Safeco Insurance Company of Oregon v. Agnelly et al
RULING granting 35 MOTION to Dismiss for Failure to State a Claim or in the alternative, MOTION to Stay. These proceedings are hereby STAYED and ADMINISTRATIVELY CLOSED pending the resolution of the state court proceeding. When the state court proc eedings are completed, any party may move the Court to reopen this case. The Court defers ruling on 44 Safeco's Motion for Summary Judgment as the Court believes the state court litigation will adequately address the issues presented therein. Signed by Judge Shelly D. Dick on 7/28/2017. (EDC)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
SAFECO INSURANCE COMPANY
WAYNE JOSEPH AGNELLY, ET AL
This matter is before the Court on the Motion to Dismiss for Failure to State a
Claim or, in the alternative, Motion to Stay1 filed by Defendant, Amy Newman
Plaintiff, Safeco Insurance Company of Oregon (“Safeco”), has filed an
Opposition2 to the motion. For the reasons which follow, the alternative motion to stay
will be granted.
FACTUAL & PROCEDURAL BACKGROUND
On November 15, 2013, an automobile accident occurred in Livonia, Louisiana,
when a vehicle driven by Newman collided with a vehicle and U-Haul trailer driven by
Wayne Agnelly (“Agnelly”).
Talon Sonnier (“Sonnier”), a minor, was riding as a
passenger in Newman’s vehicle at the time of the accident. Safeco, Plaintiff herein,
insures Cynthia Boasso (“Boasso”) under automobile and umbrella insurance policies
providing liability coverage of $2.5 million. Boasso is the sister of Agnelly, and, at the
Rec. Doc. No. 35.
Rec. Doc. No. 37.
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time of the accident, Agnelly was operating a U-Haul vehicle that he was able to reserve
by using Boasso’s credit. It is disputed whether the U-Haul was reserved and/or rented
under Boasso’s name.
Newman filed suit in the 18th Judicial District Court, Parish of Point Coupee, State
of Louisiana, on November 14, 2014, against Agnelly and his insurer GEICO.3 Around
the same time, the parents of Newman’s passenger Sonnier also filed suit in the 18th
Judicial District Court, and these lawsuits have been consolidated. During the course of
the state court litigation, Agnelly and GEICO informally requested that Safeco defend
and/or indemnify Agnelly in the two underlying state court lawsuits, which Safeco denied.
Safeco subsequently filed this declaratory judgment action on August 1, 2016, seeking
a declaratory judgment that it does not owe a defense or indemnity to Agnelly in the
state court lawsuits. Safeco notes that, at the time it filed this lawsuit, it was not a party
to the two state court lawsuits. On August 30, 2016, Newman amended her state court
petition to add Boasso and Safeco as defendants. Safeco filed an Answer to the
Amended Petition on November 8, 2016.
Newman now moves for dismissal of Safeco’s Complaint or, in the alternative,
moves the Court to stay this action pending resolution of the state court litigation that is
based on the same transaction and occurrence and involves the same parties as this
action. Safeco opposes a dismissal and/or stay and has moved for summary judgment
on the merits.4
See Rec. Doc. No. 35-3. Newman claimed that her air bags in her vehicle failed upon impact; thus, she
also named as Defendants Courvelle “Happy Town USA” Inc., since it routinely maintained and serviced
her vehicle, and Diamond Motors of Walker, L.L.C., which sold Newman her vehicle.
See Rec. Doc. No. 44.
Page 2 of 7
THE DECLARATORY JUDGMENT ACT & ABSTENTION
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 pleading,
may declare the rights and other legal relations of any interested party seeking such
declaration.”5 Unlike other kinds of cases, over which the district courts have a “virtually
unflagging obligation” to exercise their jurisdiction notwithstanding that there is a pending
state court action involving the very same issues,6 the Declaratory Judgment Act “has
been understood to confer on federal courts unique and substantial discretion in deciding
whether to declare the rights of litigants.”7 In Brillhart v. Excess Insurance Company of
America, the Supreme Court recognized district courts' discretion to dismiss a
declaratory judgment action when a parallel suit not governed by federal law and
presenting the same issues is pending in state court, holding that it would be
“uneconomical as well as vexatious for a federal court to proceed in a declaratory
judgment suit where another suit is pending in a state court presenting the same issues
... between the same parties.”8
In deciding whether to exercise this discretion, the ultimate issue for the Court to
decide is “whether the questions in controversy between the parties to the federal suit
... can better be settled in the proceeding pending in state court.”9 In the Fifth Circuit,
28 U.S.C. § 2201(a).
See Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 47
L.Ed.2d 483 (1976).
Wilton v. Seven Falls Co., 515 U.S. 277, 286, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). See also id. at
288, 115 S.Ct. 2137 (stating that “[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
316 U.S. 491, 495, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942).
Id., 316 U.S. at 495.
Page 3 of 7
this decision involves three questions: “(1) is it justiciable; (2) does the court have the
authority to grant such relief; and (3) should it exercise its discretion to decide the action
based on the factors stated in St. Paul Insurance Co. v. Trejo, 39 F.3d 585 (5th
Cir.1994).”10 Further, the Fifth Circuit instructed in Travelers Insurance Co. v. Louisiana
Farm Bureau Federation, Inc. that the following factors are relevant to a court’s
determination of abstention: “(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.”11
In Wilton v. Seven Falls Co.,12 the United States Supreme Court explained how
district courts should use discretion to abstain from entertaining a declaratory judgment
[I]n deciding whether to enter a stay, a district court should examine the
scope of the pending state court proceeding and the nature of defenses
open there. This inquiry, in turn, entails consideration of whether the claims
of all parties in interest can satisfactorily be adjudicated in that proceeding,
whether necessary parties have been joined, whether such parties are
amenable to process in that proceeding. 515 U.S. at 283, 115 S.Ct. 2137
(internal citations omitted). The Supreme Court reasoned that when another
suit “involving the same parties and presenting opportunity for ventilation of
the same state law issues is pending in state court,” a court's consideration
of the declaratory judgment action may constitute “gratuitous interference.”
AXA Re Prop. & Cas. Ins. Co. v. Day, 162 Fed.Appx. 316, 319 (5th Cir. 2006) (citing Orix Credit Alliance,
Inc. v. Wolfe, 212 F.3d 891 (5th Cir. 2000)).
996 F.2d 774, 778 (5th Cir. 1993). These are also known as the Trejo factors.
515 U.S. 277, 284 (1995).
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Regarding the first factor set forth above, the Fifth Circuit has held that: “If [a]
federal declaratory judgment action raises only issues of state law and a state case
involving the same state law issues is pending, generally the state court should decide
the case and the federal court should exercise its discretion to dismiss the federal suit.”13
As this is the case now that Safeco has been added as a defendant in the state lawsuit,
the Court finds that this factor weighs in favor of abstention.
Considering the second and third factors, whether Safeco filed suit in anticipation
of a lawsuit filed by the Defendants and whether Safeco engaged in forum shopping in
bringing the suit, the Court believes both factors weigh in favor of abstention. While
Safeco was not named a defendant in the state court litigation at the time it filed this
declaratory judgment action, Safeco clearly anticipated being named as a defendant in
the state court litigation since its filing in federal court was prompted by GEICO’s
“informal” request for defense and indemnity. Given the timing, the Court must assume
that Safeco filed for a declaratory judgment in anticipation of becoming a party to the
pending state court litigation. It cannot be seriously argued that Safeco did not foresee
the likelihood of being joined in the state court proceeding; thus, it appears Safeco has
engaged in forum shopping considering it knew that a state court proceeding involving
the same facts, parties, and legal issues was available. Safeco may raise an affirmative
defense of non-coverage in the pending state court actions, “but the Declaratory
Judgment Act is not to be used to litigate a possible state-court affirmative defense in
Sherwin–Williams Co. v. Holmes County, 343 F.3d 383, 390-391 (5th Cir. 2003).
Great American Insurance Company v. The Cumberland Investment Group, LLC, No. 13-4763, 2013 WL
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For these same reasons, the Court finds that the fourth factor weighs in favor of
The Court also finds that factors five through seven weigh in favor of
abstention because it is not more or less convenient to try this case in federal court, and
retaining this lawsuit in this Court would not serve the purpose of judicial economy as it
would likely cause the duplication of judicial effort and potentially lead to inconsistent
For the reasons set forth above, the Court finds that the exercise of jurisdiction
here would result in a gratuitous interference with the state court proceeding; therefore,
applying the Brillhart/Wilton standard to this case, the Court will abstain from exercising
jurisdiction over this matter.
Nevertheless, rather than dismissal, the Court finds that a stay is the proper course
of action in this case. The Court believes a stay is warranted because the state court can
comprehensively resolve all of the state law coverage issues in a forum that is just as
convenient as this one. Further, the Fifth Circuit has instructed that “[a] federal district
court should avoid duplicative or piecemeal litigation where possible.”15 If this action were
to proceed here, the coverage issues Safeco wishes the Court to resolve would be
simultaneously litigated by state and federal courts, which clearly does not serve judicial
economy. However, the Court also recognizes the Supreme Court's admonition 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
5755641 at *4 (E.D. La. Oct. 23, 2013)(citing Int'l Ass'n of Entrepreneurs of Amer. v. Angoff, 58 F.3d 1266
(8th Cir. 1995)).
Sherwin–Williams, 343 F.3d at 391.
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For the reasons set forth above, the Motion to Dismiss for Failure to State a Claim
or, in the alternative, Motion to Stay17 filed by Defendant Amy Newman is GRANTED in
the alternative request for relief. IT IS ORDERED that these proceedings are hereby
STAYED and ADMINISTRATIVELY CLOSED pending the resolution of the state court
proceeding. When the state court proceedings are completed, any party may move the
Court to reopen this case. The Court defers ruling on Safeco’s Motion for Summary
Judgment18 as the Court believes the state court litigation will adequately address the
issues presented therein.
IT IS SO ORDERED.
Signed in Baton Rouge, Louisiana on July 28, 2017.
JUDGE SHELLY D. DICK
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
Wilton, 515 U.S. at 288 n. 2, 115 S.Ct. 2143 n. 2; see also Melancon v. Union Carbide Corp., 1998 WL
122610, *7 (E.D.La.1998); Scottsdale, 1999 WL 777714 at *7.
Rec. Doc. No. 35.
Rec. Doc. No. 44.
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