The opinion of the court was delivered by: Helen Gillmor United States District Judge
ORDER DENYING DEFENDANT'S MOTION TO DISMISS AND STAYING PROCEEDINGS
Plaintiffs have filed an action for a declaratory judgment against Defendant State Farm Mutual Automobile Insurance Company. Defendant moves for dismissal to allow the previously filed action in Wisconsin state court to proceed. Both cases involve a dispute over whether decedent Mariah Danforth-Moore qualified as an "insured" under her grandfather's automobile insurance policies.
Defendant State Farm Mutual Automobile Insurance Company's Motion to Dismiss is DENIED. The action is STAYED pending the resolution of the Wisconsin action.
On June 12, 2012, State Farm Mutual Automobile Insurance Company ("State Farm") filed a Complaint for Declaratory Judgment in the Dane County Circuit Court, State of Wisconsin ("Wisconsin Complaint"). (Doc. 10-3.) The Wisconsin Complaint lists policy holder Darryl Moore and the Estate of Mariah Danforth-Moore as Defendants.
On June 18, 2012, Lisa Moore ("Moore"), Individually, and as Personal Representative of the Estate of Mariah Danforth-Moore, and Stephen Danforth ("Danforth") filed a Complaint for Declaratory Judgment in the Circuit Court for the First Circuit, State of Hawaii. (Doc. 1-1.) The Hawaii Complaint lists State Farm as the Defendant. State Farm removed the action from state court to the Federal Court of the District of Hawaii on July 9, 2012. (Doc. 1.)
On July 13, 2012 Moore and Danforth filed a First Amended Complaint ("Hawaii Complaint"). (Doc. 5.)
On July 27, 2012 State Farm filed a Motion to Dismiss (Doc. 10.)
On September 7, 2012, Moore and Danforth filed an Opposition (Doc. 17.) A Declaration of Woodruff K. Soldner, Plaintiffs' attorney in the Hawaii action, was submitted in support of the Opposition ("Solder Decl."). (Doc. 17-1.)
On September 21, 2012, State Farm filed a Reply. (Doc. 18.) On October 17, 2012 the Court held a hearing on the Motion to Dismiss.
On November 20, 2011, Mariah Danforth-Moore ("Mariah") was struck and killed by a vehicle while crossing a highway in Kaneohe, Hawaii. (Hawaii Complaint ("Compl.") at ¶ 9.) Mariah's parents, Lisa Moore and Stephen Danforth, and her Estate seek a declaratory judgment to determine if Mariah was covered under two State Farm car insurance policies that were issued to her grandfather, Darryl Moore. Lisa Moore and Danforth also allege derivative emotional distress and consortium claims under Hawaii law.
Lisa Moore is proceeding individually, and as Personal Representative of The Estate of Mariah Danforth-Moore. She is a Wisconsin resident. (Id. at ¶ 1.) The Estate of Mariah Danforth-Moore was established in Hawaii. (Hawaii Compl. at ¶ 2.) Danforth is a Hawaii resident. (Id. at 3.)
State Farm is an Illinois insurance corporation licensed to
do business in the State of Wisconsin, with its principal offices located in Bloomington, Illinois. (Wisconsin Compl. at ¶ 1.) Mariah's grandfather, Darryl Moore, is the insurance policy holder and resides in Wisconsin. (Id. at ¶ 3.)
Darryl Moore's two car insurance policies from State Farm covered a 2000 Toyota Sienna, policy no. 1057-764-49A, and a 2002 Saturn, policy no. 1057-763-49A. (Wisconsin Compl. at ¶ 4.) The policies provided underinsured motorist coverage of $100,000 per policy. (Hawaii Compl. at ¶ 16.)
The driver of the vehicle that struck Mariah allegedly had $500,000 of bodily injury insurance coverage. (Id. at ¶ 10.) Plaintiffs state that State Farm consented to a $500,000 policy limits settlement of their third-party claim related to the wrongful death of Mariah. (Id. at ¶ 13.) Plaintiffs claim State Farm owes them at least $200,000 from the underinsured motorist coverage from Darryl Moore's insurance policies. (Id. at ¶ 10.)
Mariah was an adult attending college at the University of Hawaii when she died. Plaintiffs state Mariah's permanent residence was with her grandparents at 3173 Jonas Circle, Oneida, Wisconsin. (Wisconsin Compl. at ¶ 2-3; See Hawaii Compl. at ¶ 7.)
According to Plaintiffs, Hawaii law provides that a family member who resides with the named insured is a "resident relative" who is entitled to benefits when injured or killed by an underinsured motorist. (Hawaii Compl. at ¶ 12.)
State Farm alleges that Mariah was not an 'insured' under her grandfather's State Farm policies, and therefore neither her estate nor anyone else is entitled to assert a claim against the grandfather's policies for underinsured motorist damages arising out of the accident. (Wisconsin Compl. at ¶ 7.)
The Declaratory Judgment Act
Under the Declaratory Judgment Act, United States courts "may declare the rights and other legal relations of any interested party seeking such declaration." 28 U.S.C. § 2201(a). A lawsuit seeking federal declaratory relief must first present an actual case or controversy within the meaning of Article III, section 2 of the United States Constitution. Gov't Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1222-23 (9th Cir. 1998).*fn1 It must fulfill statutory jurisdictional prerequisites. Id. If the suit passes constitutional and statutory muster, the district court must also be satisfied that entertaining the action is appropriate. Id.
A district court has the "unique and substantial discretion to decide whether to issue a declaratory judgment," Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995), but is "under no compulsion to exercise that jurisdiction." Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494 (1942). The Ninth Circuit Court of Appeals held that the Brillhart factors outlined by the Supreme Court "remain the philosophic touchstone" in analyzing whether to entertain a declaratory action, and the district court should: (1) avoid needless determination of state law issues; (2) discourage litigants from filing declaratory actions in an attempt to forum shop; and (3) avoid duplicative litigation. Dizol, 133 F.3d at 1225 (citing Continental Cas. Co. v. Robsac Industries, 947 F.2d 1367, 1371-73 (9th Cir. 1991)). In this analysis a court must proceed cautiously, balancing concerns of judicial administration, comity, and fairness to the litigants. Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1367 (9th Cir. 1991) (overruled in unrelated part by Wilton, 515 U.S. at 289-90).*fn2
If there are parallel state proceedings involving the same issues and parties pending at the time the federal declaratory action is filed, there is a presumption that the entire suit should be heard in state court. Dizol at 1225 (citing Chamberlain, 931 F.2d at 1366-67). As the Supreme Court explained in Brillhart:
Ordinarily 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 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. 316 U.S. 491, 495. With Brillhart in mind, the Ninth Circuit Court of Appeals held that the pendency of a state court action does not, of itself, require a district court to refuse federal declaratory relief. Dizol, 133 F.3d at 1225. Nonetheless, the federal courts should generally decline to entertain reactive declaratory actions. Id.
Additionally, the Ninth Circuit Court of Appeals recognized that the Brillhart factors are not exhaustive and suggested that district courts also consider the following factors:
[W]hether the declaratory action will settle all aspects of the controversy; whether the declaratory action will serve a useful purpose in clarifying the legal relations at issue; whether the declaratory action is being sought merely for the purposes of procedural fencing or to obtain a 'res judicata' advantage; whether the use of a declaratory action will result in entanglement between the federal and state court systems; the convenience of the parties, and the availability and relative convenience of other remedies.
Dizol, 133 F.3d at 1225 n.5 (citation omitted).
A district court is authorized, in the sound exercise of its discretion, to stay or to dismiss an action seeking a declaratory judgment. Wilton, 515 U.S. at 288. "[W]here the basis for declining to proceed is the pendency of a state proceeding, a stay will often be the preferable course, because it assures that the federal action can proceed without risk of a time bar if the ...