Safeco Insurance Company of Illinois v. Klein et al
Filing
37
MEMORANDUM DECISION AND ORDER denying 17 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by cjm)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
SAFECO INSURANCE COMPANY OF
ILLINOIS,
Case No. 4:11-cv-00261-BLW
Plaintiff,
v.
MARC E. KLEIN, an individual;
WILLIAM GREEN and STEPHANIE
GREEN, individually and doing business
as PERK’S BAR; BILLIE J.
SHERWOOD, an individual; FLOYD
DEATS; DOES I through X; ELAINE
TWITCHELL, individually, as surviving
spouse of Jory Twitchell, and on behalf
of her minor children, R.T., T.T. and
C.G.; E.G. “JERRY” TWITCHELL, an
individual; NANCY L. FARMER, an
individual; and AMANDA PARISH, on
behalf of her minor child G.T.,
MEMORANDUM DECISION AND
ORDER
Defendants.
Before the Court is Defendants’ Motion to Dismiss or Remand (Dkt. 17). The
matter is fully briefed and at issue. The Court has determined that oral argument would
not significantly assist the decisional process and will therefore consider the motion
MEMORANDUM DECISION AND ORDER - 1
without a hearing. Having reviewed the record and parties’ briefing, the Court will deny
the Motion, as more fully expressed below.
BACKGROUND
On November 11, 2010, Defendant Marc Klein drove his vehicle across the center
line, crashing head-on into the on-coming vehicle driven by Defendant Jory Twitchell;
Twitchell did not survive the accident. Just prior to the accident, Klein was a customer at
Perk’s Bar in Mackay, Idaho, where it is alleged that Klein was served alcohol
throughout the day. Compl., Dkt. 1 at 5. It is further alleged that Klein’s blood alcohol
content at the time of the accident was .279. Id.
Several family members of Twitchell filed a lawsuit in the District Court of the
Seventh Judicial District of Idaho in the County of Butte against Klein, Perk’s Bar, and
various others, for damages and relief stemming from the accident. Id. at 3-4. The
defendants in that state court matter, William and Stephanie Green, tendered defense of
the suit to Safeco Insurance Company of Illinois, Plaintiff here. Id. at 5-6. Safeco
accepted tender, but filed the action before this Court for declaratory judgment that it has
no duty to defend or indemnify the Greens in the state court matter. Id. at 5-6. Safeco
retained the firm of Lopez and Kelly, PLLC, to represent the Greens in state court,
pending the resolution of this matter. Id.
Defendants in this matter, including the Greens, now move to dismiss for lack of
jurisdiction, or to remand the matter to state court.
MEMORANDUM DECISION AND ORDER - 2
ANALYSIS
Under the Declaratory Judgment Act, the federal courts have the power to declare
the rights and legal relations of a party seeking the declaration, which “shall have the
force and effect of a final judgment or decree and shall be reviewable as such.” 28
U.S.C. § 2201(a). An action under the Act must present “an actual case or controversy”
under the U.S. Constitution, and “fulfill statutory jurisdictional prerequisites.” Gov’t
Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1222-23 (9th Cir. 1998). In addition, the
federal court before which the action is brought must “be satisfied that entertaining the
action is appropriate.” Id. at 1223. Whether to maintain jurisdiction over an action for
declaratory relief is within the federal court’s discretion. Brillhart v. Excess Insur. Co. of
Amer., 316 U.S. 491, 494 (1942).
There is no bar to an insurer’s invocation of diversity jurisdiction for declaratory
judgment on an issue of coverage. Aetna Cas. & Sur. Co. v. Merritt, 974 F.2d 1196,
1199 (9th Cir. 1992). Indeed, such matters are routinely before the federal district courts.
Rather, the courts have identified – though not exhaustively – several factors to consider
in deciding whether to maintain jurisdiction. See Dizol, 133 F.3d at 1225. These factors
include: (1) avoiding determinations of purely state law issues; (2) discouraging forum
shopping by bringing declaratory actions in federal court; and (3) avoiding duplicative
litigation where “parallel state proceedings involving the same issues and parties” are
already pending upon commencement of the federal declaratory action. Id.; see also
MEMORANDUM DECISION AND ORDER - 3
Brillhart, 216 U.S. at 496-98. In addition, the district court may consider whether the
declaratory action
will settle all aspects of the controversy, . . . [will] clarify[ ] the legal
relations at issue, . . . is being sought merely for [tactical advantage], . . .
will result in entanglement between federal and state court systems . . . [or
is warranted for] the convenience of the parties, and the availability and
relative convenience of other remedies.
American States Ins. Co. v. Kearns, 15 F.3d 142, 145 (9th Cir. 1994)(J. Garth,
concurring).
As to the concern for duplicative litigation, the Court finds that the pending state
proceedings involving Defendants, while pending at the time this federal action was filed
and involving some of the same factual issues, do not parallel these proceedings. The
state court action concerns the car accident that claimed Jory Twitchell’s life. Safeco
itself is not, and cannot be, named as a party in the state court proceeding, as there is no
direct action statute in Idaho that would allow an insurance carrier to be sued directly or
joined as a party defendant. See Pocatello Indus. Park Co. v. Steel West, Inc., 621 P.2d
399, 407 (1980).
In the action before this Court, the parties and issues focus on the contract for
insurance coverage by Safeco of Defendants William and Stephanie Green. The issue of
coverage for the Greens will necessarily require an examination of facts which are critical
to the state court liability action. So while the key issues of liability in the state court
case, and coverage in the federal court case, are distinguishable, there are undeniably
overlapping factual questions and circumstances between the two matters. See American
MEMORANDUM DECISION AND ORDER - 4
Cas. Co. of Reading, Pennsylvania v. Krieger, 181 F.3d 1113, 1119 (9th Cir. 1999).
Nonetheless, because the critical issues in the two cases are distinct, this factor weighs in
favor of maintaining jurisdiction.
The Court next considers whether this action involves purely state law issues.
Safeco’s complaint requests declaratory judgment that it is not required to indemnify or
defend the Greens in the pending state court action, under the Greens’ insurance policy.
This requires interpretation of an insurance contract under Idaho law. There do not
appear to be any unsettled or complex issues best left for a state court to resolve. See
Merritt, 974 F.2d at 1199 (there is no authority barring an insurer from invoking federal
diversity jurisdiction to bring a declaratory action on an issue of insurance coverage).
But there are no other claims joined with the action for declaratory relief such that
remand of the declaratory action would result in piecemeal litigation. Dizol, 133 F.3d at
1225-26. On balance, the Court finds that this factor – concerning determination of state
law issues – weighs neither for nor against remand.
Regarding the question of forum shopping, the Court looks to a Ninth Circuit
decision in R.R. Street & Co. Inc. v. Transport Ins. Co., 656 F.3d 966 (9th Cir. 2011).
Citing another prior decision, the court noted, “we held that when an insurer filed a
declaratory judgment action in federal court ‘during the pendency of a non-removable
state court action presenting the same issues of state law,’ and the insurer did so merely
to obtain ‘a tactical advantage from litigating in a federal forum,’ the ‘defensive or
reactive’ nature of the insurer’s action warranted dismissal. Continental Cas. Co. v.
MEMORANDUM DECISION AND ORDER - 5
Robsac Indus., 947 F.2d 1367, 1371-72 (9th Cir. 1991), overruled in part on other
grounds by Dizol, 133 F.3d at 1220. However, the issues raised here are not identical to
those in the underlying state action, in the manner described by the court in R.R. Street.
It bears repeating that there is no legal basis to bar an insurer from pursuing an
action for declaratory relief concerning insurance coverage in the federal district court.
Merritt, 974 F.2d at 1199. On consideration of the relevant factors, the Court finds no
basis to dismiss this matter or remand to state court. Accordingly, the Court will deny the
motion.
ORDER
IT IS ORDERED THAT Defendants’ Motion to Dismiss (Dkt. 17) is DENIED.
DATED: December 9, 2011
_________________________
B. Lynn Winmill
Chief Judge
United States District Court
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