Malone v. State Farm Mutual Auto Insurance Company

Filing 18

ORDER. IT IS HEREBY ORDERED, ADJUDGED, and DECREED that 5 State Farm's motion to dismiss be, and the same hereby is, GRANTED in part. IT IS FURTHER ORDERED that the complaint (ECF No. 1 at 5-10) is DISMISSED without prejudice, for lack of subject matter jurisdiction. Signed by Judge James C. Mahan on 11/8/17. (Copies have been distributed pursuant to the NEF - ADR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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THERESA T. MALONE,

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Plaintiff(s),

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Case No. 2:17-CV-1568 JCM (NJK)
ORDER

v.
STATE FARM MUTUAL AUTO
INSURANCE COMPANY,
Defendant(s).

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Presently before the court is defendant State Farm Mutual Auto Insurance Company’s

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James C. Mahan
U.S. District Judge

motion to dismiss. (ECF No. 5). Plaintiff Theresa T. Malone filed a response (ECF No. 7), to
which State Farm replied (ECF No. 8).
I.

Facts
This is a breach of contract action arising from an automobile accident that occurred on

August 15, 2013. Malone alleges that while she was in her parked vehicle in a parking lot in Las
Vegas, Nevada, a car backed into her and caused her medical and incidental damages. She claims
that at the time of the accident, she maintained an underinsured motorist coverage policy (number
088-0200F23-28) with State Farm.
On July 9, 2015, Malone filed a negligence suit in state court against John Mooney, the
purported tortfeaser who was operating the vehicle that allegedly caused the August 15, 2013
accident. (ECF No. 5-2). In December 2016, State Farm intervened in that litigation. (ECF No.
5-3). Malone now claims that she cannot recover the full amount of damages arising from the
accident from her state-court suit against Mooney.

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Therefore, Malone filed the present action against her underinsured motorist policy carrier,

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State Farm, in state court on May 2, 2017, alleging three causes of action: (1) breach of contract;

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(2) violation of the Unfair Claims Practices Act; and (3) breach of the covenant of good faith and

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fair dealing/bad faith, all related to State Farm’s alleged failure to compensate Malone under the

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policy. (ECF No. 1 at 5–13).

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State Farm removed the action to federal court on June 5, 2017. (ECF No. 1).

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State Farm now moves to dismiss the action pursuant to Federal Rule of Civil Procedure

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12(b)(6), or, in the alternative, to stay proceedings, on grounds that dismissal or a stay is warranted

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under Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976), because

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the parties are currently involved in parallel proceedings in state court—namely, the state case

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between plaintiff Malone and the alleged tortfeasor, Mooney. (ECF No. 5).

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II.

Legal Standard

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State Farm argues that Colorado River Water Conservation Dist. v. United States, 424 U.S.

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800 (1976), warrants dismissal because the parties are currently involved in parallel proceedings

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in state court that will resolve the issues in the present litigation. (ECF No. 5).

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In Colorado River, the Supreme Court derived a list of factors that weigh in favor of

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dismissing a federal suit “due to the presence of a concurrent state proceeding.” Id. Federal courts

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must consider: “(1) whether either the state or federal court has exercised jurisdiction over a res;

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(2) the inconvenience of the federal forum; (3) the desirability of avoiding piecemeal litigation;

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and (4) the order in which the forums obtained jurisdiction.” 40235 Washington St. Corp. v.

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Lusardi, 976 F.2d 587, 588 (9th Cir. 1992) (citing Colorado River, 424 U.S. at 818). Further,

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federal courts must consider (5) whether state or federal law controls issues in each of the cases

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and (6) whether the state proceeding is adequate to protect the parties’ rights. Moses H. Cone

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Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 23, 26 (1983).

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However, the United States Supreme Court has repeatedly emphasized that dismissal or

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abstention under the Colorado River doctrine is reserved “only [for] exceptional circumstances;

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only the clearest of justifications will warrant dismissal.” Id. at 2. “But we emphasize that our

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task in cases such as this is not to find some substantial reason for the exercise of federal

James C. Mahan
U.S. District Judge

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jurisdiction by the district court; rather, the task is to ascertain whether there exist ‘exceptional’

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circumstances, the ‘clearest of justifications,’ that can suffice under Colorado River to justify the

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surrender of that jurisdiction.” Id. at 25–26. The existence of a state court case that asks some of

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the same questions as a federal case is not grounds, without much more, for dismissal or abstention

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under the Colorado River doctrine.

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III.

Discussion

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The litigation in the state court case and in this court are not substantially similar: in the

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state court action pending below, it appears on this record that Malone has not filed a cause of

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action against State Farm under the underinsured motorist policy, while in this action, she has.

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While several of the key factual and legal questions in these two cases will be the same, they are

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not identical or substantially similar because a victory for Malone in the state court action would

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not result in a monetary judgment against State Farm, as it would here. Therefore, the state

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proceeding is not adequate for the adjudication of Malone’s claims against State Farm here. This

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is not an exceptional circumstance warranting dismissal or a stay under Colorado River. See Moses

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H., 460 U.S. at 2.
However, a different, but similar jurisdictional defect exists with the instant action.

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IV.

Ripeness

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If a claim is not ripe, federal courts lack subject matter jurisdiction and must dismiss the

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complaint. Richardson v. City and County of Honolulu, 124 F.2d 1150, at * (9th Cir. 1997).

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Whether a claim is ripe generally turns on whether the issues are currently fit for judicial decision

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and the hardship to the parties of denying court consideration. Ibid. The central concern for the

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court is whether the case involves uncertain or contingent future events that may or may not

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actually occur. Id. Thus the inquiry is “‘peculiarly a question of timing.’” San Diego Cty. Gun

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Rights Comm. v. Reno, 98 F.3d 1121, 1132 (9th Cir. 1996) (quoting Buckley v. Valeo, 424 U.S. 1,

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114 (1976)).

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Ripeness is a jurisdictional inquiry, rather than a simply procedural question. So. Pac

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Transp. Co. v. City of Los Angeles, 498 F.2d, at 502 (9th Cir. (1990)). The court may raise this

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issue sua sponte and must dismiss the case if lacking subject matter jurisdiction. Id.

James C. Mahan
U.S. District Judge

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In Nevada, a cause of action for breach of contract of an underinsured motorist policy does

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not accrue until insurer breaches the contract by declining to pay an amount that has become due

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under the policy. State Farm Mut. Auto. Ins. Co. v. Fitts, 99 P.3d 1160, 1162 (Nev. 2004); Grayson

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v. State Farm Mut. Auto. Ins., 971 P.2d 798, 799–800 (Nev. 1998). Whether State Farm owes

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anything to Malone, and thus breached its contract by failing to pay, remains to be seen, as it

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largely depends on the outcome of the state court litigation against Mooney, the alleged

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underinsured motorist and tortfeasor. Until that time, this instant action against State Farm is not

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ripe for judicial determination. See generally Accardo v. Am. First Lloyds Ins. Co., No. CIV.A.

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H-11-0008, 2012 WL 1576022 (S.D. Tex. May 3, 2012). Therefore, the case must be dismissed

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for lack of subject matter jurisdiction.

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V.

Conclusion

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, and DECREED that State Farm’s motion to

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dismiss (ECF No. 5) be, and the same hereby is, GRANTED in part, according to the foregoing.
IT IS FURTHER ORDERED that the complaint (ECF No. 1 at 5–10) is DISMISSED
without prejudice, for lack of subject matter jurisdiction.
DATED November 8, 2017.
__________________________________________
UNITED STATES DISTRICT JUDGE

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James C. Mahan
U.S. District Judge

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