Opinion
Civil Ation 3:22-CV-00494
03-01-2023
PATRICK SHEA, Plaintiff, v. NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY, et al., Defendants.
MANNION, J.
REPORT AND RECOMMENDATION
KAROLINE MEHALCHICK, Chief United States Magistrate Judge.
Before the Court is a motion to remand to state court filed by Plaintiff Patrick Shea (“Shea”) on April 13, 2022. (Doc. 5). Shea initiated this insurance coverage dispute in the Court of Common Pleas of Luzerne County on February 22, 2022, against Defendants Nationwide Property and Casualty Insurance Company (“Nationwide”) and Scott Davis (“Davis”) (collectively, “Defendants”). (Doc. 1). Shea requests that the current matter be remanded back to the state court because (1) Davis is a necessary party under Pennsylvania's Declaratory Judgments Act; (2) Davis has a substantial interest in the outcome of this litigation; and (3) the Court should nevertheless decline to exercise its judgment consistent with its own precedent based on a consideration of the Reifer factors. (Doc. 6, at 9). For the following reasons, it is respectfully recommended that Shea's motion to remand be granted. (Doc. 5).
I. Background and Procedural History
Shea initiated this action with the filing of a complaint on February 22, 2022. (Doc. 11, at 6). Shea completed service upon Nationwide on March 3, 2022; however, there is no evidence that Shea has completed service upon Davis and Davis has not appeared in this action. (Doc. 1, at 1). On April 1, 2022, Nationwide removed this matter to the United States District Court for the Middle District of Pennsylvania from the Court of Common Pleas for Luzerne County, Pennsylvania, pursuant to 28 U.S.C. § 1332 and 28 U.S.C. § 1446(b). (Doc. 1, at 1-2). In the notice of removal, Nationwide maintains that the citizenship of Davis “should be disregarded because Davis is a nominal party with no interest in the outcome of the dispute; or, alternatively, because Davis is fraudulently joined in this action for the purpose of defeating diversity jurisdiction.” (Doc. 1, at 3).
According to the complaint, Shea executed the original Nationwide insurance policy, Police No. 58E462085, with Nationwide for uninsured motorist (“UM”) and underinsured motorist (“UIM”) benefits for one vehicle on August 26, 2013 (the “2013 Nationwide Policy”). (Doc. 1-1, ¶ 7; Doc. 1-1, at 17-34). The 2013 Nationwide Policy provides bodily injury liability coverage of $100,000 per person and $300,000 per accident, as well as UM and UIM coverage of $50,000 per person and $100,000 per accident. (Doc. 1-1, ¶ 10; Doc. 1-1, at 24-25, 28). Shea rejected stacked UM/UIM coverage limits. (Doc. 1-1, at 26-27). On December 21, 2016, Shea was issued a new Nationwide insurance policy (the “2016 Nationwide Policy”) with a different policy number, this time Policy No. 58G035977. (Doc. 1-1, ¶¶ 10-11, Doc. 1-1, at 36-50). The 2016 Nationwide Policy provided the same bodily injury and UM/UIM limits for one vehicle as the previous 2013 Nationwide Policy. (Doc. 11, at 36-50). On February 19, 2018, Shea purchased new coverage by adding a vehicle onto his Nationwide insurance policy (the “2018 Nationwide Policy”), Policy No. 5837G035977, which changed in the following ways: (1) the addition of a “2016 GMC Sierra 1 ” to the policy; (2) “Changed Underinsured Motorists-Bodily Injury” coverage; and (3) “Changed Uninsured Motorists-Bodily Injury” Coverage. (Doc. 1-1, ¶¶ 12-14; Doc. 1-1, at 52). The 2018 Nationwide Policy provides bodily injury liability coverage of $100,000 per person and $300,000 per accident, as well as UM and UIM coverage of $50,000 per person and $100,000 per accident. (Doc. 1-1, at 52-58).
On June 3, 2021, Shea was the victim of a motor vehicle collision at the intersection of North Hunter Highway and Edge Rock Drive in Butler Township, Luzerne County, Pennsylvania. (Doc. 1-1, ¶ 22). At approximately 6:21 p.m., Shea was stopped at the stop sign on Edge Rock Drive waiting to turn onto North Hunter Highway. (Doc. 1-1, ¶ 23). At the same time and place, Davis was traveling north on North Hunter Highway, when he attempted to make a right-hand turn onto Edge Rock Drive. (Doc. 1-1, ¶ 24). As a result, Davis's vehicle collided with Shea's stopped vehicle and Shea sustained severe injuries. (Doc. 1-1, ¶¶ 25-26).
On June 7, 2021, Shea notified Nationwide of the June 3, 2021, collision. (Doc. 1-1, ¶ 27). On July 27, 2021, a representative for Nationwide informed Shea that Davis did not have insurance coverage on the date of loss, June 3, 2021, and provided Shea with a certified copy of the Nationwide Policy. (Doc. 1-1, ¶ 29). The Nationwide Policy contained two sign-down forms, one for UM coverage and one for UIM coverage. (Doc. 1-1, ¶ 34; Doc. 1-1, at 57-58). These sign-form forms contain the putative signature: “P. Shea.” (Doc. 1-1, ¶ 35; Doc. 1-1, at 57-58). Shea contends he did not request lower UM/UIM limits, did not execute those forms, and did not authorize anyone on his behalf to execute the sign-down forms. (Doc. 1-1, ¶ 36). Shea contends Section 1734 of the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”) provides that an individual may request the issuance of UM/UIM coverage in amounts equal to or less than the limits for bodily injury. (Doc. 1-1, ¶ 39). Such request must be made in writing using “sign-down” forms approved by the Pennsylvania Department of Insurance. (Doc. 1-1, ¶ 39). In the absence of such forms, Shea claims the policyholder is presumed to maintain UM/UIM coverage in an amount total to his bodily injury limits. (Doc. 1-1, ¶ 40).
Accordingly, Shea asserts that because the sign-down forms are void, “the Nationwide Policy should provide for UM coverage in the amounts of $300,000 per person, stacked across two vehicles, for $600,000 per person, consistent with the bodily injury coverage maintained under the [2013] Nationwide policy and consistent with Section 1734 of the MVFRL.” (Doc. 1-1, ¶ 41). As a result of Nationwide refusing to reform Shea's insurance policy to recognize UM coverage with a policy limit of $600,000, Shea initiated this declaratory judgment action. (Doc. 1-1, ¶ 49). As relief, Shea seeks the following declaratory judgment as relief: (1) the March 2018 sign-down is a forgery and invalid; (2) the previously executed sign-down forms are not valid; and (3) Shea “has $600,000 in uninsured motorist coverage available under the Nationwide Policy at the time of the subject collision;” (4) “Defendant Scott Davis is an uninsured motorist;” and (5) the 2018 Nationwide Policy is reformed consistent with the above declarations. (Doc. 1-1, at 13-14).
On April 13, 2022, Shea filed the motion to remand. (Doc. 5). The motion has been fully briefed and is ripe for disposition. (Doc. 6; Doc. 8; Doc. 10).
II. Standard of Review
The removal of cases from state courts to federal courts is governed by 28 U.S.C. §§ 1441-1455. Under § 1441(a), a defendant may remove “any civil action brought in a state court of which the district courts of the United States have original jurisdiction . . . to the district court of the United States for the district and division embracing the place where such action is pending.” 28 U.S.C. § 1441(a). District courts “have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interests and costs, and is between [ ] citizens of different states.” 28 U.S.C. § 1332(a)(1). The removal statute is strictly construed and all doubts are to be resolved in favor of remand. Johnson v. SmithKline Beecham Corp., 724 F.3d 337, 346 (3d Cir. 2013).
Section 1446 of the removal statute further sets forth the procedures for removal, explaining that a defendant seeking removal of an action must file a petition for removal with the proper district court that contains “a short and plain statement of the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant or defendants” in the state court action. 28 U.S.C. § 1446(a). In addition, a notice of removal “shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based.” 28 U.S.C. §§ 1446(b). After a case has been removed, a plaintiff may move to remand the action back to state court under 28 U.S.C. § 1447(c) for “(1) lack of district court subject matter jurisdiction or (2) a defect in the removal procedure.” Ramos v.Quien, 631 F.Supp.2d 601, 607 (E.D. Pa. Nov. 18, 2008) (quoting PAS v. Travelers Ins. Co., 7 F.3d 349, 352 (3d Cir. 1993)). However, a “motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal.” 28 U.S.C. § 1447(c).
In the case at bar, Nationwide filed a Notice of Removal pursuant to 28 U.S.C. § 1441(b), invoking diversity of citizenship under 28 U.S.C. § 1332(a). (Doc. 1, at 1-2). This provision states that a district court “shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs,” between “citizens of different states.” 28 U.S.C. § 1332(a)(1). Here, it is not disputed that the amount in controversy exceeds $75,000. (Doc. 1-1, at 13-14). Thus, the Court's analysis focuses on whether the parties are of diverse citizenship.
To determine whether there is before the district court a controversy between “citizens of different States,” as is required by 28 U.S.C. § 1332(a)(1) and by Article III of the United States Constitution, the Supreme Court has stated that the district court “must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy.” Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 461 (1980). District courts within the Third Circuit have stated that a nominal party is one who is “neither necessary nor indispensable to join in the action” under Federal Rule of Civil Procedure 19. Mallalieu-GolderIns. Agency, Inc. v. Executive Risk Indem., Inc., 254 F.Supp.2d 521, 524-25 (M.D. Pa. 2003) (citing Farias v. Bexar County Bd. of Trs., 925 F.2d 866, 871 (5th Cir. 1991)); Katz v. GraylingCorp., 2007 WL 4530997, at *2 (E.D. Pa. Dec. 20, 2007). Pursuant to Rule 19, a party is “necessary” if:
(1) in the person's absence complete relief cannot be accorded among those already parties, or
(2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may
(i) as a practical matter impair or impede the person's ability to protect that interest or
(ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.Fed. R. Civ. P. 19(a).
A party that is not “necessary” pursuant to Fed.R.Civ.P. 19 is, by definition, not “indispensable” to the action. See Mallalieu, 254 F.Supp.2d at 525 (citing Janney Montgomery Scott, Inc. v. Shepard Niles, Inc., 11 F.3d 399, 404 (3d Cir. 1993)). In a diversity case, the question of whether a party is a necessary or indispensable party is a procedural question that is governed by federal law. See Shetter v. Amerada Hess Corp., 14 F.3d 934, 937-38 (3d Cir. 1994) (citing Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 125 n.22 (1968)).
III. Discussion
Nationwide removed Shea's state court action for declaratory judgment on the basis of diversity jurisdiction. (Doc. 1, at 5-9). However, on the face of the complaint, there is no complete diversity because Plaintiff Shea is a citizen of Pennsylvania, Defendants Nationwide is a citizen of Ohio, and Defendant Davis is a citizen of Pennsylvania. (Doc. 1-1, ¶¶ 2-4). Despite the lack of complete diversity, Nationwide contends in the Notice of Removal that removal is proper for two reasons. First, Nationwide argues that Shea named Davis as a nominal defendant pursuant to 42 Pa.C.S. § 7540(a), and a nominal defendant's citizenship should not affect the Court's exercise of jurisdiction. (Doc. 1, ¶ 35). Second, Nationwide contends the Court should not consider the citizenship of Davis because he is fraudulently joined in this action. (Doc. 1, ¶¶ 38-40).
In support of his motion to remand, Shea argues that the Court should decline to exercise jurisdiction over this declaratory judgment action. (Doc. 6, at 9). Specifically, Shea argues that the underlying action involves Davis, a Pennsylvania resident, who is not a nominal party, but rather a necessary party with a clear interest in the outcome of this litigation. (Doc. 6, at 12) (citing Vale Chemical Co. v. Hartford Accid. & Indem. Co., 516 A.2d 684, 686 (Pa. 1986)). In the alternative, Shea asserts that the Court should decline to exercise jurisdiction because there are parallel state proceedings and a balance of Reifer factors counsel in favor of abstention. (Doc. 6, at 15) (citing United Fin. Cas. Co. v. Alario, No. 3:15CV2237, 2015 WL 8603229 (M.D. Pa. Dec. 14, 2015)). Nationwide responds that “jurisdiction is proper because the amount in controversy is satisfied and complete diversity exists among the parties, as Defendants Scott Davis is a nominal party whose citizenship is to be disregarded.” (Doc. 8, at 4-5). Alternatively, Nationwide asserts that the Reifer factors compel the conclusion that abstention is improper. (Doc. 8, at 27).
A. Davis is a nominal party and his citizenship should not matter.
Shea argues that Davis is a necessary party to the declaratory judgment action, such that his citizenship prevents the Court's exercise of diversity jurisdiction. (Doc. 6, at 10). Nationwide counters that the citizenship of Davis should be disregarded because he is only a nominal party, or, alternatively, because he is fraudulently joined. (Doc. 8, at 13). For the following reasons, the undersigned agrees with Nationwide, and will disregard the citizenship of Davis when determining diversity.
First, section 1446(b)(2)(A) clearly requires that all defendants in an action removed pursuant to § 1441(a) join in or consent to removal. See 28 U.S.C. § 1446(b)(2)(A). However, the United states Court of Appeals for the Third Circuit has recognized an exception to the unanimity rule where the “non-joining defendant is an unknown or nominal party.” Balazik v. Cty. of Dauphin, 44 F.3d 209, 213 n.4 (3d Cir. 1995) (citations omitted); see also Johnson, 724 F.3d at 358 (affirming the determination that defendant corporation's citizenship was irrelevant to the removability of the action because it was a “nominal party that lacks a real interest in the litigation” (quotation omitted)). Therefore, if Davis is a nominal party, his consent to removal was not required.
shea argues remand is necessary because, under pennsylvania law, Davis is an indispensable party to the declaratory judgment action. (Doc. 6, at 10). For example, shea insists that he was required to join Davis pursuant to the pennsylvania Declaratory Judgment Act, which requires joinder of “all persons . . . who have or claim any interest which would be affected by the declaration.” (Doc. 6, at 11) (citing 42 Pa.C.S. § 7540(a)). Similarly, Shea asserts that Vale Chemical Co., 56 A.2d 684, is applicable here. (Doc. 6, at 11). In Vale, the Pennsylvania Supreme Court held that a plaintiff suing a drug manufacturer had an interest in that drug manufacturer's declaratory judgment action against an insurer to establish a duty to defend pursuant to the relevant policies, and that, therefore, the plaintiff was required to be joined as a party in the declaratory judgment action. Vale Chemical Co., 516 A.2d at 686-87. But Shea's citations to Pennsylvania case law discussing indispensable parties under Pennsylvania's Declaratory Judgment Act are misplaced. After removal of an action, the determination of whether a party is necessary or indispensable is a question of federal law. See Spring-Ford Area School Dist. v. Genesis Ins. Co., 158 F.Supp.2d 476, 482 (E.D. Pa. 2001) (denying a motion to remand a declaratory judgment action because the parties that defeated diversity were not indispensable parties, but rather were fraudulently joined). Although Davis may be considered an indispensable party in Pennsylvania, federal law views him as nominal for the following reasons.
Shea also relies on Target Corp. v. Frederick Mut. Ins. Co., 302 F.Supp.3d 695 (E.D. Pa. 2020), to argue that third parties to an insurance contract are necessary parties. (Doc. 6, at 12). In Target, the plaintiff's complaint asserted a declaratory judgment action seeking an insurance coverage determination against the insurer, as well as claims for declaratory judgment and breach of contract against the in-state co-defendants, alleging they were required to defend and indemnify the plaintiff under contractual provisions unconnected with the insurance policy. Target, 302 F.Supp.3d at 697. The court held that the in-state codefendants were necessary, interested parties because the complaint sought to impose direct liability on the in-state co-defendants and a court declaratory order would resolve the codefendants' direct liability. Target, 302 F.Supp.3d at 699. In the present action, unlike the complaint in Target where the plaintiff sought a declaratory order that would necessarily resolve co-defendants' direct liability, Shea does not seek a declaratory Order that Davis is, in fact, liable to him, or any other order that would determine Davis' liability. (Doc. 1-1, at 1314); see Target, 302 F.Supp.3d at 699. Therefore, the holding in Target is not applicable here.
The argument that because Pennsylvania courts would require joinder of Davis under Vale, Davis is a necessary and indispensable party under the federal standard runs contrary to established federal case law. See Hippo Fleming & Pertile L. Offs. v. Westport Ins. Corp., No. CV 3:15-322, 2016 WL 1715195, at *3 (W.D. Pa. Apr. 28, 2016) (applying federal law to determine whether defendants were nominal parties). In Liberty Mutual Insurance Company v. Treesdale, Inc., 419 F.3d 216 (3d Cir. 2005), the Third Circuit held that in Vale, the Pennsylvania Supreme Court outlined a “procedural and jurisdictional ruling,” and did not announce “substantive principles of law.” Liberty Mutual, 419 F.3d at 229-30. The court, therefore, held that under the doctrine announced by Erie R. Co. v. Tompkins, 304 U.S. 64 (1938) and its progeny, as a federal court sitting in diversity, it was not bound to follow Pennsylvania law that required joinder of an injured party in a coverage action. Liberty Mutual, 419 F.3d at 229-30. Because state law was not applicable on this issue in federal court, the court assessed the question of intervention and joinder pursuant to federal law. Liberty Mutual, 419 F.3d at 229-30.
Applying federal law, the undersigned finds that Davis is a nominal party, and that his citizenship must be disregarded when determining diversity. See Fed.R.Civ.P. 19. Shea does not contend that Davis satisfies the procedural mandate of Rule 19. Instead, Shea avers that Davis is an indispensable party because Davis' personal liability depends on the amount of UM benefits available to Shea under the Nationwide Policy. (Doc. 6, at 12). However, as Nationwide points out in its brief, there is no controversy between Nationwide and Davis. (Doc. 8, at 14). Further, Nationwide explains that any payment of UM benefits to Shea “does not extinguish [Davis]' liability to [Shea],” and an insurance coverage determination that Davis is an “uninsured motorist” “will have no impact on [Davis]' rights, duties, interests or obligations.” (Doc. 8, at 14, 17). No claim is asserted against Davis, and his interests are not directly implicated by this declaratory judgment action. See (Doc. 1-1, at 6-14). Without Davis, complete relief may be accorded among the parties, and no interest of Davis relates so directly to the subject of this action such that his joinder is required under federal law. See Fed. R. Civ. P. 19.
Rather, Davis' interest in this litigation is an indirect financial one. The undersigned agrees with other courts within the Third Circuit that have consistently held that such an interest does not qualify a party as “necessary” within the meaning of Rule 19. See Mallalieu, 254 F.Supp.2d at 525 (concluding that although a party was required to be joined under the DJA, that party's interest in seeing that an insurance company paid a judgment was not a “legally protected” interest, and therefore holding that the party was a nominal party to the action rather than a necessary party under Fed.R.Civ.P. 19); Spring-Ford, 158 F.Supp.2d at 483 (holding that a party was nominal where no claims were asserted against it and where the party had no legally protected interest in the action, but rather had a “merely financial” interest in it); Coregis Ins. Co. v. Wheeler, 180 F.R.D. 280, 283 (E.D. Pa. 1998) (holding that former client of attorney that had filed a legal malpractice claim was not a necessary party who had to be joined in the action between a professional liability insurer seeking a declaration of noncoverage against attorney where the former client had a merely financial interest in the action and where complete relief could be accorded without joinder of the former client); Richman, Berenbaum & Assoc., P.C. v. Caroline Cas. Co., 2002 WL 1895900, at *5 (holding that, in an action for declaratory judgment that an insurer had a duty to defend and indemnify plaintiffs from a legal malpractice suit, plaintiff in the underlying malpractice suit was not a necessary party and thus did not defeat diversity jurisdiction for purposes of removal). It follows that such an interest also does not qualify as “indispensable” under federal law. SeeJanney, 11 F.3d at 404; Hippo Fleming, 2016 WL 1715195, at *3.
Thus, because Davis is a nominal party in that he is neither necessary nor indispensable to join in the action, the undersigned finds that the Court must disregard Davis' citizenship in assessing whether the parties satisfy the requirements of diversity jurisdiction. See Bumberger v. Ins. Co. of N. Am., 952 F.2d 764, 767 (3d Cir. 1991). It does not matter that Davis was a required party under Pennsylvania law when Shea filed its initial declaratory judgment action in state court. See Yakitori Boy, Inc. v. Starr Indem. & Liab., Co., No. CV 184094, 2019 WL 199904, at *5 (E.D. Pa. Jan. 14, 2019) (declining to remand declaratory judgment action were individual defendant was nominal party under federal law). Under federal law, Shea is a nominal party and his citizenship status should not affect this Court's exercise of diversity jurisdiction, nor should it affect removal under 28 U.S.C. § 1441(b). Disregarding Davis, the undersigned finds that the requirements of diversity jurisdiction are satisfied. As noted above, it is undisputed that the amount in controversy exceeds $75,000. (Doc. 1-1, at 13-14). As to the diversity requirement, Shea is a citizen of Pennsylvania, while Nationwide is a citizen of Ohio. (Doc. 1-1, ¶ 2-3).
Nationwide is a corporation organized under the laws of the state of ohio, with its principal place of business in columbus, ohio. (Doc. 1, at 2-3; Doc. 1-1, ¶ 3). A corporation is a citizen both of the state where it is incorporated and of the state where it has its principal place of business for purposes of determining diversity jurisdiction. 28 U.S.C.A. § 1332. Therefore, Nationwide is a citizen of the state of ohio.
Accordingly, the undersigned finds that there is complete diversity between the parties.
B. The Court should abstain from exercising jurisdiction.
In the alternative, Shea avers that if the Court determines that it may exercise diversity jurisdiction over this action, the court “should nevertheless decline to exercise its jurisdiction consistent with its own precedent.” (Doc. 6, at 15). In opposition, Nationwide argues that the Court “should not abstain from exercising jurisdiction because there is no parallel state proceeding and no other weighty considerations compel abstention.” (Doc. 8, at 22).
Generally, in diversity cases, the undersigned applies the law of Pennsylvania. Chamberlain v. Giampapa, 210 F.3d 154, 158 (3d Cir. 2000) (citing Erie R.R., 304 U.S. at 78). However, “federal courts are to apply state substantive law and federal procedural law.” Hanna v. Plumer, 380 U.S. 460, 465 (1965). The instant case is before the Court in a declaratory judgment action, and federal courts have concluded that declaratory judgment actions are procedural rather than substantive. See Fischer & Porter Co. v. Moorco Int'l Inc., 869 F.Supp. 323, 326 (E.D. Pa. 1994) (holding that “[c]ase law indicates that the [Declaratory Judgment] Act is procedural in nature, and therefore federal law, not state law, governs whether claims may be heard under it.”); Farmers Alliance Mut. Ins. Co. v. Jones, 570 F.2d 1384, 1386 (10th Cir. 1978) (“holding that the [Declaratory Judgment] Act involves procedural remedies and not substantive rights .... The Act does not create substantive rights for parties; it merely provides another procedure whereby parties may obtain judicial relief.”). As a result, the undersigned will apply substantive Pennsylvania law in interpreting the Nationwide Policy, but the procedural strictures of the Federal Declaratory Judgment Act (“DJA”), 28 U.S.C. § 2201. Fischer & Porter Co., 869 F.Supp. at 326.
Under the DJA, “[i]n a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a) (emphasis added). The United States Supreme Court has explained that “[d]istrict courts possess discretion in determining whether and when to entertain an action under the [D]A], even when the suit otherwise satisfies subject matter jurisdictional prerequisites.” Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995). The Supreme Court has emphasized that district courts are under no compulsion to exercise this discretionary jurisdiction. Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494-95 (1942). “Rather than being subject to the ‘normal principle that federal courts should adjudicate claims within their jurisdiction,' district courts exercising DJA discretion are governed by ‘considerations of practicality and wise judicial administration.' ” Reifer v. Westport Ins. Corp., 751 F.3d 129, 139 (3d Cir. 2014) (quoting Wilton, 515 U.S. at 288). A court may sua sponte exercise its discretion not to hear a declaratory judgment action. Sate Auto Ins. Co. v. Summy, 234 F.3d 131, 136 (3d Cir. 2001).
In considering whether to decline jurisdiction, the Third Circuit Court of Appeals explained that courts must first determine whether a “parallel state proceeding” exists. Kelly v. Maxum Specialty Ins. Grp., 868 F.3d 274, 282 (3d Cir. 2017) (quoting Reifer, 751 F.3d at 144). The Supreme Court has defined a parallel state proceeding in this context as “another proceeding . . . pending in a state court in which all the matters in controversy between the parties could be fully adjudicated.” Brillhart, 316 U.S. at 495 (emphasis added); Kelly, 868 F.3d at 284. “The absence of a pending parallel state proceeding militates significantly in favor of exercising jurisdiction.” Kelly, 868 F.3d at 282.
In the instant case, it is undisputed that no parallel proceeding now exists in state court because this removed action is apparently the only action between the parties concerning this subject matter. (Doc. 1, at 1-2; Doc. 8, at 24; Doc. 10, at 1). As such, the absence of a pending parallel state proceeding in this matter “militates significantly in favor of exercising jurisdiction,” and there is a presumption in favor of exercising declaratory jurisdiction that can only be overcome if outweighed by a non-exclusive list of Reifer factors. Reifer, 751 F.3d at 144. Where there is no parallel state proceeding, to justify a remand under the DJA, district courts must “be rigorous in ensuring themselves that the lack of pending parallel state proceedings is outweighed” by the factors supporting remand. Reifer, 751 F.3d at 144. Because this factor is not dispositive, however, the undersigned will proceed to analyze other factors.
After determining whether a parallel state proceeding exists, The Third Circuit has enumerated the following, non-exhaustive list of factors, known as the Reifer factors, to guide the district court's analysis:
(1) the likelihood that a federal court declaration will resolve the uncertainty of obligation which gave rise to the controversy;
(2) the convenience of the parties;
(3) the public interest in settlement of the uncertainty of obligation;
(4) the availability and relative convenience of other remedies;
(5) a general policy of restraint when the same issues are pending in a state court;
(6) avoidance of duplicative litigation;
(7) prevention of the use of the declaratory action as a method of procedural fencing or as a means to provide another forum in a race for res judicata; and
(8) (in the insurance context), 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.Reifer, 751 F.3d at 146.
“The fifth, sixth, and eighth factors are particularly relevant in insurance coverage cases.” Ewart v. State Farm Mutual Auto. Ins. Co., 257 F.Supp.3d 722, 725 (E.D. Pa. 2017) (citing Summy, 234 F.3d at 134).
The Third Circuit has instructed district courts to give “meaningful consideration” to any relevant factors, and has stated that some factors may be weighted more heavily than others, depending on the circumstances of the case. Kelly, 868 F.3d at 283 (citing Reifer, 751 F.3d at 146). Importantly, the Third Circuit also noted that “there will be situations in which district courts must consult and address other relevant case law or considerations.” Reifer, 751 F.3d at 146. In addition, “that district courts are limited to predicting-rather than establishing-state law requires ‘serious consideration' and is ‘especially important in insurance coverage cases.'” Reifer, 751 F.3d at 148 (quoting Summy, 234 F.3d at 135). For example, in Summy, the Third Circuit held that when applicable state law is “uncertain or undetermined,” district courts should be “particularly reluctant” to exercise its jurisdiction under the DJA. 234 F.3d at 135; see also Reifer, 751 F.3d at 141. The court further stated that “it is counterproductive for a district court to entertain jurisdiction over a declaratory judgment action that implicates unsettled questions of state law.” Summy, 234 F.3d at 135.
1. First Reifer Factor
The first factor is “the likelihood that a federal court declaration will resolve the uncertainty of the obligation which gave rise to the controversy.” Reifer, 751 F.3d at 146. The Third Circuit has recently explained that this factor “is not intended to be a vehicle for considering the effect of a declaratory judgment on the development of state law.” DiAnoia's Eatery, LLC v. Motorists Mut. Ins. Co., 10 F.4th 192, 205 (3d Cir. 2021). Instead, it “captures whether a declaration would bring about a complete termination of the controversy between the parties and thereby avoid duplicative, piecemeal litigation.” DiAnoia's Eatery, 10 F.4th at 205 (emphasis added) (quotations and citations omitted). “There are two general types of situations which may make it unlikely that a declaration will prevent further litigation: (1) when one or more persons have not been joined, but have an interest in the outcome of the action, and (2) when one or more issues have not been raised, but are a part of the controversy or uncertainty.” DiAnoia's Eatery, 10 F.4th at 205-06 (citing Note, Developments in the Law: Declaratory Judgments -1941-1949, 62 Harv. L. Rev. 787, 805-17, 806 (1949)).
Here, Shea avers that a risk exists “of this court making findings of fact that may conflict with the eventual findings of the state court adds to the uncertainty of the matter, militating against the exercise of federal jurisdiction.” (Doc. 6, at 18-19) (citing Alario, 2015 WL 8603229, at *2). Conversely, Defendants argue that there is no dispute that the Court can and will resolve the insurance coverage question presented in this case. (Doc. 8, at 25).
There is no question that a declaration from this Court would resolve the dispute between the parties to this case. However, a state court declaration would accomplish the same thing. See, e.g., Frederick Mut. Ins. Co. v. Target Corp., No. 17-CV-4890, 2018 WL 1399375, at *4 (E.D. Pa. Mar. 19, 2018) (“While a federal court declaration could resolve uncertainty about the parties' rights and obligations under the commercial general liability policy, a state court declaration could do so as well.”). Moreover, as discussed more fully below, this dispute involves an area of state law that appears to be unsettled. Consequently, the undersigned finds that the Court's decision would not provide certainty to other parties in similar cases pending in state court. SeeEwart, 257 F.Supp.3d at 725 (“A declaration would resolve the uncertainty of State Farm's obligation in this case. But, as we shall see, a decision here will not provide certainty in similar cases because the Pennsylvania courts are still developing the contours of the statutory notice requirements.”). Based on these considerations, the undersigned concludes that this factor weighs against exercising jurisdiction.
2. Second Reifer Factor
The second factor is “the convenience of the parties.” Reifer, 751 F.3d at 146. Relying on Alario, Shea argues that the Court's exercise of jurisdiction would impose inconvenience on all the parties because Shea, Davis, and “the insurance agent that issued these policies and who will undoubtedly testify in the matter, all reside within Luzerne County.” (Doc. 6, at 19). In addition, Shea asserts that other factors militate in favor of declining jurisdiction, including “the strong connection of this case to Luzerne County, as well as the practical implications of conducting discovery and litigating this matter.” (Doc. 10, at 2). As noted by Nationwide, “[Shea] originally filed this suit in Luzerne County, and it would have been heard in Wilkes-Barre, Pennsylvania. With removal, the matter will be heard in Scranton, Pennsylvania. The two locations are less than twenty miles and thirty minutes apart.” (Doc. 8, at 25). The undersigned finds that as both potential forums are located in the same portion of Middle District of Pennsylvania, the second factor, the convenience of the parties, stands in equipoise.
3. Third Reifer Factor
The third Reifer factor asks courts to evaluate “the public interest in settlement of the uncertainty of obligation.” Reifer, 751 F.3d at 146. As a general matter, “[t]he public interest will not be better served by the federal court deciding the insurance coverage issue when the state court, which has more familiarity with the underlying cases, can equally well decide the issue.” Burke-Dice v. Gov't Employees Ins. Cos., No. 17-CV-3198, 2017 WL 3485873, at *4 (E.D. Pa. Aug. 15, 2017) (quoting Allstate Ins. Co. v. Antoine, No. 11-CV-5830, 2012 WL 707069, at *3 (E.D. Pa. Mar. 6, 2012)); see also Frederick Mut. Ins. Co., 2018 WL 1399375, at *4 (noting that insurance issues governed by state law “[have] no special call on the federal forum”). As with the first factor, this is particularly true where “the case turns on circumstance-specific determinations to be made under relatively undetermined state law.” Burke-Dice, 2017 WL 3485873, at *4 (holding that “the public interest [is] better served by allowing the state court [to] decide” unsettled state law issues); see also Ford Motor Co. v. Ins. Comm'r of Com. of Pa., 874 F.2d 926, 933 n.10 (3d Cir. 1989) (recognizing, in another context, the “state's significant interest in the regulation of its insurance industry”).
Shea argues that though the case does not involve pressing public interest, it involves a fact pattern, including a collision and the validity of certain insurance forms, which does not weigh in favor of maintaining jurisdiction. (Doc. 6, at 19-20). Nationwide asserts that this factor weighs against abstention because “the parties do not aver that any public interest is at stake other than the usual interest in the fair adjudication of legal disputes, an interest which the District Court is well-equipped to address.” (Doc. 8, at 25) (quoting Kelly, 868 F.3d at 288). Moreover, Nationwide states that “[t]he parties do not contend that there is an unsettled question of state law or important policy issue implicated by the coverage claims here. Absent this, there is little reason for a federal court to be reluctant about deciding this case.” (Doc. 8, at 25) (quoting Kelly, 868 F.3d at 288 n.13). In response, Shea argues that this action involves two unsettled areas of state law. (Doc. 10, at 2-3). Thus, Shea asserts that “[b]ecause precedent in this District recognizes that these questions are better answered in state court, this Court should remand the action to state court.” (Doc. 10, at 3).
As to Shea's argument that this action involves novel or unsettled issues of state law, the Third Circuit recently provided:
“[W]hen applicable state law is ‘uncertain or undetermined, district courts should be particularly reluctant' to exercise DJA jurisdiction.” Further, “[t]he fact that district courts are limited to predicting-rather than establishing- state law requires ‘serious consideration' and is ‘especially important in insurance coverage cases.' ” Yet, we have cautioned that there can be no per se dismissal of insurance declaratory judgment actions, in part because “[f]ederal
and state courts are equally capable of applying settled state law to a difficult set of facts.” In weighing these factors, “district courts declining jurisdiction should be rigorous in ensuring themselves that the lack of pending parallel state proceedings is outweighed by opposing factors.” With respect to state law claims, district courts should “squarely address” the alleged novelty or undetermined nature of state law issues.DiAnoia's Eatery, 10 F.4th at 197 (internal citations omitted).
Thus, the undersigned must address the purported novel and/or unsettled nature of the issue before it.
Shea maintains that there are two unsettled areas of law which compels the Court to remand the action to state court. (Doc. 10, at 3). First, Shea argues that this case involves the unsettled issue of whether the addition of a vehicle to a policy of insurance requires new UM or UIM sign-down forms, not waivers. (Doc. 6, at 23 n.4; Doc. 10, at 2-3). Specifically, Shea avers that “[t]he Pennsylvania Supreme Court has held that, upon the addition of a new vehicle to an insurance policy, the insurance carrier must secure a new stacking waiver of UM coverage, which reduces the amount of available UM coverage. Whether this applies to signdown forms, which also reduce the amount of available UM coverage, represents an unsettled area of the law.” (Doc. 10, at 2-3). Further, Shea attempts to distinguish the alleged unsettled issue of state law in this case from the Court's retention of jurisdiction in Dayton v. Auto Ins. Co., No. 3:20-CV-1833, 2021 WL 5163221, (M.D. Pa. Nov. 5, 2021). (Doc. 6, at 23 n.4). In addition, Shea avers that “[a]nother unsettled area of law is whether sign-down forms that were issued under a different policy number remain effective under a new policy.” (Doc. 10, at 3) (emphasis in original).
By way of background, the Court notes that Section 1731 of Pennsylvania's MVFRL, 75 Pa. C.S.A. § 1701, et seq., “requires every motor vehicle insurance policy issued in Pennsylvania to include an offer of both uninsured and underinsured motorist coverage equal to the bodily injury liability amount.” Farmland Mut. Ins. Co. v. Sechrist, 769 Fed.Appx. 66, 70 (3d Cir. 2019) (citing 75 Pa.C.S. § 1731(a)). However, an insured may decline UM/UIM coverage or opt for UM/UIM limits less than the liability limits. In the absence of a rejection or a sign-down, the insurer must provide UM/UIM coverage “equal to the bodily injury liability limits.” 75 Pa. C.S.A. § 1731(c)(1); see Alcedo v. State Farm Mut. Auto. Ins. Co., 391 F.Supp.3d 452, 456 (E.D. Pa. 2019).
“[T]he MVFRL is comprehensive legislation governing the rights and obligations of the insurance company and the insured under liability insurance policies covering motor vehicles.” Rush v. Erie Ins. Exch., 265 A.3d 794, 796 (Pa. 2021) (quoting Sayles v. Allstate Ins. Co., 656 Pa. 99, 219 A.3d 1110, 1124 (2019)). The provisions of the MVFRL are mandatory and where insurance contract provisions go against the provisions of the MVFRL, the contract provisions will be found unenforceable. Rush, 265 A.3d at 796 (citations omitted).
Section 1731 provides that the insured must be provided with specific information to explain the separate purposes of UM/UIM coverage and must sign written rejection forms with certain stated language in prominent type and location in order to knowingly and voluntarily reject each type of coverage. 75 Pa. C.S.A. § 1731(b)-(c). The insured must sign and date separate forms to reject UM and UIM coverage. 75 Pa. C.S.A. § 1731(b)-(c). In light of these requirements, Section 1731 provides that the insured will not be deemed to have waived UI and/or UIM coverage if the insurer fails to produce a valid rejection form. Further, in cases where the insured has rejected UM and/or UIM coverage, Section 1731 also requires insurers to notify the insured on all policy renewals in prominent type that the policy “does not provide protection against uninsured and underinsured motorists.” 75 Pa. C.S.A. § 1731(b)-(c). In interpreting Section 1731, the Superior Court of Pennsylvania has held that an insured's affirmative decision to waive UM/UIM coverage is presumed to be in effect throughout the lifetime of that policy until “affirmatively changed” by the insured. Koch v. Progressive Direct Ins. Co., 280 A.3d 1060, 1067 (2022) (citing Smith v. Hartford Ins. Co., 849 A.2d 277, 281 (Pa.Super. 2004)).
Section 1734 provides that, “a named insured may request in writing the issuance of coverage under section 1731 (relating to availability, scope and amount of coverage) in amounts equal to or less than the limits of liability for bodily injury.” Young v. State Farm Mut. Auto. Ins. Co., 54 Fed.Appx. 365, 367 (3d Cir. 2002). While, there is no required form for an insured to select a reduced UM/UIM benefit, the Third Circuit has emphasized that Section 1734 “is intended to provide a very simple, clear-cut rule for an insurance company to follow-to lower the limits [of UM or UIM coverage] it must insist on a written authorization signed by the named insured.” Gibson v. State Farm Mut. Auto. Ins. Co., 994 F.3d 182, 187 (3d Cir. 2021) (citing Nationwide Ins. Co. v. Resseguie, 980 F.2d 226, 232 (3d Cir. 1992)); see Emps. Fire Ins. Co. v. Alvarado, No. CIV. A. 02-CV-6567, 2005 WL 182717, at *3 (E.D. Pa. Jan. 27, 2005); State Farm Mut. Auto. Ins. Co. v. Vollrath, No. CIV.A.02-1257, 2004 WL 1447836, at *5 (E.D. Pa. June 28, 2004), aff'd, 132 Fed.Appx. 414 (3d Cir. 2005)); see also Orsag v. Farmers New Century Ins., 15 A.3d 896, 900 (Pa. 2011). To effectuate such a request, insurance companies use the Pennsylvania Auto Supplements (the “PA Supplements”), which include the Section 1791 Important Notice and UM and UIM coverage selection/rejection forms that are sometimes referred to as “sign-down forms” in the Pennsylvania insurance industry. (Doc. 11, ¶ 39); Eckman v. Encompass Home & Auto Ins. Co., 551 F.Supp.3d 547, 549 (E.D. Pa. 2021). If the insured signs the Important Notice when he originally applies for coverage, it is presumed that “the insured has been advised of the benefits and limits available,” including the right to purchase UM/UIM coverage of at least $100,000 per person and $300,000 per accident. Alcedo, 391 F.Supp.3d at 456 (citing 75 Pa. C.S.A. § 1791). No other notice or rejection is required. Alcedo, 391 F.Supp.3d at 456.
The first allegedly unsettled issue in this case is whether the addition of a vehicle to the 2018 Nationwide Policy required a new UM/UIM sign-down form. (Doc. 6, at 23 n.4; Doc. 10, 2-3). As noted supra, Shea executed the original 2013 Nationwide Policy with Nationwide with UM/UIM limits for one vehicle on August 26, 2013. (Doc. 1-1, ¶ 7). On December 21, 2016, Shea executed the 2016 Nationwide Policy with a different policy number, which purportedly provided the same bodily injury and UM/UIM limits for one vehicle as the previous Policy. (Doc. 1-1, ¶ 10-11). On February 19, 2018, Shea obtained the 2018 Nationwide Policy, which added a second vehicle. (Doc. 1-1, ¶¶ 12-13). Shea contends the two sign-down forms produced by Nationwide dated March 6, 2018, are not valid because the signature of Shea contained on those forms are not authentic and were “surreptitiously and fraudulently obtained in an unlawful and deceptive effort to limit [Shea]'s available insurance coverage.” (Doc. 1-1, ¶ 42; Doc. 1-1, at 57-58). Therefore, Shea argues that Nationwide is required to provide for UM/UIM coverage equal to the bodily injury liability limits in the amounts of $300,000 per person, stacked across two vehicles, for $600,000 per person, consistent with the bodily injury coverage maintained under the 2018 Nationwide Policy and consistent with Section 1734 of the MVFRL. (Doc. 1-1, ¶ 41).
The Third Circuit, in unpublished opinions, and district courts have reached the conclusion that adding a new car to an insurance policy did not require a new section 1734 reduction. See Guglielmelli v. State Farm Mut. Auto. Ins. Co., 628 Fed.Appx. 137, 140 (3d Cir. 2015); Geist v. State Farm Mut. Auto. Ins. Co., No. 2:21-CV-04447, 2021 WL 5836048, at *2 (E.D. Pa. Dec. 9, 2021). Rather, courts have found that “a sign-down of UM/UIM benefits remains in effect unless the insured affirmatively changes it later.” Alcedo, 391 F.Supp.3d at 456.
In Nationwide Mutual Insurance Co. v. Merdjanian, Merdjanian purchased a policy with signed down UM/UIM coverage and later simultaneously added a vehicle to the policy and increased the bodily injury liability limits. 195 Fed.Appx. 78, 79 (3d Cir. 2006). In response, Nationwide provided him with forms to change his UM/UIM limits, but he did not return them. Merdjanian, 195 Fed.Appx. at 79. Merdjanian then added a third vehicle and again did not request a change in his UM/UIM limits. Merdjanian, 195 Fed.Appx. at 80. A subsequently issued “Declarations Page” reflected the same reduced UM/UIM coverage. Merdjanian, 195 Fed.Appx. at 80. The Third Circuit found it “significant” that Merdjanian paid the premiums reflected in the Declarations Page and never objected to the reduced UM/UIM coverage. Merdjanian, 195 Fed.Appx. at 80, 83 n.4. The Third Circuit concluded that Nationwide had fulfilled its obligations under §§ 1731 and 1734 when it obtained a sign down from Merdjanian at the time he purchased the policy. Merdjanian, 195 Fed.Appx. at 80. The court observed that nothing in the MVFRL “requires an insurer to obtain a new writing under section 1734 each time an insured chooses to increase liability coverage or otherwise alter the policy.” Merdjanian, 195 Fed.Appx. at 80. Rather, it requires only that an insurer offer UM/UIM coverage less than or equal to liability coverage and that any purchase of reduced coverage must be in writing. Merdjanian, 195 Fed.Appx. at 81-82 (citing 75 Pa. C.S.A. §§ 1731, 1734).
Upon review of relevant caselaw, the undersigned disagrees with Shea's first assertion that this case presents an unsettled issue of state law regarding the need to secure a new signdown form upon the addition of a new vehicle to an insurance policy. Shea does not support his first claim of unsettled law with any citation to Pennsylvania authority decided in the context at issue here. Furthermore, Shea's attempt to distinguish this case from Dayton is not persuasive as that case did not involve sign-down forms. (Doc. 6, at 22 n.4); see Dayton, 2021 WL 5163221. Under these circumstances, the undersigned cannot conclude that the issue is novel or unsettled such that this Court should decline to exercise jurisdiction. Cheyney v. Liberty Mut. Ins. Grp. Inc., No. 21-CV-5112, 2022 WL 425960, at *4 (E.D. Pa. Feb. 11, 2022) (denying motion to remand where precise issue in motion was previously decided by Supreme Court of Pennsylvania).
Next, the undersigned considers Shea's second assertion of unsettled law, whether sign-down forms that were issued under a different policy number remain effective under a new policy. (Doc. 10, at 3). While existing caselaw establishes that “increase[ing] liability coverage or otherwise alter[ing] the policy” does not invalidate original sign down of UM/UIM coverage, the undersigned cannot determine whether a policy issued under a different policy number changes this conclusion. Merdjanian, 195 Fed.Appx. at 81. Caselaw notes that it is “the initial issuance of a policy, rather than alteration of the policy's liability coverage limits, that triggers the MVFRL's requirements.” Merdjanian, 195 Fed.Appx. at 82. However, the question presented in this case is whether the issuance of a new policy number triggers the MVFRL's requirements for a second time. Based upon the lack of settled state law answering this question, the undersigned finds that this action presents a novel or unsettled issues of state law. In light of the “unsettled” or “novel” nature of this area of law, the undersigned is particularly mindful of the Third Circuit's admonition for district courts “to ‘step back' and be ‘particularly reluctant' to exercise DJA jurisdiction” under such circumstances. Reifer, 751 F.3d at 148. Indeed, district courts have frequently declined to exercise DJA jurisdiction when novel state law issues are presented and “there are no federal interests at stake.” Maxum Indem. Co. v. Heyl & Patterson, Inc., 2011 WL 4048377, at *3 (W.D. Pa. Sep. 12, 2011); see also Ewart, 257 F.Supp.3d at 726-27 (declining to exercise federal DJA jurisdiction because of the unsettled nature of Pennsylvania law with respect to stacked coverage waiver issues); Hixson v. State Farm Mut. Auto. Ins. Co., 2014 WL 201724, at *2 (W.D. Pa. Jan. 16, 2014) (declining to exercise DJA jurisdiction because the interpretation of the PMVFRL's provisions regarding stacked coverage waivers “has no relation to, or effect on, any federal law or right” and involves an area of law that “is uncertain or undetermined”) (citing Summy, 234 F.3d at 135); Allstate Prop. and Cas. Ins. Co. v. Owens, 2011 WL 94412, at *2 (W.D. Pa. Jan. 11, 2011) (noting that state insurance coverage issues present no federal question and promote no federal interest, a factor which “weighs heavily” against exercising federal DJA jurisdiction).
Accordingly, the undersigned concludes that this factor weighs against exercising federal jurisdiction over the instant action.
4. Fourth Reifer Factor
The fourth factor asks courts to consider “the availability and relative convenience of other remedies.” Reifer, 751 F.3d at 146. Shea argues that this factor is not applicable here because “other litigation on the collision has not yet commenced.” (Doc. 6, at 20 n.2). Nationwide asserts that “[w]hile it is true that declaratory relief could be afforded in the state court, there is no reason to believe that a state court proceeding would be better able to decide this matter.” (Doc. 8, at 25-26). Thus, Nationwide submits that “this factor is at most neutral, if it does not weigh against abstention.” (Doc. 8, at 26).
This Court and the Court of Common Pleas for Luzerne County are both courts of general jurisdiction, capable of adjudicating this case and affording the desired declaratory relief. Kelly, 868 F.3d at 289 (“[S]tate and federal courts are equally capable to grant effective relief in these circumstances.”). Moreover, “the Pennsylvania Declaratory Judgment Act, 42 Pa. C.S.A. § 7541, provides the same availability of remedies as the federal DJA.” Allstate Fire& Cas. Ins. Co. v. Archer, No. 1:17-CV-331, 2018 WL 2538859, at *3 n.1 (W.D. Pa. June 4, 2018). Therefore, this factor is neutral because the parties have not indicated that there are other remedies available that would be more convenient than the instant suit, nor can the Court identify any other remedies that would resolve this suit.
5. Fifth and Sixth Reifer Factor
The fifth Reifer factor has been clarified and given a narrowing construction by the Third Circuit in DiAnoia's Eatery. In Reifer, the court stated that there is “a general policy of restraint when the same issues are pending in a state court.” Reifer 751 F.3d at 146. As the Third Circuit has recently clarified, “[t]he fifth factor's ‘policy of restraint' is applicable only when the ‘same issues' are pending in state court between the same parties, not when the ‘same issues' are merely the same legal questions pending in any state proceeding.” DiAnoia's Eatery, 10 F.4th at 207 (citing Kelly, 868 F.3d at 289) (emphasis added). Relatedly, the sixth factor asks the court to consider the “avoidance of duplicative litigation.” Reifer, 751 F.3d at 146.
Relying on Alario, Shea argues that these Reifer factors are not applicable because other litigation on the underlying collision has not yet commenced. (Doc. 6, at 20 n.2). However, Defendants assert that the lack of duplicative litigation pending in state court weighs against abstention. (Doc. 8, at 26). As noted above, there is no contention that there is not pending litigation between these parties on these issues in state court. Therefore, the fifth and sixth Reifer factors weigh in favor of this Court exercising DJA jurisdiction. See Philadelphia Indem. Ins. Co. v. Yap, No. 3:21-CV-1236, 2022 WL 1546631, at *7 (M.D. Pa. May 16, 2022); Kelly, 868 F.3d at 289 (finding that the absence of a parallel proceeding meant that the general policy of restraint did not apply and there was no concern with duplicative litigation). Thus, the fifth and sixth factors are neutral.
6. Seventh Reifer Factor
The seventh factor asks the court to evaluate the “prevention of the use of the declaratory action as a method of procedural fencing or as a means to provide another forum in a race for res judicata.” Reifer, 751 F.3d at 140. Shea argues that, as the master of his claims, he commenced this action in his chosen forum, the Court of Common Pleas of Luzerne County, Pennsylvania. (Doc. 6, at 20). Shea avers that this factor weighs in favor of remand because Nationwide is seeking to manufacture a new forum by removing this matter to federal court. (Doc. 6, at 20) (quoting Alario, 2015 WL 8603229, at *3). In opposition, Nationwide argues that “[t]his is true in any case removed to federal court and, standing alone, cannot afford a basis for abstention.” (Doc. 8, at 26). Furthermore, Nationwide avers that “there is no ‘race to res judicata,' as there is no case pending in state court at all. This is not an attempt to use the federal judicial system to beat a state court to a decision, and there is nothing about the use of the federal forum that implicates comity with the state court.” (Doc. 8, at 26-27). In response, Shea argues that remand is appropriate because “it is clear that Nationwide is simply attempting to find a more favorable forum.” (Doc. 10, at 3).
The undersigned finds this factor is not applicable here because there is no parallel state proceeding in the instant matter. See Sullo v. Nationwide Prop. and Cas. Ins. Co., No. 1:19-CV-00553, 2019 WL 3337059, at *3 (M.D. Pa. July 24, 2019) (finding no “procedural fencing” or “race to res judicata” where there is no parallel state proceeding). Furthermore, the undersigned finds that there is no reason to believe that either party is engaged in a race for res judicata or any other form of procedural fencing that would be prevented by how the Court decides the motion to remand. Nationwide Prop. & Cas. Ins. Co. v. Zatyko, No. 16-CV-1010, 2016 WL 6804436, at *4 (E.D. Pa. Nov. 16, 2016) (finding that there did not appear to be any a concern about the use of the declaratory action as a method of procedural fencing or as a means to provide another forum in a race for res judicata, especially because there was no pending parallel state action). Thus, this factor is neutral.
7. Eighth Reifer Factor
The eighth factor, which is applicable in the insurance context, is 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. SeeKelly, 868 F.3d at 283; Reifer, 751 F.3d at 146. This factor is inapplicable to the resolution of Shea's motion to remand because there is no pending parallel state proceeding to consider in this case. See Sullo, 2019 WL 3337059 at *4 (concluding that the eighth factor is inapplicable where there is no pending parallel state proceeding); Sechrist v. Farmland Mut. Ins. Co., No. 16-CV-1155, 2016 WL 6082132, at *2 (M.D. Pa. Oct. 18, 2016) (same). Thus, this factor is neutral.
8. Summary of Reifer Factors
Having balanced the eight factors delineated by the Third Circuit in Reifer, the undersigned concludes that each of the salient factors either weighs against the exercise of federal jurisdiction or remain neutral. In particular, the undersigned is mindful of the Third Circuit's admonition that federal courts should “step back” and allow unsettled and novel state law issues to be resolved by the state courts. See Reifer, 751 F.3d at 148; see also Summy, 234 F.3d at 135 (warning district courts not to “entertain jurisdiction over a declaratory judgment action that implicates unsettled questions of state law” because “[s]uch matters should proceed in normal fashion through the state court system”). Consequently, in the exercise of this Court's discretion, and under the specific circumstances of this case, the undersigned recommends that the Court decline to exercise jurisdiction over the instant declaratory judgment action. See Archer, 2018 WL 2538859, at *7 (granting plaintiff's motion to remand where consideration of Reifer factors weigh against exercise of federal jurisdiction).
IV. Recommendation
Based on the foregoing, it is respectfully recommended that Shea's motion to remand this action to the Court of Common Pleas of Luzerne County (Doc. 5) be GRANTED.
NOTICE
NOTICE IS HEREBY GIVEN that the undersigned has entered the foregoing Report and Recommendation dated March 1, 2023. Any party may obtain a review of the Report and Recommendation pursuant to Rule 72.3, which provides:
Any party may object to a magistrate judge's proposed findings, recommendations or report addressing a motion or matter described in 28 U.S.C. § 636(b)(1)(B) or making a recommendation for the disposition of a prisoner case or a habeas corpus petition within fourteen (14) days after being served with a copy thereof. Such party shall file with the clerk of court, and serve on the magistrate judge and all parties, written objections which shall specifically identify the portions of the proposed findings, recommendations or report to which objection is made and the basis for such objections. The briefing requirements set forth in Local Rule 72.2 shall apply. A judge shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge, however, need conduct a new hearing only in his or her discretion or where required by law, and may consider the record developed before the magistrate judge, making his or her own determination on the basis of that record. The judge may also receive further evidence, recall witnesses or recommit the matter to the magistrate judge with instructions.