American Standard Insurance Company of Wisconsin v. Podgorski et al

Filing 41

OPINION AND ORDER: Court GRANTS 29 Motion for dismissal, abstention, or a stay by abstaining from exercising jurisdiction and STAYING this action. American Standard to file a status report within 14 days of the conclusion of state court procee dings, indicating whether the stay in this case may be lifted and this case dismissed, or whether some other course of action is appropriate under the circumstances. Failure to file a timely status report may result in dismissal of this action, with prejudice, and without further notice. Signed by Senior Judge James T Moody on 3/31/2016. (tc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
AMERICAN STANDARD INSURANCE
COMPANY OF WISCONSIN,
Plaintiff,
v.
JASON L. PODGORSKI,
JAMES M. DEWITT, JILL A. GREEN, and
RUSTY NAIL BAR, INC., d/b/a RUSTY
NAIL SPORTS BAR & GRILL,
Defendants.

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No. 2:15 CV 168

OPINION and ORDER
I.

BACKGROUND
On April 10, 2014, Jill. A Green was the passenger in a vehicle driven by Jason L.

Podgorski when the vehicle crashed into a utility pole. The vehicle, a Ford F-150 pickup
truck, was owned by Podgorski’s brother-in-law, James M. DeWitt. The plaintiff in this
case, American Standard Insurance Company of Wisconsin (“American Standard”)
issued the insurance policy to DeWitt that covered the truck.
On June 23, 2014, Green filed a personal injury action in the Porter Superior
Court in Valparaiso, Indiana, against Podgorski, DeWitt, and Rusty Nail Bar, Inc. (a bar
that Green alleged was negligent in serving alcoholic beverages to Podgorski and
DeWitt). Podgorski did not appear in the action, and Green was granted a default
judgment against him; the state court scheduled a damages hearing for that portion of
the case to take place in May of last year. A few days before the damages hearing,

American Standard filed this case in federal court seeking a declaration that it had no
duty to indemnify Podgorski because Podgorski did not have permission from DeWitt
to drive the F-150 on April 10, 2014. Around the same time, American Standard’s
attorney also entered an appearance on behalf of Podgorski in the state court
proceeding and requested permission to intervene and a stay of the state case. The state
court permitted American Standard to intervene, but did not stay the case.
Green, a defendant in this case, now moves for this court to dismiss, abstain to
exercise jurisdiction over, and/or stay this federal declaratory judgment proceeding
(DE # 29). According to Green, the issue of whether DeWitt gave Podgorski permission
to drive the F-150 on April 10, 2014, will necessarily be decided in the state court action,
and permitting a determination of the issue in this court will result in piecemeal
litigation over issues of state law which are already pending in state court. (DE # 30 at
15-16.) American Standard claims that its declaratory judgment action comes down to
one question: did DeWitt give permission to Podgorski to drive his F-150 on April 10,
2014? (DE # 31 at 12.) According to American Standard, that simple question should be
determined in this declaratory judgment action because the law permits it and it is “not
uncommon” for courts to allow it. (Id. at 11.) For the reasons set forth below, Green’s
motion (DE # 29) is granted in the form of abstention and a stay.
II.

LEGAL STANDARD
The Declaratory Judgment Act states: “In a case of actual controversy within its

jurisdiction . . . any court of the United States, upon the filing of an appropriate

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pleading, may declare the rights and other legal relations of any interested party
seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C.
§ 2201(a). “By its terms, the Declaratory Judgment Act gives the district court the
discretion to declare the rights of the litigants; it explicitly says that upon a proper
application, the district court ‘may’ declare the party’s rights. The Supreme Court has
consistently understood this language as discretionary[.]” Med. Assurance Co., Inc., v.
Hellman, 610 F.3d 371, 378-79 (7th Cir. 2010) (citation omitted). In other words, the
Declaratory Judgment Act “created an opportunity, rather than a duty” to consider
claims seeking declaratory judgments. Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995).
“[A] district court is authorized, in the sound exercise of its discretion, to stay or to
dismiss an action seeking a declaratory judgment before trial or after all arguments
have drawn to a close.” Id.
“[T]he classic example of when abstention is proper occurs where . . . solely
declaratory relief is sought and parallel state proceedings are ongoing.” Envision
Healthcare, Inc., v. Preferred One Ins. Co., 604 F.3d 983, 986 (7th Cir. 2010). Abstention
cases involving parallel state proceedings are often referred to as involving the
Wilton/Brillhart doctrine, named after the two primary Supreme Court cases on the
subject. Wilton, 515 U.S. at 289-90 (district court acted within its bounds in staying
action for declaratory relief where parallel proceedings, presenting opportunity for
ventilation of the same state law issues, were underway in state court); Brillhart v. Excess

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Ins. Co. of Am., 316 U.S. 491, 494-95 (1942) (setting the standard for discretion where
parallel state proceedings are pending).
For purposes of the Wilton/Brillhart analysis, “[t]wo actions are parallel when
substantially the same parties are contemporaneously litigating substantially the same
issues in two fora.” Envision, 604 F.3d at 986. However, “the mere pendency of another
suit is not enough in itself to refuse a declaration.” Nationwide Ins. v. Zavalis, 52 F.3d 689,
695 (7th Cir. 1995). In determining the existence of parallel proceedings sufficient to
warrant a stay, “the federal court should consider (among other matters) whether the
declaratory suit presents a question distinct from the issues raised in the state court
proceeding, whether the parties to the two actions are identical, whether going forward
with the declaratory action will serve a useful purpose in clarifying the legal obligations
and relationships among the parties or will merely amount to duplicative and
piecemeal litigation, and whether comparable relief is available to the plaintiff seeking a
declaratory judgment in another forum or at another time.” Id. The court addresses the
Zavalis factors in turn below.
III.

DISCUSSION
A.

Factor #1: Whether Suits Present Distinct Questions

The first factor of the Zavalis test is whether the state and federal suits present
distinct questions. In this case, they do not. The parties do not dispute that the question
of whether DeWitt gave Podgorski permission to use his F-150 on April 10, 2014, will be
an issue in either case. Thus, the relevant issues in both cases are identical. While the

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state case will necessarily involve the resolution of many more issues, that fact does not
dissuade the court from acknowledging the obvious parallel between the sole factual
issue in this case and one of the main factual issues in the state case. Sta-Rite Indus., Inc.
v. Allstate Ins. Co., 96 F.3d 281, 287 (7th Cir. 1996) (more comprehensive parallel state
case cuts against exercise of federal jurisdiction). Thus the first factor of the Zavalis
analysis weighs strongly in favor of abstention.
B.

Factor #2: Whether Actions Involve Identical Parties

The second Zavalis factor is whether the state and federal actions involve
identical parties. 52 F.3d at 695. American Standard argues that because it has not been
formally named as a party in the state case, this lawsuit and the state lawsuit are too
different to justify abstention. First, it is important to note that, while American
Standard is not named as a defendant in the state case, it has successfully intervened.
Second, simply because American Standard is not a named party to the state
proceedings does not mean that the proceedings are not parallel. That factor is relevant
– and the court has fully considered it – but it is not determinative. Schneider Nat.
Carriers, Inc. v. Carr, 903 F.2d 1154, 1157 (7th Cir. 1990) (“existence of additional parties
in one suit does not of itself destroy parallelism”). Further, though American Standard
is not formally named as a party in the state action, American Standard readily admits
that, as DeWitt’s insurer, it has acted on DeWitt’s behalf throughout the course of the
state court litigation. (DE # 31 at 4.) Both its insurance policy and its representation of
DeWitt bind American Standard to the state court action. Additionally, the interests of

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American Standard are implicated in the resolution of the issue of whether DeWitt gave
Podgorski permission to use his F-150 on April 10, 2014. These considerations suggest
that, despite American Standard not being formally named as a party in the state action,
the similarity of the parties in each suit and the interests implicated and represented by
those parties weigh in favor of abstention. Steadfast Ins. Co. v. Ballantine, No. 12 C 2646,
2012 WL 5304207, at *3 (N.D. Ill. Oct. 25, 2012); see also Schering Corp. v. Griffo, 872 F.
Supp. 2d 1220, 1244 (D.N.M. 2012) (parties are similar for purposes of abstention when
they possess “identity of interests”). Accordingly, this factor weighs in favor of
abstention.
C.

Factor #3: Usefulness of Action and Avoidance of Piecemeal Litigation

The third factor the court should consider in determining whether to abstain
from exercising jurisdiction over American Standard’s action is “whether going forward
with the declaratory action will serve a useful purpose in clarifying the legal obligations
and relationships among the parties or will merely amount to duplicative and
piecemeal litigation.” Zavalis, 52 F.3d at 695. In this case, going forward with the
declaratory action in federal court would serve a limited purpose in determining one
issue. However, this issue will necessarily be resolved in the more comprehensive state
action if this court declines to exercise jurisdiction. Further, resolution of a single issue
in this case will more likely than not result in duplicitous discovery efforts and two
ultimate findings of fact by a judge or jury. By retaining jurisdiction over a single issue
in this case, this court would be doing little more than permitting American Standard to

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delay state court proceedings to permit it the benefit of its choice of forum on a critical
factual issue. These considerations weigh in favor of abstention.
D.

Factor #4: Availability of Comparable Relief

The last factor enumerated in Zavalis is whether comparable relief is available to
the plaintiff seeking a declaratory judgment in another forum or at another time.
Zavalis, 52 F.3d at 695. It is beyond dispute that the issue of whether DeWitt provided
Podgorski with permission to drive his F-150 on April 10, 2014, and therefore whether
American Standard has an obligation to indemnify Podgorski, will necessarily be
determined in the state court suit. In other words, there is no question that comparable
relief is available if this court declines to exercise jurisdiction. Accordingly, this factor
weighs in favor of abstention.
IV.

CONCLUSION
Application of the four Zavalis factors to the facts of this case indicate that

abstaining to exercise jurisdiction over American Standard’s declaratory judgment
action is appropriate under the Brillhart/Wilton doctrine. As for the appropriate form of
relief, the Supreme Court observed in Wilton: “[W]here the basis for declining to
proceed is the pendency of a state proceeding, a stay [as opposed to dismissal] will
often be the preferable course, because it assures that the federal action can proceed
without risk of a time bar if the state case, for any reason, fails to resolve the matter in
controversy.” 515 U.S. at 288 n. 2.

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Accordingly, the court GRANTS Green’s motion for dismissal, abstention, or a
stay (DE # 29) by abstaining from exercising jurisdiction and STAYING this action.
American Standard is ORDERED to file a status report within 14 days of the conclusion
of state court proceedings, indicating whether the stay in this case may be lifted and this
case dismissed, or whether some other course of action is appropriate under the
circumstances. Failure to file a timely status report may result in dismissal of this action,
with prejudice, and without further notice.
SO ORDERED.

Date: March 31, 2016
s/ James T. Moody_______________
JUDGE JAMES T. MOODY
UNITED STATES DISTRICT COURT

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