Accident Insurance Co., Inc. v. Mathews Development Company, LLC et al

Filing 40

OPINION AND ORDER: it is the ORDER, JUDGMENT, and DECREE of the court that both the 13 motion to dismiss and alternative motion to stay filed by defendants Kelvin Wortham, Sheretha Wortham, Edward Thomas, Ruth Thomas, and Courtney Jordan and the 33 motion to dismiss filed by defendants Mathews Development Company, LLC and James E. Mathews are denied. Signed by Honorable Judge Myron H. Thompson on 4/26/2021. (amf, )

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION
ACCIDENT INSURANCE CO.,
INC.,

)
)
)
)
)
)
)
)
)
)
)

Plaintiff,
v.
MATHEWS DEVELOPMENT
COMPANY, LLC, et al.,
Defendants.

CIVIL ACTION NO.
2:19cv848-MHT
(WO)

OPINION AND ORDER
Pursuant to the Declaratory Judgment Act, 28 U.S.C.
§ 2201, plaintiff Accident Insurance Co., Inc. brings
this lawsuit seeking a declaratory judgment that it has
no obligation to defend defendants Mathews Development
Company,
brought

LLC

and

against

James
them

E.

in

Mathews
Alabama

against
state

claims

court

by

defendants Kelvin and Sheretha Wortham, Edward and Ruth
Thomas, and Courtney Jordan.

Diversity jurisdiction is

proper pursuant to 28 U.S.C. § 1332.
The Worthams, the Thomases, and Jordan have filed a
motion to dismiss and an alternative motion to stay the

case.

They

note

that

three

underlying

state-court

cases remain pending and argue that this federal court
should

decline

to

hear

this

case

until

they

are

resolved, citing both the Wilton-Brillhart abstention
doctrine and the Colorado River abstention doctrine.
The Mathews defendants have filed a motion to dismiss
on the same grounds.

For the reasons that follow, the

motions to dismiss and the alternative motion to stay
will be denied.

I.

BACKGROUND

The Worthams, the Thomasas, and Jordan have filed
suit against the Mathews defendants, asserting breach
of

warranty,

fraudulent

misrepresentation,

and

other

state-law claims in connection with the construction of
their

homes.

constructed,

They
which

say

that

resulted

extensive damage.

in

the

homes

numerous

were

poorly

defects

and

These cases all remain pending in

Alabama state court.
For

much

of

the

time
2

period

during

which

the

Worthams,
homes,

the

Mathews

Insurance.

Thomases

and

Development

Under

a

Jordan
was

purchased

insured

reservation

of

their

by

Accident

rights,

Accident

Insurance is defending both Mathews defendants in the
state-court

suits.

However,

the

insurance

company

argues that under the terms of its policies, it is not
obligated

to

defend

either

one.

It

filed

this

declaratory-judgment action seeking a determination of
its duty to defend in each of the underlying state
actions.1

II.

DISCUSSION

The motions to dismiss or stay both cite to two
separate doctrines in explaining why the court should
abstain

from

hearing

this

case:

Wilton-Brillhart

abstention and Colorado River abstention.

However, in

1. While the Worthams, the Thomases, and Jordan say
that Accident Insurance seeks “a declaration that it
owes no duty to defend and/or indemnify,” Brief in
Support of Defendants’ Motion to Dismiss or Motion to
Stay (Doc. 14) at 2, the complaint asks that the court
decide only the insurance company’s duty to defend, see
Complaint (Doc. 1) at 24.
3

Wilton v. Seven Falls Co., 515 U.S. 277 (1995), the
Supreme Court stated that the “discretionary” standard
set

forth

in

America, 316

Brillhart

U.S.

491,

v.

Excess
(1942),

1620

Ins.
and

Co.
not

of
the

“exceptional circumstances” test developed in Colorado
River Water Conservation Dist. v. United States, 424
U.S. 800 (1976), and Moses H. Cone Memorial Hospital v.
Mercury Constr. Corp., 460 U.S. 1 (1983), “governs a
district

court's

judgment

action”

state-court

decision
during

the

proceeding.

to

stay

pendency

Wilton,

515

a

declaratory

of

a

U.S.

related
at

279.

Since Accident Insurance seeks only declaratory relief
in this case, the court concludes that Colorado River’s
abstention is inapplicable and will proceed to consider
whether

abstention

is

warranted

under

the

Wilton-Brillhart “discretionary” standard.2

2. While circuit courts of appeals have split over
whether
the
Wilton-Brillhart
standard
governs
a
situation in which a plaintiff requests forms of relief
in addition to a declaratory judgment, there is “no
doubt” that it applies where “solely declaratory relief
is sought,” R.R. Street & Co. v. Vulcan Materials Co.,
569 F.3d 711, 715 (7th Cir. 2009), as is the case here.
4

It is well-settled that the Declaratory Judgment
Act is “an enabling Act, which confers a discretion on
the

courts

rather

litigant.”
“federal

than

an

absolute

right

Wilton, 515 U.S. at 287.

courts

competence

to

make

upon

the

The Act gives

a

declaration

of

rights,” but “it does not impose a duty to do so.”
Ameritas

Variable

Life

Ins.

Co.

1328, 1330 (11th Cir. 2005).

v.

Roach,

411

F.3d

The Supreme Court has

warned that it is both “uneconomical” and “vexatious”
for

a

federal

district

court

to

hear

a

declaratory-judgment action while proceedings involving
the

same

parties

and

ongoing in state court.
As

a

result,

courts

the

same

legal

issues

remain

Brillhart, 316 U.S. at 495.
should

generally

“decline

to

entertain a declaratory judgment action on the merits
when a pending proceeding in another court will fully
resolve

the

controversy

between

the

parties.”

Ven-

Fuel, Inc. v. Dep’t of the Treasury, 673 F.2d 1194,
1195 (11th Cir. 1982).

5

The Eleventh Circuit Court of Appeals has set out
nine “guideposts” that district courts should consider
in

wielding

Judgment

their

Act.

guideposts

discretion

Ameritas,

are:

(1)

411

the

under
F.3d

the
at

strength

Declaratory

1331.

of

Those

the

State’s

interest in having the issues decided in a state court;
(2)

whether

a

judgment

in

the

federal

action

would

settle the controversy; (3) whether the federal action
would help clarify the legal relations at issue; (4)
whether

the

federal

action

is

being

used

for

‘procedural fencing,’ that is, as part of a race to res
judicata or to allow a federal court to hear a case
that

otherwise

ruling

in

between

the

the

wouldn’t
federal

federal

be

removable;

action

and

state

would

(5)
cause

courts

or

whether

a

friction
otherwise

encroach on state proceedings; (6) whether a better or
more effective alternative remedy exists; (7) whether
the

underlying

informed

factual

resolution

of

issues
the

are

matter;

important
(8)

to

whether

an
the

state court is better suited than the federal court to
6

evaluate those facts; and (9) whether there is a close
nexus between the underlying issues and state law or
public policy, or whether federal common or statutory
law

requires

action.

resolution

See id.

of

the

declaratory-judgment

This list is not exhaustive, and no

one factor is controlling.

See id.

Accident Insurance argues that the Wilton-Brillhart
abstention doctrine does not apply here because there
are no state proceedings sufficiently parallel to this
case.

Suits

congruent,

if

parties

and

Mercury

Ins.

Inc.,

648

curiam).3
action

are

sufficiently

they

involve

substantially

F.

Co.

v.

App’x

that

“substantially

the

same

Excellent
861,

parallel,

866

(11th

the

issues.”

Computing
Cir.

is,
same
First

Distribs.,
2016)

(per

When an insurer brings a declaratory-judgment

against

an

insured,

the

proceedings

are

not

sufficiently parallel or overlapping if “the insurer

3. While unpublished opinions are not controlling
authority, they may be cited as persuasive authority to
the extent that their legal analysis warrants.
See
Bonilla v. Baker Concrete Constr., Inc., 487 F.3d 1340,
1345 n.7 (11th Cir. 2007).
7

was not a party to the suit pending in state court” and
“the state court actions involved issues regarding the
insured’s liability, whereas the federal suit involved
matters of insurance coverage.”

Cont’l Cas. Co. v.

Advance Terrazzo & Tile Co., 462 F.3d 1002, 1006 (8th
Cir. 2006).

That is clearly the case here.

Accident

Insurance is not party to any of the three underlying
suits.

None of the suits will determine whether the

claims asserted in those suits lie within the scope of
the Mathews defendants’ insurance policy, nor will they
determine
defend

whether

the

Accident

Mathews

Insurance

defendants.

In

has

a

duty

short,

to

these

proceedings are merely related, and not sufficiently
parallel or congruent.
However, the Eleventh Circuit has never held that
abstention

applies

only

congruent proceedings.

when

there

are

completely

Instead, it has said that “the

district court must weigh all relevant factors,” even
if the federal action is not parallel to any state
action.

First Mercury, 648 F. App’x at 866.
8

In any

event, the court finds that the Ameritas factors weigh
heavily against abstention here, so it will exercise
its

discretion

to

retain

jurisdiction

over

this

declaratory-judgment action.
As

other

federalism,

courts

have

comity

and

Wilton/Brillhart

found,

“the

interests

efficiency

abstention

are

on

founded

of

which
are

not

directly implicated” where the legal issues presented
in the federal case differ from those in the underlying
state action.

Emp’rs Mut. Cas. Co. v. Kenny Hayes

Custom Homes, LLC, 101 F. Supp. 3d 1186, 1191 (S.D.
Ala. 2015) (Granade, J.).

Indeed, “[t]he bulk of the

Ameritas guideposts ... only favor abstention when both
the state and federal courts are asked to decide the
same legal or factual issues.”

Atl. Cas. Ins. Co. v.

GMC Concrete Co., Inc., No. 07-0563, 2007 WL 4335499,
at *3 (S.D. Ala. Dec. 7, 2007) (Steele, J.).

That is

simply not the case here, and defendants’ arguments to
the

contrary

company's

duty

misunderstand
to

defend

the
its

9

law.

An

insured

from

insurance
suit

is

determined by the language of the insurance policy and
by

the

against

factual
the

allegations

insured.

See

in

the

Alfa

complaint

Mut.

Ins.

Morrison, 613 So. 2d 381, 382 (Ala. 1993).

filed

Co.

v.

There is

no need for this court to make any “specific findings
of fact as to the merits or validity of those factual
allegations in the pleading,” so the resolution of any
disputed

factual

issues

by

the

state

court

irrelevant to resolution of the federal case.

is

See Pa.

Nat. Mut. Cas. Ins. Co. v. King, No. 11-0577, 2012 WL
280656, at *3 n.5 (S.D. Ala. Jan. 30, 2012) (Steele,
C.J.).

Nor is there any overlap in the legal issues

presented:

The issue of the insured’s liability has

not been raised in the federal case, and the issue of
insurance

coverage

state-court cases.
are

separate--there

has

not

been

raised

in

the

While the cases are related, they
is

“no

reasonable

risk

of

inconsistent rulings, duplication of effort, or federal
entanglement with the state court proceedings.”

State

Farm Fire & Cas. Co. v. Knight, No. 09-0783, 2010 WL
10

551262, at *4 (S.D. Ala. Feb. 11, 2010) (Steele, J.).
Thus, there is no reason for this court to abstain from
hearing the declaratory-judgment action.
Evaluating

each

of

the

Ameritas

factors

individually leads to the same conclusion.

As to the

first factor (State’s interest), it is true that state
law controls interpretation of the insurance policy.
However, given that the issue has not been raised in
any Alabama proceeding, there is no indication that the
State has a strong interest in having it decided in a
state court.

The second factor (settling controversy)

similarly weighs against abstention.

Given that this

case presents distinct legal issues, a judgment by this
court

would

state-court

not
claims.

settle

any

Moreover,

of
it

the
is

underlying

unquestionable

that a judgment in this case would help clarify the
legal

relations

between

Accident

Insurance

and

the

Mathews defendants, so the third factor (clarification
of legal relations) supports the conclusion that the
court should not abstain from hearing this case.
11

As to the fourth factor (procedural fencing), the
court also lacks any evidence that this action is being
used

for

procedural

fencing.

Because

there

is

no

overlap between the legal and factual issues in this
case and those in the state-court cases, there is no
risk of res judicata.

Accident Insurance “appears to

have brought this action in the proper forum for a
proper

purpose

to

resolve

underlying action.”

issues

not

joined

in

the

Emp’rs Mut., 101 F. Supp. 3d at

1191.
The

fifth

factor

(friction

between

state

and

federal courts) also supports the conclusion that this
court should retain jurisdiction over the declaratoryjudgment action.

The issues of insurance coverage and

Accident Insurance’s duty to defend are not pending in
any of the underlying state-court actions, so there is
no reason to believe that this case would cause any
friction with the state courts or encroach on the state
proceedings.

12

Under the sixth factor (better remedy), the Mathews
defendants
because

argue

that

Accident

intervene

in

an

alternative

Insurance

the

could

state-court

remedy

simply

cases

and

question of its duty to defend there.

exists

seek
raise

to
the

However, the

Mathews defendants have provided no reason to believe
that this remedy would be better or more effective.
The state court could deny the motion to intervene,
preventing Accident Insurance from making use of this
approach.

And it would be more efficient for this

court “to make a timely declaration of the insurer’s
duty to defend obligations” now than either to wait for
Accident

Insurance

to

intervene

and

raise

the

issue

before the state court--or, worse, for the question to
remain

undecided

for

even

longer

while

the

company

continues to provide a defense in the underlying case.
Atl. Cas. Ins., 2007 WL 4335499, at *3.
With respect to the seventh factor (importance of
underlying

factual

allegations)

and

eighth

factor

(better suited court), informed resolution of this case
13

does

not

turn

on

any

of

the

factual

issues

in

the

underlying cases because duty to defend is based solely
on the language of the insurance policy and the factual
allegations

in

the

state-court

complaints.

The

defendants have not raised any other overlapping issues
of fact that would arise between this case and the
underlying cases, so these factors also weigh against
abstention.
Finally,

under

the

ninth

factor

(nexus

between

underlying issues and state law), as under the first,
it

is

true

insurance

the

coverage

accordance
issue

that

is

with
not

state-court

in

question
this

Alabama
currently

cases,

or

about

case

law.

must

any

in

scope

of

decided

be

However,

pending
in

the

in

because

the

other

the

underlying
state-court

litigation, this factor does not favor abstention.
In any event, dismissing this case or staying it
pending the outcome of the underlying action would be
unproductive and would waste judicial resources because
the

question

of

Accident

Insurance’s
14

duty

to

defend

“would remain undecided ... after the underlying action
was completed.”

Emp’rs Mut., 101 F. Supp. 3d at 1191.

In fact, the issue would “almost certainly be rendered
moot”

by

a

stay,

“needlessly

frustrating”

Insurance’s efforts to obtain a resolution.
from

being

wasteful

or

Accident
“Far

allowing

inefficient,

Id.

this

declaratory judgment action to proceed would provide
substantial benefits to all parties by affording them
certainty as to the currently murky status” of Accident
Insurance’s

duties

towards

the

Mathews

defendants,

providing good reason for this court to hear this case.
State Farm Fire & Cas., 2010 WL 551262, at *4.
In sum, this court finds that the Ameritus factors
weigh strongly in favor of retaining jurisdiction over
this declaratory-judgment action.

The defendants have

offered no reason to believe that dismissing or staying
this action would promote the objectives of federalism,
efficiency,

and

comity

Declaratory

Judgment

that

Act

and

15

underly
the

the

Federal

Brillhart-Wilton

doctrine.

Therefore,

the

court

will

exercise

its

discretion to hear this declaratory-judgment action.
* * *
Accordingly, it is the ORDER, JUDGMENT, and DECREE
of

the

court

that

both

the

motion

to

dismiss

and

alternative motion to stay filed by defendants Kelvin
Wortham, Sheretha Wortham, Edward Thomas, Ruth Thomas,
and Courtney Jordan (Doc. 13) and the motion to dismiss
filed by defendants Mathews Development Company, LLC
and James E. Mathews (Doc. 33) are denied.
DONE, this the 26th day of April, 2021.
/s/ Myron H. Thompson
UNITED STATES DISTRICT JUDGE

16