Sentry Insurance A Mutual Company v. McCormick et al
OPINION AND ORDER by Judge James H Payne ; granting 16 Motion to Dismiss; granting 17 Motion to Dismiss; finding as moot 18 Motion to Stay (pll, Dpty Clk)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
(1) SENTRY INSURANCE A MUTUAL )
COMPANY, a Wisconsin Corporation, )
(2) JOSEPH A. MCCORMICK, Special )
Administrator of the ESTATE OF
(3) MICHAEL ALLEN MCELWRATH; )
(4) DANA STARR LANDING,
Administrator of the ESTATE OF
GEORGE VERNON LANDING, JR.;
(5) DYLAN BURK;
(6) ROBERT PREBLE;
(7) INVENTIV COMMERCIAL
(8) INVENTIV HEALTH, INC.; and
(9) INVENTIV HEALTH CLINICAL
Case No. 16-CV-172-JHP-TLW
OPINION AND ORDER
Before the Court are (1) Defendant Joseph A. McCormick’s Motion to Dismiss or to Stay
Proceedings (Doc. No. 16) and (2) Interested Party/Defendant Michael Allen McElwrath’s
Motion to Dismiss (Doc. No. 17). After consideration of the briefs, and for the reasons stated
below, the Motions to Dismiss are GRANTED.
Plaintiff Sentry Insurance A Mutual Company (“Sentry”) filed this declaratory judgment
action in this Court against the Special Administrator of the Estate of Crystal Lopez, Joseph A.
Parties/Defendants,” including Michael Allen McElwrath (“McElwrath”).
Sentry seeks a
declaratory judgment pursuant to 28 U.S.C. §§ 2201-2202 and Federal Rule of Civil Procedure
57 regarding the existence of coverage and its duty to pay damages arising out of an automobile
According to the Complaint, on July 31, 2015, Crystal Lopez (“Lopez”), an employee of
inVentiv Commercial Services, LLC (“inVentiv”), was driving a car owned by inVentiv. (Doc.
No. 2, ¶¶ 12-14). Sentry was the insurance carrier for inVentiv at the time. (Id. ¶ 13). Prior to
the accident, Lopez had consumed alcoholic drinks and was on a weight loss medication that
warned against mixing it with alcohol. (Id. ¶ 17). As Lopez drove the wrong way on the Will
Rogers Turnpike, she collided head-on with a truck driven by George Landing, Jr. (“Landing”),
killing both of them. (Id. ¶ 12). Another vehicle occupied by McElwrath, Dylan Burk, and
Robert Preble was also involved in the accident, and all three were injured as a result. (Id.).
Lopez’s use of the vehicle in question was subject to a Fleet Management Policy, which
prohibited Lopez from driving the vehicle while her ability or alertness was impaired, including
by intoxication from alcohol or drugs. (Id. ¶¶ 14-15). Lopez had agreed to be bound by the
Fleet Management Policy when inVentiv provided her with the subject vehicle. (Id. ¶ 16). By
driving while intoxicated, Lopez allegedly violated inVentiv’s policy and was not a permissive
user of the vehicle. (Id. ¶ 21).
Following the accident, McElwrath filed a Petition in Tulsa County District Court against
the Estate of Crystal Lopez seeking damages for injuries arising out of the accident, McElwrath
v. McCormick, Special Administrator of the Estate of Crystal Lopez; inVentiv Health Clinical
SRS, LLC; and inVentiv Commercial Services, LLC., Case No. CJ-2015-3328 (the “McElwrath
Lawsuit”). (Id. ¶ 22). McElwrath asserts claims of gross negligence and punitive damages
against the Estate of Crystal Lopez, and a respondeat superior claim against inVentiv. (Id.).
The Estate of George Landing, Jr. has also filed a Petition in Tulsa County District Court against
the Estate of Crystal Lopez and others seeking damages for Landing’s wrongful death, Landing
v. Inventiv Commercial Services, LLC, InVentiv Health, Inc., Aeterna Zentaris, Inc., and the
Estate of Crystal Lopez, Case No. CJ-2015-4675 (the “Landing Lawsuit”). (Id. ¶ 24). The
Estate of George Landing, Jr. asserts claims for negligence and punitive damages against the
Estate of Crystal Lopez, and alleges inVentiv and inVentiv Health, Inc. knew or should have
known that Lopez would likely drive her vehicle while intoxicated but failed to take reasonable
action to prevent that risk. (Id.). Sentry is providing a defense to Lopez and the inVentiv entities
in both the McElwrath and Landing Lawsuits, under a reservation of rights. (Id. ¶¶ 23, 25).
McElwrath, Burk, and Preble have also filed workers’ compensation claims as a result of the
accident, and inVentiv’s workers’ compensation insurer sent a notice of subrogation to Sentry for
any payments made to those individuals. (Id. ¶ 26).
In this declaratory judgment action, Sentry contends it has no duty to indemnify for the
damages claimed against Crystal Lopez in either of the state court lawsuits, because Lopez
violated inVentiv’s policy against operating a vehicle while intoxicated, inVentiv had no
knowledge that Lopez drove the company car while intoxicated, and Lopez was not acting within
the scope of permission or authorization from inVentiv at the time of the accident. Sentry
alleges it did not assume the risk of covering injuries resulting from an inVentiv employee
violating company policy.
Sentry seeks a judicial declaration “of the rights, duties and
obligations of Sentry concerning its duties, if any, to indemnify in relation to the various claims
asserted against Lopez.” (Doc. No. 2, ¶ 37).
Defendant McCormick has now moved to dismiss Sentry’s declaratory judgment action,
asking the Court either to decline to exercise jurisdiction or to dismiss for lack of subject matter
jurisdiction. (Doc. No. 16). In the alternative, McCormick asks the Court to stay proceedings in
this case until pertinent issues in the Tulsa County cases have been resolved.
Party/Defendant McElwrath also has moved to dismiss, joining McCormick’s arguments and
separately arguing Sentry fails to raise a viable claim with respect to McElwrath. (Doc. No. 17).
The motions are now fully briefed and ripe for review.
McCormick contends the Court should decline to exercise its jurisdiction over Sentry’s
declaratory judgment action.1 McCormick argues this case presents the same material issue of
facts that are currently before the Tulsa County District Court in the Landing and McElwrath
Lawsuits: Was Crystal Lopez operating the subject inVentiv vehicle with inVentiv’s permission
and within the course and scope of her employment by inVentiv? McCormick argues Sentry has
created a duplicate, parallel proceeding in the form of this later-filed declaratory judgment
action, which locks the Court in a “judicial race to judgment.” (Doc. No. 16, at 6). Sentry
disagrees with McCormick’s position and asks the Court to retain jurisdiction over this case.
1 McElwrath’s request for dismissal incorporates the arguments made in McCormick’s Motion to Dismiss.
Accordingly, the Court will refer to the arguments of both defendants as the arguments of McCormick.
Standard of Review
The Declaratory Judgment Act “confers upon courts the power, but not the duty, to hear
claims for declaratory judgment.” Mid-Continent Cas. Co. v. Vill. at Deer Creek Homeowners
Ass’n, 685 F.3d 977, 980 (10th Cir. 2012) (citing Wilton v. Seven Falls Co., 515 U.S. 277, 28687 (1995)); Pub. Affairs Assoc., Inc. v. Rickover, 369 U.S. 111, 112 (1962)). Therefore, whether
to entertain a declaratory judgment action is a matter committed to the trial court’s sound
discretion. Kunkel v. Cont’l Cas. Co., 866 F.2d 1269, 1274 (10th Cir. 1989) (citing Alabama
State Fed’n of Labor v. McAdory, 325 U.S. 450, 462 (1945)). When a parallel case is pending in
state court, “[o]rdinarily 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 state court presenting the
same issues, not governed by federal law, between the same parties.” Brillhart v. Excess Ins. Co.
of America, 316 U.S. 491, 495 (1942).
When deciding whether to hear a declaratory judgment action, the court should weigh the
following factors: (1) whether a declaratory action would settle the controversy; (2) whether it
would serve a useful purpose in clarifying the legal relations at issue; (3) whether the declaratory
remedy is being used merely for the purpose of “procedural fencing” or “to provide an arena for
a race to res judicata”; (4) whether use of a declaratory action would increase friction between
our federal and state courts and improperly encroach upon state jurisdiction; and (5) whether
there is an alternative remedy which is better or more effective. St. Paul Fire & Marine Ins. Co.
v. Runyon, 53 F.3d 1167, 1169 (10th Cir. 1995) (citing State Farm Fire & Cas. Co. v. Mhoon, 31
F.3d 979, 983 (10th Cir. 1994)). The Court will refer to these five factors as the “Mhoon
McCormick argues all five Mhoon factors weigh against this Court’s exercising its
jurisdiction over Sentry’s declaratory judgment action. Applying these factors, the Court agrees
it should decline to exercise its jurisdiction here.
In this case, Sentry seeks a declaratory judgment of its rights and obligations “to defend
and/or indemnify Crystal Lopez in relation to the various claims asserted in the McElwrath
Lawsuit, the Landing Lawsuit and . . . any claims brought by . . . Dylan Burk and Robert Preble.”
(Doc. No. 2, Prayer). Accordingly, a declaration from this Court would resolve the issue of
insurance coverage and could serve a useful purpose in clarifying the legal relations between
Sentry and the Estate of Crystal Lopez (the first and second Mhoon factors). Moreover, the
timing of Sentry’s complaint in this case, less than four months after the Landing and McElwrath
Lawsuits were filed, does not strongly suggest questionable intentions or attempted “procedural
fencing” (the third Mhoon factor).
A declaration of coverage from this Court, however, would come at the cost of increasing
friction between our federal and state courts and improperly encroaching upon state court
jurisdiction (the fourth Mhoon factor). The resolution of whether insurance coverage exists
depends on fact-based determinations of state law—namely, whether Lopez was a permissive
user of the inVentiv vehicle at the time of the accident, and whether she was acting within the
scope of her employment at the time. (Doc. No. 2, ¶¶ 20, 21, 32-37). These issues are already
being considered in the Landing and McElwrath Lawsuits, both of which were pending when
Sentry filed this federal action. Both the Landing and McElwrath Lawsuits allege that Lopez
was acting within the course and scope of her employment by inVentiv at the time of the
accident. (See Doc. No. 44, at 2 (Second Amended Petition in McElwrath Lawsuit); id. at 7
(Petition in Landing Lawsuit), ¶ 12).2 The Landing Lawsuit further alleges that inVentiv knew
or should have known that Lopez was likely to drive the inVentiv vehicle while intoxicated and
failed to take reasonable actions to prevent such a risk. (Id. at 8-9 (Petition in Landing Lawsuit),
¶ 24). Because all three actions involve the same set of facts and address the same issues, the
judgment in this action likely will be outcome determinative for the state court actions (or viceversa), which could create friction between our state and federal courts. Accordingly, dismissal
of this federal action would enable the Oklahoma court to resolve the pending state-law issues
more effectively and efficiently.
Moreover, Sentry’s action is not the best or most effective available remedy to determine
insurance coverage (the fifth Mhoon factor). In this regard, on May 27, 2016, the Estate of
Crystal Lopez filed a third party petition declaratory judgment action in the Landing Lawsuit
against Sentry and another insurer, ACE Insurance Company (“ACE”). (See Doc. No. 16-1
(Petition of Third Party Plaintiff Estate of Crystal Lopez, Deceased)). Similar to Sentry’s federal
action, the third party action seeks a declaratory judgment under state law that Sentry and ACE
must defend and indemnify the Lopez Estate under their respective insurance policies. Through
the third party action, Sentry may obtain a determination of its obligation to defend and
indemnify the Estate of Crystal Lopez, the same question to be decided in this case. The third
party action provides an adequate alternative remedy to determine insurance coverage through
Oklahoma’s own Declaratory Judgment Act, OKLA. STAT. tit. 12, § 1651, and the Oklahoma
state court is in the best position to resolve these issues under Oklahoma law. The Oklahoma
court is also the arbiter of the state-law liability issues. Accordingly, the issues between the
The Petitions in the McElwrath and Landing Lawsuits were attached to Sentry’s Complaint as Exhibits 1 and 2,
respectively. However, the attachments were not uploaded to the Court’s ECF filing system with the Complaint.
Accordingly, Sentry uploaded these exhibits to the docket as Doc. No. 44.
parties in this federal declaratory judgment action could be better resolved in the underlying state
Finally, the Court is not persuaded by Sentry’s argument that the issue of liability
insurance coverage could not be discussed in the state court proceedings. See OKLA. STAT. tit.
12, § 2411 (“Evidence of the existence of liability insurance is not admissible upon the issue of
negligence or wrongful action.”). The Oklahoma district court has authority to order a separate
trial of any issue “in furtherance of convenience or to avoid prejudice,” which could include the
issue of insurance coverage. OKLA. STAT. tit. 12, § 2018(D). Therefore, Sentry’s concern is
In sum, the first two Mhoon factors favor retention of Sentry’s declaratory judgment
action, the third Mhoon factor is neutral, and the last two Mhoon factors strongly favor dismissal
of Sentry’s action. The Court finds these factors collectively weigh in favor of dismissing
Sentry’s declaratory judgment action. Accordingly, the Court declines to exercise its jurisdiction
and will not allow Sentry’s case to proceed.3
For the reasons detailed above, Defendant Joseph A. McCormick’s Motion to Dismiss
(Doc. No. 16) and Defendant McElwrath’s Motion to Dismiss (Doc. No. 17) are GRANTED. In
light of the Court’s dismissal of this case, Defendant McCormick’s alternative request to stay the
proceedings is MOOT.
3 Because the Court dismisses this case based on application of the Mhoon factors, the Court will not address
McCormick’s or McElwrath’s remaining arguments in favor of dismissal.
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