Henstooth Ranch LLC v. The Burlington Insurance Company

Filing 24

ORDER DENYING PLAINTIFF'S MOTION TO STAY 15 . (Illston, Susan) (Filed on 3/27/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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HENSTOOTH RANCH LLC,
Plaintiff,

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Case No. 17-cv-00006-SI
ORDER DENYING PLAINTIFF'S
MOTION TO STAY

v.
THE BURLINGTON INSURANCE
COMPANY,

Re: Dkt. No. 15

United States District Court
Northern District of California

Defendant.
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Before the Court is plaintiff Henstooth Ranch LLC’s (“Henstooth’s”) motion to stay. Dkt.

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No. 15. Pursuant to Civil Local Rule 7-1(b), the Court determines that this matter is appropriate

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for resolution without oral argument and hereby VACATES the hearing scheduled for April 14,

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2017. For the reasons set forth below, the Court DENIES plaintiff’s motion.

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BACKGROUND
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In November 2015, Sonoma Land Trust (“SLT”) sued Henstooth and its members, Peter

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and Toni Thompson, in Sonoma County Superior Court for violation of a conservation easement
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(the “SLT Action”). See SLT Action Complaint (Dkt. No. 1-1) at 88-106. SLT alleges that

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Henstooth and the Thompsons violated the easement by constructing a new road, removing an old
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oak tree, and causing other property damage. Id. SLT asserts three causes of action: (i) violation
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of the conservation easement; (ii) breach of contract; and (iii) cutting, carrying off, or injuring
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trees. Henstooth tendered the SLT Action to Burlington under a liability insurance policy and
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Burlington denied coverage. Complaint (Dkt. No. 1-1) at ¶¶ 15-16. Trial in the SLT Action is set
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to begin on June 2, 2017. Leslie Decl. (Dkt. No. 15-1) ¶ 6.
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Henstooth filed this declaratory relief action in Contra Costa County Superior Court on

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November 21, 2016 and served defendant Burlington Insurance Company (“Burlington”) on

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December 20, 2016. See Notice of Removal (Dkt. No. 1) ¶ 6; id. Ex. 1, Complaint (Dkt. No. 1-1)

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at 2-6.1 Burlington removed the action to this Court on January 3, 2017. The complaint seeks a

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declaration of rights under liability insurance policies and that Burlington, as insurer, has a duty to

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defend or indemnify Henstooth in the SLT Action. Id. Henstooth now moves to stay this case

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pending resolution of the SLT Action. Mot. (Dkt. No. 15).

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LEGAL STANDARD

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“A district court has discretion to stay or dismiss an action for declaratory relief over

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United States District Court
Northern District of California

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which it has jurisdiction.” Century Sur. Co. v. Byal, No. 10-3917-WHA, 2011 WL 2550832, at *2

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(citing Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995)); see also Clinton v. Jones, 520 U.S.

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681, 706 (1997) (“The District Court has broad discretion to stay proceedings as an incident to its

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power to control its own docket.”). “If there are parallel state proceedings involving the same

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issues and parties pending at the time the federal declaratory relief action is filed, there is a

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presumption that the entire suit should be heard in state court.” Gov’t Emps. Ins. Co. v. Dizol, 133

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F.3d 1220, 1225 (9th Cir. 1998) (citation omitted). However, “[t]he pendency of a state court

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action does not, of itself, require a district court to refuse federal declaratory relief.” Id. “[T]here

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is no presumption in favor of abstention in declaratory actions generally, nor in insurance

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coverage cases specifically.” Id.

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District courts in the Ninth Circuit utilize the Brillhart factors as their “philosophic

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touchstone” in considering whether to stay or dismiss an action for declaratory relief. Id. & n.5;

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see Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942); Am. States Ins. Co. v. Kearns, 15

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F.3d 142 (9th Cir. 1994).

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determination of state law issues; . . . discourage litigants from filing declaratory actions as a

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means of forum shopping; and . . . avoid duplicative litigation.”

The Brillhart factors guide district courts to “avoid needless

Dizol, 133 F.3d at 1225.

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Unless otherwise indicated, pinpoint citations are to ECF-generated page numbers.
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Additionally, a court may consider “whether the declaratory action will settle all aspects of the

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controversy”; whether it “will serve a useful purpose in clarifying the legal relations at issue”;

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whether declaratory relief “is being sought merely for the purposes of procedural fencing or to

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obtain a ‘res judicata’ advantage”; or whether the action “will result in entanglement between the

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federal and state court systems.” Id. at 1225 n.5 (citing Kearns, 15 F.3d at 145 (Garth, J.,

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concurring)). “In addition, the district court might also consider the convenience of the parties,

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and the availability and relative convenience of other remedies.” Id.

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DISCUSSION

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Neither party argues that the Court should dismiss this case under Wilton and its progeny.

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United States District Court
Northern District of California

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Nor has plaintiff requested a remand; it seeks only to stay this action for its convenience. This

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order focuses only on plaintiff’s request for a stay.

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As an initial matter, the Court places particular emphasis on the fact that Henstooth filed

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this declaratory relief action, not Burlington. Henstooth claims it filed this action to “preserve and

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assert its rights under the policy,” yet it faced no imminent statutory or contractual deadline to file.

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Mot. at 3. Now, much of Henstooth’s motion to stay this action is based upon the prejudice it will

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purportedly face in having to “fight a two-front war.” The second “front” – this declaratory relief

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action – is of Henstooth’s own creation. As such, Henstooth’s claims of prejudice in this regard

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are unpersuasive.

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The Court now turns to the relevant Brillhart factors to determine whether a stay is

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appropriate here. Henstooth argues that this declaratory relief action would “require needless

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determination of state law issues and duplicative litigation.” Mot. at 10. Henstooth argues that

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many factual issues in this case will overlap with those in the SLT Action, such as “what

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precipitated the tree removal and also the subsequent alleged property damage, what did

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Henstooth Ranch and the Thompsons do, what were Henstooth Ranch and the Thompsons

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supposed to do, who (if anyone) is at fault, and who is ultimately responsible.” Id. (citing Leslie

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Decl. ¶ 10).

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Based on the record, the Court does not see a significant overlap between the two actions.
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The SLT Action will turn on, among other things, whether the defendants’ removing trees,

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building a road, and damaging land violated SLT’s conservation easement. This declaratory relief

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action turns on whether the property damage is a covered “occurrence” (i.e., accident) under the

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Burlington insurance policy. In this action, Burlington will seek to prove that Henstooth acted

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intentionally in building a road, moving a tree, and causing other damage. Findings on this issue

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would not interfere with the state court’s determination of whether Henstooth or the Thompsons

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violated the SLT easement. While some discovery will overlap between the two actions, the

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overlap is not likely to be significant or prejudicial. In the Court’s view, this action can be

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resolved without any prejudice to Henstooth in the SLT Action, especially where the SLT Action

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will likely proceed to final judgment well ahead of this case. See Great Am. Ins. Co. v. Superior

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United States District Court
Northern District of California

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Court, 178 Cal. App. 4th 221, 235 (2009).

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Henstooth further argues that “[t]here is no inconvenience or prejudice to Burlington by

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having to wait a few extra months” before proceeding with this declaratory relief action, but that

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Henstooth will face significant prejudice in having to litigate two actions simultaneously. Reply

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(Dkt. No. 23) at 4-5. As set forth above, however, Henstooth’s arguments about fighting a “two-

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front war” lack persuasive force. Henstooth filed this action and, absent a concrete risk of

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prejudice, this action will proceed.

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Because Henstooth does not argue any other factors in favor of a stay, the Court ends its

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analysis here. Henstooth’s motion to stay is hereby DENIED. If, however, a clear potential for

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prejudice arises during discovery or motion practice, Henstooth may file a renewed motion.

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CONCLUSION

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For the foregoing reasons, plaintiff’s motion to stay is DENIED without prejudice.

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This order resolves Dkt. No. 15.

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IT IS SO ORDERED.

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Dated: March 27, 2017
______________________________________
SUSAN ILLSTON
United States District Judge
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