Beazley Furlonge LTD v. Gateway Ambulance Service, LLC et al
MEMORANDUM AND ORDER IT IS HEREBY ORDERED that Defendants Motion to Dismiss (ECF No. 13) is GRANTED in part, and this case is STAYED until further order of the Court. IT IS FURTHER ORDERED that all other pending motions (ECF Nos. 21, 23, 24) are DENI ED without prejudice to refiling in the event the stay of this action is lifted. IT IS FURTHER ORDERED that the Clerk of the Court shall administratively close this case, which may be reopened on the motion of any party. Any motion to reopen shall in clude a statement of all relevant proceedings that have occurred in the equitable garnishment action in the Circuit Court for the City of St. Louis, Missouri. 21 23 13 24 Signed by District Judge Jean C. Hamilton on 9/9/15. (CLA)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
BEAZLEY FURLONGE LTD on Behalf
Of CERTAIN UNDERWRITERS AT
LLOYD’S, LONDON, doing
Business as Syndicate 2623 and
BEAZLEY UNDERWRITING LTD.,
GATEWAY AMBULANCE SERVICE, LLC, )
AMIE WILSON LEPSKY, DAVID
SPALINGER, and JAN H. FREEMAN,
Individually and as Personal Representative
of JEAN ROBERT NAST,
Case No. 4:15CV918 JCH
MEMORANDUM AND ORDER
This matter is before the Court on Defendants’ Motion to Dismiss, filed July 14, 2015. (ECF
No. 13). The motion is fully briefed and ready for disposition.
Plaintiff Beazley Furlonge LTD is the Managing Agency for Syndicate 2623 at Lloyd’s,
London, and Plaintiff Beazley Underwriting Ltd. is the sole member of Syndicate 2623. (First
Amended Complaint (“FAC”), ¶ 1).2 Beazley issued a Miscellaneous Medical Professional Liability
Policy to PROCARENT f/k/a Louisville Transportation Company, in Louisville, Kentucky, with a
policy period from October 1, 2010, to October 1, 2011 (the “Policy”). (Id., ¶ 9). By endorsement to
1 The Court’s background section is taken primarily from Plaintiffs’ First Amended Complaint, to which Defendants
have not filed an Answer.
2 Plaintiffs collectively are referred to as “Beazley” or “Underwriters.”
the Policy, Defendant Gateway Ambulance Service, LLC is a Named Insured. (Id.). The Policy
provides a Limit of Liability of $1,000,000 per claim, inclusive of defense attorney’s fees and costs.
On July 1, 2011, 26-year-old quadriplegic Jean Robert Nast was transported from Saint Louis
University Hospital to his home by Gateway Ambulance. (FAC, ¶ 11). On that day, the lift attached
to his home and used to transport him in and out of the building was not functioning, and/or his
caretaker was unable to operate it. (Id.). In the course of attempting to operate the lift Gateway’s
personnel moved Mr. Nast’s stretcher, and the wheels encountered an uneven surface. (Id.). The
stretcher tipped over, and Mr. Nast was injured and immediately transported back to Saint Louis
University Hospital by Gateway personnel. (Id.).
Beazley was notified of the July 1, 2011, incident on July 6, 2011. (FAC, ¶ 13). In
correspondence dated July 21, 2011, Beazley confirmed it was defending Gateway under the Policy,
and identified no known reason to believe coverage might be denied. (Id.). The letter did state that,
“[g]iven the limited facts currently known to us and in an abundance of caution, however,
Underwriters must reserve all rights under the Policy, at law and in equity.” (Id.).
In a letter dated December 19, 2012, Mr. Nast’s counsel demanded $25,000,000, “or the
limits of all of the applicable insurance policies” to settle Mr. Nast’s claim. (FAC, ¶ 15). The letter
stated that Mr. Nast’s medical bills were in excess of $1,200,000, and that his future medical care
and treatment would cost $9,934,200. (Id.). The letter further stated that the demand would remain
open for a period of ninety-one days after the offer was received. (Id.). Beazley and Gateway’s
attorney requested a 60-day extension of the demand’s expiration date, but Mr. Nast’s counsel agreed
only to extend the deadline to April 3, 2013. (Id., ¶ 16).
On April 18, 2013, Mr. Nast’s counsel filed suit, naming as defendants Gateway, its
employees, and Petre Construction, LLC.3 (FAC, ¶ 22). Through appointed counsel, Beazley
continued to defend and to make efforts to resolve the claim, and further reassured Gateway that it
was affording an unqualified defense and indemnity, subject to the Policy limits. (Id., ¶¶ 22, 23).
When Gateway requested in or around September, 2014, that Beazley replace their chosen counsel,
Beazley agreed and engaged Mr. Joseph Swift of the Brown & James Law Firm. (Id., ¶ 24).
On Monday, June 8, 2015, Mr. Swift informed Beazley that he had been fired by Gateway,
that Gateway had replaced him with other counsel, and that a proceeding designed to establish
liability and damages had been set for that day. (FAC, ¶ 25). Counsel for Beazley rushed to the
courthouse to advise the trial court of the circumstances, and made an oral motion to intervene and
continue the hearing. (Id., ¶ 26). Counsel for Gateway and Mr. Nast opposed the oral motion, and
informed Beazley’s counsel that Gateway, its employees and Mr. Nast had entered into a settlement
agreement pursuant to Missouri Revised Statute Section 537.065. (Id.). The settlement provided,
among other things, that Mr. Nast would never seek out any personal or other funds from Gateway,
and that Gateway would not cross examine Mr. Nast’s trial witnesses, offer any evidence at trial, file
any post-trial motions after the Court entered judgment, or appeal any judgment entered by the
Beazley’s motion to intervene and continue the hearing was denied, and the hearing went
forward on the afternoon of June 8, 2015. On June 9, 2015, the Circuit Court for the City of St.
Louis, Missouri, entered an “Order and Final Judgment,” awarding Mr. Nast a total of $24,915,604,
against Gateway and its employee, Defendant Amie Wilson Lepsky. (Id., ¶ 27). That same day, Mr.
Nast filed an equitable garnishment action and claim for bad faith in the Circuit Court for the City of
3 Petre Construction installed the lift used to facilitate Mr. Nast’s ingress and egress from his home. (Plaintiffs’
St. Louis. (Memorandum in Support of Defendants’ Motion to Dismiss (“Defendants’ Memo in
Support”), P. 2).
Beazley filed its original Complaint in this matter on June 11, 2015. (ECF No. 1). Named as
Plaintiff in that Complaint was “Beazley Furlonge LTD, on behalf of Certain Underwriters at
Lloyd’s, London, doing business as Syndicates 623 and 2623.” Beazley filed its First Amended
Complaint on July 1, 2015, naming as Plaintiffs “Beazley Furlonge LTD, on behalf of Certain
Underwriters at Lloyd’s, London, doing business as Syndicate 2623, and Beazley Underwriting Ltd.”
(ECF No. 7). Syndicate 623 is not mentioned in Beazley’s First Amended Complaint.
In its First Amended Complaint, Beazley’s first cause of action is for declaratory relief as to
all Defendants. (FAC, ¶¶ 28-31). With this claim, Beazley alleges the settlement and resulting
award are neither binding on nor otherwise collectible from Beazley for multiple reasons, and thus
seeks a declaration as follows:
a. Gateway, Spangler (sic) and Lepsky’s settlement with [Nast] under these
circumstances constituted a material breach of the terms and conditions of the Policy,
and as a result these insureds forfeited any right to a defense or indemnity under the
b. Beazley had a right under the Policy and applicable law to control the defense, with
which defendants unreasonably interfered (citing Policy Section B.1);
c. Beazley did not breach its duty to defend and, having been deprived of its right to
defend, cannot be bound to any liability, damages, or other determinations made in its
d. The Policy does not cover any voluntary disposition of a claim achieved without
Beazley’s consent (citing Policy Section XII);
e. The Policy prohibits any action to recover the Judgment against Beazley entered as a
result of the settlement (citing Policy Section XIII);
Opposition to Defendants’ Motion to Dismiss (“Plaintiffs’ Opp.”), P. 4).
f. In whole or in part, the amount at issue does not actually arise out of any negligent
act, error or omission of the Insured in rendering or failing to render Professional
Services for others, as required for coverage to exist under the Policy’s Insuring
g. The settlement agreement and resulting award was the result of a collusive and/or
fraudulent denial of Beazley’s rights;
h. The settlement agreement and/or resulting award are not reasonable; and
i. Enforcing the settlement and resulting uncontested award/judgment against Beazley,
or requiring Beazley to pay such amounts under the Policy or otherwise, would be
unfair/inequitable, unlawful, unconstitutional, or contrary to the terms of the Policy,
equity, and/or law.
(Id., ¶ 30). Beazley’s second cause of action is for breach of contract, against Defendant Gateway
only. (Id., ¶¶ 32-35). With this claim, Beazley alleges Gateway breached the Policy in numerous
ways, including but not limited to the following:
a. Beazley had a right under the Policy and applicable law to control the defense, which
Gateway accepted; yet Gateway secretly and unilaterally assumed control of the claim
without good cause or notice (citing Policy Section B.1);
b. Not only did Gateway improperly assume control of the defense without cause, but
then Gateway failed and refused to defend the claim and, instead, agreed to a
voluntary disposition of the claim involving an uncontested proceeding without
Beazley’s consent (or even knowledge) (citing Policy Section XII); and
c. In addition to breaching express contract terms such as those set forth above,
Gateway violated the implied covenant of good faith and fair dealing by engaging in
the aforementioned conduct, depriving Beazley of its right to control the defense and
pursue a result within Policy limits while, simultaneously, working together with the
underlying plaintiff in a secret and deliberate effort to achieve a result that would not
have resulted if Gateway had acted in good faith.
(Id., ¶ 34).
As noted above, Defendants filed the instant Motion to Dismiss on July 14, 2015, claiming
Beazley’s First Amended Complaint must be dismissed because there is not complete diversity
between the parties, because Syndicate 623 is an indispensable party, and because the same parties,
issues, and law are involved in a previously filed state court action. (ECF No. 13).
STANDARD FOR MOTION TO DISMISS
In ruling on a motion dismiss, the Court must view the allegations in the complaint in the
light most favorable to Plaintiff. Eckert v. Titan Tire Corp., 514 F.3d 801, 806 (8th Cir. 2008). The
Court, “must accept the allegations contained in the complaint as true and draw all reasonable
inferences in favor of the nonmoving party.” Coons v. Mineta, 410 F.3d 1036, 1039 (8th Cir. 2005)
(citation omitted). The complaint’s factual allegations must be sufficient “to raise a right to relief
above the speculative level,” however, and the motion to dismiss must be granted if the complaint
does not contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007) (abrogating the “no set of facts” standard for
Fed.R.Civ.P. 12(b)(6) found in Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). Furthermore, “the
tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to
legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing
Twombly, 550 U.S. at 555 (pleading offering only “labels and conclusions” or “a formulaic recitation
of the elements of a cause of action” will not do)).
Is Syndicate 623 An Indispensable Party To This Action, And If So, Would Requiring
Its Presence Destroy Diversity Jurisdiction?
In their motion Defendants first assert Beazley’s First Amended Complaint must be
dismissed for lack of subject matter jurisdiction, as complete diversity does not exist between the
(Defendants’ Memo in Support, PP. 3-9).
In so asserting, Defendants seemingly
acknowledge diversity is present on the face of Beazley’s First Amended Complaint.4 Defendants
4 According to Beazley, Beazley Furlonge LTD and Beazley Underwriting Ltd. are incorporated in England and
Wales, with principal offices in London, United Kingdom, Gateway is a Kentucky limited liability company whose
nevertheless maintain jurisdiction does not exist, as Syndicate 623 is an indispensable party under
Federal Rule of Civil Procedure 19, and its presence would destroy diversity.5 (Id., PP. 9-11).
Consideration of Defendants’ argument requires a brief overview of the structure of Lloyd’s
of London, which “is typically understood to be not a single entity but a number of underwriters
involved in the Lloyd’s of London insurance market.” Ayuso v. Certain Underwriters at Lloyd’s of
London, 2013 WL 4854742, at *3 (E.D. Mo. Sep. 11, 2013).
Lloyd’s is an association that provides the physical premises and the administrative
services and staff to enable insurance underwriters to carry on their business. Lloyd’s is not
an insurance company, but rather is an exchange or market where various individuals or
groups bid on the right to insure a given risk. Lloyd’s takes no part in the business of
underwriting; policies are underwritten at Lloyd’s and not by Lloyd’s.
An individual must pay a membership fee, keep certain deposits at Lloyd’s, and meet
several specific requirements, including possession of a certain degree of wealth, in order to
have access to the Lloyd’s insurance market. Once they have joined the market, these
individuals may underwrite risks in this market. The individuals are alternatively referred to
as members, underwriters, or names. In order to increase the efficiency of underwriting risks
and to combine the resources of numerous individuals, names form groups called syndicates.
However, syndicates are not legal entities. Syndicates do not assume liability or underwrite
risks; names do. Each name has unlimited personal liability yet only to the extent of the
percentage share of the risk that he or she has assumed. The holders of Lloyd’s policies thus
enter into contractual relationships with specific names who have subscribed to the policy for
the portion of the risk each name has agreed to underwrite.
Within each syndicate, a Managing Agent is responsible for the underwriting and
management of each individual’s investments. The Managing Agent receives this authority
through contracts with each individual. The Managing Agent, typically a partnership or
limited company, appoints one of its employees to serve as the Active Underwriter for the
syndicate. The Active Underwriter has the authority to bind all the individuals in the
syndicate. The Active Underwriter selects the risks to underwrite, determines the conditions
to which a risk will be subject, assigns each individual in the syndicate a percentage of the
risk, and decides whether to pay a particular claim.
Chemical Leaman Tank Lines, Inc. v. Aetna Cas. and Sur. Co., 177 F.3d 210, 221-22 (3rd Cir. 1999).
members are residents of Kentucky, and whose principal place of business is in Kentucky, and Lempsky, Spalinger
and Freeman are all citizens of Missouri. (FAC, ¶¶ 1-5).
5 Syndicate 623 secures 19% of the Policy, and thus according to Defendants, it has a financial interest in the subject
of the litigation and is an indispensable and interested party to this action. (Defendants’ Memo in Support, P. 9).
Within the context of this framework, the United States Court of Appeals for the Second
Circuit considered whose citizenship must be plead in suits involving Lloyd’s of London, and held as
[W]hen a Lloyd’s lead underwriter is sued6 in a representative capacity (but not in a
class action) each and every Name whom the lead underwriter represents must be completely
diverse. But….when a Lloyd’s Name (including a lead underwriter) is properly sued only in
an individual capacity, it is that Name’s characteristics, both as to citizenship and
jurisdictional amount, that are determinative for jurisdictional purposes. And the fact that
other Lloyd’s underwriters who are not diverse parties in the suit may be bound by the result
of the suit (whether by contract or by preclusion) is of no consequence.
E.R.Squibb & Sons, Inc. v. Accident & Cas. Ins. Co.,160 F.3d 925, 939-40 (2nd Cir. 1998). Other
courts have reached the same conclusion. See, e.g., Corfield, 355 F.3d at 863-64 (finding the Second
Circuit’s approach in Squibb to be “based upon sound reasoning”, and holding that “[t]he fact that
other parties are bound by a judgment against one obligor….is insufficient to bring their citizenship
into consideration when they are not parties to the suit.”); Chemical Leaman, 177 F.3d at 223 n. 16
(citations omitted) (“According to the terms of the Lloyd’s policies, the names are liable ‘each for his
own part and not one for another.’ Thus, while the absent names would be proper parties to this suit,
they are not necessary parties. Complete relief may be accorded to those already parties to the action
without impairing or impeding the absent names’ ability to protect their interests and without
subjecting any party to multiple or otherwise inconsistent obligations.”).
Upon consideration, the Court finds the case before it presents a hybrid situation. In other
words, while Beazley is suing in its representative capacity, thus putting at issue the citizenship of its
various members, it is suing on behalf of only Syndicate 2623. Defendants posit that because
Beazley also acts as the managing agent for Syndicate 623, it must plead the citizenship of all
Further, while Defendants acknowledge the citizenship of the members of Syndicate 623 is unknown (Id., P. 10),
Beazley does not dispute that its presence as a party would destroy diversity.
members of that Syndicate as well. (Defendants’ Reply Memorandum of Law in Further Support of
their Motion to Dismiss (“Defendants’ Reply”), P. 7). Defendants provide no case law in support of
their position, however, and the Court finds it is not well-taken. See, e.g., Chemical Leaman, 177
F.3d at 223 n. 16 (“Moreover, we perceive no reason why Chemical Leaman should not be entitled to
sue less than all of the names if it so chooses.”). Thus, because Syndicate 623 is not an
indispensable party to this action, and complete diversity exists among the named parties, this
portion of Defendants’ Motion to Dismiss will be denied.
Should The Instant Suit Be Dismissed In Favor Of The Previously Filed State Court
As noted above, two days before the instant suit was filed Mr. Nast filed an equitable
garnishment action in Missouri state court, in which he sued Certain Underwriters at Lloyd’s, Lloyds
of London, Subscribing to Policy of Insurance No. W15LTV100201, Beazley Insurance, d/b/a
Beazley Group, Gateway Ambulance Service, LLC, and Amie Wilson Lepsky. (ECF No. 14-3). In
Count I of his Petition, Mr. Nast alleges that the Policy contractually obligated Beazley both to
defend and to indemnify Defendants Gateway and Wilson against Plaintiff Nast’s bodily injury
claim; that the Policy was in force on the day Mr. Nast was injured by what he alleged to be the
negligent acts of Defendants Gateway and Wilson; that Beazley neither has, nor ever had, a valid
policy defense excusing it from providing liability coverage under the Policy for the bodily injury
claim asserted by Mr. Nast; and that despite its obligation, Beazley failed to defend or indemnify
Defendants Gateway and Wilson against the claim. (Id., ¶¶ 22-24). Plaintiff Nast thus asserts he is
entitled to judgment against Beazley in the amount of the judgment covered by the Policy. (Id., ¶
6 The Squibb analysis applies equally to suits brought by Lloyd’s of London. See, e.g., Corfield v. Dallas Glen Hills
LP, 355 F.3d 853 (5th Cir. 2003); Underwriters at Lloyd’s, London v. Osting-Schwinn, 613 F.3d 1079 (11th Cir.
27). In Count II of his Petition, Mr. Nast asserts a bad faith refusal to settle claim against Beazley.
(Id., ¶¶ 28-35).
In their Motion to Dismiss, Defendants contend the instant suit must be dismissed, as the
state and federal actions present the same issues, governed by state law, between the same parties.
(Defendants’ Memo in Support, P. 13). Specifically, Defendants state as follows:
The issue in both actions is a dispute over Lloyd’s rights and duties under the policy,
and whether Lloyd’s breached its good faith duty to settle. The garnishment action is seeking
coverage for the judgment under the insurance policy, and the declaratory judgment action is
seeking a determination there is no coverage.
As an initial matter, Defendants assert that because Beazley’s suit is one under the
Declaratory Judgment Act, in determining whether to abstain in favor of the state court proceeding
the Court must apply the more lenient standard articulated in Brillhart v. Excess Ins. Co. of America,
316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942). (Defendants’ Memo in Support, PP. 11-15).
Beazley counters that the “exceptional circumstances” test articulated in Colorado River Water
Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) should
govern the Court’s abstention analysis, because Beazley’s First Amended Complaint contains a claim
for breach of contract in addition to the request for declaratory relief. (Plaintiffs’ Opp., PP. 10-15).
Upon consideration the Court finds it need not decide this issue, as abstention is warranted even
under the more stringent Colorado River analysis.
The Eighth Circuit explained the Colorado River standard in Mountain Pure, LLC v. Turner
Holdings, LLC, as follows:
Federal courts have a “virtually unflagging obligation…to exercise the jurisdiction
given them,” Colorado River, 424 U.S. at 817, 96 S.Ct. 1236, even when there is a pending
state court action involving the same subject matter, id. at 813-14, 817, 96 S.Ct. 1236.
“Abdication of the obligation to decide cases can be justified under [the abstention]
doctrine[s] only in the exceptional circumstances where the order to the parties to repair to
the State court would clearly serve an important countervailing interest.” Moses H. Cone
[Mem. Hosp. v. Mercury Constr., 460 U.S. 1, 14, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)]
(quoting Colorado River, 424 U.S. at 813, 96 S.Ct. 1236 (internal quotation and citation
omitted) (emphasis added).
Determining whether exceptional circumstances exist requires evaluation of the
following factors (the Colorado River/Moses H. Cone factors).
(1) Whether there is a res over which one court has established jurisdiction, 2)
the inconvenience of the federal forum, (3) whether maintaining separate
actions may result in piecemeal litigation, unless the relevant law would
require piecemeal litigation and the federal court issue is easily severed, (4)
which case has priority—not necessarily which case was filed first but a
greater emphasis on the relative progress made in the cases, (5) whether state
or federal law controls, especially favoring the exercise of jurisdiction where
federal law controls, and (6) the adequacy of the state forum to protect the
federal plaintiff’s rights.
[United States Fid. & Guar. Co. v. Murphy Oil USA, 21 F.3d 259, 263 (8th Cir. 1994)].
These factors are not intended to be exhaustive, nor are they mechanically applied.
Rather, they are pragmatically applied to advance the “clear federal policy” of avoiding
piecemeal adjudication. Moses H. Cone, 460 U.S. at 16, 21, 103 S.Ct. 927. When
examining the factors, “the balance [is] heavily weighted in favor of the exercise of
jurisdiction.” Id. at 16, 103 S.Ct. 927.
Mountain Pure, LLC v. Turner Holdings, 439 F.3d 920, 926 (8th Cir. 2006). Bearing these
instructions in mind, the Court turns to consideration of the Colorado River/Moses H. Cone factors
to determine whether abstention is warranted in this case.
The Court finds factors one and two have no relevance here.7 See USF & G, 21 F.3d at 263.
As to factor three, whether maintaining separate actions will result in piecemeal litigation, “Supreme
Court cases make it clear that this is the predominant factor.” Federated Rural Elec. Ins. Corp. v.
Arkansas Elec. Cooperatives, Inc., 48 F.3d 294, 297 (8th Cir. 1995) (citing Moses H. Cone, 460 U.S.
at 16, 21, 103 S.Ct. at 937, 939-40). “The policies underlying Colorado River abstention are
7 Beazley notes this case does not involve any res or property over which any court, state or federal, has taken
control, and the federal and state courts are located in approximately the same geographic location within the state.
(Plaintiffs’ Opp., P. 11).
‘considerations of ‘[w]ise judicial administration,’ giving regard to conservation of judicial resources
and comprehensive disposition of litigation.’” Id. at 297-98 (citations omitted). The Eighth Circuit
continued as follows:
Our cases have advanced this policy by favoring the most complete action. See, e.g.,
USF & G, 21 F.3d at 263 (state action, unlike federal action, included “all parties in a
declaratory judgment action involving multiple insurers and overlapping coverage” and
federal action stayed); Employers Ins. Of Wausau v. Missouri Elec. Works, 23 F.3d 1372,
1375 (8th Cir. 1994) (in dispute with two insurers, federal action against one insurer stayed to
allow state action involving both insurers to proceed).
As we noted in a similar case, “the interest of an insured in binding as many of its
insurers as possible to a single adjudication is a factor strongly weighing in favor of
maintenance of an inclusive action.” Insurance Co. of the State of Penn v. Syntex, 964 F.2d
829, 834-35 (8th Cir. 1992). The same principle that led us in Syntex to disapprove of the
strategic omission of nondiverse insurers to create diversity applies with equal force to the
strategic splitting of a cause of action by omitting policies to defeat diversity.
Id. at 298 (footnote omitted); see also Mountain Pure, 439 F.3d at 927.
Upon consideration of the foregoing, the Court finds factor three weighs heavily in favor of
abstention. As noted above, Syndicate 623 secures 19% of the Policy, but presumably cannot be
made a party to this action as its presence would destroy diversity. The Court disapproves of
Beazley’s apparent “strategic omission” of the nondiverse insurer8, and thus factor three weighs in
favor of continuation of the most complete action, Mr. Nast’s state equitable garnishment action.
With respect to factor four, which case has priority, the Court finds such factor neutral. In
other words, while Beazley has filed a motion for partial summary judgment in this case, albeit
prematurely according to Defendants9, discovery has begun in the state action. (Defendants’ Reply,
P. 11). With respect to factor five, whether state or federal law controls, the Court finds this action is
8 Again, although the citizenship of the members of Syndicate 623 is unknown, the Court finds it telling that Beazley
omitted all reference to the group in its First Amended Complaint, and further did not address the citizenship issue in
its response to Defendants’ motion.
9 The Court notes Beazley’s Motion for Partial Summary Judgment was filed at an unusually early point in the
litigation, before the conduct of any discovery or even the filing of an Answer or entry of a Case Management Order.
governed by state law.10 Finally, while Beazley argues that factor six is important here, and supports
the exercise of federal jurisdiction, the Court finds no evidence that Beazley would not receive a fair
hearing in state court, or that the state court “is biased or otherwise inadequate to protect the federal
plaintiff’s rights.” USF & G, 21 F.3d at 263.
Based on the foregoing, the Court finds exceptional circumstances warrant abstention from
the exercise of jurisdiction in this matter at this time. The Court concludes the case should be stayed
rather than dismissed, however. “[W]here 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.” State Farm Fire and Cas. Co. v. Pit Stop Bar and Grill, LLC, 2015 WL 4663492, at
*4 (E.D. Mo. Aug. 6, 2015) (internal quotations and citations omitted). To the extent Beazley
believes that its claims remain unresolved at the conclusion of the state court action, it may seek to
pursue them in this Court. Id.
IT IS HEREBY ORDERED that Defendants’ Motion to Dismiss (ECF No. 13) is
GRANTED in part, and this case is STAYED until further order of the Court.
IT IS FURTHER ORDERED that all other pending motions (ECF Nos. 21, 23, 24) are
DENIED without prejudice to refiling in the event the stay of this action is lifted.
10 While Beazley does allege in its First Amended Complaint that enforcing the settlement and resulting uncontested
award/judgment against it would be unconstitutional (see FAC, ¶ 30.1), it offers no explanation as to how
Constitutional issues would be implicated here, and the Court does not find that Plaintiffs’ single unsupported
reference militates against abstention.
IT IS FURTHER ORDERED that the Clerk of the Court shall administratively close this
case, which may be reopened on the motion of any party. Any motion to reopen shall include a
statement of all relevant proceedings that have occurred in the equitable garnishment action in the
Circuit Court for the City of St. Louis, Missouri.
Dated this 9th Day of September, 2015.
/s/ Jean C. Hamilton
UNITED STATES DISTRICT JUDGE
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