United States District Court, W.D. Washington, Seattle
MARKEL AMERICAN INSURANCE COMPANY, a foreign insurer, Plaintiff,
GREG STARK, an individual, Defendant.
ORDER STAYING CASE
RICARDO S. MARTINEZ, CHIEF UNITED STATES DISTRICT JUDGE.
matter comes before the Court on Defendant Greg Stark's
Motion to Dismiss or Stay Action (Dkt. #7), Plaintiff Markel
American Insurance Company (“Markel”)'s
Motion to Consolidate Cases (Dkt. #16), Markel's
Counter-Motion for Declaration of Jurisdiction (Dkt. #18),
and Mr. Stark's Motion for Relief from Deadlines (Dkt.
#23). The Court has determined that oral argument is
unnecessary. For the reasons below, the Court agrees with Mr.
Stark that a stay of this case is warranted, GRANTS his
Motion to Dismiss or Stay Action, and DENIES as moot all
other pending Motions.
case concerns a dispute over an insurance policy issued by
Plaintiff Markel to Defendant Stark, covering a 1960 Chris
Craft vessel that was destroyed in a fire on May 21, 2017.
Dkt. #1 at 2; see also Dkt #9-1.
September 5, 2017, Mr. Stark initiated a state court action
in King County Superior Court against Markel and another
defendant, Degginger McIntosh & Associates, Inc.
(“DMA”) for reformation of the Markel Policy.
See Dkt. #9-1.
days after Mr. Stark filed suit in state court, Markel filed
the instant action, seeking declaratory judgment that there
is no coverage under the Markel Policy and that the policy
should not be equitably reformed. Dkt. #1. On October 5,
2017, Markel removed Mr. Stark's state court action to
this Court in Case No. 2:17-cv-1498-RSM. Mr. Stark filed a
Motion to Remand in that case, which the Court granted.
See Case No. 2:17-cv-1498-RSM, Dkt. #19. That Order
sets forth additional factual background and addresses many
of the same legal issues raised by the parties in this case.
action, meanwhile, the parties have filed several motions.
The Court will first address Defendant Stark's Motion to
Dismiss or Stay Action, Dkt. #7.
Motion to Dismiss or Stay Action
courts usually avoid duplicative litigation when similar
cases are pending in two different federal courts,
‘[g]enerally, as between state and federal courts, the
rule is that the pendency of an action in the state
court is no bar to proceedings concerning the same
matter' in a federal court.” R.R. St. & Co.
v. Transp. Ins. Co., 656 F.3d 966, 974-975, (9th Cir.
2011) (quoting Colorado River Water Conservation Dist. v.
United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 47
L.Ed.2d 483 (1976)) (internal quotation marks omitted)
(emphasis in original). A district court has discretion to
dismiss or stay a federal declaratory judgment action when
“the questions in controversy… can better be
settled in” a pending state court proceeding.
Brillhart v. Excess Insurance Co. of America, 316
U.S. 491, 495, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942). The Court
reaffirmed this principle in Wilton v. Seven Falls
Co., 515 U.S. 277, 290, 115 S.Ct. 2137, 132 L.Ed.2d 214
(1995), holding that a district court may decline to
entertain a federal declaratory judgment action when state
court proceedings “present opportunity for
ventilation of the same state law issues.” The Ninth
Circuit has allowed district courts broad discretion on this
issue “as long as it furthers the Declaratory Judgment
Act's purpose of enhancing judicial economy and
cooperative federalism.” R.R. St. & Co.,
656 F.3d at 975. In Brillhart, the Court articulated
three factors that courts should consider when examining the
propriety of entertaining a declaratory judgment action:
“avoiding needless determination of state law issues;
discouraging forum shopping; and avoiding duplicative
Stark argues that the issue in this case, whether the Policy
should be reformed, is governed exclusively by state law.
Dkt. #7 at 6 (citing Washington Mut. Sav. Bank v.
Hedreen, 125 Wn.2d 521, 886 P.2d 1121 (1994) (setting
forth one standard for reforming a contract under Washington
law); Schmidt v. Am. Commerce Ins. Co., No. C11-1457
MJP, 2011 WL 5570306, at *2 (W.D. Wash. Nov. 16, 2011)
(“[E]specially in the area of insurance law, the scales
tip in favor of state court determination.”);
Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348
U.S. 310, 321 (1955) (holding that marine insurance contracts
are governed by state law); and Cont'l Cas. Co. v.
Robsac Indus., 947 F.2d 1367, 1371 (9th Cir. 1991)
(abstaining where “this case involves insurance law, an
area that Congress has expressly left to the states through
the McCarran-Ferguson Act”)). Mr. Stark argues that his
other claims brought in the parallel state court action arise
exclusively under Washington law. Mr. Stark also argues that
Markel is engaging in forum shopping, citing communication
between the parties prior to filing and the fact that the
state court action is not properly removable to federal
court. Id. at 7-8. Mr. Stark argues that litigating
this declaratory judgment action will result in duplicative
and piecemeal litigation. Id. at 8-9.
Response, Plaintiff Markel argues that this action is based
on exclusive federal jurisdiction and is neither reactive nor
duplicative. Dkt. #18 at 15. Markel discusses how
communications between counsel prior to Mr. Stark's state
court action indicate that Markel intended to file suit, and
that it is really Mr. Stark who has been reactive or
duplicative. Id. Markel repeats arguments about
exclusive federal jurisdiction that the Court has addressed
in the Order remanding the state court action in Case No.
2:17-cv-1498-RSM. Id. at 16 - 17. Markel addresses
the Brillhart factors above. Markel argues that even
if this action required the Court to determine major issues
of state law, it “should be retained to avoid piecemeal
litigation.” Id. at 18. Markel discusses the
prejudice it faces by being forced to try the instant claims
before a jury in state court. Markel argues that the Court
should enter a stay, rather than a dismissal, arguing that it
would be prejudiced “as the state court does not have
jurisdiction over the maritime contract reformation
claim.” Id. at 25.
Reply, Mr. Stark discusses the duplicative nature of this
case, stating, “[n]ot only is the reformation claim
presented in Markel's Declaratory Judgment Action the
mirror image of Mr. Stark's claim for reformation, every
other claim Mr. Stark presents in his State Court Action
arises from the same series of transactions or
occurrences.” Dkt. #33 at 3. Mr. Stark argues that it
would be inefficient and prejudicial to require him to
proceed in federal court on the reformation claim while at
the same time “leaving to the state court the related
issues of Markel's liability under the CPA and
[DMA]'s liability for breaches of its professional and
fiduciary obligations.” Id. at 3-4. Mr. Stark
argues that where his State Court Action can afford more
complete relief against the parties than Markel's single
duplicative reformation claim, abstention is particularly
appropriate. Id. at 4 (citing John Deere Ins.
Co. Through Int'lSpecialty v. Smith Lighterage
Co., 948 ...