Selective Insurance Company of the Southeast v. D7 Roofing, LLC et al

Filing 39

ORDER GRANTING 26 Consent Motion for Extension of Time to File Response/Reply filed by Selective Insurance Company of the Southeast; DENYING 14 Motion to Stay filed by D7 Roofing, LLC, Kehrer Brothers Construction, Inc., and Wesclin Community Unit District #3. Signed by Judge Staci M. Yandle on 8/28/15. (mah)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS

SELECTIVE INSURANCE COMPANY
OF AMERICA,

)
)
)
Plaintiff,
)
)
vs.
)
)
D7 ROOFING, LLC, KEHER BROTHERS )
CONSTRUCTION, INC. and WESCLIN
)
COMMUNITY UNIT DISTRICT #3,
)
)
Defendants.
)

Case No. 15-CV-16 –SMY-DGW

MEMORANDUM AND ORDER
YANDLE, District Judge:
This matter comes before the Court on Defendants D7 Roofing, LLC and Kehrer
Brothers Construction, Inc.’s Motion to Stay (Doc. 14). The Consent Motion for Extension of
Time to file Response/Reply (Doc. 26) is GRANTED and Plaintiff’s response (Doc. 28) is
deemed timely filed. For the following reasons, Defendants’ Motion is DENIED.
This case arises out of a property insurance claim filed by Wesclin Community Unit
District #3 (the “School District”) for damage to the roofing systems of schools located within
the district. Plaintiff alleges a breach of contract claim arising from a settlement agreement
regarding the insurance claim.

The Complaint was filed on January 7, 2015 (Doc. 2).

Defendants filed their answer and counterclaim seeking declaratory judgment and alleging
breach of contract (Doc. 13). On January 9, 2015, Defendant D7 filed a complaint against
Plaintiff and Defendant Wesclin Community Unit District #3 for declaratory judgment and
breach of contract in the Circuit Court of the Fourth Judicial District, Clinton County, Illinois.
Defendants seek a stay of the instant action pending the outcome of the state court action based

on the Wilton/Brillhart abstention doctrine, or, alternatively, the Colorado River abstention
doctrine.
Under the Wilton/Brillhart abstention doctrine, district courts possess significant
discretion to dismiss or stay claims seeking declaratory relief, even though they have subject
matter jurisdiction over such claims. R.R. St. & Co. v. Vulcan Materials Co., 569 F.3d 711, 713
(7th Cir. 2009). If state and federal proceedings are parallel and the federal suit contains claims
for both declaratory and non-declaratory relief, the district court should determine whether the
claims seeking non-declaratory relief are independent of the declaratory claim. Id. at 716. A
claim for relief is “independent” of the declaratory claim if: “1) it has its own federal subjectmatter-jurisdictional basis, and 2) its viability is not wholly dependent upon the success of the
declaratory claim. If a claim satisfies this test, then the district court's “virtually unflagging
obligation” to exercise jurisdiction over a non-declaratory claim is triggered.” Id. at 717. If they
are not parallel, the court may exercise its discretion under Wilton/Brillhart and abstain from
hearing the entire action. Id. at 716. If the actions are parallel, however, the Wilton/Brillhart
doctrine does not apply and, unless there are exceptional circumstances, the court must hear the
independent non-declaratory claims. Id. To avoid piecemeal litigation, the Court should also,
then, hear the declaratory claims, as well. Id.
The Court finds that the Wilton/Brillhart abstention doctrine does not apply. If the
declaratory counterclaim was to be dropped from the case, this Court would still have diversity
jurisdiction over Plaintiff’s breach of contract claim. Thus, the declaratory relief requested in
Defendants’ counterclaim is not a prerequisite to resolution of Plaintiff’s claim. As the nondeclaratory claim is independent of the declaratory claim, this Court will also hear and decide the
declaratory counterclaim.

2

Under the Colorado River abstention doctrine, abstention “is an extraordinary and narrow
exception to the duty of a District Court to adjudicate a controversy properly before it.”
Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 813 (1976). To
determine whether a stay is appropriate, the district court must undertake a two-part inquiry.
Tyrer v. City of S. Beloit, Ill., 456 F.3d 744, 751 (7th Cir. 2006). First, the court must determine
whether “the concurrent state and federal actions are actually parallel. Then, once it is
established that the suits are parallel, the court must consider a number of non-exclusive factors
that might demonstrate the existence of ‘exceptional circumstances.” Clark v. Lacy, 376 F.3d
682, 685 (7th Cir.2004). In applying these requirements, there is a “general presumption against
abstention.” AXA Corporate Solutions v. Underwriters Reins. Corp., 347 F.3d 272, 278 (7th
Cir.2003).
Generally,

a

“…suit

is

parallel

when

substantially

the

same

contemporaneously litigating substantially the same issues in another forum.”

parties

are

Interstate

Material Corp. v. City of Chicago, 847 F.2d 1285, 1288 (7th Cir.1988) (internal quotation marks
omitted). To determine whether two suits are parallel, the court examines whether the suits
involve the same parties, arise out of the same facts and raise similar factual and legal issues.
See Clark, 376 F.3d at 686.
Here, although the roles of the parties are reversed in the state and federal cases, the
issues remain substantially similar. Both cases arise out of the same facts and the legal issues are
similar in that they involve contractual questions arising out of the disputes between the parties.
Further, although, one party, Keher Brothers Construction, Inc. is only party to the federal case,
the two cases appear to be parallel.

3

A conclusion that federal and state proceedings are parallel, however, only begins the
inquiry into whether a stay is appropriate under Colorado River. Tyrer, 456 F.3d at 754. There
must also be a showing of exceptional circumstances which is analyzed based on ten factors:
1) whether the state has assumed jurisdiction over property; 2) the inconvenience
of the federal forum; 3) the desirability of avoiding piecemeal litigation; 4) the
order in which jurisdiction was obtained by the concurrent forums; 5) the source
of governing law, state or federal; 6) the adequacy of state-court action to protect
the federal plaintiff's rights; 7) the relative progress of state and federal
proceedings; 8) the presence or absence of concurrent jurisdiction; 9) the
availability of removal; and 10) the vexatious or contrived nature of the federal
claim.
Caminiti & Iatarola, Ltd. v. Behnke Warehousing, Inc., 962 F.2d 698, 701 (7th Cir.1992).
In this case, the first factor is inapplicable. However, the second factor weighs against
abstention as the District Court is not inconvenient to any party. All parties litigated in this court
for several months in a prior case arising out of the same facts. The parties agree that proceeding
in the federal Court will not result in piecemeal litigation. Furthermore, Plaintiff filed this action
several days prior to the filing of the action in state Court, so the fourth factor also weighs
against abstention. While Illinois law will apply to the substantive issues in the case, in light of
the other factors, this does not weigh significantly in this analysis. Although the state-court
action would be adequate to protect the federal plaintiff’s rights, Plaintiff was entitled to exercise
its right to file in federal court.
Regarding the relative progress of the state and federal proceedings, this factor clearly
weighs against abstention. The original federal case was litigated for several months during
which discovery was conducted, depositions were taken and settlement conferences were held.
In the instant case, all parties have entered their appearances, answers and cross claims have
been filed, a scheduling order has been entered and discovery has commenced.

4

As both courts have concurrent jurisdiction over the matter, the eighth factor does not
weigh in favor of either party. However, removal of the state court action is not available
because D7 and the School District have shared citizenship. Finally, there does not appear to be
anything vexatious or contrived about the federal lawsuit. Federal jurisdiction has been properly
invoked and there appears to be a case in controversy that can properly be adjudicated in federal
court. For the foregoing reasons, Defendants’ Motion to Stay (Doc. 14) is DENIED.
IT IS SO ORDERED.
DATED: August 28, 2015
s/ Staci M. Yandle
STACI M. YANDLE
United States District Judge

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