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American National Property and Casualty Co. v. Wilson

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

April 26, 2019



          David L. Banning United States District Judge.

         Plaintiff American National Property and Casualty Company (ANPCC) brought this declaratory-judgment action to adjudicate its obligations under an insurance contract. (Doc. # 1). ANPCC's suit arises from an underlying tort action brought in Kentucky state court by Defendant Jalontai Wilson against ANPCC's insureds, Dalton and Douglas Conway, following an automobile accident between Dalton Conway and Jalontai Wilson. Id. ANPCC alleges certain facts that, if true, would-according to ANPCC-invoke an exclusion in the Conways' automobile insurance policy and free ANPCC from its contractual obligations. Id.

         This matter is now before the Court on Defendant Jalontai Wilson's Motion to Dismiss for Lack of Subject Matter Jurisdiction. (Doc. # 10). Wilson argues that the Court should exercise its discretion to decline jurisdiction over this declaratory-judgment action in the interest of fairness, judicial efficiency, and federalism. Id. ANPCC having filed its Response (Doc. # 13) and the time for further briefing having expired under the Local Civil Rules, the matter is now ripe for review. L.R. 7.1(c). For the reasons set forth herein, Defendant Wilson's Motion to Dismiss is granted.


         Plaintiff-insurer ANPCC has named its insureds, Dalton and Douglas Conway, as well as claimant Jalontai Wilson, as Defendants in this declaratory-judgment action. See (Doc. # 1). Defendant Wilson is the Plaintiff in the underlying state-court action filed in Kenton County Circuit Court on June 7, 2018.[1] (Doc. # 10-2). Wilson's suit named Dalton Conway, Douglas Conway, and ANPCC. Id. Therefore, the same parties involved in the instant declaratory-judgment action are parties to the underlying state-court suit. See id.

         Wilson's state-court Complaint alleges that on September 5, 2017, he was a passenger in Dalton Conway's vehicle, and was injured while exiting the vehicle due to Mr. Conway's operation of the vehicle. Id. As to Dalton Conway, Wilson brought a negligence claim (Count One) and a negligence-per-se claim based upon Kentucky's reckless-driving statute, Ky. Rev. Stat. § 189.290 (Count Two). Id. Wilson also alleges assault and battery claims against Dalton Conway (Counts Four and Five) as well as a remedy-for-criminal-acts claim under Ky. Rev. Stat. § 446.070 (Count Six) and a gross-negligence claim (Count Seven). Id. at 4-5. As to the owner of the vehicle, Douglas Conway, Wilson brought a negligent-entrustment claim (Count Three). Id. at 3. Finally, as to ANPCC, the Conways' motor-vehicle insurer, Wilson brought a claim for reparation benefits under Ky. Rev. Stat. § 304.39-050 (Count Eight). Id. at 7.

         ANPCC initiated this declaratory-judgment action on July 11, 2018-approximately thirty-four days after Jalontai Wilson filed his state-court complaint.[2] (Doc. # 1). In its federal complaint, ANPCC summarized the allegations in Wilson's state-court Complaint, see (Doc. # 1 at 2-3), and added an allegation that the motor-vehicle accident arose out of Dalton Conway's intentional acts and criminal conduct. Id. at 3. Specifically, ANPCC's Complaint alleges that on the day of the subject accident, Dalton Conway was selling marijuana to Jalontai Wilson and an unknown individual when Wilson and the unknown individual attempted to rob him. Id. ANPCC further alleges that during the attempted robbery, Conway attempted to flee to avoid being shot. Id. at 3. In the process of fleeing, Conway allegedly struck Wilson with the door of the insured vehicle, causing significant injuries. Id. at 2-3.

         ANPCC's Complaint alleges that the insurer is entitled to a declaratory judgment confirming that there is no coverage under the circumstances because Wilson's injuries occurred as the result of an “intentional act” by Dalton Conway “while participating in or preparing to commit a criminal act, ” triggering several exclusions under the policy. Id. at 3-4. Further, ANPCC seeks a declaration not only that it “has no liability” under the policy, but that it also “has no duty or obligation to defend Douglas Conway and/or Dalton Conway” against Wilson's state-court tort claims.[3] (Doc. # 1 at 5-6).

         In its motion to dismiss (Doc. # 10), Wilson argues that the Court should decline jurisdiction over this action in the interest of fairness, judicial efficiency, and federalism. Id. Because this case presents the same parties and similar issues of fact as those involved in the underlying state-court litigation, Wilson argues that litigation of the insurance issue before this Court would be inefficient, unfair, and result in potentially overlapping factfinding. See Id. ANPCC filed a Response on September 20, 2018. (Doc. # 13). The time for further briefing having expired, see L. R. 7.1(c), the matter is now ripe.

         II. ANALYSIS

         A. Standard of Review

         The Declaratory Judgment Act “confer[s] on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants.” Scottsdale Ins. Co. v. Flowers, 513 F.3d 546, 554 (6th Cir. 2008) (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995)); 28 U.S.C. § 2201 (providing that courts “may, ” not must, “declare the rights and other legal relations of any interested party seeking such declaration”). Thus, the U.S. Supreme Court has held that “[a]lthough the District Court ha[s] jurisdiction of the suit under the Federal Declaratory Judgments Act, it [i]s under no compulsion to exercise that discretion.” United States Fire Ins. Co. v. Albex Aluminum, Inc., 161 Fed.Appx. 562, 564 (6th Cir. 2006) [Albex] (citing Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494 (1942)). Moreover, unlike the high threshold required to invoke Colorado River abstention, courts need not “point to ‘exceptional circumstances' in declining to exercise jurisdiction in a declaratory judgment suit.” Id. (citing Wilton, 515 U.S. at 286; Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 818-20 (1976)).

         “[A] district court's discretion is not unfettered, however.” Albex, 161 Fed.Appx. at 564. The Sixth Circuit has identified five factors that a district court must consider in deciding whether or not to exercise jurisdiction over a request for a declaratory judgment. Grand Trunk W. R.R. Co. v. Consol. Rail Corp., 746 F.2d 323 (6th Cir. 1984). Subsequently refined to add three additional subfactors, the present formulation of the Grand Trunk test requires the district court to analyze the following 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 the friction between our federal and state courts and improperly encroach upon state ...

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