Federated Rural Electric Insurance Exchange v. Jourdan et al

Filing 43

ORDERED that Federated's declaratory judgment action is DISMISSED WITHOUT PREJUDICE. It is FURTHER ORDERED that the pending Motions for Summary Judgment (R. Docs. 29 , 35 ), Motion to Strike Jury (R. Doc. 19 ), and Motion for Leave to File (R. Docs. 32 ) are DENIED AS MOOT. Signed by Judge Carl Barbier. (gec)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

FEDERATED RURAL ELECTRIC
INSURANCE EXCHANGE

CIVIL ACTION
No. 16-14187

VERSUS
IRIS JOURDAN, ET AL.

SECTION: “J”(1)

ORDER
In this case, Declaratory Defendants are the heirs of Lawrence
“Cotton”

Jourdan.

Mr.

Jourdan

was

a

member

of

the

Board

of

Directors of Washington, St. Tammany Electric Cooperative, Inc.
The

Board

of

Directors

of

Washington,

St.

Tammany

Electric

Cooperative, Inc. have an insurance policy (“Federated policy”)
with Federated Rural Electric Insurance Exchange (“Federated”)
which

provides

several

forms

of

coverage,

including

uninsured/underinsured motorist coverage. On or about March 8,
2016, Mr. Jourdan was walking across a street and was struck by a
vehicle. Tragically, Mr. Jourdan died from the injuries he suffered
as a result of this incident. Thereafter, Federated filed this
declaratory judgment action seeking a judgment that Mr. Jourdan is
not an insured under the uninsured/underinsured portion of the
Federated policy. Declaratory Defendants also seek a declaratory
judgment that Mr. Jourdan was in fact insured at the time of the
incident and asks this Court to issue a judgment finding that the

Declaratory Defendants are entitled to Mr. Jourdan’s insurance
proceeds.
On March 27, 2017, this Court ordered the parties to brief
the applicability of Wilton v. Seven Falls Co., 515 U.S. 277 (1995)
and St. Paul Insurance Co. v. Trejo, 39 F.3d 585, 590-91 (5th Cir.
1994). (R. Docs. 33, 36.) These cases are implicated in this case
because Defendants’ opposition to Federated’s Motion to Strike
Jury (R. Doc. 19) provided the following:
The Jourdan heirs also filed a wrongful death and
survival action in Franklinton Parish against the driver
and Federated. Iris Nell Spinks Jourdan, et al. vs.
Allmerica Financial Benefit Insurance Company, et al.,
22nd Judicial District Court No. 110,195, Div. H, Parish
of Washington, State of Louisiana. In their state court
suit, the Jourdan heirs allege that, at the time of the
accident, Mr. Jourdan was performing his duties as a
member of the Co-op’s board and was thus insured under
the UM coverage in Federated’s policy issued to the Coop.
(R. Doc. 19-1, at 3 n.1.) On April 4, 2017, Federated filed a
memorandum

addressing

the

above-mentioned

cases.

Federated

contends that its declaratory judgment action is justiciable, that
this court has the authority to grant declaratory relief, and that
this

court

should

exercise

its

discretion

to

decide

this

declaratory judgment action. (R. Doc. 38.) On April 5, 2017,
Declaratory Defendants filed a memorandum essentially adopting
Federated’s

position

and

contending

that

this

Court

should

exercise its discretion to decide this action. (R. Doc. 40.)

2

In analyzing whether to decide or dismiss a declaratory
judgment suit, a federal district court must determine: (1) whether
the declaratory action is justiciable; (2) whether the court has
the authority to grant declaratory relief; and (3) whether to
exercise its discretion to decide or dismiss the action. Axis
Oilfield Rentals, LLC v. Mining, Rock, Excavation and Constr.,
LLC, 2016 WL 6995105, at *3 (E.D. La. Nov. 30, 2016) (citing
Sherwin-Williams Co. v. Holmes Cty., 343 F.3d 383, 387 (5th Cir.
2003)).
This action is clearly justiciable as there is an actual
controversy between the parties as to whether Lawrence “Cotton”
Jourdan was insured at the time of the incident, and whether
Declaratory Defendants are entitled to any proceeds from Mr.
Jourdan’s insurance policy. See Ironshore Specialty Ins. Co. v.
Tractor Supply Co., 624 F. App’x 159, 163 (5th Cir. 2016). However,
the Court must determine whether it has the authority to grant
relief. “[A] district court does not have authority to consider
the

merits

of

a

declaratory

judgment

action

when:

(1)

the

declaratory defendant previously filed a cause of action in state
court; (2) the state case involved the same issue as those in the
federal court; and (3) the district court is prohibited from
enjoining the state proceedings under” 28 U.S.C. § 2283. SherwinWilliams, 343 F.3d at 388 n.1. Here, Declaratory Defendants filed
a wrongful death and survival action against the driver of the
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vehicle who struck Mr. Jourdan and Federated in state court in
Washington Parish, Louisiana. Further, the precise issue before
this

Court

is

presently

pending

before

the

state

court.

Specifically, the Declaratory Defendants admit that in their state
court suit they allege that, “at the time of the accident, Mr.
Jourdan was performing his duties as a member of the Co-op’s board
and was thus insured under the UM coverage in Federated’s policy
issued to the Co-op.” (R. Doc. 19-1, at 3 n.1) (emphasis added).
Federated
“Federated

contends,
filed

and

[the

Declaratory

present]

Plaintiffs

declaratory

action

agree,
before

that
the

Jourdans filed their state action against Federated and other
defendants.” (R. Doc. 38 at 2-3) (emphasis added). Accordingly, it
appears that this Court has authority to consider the merits of
this declaratory judgment action. See Cherokee Ins. Co. v. Babin
ex rel. Rogers, No. 06-612, 2007 WL 2381928, at *3 (S.D. Miss.
Aug. 17, 2007) (holding that the court had authority to decide a
declaratory judgment action when there was no state court action
involving the same parties filed prior to the declaratory judgment
action being filed); Endurance Specialty Ins. Co. v. City of Baton
Rouge, No. 14-642, 2015 WL 333059, at *2 (M.D. La. Jan. 23, 2015)
(“The Court agrees with the holdings of other district courts that
‘a federal court does not lack authority to consider a declaratory
judgment action if no state court action was pending at the time

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the federal complaint for declaratory relief was filed, regardless
of the reason no state court action had been filed.’”).
Therefore, the only remaining inquiry is whether this Court
should exercise its discretion to consider the merits of this
declaratory judgment action. This Court is required to examine
several
decide

non-exclusive
or

dismiss

factors

this

to

determine

declaratory

judgment

whether
action.

it

should

Sherwin-

Williams, 343 F.3d at 388 (citing Trejo, 39 F.3d 585). These
factors 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;
(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.
1. Pending State Action
“When a pending state court suit raises the same issues as a
federal declaratory judgment action, the central question for a
district court . . . is whether the controversy is better decided
in state or federal court. A district court may decline to decide
‘a declaratory judgment suit where another suit is pending in state
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court presenting the same issues, not governed by federal law,
between the same parties.’” Id. at 392. The relevant state court
action related to this case was filed by Declaratory Defendants
against Federated and the driver of the vehicle who struck Mr.
Jourdan. Further, this action and the state court action involve
on primary issue—whether Mr. Jourdan was an insured under the
Federated policy at the time of his accident. This is purely a
Louisiana state law issue. Specifically, one of the most important
legal

issues

in

this

case

is

whether

a

Louisiana

uninsured/underinsured insurance policy covers an individual who
was not “occupying” his vehicle at the time of the incident. This
state law issue must also be addressed by the state court in
rendering its decision. “[T]he presence . . . of a pending parallel
state proceeding is an important factor” weighing strongly in favor
of dismissal. Sherwin-Williams, 343 F.3d at 394. Accordingly,
because a state court action between the same parties in this suit,
with the same state law issue, is pending in state court, this
factor weighs strongly in favor of dismissal.
2. Whether Plaintiff Filed Suit in Anticipation of a Lawsuit
Filed by Defendants
Under this factor, the Fifth Circuit looks to whether the
declaratory judgment plaintiff engaged in procedural fencing in
bringing

the

declaratory

judgment

action

in

federal

court.

Ironshore, 624 F. App’x at 167 (citing Sherwin-Williams, 343 F.3d
6

at 397 & n.7). Federated admits that it “filed this action in
anticipation of the state court suit that” was subsequently filed.
(R. Doc. 38 at 5.) While there is no evidence of “procedural
fencing”, it does appear that Federated was engaged in a “race to
res judicata” because issues resolved in this Court may have a
precedential and binding effect on the Jourdans’ state court suit.
See Sherwin-Williams, 343 F.3d at 399; Firm v. Phipps Anderson
Deacon, LLP, No. 16-3675, 2016 WL 3656004, at *4 (E.D. La. July 8,
2016). Accordingly, this factor weighs in favor of dismissal.
3. Whether Plaintiff was “Forum Shopping”
There is no evidence that Federated engaged in forum shopping
by

invoking

diversity

jurisdiction

to

bring

this

declaratory

judgment action against an alleged insured on an issue of insurance
coverage. See Ironshore, 624 F. App’x at 167; Sherwin-Williams,
343 F.3d at 398 (“[W]e know of no authority for the proposition
that an insurer is barred from invoking diversity jurisdiction to
bring a declaratory judgment action against an insured on an issue
of coverage.”) (internal quotation marks omitted)). Accordingly,
this factor weighs against dismissal.
4. Whether Possible Inequities in Allowing Plaintiff to Gain
Precedence in Time or to Change Forums Exist
The parties to this suit are parties in the pending state
court suit. While Federated contends that a declaratory judgment
will not cause inequities in the state action, the precise issue
7

before

this

Court—whether

a

Louisiana

uninsured/underinsured

insurance policy covers an individual who was not “occupying” his
vehicle at the time of the incident—is before the state court.
Accordingly, any determination by this Court as to this issue would
result in res judicata, which weighs in favor of dismissal. See
Ironshore, 624 F. App’x at 168.
5. Convenience of the Forums
There is no indication that the Federal District Court for
the Eastern District of Louisiana is an inconvenient forum for
either party. Accordingly, this factor weighs against dismissal.
See id.
6. Judicial Economy
The sixth Trejo factor addresses efficiency considerations—
whether retaining the lawsuit would serve judicial economy. The
Fifth Circuit has noted that when there are “no factual disputes
between the parties and . . . they have fully briefed the merits
of the insurance issues” in the federal court action that judicial
economy weighs against dismissal. Ironshore, 624 F. App’x at 168
(citing Agora Syndicate, Inc. v. Robinson Janitorial Specialists,
Inc., 149 F.3d 371, 373 (5th Cir. 1998)). However, in Agora the
case had been pending for over a year when the district court
dismissed the case sua sponte. Agora, 149 F.3d at 373. While the
parties have fully briefed the insurance issue in this Court, this
lawsuit was filed only six months ago and this Court is not acting
8

sua sponte. The Court finds that judicial economy would be better
served in state court. Rendering a decision in this court may lead
to conflicting outcomes in whether Mr. Jourdan was insured at the
time

of

the

incident

and

subject

the

parties

to

piecemeal

litigation. See Euler Hermes N.A. Ins. Co. v. ILJIN Steel Am.,
Inc., No. 16-2251, 2017 WL 1013225, at *4 (S.D. Tex. Feb. 24, 2017)
(finding that judicial economy was better served in state court
where insurance issue would have to be addressed in the parallel
proceeding in state court). Accordingly, this factor weighs in
favor of dismiss.
7. State Judicial Decree
This Court is not being called upon to construe a state court
judicial decree. Accordingly, this factor is neutral. See Firm,
2016 WL 3656004, at *5.

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CONCLUSION
Therefore, after weighing all of the Trejo factors, the Court
finds that the first, second, fourth, and sixth factors weigh in
favor of dismissal. Accordingly,
IT IS HEREBY ORDERED that Federated’s declaratory judgment
action is DISMISSED WITHOUT PREJUDICE.
IT IS FURTHER ORDERED that the pending Motions for Summary
Judgment (R. Docs. 29, 35), Motion to Strike Jury (R. Doc. 19),
and Motion for Leave to File (R. Docs. 32) are DENIED AS MOOT.
New Orleans, Louisiana this 19th day of April, 2017.

CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

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