IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF LOUISIANA
BATON ROUGE DIVISIONTHE FIDELITY AND CASUALTY COMPANY OF NEW YORK,
HEBERT BROTHERS ENGINEERS, INC.; ROSA LEE WATTS, individually as surviving spouse and on behalf of the late Alfred Watts, Jr.; HELEN MALLION, GWEN BURNSTEIN, JOYCE WATTS and ALFREDA WATTS, all individually as surviving children and on behalf of the late Alfred Watts, Jr.,
Civil Action No. 05-886-B-M2
WATTS DEFENDANTS’ MOTION TO DISMISS ON GROUNDS OF ABSTENTION
Come now ROSA LEE WATTS, individually as surviving spouse and on behalf of the late Alfred Watts, Jr.; HELEN MALLION, GWEN BURNSTEIN, JOYCE WATTS and ALFREDA WATTS, all individually as surviving children and on behalf of the late Alfred Watts, Jr. (“the Watts Defendants”), by and through their undersigned counsel, and file this Motion to Dismiss Plaintiff The Fidelity Casualty Company of New York (“Fidelity”)’s Original Complaint for Declaratory Judgment on the grounds of abstention, and would respectfully show this Court as follows:
This insurance coverage dispute arises from a personal injury action originally filed in state court four years ago. See Complaint at 1. Specifically, in August 2001, Mr. and Mrs. Watts brought suit in state court for Mr. Watts’s personal injuries (and ultimately death) caused by exposure to asbestos. See id. at 16. One of the defendants in the state court litigation is Hebert Brothers Engineers. In the state court action, the Watts family propounded discovery to Hebert Brothers concerning any potentially relevant insurance coverage; Hebert Brothers never provided any such information. The asbestos case went to trial in state court against Hebert Brothers in the summer of 2005, and the jury returned a verdict in favor of the Watts family. That action is currently under consideration on a Motion for Directed Verdict filed by Hebert Brothers.
After the verdict, Fidelity, insurer of Hebert Brothers, brought this declaratory judgment action. This is the first notice that the Watts family received of a potential insurance coverage issue. Fidelity’s reservation of rights letter, attached as Exhibit F to Plaintiff’s Complaint, indicates that Continental Insurance Company (“CNA”) is also an insurer of Hebert Brothers, and thus should have been brought as a necessary and proper party to this litigation. Accordingly, the Watts family sought leave to amend the state court case to bring a direct action against both Fidelity and CNA in the long-pending state court action. See La. R.S. 22:655 (establishing a direct right of action for an injured person against the tortfeasor’s insurer in state court). On September 15, 2005, the Honorable James J. Best of the 18th Judicial District Court for the Parish of Iberville granted leave to file a Fifth Supplemental and Amending Petition, naming Plaintiff herein and CNA as defendants in the earlier-filed state court action.
Because this insurance coverage dispute should be resolved as part of the underlying personal injury action, which has been pending in state court for over four years, the Watts Defendants respectfully request that this court abstain from deciding this action.
This Court should decline to exercise jurisdiction and dismiss this case on the grounds of abstention. This court enjoys broad discretion under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201, to stay or dismiss this action, given that a parallel state court proceeding is pending. See Trent v. Nat’l City Bank of Indiana, No. 04-30883, 2005 WL 1990208 (5th Cir. Aug. 17, 2005) (citing Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494, 62 S.Ct. 1173, 1175 (1942); Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995)). The Supreme Court has cautioned that “[o]rdinarily it would be uneconomical as well as vexatious for a federal court to proceed in a declaratory judgment where another suit is pending in a state court presenting the same issues, not governed by federal law, between the same parties. Gratuitous interference with the orderly and comprehensive disposition of a state court litigation should be avoided.” Brillhart, 316 U.S. at 495, 62 S.Ct. at 1175-76 (1942).
This court has abstained from hearing declaratory judgment actions under similar circumstances. For example, in Palmer v. Boucvalt, this Court dismissed an insurance coverage declaratory judgment action, where state court litigation had been ongoing for two years and “can resolve all of the issues of fault, damages and insurance coverage whereas the pending federal court declaratory action can only decide the insurance coverage issue.” 789 F. Supp. 211, 213 (M.D. La. 1992). Likewise here, the state court can resolve all issues stemming from the personal injury and wrongful death actions, including this insurance dispute. The fact that the insurance company was added to the state court action after this declaratory judgment action was filed is not dispositive; the Watts family brought Fidelity into the state action as soon as they learned that insurance coverage was at issue. See, e.g., Dresser, Inc. v. Lowry, 320 F. Supp. 2d 486 (W.D. La. 2004) (granting motion for abstention and declining to decide declaratory judgment action, even though state action filed after federal action).
In deciding whether to abstain, the court “should ascertain whether the questions in controversy between the parties to the federal suit, and which are not foreclosed under the applicable substantive law, can better be settled in the proceeding pending in the state court.” Trent, 2005 WL 1990208at *2 (quoting Brillhart, 316 U.S. at 495). The Fifth Circuit has identified seven factors to consider when making this determination:
(1) whether there is a pending state action in which all of the matters in controversy may be fully litigated;
(2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant;
(3) whether the plaintiff engaged in forum shopping in bringing the suit;
(4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist;
(5) whether the federal court is a convenient forum for the parties and witnesses;
(6) whether retaining the lawsuit would serve the purposes of judicial economy; and
(7) whether the federal court is being called on to construe a state judicial decree involving the same parties and entered by the court before whom the parallel state suit between the same parties is pending.
Dresser, Inc. v. Lowry, 320 F. Supp. 2d 486, 493 (W.D. La. 2004) (citing Sherwin-Williams Co. v. Holmes County, 343 F.3d 383, 388 (5th Cir. 2003); St. Paul Ins. Co. v. Trejo, 39 F.3d 585 (5th Cir. 1994)). This seven-factor analysis addresses three overarching issues: the proper allocation of decision-making between state and federal courts, fairness, and efficiency. Id.
Here, all factors, including this courts’ overarching interests in comity, fairness, and efficiency, weigh in favor of abstention. First, the proper allocation of decision-making between state and federal courts dictates that this dispute should be resolved in state court. There is a pending state action in which all of the matters in controversy may be fully litigated. As soon as the Watts family learned of this insurance dispute, which stems from their underlying personal injury claim, they sought and received leave to amend the state court action. It will be more efficient for the state court judge, who has presided over the case for over four years and through a trial of the insured’s liability, to resolve the insurance coverage issue. “[I]f [a] federal declaratory judgment action raises only issues of state law and a state case involving the same state law issues is pending, generally the state court should decide the case and the federal court should exercise its discretion to dismiss the federal suit.” Trent, 2005 WL 1990208 at *2 (quoting Sherwin-Williams, 343 F.3d at 390-91). Thus, in Trent, the district court properly declined to hear a case that involved only state law issues. See id. The declaratory judgment action at issue in this case involves only state law issues and was brought before this court solely on the grounds of diversity. Moreover, many of the issues raised by the complaint, such as the nature and timing of Mr. Watts’s exposure and injury, have already been addressed in the state court proceeding. See generally Complaint at 42-52. No federal issue is raised by the action, and all issues are best left to the resolution of the state court judge, who is already familiar with this case.
Second, the interest of fairness weighs in favor of resolution in state court. As described above, the Watts Defendants had no knowledge of any potential insurance issue until they were sued by Plaintiff herein, even though the Watts Defendants had sought such information from the insured in the underlying state court action. Both Plaintiff and its insured were in the position to inform the Watts family of this issue (and in fact the insured was formally asked in discovery to provide such information), yet failed to do so. Further, the Iberville Parish state court, in which the Watts family and Hebert Brothers have been litigating the underlying personal injury action for four years, is a more convenient forum for the Watts family and Hebert Brothers, and is no less convenient for Fidelity. See, e.g., Palmer v. Boucvalt, 789 F. Supp. 211, 213 (M.D. La. 1992) (“[T]here is no more inconvenience in trying the case in state court than federal court since there is close proximity between this Court and the state court in Iberville Parish.”). Quite simply, “[t]his Court must give deference to defendant’s choice of state court as the forum to litigate the coverage issues.” Id.
As this Court observed in Palmer, efficiency weighs in favor of resolution of this insurance coverage action with the underlying state court action: “judicial economy would best be served if all issues arising from plaintiff’s accident were tried together in one lawsuit.” 789 F. Supp. at 213. Moreover, “[a] federal court should be less inclined to hear a case if necessary parties are missing from the federal forum, because that leads to piecemeal litigation and duplication of effort in state and federal courts.” Trent v. Nat’l City Bank of Indiana, No. 04-30883, 2005 WL 1990208, at *2 (5th Cir. Aug. 17, 2005)(quoting Sherwin-Williams Co. v. Holmes County, 343 F.3d 383, 390-91 (5th Cir. 2003)). As explained above, a document attached to Fidelity’s Complaint suggests that another insurer, CNA, is also a necessary party to the insurance coverage dispute. Although CNA was not named as a party to this action, it was joined as a defendant in the state court action. The fact that an apparently necessary party has been named in the state court action, but not in this action, weighs in favor of full and complete resolution in the state forum. See, e.g., Trent, id., (finding that district court properly abstained where “certain parties whose interests may be affected by the district court’s ruling are not participants in the federal suit and judicial economy would be served by having all the issues determined in one proceeding”).
All factors weigh in favor of this Court abstaining from deciding this action. The Watts Defendants therefore respectfully request that this Court grant their motion to dismiss.
BARON & BUDD, P.C.
3102 Oak Lawn Ave., Ste. 1100
Dallas, TX 75219-4281
214/521-3605; Fax: 214/520-1181