Opinion
Case No. 5:00 CV 1179.
July 26, 2000. Judgment Entry Filed July 28, 2000.
MEMORANDUM OF OPINION AND ORDER
Before the Court is the Motion of Defendant to Dismiss or Stay (Doc. No. 4). For the following reasons, the Motion to Dismiss is GRANTED.
I.
On August 6, 1996, an automobile driven by Mrs. Mary Welch struck Jonathan O'Hayon, a pedestrian standing outside a shoe store. Jonathan sustained seriously bodily injuries resulting from the accident. He settled with Mrs. Welch for $100,000, the limit of her automobile policy's bodily injury coverage.
On July 25, 1997, Jonathan and his parents, Jacob and Brenda O'Hayon, filed a declaratory judgment action against their automobile insurer, Safeco, in the Summit County Court of Common Pleas. The O'Hayons asked the state court to determine whether their own automobile insurance covered Jonathan's injuries. That case is now before the Ohio State Supreme Court.
On February 11, 2000, Jacob O'Hayon filed an insurance claim with plaintiff Jewelers Mutual Insurance Company ("Jewelers") to recover for Jonathan's injuries. Jewelers had issued a Businessowners Special Policy to Brilliance LDD Corporation ("Brilliance"), a company owned by Jacob O'Hayon, in 1996. The policy contained commercial liability coverage and a non-owned auto liability coverage/hired auto liability coverage endorsement. However, there was no express uninsured motorist/underinsured motorist clause contained in the policy. Jewelers denied the insurance claim on May 3, 2000.
On May 5, 2000, Jewelers filed a declaratory judgment action against Jacob and Jonathan O'Hayon in the Summit County Court of Common Pleas, asking the state court to determine whether the insurance policy issued to Brilliance covered Jonathan's injuries arising from the 1996 accident. Jewelers sent a courtesy copy of the complaint to counsel for the O'Hayons on the same day.
On May 9, 2000, after receiving notice of the state court action, the O'Hayons and Brilliance filed the pending declaratory judgment action against Jewelers, asking this Court to make the same determination regarding the Brilliance policy.
On June 5, 2000, Jewelers added as defendants in its state court action Brenda O'Hayon and Brilliance.
In sum, there are two lawsuits (one state and one federal) currently pending between the same parties seeking a determination of insurance coverage for the same accident under the same insurance policy — not to mention a third insurance coverage lawsuit pending before the Ohio Supreme Court. Because Jewelers filed its declaratory judgment action against the plaintiffs before the plaintiffs filed their declaratory judgment action against Jewelers, Jewelers requests dismissal or a stay of this case.
II.
A district court's exercise of jurisdiction over a declaratory judgment action is entirely discretionary. 28 U.S.C. § 2201(a); Brillhart v. Excess Ins. Co. of America, 316 U.S. 491 (1942); Omaha Property and Cas. Ins. Co. v. Johnson, 923 F.2d 446, 450 (6th Cir. 1991). The United States Supreme Court recently reaffirmed this axiom with respect to insurance coverage cases where, as here, the same issues are also addressed in parallel state actions. Wilton v. Seven Falls Co., 515 U.S. 277 (1995).
In determining whether to exercise jurisdiction in insurance coverage declaratory judgment actions where related issues are simultaneously before a state court, this Court should consider:
(1) whether pending state proceedings present the same issues or underlying facts;
(2) whether the claims of all parties can satisfactorily be adjudicated in the state proceeding;
(3) whether determination of the issues by a federal court would interfere with the orderly and comprehensive disposition of the issues in state court:
(4) whether the declaratory action would settle the controversy;
(5) whether the judgment would serve a useful purpose in clarifying and settling the legal relations in issue:
(6) whether the declaratory judgment action is being used for the purpose of "procedural fencing" or to provide an arena for a race for res judicata;
(7) whether the judgment would increase friction between federal and state courts and improperly encroach upon state jurisdiction;
(8) whether there is an alternative remedy which is better or more effective;
(9) whether the state court affords an adequate remedy; and
(10) whether the facts underlying the declaratory action are in dispute.Coregis Ins. Co. v. Frank, Seringer Chaney, Inc., 993 F. Supp. 1092, 1095 (N.D. Ohio 1997) citing Empire Indem. Ins. Co. v. Specialized Foster Care Services, Inc., 908 F. Supp. 483, 484-85 (N.D. Ohio 1995). Having reviewed the record in light of these factors, the Court concludes that it should decline to exercise jurisdiction over the complaint.
The first factor militating against jurisdiction is that the parallel state court proceeding presents the same issue as this case, i.e., whether the insurance policy of Brilliance covers the injuries Jonathan O'Hayon sustained in the 1996 accident.
Second, any claims the parties have can be satisfactorily adjudicated in the state court proceeding. Plaintiffs argue that this case should not be dismissed because the parties and claims in both cases are not identical. However, Jewelers has added to its state court action the two plaintiffs in this case (Brenda O'Hayon and Brilliance) that were not named in its original complaint, so the parties in both actions are now identical. Furthermore, any additional claims plaintiffs have or may have against Jewelers can be added to the state court action.
As plaintiffs point out, this case involves the interpretation and application of Ohio's Uninsured and Underinsured Motorist Coverage statute, Ohio Revised Code § 3937.18. See Plaintiffs' Memorandum in Opposition etc. (Dcc. No. 6) at 6-7. According to plaintiffs, two recent Ohio Supreme Court decisions interpreting this statute are directly on point and govern the outcome of this case. Id. at 4. Because this case involves the interpretation of a state statute and two recent state supreme court decisions, a declaratory judgment by this Court would increase friction between federal and state courts and improperly encroach upon a matter better left to state courts. Coregis, 993 F. Supp. At 1095 (N.D. Ohio 1997) citing Allstate Ins. Co. v. Mercier, 913 F.2d 273, 279 (6th Cir. 1990) ("states regulate insurance companies for the protection of their residents, and state courts are best situated to identify and enforce the public policies that form the foundation of such regulations."). Indeed, it would be presumptuous for this Court to determine the substantive application of a state statute when the precise issue is simultaneously before the state court.
Determination of the issues in this action would interfere with the orderly disposition of issues in the state court action because of the possibility of conflicting rulings. Further, any judgment rendered in this Court would have a res judicata effect on the state court action, rendering the state court's efforts in adjudicating that case meaningless.
Although the Court will not so conclude, it would appear that the federal declaratory judgment action is being used for the purpose of "procedural fencing," forum shopping, or providing an arena for a race to res judicata because (1) plaintiffs had notice of the parallel state court proceeding when they filed this action, (2) the issue for adjudication in this action is the same as that in the earlier-filed state proceeding, (3) the case involves only state law issues, and (4) the O'Hayons had previously filed a similar case against a different insurance company over the very same accident in state court. Moreover, Jewelers initiated its action in state court naturally, since there was no federal jurisdiction over its case. For the same reason, the state court action could not be removed to federal court.
There is no remedy the parties seek that may not be recovered in the state court action. In other words, the state action affords plaintiffs an adequate remedy.
Finally, it would be a waste of judicial resources, not to mention the parties' resources, to have the same action being litigated simultaneously in two different courts, with the not-unlikely prospect of conflicting rulings. Clearly, the Jewelers state court action provides the best forum to adjudicate all the claims of the parties. In addition, because the state court's decision is binding on this Court, it makes little sense to stay this case. See Wilton, 515 U.S. at 283.
III.
Accordingly, the Court hereby GRANTS the Motion of Defendant to Dismiss or Stay (Doc. No. 4), and dismisses the case without prejudice.
IT IS SO ORDERED.
JUDGMENT ENTRY
For the reasons stated in the Memorandum of Opinion and Order filed contemporaneously with this Judgment Entry, and pursuant to Federal Rule of Civil Procedure 58, it is hereby ORDERED, ADJUDGED AND DECREED that the above-captioned case is hereby terminated and dismissed as final.