Alfa Specialty Insurance Corporation v. Williams et al

Filing 14

ORDER granting 5 motion to dismiss case. Signed on 03/02/16 by District Judge Stephen R. Bough. (Amos, Gloria)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
ALFA SPECIALTY INSURANCE CORP.,
Plaintiff,
vs.
VENETTA WILLIAMS, et al.
Defendants.

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Case No. 4:16-cv-00069-SRB

ORDER
Before the Court is Defendants’ Motion to Dismiss (Doc. #5). For the reasons stated
below, Defendants’ Motion to Dismiss (Doc. #5) is GRANTED.
I.

Background

Plaintiff Alfa Specialty Insurance Corporation (“Alfa”) seeks a declaratory judgment that
it handled the underlying claim of Defendant Williams against Defendant Stark in a reasonable
fashion and in accordance with the subject insurance policy and Missouri law. On December 2,
2015, the Defendants entered into a section 537.065 agreement with a stipulated judgment of
$2,000,000. On December 16, 2015, the state trial court entered a judgment against Defendant
Stark. Plaintiff Alfa filed this declaratory judgment action on January 28, 2016. Defendant
Williams filed an equitable garnishment and declaratory judgment action in state court on
February 1, 2016. 
II.

Legal Standard

The Declaratory Judgment Act, 28 U.S.C. § 2201(a), “confer[s] 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, 286 (1995). The statute states that “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, whether or not further relief is or could be sought.” 28
U.S.C. § 2201(a) (emphasis added). As stated by the Eighth Circuit:
The full scope of a district court’s discretion to grant a stay or abstain from
exercising jurisdiction under the Declaratory Judgment Act differs depending
upon whether a “parallel” state court action involving questions of state law is
pending. [Scottsdale Ins. Co. v. Detco Indus., Inc., 426 F.3d 994, 999 (8th Cir.
2005).] Where such an action is pending, a district court enjoys broad discretion.
Id. at 997. This broad discretion is to be guided by considerations of judicial
economy, Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 495, 62 S. Ct. 1173,
86 L. Ed. 1620 (1942), by “considerations of practicality and wise judicial
administration,” Wilton, 515 U.S. at 288, 115 S. Ct. 2137, and with attention to
avoiding “[g]ratuitous interference” with state proceedings, Brillhart, 316 U.S. at
495, 62 S. Ct. 1173.
Where no such parallel state action is pending, discretion to abstain or
grant a stay still exists, but that discretion is less broad and is to be exercised
according to a six factor test [adopted in Scottsdale.]
Lexington Ins. Co. v. Integrity Land Title Co., Inc., 721 F.3d 958, 967-68 (8th Cir. 2013).
In deciding whether to abstain, the threshold issue for the district court is whether the
federal declaratory judgment action and the pending state court action are, in fact, parallel.
Scottsdale Ins., 426 F.3d at 996. “Suits are parallel if ‘substantially the same parties litigate
substantially the same issues in different forums.’” Id. at 997 (quoting New Beckley Mining
Corp. v. Int’l Union, United Mine Workers, 946 F.2d 1072, 1073 (4th Cir. 1991)). “[W]here
every party to [the federal] suit is also a party to the state court suit, the parties are substantially
the same.” Maritz v. Starek, No. 4:05-cv-2093-JCH, 2006 WL 1026925, at *6 (E.D. Mo. April
18, 2006). Similarly, the requirement that the suits involve “substantially the same issues” does
not require that the claims be identical for the suits to be parallel. See Travelers Home and
Marine Ins. Co. v. White, No. 4:12-cv-818-TIA, 2012 WL 5258892, at *1 (E.D. Mo. Oct. 23,

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2012) (staying federal declaratory judgment action as parallel to subsequently-filed, state-court
action for equitable garnishment where both cases involved interpretation of insurance policy).
If a district court finds the cases are parallel and that the issues in the federal action can be better
settled by the state court, the district court must abstain “because ‘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, not governed by federal law, between the
same parties.’” Capitol Indem. Corp. v. Haverfield, 218 F.3d 872, 874-75 (8th Cir. 2000) (citing
Brillhart, 316 U.S. at 495).
III.

Discussion

Initially, the Court finds that this case and the state-court case are parallel. The three
parties before this Court are the same three parties named in the state-court action, and Alfa does
not argue that the parties are not substantially the same. The issues are also substantially the
same. Plaintiff Alfa admits that the state-court action involves claims for equitable garnishment,
bad faith, and declaratory judgment. Plaintiff Alfa argues that the equitable garnishment is moot
because Plaintiff Alfa has now paid the policy limits. All the claims, however, stem from the
parties’ insurance agreement, an agreement governed by Missouri and not federal law. As a
result, the Court finds the issues are substantially the same.
Plaintiff Alfa finally argues that the “first filed” rule weighs in favor of this Court
retaining jurisdiction. Pharmacists Mut. Ins. Co. v. Courtney, No. 02-cv-0242-W-ODS, 2003
WL 950081 (W.D. Mo. March 13, 2003). Judge Smith’s decision in the Courtney litigation is
inapplicable here because he found that the insurance company was not a party to the state-court
garnishment, and state-court litigation would “not allow Plaintiff an opportunity to litigate the
issues.” Id. at *2. The first party to file is one of several factors this Court must weigh. See
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State Farm Fire & Cas. Co. v. Brown, No. 10-00520-cv-W-DGK, 2010 WL 4362858 (W.D. Mo.
Oct. 27, 2010) (declining jurisdiction even when the federal case was filed first). In this case, the
parties agree that this case was filed on January 28, 2016, and the state-court claim was filed on
February 1, 2016 – a difference of three days, including the weekend. This Court does not want
to encourage a race to the courthouse, rather the economical, non-vexatious resolution of the
matter. Capitol Indem. Corp., 218 F.3d at 874-75. As such, this Court finds that the fact the two
cases were filed within days of each other weighs in favor of not exercising jurisdiction.
IV.

Conclusion

Accordingly, it is hereby ORDERED:
Defendants’ Motion to Dismiss (Doc. #5) is GRANTED. Plaintiff’s declaratory
judgment action is dismissed without prejudice.
IT IS SO ORDERED.
/s/ Stephen R. Bough
STEPHEN R. BOUGH
UNITED STATES DISTRICT JUDGE
Dated: March 2, 2016

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