of Sullivan Management. (Compl. ¶¶ 11-14.)
On October 21, 2002, State Auto filed its Complaint, seeking a declaratory judgment that it is not required to provide insurance coverage for claims against Toure arising out of the March 2, 2002 accident because he did not have Sullivan Management's permission to drive the Rolls Royce. Defendants now move to dismiss or, in the alternative, to stay the above-captioned action.
II. Analysis
Defendants move to dismiss or stay the action based on the discretion conferred upon district courts to decline to exercise jurisdiction over declaratory judgment actions brought pursuant to 28 U.S.C. § 2201. "[D]istrict courts possess discretion in determining whether and when to entertain an action under the Declaratory Judgment Act [ 28 U.S.C. § 2201], even when the suit otherwise satisfies subject matter jurisdictional prerequisites." Wilton v. Seven Falls Company, 515 U.S. 277, 282 (1995) (citing Brillhart v. Excess Insurance Co. of America, 316 U.S. 491 (1942)). "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.
"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. On its face, the statute provides that a court `may declare the rights and other legal relations of any interested party seeking such declaration,' 28 U.S.C. § 2201(a). . . . The statute's textual commitment to discretion, and the breadth of leeway we have always understood it to suggest, distinguish the declaratory judgment context from other areas of the law in which concepts of discretion surface." Wilton, 515 U.S. at 286-287.
"[W]here district courts must decide whether to hear declaratory judgment actions involving insurance coverage issues, [the Third Circuit has] suggested relevant considerations: (1) A general policy of restraint when the same issues are pending in state court; (2) An inherent conflict of interest between an insurer's duty to defend in a state court and its attempt to characterize that suit in federal court as falling within the scope of a policy exclusion; [and] (3) Avoidance of duplicative litigation." State Auto Insurance Companies v. Summy, 234 F.3d 131, 134 (3d Cir. 2000) (vacating the judgment of the district court when, despite pendency of a case in a state court on the same issues, the district court granted a declaratory judgment in favor of an insurance carrier in a coverage case based solely on state law). The state's interest in determining issues of state law also weighs against exercising jurisdiction in declaratory judgment actions. Id. at 136 ("When the state law is firmly established, there would seem to be even less reason for the parties to resort to the federal courts. Unusual circumstances may occasionally justify such action, but declaratory judgments in such cases should be rare.").
Considerations of practicality and wise judicial administration compel this Court to stay the present action. State Auto seeks a declaration that Toure did not have permission from Sullivan Management to drive the vehicle involved in the accident. A complaint by Engelhardt is currently pending in state court, in which he asserts claims against Toure, Sullivan Management, and Rosemary Sullivan arising out of the March 2, 2002 accident. In that complaint, Engelhardt alleges, inter alia, that Toure had permission to use the vehicle at the time of the accident. (Mot. Dismiss ¶ 3; Engelhardt v. Toure, et al., November Term 2002, No. 000475 (Pa. Com. Pl. 2002).) Thus, the same issue is pending in both the state and federal court actions. Further, there are no federal questions present in this dispute. The requested relief would require the Court only to apply well-settled state law. See Winslow-Quattlebaum v. Maryland Ins. Group, 752 A.2d 878 (Pa. 2000). See also Brillhart, 316 U.S. at 495 (holding that it would be uneconomical and vexatious for a federal court to proceed by declaratory judgment when another action presenting the same state law issues is pending in state court); Wilton, 515 U.S. 277 (confirming the applicability of Brillhart to insurance coverage disputes). Accordingly, the Court will stay the action. See Wilton, 515 U.S. at 288 n. 2 ("[W]here the basis for declining to proceed is the pendency of a state proceeding, a stay will often be the preferable course [to dismissal], 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.").
III. Conclusion
For the foregoing reasons, the Court will grant Defendants' Motions to Stay the above-captioned action.
ORDER
AND NOW, this day of August, 2003, upon consideration of the Motions to Dismiss or, in the Alternative, to Stay by Defendants Engelhardt, Meyers, Zippilli, and Geisz (docket nos. 3 and 8), Plaintiff's Responses thereto (docket nos. 4 and 11), and Defendants' Reply (docket no. 7), IT IS ORDERED that the Motions to Stay are GRANTED. Accordingly, the above-captioned action is STAYED and placed in civil suspense pending the resolution of Engelhardt v. Toure, et al., November Term 2002, No. 000475 (Pa. Com. Pl. 2002).