Opinion
Civil Action No. 01-3615, Section "L" (4)
March 11, 2002
ORDER AND REASONS
Before the Court is defendant's motion to dismiss and/or alternatively to stay the proceedings in the above captioned matter. For reasons set forth below, the motion is GRANTED. Accordingly, the above captioned matter is STAYED pending the resolution of the state court matter entitled LeBlanc Associates, Inc. v. Advantage Contract Services, Inc., bearing civil docket number 119017, now pending in the 32nd Judicial District Court for the Parish of Terrebonne, State of Louisiana.
I. BACKGROUND
This case has its genesis in the allegedly harmful sandblasting operations conducted by Advantage Contract Services, Inc. (hereinafter "Advantage") at its facility in Houma, Louisiana. On April 22, 1997, LeBlanc Associates, Inc. ("LeBlanc") filed suit against Advantage in the district court for the Parish of Terrebonne seeking damages and injunctive relief National American Insurance Company ("NAICO") was Advantage's insurer under a liability insurance policy, and on this basis Advantage claims that NAICO is bound to provide a defense to the claims brought against it. NAICO disputes that it owes such a duty under the circumstances of this case.
On December 3, 2001, NAICO filed a complaint for declaratory judgment with this Court wherein NAICO seeks a declaration that it is not bound to provide a defense nor to pay claims presented by Advantage for any damages owed to LeBlanc. The declaratory judgment action does not seek coercive relief
On January 11, 2002, the state district judge granted Advantage leave to file a third-party demand against NAICO regarding the insurance coverage dispute. The state district court also continued without date the trial of the underlying claim against Advantage, which was originally set for January 14, 2002, so that both the principal and the third-party claims might be litigated together.
On December 21, 2002, defendant Advantage filed the instant motion to stay and/or dismiss the above captioned declaratory judgment action. Advantage contends that the Court should exercise its discretion to stay or dismiss the declaratory judgment action so that the issue of insurance coverage might be litigated in the parallel state court proceeding. Plaintiff NAICO on the other hand contends that this Court should allow the declaratory action to proceed as NAICO is not guilty of forum shopping and secondly that NAICO ultimately intends to remove the third-party claim lodged against it in the state district court based on diversity of citizenship.
II. ANALYSIS
The Declaratory Judgment Act is a procedural mechanism designed to provide parties a new remedy in federal court, however, it does not act to confer jurisdiction. Days Inns of America, Inc. v. Reno, 935 F. Supp. 874, 877 (W.D.Tex. 1996). A court need not provide a party with declaratory judgment relief on request "as this is a matter left to the district court's sound discretion." Odeco Oil Gas Co., Drilling Div. v. Bonnette, 4 F.3d 401, 404 (5th Cir.), reh'g denied, 9 F.3d 105 (5th Cir. 1993), cert. denied, 511 U.S. 1004 (1994). The Declaratory Judgment Act provides that "in a case of actual controversy within its jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations of any interested party seeking such a declaration. . . ." 28 U.S.C. § 2201(a). Since its inception, the Act "has been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants." Wilton v. Seven Falls Co., 515 U.S. 277, 284 (1995). In exercising its discretion, a district court is authorized to stay or to dismiss an action seeking declaratory judgment. Id. When the basis for declining to proceed is the pendency of a state court proceeding, as is the case here, a stay is often the preferable course. Id. at 288 n. 2.
Although the district court's discretion is broad, it is not unfettered. Courts may not dismiss requests "for declaratory judgment relief on the basis of whim or personal disinclination." Rowan Cos., Inc. v. Griffin, 876 F.2d 26, 28-29 (5th Cir. 1989) (quoting Hollis v. Itawamba County Loans, 657 F.2d 746, 750 (5th Cir. 1981)). The Fifth Circuit has set out several factors which the district court must consider when deciding whether to hear a declaratory judgment action, which include, but are not limited to: (1) whether there is a pending state action in which all of the matters in controversy may 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 the suit; (4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist; (5) whether the federal court is a convenient forum for the parties and witnesses; and (6) whether retaining the lawsuit in federal court would serve the purposes of judicial economy. Travelers Ins. Co. v. Louisiana Farm Bureau Federation, Inc., 996 F.2d 774, 778 (5th Cir. 1993).
In Wilton v. Seven Falls Co., the Supreme Court simplified the above test by stating that whether the district court should exercise its discretion comes down to considerations of practicality and wise judicial administration. Wilton, 515 U.S. at 288. In Wilton, the Supreme Court affirmed a Fifth Circuit decision upholding a district court's ruling to stay a declaratory judgment action pending the resolution of a later-filed state court suit. The Wilton court found that the issuance of such a stay was not an abuse of the trial court's discretion.
After a review of the law and facts surrounding the above captioned matter, this Court, in the exercise of its discretion, finds that this declaratory judgment action should be stayed pending the resolution of the state court matter. First, the pending action in state court can fully resolve all of the issues between the parties to this litigation since the state court has allowed the filing of the third-party demand against NAICO. Second, staying this action will avoid duplicative litigation while allowing the parties to reopen the case without the risk of a time bar if, for any reason, the state court case fails to resolve, the matter in controversy. See Wilton, 515 U.S. at 288 n. 2. Third, the state court matter is capable of fully litigating all of the issues raised in this declaratory judgment action. Additionally, it would be inequitable to allow the declaratory judgment plaintiff to gain precedence in time over the state court plaintiff. Moreover, retaining this lawsuit in federal court would not serve the purposes of judicial economy.
Although NAICO places much emphasis on the ultimate removability of the state court third-party claim to this Court, this possibility does not alter the Court's conclusion that a stay would further the interests of judicial economy. Indeed, in virtually all cases in which a Court is asked to stay or dismiss a declaratory action, the pending state court claim is potentially removable. Were this not true the Court would not have subject matter jurisdiction over the declaratory judgment action.
III. CONCLUSION
Because considerations of practicality and wise judicial administration necessitate staying this matter,
IT IS ORDERED that the above captioned declaratory judgment action be and is hereby STAYED pending resolution of the state court matter entitled LeBlanc Associates, Inc. v. Advantage Contract Services, Inc., bearing civil docket number 119017, now pending in the 32nd Judicial District Court forthe Parish of Terrebonne, State of Louisiana.