Burley v. National Union Fire Insurance Company of Pittsburgh PA

Filing 21

ORDER denying 7 Motion to Remand to State Court. Signed by Judge Howard D. McKibben on 10/6/15. (Copies have been distributed pursuant to the NEF - JC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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TROY AND PAULA BURLEY AND PAUL
ACKERMAN AND JUDY ACKERMAN AS
TRUSTEES OF THE ACKERMAN FAMILY
TRUST, et al.,

)
)
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Plaintiffs,
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vs.
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NATIONAL UNION FIRE INSURANCE
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COMPANY OF PITTSBURGH PA, a
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subsidiary of AMERICAN
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INTERNATIONAL GROUP, INC., and
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DOES 1 through 100, inclusive,
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)
Defendants.
)
_________________________________ )

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3:15-cv-00272-HDM-WGC
ORDER

Before the court is plaintiffs’ motion to remand to state court

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(#7).

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replied (#14).

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and requested leave to file a sur-reply (#17). The court granted that

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motion (#19) and defendant filed a sur-reply (#20).

Defendant National Union filed a response (#12) and plaintiffs
Defendant filed objections to plaintiffs’ reply (#15)

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Plaintiffs are citizens of Nevada and are plaintiffs in an

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underlying state construction defect lawsuit concerning their Nevada

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residences.

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subcontractor Padilla Construction Company of Nevada

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state court and were awarded a $588,888.32 judgment.

Plaintiffs allege that they obtained a verdict against

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(“Padilla”) in
Defendant,

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Padilla’s insurer, is a Pennsylvania corporation with its principal

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place of business in New York.

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refused or otherwise failed to pay the state court judgment. In their

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Second Amended Complaint filed in state court, Plaintiffs allege four

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causes

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enforcement of judgment; 3) breach of duty of good faith and fair

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dealing; and 4) breach of Nevada insurance laws/statutory bad faith.

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Defendant removed the action to this court on the basis of complete

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diversity of the parties.

of

action:

1)

Plaintiffs allege that defendant has

declaratory

relief;

2)

satisfaction

and

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Pursuant to 28 U.S.C. § 1447(c), once a case is removed to

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federal court, a motion to remand may be filed on the basis of any

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defect other than lack of subject matter jurisdiction and must be made

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within 30 days after the filing of the notice of removal under section

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1446(a).

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Plaintiffs timely filed their motion to remand on June 8, 2015 (#7).

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In their motion, Plaintiffs assert that because this case is an

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insurance declaratory relief action inextricably related to the state

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court case, the court has discretion to decline jurisdiction and

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remand this action pursuant to the doctrine of abstention.

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contends that the discretionary jurisdictional rule is inapplicable

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because the declaratory relief claim is mixed with other, independent

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causes of action.

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doctrine of abstention were to apply in this case, remand would be

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improper.

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Standards

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Defendant filed its notice of removal on May 21, 2015 (#1).

Defendant

Additionally, defendant contends that even if the

Under the Declaratory Judgment Act, 28 U.S.C. § 2201(a), district

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courts

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declaratory relief in federal court. The exercise of jurisdiction

have discretion to decline jurisdiction over actions seeking

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under

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discretion of federal district courts.”

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of the Midwest, 298 F.3d 800, 802 (9th Cir. 2002).

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actions for declaratory judgment, “the normal principle that federal

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courts should adjudicate claims within their jurisdiction yields to

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considerations of practicality and wise judicial administration.”

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Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995).

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court should exercise its discretion to decline jurisdiction over a

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declaratory judgment action is guided by the factors set forth in

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Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494-95 (1942).

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See Huth, 298 F.3d at 803.

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whether declining jurisdiction will (1) avoid needless determination

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of state law issues; (2) discourage litigants from filing declaratory

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actions as a means of forum shopping; and (3) avoid duplicative

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litigation.

the

Declaratory

Judgment

Act

“is

committed

to

the

sound

Huth v. Hartford, Ins. Co.
In assessing

Whether the

Brillhart requires the court to consider

Id. at 803.

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However, the Brillhart factors do not apply when other claims

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(e.g., bad faith, breach of contract, breach of fiduciary duty,

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rescission, or other monetary relief) are joined with an action for

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declaratory relief.

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1225-26 & n. 6 (9th Cir. 1998). “Claims that exist independent of the

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request for a declaration are not subject to the Declaratory Judgment

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Act’s discretionary jurisdiction rule.”

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& Accident Ins. CO., 147 F.3d 1163, 1167 (9th Cir. 1998)(citing

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Maryland Cas. Co. v. Knight, 96, F.3d 1284, 1289 & n. 6 (9th Cir.

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1996)).

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obligation to exercise jurisdiction.

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Assocs. Inc., 113 F.3d 161, 163 (9th Cir. 1997) (quoting Colorado

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River Water Conservation Dist. v. United States, 424 U.S. 800, 817

Rather,

Gov’t Emps. Ins. Co. v. Dizol, 133 F.3d 1220,

such

claims

invoke

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Snodgrass v. Provident Life

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“virtually

unflagging”

First State Ins. Co. v. Callan

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(1995)). See also Dizol, 133 F.3d at 1225-26 & n. 6 (stating that, as

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a general rule, the court should not remand when other claims are

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joined with an action for declaratory relief).

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In Snodgrass, the Ninth Circuit provided the following guidance

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for courts seeking to determine whether jurisdiction over actions with

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both declaratory and monetary claims remained discretionary or became

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mandatory:

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The appropriate inquiry for a
district court in a
Declaratory Judgment Act case is to determine whether
there are claims in the case that exist independent of
any request for purely declaratory relief, that is,
claims that would continue to exist if the request for a
declaration simply dropped from the case.

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Snodgrass, 147 F.3d at 1167-68.

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relevant question to be “whether the claim for monetary relief is

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independent in the sense that it could be litigated in federal court

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even if no declaratory claim had been filed.”

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v. R&D Latex Corp., 242 F.3d 1102, 1113 (9th Cir. 2001).

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words, the district court should consider whether it has subject

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matter jurisdiction over the monetary claim alone, and if so, whether

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the claim must be joined with one for declaratory relief.”

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1113.

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Analysis

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The Ninth Circuit later refined the

United Nat’l Ins. Co.
“In other

Id. at

Plaintiffs’ complaint asserts claims for both declaratory relief

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and monetary damages.

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to remand fails.

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for removal.

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28 U.S.C. § 1332—plaintiffs are citizens of Nevada and defendant is

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a Pennsylvania corporation with its principal place of business in New

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York—and

the

Applying the preceding principles, the motion

As an initial matter, defendant had a proper basis

The parties’ citizenship is diverse for the purposes of

amount

in

controversy
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exceeds

$75,000.

See

#1.

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Plaintiffs do not dispute that defendant properly removed this case

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pursuant to the court’s diversity jurisdiction.

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Plaintiffs’ suit seeks damages, both actual and punitive, from

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defendant for allegedly breaching the duty of good faith and fair

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dealing and violating Nevada’s Unfair Claims Practices Act.

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claims for damages are independent of the claims for declaratory

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relief.

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they are not dependent on the declaratory relief claims as they could

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have

These

While the claims may be related to the declaratory relief,

been

brought

separately

pursuant

to

the

court’s

diversity

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jurisdiction.

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(9th Cir. 1991) (noting that the district court had to retain

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jurisdiction over a bad faith suit filed with a declaratory relief

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claim). As such, the claims “could be litigated in federal court even

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if no declaratory claim had been filed.”1 R&D Latex Corp., 242 F.3d

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at 1113.

Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1367

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The court finds plaintiffs’ attempts to distinguish Snodgrass and

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the surrounding case law unavailing. Plaintiffs represent that “only

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in a situation in which there was not a valid judgment against the

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insured in a related case did the Snodgrass Court determin(e) that the

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monetary

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Plaintiffs argue that the court may decline jurisdiction because their

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claims for breach of the duty of good faith and fair dealing and

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violations

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dependent on their claims for declaratory relief.

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Plaintiffs also assert that they did “not intend to bring independent

claims

of

were

independent

Nevada’s

Unfair

coercive

Claims

claims.”

Practices

Act

#14

are

at

10.

wholly

Id. at 11.

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The parties have not presented evidence that would establish that the jurisdictional threshold
has been met in this action if the monetary claims were brought without the requested declaratory relief
claim. Nonetheless, the requested compensatory and punitive damages appear to meet the amount-incontroversy requirement. See #1 at ¶¶ 3.5, 3.6, 4.5, 4.6, 4.7.
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monetary claims . . . that are not dependent upon the declaratory

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relief action.” Id. at 11.

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Under Nevada Unfair Claims Practices Act, NRS 686A.310, however,

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an insurer is liable for engaging in certain unfair practices.

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Plaintiffs seek damages against defendant for violations of NRS

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686A.310 because defendant allegedly (1) misrepresented to insureds

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or claimants pertinent facts or insurance policy provisions relating

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to any coverage at issue, (2) failed to acknowledge and act promptly

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upon communications with respect to claims arising under insurance

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policies, (3) failed to adopt and implement reasonable standards for

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the prompt investigation and processing of claims arising under

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insurance policies, (4) failed to affirm or deny coverage of claims

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within a reasonable time after proof of loss requirements have been

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completed and submitted by the insured, (5) failed to effectuate

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prompt, fair and equitable settlement of claims in which liability of

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the insurer has become reasonably clear, and (6) failed to reference

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in the original denial letter the specific policy provision, condition

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or exclusion for the ultimate denial. #1 at 16.

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question regarding coverage may be relevant, the bad faith claims seek

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damages regardless of whether coverage is owed.

Accordingly, because

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the

the

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declaration,” the motion to remand (#7) should be and is hereby

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DENIED.

monetary

claims

“exist

independent

of

Thus, although the

request

Snodgrass, 147 F.3d at 1167-68.

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IT IS SO ORDERED.

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DATED: This 6th day of October, 2015.

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____________________________
UNITED STATES DISTRICT JUDGE

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for

a