Opinion
CIVIL ACTION No. 03-3551 SECTION C(1)
April 16, 2004
ORDER AND REASONS
Before the Court is Defendant's, St. Bernard Parish Government, Motion to Dismiss. (Rec. Doc. 9). Plaintiff, National Union Fire Insurance Company of Pittsburgh, Pa., opposes this Motion. (Rec. Doc. 11). The Motion was set for hearing on March 17, 2004. (Rec. Doc. 12). The Motion was submitted on the briefs. Id.
Defendant's, St. Bernard Parish Government, Motion to Dismiss is GRANTED IN PART and DENIED IN PART. IT IS FURTHER ORDERED that Plaintiffs claims seeking a judicial declaration that it has no duty to indemnify Defendant are hereby DISMISSED, as non-justiciable claims because they do not involve an actual case or controversy. IT IS FURTHER ORDERED that the Court shall retain jurisdiction over Plaintiffs claims seeking a judicial declaration that it has no duty to defend Defendant. These claims are ripe for adjudication and, as such, are properly before this Court.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
This case involves an insurance coverage dispute. (Rec. Doc. 1). According to the allegations of Plaintiffs complaint, on August 29, 2001, Cynthia Self Poolson and 102 other named plaintiffs filed suit in the Thirty-Fourth Judicial District Court for the Parish of St. Bernard, State of Louisiana, bearing docket number 94,145 (hereinafter referred to as the "Poolson lawsuit"). Id. In the Poolson lawsuit, the plaintiffs allege damages allegedly sustained as the result of a September 5, 2000 fire. Id. Defendant was named as a defendant in the Poolson lawsuit. Id.
Plaintiff initially erroneously stated that the Poolson lawsuit was pending in the Thirty-Second Judicial District Court.
On August 31, 2001, a class action petition was filed in the Thirty-Fourth Judicial District Court for the Parish of St. Bernard, State of Louisiana, entitled "Joseph Lejeune, et al. v. Lucien Gioe, et al.", bearing docket number 94,176 (hereinafter referred to as the "Lejeune lawsuit"). Id. The Lejeune lawsuit involves the same incident, and the Lejeune plaintiffs also named Defendant as a defendant. Neither suit named Plaintiff as a defendant. (Rec. Doc. 1).
By an Order dated January 6, 2002, the Poolson and Lejeune lawsuits were consolidated for trial before Division "A" of the Thirty-Fourth Judicial District Court for the Parish of St. Bernard, State of Louisiana. Id.
Previously, Plaintiff issued a Public Officials and Employees Liability Policy No. 860-49-45 to Defendant. Id. Defendant notified Plaintiff of the Poolson and Lejeune lawsuits and requested that Plaintiff defend and indemnify St. Bernard against those lawsuits. Id. Plaintiff denied coverage and filed suit in this Court on December 18, 2003. Id.
The Court has not been made aware of when Plaintiff issued the policy to Defendant or when Defendant notified Plaintiff of the lawsuits. Moreover, the Court is likewise unaware of why Plaintiff waited over two years after the underlying lawsuits were filed to file suit in federal court. Last, the Court is unaware of why Defendant never filed a third party complaint against Plaintiff in the two year period of time following the filing of the underlying lawsuits.
On February 10, 2004, Defendant filed the current Motion to Dismiss arguing that the Court should not exercise its jurisdiction to hear this lawsuit. (Rec. Doc. 8). Notably, on that same day, Defendant filed an Answer but declined to file a counterclaim. (Rec. Doc. 9). Plaintiff filed an Opposition on March 9, 2004. (Rec. Doc. 11). Defendant filed a Reply Memorandum on March 16, 2004. (Rec. Doc. 13).
II. LAW AND ANALYSIS
When analyzing whether to decide a declaratory judgment action, a district court must engage in a three step inquiry. Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000). The Court must decide:
1.Whether the declaratory action is justiciable: whether an actual controversy exists between the parties;
2.Whether the district court has authority to grant relief in the case presented; and
3.How to exercise its broad discretion to decide or dismiss the declaratory judgment action.Id.
The parties agree that this declaratory action is justiciable and that the Court has authority to grant relief in the case presented. The parties disagree only on how the Court should exercise its discretion in deciding to dismiss or hear the declaratory action.
While the Court agrees with the parties that Plaintiff's duty to defend claims are justiciable and it has authority to hear those claims, it disagrees that Plaintiff's duty to indemnify claims are justiciable. Quinlan v. Liberty Bank Trust Co., 575 So.2d 336 (La. 1990) (providing that the duty to indemnify in an indemnity contract does not arise until a loss is sustained by insured as a result of the attachment of liability whereas the duty to indemnify in a liability insurance contract arises when liability attaches); see also First Nat'l Bank of Louisville v. Lustig, 975 F.2d 1165, 1166-67 (5th Cir. 1992) (stating that "[t]he chief distinction between the two types of policies is that under a liability policy a cause of action accrues when liability attaches, whereas under an indemnification policy there is no cause of action until the liability has been discharged, as by payment of the judgment by the insured"). The Court will not entertain Plaintiff's duty to indemnify claims because they are not yet ripe.
In regard to Plaintiff's duty to defend claims, the Declaratory Judgment Act, 28 U.S.C § 2201, provides that a district court "may declare the right and other legal relations of any interested party . . ." Id. at § 2201(a). The Act thus "`confers a discretion on the courts [to decide whether or not to hear a declaratory action] rather than an absolute right upon the litigant.'" Wilton v. Seven Falls Co., 515 U.S. 277, 287, 115 S.Ct. 2137, 2143, 132, L. Ed.2d 214 (1995) (quoting Public Service Commission v. Wycoff Co., 344 U.S. 237, 241, 73 S.Ct. 236, 239, 97 L.Ed. 291 (1952)). Because the declaratory judgment remedy is discretionary,
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, 115 S.Ct. at 2143,
In Wilton, the Supreme Court concluded that a district court "acted within its bounds in staying [an] action for declaratory relief where parallel proceedings, presenting opportunity for ventilation of the same state law issues, were underway in state court." Id. at 290, 115 S.Ct. at 2144. However, the Supreme Court declined to "delineate the outer boundaries" of a district court's discretion in retaining or dismissing a declaratory action. Id.
The United States Court of Appeals for the Fifth Circuit has, however, provided guidance to district courts in this Circuit on this issue. The Fifth Circuit has identified six factors for district courts to consider in determining whether to entertain a declaratory action. Those factors are:
1) whether there is a pending state action in which all of the matters in controversy can 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 action plaintiff to gain precedence in time or to change forums exist [;] . . . 5) whether the federal court is a convenient forum for the parties and for witnesses [;]. . . and 6) whether retaining the lawsuit in federal court would serve the purposes of judicial economy.Travelers Insurance Co. v. Louisiana Farm Bureau Federation, Inc., 996 F.2d 774, 778 (5th Cir. 1993) (internal citations omitted). These factors are not exclusive. See id.
Even though a district court has wide discretion to determine whether it will exercise its jurisdiction in a declaratory judgment action where related state court proceedings are pending, that discretion is not boundless. In Agora Syndicate, Inc. v. Robinson Janitorial Specialists, Inc., 149 F.3d 371 (5th Cir. 1998), the Fifth Circuit held that a district court abused its discretion where it dismissed an insurance company's declaratory judgment suit in deference to an underlying liability case pending in state court in which the insurance company was not a party. See id. at 372. The court reasoned that, without the insurance company as a party to the underlying suit, the state proceedings were not truly "parallel." Id. at 373. The insurance company "could only bring the insurance issues before the state courts by affirmatively intervening in the pending liability action or commencing a separate, independent declaratory judgment action in state court." Id. Because the federal declaratory action had been pending for over a year when the district court dismissed the action on its own accord, the Fifth Circuit reasoned that it would be inefficient to force the insurance company to file another suit in state court to resolve the coverage issue. See id. Moreover, the issues of liability to be decided in state court had no direct bearing on the issues of coverage involved in the declaratory action, and, likewise, a decision by the federal court on coverage issues would not affect resolution of the liability issues in state court. See id. Finally, the court stated that the state law issues involved in the case would not complicate federal adjudication because the federal courts had considered these same insurance issues previously. See id.
The Court determines that the factors set forth in Travelers Insurance Co. weigh in favor of the Court exercising its jurisdiction to hear this suit. First, in this case, although Defendant has been aware of claims pending against it in State court for over two years and has been aware, for some period of time, that Plaintiff denied coverage as to those claims, Defendant did not institute a third party action against Plaintiff in State court. As such, there is little inequity involved as Plaintiff has not gained precedence in time or a change in forum as repudiated by the fourth Trejo factor. Moreover, the concerns of the fifth Trejo factor are minimized because, although Plaintiff did chose this forum over State court, he did so only after Defendant declined to make it a part of the State court litigation, as was Defendant's right.
Secondly, judicial economy is not offended by maintenance of this suit in federal court. At this point, because the Court shall not hear Plaintiff's duty to indemnify claims, the only claims remaining are Plaintiff's duty to defend claims. According to the Fifth Circuit, "[t]he duty to defend is determined by examining the allegations of the injured plaintiff's petition. . . and the insurer is obligated to defend unless the petition unambiguously excludes coverage." Hardy v. Hartford Ins. Co., 236 F.3d 287, 290 (5th Cir. 2001). The determination of whether Plaintiff has a duty to defend, therefore, can be made upon view of the policy and the petitions filed by the Lejeune plaintiffs and the Poolson plaintiff's. Summary judgment, one way or the other, is likely appropriate and is relatively easy to brief.
Third, while it does appear that Plaintiff filed suit in anticipation of the Defendant possibly adding it to the state litigation, that is not preclusive of hearing the dispute. Defendant did not bring a third party demand against Plaintiff in State court after over two years of litigation even though Defendant apparently called upon Plaintiff to defend and indemnify them. Defendant is not obliged to sit and wait to be sued. Accordingly, the second Trejo factor weighs in favor of maintenance of the present action.
Defendant has failed to persuade the Court that it should not exercise its jurisdiction to hear the present action. The Trejo factors weigh in favor of the Court exercising its jurisdiction.
III. CONCLUSION
Defendant's, St. Bernard Parish Government, Motion to Dismiss is GRANTED IN PART and DENIED IN PART. IT IS FURTHER ORDERED that Plaintiffs claims seeking a judicial declaration that it has no duty to indemnify Defendant are hereby DISMISSED, as non-justiciable claims because they do not involve an actual case or controversy.
IT IS FURTHER ORDERED that the Court shall retain jurisdiction over Plaintiff's claims seeking a judicial declaration that it has no duty to defend Defendant. These claims are ripe for adjudication and, as such, are properly before this Court.