United States District Court, D. Montana, Missoula Division
MID-CENTURY INSURANCE COMPANY, a member company of FARMER'S INSURANCE GROUP OF COMPANIES, Plaintiff,
RICK'S AUTO BODY, INC., and AARON HALL, Individually and as Personal Representative of the Estate of Bruce Hall, Defendants. RICK'S AUTO BODY, INC., Counter-Claimant,
MID-CENTURY INSURANCE COMPANY and TRUCK INSURANCE EXCHANGE, member companies of FARMER'S INSURANCE GROUP OF COMPANIES, Counter-Defendants.
L. Christensen, Chief Judge United States District Court
the Court is a motion to stay or dismiss without prejudice
filed by both Defendants, Rick's Auto Body, Inc.
("Rick's") and Aaron Hall ("Hall").
Defendants ask the Court to stay any coverage determination
pending more factual development in the Underlying Action, or
in the alternative, to dismiss the Complaint without
read the parties briefs and documents presented, the Court
denies Defendants' motions for the reasons stated below.
the parties are familiar with the facts of this case, they
will only be recited as necessary to understand this Order.
Hall, an auto body repair worker, was injured when static
electricity ignited vapor fumes in the distillation room
where he was working. He was badly burned and died the
following day. Subsequently Aaron Hall, Bruce Hall's son,
filed a complaint in the Fourth Judicial District of Montana
alleging emotional distress in his own right and seeking
punitive damages against Rick's. Rick's is insured
under a Garage Policy with Mid-Century Insurance Company
("Mid-Century"), which allegedly precludes coverage
for any injuries also covered under Montana's
Workers' Compensation Act or any "bodily
injury" to a child of an injured employee arising from a
workplace accident. Additionally, Mid-Century alleges that
there is no coverage under the policy for punitive damages.
After Rick's received service of the complaint, it
tendered the claim to Mid-Century. Mid-Century sent
Rick's a reservation of rights letter, and this action
Declaratory Judgment Act is permissive; "a federal court
may declare the rights and other legal relations of any
interested party" involving a case of "actual
controversy within its jurisdiction." 28 U.S.C. §
2201(a). The United States Supreme Court has found that the
Declaratory Judgment Act is procedural in nature, and thus
"does not extend the jurisdiction of the federal
courts." Medtronic, Inc. v. Mirowski Fam.
Ventures, LLC, 134 S.Ct. 843, 848 (2014) (citing
Shelly Oil Co. v. Phillips Petroleum Co., 339 U.S.
667, 671 (1950) (internal marks omitted); see also Aetna
Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S.
227, 240 (1937) ("[T]he operation of the Declaratory
Judgment Act is procedural only."). Rather, cases
brought pursuant to the Act must satisfy "both
constitutional and prudential concerns." Government
Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1222 (9th
Cir. 1998) (en banc). Thus, petitioners seeking declaratory
relief must satisfy the "case or controversy"
clause under Article III, section 2 of the United States
Constitution, as well as statutory jurisdictional
requirements. Dizol, 133 F.3dat 1222-1223 (citations
the Court finds that both of these prerequisites under the
Act are met. First, the Ninth Circuit has "consistently
held that a dispute between an insurer and its insureds over
the duties imposed by an insurance contract satisfies Article
Ill's case and controversy requirement."
Id. at 1222 n.2. Second, the parties do not dispute,
and the Court agrees, that diversity subject matter
jurisdiction exists in this case because the parties are
diverse and the amount in controversy exceeds $75, 000.
See 28 U.S.C. § 1332.
even though diversity jurisdiction is not in dispute, a
federal court may decline to exercise jurisdiction under the
Declaratory Judgment Act under certain circumstances. See
Snodgrass v. Provident Life and Ace. Ins. Co., 147 F.3d
1163, 1166 (9th Cir. 1998) ("Under the Declaratory
Judgment Act, a district court may decline to exercise
jurisdiction over a declaratory action even though subject
matter jurisdiction is otherwise proper."); see also
Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995)
("By the Declaratory Judgment Act, Congress sought to
place a remedial arrow in the district court's quiver; it
created an opportunity, rather than a duty, to grant a new
form of relief to qualifying litigants.").
"prudential concerns" were developed more fully by
the Supreme Court, first in Brillhart v. Excess Ins.
Co., then in Wilton v. Seven Falls Co., and
their progeny. 316 U.S. 491 (1942); 515 U.S. 277 (1995).
Taken together, the two Supreme Court cases proscribe
circumstances under which a federal court should exercise its
jurisdiction. While the Ninth Circuit has added additional
considerations, it is the three Brillhart
factors that remain the "philosophic touchstone" of
the Wilton/Brillhart analysis. R.R. St. &
Co. v. Transport Ins. Co., 656 F.3d 966, 975 (9th Cir.
Brillhart factors instruct a district court to
decline jurisdiction (1) to avoid "needless
determination of state law issues, " (2) discourage
"forum shopping, " and (3) to avoid
"duplicative litigation." See Id. (citing
Brillhart, 316 U.S. at 289-290). A presumption in
favor of dismissal arises when the federal action involves
the same issues and parties. Dizol, 133 F.3d at
the Court notes that no presumption arises here as
Mid-Century is not a party in the Underlying Action. Nor does
the Underlying Action raise the same questions of policy
coverage. The Underlying Action alleges only two claims
against Rick's: the emotional distress and punitive
damages claims. Rick's answered the claim by bringing a
motion to dismiss under Montana Rule of Civil Procedure
12(b)(6), which the state district court granted. Though Hall
has appealed this case arguing that the Workers'
Compensation exclusivity provision violates the Montana
Constitution, that issue is not before this Court.
no presumption arises, the Ninth Circuit has broadly
interpreted what constitutes a "parallel action."
American Nat'l Fire Ins. Co. v. Hungerford, 53
F.3d 1012, 1017 (9th Cir. 1995); Employers Reinsurance
Corp. v. Karrusos,65 F.3d 796, 800 (9th Cir. 1995),
both overruled on other grounds by Dizol, 133 F.3d
1220. The Wilton/Brillhart factors are implicated
when a related action rests on the same factual
circumstances. Hungerford, 53 F.3d at 1017. Here,
the two cases are undoubtably related as both involve the
same operative facts: Bruce Hall's injury sustained in
the distillation room and Hall's subsequent ...