National Union Fire Insurance Company of Pittsburgh, PA v. Plaquemines Parish Government

Filing 16

ORDER granting 8 Motion to Dismiss. Signed by Judge Jay C. Zainey on 12/29/14. (jrc)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
NATIONAL UNION FIRE
INSURANCE COMPANY OF
PITTSBURGH, PA

CIVIL ACTION

VERSUS

NO: 14-1633

PLAQUEMINES PARISH
GOVERNMENT

SECTION: "A" (2)

ORDER AND REASONS
Before the Court is a Motion to Dismiss on Grounds of
Abstention (Rec. Doc. 8) filed by defendant Plaquemines Parish
Government ("PPG"). Plaintiff National Union Fire Insurance Co.
of Pittsburgh, PA ("National Union") opposes the motion. The
motion, set for hearing on December 3, 2014, is before the Court
on the briefs without oral argument.1
I. BACKGROUND
In July of 2005, National Union issued a "bumbershoot"
liability policy to PPG, apparently insuring PPG against a wide
variety of claims for personal injury and property damage. In
late August of 2005, a significant portion of Plaquemines Parish

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National Union has requested oral argument, but the Court
finds that oral argument would not assist the Court in resolving
the pending issue.

flooded in the aftermath of Hurricane Katrina. In April of 2006,
Melvin J. Burmaster, a resident of Plaquemines Parish, filed a
lawsuit against PPG in the Twenty-Fifth Judicial District Court,
Parish of Plaquemines, State of Louisiana, alleging that PPG's
negligence in failing to maintain the East Bank Protection Levee
System caused the flooding damage to his property. Burmaster
later amended his petition to reflect that he had filed it as a
representative of a class of those similarly situated as well as
in his individual capacity.
The state court litigation is ongoing. In 2009, National
Union was named as a defendant in the state court class action
lawsuit via Louisiana's Direct Action Statute. Plaintiffs and
National Union filed cross motions for summary judgment in state
court disputing applicability and coverage of the policy issued
by National Union to PPG. PPG filed a position paper on the
motions agreeing with plaintiffs' contentions as to the extent of
the policy coverage.
The trial court found that "under the policy, PPG is
responsible for the first $1,000,000.00 (one million) of
liability, and that National Union would be responsible for the
next $10,000,000.00 (ten million)." (Rec. Doc. 8-7, at 4).
National Union did not appeal the state trial court's decision on
coverage.
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On July 15, 2014, National Union filed the present action in
federal court seeking a declaration that this same insurance
policy does not cover damages asserted against PPG by residents
of Plaquemines Parish.
PPG argues that National Union is attempting to get "a
second bite at the apple" by submitting the question of coverage
of the policy to this Court after the state court has already
provided an answer – an answer which National Union chose not to
appeal. Looking to the factors in St. Paul Ins. Co. v. Trejo, 39
F.3d 585 (5th Cir. 1994), PPG contends that the Court should
exercise its discretion in abstaining from or dismissing the
case.
National Union argues that PPG's motion should be denied for
two primary reasons: 1) PPG has since allegedly reached a
"settlement"2 with the plaintiffs in which it agreed to remain in
the lawsuit but only as a "nominal defendant," undermining any
arguments it now makes for this Court to abstain for reasons of
judicial efficiency and fairness; and 2) National Union reserved
its right to argue alternative grounds for exclusion in the state
court proceeding and now presents those arguments for the first

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National Union claims later in its Complaint that the
agreement was "no settlement at all and does not trigger coverage
under the Policy." (Rec. Doc. 1, at ¶15).
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time. Applying the same Trejo factors, National Union expands on
these contentions in arguing for denial of PPG's motion.
II.

DISCUSSION
The Declaratory Judgment Act, 28 U.S.C. § 2201, et seq.,

provides that a court “may declare the rights and other legal
relations of any interested party seeking such declaration.”
Odeco Oil & Gas Co. v. Bonnette, 4 F.3d 401, 403 -04 (5th Cir.
1993)(quoting 28 U.S.C.A. § 2201(a) (West 1994)). It is well
established in this circuit that a court need not provide
declaratory judgment relief on request, as this is a matter left
to the district court's sound discretion. Id. (citing Rowan
Companies, Inc. v. Griffin, 876 F.2d 26, 28 (5th Cir. 1989);
Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 601
(5th Cir. 1983)). Federal courts have a “virtually unflagging
obligation . . . to exercise the jurisdiction given them,”
Colorado River Water Conservation Dist. v. United States, 424
U.S. 800, 817 (1976), but “[i]n the declaratory judgment context,
the normal principle that federal courts should adjudicate claims
within their jurisdiction yields to considerations of
practicality and wise judicial administration.” Wilton v. Seven
Falls Co., 515 U.S. 277, 288 (1995).
The court may consider a variety of factors in determining
whether to decide a declaratory judgment suit. Odeco Oil & Gas

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Co., 4 F.3d at 403-04. Relevant factors the district court must
consider in determining whether to dismiss a declaratory judgment
include: 1) whether there is a pending state action in which all
of the matters in controversy may be fully litigated, 2) whether
the plaintiff filed suit in anticipation of a lawsuit filed by
the defendant, 3) whether the plaintiff engaged in forum shopping
in bringing the suit, 4) whether possible inequities in allowing
the declaratory plaintiff to gain precedence in time or to change
forums exist, 5) whether the federal court is a convenient forum
for the parties and witnesses, and 6) whether retaining the
lawsuit in federal court would serve the purposes of judicial
economy. Trejo, 39 F.3d at 590-91.
The Fifth Circuit has explained that these factors can be
grouped into and summarized in three categories: federalism,
fairness, and efficiency. Sherwin-Williams Co. v. Holmes Cnty.,
343 F.3d 383, 390-91 (5th Cir. 2003).
The first category of concerns weighs in favor of abstention
or dismissal. The ongoing state court litigation involves both
PPG and National Union, and that court has ruled on the extent of
coverage of the National Union policy. Any further matters
regarding the policy can be resolved in the state court
proceedings. See Sherwin-Williams Co., 343 F.3d at 392 (noting
that an ongoing state proceeding addressing the same state law

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issues suggests that the matter is better decided in that
proceeding).
National Union points out that PPG "has never filed a claim
or incidental action" against it and also that its Complaint in
this Court raises arguments for exclusion of coverage different
than those raised in state court. (Rec. Doc. 12, at 3). Plaintiff
attempts to draw too fine a distinction in arguing on this basis
that there is no parallel state proceeding due to a lack of
identity in parties or legal issues. While National Union has
been sued under a direct action statute, the policy is to cover
liability of PPG. PPG clearly agrees with the state court
plaintiffs' position, and undoubtedly relies on the state court's
ruling, that any exposure greater than $1,000,000.00 will be
covered by National Union via the policy at issue. As to the
issues being litigated, this is not a case where, for instance,
the insurer must affirmatively intervene or file a declaratory
judgment in state court to protect its interest. See Agora
Syndicate, Inc. v. Robinson Janitorial Specialists, Inc., 149
F.3d 371, 373 (5th Cir. 1998) (reversing the district court's
dismissal of the declaratory judgment action where the plaintiff
was not a party to the liability suit in state court or any
related state proceeding, and none of the state court proceedings
addressed the issue of policy coverage).

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Not only would allowing this action to go forward undermine
the "federalism" category of concerns in light of the state court
litigation, it also would directly contradict the interests
expressed by those factors in the "efficiency" category. It would
not be in the interest of judicial economy (by requiring yet
another court to address the issue of coverage), cause prejudice
to the parties relying on the state court's ruling on this issue,
and create a great risk of duplicative or piecemeal litigation if
this Court now took up the issue of coverage of the same policy.
As to the issue of fairness, this Court finds these factors
remain at most neutral on the question of abstention and
dismissal. There is minimal impact on convenience given the
negligible distance between the state court in Plaquemines Parish
and this Court (in Orleans Parish). The litigation has already
commenced on the issue of coverage in the state court, and this
declaratory judgment action appears to be a clear attempt to
avoid the adverse, prior state court ruing.
Given the clear weight of factors in the first and third
categories suggesting abstention or dismissal, the Court
exercises its broad discretion in dismissing the declaratory
judgment action before it. Colony Ins. Co. v. Holley, No. 02-56,
2002 WL 31683675 (E.D. La. Nov. 27, 2002) (Vance, J.) (citing
Agora Syndicate, Inc., 149 F.3d at 373; State Farm Mut. Auto.
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Ins. Co. v. Daughdrill, 702 F.2d 70, 71 (5th Cir. 1983); Allstate
Ins. Co. v. Employers Liab. Assur. Corp., 445 F.2d 1278, 1280
(5th Cir. 1971)) (explaining that it lies within a court's
discretion to dismiss this action in lieu of staying it).
Accordingly, and for the foregoing reasons;
IT IS ORDERED that the Motion to Dismiss on Grounds of
Abstention (Rec. Doc. 8) filed by defendant Plaquemines Parish
Government ("PPG") is GRANTED.
December 29, 2014

JAY C. ZAINEY
UNITED STATES DISTRICT JUDGE

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