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Atlantic Casualty Insurance Co. v. Clark

United States District Court, E.D. Kentucky, Northern Division, Covington

December 21, 2017

ATLANTIC CASUALTY INSURANCE COMPANY PLAINTIFF
v.
ERIC CLARK, ET AL. DEFENDANTS

          MEMORANDUM OPINION & ORDER

          David L. Banning United States District Judge

         Plaintiff Atlantic Casualty Insurance Company seeks the entry of a declaratory judgment against Defendants Eric Clark, Matthew Clark, Joan Tiesl Carmack, and Chris Carmack. (Doc. # 21). Additionally, Defendants Joan Tiesl Carmack and Chris Carmack seek entry of summary judgment against Plaintiff. (Doc. # 19). In essence, Plaintiff asks the Court to find that the Absolute Auto, Aircraft, and Watercraft Exclusion in the subject insurance policy applies to the facts of this case, and as a result, the insurance coverage issued to Defendants Eric Clark and Matthew Clark is not applicable to the claims of Joan Tiesl Carmack and Chris Carmack. On the contrary, Defendants ask the Court to find the opposite-namely that the exclusion does not apply and the insurance coverage is applicable to Defendants' claims.

         Both Motions are fully briefed (Docs. # 19-1, 21-1, 25, 26, 27, and 28), and ripe for the Court's review. Upon filing this action, Plaintiff invoked the jurisdiction of this Court under 28 U.S.C. §§ 1332 and 2201. However, because this is an action seeking a declaratory judgment, this Court has discretion whether to exercise jurisdiction pursuant to 28 U.S.C. § 2201. For the reasons that follow, Plaintiff's Motion for Declaratory Judgment (Doc. # 21) and Defendants' Motion for Summary Judgment (Doc. # 19) are hereby denied and this matter is dismissed and stricken from the Court's active docket.

         I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

         The factual scenario that follows is taken from Plaintiff Atlantic Casualty Insurance Company's (“Atlantic Casualty”) Complaint (Doc. # 1) and is undisputed by Defendants. Atlantic Casualty issued a Commercial General Liability Policy to Defendants Eric Clark and Matthew Clark on behalf of Clark Brothers Construction. (Doc. # 1 at ¶ 6). On October 6, 2016, Defendants Joan Tiesl Carmack and Chris Carmack filed a complaint in Campbell County Circuit Court against Defendants Eric Clark and Matthew Clark and Plaintiff Atlantic Casualty, seeking damages for personal injuries sustained from a motor-vehicle accident. (Doc. # 21-1 at 2).

         The motor-vehicle accident that is the subject of this action and the pending case in Campbell County Circuit Court occurred on April 13, 2016, in Campbell County, Kentucky. (Doc. # 1 at ¶ 8). The chain of events leading to the accident started with a ladder falling from a vehicle owned and operated by Defendant Eric Clark while the vehicle was in motion on a public highway. Id. at ¶ 17. Defendant Eric Clark pulled off to the side of the road and walked back onto the highway to retrieve the ladder. Id. A vehicle driven by non-party Matthew Hood slowed down to avoid the ladder, but was then struck from behind by Defendant Joan Tiesl Carmack's vehicle. Id.

         As a result of the motor-vehicle accident, Defendant Joan Tiesl Carmack brought a personal-injury lawsuit in Campbell County Circuit Court alleging that the Atlantic Casualty Commercial General Liability Policy is applicable to the motor-vehicle accident. Id. Defendant Eric Clark's personal automobile policy has tendered $25, 000 to Defendant Joan Tiesl Carmack. Id. However, Defendant Joan Tiesl Carmack's insurance carrier has substituted these funds to preserve subrogation rights against Defendant Eric Clark. Id. Defendant Matthew Clark does not have automobile coverage applicable to this motor-vehicle accident. Doc. # 21-1 at 3.

         The complaint filed in Campbell County Circuit Court by Defendants Joan Tiesl Carmack and Chris Carmack contains three counts: (1) Eric Clark and Matthew Clark negligently obstructed the roadway causing Joan Tiesl Carmack to suffer bodily injuries; (2) Atlantic Casualty was promptly notified of the claim, and despite prompt notice, Atlantic Casualty violated Ky. Rev. Stat. Ann. § 304-12.230 by failing to acknowledge and act promptly in the investigation of the claims; and (3) Chris Carmack has suffered loss of the society, companionship, consortium, and services of his wife, Joan Tiesl Carmack. (Doc. # 1-3 at 4). In the state-court lawsuit, Atlantic Casualty answered and maintains that there is no insurance available for the claims raised in the motor-vehicle accident pursuant to the Clark Brothers Construction's Commercial General Liability Policy. Subsequently, Atlantic Casualty filed its Motion for a Declaratory Judgment in this Court on July 10, 2017. (Doc. # 21).

         II. ANALYSIS

         This Court declines to exercise jurisdiction over this matter pursuant to 28 U.S.C. § 2201.

         Neither party has addressed the issue of whether the Court should exercise jurisdiction. Plaintiff Atlantic Casualty merely states that the Court has jurisdiction to enter a declaratory judgment pursuant to 28 U.S.C. § 2201 without explaining why it is appropriate for the Court to exercise jurisdiction. (Doc. # 21-1 at 1). Additionally, Defendants' Motion for Summary Judgment fails to explain why exercising jurisdiction would be appropriate or inappropriate. Before potentially reaching the substantive issues in this matter, the Court must first consider whether to exercise its discretionary jurisdiction under the Declaratory Judgment Act. Having carefully considered the facts of this matter, and in the context of the factors the Court must consider, the Court declines to exercise jurisdiction.

         The Declaratory Judgment Act provides that federal courts “may” enter declaratory judgments in “case[s] of actual controversy.” See 28 U.S.C. § 2201(a). The Act “confer[s] on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants.” Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995). The United States Supreme Court has advised “that federal courts exercising this discretion should avoid ‘[g]ratuitous interference with the orderly and comprehensive disposition of [ ] state court litigation.'” Aspen Ins. UK Ltd. v. Murriel-Don Coal, Inc., 793 F.Supp.2d 1010, 1012 (E.D. Ky. 2011) (citing Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942)). The Sixth Circuit has heeded the Supreme Court's guidance, “h[olding] on a number of occasions that a district court should stay or dismiss complaints filed by insurance companies seeking a declaratory judgment as to their underlying state court law suits.” Travelers Indem. Co. v. Bowling Green Prof'l Assocs., PLC, 495 F.3d 266, 273 (6th Cir. 2007).

         In this case, the Court has been asked to resolve the exact same issues presented by the exact same parties in a case currently pending before the Campbell County Circuit Court. That case was brought by current Defendants Joan Tiesl Carmack and Chris Carmack against current Defendants Eric Clark and Matthew Clark and current Plaintiff Atlantic Casualty. Furthermore, the same issue is present in both cases-whether the insurance policy that Defendants Eric Clark and Matthew Clark have with Atlantic Casualty provides coverage for Joan Tiesl Carmack's personal-injury claims, or in the alternative, whether those claims fall within the policy's automobile exception. “It is a rare case in which a district court should entertain an insurance company's declaratory-judgment action to resolve coverage issues that are squarely presented in an ongoing state-court case.” Aspen Ins. UK Ltd., 793 F.Supp.2d at 1013 (citing Gov't Emps. Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir. 1998)) (“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.”). While it is true that on occasion the Sixth Circuit has “held that district courts have not abused their discretion by hearing such cases, ” the Sixth Circuit has “repeatedly advised that the best exercise of that discretion, in the mine-run of cases, is to respect the state court's ability to handle the matter.” Id. at 1013-1014.

         The Sixth Circuit employs a five-factor test to determine whether to exercise jurisdiction over declaratory-judgment actions. Those factors are: (1) whether the declaratory action would settle the controversy; (2) whether a declaratory judgment would increase friction between federal and state courts; (3) whether an alternative, better remedy is available; (4) whether a declaratory judgment would serve a “useful purpose in clarifying the legal relations in issue”; and (5) whether the declaratory remedy is being sought merely for the purpose of “procedural fencing” or to “provide an arena for a race for res judicata.” Aspen Ins. UK Ltd., 793 F.Supp.2d at 1014 (citing Grand Trunk W.R. Co. v. Consol. Rail Corp., 746 F.2d ...


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