The Brethren Mutual Insurance Company v. Rovito

Filing 3

MEMORANDUM and ORDER DISMISSING complaint; Clerk of Court is directed to CLOSE CASESigned by Honorable James M. Munley on 7/29/09. (sm, )

IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA THE BRETHREN MUTUAL INSURANCE COMPANY, Plaintiff : No. 3:09cv1360 : : (Judge Munley) : v. : : JAMES A ROVITO, SURVIVING : ADMISTRATOR OF THE ESTATE : OF DIANE C. ROVITO, DECEASED, : Defendant : ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
M E M O R AN D U M B e fo re the court is plaintiff's complaint for a declaratory judgment in a dispute over insurance coverage (Doc. 1). For the reasons stated below, the court will d e c lin e to exercise its discretion to hear the case. B a c k g ro u n d T h is case arises out of an accident that occurred on September 14, 2003. (Complaint (Doc. 1) (hereinafter "Complt.") at ¶ 5). On that date, the decedent, D ia n e C. Rovito, was at her parents' residence in Kulpmont, Pennsylvania. (Id.). A frie n d , Vincent Okronglis, backed into her. (Id.). Rovito's legs were pinned against th e garage of the house. (Id.). Okronglis was operating a vehicle owned by the B u r n rite Coal Company and/or Casey Trucking Company. (Id.). That vehicle was in s u re d by the Rockwood Casualty Insurance Company. (Id.). Plaintiff had coverage under two personal automobile policies of insurance. (Id. at ¶ 6). One policy was issued to her and one to her parents. (Id.). Both

p o lic ie s were issued by the plaintiff, The Brethren Mutual Insurance Company ("The B r e th re n "). (Id.). The policies both contain endorsements for uninsured and u n d e rin s u re d motorist coverage that establish that coverage disputes are not to be s o lve d by arbitration. (Id. at ¶ 7). Rockwood Casualty Insurance Company provided c o v e ra g e for Burnrite Coal Company. (Id. at ¶ 8). Rockwood sent Okronglis a re s e rva tio n of rights letter in November 2007. (Id.). On or about September 1, 2005, Diane C. Rovito filed a writ of summons a g a in s t Vincent Okronglis in the Court of Common Pleas of Northumberland County. (Id. At ¶ 9). Rockwood provided Okronglis with an attorney, who entered an a p p e a ra n c e for Okronglis in that civil matter. (Id. at ¶ 10). Plaintiff avers that no c o m p la in t has ever been filed in that case, and no discovery undertaken. (Id. at ¶ 1 1 ). Plaintiff also insists that Rockwood issued Okronglis a "reservation of rights le tte r," in which the company agreed to provide Okronglis a defense pending a d e c la ra to ry judgment action on Rockwood's responsibilities in the action. (Id. at ¶ 3 0 ). This letter, plaintiff claims, did not deny Okronglis coverage in any way and did n o t justify the uninsured motorist claim that defendant made to The Brethren. (Id.). On or about September 21, 2005, Diane C. Rovito's counsel made a demand to the plaintiff, requesting coverage under her policy for the limits of her uninsured a n d underinsured motorist coverage. (Id. at ¶ 12). The Brethren responded by re q u e s tin g information about the claim from Rovito's attorney. (Id. at ¶ 13). The c o m p a n y also assigned an adjuster to the claim, and this adjuster requested

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a d d itio n a l information. (Id. at ¶ 14). Rovito's attorney was not forthcoming with this in fo rm a tio n , and the adjuster was forced to seek it from other sources, as well as w rite other letters to Rovito's counsel. (Id. at ¶¶ 15-18). Rovito passed away on J a n u a ry 4, 2006 without having provided a statement to the adjuster. (Id. at ¶¶ 192 0 ). Over the next two years, attorneys for the plaintiff and defendant attempted to w o rk out a resolution of the insurance claim, including a request by defendant to a rb itra te the dispute. (Id. at ¶ 21). Eventually, a casualty claims manager for B re th re n wrote defendant's attorney, informing him that plaintiff had refused to p ro vid e information essential to the determination of the claim. (Id. at ¶ 22). This in fo rm a tio n included medical and accident reports. (Id.). The letter suggested that a n y underlying tort action should be resolved before the Brethren determined w h e th e r coverage­either underinsured or uninsured motorist­should apply. (Id.). The letter also insisted that arbitration of the claim was not available under the p o lic y. (Id.). Plaintiff's counsel then wrote defense counsel on December 14, 2008, in fo rm in g him that the company did not believe any uninsured motorist claim existed u n d e r the policy and would therefore refuse to appoint an arbitrator for an uninsured m o to ris t hearing. (Id.). On July 14, 2007, The Brethren filed the instant action in this court, styled as a "d e c la ra to ry judgment complaint." The action seeks a declaration from this court that d e fe n d a n t has not established that an uninsured motorist claim exists, and that p la in tiff has no obligation under the policy to participate in an arbitration hearing on

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s u c h a claim. Jurisdiction T h is Court has jurisdiction pursuant to the diversity jurisdiction statute, 28 U .S .C . § 1332. The plaintiff is a Maryland corporation with its principal place of b u s in e s s in Maryland. Defendants are citizens of Pennsylvania. The amount in c o n tro ve rs y exceeds $75,000. Discussion In most cases, because the court is sitting in diversity, the substantive law of P e n n s ylv a n ia would apply. Chamberlain v. Giampapa, 210 F.3d 154, 158 (3d Cir. 2 0 0 0 ) (citing Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938)). However, "federal c o u rts are to apply state substantive law and federal procedural law." Hanna v. P lu m e r, 380 U.S. 460, 465 (1965). The instant case is before the court in the form o f a declaratory judgment action, and Federal Courts have concluded that d e c la ra to ry judgment actions are procedural rather than substantive. See Fischer & P o r te r Co. v. Moorco Int'l Inc., 869 F.Supp. 323, 326 (E.D. Pa. 1994) (holding that "[c ]a s e law indicates that the [Declaratory Judgment] Act is procedural in nature, and th e re fo re federal law, not state law, governs whether claims may be heard under it."); Farmers Alliance Mut. Ins. Co. v. Jones, 570 F.2d 1384, 1386 (10th Cir. 1978) (h o ld in g that the [Declaratory Judgment] Act involves procedural remedies and not s u b s ta n tiv e rights . . . The Act does not create substantive rights for parties; it merely p ro vid e s another procedure whereby parties may obtain judicial relief."). As a result,

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w e here would apply substantive Pennsylvania law in interpreting the insurance c o n tra c t, but the procedural strictures of the federal Declaratory Judgment Act, 28 U .S .C . § 2201. See Fischer & Porter, 869 F. Supp. at 326. Under the Declaratory Judgment Act, "[i]n a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate p le a d in g , may declare the rights and other legal relations of any interested party s e e k in g such declaration." 28 U.S.C. § 2201(a) (emphasis added). The United S ta te s Supreme Court has declared that "[d]istrict courts possess discretion in d e term in in g whether and when to entertain an action under the Declaratory J u d g m e n t Act, even when the suit otherwise satisfies subject matter jurisdictional p re re q u is ite s ." W ilto n v. Seven Falls Co., 515 U.S. 277, 282 (1995). A court's d e c is io n to exercise its discretion to hear an action under the Declaratory Judgment A c t "requires some inquiry into the scope of the state court proceeding, the nature of d e fe n s e s available there, and whether the claims of all parties in interest can s a tis fa c to rily be adjudicated in that proceeding." Sate Auto Ins. Co. v. Summy, 234 F .3 d 131, 133 (3d Cir. 2001). Further, "[a] federal court should also decline to e xe rc is e its discretionary jurisdiction when doing so would promote judicial economy b y avoiding duplicative and piecemeal litigation." Id. at 135. These considerations a re especially important because "district courts should give serious consideration to th e fact that they do not establish state law, but are limited to predicting it." Id. The court will decline jurisdiction over this declaratory judgment action. The

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m a tte r before this court is one of contract interpretation under Pennsylvania law. The court would be required to determine whether the letter from Rockwood to O k ru n g lis constituted a denial of coverage, and whether The Brethren has an o b lig a tio n under the policy here in question to participate in arbitration. All of these a re questions of state law, where the court would be required to predict how a state c o u rt would rule in the matter. No unique questions of federal law exist, and this c o u rt's expertise is not necessary for a just outcome in the case. Further, the c o m p la in t indicates that other litigation may be pending on the underlying matter. The parties' claims can be better addressed if such litigation appears. The court will th e re fo re decline to exercise its jurisdiction to hear this case. C o n c l u s io n F o r the reasons stated above, the court will decline to exercise its jurisdiction to hear this declaratory judgment action. An appropriate order follows.

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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA THE BRETHREN MUTUAL INSURANCE COMPANY, Plaintiff : No. 3:09cv1360 : : (Judge Munley) : v. : : JAMES A ROVITO, SURVIVING : ADMISTRATOR OF THE ESTATE : OF DIANE C. ROVITO, DECEASED, : Defendant : ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
ORDER AND NOW, to wit, this 29th day of July 2009, it is hereby ORDERED that the instant complaint (Doc. 1) is DISMISSED. The Clerk of Court is directed to CLOSE the case.

BY THE COURT:

s/ James M. Munley JUDGE JAMES M. MUNLEY United States District Court

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