NATIONAL LIABILITY & FIRE INSURANCE COMPANY v. LP TRUCKING, LLC et al
OPINION. Signed by Judge Jerome B. Simandle on 6/30/2017. (dmr)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
NATIONAL LIABILITY & FIRE
HONORABLE JEROME B. SIMANDLE
No. 15-5449 (JBS/KMW)
LP TRUCKING, LLC, et al.,
Diana M. Hendry, Esq.
John T. Coyne, Esq.
MCELROY, DEUTCH, MULVANEY & CARPENTER, LLP
1330 Mount Kemble Ave.
PO Box 2075
Morristown, NJ 07962
Attorneys for Plaintiff
Richard M. Pescatore, Esq.
1055 East Landis Ave.
Vineland, NJ 08360-4041
Attorney for Defendants
SIMANDLE, District Judge:
Presently before the Court are the motions for summary
judgment by Plaintiff National Liability & Fire Insurance Co.
(hereinafter, “Plaintiff” or “NLF”) [Docket Item 38], as well as
Defendants’ LP Trucking, LLC (hereinafter, “LP Trucking”) and
Lionel Powell (hereinafter, “Defendant Powell”)(collectively,
“Defendants”) motion to dismiss Plaintiff’s Complaint [Docket
Having considered the parties’ submissions and oral
argument, for the reasons set forth below, the Court will grant
Defendants’ motion to dismiss because it lacks declaratory
judgment jurisdiction under the Declaratory Judgment Act, 28
U.S.C. § 2201.
Plaintiff’s motion for summary judgment will
therefore be dismissed without prejudice.
This insurance coverage dispute between NLF and Defendants
arose out of a purported cancellation of a truckers insurance
policy by Defendants’ agent, Lasting Legacy.3
NLF issued the
policy to LP Trucking that incepted on May 23, 2014. (Compl. at
The quoted premium for the policy was $14,380, which was
based on Defendant Powell’s representation that he had zero
motor vehicle points, but after the policy was issued, NLF
determined that Powell actually had seven motor vehicle points,
so NLF adjusted the premium to $28,321. (Id. at ¶¶ 15-17.)
Lasting Legacy and Defendant Powell requested that NLF
The Court will also address Defendant’s motion “granting leave
to defendant to supplement previous opposition.” [Docket Item
2 For purposes of the pending motion, the Court accepts as true
the version of events set forth in Plaintiffs’ Complaint,
documents explicitly relied upon in the Complaint, and matters
of public record. See Schmidt v. Skolas, 770 F.3d 241, 249 (3d
3 The parties are diverse under 28 U.S.C. § 1332.
reevaluate the magnitude of the premium increase, and NLF then
revised the premium amount to $23,194. (Id. at ¶ 19.)
Defendants, apparently unwilling to pay the adjusted premium of
$23,194, opted to cancel the policy via a cancellation request
on June 10, 2014. (Id. at ¶¶ 20, 22.)
Defendants’ agent, emailed to the Tuscano Agency, NLF’s agent, a
cancellation request purported signed by Powell, and in
response, NLF cancelled the policy effective at 12:01 a.m. on
June 11, 2014. (Id. at ¶¶ 22-24.)
Defendants claim that Lasting
Legacy fraudulently signed the cancellation form. [Docket Item
56-1 at ¶ 3.]
On June 11, 2014, at approximately 3:30 a.m., Defendant
Powell was involved in a motor vehicle accident with Shawn
Virgillo, and on July 3, 2014, Virgillo filed an action
(hereinafter, “the Underlying Action”) against LP Trucking and
Powell, among other parties. (Id. at ¶¶ 25, 27.)
NLF offered to
defend LP Trucking and Powell subject to a written reservation
of rights letter dated December 15, 2014. (Id. at ¶ 30.)
On July 10, 2015, Plaintiff filed a one-count Complaint in
this Court requesting a declaratory judgment “that the
cancellation of the NLF Policy at LP Trucking’s request became
effective on June 11, 2014 at 12:01 a.m. and that, accordingly,
NLF has no obligation to defend or indemnify LP Trucking or
Powell against the claims asserted in the Underlying Action or
any other proceedings that may arise from the Accident.” (Compl.
at ¶ 28.)
NLF included LP Trucking, Defendant Powell, and Shawn
Virgillo as Defendants in the federal action, but did not
include Lasting Legacy.4
Then, on November 24, 2015, Powell and LP Trucking filed a
complaint in Cumberland County Superior Court against Lasting
Legacy, alleging negligence and fraud. Powell and LP Trucking
amended their complaint on April 19, 2016, adding Jenna Zeringo
as a Defendant. Since neither LP Trucking nor Defendant Powell
notified NLF of the underlying action involving Virgillo (Compl.
at ¶ 28), LP Trucking’s initial state court actions did not
However, On July 22, 2016, Powell and LP Trucking
amended their complaint again and filed a properly styled
declaratory judgment action against NLF, Jenna Zeringo,
Virgillo, AAA Midlantic, GEICO, NJM a/s/o Mary Dampf, Rochdale
Ins. Co. and Western Union Ins. Co. (Ex. C. to Def. MTD Br.)
As the federal court case progressed through discovery and
through summary judgment motion practice,5 ongoing discovery in
the state court matter revealed a possibility of a conflict of
NLF also included South State, Inc., Rochdale Insurance
Company, Government Employees Insurance Company, and Western
United Insurance Company, but all of those parties have since
been dismissed from this action.
5 NLF filed a motion for summary judgment on its declaratory
judgment claim in this action on September 9, 2016. [Docket Item
interest. NLF’s counsel had participated in the negotiations and
mediation of the underlying action with Virgillo by negotiated
the terms and conditions of a release agreement which included a
payment of nearly $200,000. [Docket Item 56-8 at 26]
filed a counterclaim against Powell for reimbursement of the
settlement money “which [NLF counsel] negotiated and . . . had
authorized,” despite no language in any of the reservation of
rights letters (Ex. G to Def. MTD Br) regarding the
reimbursement of indemnity monies. [Docket Item 64-6 at 43.]
NLF also filed a motion for summary judgment “based on the
theory of apparent authority.” [Docket Item 64-6 at 41.]
state court judge held a hearing on Powell’s motion to
disqualify counsel and NLF’s motion for summary judgment on
January 20, 2017, [Docket Item 64-6 at 39.]
On February 17, 2017, in light of evidence that a lawyer
from NLF’s law firm had represented both Powell and NLF, the
state court judge entered an order disqualifying the McElroy
Deutch Mulvaney and Carpenter law firm from representing NLF in
the state court matter because of this alleged conflict of
interest. [Docket Item 54; Docket Item 64-5.]6
The state court
judge explained that he “has concerns about how this went down
The state court judge explained that this conflict of interest
ruling did not affect the federal court action. [Docket Item 646 at 75.]
and [he thinks] they need to get out.” [Docket Item 64-5.] NLF
appealed this disqualification ruling, and that appeal is
currently pending in the Appellate Division.
The state court
judge also denied NLF’s motion for summary judgment “for several
reasons,” given the disqualification of the firm of NLF’s
counsel, and that “discovery is still outstanding and ongoing.”
[Id.; Ex. B to Docket Item 63.]7
The judge further found that
“the issues of apparent authority are fact sensitive and . . .
involve issues of intent and credibility which are normally
issues to be decided by the fact finder as opposed to on a
motion for summary judgment.” [Ex. B to Docket Item 63.]
Additionally, the judge found that there are issues “with regard
to authenticity of a cancellation notice that no premium refund
occurred after the purported cancellation,” and there are issues
“with regard to whether a cancellation notice was faxed to
Powell . . . and back.” [Id.]
On February 21, 2017, Defendants then requested that this
Court hold summary judgment in abeyance given the denial of
NLF’s summary judgment in the state declaratory judgment action.
[Docket Item 54.]
Then, on March 21, 2017, Defendants filed a
motion to dismiss Plaintiff’s Complaint based on the Colorado
River abstention doctrine. [Docket Item 56.]
Discovery does not end in the state case until October 25,
2017. [Ex. B to Docket Item 63.]
STANDARD OF REVIEW
A. Rule 12(b)(1)
As courts of limited jurisdiction, the federal courts may
only exercise jurisdiction over cases which the Constitution and
Congress expressly grant them power.
Kokkonen v. Guardian Life
Ins. Co. of Am., 511 U.S. 375, 377 (1994); Zambelli Fireworks
Mfg. Co., Inc. v. Wood, 592 F.3d 412, 418 (3d Cir. 2010). A
motion to dismiss under Fed. R. Civ. P. 12(b)(1) must be granted
if the court lacks subject matter jurisdiction to hear a claim.
In re Schering Plough Corp. Intron/Temodar Consumer Class
Action, 678 F.3d 235, 243 (3d Cir. 2012).
When a defendant
files a motion under Rule 12(b)(1), the plaintiff bears the
burden of establishing subject matter jurisdiction for the sake
of remaining in federal court. Gould Elec., Inc. v. United
States, 220 F.3d 169, 178 (3d Cir. 2000).
Under Rule 12(b)(1), the court’s jurisdiction may be
challenged either facially (based on the legal sufficiency of
the claim) or factually (based on the sufficiency of a
jurisdictional fact). Gould, 220 F.3d at 178; see also A.D. v.
Haddon Heights Bd. of Educ., 90 F. Supp. 3d 326, 334 (D.N.J.
2015) (stating same).
In considering a factual attack, as here,
the Court need not cabin its inquiry to allegations in the
Rather, the Court may “consider affidavits,
depositions, and testimony to resolve factual issues bearing on
Gotha v. U.S., 115 F.3d 176, 179 (3d Cir. 1997);
see also Mortensen v. First Fed. Sav. & Loan Ass’n, 549 F.2d
884, 891–92 (3d Cir. 1977).
B. Rule 56
With respect to Plaintiff’s motion for summary judgment,
Federal Rule of Civil Procedure 56(a) generally provides that
the “court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact” such that
the movant is “entitled to judgment as a matter of law.” FED. R.
CIV. P. 56(a). A “genuine” dispute of “material” fact exists
where a reasonable jury’s review of the evidence could result in
“a verdict for the non-moving party” or where such fact might
otherwise affect the disposition of the litigation.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
irrelevant or unnecessary facts, however, fail to preclude the
entry of summary judgment. Id.
submissions cannot alone withstand a motion for summary
judgment. Gonzalez v. Sec’y of Dept. of Homeland Sec., 678 F.3d
254, 263 (3d Cir. 2012) (internal citations omitted).
In evaluating a motion for summary judgment, the Court must
view the evidence in the light most favorable to the non-moving
party, and must provide that party the benefit of all reasonable
Scott v. Harris, 550 U.S. 372, 378 (2007); Halsey
v. Pfeiffer, 750 F.3d 273, 287 (3d Cir. 2014).
such inferences “must flow directly from admissible evidence
[,]” because “‘an inference based upon  speculation or
conjecture does not create a material factual dispute sufficient
to defeat summary judgment.’”
Halsey, 750 F.3d at 287 (quoting
Robertson v. Allied Signal, Inc., 914 F.2d 360, 382 n. 12 (3d
Cir. 1990); citing Anderson, 477 U.S. at 255).
A. Defendants’ Motion to Dismiss
1. Colorado River abstention
The Court first addresses Defendants’ motion to dismiss.
Defendants argue that Plaintiff’s Complaint should be dismissed
under the Colorado River abstention doctrine, see Colorado River
Water Conservation Dist. v. United States, 424 U.S. 800, 813
(1976), as Plaintiff’s claim here is identical to the one
presented in New Jersey Superior Court.
Plaintiff replies that
the Court should not abstain because the suits are not parallel
actions, as the state court case was brought a year after the
In general, “federal courts are obligated to decide cases
within the scope of federal jurisdiction.” Sprint
Communications, Inc. v. Jacobs, -- U.S. --, 134 S. Ct. 584, 588
However, “in certain circumstances . . . the prospect
of undue interference with state proceedings counsels against
federal relief.” Id.
To prevent such interference, various
judge-made doctrines of abstention have developed, whereby the
federal courts decline to exercise jurisdiction otherwise
granted them by the Constitution or federal statute.
Colorado River, the Supreme Court found that abstention might be
warranted in some “extraordinary” circumstances where there are
parallel state and federal proceedings, under principles of
“wise judicial administration, giving regard to conservation of
judicial resources and comprehensive disposition of litigation.”
Colorado River, 424 U.S. at 817.
First, a court must determine whether the two proceedings
Two proceedings generally are considered
parallel when they “involve the same parties and substantially
identical claims, raising nearly identical allegations and
issues,” Yang v. Tsui, 416 F.3d 199, 204 n. 5 (3d Cir.
2005) (citation and internal quotation marks omitted), and when
plaintiffs in each forum seek the same remedies, see Harris v.
Pernsley, 755 F.2d 338, 346 (3d Cir. 1985).
In the state court
declaratory judgment action, LP Trucking and Defendant Powell
(as Plaintiffs) “seek a determination as to the construction
and/or validity of the insurance policy issued by the defendantNational and/or the validity or invalidity of an alleged
cancellation notice forwarded to the defendant insurance company
and, in particular, confirmation of benefits associated with
indemnification for a motor vehicle accident.” (Ex. C. to Def.
MTD Br. at ¶ 5.)
LP Trucking and Powell also alleges that NLF
“has breached the terms and conditions of their insurance policy
and/or statutory obligations and have failed to honor LP
Trucking’s request for coverage, including indemnification from
and against any and all claims arising out of the underlying
motor vehicle accident. (Id., ¶ 6.)
NLF argues that the proceedings are not parallel because
the state court case was originally solely a malpractice action
against Lasting Legacy, not a declaratory judgment case, and
that the state court case includes additional parties not
present in the federal court action. (Opp’n at 4-5.)
LP Trucking properly amended its complaint to include NLF, and
the case has proceeded with NLF as a party since July 22, 2016.
Currently, both the state and federal actions involve NLF, LP
Trucking, and Defendant Powell.
While the state court action
includes two additional parties, Lasting Legacy and Ms. Zeringo,
given that both cases are declaratory judgment actions seeking
to determine whether Defendant Powell’s cancellation was valid,
the Court finds that the parties are sufficiently parallel.8 See
NLF also argues that the actions are not parallel because NLF
has no claims at all against Lasting Legacy and Zeringo. But a
properly styled declaratory judgment action exists between NLF
and LP Trucking/Defendant Powell exists in the state court
action, and the existence of Lasting Legacy and Zeringo as
parties will not affect the Court’s eventual resolution of the
apparent authority issue.
IFC Interconsult AG v. Safeguard Intern. Partners, LLC, 438 F.3d
296, 306 (3d Cir. 2006)(“We have never required complete
identity of parties for abstention.”); Perry v. Manor Care,
Inc., No. 05-5767, 2006 WL 1997480, at *3 (E.D. Pa. July 14,
2006)(holding that “federal and state cases are sufficiently
parallel if all the parties in the federal case are also parties
in the state case, even if the state case involves additional
Additionally, state and federal claims are parallel when
“the state litigation will dispose of all of the claims raised
in the federal case.” Spring City Corp v. American Bldgs. Co.,
193 F.3d 165, 171 (3d Cir. 1999).
There is no question that
resolution of the declaratory judgment action in state court
would dispose of the declaratory judgment action in this court.
Finally, there is an identity of time between the two actions
because both lawsuits arise from the question of apparent
authority of Lasting Legacy to cancel Defendant Powell’s policy
on June 10, 2014, and the resulting reservation of rights from
NLF. Given that there are identities of parties, claims and
time, the Court finds that the two actions are sufficiently
parallel, thereby meeting the first step of Colorado River.
Once a federal court determines that two proceedings are
parallel, the Third Circuit instructs the court to consider the
following pertinent factors, drawn from the Colorado River case:
“(1) in an in rem case, which court first assumed jurisdiction
over the property; (2) the inconvenience of the federal forum;
(3) the desirability of avoiding piecemeal litigation; (4) the
order in which jurisdiction was obtained; (5) whether federal or
state law controls; and (6) whether the state court will
adequately protect the interests of the parties.” Nationwide
Mut. Fire Ins. Co. v. George V. Hamilton, Inc., 571 F.3d 299,
308 (3d Cir. 2009).
On balance, the Court finds that abstention under the
Colorado River doctrine is not appropriate in this instance. The
first factor is neutral because this is not an in rem case. The
second factor, the alleged inconvenience of the federal forum,
provides little, if any, support for abstention.
courthouse in Camden is only forty miles from the Bridgeton,
Cumberland County courthouse where the state proceedings were
filed and where the parties are based.
lies within the vicinage of the federal court in Camden.
is therefore little practical inconvenience for the parties to
litigate in Camden; thus, this factor weighs against abstention.
See Golden Gate Nat. Sr. Care, LLC v. Minich ex rel. Estate of
Shaffer, 629 F. App’x 348, 351 (3d Cir. 2015) (characterizing
the seventy-mile distance between the federal and state
courthouses as “moderate additional travel time required for the
few in-court appearances that that the parties may wish to
The third factor, the desirability of avoiding piecemeal
litigation, weighs against abstention.
The Third Circuit takes
a narrow view of this factor, as “there must be a strongly
articulated congressional policy against piecemeal litigation in
the specific context of the case under review.” Ryan v. Johnson,
115 F.3d 193, 198 (3d Cir. 1997).
Accordingly, “[t]he presence
of garden-variety state law issues has not, in this circuit,
been considered sufficient evidence of a congressional policy to
consolidate multiple lawsuits for unified resolution in the
state courts.” Id.
The Ryan court emphasized that a broad
interpretation of the “avoidance of piecemeal litigation” factor
would “swallow[ ] up the century-old principle” that “pendency
of an action in state court is no bar to proceedings concerning
the same matter in the Federal court having jurisdiction
....” Id. at 198 (quoting Colorado River, 424 U.S. at 817).
Here, Defendants identify no congressional policy indicating any
intended avoidance of piecemeal litigation in this area of the
The next factor, the order in which jurisdiction was
obtained, also weighs against abstention. This prong is “not a
strict first-past-the-post test,” but rather, the Court reviews
“both the filing date and the advancement of the litigation in
each forum.” Golden Gate, 629 F. App’x at 351 (citing Moses H.
Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 21
(1983)). Here, the federal action was filed on July 10, 2015,
whereas the state court action did not include NLF until July
22, 2016, over a year later.
The state court has already denied
NLF’s summary judgment motion, while this Court has yet to
decide the motion.9 However, discovery is complete in the federal
court action, whereas it does not conclude in the state court
action until October 2017.
Given that both actions are
substantially advanced, this factor weighs against abstaining at
The fifth factor, whether state or federal law controls,
counsels in favor of abstention. While Plaintiff’s action is
brought pursuant to the Declaratory Judgment Act, 28 U.S.C. §
2201, the issues involved are standard ones of agency and
contract interpretation arising under state law.
Third Circuit has noted that “abstention cannot be justified
merely because a case arises entirely under state law,” Spring
City Corp. v. American Bldgs. Co., 193 F.3d 165, 172 (3d Cir.
1999), here, the state court judge disqualified NLF’s counsel
from participating in that action based on a conflict of
Resolving that issue, which is currently on appeal,
The Court does not fault either party for its delay in
resolving Plaintiff’s summary judgment motion.
as well as LP Trucking and Defendant Powell’s related estoppel
argument, calls for a reliance on state law.
Finally, the court considers whether the state court will
adequately protect the interest of the parties.
serves only to weigh against abstention where a state court is
incapable of protecting a party’s interests, see Moses H. Cone,
460 U.S. at 26-27, but here, as Plaintiff concedes, there is no
question that the Superior Court can adequately protect the
interests of all parties.
NLF can file a summary judgment
motion on apparent authority grounds in state court after
discovery completes in October 2017, and does not suffer any
other prejudice by having to litigate in state court only.
Upon balancing the relevant factors, the Court concludes
that the “exceptional circumstances” required to abstain under
Colorado River are not present in this case. Id. at 16, 19.
2. Declaratory Judgment Jurisdiction
The parties, at the Court’s invitation prior to argument,
addressed the exercise of discretionary jurisdiction in a
dispute of this type under the Declaratory Judgment Act, 28
U.S.C. § 2201.10
The DJA provides that a court “may declare the
While Plaintiff appears to have brought its claim under the
New Jersey Declaratory Judgment Act, the Federal Declaratory
Judgment Act, 28 U.S.C. § 2201, applies in federal court.
Bianchi v. Rutgers, the State Univ. of New Jersey, No. 14-131,
2016 WL 430597, at *11 (D.N.J. Feb. 3, 2016)(explaining that
regardless of whether Plaintiff brings the initial claim under
rights and other legal relations of any interested party seeking
such declaration.” 28 U.S.C. § 2201(a) (emphasis added). “The
Supreme Court has long held that this confers discretionary,
rather than compulsory, jurisdiction upon federal courts.”
Reifer v. Westport Ins. Corp., 751 F.3d 129, 134 (3d Cir.
2014)(quoting Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491,
This is in stark contrast to the general rule that
“federal courts have a strict duty to exercise the jurisdiction
that is conferred upon them by Congress.” Reifer, 751 F.3d at
134 (quoting Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716
Nonetheless, although the DJA confers on district
courts a “unique and substantial discretion,” the exercise of
that discretion must be “sound and reasoned.” Reifer, 751 F.3d
The DJA is commonly invoked by insurance companies “to
seek a declaratory judgment on a purely state law matter” in
federal court based on diversity subject matter jurisdiction.
Id. at 141.
In response to such cases, the Third Circuit has
previously observed that “[t]he desire of insurance companies
and their insureds to receive declarations in federal court on
the New Jersey Declaratory Judgment Act, the Federal Declaratory
Judgment applies in federal court); see also Lilac Dev. Grp.,
LLC v. Hess Corp., No. 15-7547, 2016 WL 3267325, at *3 (D.N.J.
June 7, 2016)(citations omitted)(“However, even in the absence
of such specificity, the Erie Doctrine would nevertheless
mandate the application of the Federal Declaratory Judgment
matters of purely state law has no special call on the federal
forum.” State Auto Ins. Cos. v. Summy, 234 F.3d 131, 136 (3d
Consequently, it became common practice for
district courts “to decline to exercise jurisdiction over
declaratory judgment actions, involving an insurance company,
that are solely brought on diversity, and have no federal
question or interest.” Reifer, 751 F.3d at 142.
is especially relevant because the interest of a state “in
resolving its own law must not be given short shrift simply
because one party or, indeed, both parties, perceive some
advantage in the federal forum.” Summy, 234 F.3d at 136.
state law is uncertain or undetermined, the proper relationship
between federal and state courts counsels district courts to
“step back” and be “particularly reluctant” to exercise DJA
jurisdiction. Id. at 136.
The fact that district courts are
limited to predicting—rather than establishing—state law
requires “serious consideration” and is “especially important in
insurance coverage cases.” Id. at 135.
In Reifer, however, the Third Circuit cautioned against
“declining jurisdiction per se” in such cases, because a
“wholesale, ‘revolving door’ dismissal of such cases” would
evidence neither sound nor reasoned discretion. Id. at 147
(citing Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995) and
Bituminous Coal Operators' Assoc., Inc. v. Int'l Union, United
Mine Workers of Am., 585 F.2d 586, 596 (3d Cir. 1978))
(additional citations omitted).
Instead, the Third Circuit
instructed district courts to consider a non-exhaustive list of
factors when determining whether to exercise jurisdiction over
such declaratory judgment actions, including:
(1) the likelihood that a federal court declaration will resolve
the uncertainty of obligation which gave rise to the
(2) the convenience of the parties;
(3) the public interest in settlement of the uncertainty of
(4) the availability and relative convenience of other remedies;
(5) a general policy of restraint when the same issues are
pending in a state court;
(6) avoidance of duplicative litigation;
(7) prevention of the use of the declaratory action as a method
of procedural fencing or as a means to provide another forum in
a race for res judicata; and
(8) (in the insurance context), an inherent conflict of interest
between an insurer's duty to defend in a state court and its
attempt to characterize that suit in federal court as falling
within the scope of a policy exclusion.
Reifer, 751 F.3d at 146.11
Here, the first and second factors counsel in favor of
assuming jurisdiction, as a federal court declaration would
resolve the uncertainty regarding the apparent authority of
Lasting Legacy to cancel Defendants’ insurance policy, despite
the existence of a parallel state court declaratory judgment
action. Additionally, as described supra, litigating the dispute
in Camden does not materially inconvenience the parties.
However, the third, fourth, fifth, and sixth factors all counsel
against assuming jurisdiction.12
The public interest in
resolving this dispute is minimal, as the case turns on a narrow
instance of cancelling (or not cancelling) an insurance policy
as between private parties. There are other remedies that NLF
can pursue, specifically a declaratory judgment under the New
Jersey Declaratory Judgment Act.
The general policy of
restraint applies here since the issues are so similar in state
court, and all of the relevant parties are in that action, most
notably Lasting Legacy, which is absent here.
And as described
supra, the Court should avoid duplicative litigation, as the
The Reifer court also suggested that in insurance cases,
“Summy’s additional guidance should also be considered,” as well
as the Brillhart factors, if appropriate. Reifer, 751 F.3d at
12 There is no indication that the seventh and eighth factors are
applicable to the instant matter.
state court has already denied NLF’s summary judgment motion
based on similar grounds.13
In addition to the eight-factor test, the Reifer court also
endorsed the application of factors from Brillhart v. Excess
Ins. Co. of America, 316 U.S. 491, 495 (1942), which applies
where “another proceeding was pending in state court in which
all the matters in the controversy between the parties could be
Those factors including inquiring “into the
scope of the pending state court proceeding . . . the nature of
the defenses open there . . . . 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, etc.”
Here, the pending state court proceeding has a wider scope
than the current federal action, and there is no indication that
NLF cannot satisfactorily adjudicate its declaratory judgment
action in that proceeding.
Given the state court’s
disqualification of NLF’s law firm and the pending appeal, along
with the fact that the liability and coverage issues in state
court are broader than the issues before this Court,
The Court notes that for the purposes of DJA jurisdiction,
“[i]t is irrelevant that the state declaratory judgment petition
was filed after its counterpart in the District Court.” See
State Auto Ins. Cos. V. Summy, 234 F.3d at 136.
particularly regarding estoppel, the Court declines DJA
jurisdiction in this matter.
B. Plaintiff’s Motion for Summary Judgment
Because the Court grants Defendants’ motion to dismiss on
abstention grounds, it need not reach Plaintiff’s motion for
summary judgment on the issue of whether Plaintiff reasonably
relied upon the apparent authority of Lasting Legacy in
cancelling the NLF Policy prior to Defendant Powell’s accident
on June 11, 2014. The Court heard oral arguments on the merits
of Plaintiff’s summary judgment motion from both parties on June
13, 2017, but finds that given the propriety of abstaining from
entertaining this declaratory judgment action when a suitable
case is pending in state court, Plaintiff’s motion for summary
judgment shall be dismissed without prejudice.
An accompanying Order will be entered, abstaining from
exercising jurisdiction under the Declaratory Judgment Act in
this insurance coverage dispute, in favor of the parties
proceeding with their ongoing and more comprehensive state court
June 30, 2017
s/ Jerome B. Simandle
JEROME B. SIMANDLE
U.S. District Judge
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