Fortenberry et al v. Scottsdale Insurance Company et al
ORDER & REASONS that the Plaintiffs' Motions to Strike Defendants' answers and counterclaims 13 and 30 are DENIED. Further, case is STAYED and Administratively Closed, pending the resolution of the state court matter entitled Dotty Fortenberry wife of/and Alvin L. Fortenberry vs. Scottsdale Insurance Company, Liberty Mutual Insurance Company, JYD Trucking LLC., David Lyle Scott, Sr., and United Services Automobile Association, bearing civil docket number 738-827, now pending in the 24th Judicial District Court for the Parish of Jefferson, State of Louisiana. Signed by Judge Eldon E. Fallon on 10/13/16. (dno)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
FORTENBERRY, ET AL.
SCOTTSDALE INSURANCE CO, ET AL.
SECTION "L" (2)
ORDER & REASONS
Before the Court are Plaintiffs’ Dotty and Alvin Fortenberrys’ (“Fortenberrys”) Motions
to Strike the Defendants’ Answers and Counterclaims. R. Docs. 13, 30. Defendant Liberty Mutual
Fire Insurance Company (“Liberty Mutual”), has filed an Opposition. R. Doc. 17. Defendant
United Services Automobile Association (“USAA”) has adopted Liberty Mutual’s arguments. R.
Doc. 36. The Court has reviewed the extensive briefing on these issues and the applicable law and
now issues this Order & Reasons.
This case involves an insurance coverage dispute for damages arising out of a car accident.
On November 15, 2013, Plaintiffs Dotty and Alvin Fortenberry were injured when their vehicle
was struck by a commercial delivery truck operated by David Scott in East Baton Rouge Parish,
Louisiana. R. Doc. 13-1 at 2-3. Mr. Scott was operating the truck on behalf of either JYD Trucking
(“JYD”), a Louisiana limited liability company, or B&R Hot Shot Logistics (“B&R”). 1 Mr. Scott,
the truck, and JYD were insured by a Scottsdale Insurance Company policy which provided
It appears this issue is somewhat in dispute. Plaintiff asserts that Scott was operating the truck on behalf of
B&R but the truck was not covered by the B&R policy, (R. Doc. 13-1 at 4), while Defendant Liberty Mutual indicates
Scott was driving the truck on behalf of “JYD and/or B&R.” R. Doc. 17 at 2.
$100,000 of liability coverage per injured person. B&R had a one million dollar liability policy
with Western World Insurance Company (“Western World”). The Western World policy includes
a MCS-90 endorsement, which assures compliance with federal minimum levels of responsibility
for motor carriers. See Canal Ins. Co. v. Coleman, 625 F.3d 244, 247 (5th Cir. 2010)
At the time of the accident, Mr. Fortenberry was driving a 2013 Ford Fusion, provided by
his employer, United Services Automobile Association (“USAA”). According to Plaintiffs’, the
Fusion and driver were insured by a under/uninsured motorist (“UM/UMI”) Liberty Mutual policy
which provided two million dollars of coverage. The Plaintiffs also had a personal UM/UMI policy
with USAA providing $500,000 in coverage. R. Doc. 13-1 at 3. As a result of the accident, Mr.
Fortenberry sustained serious injuries, which required extensive medical treatment. According to
the Plaintiffs, Mr. Fortenberry is now permanently disabled.
On May 27, 2014, Plaintiffs filed suit in state court seeking damages against Scott, JYD
Trucking, B&R, Scottsdale, and Western World. Western World denied coverage, as the vehicle
involved in the accident was not listed on the policy. After exhausting the Scottsdale $100,000
policy limits, Plaintiffs then filed a claim for UM coverage under both the USAA and Liberty
Mutual policies. R. Doc. 13-1 at 4. Liberty Mutual denied the claim, contending that the policy did
not provide coverage because USAA, the policy holder, validly waived UM coverage. R. Doc. 9
at 11. USAA denied coverage, arguing that the Liberty Mutual coverage is primary, and must be
exhausted before coverage is triggered under the USAA policy. R. Doc. 13-1 at 4. USAA also
argues that Western World’s MCS-90 endorsement 2 constitutes insurance coverage which must
be exhausted before triggering either of the UM Policies. 3 R. Doc. 13-1 at 5.
The parties have filed multiple motions for summary judgment and engaged in extensive
discovery in the state court proceeding. See R. Docs. 17 at 3-4; 13-1 at 6-7. Of note is Liberty
Mutual’s Motion seeking summary judgment that the Plaintiffs were not covered under a Liberty
Mutual UM/UMI policy because USAA validity waived UM coverage to reduce its policy
premiums. R. Doc. 17 at 3. Plaintiffs filed a cross Motion seeking summary judgment that the
Liberty Mutual policy did provide UM/UMI coverage to Plaintiffs. These Motions were denied,
because the state court found there were outstanding issues of material fact. R. Doc. 17 at 3.
Plaintiff contends that not only was Liberty Mutual’s Motion denied, but both the Louisiana Fifth
Circuit and the Louisiana Supreme Court denied writs. R. Doc. 13-1 at 6.
On June 22, 2016, more than two years after the initial lawsuit was filed in state court,
Plaintiffs filed a Complaint in this Court, seeking a declaratory judgement to determine whether
the federally-mandated MCS-90 endorsement constitutes automotive liability insurance. R. Doc.
2 at 4. If so, Plaintiffs would need to exhaust the Western World policy limits before triggering
coverage under either of the UM policies issued by Liberty Mutual or USAA. Plaintiffs contend
that no other federal or Louisiana state court has yet to rule on this issue. R. Doc. 2 at 4. In addition,
Plaintiffs emphasize that they only seek a declaratory judgment regarding this single issue of
Judge Beer explained the role of the MCS-90 amendment in insurance coverage disputes in Herkes v. Doe,
“the Fifth Circuit has stated that the MCS–90 and the relevant federal regulations do not address coverage for the
purpose of disputes between the insured and the insurer. However, when the protection of injured members of the
public is at stake ‘the insurer's obligations under the MCS–90 are triggered when the policy to which it is attached
provides no coverage to the insured.’ Thus, where the policy provides no coverage for the vehicle, the MCS–90
endorsement is triggered for the benefit of plaintiff.” Herkes v. Doe, No. CIV.A. 01-0700, 2002 WL 465192, at *2
(E.D. La. Mar. 25, 2002) (quoting T.H.E. Insurance Company v. Larson Intermodel Service, Inc., 242 F.3d 667, 672
(5th Cir. 2001).
Plaintiff claims that Liberty Mutual is arguing the Western World policy must be exhausted before triggering
UM coverage, while Liberty Mutual takes the position that the policy holder waived UM coverage in this case. R.
Doc. 17 at 1.
federal law, and do not want to litigate the entire claim in federal court. R. Doc. 2. at 6. As such,
Plaintiffs’ Complaint seeks a declaration that “the MCS-90 endorsement represents a surety
agreement and that it is not liability ‘insurance.’” R. Doc. 2 at 10.
Defendant Liberty Mutual filed an Answer denying liability and averring that the Liberty
Mutual policy does not provide UM coverage to Plaintiffs because USAA, the policyholder,
waived UM coverage to reduce its premiums. R. Doc. 9 at 1. This is the same issue Liberty Mutual
previous raised in state court. Liberty Mutual also filed a counterclaim seeking declaratory relief
that (1) it owes no obligation to plaintiffs/counter-defendants under the policy because USAA
waived UM coverage and (2) that Liberty Mutual handled Plaintiffs claim in accordance with
Louisiana law and did not violate either La. Rev. Stat. 22:1982 or La. Rev. Stat. 22:1973, the
insurance bad faith statutes. Liberty Mutual invokes jurisdiction for its counterclaims under either
28 U.S.C. § 1367(a), claiming the counterclaims form part of the same case or controversy as the
Plaintiffs’ claims, or diversity jurisdiction pursuant to 28 U.S.C. § 1332. R. Doc. 9 at 10-11.
Defendant USAA also filed an Answer denying liability and asserting a counterclaim in
this case. R. Doc. 24. USAA contends that the Court has jurisdiction over the counterclaim under
supplemental jurisdiction pursuant to 28 U.S.C. § 1367, or in the alternative, diversity jurisdiction
pursuant to 28 U.S.C. § 1332. R. Doc. 24 at 2. USAA’s counterclaim is essentially the inverse to
the original complaint seeking a declaratory judgment in this matter. In the counterclaim, USAA
argues that the coverage provided by the MCS-90 Endorsement should prime any insurance
policies potentially triggered by the accident. R. Doc. 24 at 5. USAA contends that the purpose of
the MCS-90 Endorsement is “to ensure that an interstate motor carrier takes financial responsibility
for all drivers . . . . Requiring UM/UIM coverage to prime the MCS-90 Endorsement would defeat
Congress’ purpose of mandating an MCS-90 Endorsement to ensure that the financial
responsibility for a third party’s injury rests with the negligent tortfeasors.” R. Doc. 24 at 5. Thus,
according to USAA, coverage under the USAA and Liberty Mutual Policies should only be
triggered after the $750,000 limit provided in the MCS-90 Endorsement has been exhausted.
USAA seeks a declaratory judgement that Western World’s coverage under the MCS-90
Endorsement is primary, and any UM/UIM coverage is in excess of the endorsement. R. Doc. 24
On August 2, 2016, Plaintiffs filed a Motion to Strike Defendant Liberty Mutual’s Answer
and Counterclaim. R. Doc. 13. Liberty Mutual filed an Opposition on August 23, 2016. R. Doc.
17. The Plaintiffs replied, Defendants surreplied, and Plaintiffs submitted yet another response. R.
Docs. 16, 32, 35. On August 30, 2016, Plaintiffs filed a Motion to Strike Defendant USAA’s
Answer and Counterclaim. R. Doc. 30. Defendant USAA filed an opposition, adopting Liberty
Mutual’s arguments. R. Doc. 36.
A. Plaintiffs’ Motion to Strike Liberty Mutual’s Answer and Counterclaim
(R. Doc. 13)
In Plaintiffs’ Motion to Strike they argue their complaint seeks only to determine a discrete
question of federal law, while Liberty Mutual’s counterclaim seeks “to complicate and delay this
matter” by introducing substantive issues of Louisiana law. R. Doc. 13-1 at 1-2. Additionally,
Plaintiffs aver that the questions raised in the counterclaim have already been addressed in the
state court action, and while not yet resolved, should remain in state court. R. Doc. 13-1 at 2.
Plaintiffs ask this Court to refuse to extend supplemental jurisdiction and strike the counterclaim
under Rule 12. R. Doc. 13-1 at 2.
Plaintiffs argue that Liberty Mutual has already had an opportunity to litigate these
questions in state court. R. Doc. 13-1 at 6. Specifically, they emphasize that Liberty Mutual’s
Motion for Summary Judgment regarding USAA’s alleged waiver of UM coverage was already
denied, and both the Louisiana Fifth Circuit and the Louisiana Supreme Court denied writs. R.
Doc. 13-1 at 6. Plaintiff frames the counterclaim as an attempt to relitigate an argument that has
already been denied in Louisiana state courts. Additionally, Plaintiffs refute Liberty Mutual’s
claim that diversity jurisdiction exists in this case. R. Doc. 13-1 at 8. Plaintiffs argue that this action
include non-diverse defendants, as both USAA and B&R Hotshot Logistics are Louisiana citizens,
thus destroying diversity. R. Doc. 13-1 at 8.
Finally, Plaintiffs argue that the Court should decline to exercise supplemental jurisdiction
in this case. First, they assert that the issues in Liberty Mutual’s counterclaim, namely whether
USAA validly waived UM coverage and whether Liberty Mutual violated Louisiana “bad faith”
statutes in handling Plaintiffs claim, are not sufficiently related to Plaintiffs’ complaint for a
declaratory judgment to form the same case or controversy. (citing Wisconsin Dep't of Corr. v.
Schacht, 524 U.S. 381, 387 (1998)). Second, Plaintiffs argue that the counterclaim raises novel
issues of state law and this Court should decline to exercise supplemental jurisdiction. (citing 28
U.S.C. § 1454(d)(2); id. § 1367(c)(1)–(4); Team Express Distributing LLC v. Junction Solutions,
Inc., No. 5:15-CV-994, 2016 WL 3081020, slip op. (W.D. Tex May 31, 2016)) R. Doc. 13-1 at 9.
Therefore, Plaintiffs contend that these issues would be best resolved in the action already pending
in state court.
B. Liberty Mutual’s Opposition
Liberty Mutual timely responds. R. Doc. 17. Liberty Mutual makes three arguments in
support of its counterclaim: (1) an entire pleading cannot be struck under Rule 12, and the
counterclaim is not within the category of pleadings that can be struck under Rule 12(f); (2) the
Court has diversity and supplemental jurisdiction under 28 U.S.C. §1332 and 28 U.S.C. §1367,
respectively; and (3) because the UM coverage issue has not yet been resolved in state court,
granting a declaratory judgment on the matter would save the parties additional time and expense.
Liberty begins by reviewing the path the UM issue has already taken in the state courts.
First, they explain that Plaintiffs filed a motion for summary judgment in February 2015, alleging
that they did in fact have UM coverage under the Liberty Mutual policy. R. Doc. 17 at 3. Liberty
filed a cross motion, arguing the policyholder had validly waived UM coverage. R. Doc. 17 at 3.
The state court denied both motions. Liberty asserts that “[n]o party ever has sought appellate
review of this Judgment, which is an interlocutory ruling and not a final judgment under Louisiana
law.” (citing Williams v. City of New Orleans, 2015-0769 (La. App. 4 Cir. 4/20/16), 193 So. 3d
259, 264 (“‘[T]he denial of an initial motion for summary judgment is an interlocutory judgment,
and therefore, not a final judgment.’”) (quoting Hargett v. Progressive Ins. Co., 08-0293 (La. App.
4 Cir. 10/29/08), 996 So. 2d 1199, 1202). Liberty contends that this unresolved issue has led to
“discovery and motion practice for the past fourteen months.” R. Doc. 17 at 4.
Liberty then addresses Plaintiffs’ arguments. First, Liberty avers that Rule 12 is not the
proper, nor preferred, procedural mechanism for dismissing a claim. (citing Rowe v. Hornblower
Fleet, No. C-11-4979, 2012 WL 5833541, at *6 (N.D. Cal. 2012) “[M]otions to strike are generally
disfavored . . . A Rule 12(f) motion is not a proper method to procure dismissal of all or part of a
complaint or counterclaim;” 5C Fed. Prac & Proc. Civ. § 1380 (3d ed. 2016) “[Rule 12 (f)] is
neither an authorized nor a proper way to procure the dismissal of all or a part of a complaint, or a
counterclaim.”) Instead, Liberty Mutual argues that if Plaintiffs wish to attack subject matter
jurisdiction, they must do so through a motion to dismiss under Rule 12(b)(1).
Second, Liberty argues that this Court has subject matter jurisdiction over the counterclaim.
Addressing Plaintiffs’ arguments that there is a lack of complete diversity in this case, Liberty
contends that the only parties to its counterclaim are Plaintiffs, Louisiana citizens, and Liberty
Mutual, a citizen of Wisconsin and Massachusetts. R. Doc. 17 at 5-6. Thus, Liberty contends there
is complete diversity in this case. The parties did not dispute that the jurisdictional amount is met.
As to supplemental jurisdiction, Liberty contends “a loose factual connection” is generally
sufficient to satisfy the requirement that the claims arise from a common nucleus of operative fact.
(quoting Hankins v. Yellow Fin Marine Servs., LLC, No. 15-2494, 2015 WL 9004447, at *3 (E.D.
La. 2015). Furthermore, Liberty asserts that the counterclaim arises from the same transaction or
occurrence—the underlying car accident—and is thus a compulsory counterclaim.
Finally, Liberty argues that none of the factors allowing the Court to decline jurisdiction
under § 1367 (c) are present here. According to Liberty, the counterclaim does not raise any novel
or complex issues of state law, as Louisiana and Texas law regarding UM coverage is well-settled.
R. Doc. 17 at 9-10. Further, Liberty argues the counterclaim does not “predominate” over
Plaintiff’s claims. Thus, they contend “there are no compelling reasons to decline jurisdiction.” R.
Doc. 17 at 10.
C. Plaintiffs’ Reply (R. Doc. 26)
Plaintiffs filed a Reply to Liberty’s Motion, R. Doc. 26, which reiterates Plaintiffs’
argument that the original complaint does not seek a decision regarding the ranking of the policies
potentially implicated in this matter, but merely to “clarify a pure issue of federal law.” R. Doc.
26 at 2, 5. Plaintiffs argue they only seek a declaration whether a MCS-90 endorsement constitutes
insurance or suretyship. R. Doc. 26 at 2. Plaintiffs contend Liberty Mutual filed its counterclaim
to complicate and delay this case, rather than merely addressing the correct interpretation of the
Addressing the arguments Liberty makes in its opposition, Plaintiffs argue they are not
using the federal forum to resolve a state law insurance coverage issue, and dispute Liberty’s
allegation that the motion to strike is procedurally defective. However, Plaintiffs do not directly
address the alleged procedural deficiencies in their original Motion to Strike, but instead argue
there are other reasons that Liberty’s counterclaim should be dismissed. R. Doc. 26 at 5. Plaintiffs
then proceed to discuss legal doctrines regarding whether abstention is appropriate in this case.
First, Plaintiffs argue that in a suit for declaratory relief, the Wilton/Brillhart Standard
provides the district court with “discretion to entertain or to stay an ‘action for declaratory relief
where parallel proceedings . . . were underway in state court.’ ” R. Doc. 26 at 6 (quoting Wilton v.
Seven Falls Co., 515 U.S. 277, 288 (1995). Plaintiffs aver that the Fifth Circuit has developed a
seven-factor test to determine whether to retain jurisdiction over declaratory judgments. R. Doc.
26 at 6. (citing St. Paul Ins. Co. v. Trejo, 39 F.3d 585, 590 (5th Cir. 1994)). According to Plaintiffs,
these factors demonstrate the Court should exercise jurisdiction over the Plaintiffs’ claim for
declaratory relief. R. Doc. 26 at 7.
However, Plaintiffs contend that because the Defendant’s counterclaim seeks monetary or
other coercive relief, the Colorado River abstention doctrine applies to the counterclaim. R. Doc.
26 at 8; (citing Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817
(1976)). Under Colorado River, a federal court should abstain when there are parallel proceedings
in state and federal court. R. Doc. 26 at 8. Plaintiffs argue that because the issues in Defendant’s
counterclaim are already pending in state court, the Court should decline to exercise jurisdiction
pursuant to Colorado River. R. Doc. 26 at 11.
Finally, Plaintiffs argue that the Rooker-Feldman abstention doctrine prevents federal
district courts from hearing collateral attacks on state court judgments. R. Doc. 26 at 12 (citing
Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 291 (2005)). Plaintiffs contend that
Liberty Mutual’s counterclaim seeks to relitigate issues that were already decided in state court,
and thus this Court is precluded from hearing the case under Rooker-Feldman. R. Doc. 26 at 12.
Further, Plaintiffs aver that the Rooker-Feldman provides a basis for challenging the Court’s
subject matter jurisdiction. R. Doc. 26 at 12.
D. Liberty Mutual’s Surreply (R. Doc. 32)
Defendant Liberty Mutual argues that Plaintiffs improperly raised new arguments in their
reply, which the Court should not consider. R. Doc. 32 at 1. Additionally, Liberty objects to the
additional relief Plaintiffs request in their reply; initially, Plaintiffs sought to strike the
counterclaim, but in their latest filing have requested administrative dismissal. R. Doc. 32 at 1.
Further, Liberty contends that Plaintiffs should not be able to use abstention doctrines to bar the
Defendant’s counterclaim after they filed this suit in federal court. R. Doc. 32 at 1.
Addressing Plaintiffs’ abstention arguments, Liberty argues that Plaintiffs should not be
allowed to bring part of their case into federal court while simultaneously preventing Liberty from
exercising that same right. R. Doc. 32 at 2. Further, Liberty contends that federal courts have an
obligation to exercise jurisdiction over claims filed in federal court even if there are similar matters
pending in state court. R. Doc. 32 at 3. While Liberty Mutual agrees that the Brillhart standard
applies to cases seeking declaratory relief, they disagree with Plaintiffs’ characterization of the
counterclaims in this matter. R. Doc. 32 at 3. Liberty argues that its counterclaim only seeks
declaratory relief, and therefore any possible abstention regarding its counterclaim is also governed
by Brillhart, not Colorado River. Finally, Liberty argues that the Brillhart standards “weigh
heavily” in favor of exercising jurisdiction over Liberty Mutual’s counterclaim. R. Doc. 32 at 4.
E. Plaintiffs’ Response (R. Doc. 35)
Plaintiffs argue that their reply did not seek any additional relief that was not already
requested in the motion to strike. R. Doc. 35 at 2. Further, they restate their position that the issues
in Liberty Mutual’s counterclaim are not part of the same case or controversy as the declaratory
judgement, and thus supplemental jurisdiction does not exist. R. Doc. 35 at 3. Finally, Plaintiffs
argue that the correct application of the Brillhart standards demonstrates that the Court should not
exercise jurisdiction over the Defendants’ counterclaims. R. Doc. 35 at 4.
F. Plaintiffs’ Motion to Dismiss USAA’s Answer and Counterclaim (R. Doc.
After USAA filed its Answer and Crossclaim, seeking a declaration that coverage under
the MCS-90 Endorsement is primary to any UM/UIM policies, Plaintiffs filed a Motion to Strike,
Abstain, or Dismiss. R. Doc. 30-1. Plaintffs begin by reviewing the factual and procedural
background of this case, and note that the case has been pending in state court for 27 months. R.
Doc. 30-1 at 1. Plaintiffs argue that “numerous federal cases” have determined that an MCS-90
Endorsement is a surety obligation rather than insurance, and this determination is governed by
federal law. R. Doc. 30-1 at 4.
Next Plaintiffs admit that USAA’s allegation that B&R is liable for the driver’s negligence,
because his is an employee under federal law, raises an additional question of federal law. R. Doc.
30-1 at 5. However, Plaintiffs aver that this is an insufficient basis to extend jurisdiction over all
the state law claims asserted in the counterclaim, as these issues are already being litigated in state
court. R. Doc. 30-1 at 6. Plaintiffs object to USAA’s request seeking a ruling regarding the ranking
of the insurance policies and the MCS-90 endorsement, and argue that their original complaint
does not seek a ranking of the policies, but only a declaration of whether a MCS-90 endorsement
constitutes liability insurance. R. Doc. 30-1 at 6.
Plaintiffs then review the timeline of the filings in this Court, along with the filings in the
related state court proceeding. R. Doc. 30-1 at 7-9. According to Plaintiffs, this history reveals that
the Defendants are seeking to delay and complicate this matter, and thus, the Court should only
issue a decision on the classification of the MCS-90 Endorsement, while deferring all other matters
to the state court proceeding. R. Doc. 30-1 at 10. Finally, Plaintiffs argue that under Colorado
River and the Rooker-Feldman doctrine, this Court should abstain from addressing any of the
issues USAA raises in its counterclaim. R. Doc. 30-1 at 12.
G. USAA’s Opposition (R. Doc. 36)
In its Opposition to Plaintiff’s Motion to Strike, Dismiss, or Abstain, Defendant USAA
adopts Liberty Mutual’s positions and arguments. R. Doc. 36 at 1. For these reasons, Defendant
USAA argues the Court should deny Plaintiffs’ Motion, and exercise jurisdiction over USAA’s
counterclaim. R. Doc. 36 at 1.
LAW AND ANALYSIS
Plaintiffs’ complaint in this matter sought a declaratory judgment. Likewise, Defendants
Liberty Mutual and USAA filed counterclaims seeking declaratory judgments in this matter. All
of these claims are pursuant to The Declaratory Judgment Act, a procedural mechanism designed
to provide parties a new remedy in federal court. However, the Act does not confer jurisdiction.
Days Inns of America, Inc. v. Reno, 935 F.Supp. 874, 877 (W.D. Tex. 1996). A court need not
provide a party with declaratory judgment relief on request “as this is a matter left to the district
court’s sound discretion.” Odeco Oil & Gas Co., Drilling Div. v. Bonnette, 4 F.3d 401, 404 (5th
Cir.), reh'g denied, 9 F.3d 105 (5th Cir. 1993), cert. denied, 511 U.S. 1004 (1994). The Declaratory
Judgment Act provides that “in a case of actual controversy within its jurisdiction . . . any court of
the United States . . . may declare the rights and other legal relations of any interested party seeking
such a declaration . . . .” 28 U.S.C. § 2201(a). Since its inception, the Act “has been understood to
confer on federal courts unique and substantial discretion in deciding whether to declare the rights
of litigants.” Wilton v. Seven Falls Co., 515 U.S. 277, 284 (1995). In exercising its discretion, a
district court is authorized to stay or to dismiss an action seeking declaratory judgment. Id. When
the basis for declining to proceed is the pendency of a state court proceeding, as is the case here, a
stay is often the preferable course. Id. at 288 n.2.
Although the district court’s discretion is broad, it is not unfettered. Courts may not dismiss
requests “for declaratory judgment relief on the basis of whim or personal disinclination.” Rowan
Cos., Inc. v. Griffin, 876 F.2d 26, 28–29 (5th Cir. 1989) (quoting Hollis v. Itawamba County Loans,
657 F.2d 746, 750 (5th Cir. 1981)). The Fifth Circuit has set out several factors which the district
court must consider when deciding whether to hear a declaratory judgment action, which include,
but are not limited to: (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; (6) whether retaining the lawsuit would serve the purposes of judicial economy; and (7)
whether the federal court is being called on to construe a state judicial decree involving the same
parties and entered by the court before whom the parallel state suit between the same parties is
pending. St. Paul Insurance Co. v. Trejo, 39 F.3d 585, 590–91 (5th Cir.1994).
In Wilton v. Seven Falls Co., the Supreme Court simplified the above test by stating that
whether the district court should exercise its discretion comes down to considerations of
practicality and wise judicial administration. Wilton, 515 U.S. at 288. In Wilton, the Supreme Court
affirmed a Fifth Circuit decision upholding a district court’s ruling to stay a declaratory judgment
action pending the resolution of a later-filed state court suit. Id. The Wilton court found that the
issuance of such a stay was not an abuse of the trial court’s discretion. Id.
After a review of the law and facts surrounding this case, this Court, in the exercise of its
discretion, finds that this declaratory judgment action should be stayed pending the resolution of
the state court matter. The Court will address each of the Trejo factors in turn.
1. The pending state action
First, the pending state court action can fully resolve all of the issues between the parties
in this litigation. As Plaintiffs emphasize, that case has been pending for more than two years, and
the parties have engaged in extensive discovery and motion practice. Additionally, the Court has
been advised that the state court recently took this very same issue—whether the MCS-90
Endorsement constitutes insurance or suretyship—under consideration. As Plaintiffs point out in
their motion, multiple federal courts have addressed the nature of the MCS-90 Endorsement,
providing substantial guidance to the state court on this issue. As such, the state court has
precedence in both the time the suit was filed, and the extent of involvement it has in resolving
2. Did Plaintiff file suit in anticipation of a lawsuit by the Defendant?
The second factor weighs weighs against abstention. Plaintiff filed this suit for a
declaratory judgment in order to expedite, rather than avoid the state proceedings. Nonetheless,
this factor is not dispositive.
3. Forum shopping
Plaintiff filed this motion in an attempt to accelerate a decision in state court. This same
issue was recently taken under consideration in the state court proceeding. Because the state court
is fully capable of determining the questions at issue here, the Court can see no reason why federal
court is a more convenient forum. Thus, to the extent Plaintiff filed this action to reach a faster
result, the Court finds that Plaintiff engaged in forum shopping. This factor weighs in favor of
4. Possible inequities that would exist in changing forums
The parties repeatedly mention the vast discovery and motion practice that has already
taken place in federal court. Plaintiffs argue that this supports their position that the Court should
only resolve the questions presented in their complaint, while denying the Defendants access to
the federal forum. This outcome would certainly be inequitable. However, forcing the parties to
refile and relitigate all the issues raised in the complaint and crossclaims would only further delay
this matter. As such, the Court finds that the fourth factor weighs in favor of abstention.
5. Convenience of federal court
The Court finds this factor is neutral, due to the geographic proximity of this Court and the
state court in Jefferson Parish.
6. Judicial economy
The Court finds that retaining this lawsuit in federal court would frustrate—rather than
serve—the purposes of judicial economy. One only needs to review the filings in this Court to
appreciate the extent and depth of the litigation currently pending in state court. The overwhelming
evidence demonstrates that considerations of practicality and wise judicial administration are best
served by allowing this case to continue in state court—without this Court issuing rulings on the
declaratory judgments requested in Plaintiffs’ original complaint or Defendants’ counterclaims.
Thus, these question should remain in state court and be resolved alongside the entirely of the state
court action. 4
7. Does the federal suit seek to construe a state judicial decree?
While none of the questions raised in the complaint or crossclaims have been completely
resolved by the state court, many of the issues have already been addressed via motions for
summary judgment. Further, the parties have filed motions in state court addressing these same
issues. As such, federalism and comity concerns dictate that the seventh factor weighs in favor of
The Court finds that the first, third, fourth, sixth, and seventh favors weigh in favor of
abstention. The fifth factor is neutral. Only the second factor weighs against abstention in this case.
While the parties raise myriad arguments in support of their respective positions, the Court finds that
because abstention is proper, it is not necessary to address those arguments at this time.
For the foregoing reasons, the Court decides to exercise its discretion to abstain from ruling in this
declaratory judgment action.
Furthermore, the United States Supreme Court explained that “where the basis for
declining to proceed is the pendency of a state proceeding, a stay 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.” See Wilton, 515 U.S. at 288 n.2.
Thus the Court finds that staying this action will avoid duplicative litigation while allowing the
parties to reopen the case without the risk of a time bar if, for any reason, the state court case fails
to resolve the matter in controversy.
For the foregoing reasons, IT IS ORDERED that Plaintiffs’ Motions to Strike Defendants’
Answers and Counterclaims, R. Docs. 13, 30, are DENIED. Further, the above captioned matter
is STAYED and Administratively Closed, pending the resolution of the state court matter entitled
Dotty Fortenberry wife of/and Alvin L. Fortenberry vs. Scottsdale Insurance Company, Liberty
Mutual Insurance Company, JYD Trucking LLC., David Lyle Scott, Sr., and United Services
Automobile Association, bearing civil docket number 738-827, now pending in the 24th Judicial
District Court for the Parish of Jefferson, State of Louisiana.
New Orleans, Louisiana, this 13th day of October, 2016.
UNITED STATES DISTRICT JUDGE
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