United States District Court, W.D. Washington, Seattle
ORDER ON MOTION TO DISMISS OR STAY
L. ROBART, UNITED STATES DISTRICT JUDGE
the court is Defendant Selective Insurance Company of
America's (“Selective”) motion to dismiss or
stay. (MTD (Dkt. # 6); Selective Supp. (Dkt. # 17).)
Plaintiff T-Mobile Northeast, LLC (“T-Mobile NE”)
opposes dismissal and the basis on which Selective requests a
stay but agrees that the court should stay this matter.
(Resp. (Dkt. # 10); T-Mobile NE Supp. (Dkt. # 19).) The court
has considered Selective's motion, the parties'
submissions in support of and in opposition to the motion,
the relevant portions of the record, and the applicable law.
Being fully advised,  the court GRANTS Selective's motion
and STAYS this matter but for reasons other than those raised
by the parties.
The 2015 Action
related case, T-Mobile USA-T-Mobile NE's parent
company-asserted that (1) it was an additional insured under
a Selective insurance policy or otherwise entitled to defense
costs under that policy, and (2) Selective wrongfully failed
to defend and indemnify T-Mobile USA in litigation in New
York State (“the New York Action”). See T-Mobile
USA v. Selective Ins. Co. of Am., No. C15-1739JLR (W.D.
Wash.) (“the 2015 Action”), Dkt. ## 1-1
(“Compl.”), 6/27/17 Order, 10/19/17 Order.
T-Mobile USA sought a declaratory judgment that Selective was
contractually obligated to defend and indemnify T-Mobile USA
in the New York Action, and brought claims for (1) breach of
the insurance contract, (2) attorneys' fees, (3) breach
of the duty of good faith and fair dealing, (4) violation of
the Washington State Consumer Protection Act
(“CPA”), RCW 19.86, et seq., and (5)
coverage by estoppel. Id., Compl. ¶¶
parties in that case cross-moved for summary judgment.
See id., 6/27/17 Order. On June 27, 2017, the court
denied T-Mobile USA's motion for partial summary
judgment, granted in part Selective's motion for summary
judgment, and reserved ruling in part on Selective's
motion. (Id. at 2.) Specifically, on T-Mobile
USA's breach of contract and insurance bad faith claims,
the court denied T-Mobile USA summary judgment and granted
Selective summary judgment, and reserved ruling on
Selective's motion for summary judgment on the consumer
fraud claim. See generally Id. Of particular
relevance for the present case, the court concluded that
T-Mobile USA was not entitled to coverage under the policy as
T-Mobile NE's parent corporation. See Id. at
16-36. T-Mobile USA later moved for reconsideration, which
the court denied. See id., Dkt. # 83
(“MFR”), 10/19/17 Order. The court also concluded
that no further claims or issues remained for decision and
denied as moot Selective's motion for summary judgment on
the consumer fraud claim. Id., 10/19/17 Order.
T-Mobile USA has since appealed to the Ninth Circuit Court of
Appeals. See id., Dkt. ## 93
(“Judgment”), 94 (“Not. of Appeal”).
The New Jersey Action and This Action
on the court's rulings, on June 28, 2017, T-Mobile NE
tendered its own claim for defense and indemnification to
Selective. (See Sheridan Decl. (Dkt. # 11) ¶
18, Ex. Q (Dkt. # 11-17) (“Tender”) at 3; see
also Tindal Decl. (Dkt. # 7) ¶ 8, Ex. G (Dkt. #
7-7) (“Denial”) at 2.) Selective acknowledged
receipt of T-Mobile NE's claim, investigated the claim,
and on July 27, 2017, denied coverage based on the
policy's Professional Services Exclusion. (See
Denial at 2-5.) That same day, after T-Mobile NE received
Selective's denial, counsel for T-Mobile NE emailed
Selective's counsel to seek “confirm[ation] that
Selective would agree not to try to institute litigation
regarding the denial of the T-Mobile [NE] tender until [the
undersigned judge] decides the pending motion for
reconsideration” in the 2015 Action. (Sheridan Decl.
¶ 20, Ex. S (Dkt. # 11-19) at 2.) However, earlier that
day at 8:48 a.m. PDT, Selective had filed a declaratory
judgment action in the Superior Court of New Jersey
(“the New Jersey Action”). (Tindal Decl. ¶
9, Ex. H (Dkt. # 7-8) (“NJ Compl.”) at 5, 11-13.)
At 2:03 p.m. PDT, T-Mobile NE filed this case in King County
Superior Court, “prompted” by Selective's
suit to file the case as a
“‘placeholder.'” (Resp. at 3; see
also Compl. (Dkt. # 1-1).)
NE removed the New Jersey Action to the District Court for
the District of New Jersey. (Tindal Decl. ¶ 11, Ex. J
(Dkt. # 7-10) (“Not. of Removal”).) In that case,
Selective seeks a declaration that it has no duty to defend
or indemnify T-Mobile NE in the New York Action. (NJ Compl.
at 5, 11-13.) On February 23, 2018, T-Mobile NE moved to stay
the New Jersey Action pending resolution of T-Mobile
USA's appeal of the 2015 Action. (See 2d Tindal
Decl. (Dkt. # 18) ¶ 5, Ex. D (Dkt. # 18-4)
(“T-Mobile NE Mot.”) at 24 (arguing for a stay
based on the court's inherent authority).) Magistrate
Judge Michael A. Hammer denied the motion, concluding that
“T-Mobile [NE]'s central premise for its
motion-i.e., that the Ninth Circuit's resolution of its
appeal in the [2015 Action] will moot [the New Jersey
Action]-is too speculative and attenuated to warrant a
stay.” (Id. ¶ 8, Ex. G (Dkt. # 18-7) at
15.) T-Mobile NE appealed Magistrate Judge Hammer's
decision to District Judge Madeline Cox Arleo. (See
2d Sheridan Decl. (Dkt. # 20) ¶ 2, Ex. A (Dkt. # 20-1)
(“NJ Appeal”). Judge Arleo has not yet ruled on
that appeal. See Selective Ins. Co. of Am. v. T-Mobile
Ne., LLC, No. C17-6420-MCA-MAH, Dkt.
T-Mobile NE seeks a declaration that Selective is obligated
to defend and indemnify T-Mobile NE in the New York Action
and brings claims for breach of contract, attorneys'
fees, bad faith, violation of the CPA, and coverage by
estoppel. (Compl. ¶¶ 141-58.) Selective removed the
case on August 24, 2017 (see Not. of Removal (Dkt. #
1)), and shortly thereafter, filed the instant motion to
dismiss or stay (see MTD). On May 17, 2018, the
Honorable Robert S. Lasnik transferred this case to the
undersigned judge as related to the 2015 Action.
(See Dkt. (5/17/18 entry).) Upon transfer, the court
ordered supplemental briefing on Selective's motion.
(See 5/18/18 Order (Dkt. # 16).)
contends that this action is identical to the New Jersey
Action and therefore seeks a dismissal or stay under the
first to file rule. (See MTD at 2.) T-Mobile NE
“nominally agrees” that the court should stay
this case but argues that the stay should instead be based on
finding that the 2015 Action is the first-filed case. (Resp.
at 2.) Thus, the parties agree to a stay but dispute the
basis on which it should be granted.
court concludes that a stay is appropriate but does so
pursuant to its inherent authority rather than the first to
file rule. “[T]he power to stay proceedings is
incidental to the power inherent in every court to control
disposition of the cases on its docket with economy of time
and effort for itself, for counsel, and for litigants.”
Landis v. N. Am. Co., 299 U.S. 248, 254 (1936).
“The exertion of this power calls for the exercise of
sound discretion.” CMAX, Inc. v. Hall, 300
F.2d 265, 268 (9th Cir. 1962); see Clinton v. Jones,
520 U.S. 681, 706 (1997) (“The [court] has broad
discretion to stay proceedings as an incident to its power to
control its own docket.”). “A trial court may,
with propriety, find it is efficient for its own docket and
the fairest course for the parties to enter a stay of an
action before it, pending resolution of independent
proceedings which bear upon the case.” Leyva v.
Certified Grocers of Cal., Ltd., 593 F.2d 857, 863 (9th
Cir. 1979). A court must weigh “the competing interests
which will be affected by the granting or refusal to grant a
stay.” Lockyer v. Mirant Corp., 398 F.3d 1098,
1110 (9th Cir. 2005) (citing CMAX, 300 F.2d at 268).
Those interests are: (1) “the possible damage which may