ESURANCE INSURANCE COMPANY v. BOWSER et al

Filing 10

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE J. CURTIS JOYNER ON 5/8/17. 5/10/17 ENTERED AND COPIES EMAILED TO COUNSEL AND COPY TO LEGAL.(jaa, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

ESURANCE INSURANCE COMPANY,

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Plaintiff,
v.
LAVADA BOWSER,
CAROL HARVEY,

Defendants.

CIVIL ACTION

NO. 16-cv-5739

MEMORANDUM
Joyner, J.
I.

May 8, 2017

Introduction
Plaintiff Esurance Insurance Company brought this

declaratory judgment action pursuant to the Declaratory Judgment
Act, 28 U.S.C. § 2201, seeking a determination that it has no
duty to defend or to indemnify the Defendants, Lavada Bowser and
Carol Harvey, in connection with two lawsuits pending in state
court.1

The underlying proceedings are tort actions involving

allegations relating to excessive corporal punishment and the
physical, mental, and sexual abuse of two foster children while
in the care of Defendants.

Defendants were served with the

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The underlying state court lawsuits are captioned Z.N.1 v.
Asociacion Puertorriquenos en Marcha, Court of Common Pleas of
Philadelphia, No. 1605-2613, and Z.N.2 v. Asociacion Puertorriquenos
en Marcha, Court of Common Pleas of Philadelphia, No. 1605-2616.

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declaratory judgment complaint on November 10, 2016.

The time to

plead or otherwise defend having expired, the Clerk of the Court
entered a default on the record on December 7, 2016.

On

Plaintiff’s motion for entry of default judgments, we declined to
exercise jurisdiction over the matter and, sua sponte, dismissed
the complaint without prejudice to Plaintiff’s ability to seek a
declaration in state court.

(Doc. No. 8).

for reconsideration of that decision.

Plaintiff now moves

(Doc. No. 9).

For the

following reasons, Plaintiff’s Motion will be denied.
II.

Standard of Review
“The purpose of a motion for reconsideration is to correct

manifest errors of law or fact or to present newly discovered
evidence.”
1985).

Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir.

A motion for reconsideration may be granted if the moving

party can show at least one of the following: “(1) an intervening
change in the controlling law; (2) the availability of new
evidence that was not available when the court [ruled
previously]; or (3) the need to correct a clear error of law or
fact or to prevent manifest injustice.”

Howard Hess Dental Labs.

Inc. v. Dentsply Int’l, Inc., 602 F.3d 237, 251 (3d Cir. 2010).
Plaintiff rests its Motion on the third factor, arguing that the
Court committed a clear error of law by failing to fully and
properly consider the relevant factors set out in Reifer v.
Westport Ins. Corp., 751 F.3d 129 (3d Cir. 2014), and that the

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dismissal of Plaintiff’s case has resulted in a manifest
injustice.
III.

Analysis
Plaintiff argues that the Court committed a clear error of

law by considering only those factors enumerated in State Auto
Ins. Co. v. Summy, 234 F.3d 131 (3d Cir. 2000), without
considering additional factors enumerated by the Third Circuit in
Reifer.

In Reifer, the Third Circuit stated that in cases

brought under the Declaratory Judgment Act district courts should
guide their exercise of discretion by considering eight nonexhaustive factors, “to the extent they are relevant:
(1) the likelihood that a federal court declaration will
resolve the uncertainty of obligation which gave rise to the
controversy;
(2) the convenience of the parties;
(3) the public interest in settlement of the uncertainty of
obligation;
(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;

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(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 131 at

146.
If, however, another proceeding is pending in state court in
which all of the matters in controversy “could be fully
adjudicated,” it is ordinarily “uneconomical as well as
vexatious” for the federal court to exercise its jurisdiction.
Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 495
(1942).

In circumstances such as these, courts should consider

whether the questions in controversy “can better be settled in
the proceeding pending in state court.”
n.21.

Reifer, 751 F.3d at 146

Although not dispositive, the existence of parallel state

proceedings “militates significantly” in favor of declining
jurisdiction.

Id. at 144-45; see also Rachel II, Inc. v. State

Nat’l Ins. Co., No. 5:15-CV-01096, 2016 WL 1273941, at *4 (E.D.
Pa. Mar. 31, 2016) (noting that, under Reifer, the “finished
product resembles a guided totality-of-the-circumstances
balancing test, but with a focus on the presence or absence of a
parallel state proceeding.”).

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A.

Existence of Parallel State Proceedings
Plaintiff argues there are no parallel state court

proceedings in this case and that the absence of any such
proceedings created a rebuttable presumption in favor of
jurisdiction, which this Court ignored.

(Doc. No. 9-2).

Plaintiff suggests that state court proceedings are “parallel”
only where the state court litigation presents “the same issues”
between “the same parties” and where all matters in controversy
between those parties may be fully adjudicated.

Id. at 5.

Esurance Insurance Company is not itself a party in either of the
underlying state court actions.

And the Court is aware of no

relevant declaratory judgment claim pending in state court.
“What exactly constitutes parallel state proceedings,
however, has not been defined precedentially at a particularly
high level of detail.”

Rachel II, 2016 WL 1273941, at *4.

Although Plaintiff’s position is not without support, see, e.g.,
W. World Ins. Co. v. Alarcon & Marrone Demolition Co., No. CIV.A.
14-6617, 2015 WL 3622896, at *2 (E.D. Pa. June 9, 2015), we
believe a broader view as to what constitutes parallel state
proceedings better comports with the Supreme Court’s instruction
that district courts be mindful of unnecessarily interfering with
pending state court proceedings.

See Wilton v. Seven Falls Co.,

515 U.S. 277, 288 (1995) (“In the declaratory judgment context,
the normal principle that federal courts should adjudicate claims

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within their jurisdiction yields to considerations of
practicality and wise judicial administration.”); Brillhart, 316
U.S. at 495 (“Gratuitous interference with the orderly and
comprehensive disposition of a state court litigation should be
avoided.”).
Judge Leeson’s opinion in Rachel II is instructive, and we
join with his approach.

In that case, the federal plaintiffs

were defendants in a pending state court tort lawsuit, and the
federal defendant was an insurance company that was not a party
to the pending state court litigation.
1273941, at *1.

Rachel II, 2016 WL

As here, this court was asked to exercise its

jurisdiction under the Declaratory Judgment Act in order to
determine whether the insurer was obligated to defend insured
persons in the underlying state court litigation and indemnify
them for any losses sustained.

Although the underlying tort

litigation did not itself present the coverage issue that was
posed by the declaratory judgment claim, the court declined to
hear the case because, inter alia, “Pennsylvania law affords
trial judges the ability to coordinate multiple actions ‘to
prevent duplication of efforts by the courts and inconsistent
rulings.’”

Id. at *5 (citing Lincoln Gen. Ins. Co. v. Donahue,

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616 A.3d 1076 (Pa. Commw. Ct. 1992)).

That is true in this case

as well.2
At bottom, Plaintiff is asking us to declare its rights
under Pennsylvania law in circumstances where a Pennsylvania
court is better equipped to do so while minimizing the potential
for any disruption to pending state court proceedings.
Pennsylvania’s interest in resolving its own law and the orderly
disposition of its pending litigation counsels strongly against
the exercise of federal jurisdiction.

Those interests “must not

be given short shrift simply because one party . . . perceive[s]
some advantage in the federal forum.”

Summy, 234 F.3d at 136.

Plaintiff’s attempt to separate its declaratory judgment claim
from the underlying tort litigation, such that related issues
must be “resolved piecemeal by the state and federal courts, is
the kind of ‘uneconomical’ and ‘vexatious’ interference with
parallel state litigation that the Supreme Court has urged the
district courts to avoid.”

Rachel II, 2016 WL 1273941, at *5

(quoting Brillhart, 316 U.S. at 495).
B.

Additional Reifer Factors
On consideration of the additional Reifer factors, we

conclude that the Court acted within its discretion by declining

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It makes no
judgment claim was
federal court. As
declaratory relief

difference that in Rachel II, the declaratory
originally filed in state court and then removed to
we have already stated, Plaintiff is free to seek
in state court. (Doc. No. 8).

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to exercise jurisdiction over Plaintiff’s declaratory judgment
complaint.

Plaintiff contends that the third factor (public

interest in settlement of uncertainty) is neutral, but that all
other factors weigh in favor of the exercise of jurisdiction.
disagree.

We

For the same reasons discussed above relating to the

pending state court litigation, the second factor (convenience of
the parties), fourth factor (availability and convenience of
other remedies), and sixth factor (avoidance of duplicative
litigation) all counsel against exercising jurisdiction in this
case.

See Rachel II, 2016 WL 1273941, at *6.

We have already

noted that the eighth Reifer factor (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) also counsels against
jurisdiction.

(Doc. No. 8).

Nothing in Plaintiff’s Motion

demonstrates that this inherent conflict is not present in this
case.
These factors are “non-exhaustive,” Reifer, 751 F.3d at 146,
and the circumstances of this case present additional
considerations weighing against the exercise of jurisdiction.
For instance, Plaintiff’s complaint raises no federal issue; it
asks us to decide issues of state law only.

See Summy, 234 F.3d

at 136.

We also take into account that Defendants have failed to

defend.

This failure deprives the Court of the benefits of

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zealous advocacy and also amounts to a lack of enthusiasm on the
part of the Defendants for resolving these issues in federal
court.

Cf. Reifer, 751 F.3d at 141 (“district courts should

weigh a party’s ‘vigorous objection’ to the district court’s
assumption of jurisdiction”) (quoting Summy, F.3d at 136).

In

our view this too counsels against exercising jurisdiction.
On the other side of the ledger, we agree with Plaintiff
that the first Reifer factor (resolution of uncertainty) would
support an exercise of discretion.

And we further find that the

concerns implicated by the fifth and seventh Reifer factors
(general policy of restraint when same issues are pending in
state court, prevention of procedural fencing or forum shopping)
are not present in this case.

In our judgment, however, these

countervailing factors are not sufficient to counsel the exercise
of jurisdiction in light of the concerns discussed above, most
prominently the nature of Plaintiff’s complaint and the existence
of parallel state court proceedings where Plaintiff’s claim could
be more efficiently heard.
IV.

Conclusion
For the foregoing reasons, and because we find no ground to

believe Plaintiff will suffer a manifest injustice from pursuing
its declaratory judgment claim in state court rather than federal
court, Plaintiff’s Motion for Reconsideration is denied.
appropriate order follows.

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An

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