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Argonaut-Midwest Insurance Co. v. Johnson

United States District Court, W.D. Kentucky, Louisville Division

December 3, 2014

ARGONAUT-MIDWEST INSURANCE COMPANY, Petitioner,
v.
LAWRENCE JOHNSON, et al., Defendants.

MEMORANDUM OPINION

THOMAS B. RUSSELL, District Judge.

This matter is before the Court upon Defendants' motion to dismiss. (Docket #6). Petitioner has responded. (Docket #7). Defendant has replied. (Docket #8). These matters now are ripe for adjudication. For the reasons that follow, Defendants' motion to dismiss (Docket #6) will be GRANTED.

BACKGROUND

This case arises from a motor vehicle accident that occurred when Lawrence Johnson's Silverado (the "Silverado") crossed the center line and struck a vehicle driven by Stacy Ellison, resulting in the death of Ellison. (Docket #6, Ex. 3). Johnson purchased the Silverado from Dad's Auto Sales, LLC ("Dad's Auto"), but legal title was not transferred to Johnson until after the accident. Ellison's estate filed a lawsuit against Johnson and Dad's Auto in Jefferson County Circuit Court. (Docket #6, Ex. 2). Through discovery, Ellison's estate learned that title was arguably held by Rockford Lane Auto Sales, Inc. ("Rockford Auto"), which purchased the car at auction and allegedly dealerassigned title to Dad's Auto. (Docket #6). Ellison's estate filed a state action against Rockford Lane as the legal owner of the vehicle at the time of the accident. (Docket #6, Ex. 3).

On September 7, 2011, Rockford Auto purchased the Silverado at auction. That same day, Rockford Auto allegedly dealer-assigned title to Dad's Auto. (Docket #1). On October 7, 2011, Dad's Auto sold the vehicle to Johnson. Johnson completed the paperwork necessary to transfer title to his name. However, before title was transferred, Johnson was involved in the accident with Ellison on December 2, 2011. (Docket #6).

Rockford Auto did not receive physical possession of the title until October 20, 2011. Rockford Auto transferred title to Dad's Auto on December 5, 2011, the day on which Dad's Auto paid for the vehicle. Title was transferred to Johnson on December 21, 2011. (Docket #6).

Petitioner Argonaut-Midwest Insurance Company ("Argonaut") issued a general liability insurance policy to Rockford Auto. Argonaut has filed this petition for declaratory judgment seeking to declare Rockford Auto properly transferred title to Dad's Auto, thereby relieving Argonaut of any duty to defend or indemnify Johnson, or alternatively, to declare that Johnson was not entitled to full liability limits. (Docket #1).

STANDARD

The Declaratory Judgment Act ("Act") states a federal court "may declare the rights and other legal relations of any interested party seeking such declaration." 28 U.S.C. ยง2201(a). The Act is an enabling act that "confers a discretion on the courts" to act "rather than an absolute right upon the litigant." Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995) ( quoting Public Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 241 (1952)). In other words, the Act authorizes district courts to exercise jurisdiction, but does not impose a duty to do so. Bituminous Cas. Corp. v. J & L Lumber Co., Inc., 373 F.3d 807, 812 (6th Cir. 2004); Allstate Ins. Co. v. Mercier, 913 F.2d 273, 276 (6th Cir. 1990) ( abrogated on other grounds by Wilton v. Seven Falls Co., 515 U.S. 277 (1995)). A district court may not decline jurisdiction, however, as a matter of whim or personal disinclination. Mercier, 913 F.2d at 277.

In determining whether the exercise of jurisdiction is proper, the Court must consider five factors:

(1) whether the declaratory action would settle the controversy; (2) whether the declaratory action would serve a useful purpose in clarifying the legal relations in issue; (3) whether the declaratory remedy is being used merely for the purpose of procedural fencing' or to provide an arena for a race for res judicata;' (4) whether the use of a declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction; and (5) whether there is an alternative remedy which is better or more effective. Grand Trunk W. R. R. Co. v. Consol. Rail Co., 746 F.2d 323, 326 (6th Cir. 1984).

In the determination of factor number four, three additional factors are considered:

(1) whether the underlying factual issues are important to an informed resolution of the case; (2) whether the state trial court is in a better position to evaluate those factual issues than is the federal court; and (3) whether there is a close nexus between the underlying factual and legal issues and state law and/or public policy, or whether federal common law or statutory law dictates a resolution ...

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