SWENSON v. CAROLINA CASUALTY INSURANCE CO.

Filing 2

OPINION/ORDER that this action is remanded to New Jersey Superior Court, Bergen County; that the Clerk of the United States District Court for the District of New Jersey mark this action as CLOSED. Signed by Chief Judge Jose L. Linares on 3/12/18. (DD, )

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT Of NEW JERSEY

CIVIL ACTION NO. 18-3086 (JLL)

CRAIG SWENSON,
Plaintiff,

:

OPINION & ORDER

V.

CAROLINA CASUALTY INSURANCE CO.,
Defendant.

LINARES, Chief District Judge
IT APPEARING THAT:

1.

Kevin Caccavella and Joanne Caccavella brought an action in New Jersey

State Court to recover damages for legal malpractice (hereinafter, “the State Tort
Action”) against Craig Swenson (hereinafter, “the Insured Attorney”). (ECF No. 1-2 at
1—21 (pleadings in the State Tort Action).) The State Tort Action remains pending. (ECf

No. 1 at 2.) Carolina Casualty Insurance Co. (hereinafter, “the Insurer”) provided legal
malpractice coverage to the Insured Attorney. (ECF No. 1-1 at 2.)
2.

The Insured Attorney brought a separate action in New Jersey State Court

against the Insurer for a judgment declaring that the Insurer is obligated to defend and
indemnify him in the State Tort Action (hereinafter, “the Declaratory Judgment Action”).

(Id. at 1—2.) The Insurer then removed the Declaratory Judgment Action to this Court
based upon diversity jurisdiction pursuant to 28 U.S.C.
3.

§

1332. (ECF No. 1 at 2—3.)

It is apparent that a determination by this Court concerning the state law

insurance coverage issues raised in the Declaratory Judgment Action will necessarily
affect

—

and thus interfere with

the State Tort Action. For instance, a comparison of

the pleadings in both actions reveals that this Court would need to delve into issues
concerning the Insured Attorney’s legal representation of Kevin Caccavella and Joanne
Caccavella that are identical to the issues being addressed in the State Tort Action.
(Compare ECF No. 1-1 at 2 (in the Declaratory Judgment Action, the Insured Attorney
refers to the claims that are set forth in the State Tort Action), wit/i ECF No. 1-2 at 1—2
(Kevin Caccavella and Joanne Caccavella set forth allegations in the State Tort Action
concerning the quality of the legal representation provided to them by the Insured
Attorney).) Indeed, the Insurer asserts in its notice of removal that “the ‘object’ of the
current litigation is the Caccavella lawsuit.” (ECF No. I at 2.)
4.

As a result, this Court abstains from adjudicating the Declaratoiy Judgment

rt
Action. See Wilton v. Seven falls Co., 515 U.S. 277, 282—90 (1995) (upholding Brifiha
v. Excess Ins. Co., 316 U.S. 491 (1942)). The Declaratory Judgment Action is remanded,
because the claims should be adjudicated by the same state court overseeing the State
Tort Action. See Markel Ins. Co. v. Connoift, Connollv & Heun, LLP, No. 17-1885, 2017
WL 4618750, at *34 (D.N.J. Oct. 16, 2017) (abstaining from the adjudication of a

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dispute between a law finn insured and its legal malpractice insurer, because the parties
sought a determination of their rights and obligations before the related state court legal
malpractice case against the law firm had been resolved, and thus such a determination
would interfere with that state court case); see also Williams v. State Auto Prop. & Cas.
Ins. Co., No. 08-4983, 2009 WL 1119502, at *2.3 (E.D. Pa. Apr. 24, 2009) (remanding

an action concerning a dispute over insurance coverage, and noting that “the possibility of
interfering with the state court cases regarding the same matter is substantial,” because
the conduct of certain parties would need to be addressed in both the underlying state
cases and the removed declaratory judgment action).
5.

In view of the pending State Tort Action, this Court must “promote judicial

economy by avoiding duplicative and piecemeal litigation.” State Auto Ins. Cos. v.

Sunnny, 234 f.3d 131, 135 (3d Cir. 2001). The Third Circuit Court of Appeals has
recognized that “in certain circumstances, determining the issue of coverage will rely on
questions central to the underlying liability proceeding,” thereby “warrant[ing] a court’s
abstention.” Kelly v. Maxum Specialty Ins. Grp., 868 F.3d 274, 287 n.12 (3d Cir. 2017);
see also Summv, 234 f.3d at 13 5—36 (abstaining from the adjudication of an insurance
coverage action in federal court, and holding that “[t]he desire of.

.

.

tthe Insurer] to

receive declarations in federal court on matters of purely state law has no special call on
the federal forum”).

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6.

Therefore, this Court rernands the Declaratory Judgment Action pursuant to

the doctrine of Bill/hart abstention.1 For good cause shown:

day of March, 2018, ORDERED that this

IT IS THEREFORE on this

action is remanded to New Jersey Superior Court, Bergen County; and it is further

ORDERED that the Clerk of the United States District Court for the District of
New Jersey mark this action as closed.2

JOSE L. LINARES
çhief Judge, United States District Court

Even if the Declaratory Judgment Action were to proceed in this Court, Kevin
Caccavella and Joanne Caccavella would need to be named as additional defendants. See
N.J.S.A. 2A: 16-56 (stating that when declaratory relief is sought, all those having an interest that
would be affected by the declaration must be made parties to the proceeding). Their interests
would certainly be affected if the Insured Attorney is found liable in the State Tort Action, but
has no insurance coverage related to any of their claims against him. This Court’s diversity
jurisdiction would then be extinguished, because (1) Swenson, who is the plaintiff, is a New
Jersey citizen, and (2) Kevin Caccavella and Joanne Caccavella, who would then be defendants,
are New Jersey citizens. (ECF No. 1-2 at 1.)
A remand of the Declaratory Judgment Action is preferable to a dismissal, as “a
remand may best promote the values of economy, convenience, fairness, and cornity,” because
the parties will
“[amy time a district court dismisses. rather than remands, a removed case.
have to refile their papers in state court, at some expense of time and money,” and “the state
court will have to reprocess the case.” Carnegie-Mellon Univ. v. C’ohilt, 484 U.S. 343, 353
(1988).
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