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State Farm Fire & Casualty Co. v. Fischer

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

September 26, 2017

STATE FARM FIRE & CASUALTY COMPANY, Plaintiff,
v.
DANIEL FISCHER, Defendant.

          MEMORANDUM OPINION & ORDER

          David J. Hale, Judge

         Anthony Watson sued Daniel Fischer in Jefferson County, Kentucky Circuit court for an alleged assault that took place on a school bus. Fischer's parents held a homeowners insurance policy with State Farm at the time of the alleged assault. State Farm is currently defending Fischer in the state-court case under a reservation of rights. State Farm filed suit in this Court, seeking a declaration of rights regarding Fischer's coverage under the policy. (Docket No. 1) Fischer has moved to dismiss this action without prejudice, arguing that the Court should decline to exercise discretionary jurisdiction. (D.N. 8) After careful consideration, the Court will grant the motion to dismiss without prejudice.

         I. Background

         In December 2010, students Daniel Fischer and Anthony Watson were involved in an altercation on a Jefferson County school bus that left Watson seriously injured. (D.N. 1-2, PageID # 8; D.N. 10-1, PageID # 95) In July 2016, Watson sued Fischer for assault and battery in Jefferson Circuit Court. (D.N. 1-2, PageID # 11) At the time of the 2010 altercation, State Farm insured Fischer's parents under a homeowners insurance policy that provided liability coverage to resident relatives, including their son Daniel. (D.N. 1, PageID # 2) According to the parties, State Farm is currently providing a legal defense to Fischer in the state-court action under a reservation of rights. (D.N. 8-1, PageID # 72; D.N. 10, PageID # 82)

         In December 2016, State Farm filed this declaratory judgment action, seeking a declaration of rights regarding Fischer's coverage under the policy for the alleged assault. (D.N. I, PageID # 3) The policy contains an exclusion for bodily injury “which is either expected or intended by the insured” or “which is the result of willful and malicious acts of the insured.” (D.N. 1-3, PageID # 45) State Farm wants to know whether this exclusion applies to the alleged assault in the state-court action. (D.N. 1, PageID # 2-3)

         Fischer requests dismissal of this case without prejudice, arguing that the Court should decline to exercise its discretionary jurisdiction because the factual issues related to the school-bus altercation are pending before the Jefferson Circuit Court. (D.N. 8, PageID # 69) State Farm argues that this Court should take up the coverage issue, because it is not before the state court and because resolution of the coverage issue would involve legal and factual issues that are distinct from those in the state-court action. (D.N. 10, PageID # 83)

         II. Standard

         The Declaratory Judgment Act gives the Court discretion to “declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). Thus, the Court has “discretion in determining whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional prerequisites.” Travelers Indem. Co. v. Bowling Green Prof'l Assocs., PLC, 495 F.3d 266, 271 (6th Cir. 2007) (quoting Adrian Energy Assocs. v. Mich. Pub. Serv. Comm'n, 481 F.3d 414, 421 (6th Cir. 2007)).

         In deciding whether to exercise jurisdiction under the Act, 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 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.

Scottsdale Ins. Co. v. Flowers, 513 F.3d 546, 554 (6th Cir. 2008) (citing Grand Trunk W. R.R. Co. v. Consol. Rail Corp., 746 F.2d 323, 326 (6th Cir. 1984)).

         III. Discussion

         Fischer argues that at least four of the factors weigh against the Court exercising jurisdiction. (D.N. 8-1, PageID # 74-77) State Farm asserts that all of the factors weigh in favor of the Court exercising jurisdiction. (D.N. 10, PageID # 83-92) The Court will consider each factor in turn.

         A. Whether the Declaratory Action Would ...


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