Travelers Casualty Insurance Company of America et al v. American Home Realty Network, Inc. et al

Filing 40

ORDER by Judge Samuel Conti DENYING (16) Motion to Dismiss in case 3:13-cv-00360-SC; DENYING (14) Motion to Remand in case 3:13-0984-SC; DENYING (26) Motion for Leave to File in cases 3:13-cv-00984-SC and in case 3:13-0984-SC. (sclc2, COURT STAFF) (Filed on 4/29/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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United States District Court

For the Northern District of California

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) Case Nos. 13-0360 SC
)
13-0984 SC
TRAVELERS CASUALTY INSURANCE
)
COMPANY OF AMERICA and TRAVELERS )
INDEMNITY COMPANY OF
) ORDER DENYING MOTION TO DISMISS
CONNECTICUT,
) AND DENYING MOTION TO REMAND
)
Plaintiffs,
)
)
v.
)
)
AMERICAN HOME REALTY NETWORK,
)
INC. and JONATHAN J. CARDELLA,
)
)
Defendants.
)
)
)
AMERICAN HOME REALTY NETWORK,
)
INC.,
)
)
Plaintiff,
)
)
v.
)
)
TRAVELERS CASUALTY INSURANCE
)
COMPANY OF AMERICA and TRAVELERS )
INDEMNITY COMPANY OF
)
CONNECTICUT,
)
)
Defendants.
)
)
)

1

I.

INTRODUCTION
The underlying actions in the above-captioned cases concern

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two disputes between the same parties.

The first dispute concerns

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whether Travelers Casualty Insurance Company of America and

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Travelers Indemnity Company of Connecticut (collectively

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"Travelers") may bring an action for declaratory relief and

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reimbursement against Defendants American Home Realty Network, Inc.

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("AHRN") and AHRN's president Jonathan J. Cardella ("Cardella")

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(collectively "Defendants") based on duties to defend in two

United States District Court

For the Northern District of California

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underlying insurance disputes.

The second dispute concerns a

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related case, American Home Realty Network, Inc. v. Travelers

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Casualty Insurance Co. of America, No. 13-0984 SC (N.D. Cal.) (the

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"Related Case"),1 brought first in state court and then removed to

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this Court, in which AHRN seeks declaratory relief regarding

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Travelers' purported duty to defend in one of the aforementioned

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underlying insurance disputes.

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Removal"), 12 ("Order Relating Case").

Related Case ECF Nos. 1 ("Notice of

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Now before the Court is Defendants' motion to dismiss

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Travelers' complaint for declaratory judgment and reimbursement,

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ECF Nos. 1 ("Compl."), 16 ("MTD"), and AHRN's motion to remand the

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Related Case, Related Case ECF No. 14 ("Mot. to Remand").

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motions are fully briefed.

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("Reply ISO MTD"); Related Case ECF Nos. 19 ("Travelers Opp'n to

Both

ECF Nos. 26 ("Opp'n to MTD"), 33

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25
26
27
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1

For brevity's sake, future references to documents from the
Related Case simply refer to its abbreviated name followed by the
ECF number for that case's document, e.g., "Related Case ECF No.
1." Citations to documents from the case involving AHRN's motion
to dismiss use a reference to the ECF number alone.

2

1

Remand"), 23 ("AHRN's Reply ISO Remand").2

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appropriate for decision without oral argument, Civ. L.R. 7-1(b).

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For the reasons explained below, the Court DENIES Defendants'

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motion to dismiss Travelers' complaint and DENIES Defendants'

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motion to remand the Related Case.

All of the motions are

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7 II.

BACKGROUND & PROCEDURAL HISTORY

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A.

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The following facts are taken from Travelers' complaint and

Background

United States District Court

For the Northern District of California

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the parties' requests for judicial notice.3

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plaintiffs are insurance corporations.

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obtained three general commercial insurance policies from

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Travelers.

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policy period July 23, 2010 to July 23, 2011 (the "AHRN Policy").

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Id. ¶ 9.

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AHRN's corporate owner: one for the policy period March 20, 2011 to

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March 20, 2012 and the other from March 20, 2012 to March 20, 2013

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(collectively the "Neighborhubs Policies").

See id. ¶¶ 9-16.

The two Travelers

Compl. ¶¶ 3-4.

AHRN

One policy was issued to AHRN for the

Two policies were issued to Neighborhubs LLC, which is

Id. ¶¶ 10-11.

The present dispute arises from two underlying actions.

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On

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March 28, 2012, Metropolitan Regional Information Systems, Inc.

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("Metropolitan") sued AHRN and Cardella in the United States

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Travelers also moved for leave to file a sur-reply in support of
its oppositions to the motions to remand and dismiss filed in this
matter and the Related Case. ECF No. 38. AHRN did not object.
The Court DENIES this motion as moot because Travelers prevails in
this action.
3

The Court GRANTS both parties' requests for judicial notice
because the documents in question -- insurance policies, case
filings, and so forth -- all are either incorporated by reference
or matters of public record. ECF Nos. 15 ("Travelers RJN"), 17
("AHRN RJN ISO MTD"), 29 ("Travelers RJN ISO Opp'n"); Related Case
ECF Nos. 20 ("Travelers Remand RJN"), 24 ("AHRN Remand RJN").
3

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District Court for the District of Maryland (the "Metropolitan

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Action," No. 8:12-cv-00954-AW).

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asserts claims against AHRN for direct, induced, and contributory

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copyright infringement; false designation of origin; unfair

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competition under the Lanham Act; conversion; unjust enrichment;

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and, as to Cardella, vicarious copyright infringement.

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17-24.

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Minnesota, Inc., d.b.a. NorthstarMLS ("Regional") sued AHRN in the

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United States District Court for the District of Minnesota (the

In that action, Metropolitan

Compl. ¶¶

On April 18, 2012, Regional Multiple Listing Services of

United States District Court

For the Northern District of California

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"Regional Action," No. 0:12-cv-00965-JRT-FLN).

In that action,

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Regional asserts claims against AHRN for copyright infringement.

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Compl. ¶¶ 25-32.
Defendants assert that the three policies cover claims against

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them in both the Metropolitan and Regional Actions.

See id. ¶¶ 33,

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38.

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Travelers and requested defense and indemnity under the AHRN

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Policy.

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Action to Travelers, likewise requesting defense and indemnity in

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that action.

On April 9, 2012, AHRN tendered the Metropolitan Action to

Id. ¶ 33.

On April 25, 2012, AHRN tendered the Regional

Id. ¶ 38.

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Travelers declined to provide a defense in the Regional

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Action via an email dated May 8, 2012 and confirmed its declination

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by phone on May 22, 2012, the same day it accepted defense of the

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Metropolitan Action under a full reservation of rights.

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During the phone conversation about the Metropolitan Action,

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Travelers also advised AHRN's general counsel that it would file a

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complaint for declaratory relief regarding the duty to defend.

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On that same day, Travelers filed an action for declaratory relief

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in this Court as to both the Metropolitan and Regional Actions, and

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Id. ¶ 33.

Id.

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for reimbursement as to the Metropolitan Action, all in reference

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to the AHRN Policy.

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Compl.").

4

See AHRN RJN ISO MTD, Ex. 1 ("First Federal

Later, in a letter dated June 7, 2012, Travelers confirmed the

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acceptance with full reservations of the Metropolitan Action.

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Compl. ¶¶ 33-34.

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to defend in the Regional Action in a letter to Defendants, id. ¶¶

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38-39.

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On June 19, 2012, it memorialized its declination

Sometime between June and September 2012, AHRN also requested

United States District Court

For the Northern District of California

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that Travelers defend and indemnify them in the Metropolitan and

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Regional Actions under the Neighborhubs Policies, but Travelers

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declined in a letter dated September 18, 2012.

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On that same day, Travelers amended its complaint to request

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declaratory relief and reimbursement for both the Regional and

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Metropolitan Actions as to the Neighborhubs Policies as well as the

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AHRN Policy.

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B.

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On October 5, 2012, AHRN moved to dismiss or alternatively to

Id. ¶¶ 35-36, 40.

See First Federal Compl. ¶¶ 32, 35.

Procedural History

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stay Travelers' First Federal Complaint.

Travelers RJN ISO Opp'n

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Ex. 5.

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grounds, contending that Travelers had failed to establish the

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$75,000 amount-in-controversy requirement necessary for federal

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courts to exercise subject matter jurisdiction in diversity cases.

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See id. at 14.

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January 16, 2013 and dismissed Travelers' action for lack of

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subject matter jurisdiction on January 24, 2013.

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Ins. Co. of Am. v. Am. Home Realty Network, Inc., No. C 12-2637

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PJH, 2013 WL 271668, 2013 U.S. Dist. LEXIS 9797 (N.D. Cal. Jan. 24,

AHRN challenged the complaint partly on jurisdictional

This Court heard arguments on that motion on

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Travelers Cas.

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2013) ("Travelers I").

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declaratory relief action, filed before Travelers notified AHRN of

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the decisions to defend or decline the underlying actions, could

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not satisfy the amount-in-controversy requirement because Travelers

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had incurred no defense costs at the time the complaint was filed.

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Id. at *4.

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The Travelers I Court held that Travelers'

On the same day Travelers I was dismissed, AHRN filed a state

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court declaratory relief action regarding Travelers' duty to defend

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in the Regional Action.

AHRN RJN ISO MTD, Ex. 4.

On the following

United States District Court

For the Northern District of California

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day, January 25, 2013, Travelers filed the instant complaint in

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federal court, seeking the same declaratory relief and

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reimbursement as to the Regional and Metropolitan Actions that it

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requested in the First Federal Complaint.

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On March 4, 2013, Travelers agreed to defend AHRN in the

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Regional Action under a reservation of rights.

See Related Case

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ECF No. 22 (Decl. of Pam Matsufuji ISO Opp'n to Remand ("Matsufuji

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Decl.")) ¶¶ 13, 14, Exs. 8, 9.

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Travelers has a duty to defend for any period during the Regional

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Action's litigation, and if so, what timeframe that duty would

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cover.

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removed AHRN's state court declaratory relief action to federal

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court on March 5, 2013.

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was related to this one on March 18, 2013.

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Relating Case.

The parties still dispute whether

See, e.g., Travelers Opp'n to Remand at 12-14.

Related Case Notice of Removal.

Travelers

That case

Related Case Order

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Now AHRN moves to dismiss Travelers' complaint for declaratory

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relief and reimbursement, arguing as follows: (1) Travelers' claims

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regarding the Regional Action should be dismissed for lack of

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subject matter jurisdiction, and moreover, collateral estoppel

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1

prevents Travelers from rearguing the same matter after its

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previous litigation and decision on the merits; (2) additionally or

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alternatively, Travelers' complaint should be dismissed as to the

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Regional Action because AHRN filed its own declaratory relief

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action in state court before Travelers filed the instant action;

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(3) additionally or alternatively, the Court should exercise its

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discretion under the Declaratory Judgment Act ("DJA"), 28 U.S.C. §

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2201, and dismiss Travelers' claims as to either the Regional

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Action alone or both underlying actions.4
Travelers opposes AHRN's motion to dismiss.

United States District Court

For the Northern District of California

10

It argues that

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the Court has subject matter jurisdiction over the instant matter

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because its defense costs will almost certainly exceed $75,000, and

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that the Court should not decline to hear Travelers' actions for

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declaratory relief.

See generally Opp'n to MTD.

AHRN also seeks to remand the Related Case to state court,

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arguing -- essentially as it does in its motion to dismiss -- that

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(i) Travelers lacks removal jurisdiction because it fails to

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satisfy the amount in controversy requirement, and (ii) the Court

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should not exercise its discretion under the DJA and removal

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jurisdiction to hear Travelers' declaratory relief claims.

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generally Related Case Mot. to Remand.

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motion for the same reasons it does AHRN's motion to dismiss.

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///

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///

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///

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4

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See

Travelers opposes this

Defendants also argue that the Court should dismiss Travelers'
complaint if Travelers does not maintain or follow through on steps
to minimize prejudice to AHRN or Cardella in the underlying actions
as a result of this litigation. Based on the parties' arguments,
this dispute is not ripe. The Court declines to address it here.
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1 III.

LEGAL STANDARD

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A.

Motions to Dismiss

A motion to dismiss under Federal Rule of Civil Procedure

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4

12(b)(6) "tests the legal sufficiency of a claim."

Navarro v.

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Block, 250 F.3d 729, 732 (9th Cir. 2001).

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on the lack of a cognizable legal theory or the absence of

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sufficient facts alleged under a cognizable legal theory."

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Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.

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1988).

"Dismissal can be based

"When there are well-pleaded factual allegations, a court

United States District Court

For the Northern District of California

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should assume their veracity and then determine whether they

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plausibly give rise to an entitlement to relief."

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Iqbal, 556 U.S. 662, 679 (2009).

13

must accept as true all of the allegations contained in a complaint

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is inapplicable to legal conclusions.

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elements of a cause of action, supported by mere conclusory

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statements, do not suffice."

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Twombly, 550 U.S. 544, 555 (2007)).

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generally "limited to the complaint, materials incorporated into

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the complaint by reference, and matters of which the court may take

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judicial notice."

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540 F.3d 1049, 1061 (9th Cir. 2008) (citing Tellabs, Inc. v. Makor

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Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)).

Ashcroft v.

However, "the tenet that a court

Threadbare recitals of the

Id. (citing Bell Atl. Corp. v.
The court's review is

Metzler Inv. GMBH v. Corinthian Colls., Inc.,

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B.

Declaratory Judgments

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Under the Declaratory Judgment Act, the Ninth Circuit applies

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a two-part test to determine whether jurisdiction over a claim for

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a declaratory relief is appropriate. Principal Life Ins. Co. v.

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Robinson, 394 F.3d 665, 669 (9th Cir. 2005).

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determine if an actual case or controversy exists within its

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The court must first

1

jurisdiction.

Id.

If so, the court must then decide whether to

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exercise its jurisdiction.

Id.

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District courts have "discretion in determining whether and

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when to entertain an action under the Declaratory Judgment Act."

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Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995).

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"there is no presumption in favor of abstention in declaratory

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actions generally, nor in insurance coverage cases specifically."

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Gov't Emps. Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir.

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1998).
"The district court's discretion to hear declaratory actions

United States District Court

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For the Northern District of California

However,

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over which it has jurisdiction is guided by the Supreme Court's

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announcements in [Brillhart v. Excess Ins. Co., 316 U.S. 491

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(1942)]."

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exclusive and state that, '[1] the district court should avoid

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needless determination of state law issues; [2) it should

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discourage litigants from filing declaratory actions as a means of

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forum shopping; and [3] it should avoid duplicative litigation.'"

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Id. (quoting Dizol, 133 F.3d at 1225) (alterations in original).

19

"Essentially, the district court must balance concerns of judicial

20

administration, comity, and fairness to the litigants."

21

Id. (internal quotations omitted).

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"noted additional and potentially relevant considerations,"

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including "whether the declaratory action will serve a useful

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purpose in clarifying the legal relations at issue" and "whether

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the declaratory action is being sought merely for the purposes of

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procedural fencing or to obtain a 'res judicata' advantage."

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///

28

///

Dizol, 394 F.3d at 672.

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"The Brillhart factors are non-

The Ninth Circuit has also

Id.

1 IV.

DISCUSSION

2

A.

3

The parties do not dispute that the Court has subject matter

Subject Matter Jurisdiction

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jurisdiction over claims related to the Metropolitan Action.

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However, they disagree on whether the Court has subject matter over

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claims related to the Regional Action.

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whether the amount in controversy in that action exceeds the

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$75,000 limit set by 28 U.S.C. § 1332(a).

9

the amount in controversy is either zero, since Travelers filed its

Specifically, they dispute

Defendants claim that

United States District Court

For the Northern District of California

10

complaint before making a coverage decision, or that it is under

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$75,000, since AHRN claims that its legal bills will go no higher.

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See MTD at 10-11.

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alleges an amount in controversy in excess of $75,000, based on

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projected defense costs for the entire Regional Action litigation -

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- not just the relatively short period that AHRN claims is at

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issue.

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its facts are correct and unchanging, and arguing that collateral

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estoppel precludes this issue, since this Court already heard and

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decided the parties' arguments on this issue in Travelers I.

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ISO MTD at 2-6.

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Travelers responds that because its complaint

See Opp'n to MTD at 9-14.

AHRN responds by insisting that

Reply

While the issues presented in Travelers I's holding on the

22

motion to dismiss were similar to those presented on the same

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motion here, the facts are not precisely the same, thereby making

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it improper for the Court to apply collateral estoppel here.

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the conclusion of Travelers I, Travelers has assumed the defense of

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the Regional Action, and the parties agree that AHRN has indeed

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incurred substantial fees and costs in that action.

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the amount in controversy can be no more than $58,998.20, while

10

Since

AHRN insists

1

Travelers says that costs incurred plus future costs will be at

2

least $76,000.

3

Remand at 7.

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the parties are not so precise on the numbers, but the arguments

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are the same.

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Court's findings on this issue take into account the facts and

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arguments from both of the motions now before the Court, since both

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motions argue essentially the same point.

See, e.g., Opp'n to Remand at 12-14, Reply ISO
In the parties' briefs on AHRN's motion to dismiss,

See Opp'n to MTD at 9-14; Reply ISO MTD at 2-6.

The

Under 28 U.S.C. § 1332(a), diversity jurisdiction exists only

9

United States District Court

For the Northern District of California

10

"where the matter in controversy exceeds the sum or value of

11

$75,000 exclusive of interest or costs."

12

this jurisdictional amount it must appear "to a legal certainty"

13

that the claim is really for less than the jurisdictional amount.

14

St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288-89

15

(1938).

16

test occurs where a rule of law or measure of damages limits the

17

amount of damages recoverable."

18

F.2d 1113, 1115 (9th Cir. 1983). The party seeking federal court

19

jurisdiction has the burden of proving that the amount in

20

controversy requirement is satisfied under the legal certainty

21

test.

22

relief action the amount in controversy "is not what might have

23

been recovered in money, but rather the value of the right to be

24

protected or the injury to be prevented."

25

Ass'n, 538 F.2d 829, 831 (9th Cir. 1976).

To dismiss for lack of

"A situation which typically meets the legal certainty

Morris v. Hotel Riviera, Inc., 704

Gibbs v. Buck, 307 U.S. 66, 72 (1939).

In a declaratory

Jackson v. Am. Bar

26

The Court finds that Travelers has shown, based on its

27

pleadings, declarations, and arguments, that a duty to defend the

28

Regional Action would result in costs totaling more than $75,000 --

11

1

this is the "injury to be prevented" under Jackson, 538 F.3d at

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831.

3

16, Ex. 10; Decl. of Nicholas Boos ISO Opp'n to Remand ¶ 10, Ex.

4

3).

5

its costs exceeding the amount in controversy requirement exists,

6

even considering AHRN's insistence that the case will settle before

7

bills reach that limit or that the billing should be limited to a

8

timeframe in which billing could not reach $75,000.

9

bills exceeding $75,000 are likely because the parties dispute the

See Opp'n to Remand at 11-14 (citing Matsufuji Decl. ¶¶ 15,

The Court finds that Travelers has shown that a probability of

Id.

Legal

United States District Court

For the Northern District of California

10

possibility of settlement, the litigation activity in the

11

underlying action has been substantial, and if Travelers is indeed

12

held to have a duty to defend that action its costs would be almost

13

certainly more than $75,000.

14

Gen. Ins. Co., No. C-89-3330 SC, 1990 U.S. Dist. LEXIS 13571, at *3

15

(N.D. Cal. Mar. 26, 1990) (deciding a similar issue on a motion to

16

remand).

17

certainty" that Travelers' claim is for less than the

18

jurisdictional amount.

19

(9th Cir. 1992).

20

dismiss and its motion to remand.

21

Id.; see also Kessloff v. State Farm

Given the disputes, the Court does not find it a "legal

See Gaus v. Miles, Inc., 980 F.2d 564, 566

This finding applies to both AHRN's motion to

The Court accordingly declines to dismiss Travelers' claims

22

for declaratory relief as to the Regional Action.

The Court also

23

finds unconvincing AHRN's argument that the "first-to-file" rule

24

warrants dismissal of Travelers' Regional-related declaratory

25

relief claims because AHRN's state court action for declaratory

26

relief was filed first.

27

rule might be found to apply when there are parallel state

28

proceedings on the same issues pending at the time the federal

See, e.g., Reply ISO MTD at 6-8.

12

That

1

declaratory action was filed.

Dizol, 133 F.3d at 1220-23.

2

However, the Court does not find that presumption warranted here

3

since the state court action has long since been removed and

4

related to the federal one.

5

B.

Declaratory Judgment Actions

6

As to Travelers' DJA claims regarding the Regional and

7

Metropolitan Actions, AHRN argues that the factors articulated in

8

Dizol and Brillhart caution against the Court's exercising

9

jurisdiction over those claims.

For the reasons discussed below,

United States District Court

For the Northern District of California

10

the Court finds otherwise and exercises its discretion under the

11

DJA to hear Travelers' claims for declaratory relief as to both

12

underlying actions.

13

i.

State Law Issues

14

"When parallel state proceedings involving the same issues and

15

parties [are] pending at the time the federal declaratory action is

16

filed, there is a presumption that the entire suit should be heard

17

in state court."

18

Cir. 1999) (internal quotation omitted).

19

state law" may involve: an ongoing parallel state proceeding

20

regarding the "precise state law issue," an area of law Congress

21

expressly left to the states, or a lawsuit with no compelling

22

federal interest (for instance, when a case is solely based on

23

diversity).

24

72 (9th Cir. 1991), overruled in part on other grounds by Dizol,

25

133 F.3d 1220.

26

abstention in declaratory actions generally, nor in insurance cases

27

specifically."

Am. Cas. Co. v. Krieger, 181 F.3d 1113, 1118 (9th
A "needless decision of

Cont'l Cas. Co. v. Robsac Indus., 947 F.2d 1367, 1371-

"However, there is no presumption in favor of

Dizol, 133 F.3d at 1226.

28

13

Indeed, the district

1

court is in the "best position to assess how judicial economy,

2

comity and federalism are affected in a given case."

3

Id. at 1226.

Defendants argue that because the underlying issues in this

4

matter involve California insurance law, and state courts are best

5

situated to "identify and enforce the public policies that form the

6

foundation of such regulations," this factor favors dismissal.

7

Reply ISO MTD at 9 (quoting Emp'rs Reinsurance Corp. v. Karussos,

8

65 F.3d 796, 799 (9th Cir. 1995)).

9

court practice in granting declaratory relief in insurance issues

See

Travelers respond that federal

United States District Court

For the Northern District of California

10

belies this suggestion, and that in any event, whatever pending

11

state law claims were at issue in Defendants' state law declaratory

12

relief action are moot because Travelers has now removed that

13

action and related it to this case.

See Opp'n to MTD at 19.

14

The Court finds that decision of Travelers' declaratory relief

15

claims will necessarily involve application of California insurance

16

law, and the only reason Travelers are in federal court is on

17

diversity grounds, suggesting that the federal interest in this

18

matter is at its nadir.

19

since the related state action has been removed and related, there

20

is no ongoing parallel state action, and so concerns about comity,

21

economy, and federalism are somewhat lessened.

22

at 1226.

23
24

ii.

See Robsac, 947 F.2d at 1371.

However,

See Dizol, 133 F.3d

The Court finds that this factor is neutral.
Forum Shopping

"This factor usually is understood to favor discouraging an

25

insurer from forum shopping, i.e., filing a federal court

26

declaratory action to see if it might fare better in federal court

27

at the same time the insurer is engaged in a state court action."

28

Am. Cas. Co. of Reading, Pa. v. Krieger, 181 F.3d 1113, 1119 (9th

14

1

Cir. 1999).

2

defensive declaratory actions.

3

This concern is particularly pertinent in reactive or
Robsac, 947 F.2d at 1371.

Defendants argue that Travelers is engaged in forum shopping

4

because it filed its action in federal court before issuing

5

coverage positions on the underlying actions, suggesting that

6

Travelers had planned its complaint in advance in order to secure a

7

favorable jurisdiction early.

8

Travelers, in turn, asserts that it has every right to be in

9

federal court on jurisdictional grounds, that it informed

See Reply ISO MTD at 9-10.

United States District Court

For the Northern District of California

10

Defendants of its coverage positions before filing its federal

11

action, and that there has never been a parallel state action at

12

the same time Defendants have been in federal court.

13

MTD at 19-20.

14

arguments on the issue, the Court finds no evidence suggesting that

15

Travelers is gaming the system by bringing its suit in this Court.

16

The Court finds that this factor favors the exercise of

17
18
19

See Opp'n to

Having considered these facts and the parties'

jurisdiction over Travelers' declaratory relief claims.
iii.

Duplicative Litigation

The third Brillhart factor seeks to avoid duplicative

20

litigation.

"If there are parallel state court proceedings

21

involving the same issues and parties pending at the time the

22

federal declaratory action is filed, there is a presumption that

23

the entire suit should be heard in state court."

24

at 1225.

25

for a federal court to proceed in a declaratory judgment suit where

26

another suit is pending in a state court presenting the same

27

issues, not governed by federal law, between the same parties."

28

Brillhart, 316 U.S. at 495.

Dizol, 133 F.3d

"Ordinarily it would be uneconomical as well as vexatious

However, the pendency of a state court

15

1

action does not require a district court to refuse federal

2

declaratory relief, but the federal courts should generally decline

3

to entertain reactive declaratory actions.

4

1225.

Dizol, 133 F.3d at

5

The parties' arguments on this issue were mostly briefed

6

before Travelers had removed AHRN's state court action and related

7

it to this one.

8

result, Defendants suggest that "even if the San Francisco Superior

9

Court complaint was removed, the existence of the pending Regional

Those arguments are moot.

Anticipating this

United States District Court

For the Northern District of California

10

and Metropolitan Actions favor dismissal."

11

This argument is not compelling: the underlying actions concern,

12

among other things, copyright infringement and unfair competition,

13

not the duty to defend.
The Court finds that this factor favors the exercise of

14
15

Reply ISO MTD at 10.

jurisdiction over Travelers' declaratory relief claims.
iv.

16

Conclusion as to Declaratory Relief Claims

Based on consideration of the foregoing factors, the Court

17
18

concludes that practicality, equity, and judicial economy are best

19

served by exercising jurisdiction over Travelers' declaratory

20

relief claims.

21

parties' disputes, as opposed to splitting the actions piecemeal

22

and -- most likely -- seeing them return to federal court, or be

23

remanded to the state, in various positions of procedural disarray.

24

Moreover, deciding the declaratory action now would clarify the

25

parties' relations.

26

to these claims is DENIED.

27

///

28

///

This will provide for speedier adjudication of the

Accordingly, Defendants' motion to dismiss as

16

1

C.

AHRN's Motion to Remand

2

AHRN moves to remand its own case for declaratory relief

3

against Travelers to state court, arguing that (1) the Court lacks

4

subject matter jurisdiction and (2) additionally or alternatively,

5

Travelers' removal was improper because the Brillhart and Dizol

6

factors weigh against the Court's exercising its jurisdiction.

7

Mot. to Remand at 6-13.

8

it claims Travelers' removal was improper as a matter of law.

9

at 13-14.

See

AHRN also asks for fees and costs because
Id.

The Court's analysis in Sections IV.A-B, supra, applies

United States District Court

For the Northern District of California

10

to AHRN's two arguments because they are essentially the same in

11

both motions.

12

remand and DENIES AHRN's request for fees and costs associated with

13

that motion.

Accordingly, the Court DENIES AHRN's motion to

14
15
16

V.

CONCLUSION
For the reasons explained above, the Court DENIES Defendants

17

American Home Realty Network, Inc. and Jonathan J. Cardella's

18

motion to dismiss Travelers Casualty Insurance Company of America

19

and Travelers Indemnity Company of Connecticut's complaint in Case

20

No. 13-0360 SC.

21

Case No. 13-0984 SC.

The Court also DENIES AHRN's motion to remand in

22
23

IT IS SO ORDERED.

24
25

Dated: April 29, 2013

26

UNITED STATES DISTRICT JUDGE

27
28

17