Bunch v. Nationwide Mutual Insurance

321 P.3d 266, 180 Wash. App. 37
Court of Appeals of Washington·Decided February 3, 2014·No. No. 69600-9-I·Published·Cited by 14 cases

Opinion

Cox, J.

¶1 The priority of action doctrine generally requires that the forum that first gains jurisdiction over a matter retains exclusive authority over it.1 Here, the United States District Court for the Western District of Washington gained jurisdiction over the Consumer Protection Act (CPA), chapter 19.86 RCW, claim by Wanda Bunch [40]*40against Nationwide Mutual Insurance Company and Depositors Insurance Company (collectively Nationwide). That federal court dismissed without prejudice only the request for CPA injunctive relief. Thereafter, Bunch filed this second state action, seeking CPA injunctive relief. Because the trial court did not properly exercise its discretion by denying Nationwide’s motion to stay this action on the basis of the priority of action doctrine, we reverse and remand with instructions.

¶2 In 2011, Bunch’s tenant told her that there was water damage in Bunch’s house. At the time, Bunch had homeowner’s insurance with Nationwide. It denied her insurance claim for this water damage.

¶3 In 2012, Bunch commenced a putative class action against Nationwide in state court. She asserted, among other claims, that Nationwide violated the CPA by relying on ambiguous language in its homeowners’ insurance policies to deny coverage to her and other policyholders. She requested injunctive and other equitable relief along with actual and treble damages.

¶4 Nationwide removed the action to federal district court. The court concluded that it lacked “Article III jurisdiction” with respect to Bunch’s request for CPA injunctive relief. It dismissed the “CPA injunction claim” without prejudice. It appears this decision was based on the fact that Bunch was no longer a policyholder. The federal district court retained jurisdiction to decide whether liability exists under the CPA and to determine what relief, other than injunctive relief, is warranted if liability exists.

¶5 One day after the district court dismissed the request for CPA injunctive relief, Bunch commenced this second action against Nationwide in superior court. She asserted a request for CPA injunctive relief based on the same factual allegations stated in her complaint in her first action.

¶6 Nationwide moved to stay these proceedings, pending the resolution of the CPA claim in federal district court. It [41]*41argued that a stay was necessary under the priority of action doctrine because the actions in state and federal court had identical subject matter, parties, and relief.

¶7 The court denied Nationwide’s motion. We granted discretionary review.

PRIORITY OF ACTION

¶8 Nationwide argues that the trial court abused its discretion when it denied the motion to stay proceedings in state court pending the outcome of proceedings in federal court. Specifically, it argues that the priority of action doctrine requires a stay in this case. We agree.

¶9 This court generally reviews for abuse of discretion a lower court’s determination on a motion to stay proceedings.2 But a decision denying such a motion based on the priority of action doctrine is a legal determination that we review de novo.3

¶10 Under the priority of action doctrine, “ ‘the court which first gains jurisdiction of a cause retains the exclusive authority to deal with the action until the controversy is resolved.’ ”4 This rule applies where two actions share “identity”5 of certain elements. Generally, courts look to whether the actions share identity of (1) subject matter, (2) parties, and (3) relief.6

¶11 While the general rule looks to these three elements, these elements are not to be applied inflexibly.7 Rather, courts have looked beyond these elements and to the policy [42]*42behind the doctrine.8 This was seen in State ex rel. Evergreen Freedom Foundation v. Washington Education Ass’n, where Division Two of this court stated that the underlying purpose of the three elements is to determine whether the “identity” of the actions is “such that a decision in one tribunal would bar proceedings in the other tribunal because of res judicata.”9

¶12 In Evergreen Freedom Foundation, the foundation argued that the priority of action doctrine did not apply to bar its claim in superior court.10 There, the foundation pursued its claims administratively but also sought to bring these claims in superior court.* 11 The trial court denied the foundation’s motion to amend its complaint to include allegations made to the agency because the allegations would violate the priority of action rule.12

¶13 On appeal, Division Two agreed with the trial court.13 Division Two explained that it was undisputed that the first two elements were identical — the subject matter and parties.14 Thus, the issue was whether the third element, identity of relief, was met.15 The foundation argued that there was not an identity of relief because the administrative agency could only levy fines up to $2,500 while the court could “levy fines far in excess of that amount.”16

¶14 In determining that there was identity of relief, the court relied on “the policy behind the priority of action doc[43]*43trine, the ability to apply res judicata to a later action in superior court.”17 The court concluded that the elements of res judicata were met and the priority of action rule applied.18

¶15 The generic term “res judicata” may include both res judicata or claim preclusion and collateral estoppel or issue preclusion.19 Because “res judicata” is a general term, a court may look to both claim and issue preclusion to determine whether there is an “identity” of the actions.20

¶16 “Res judicata [or claim preclusion] precludes a later lawsuit when the second lawsuit has identical subject matter, cause of action, persons and parties, and the quality of the persons for or against whom the claim is made.”21

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Bunch v. Nationwide Mutual Insurance, 321 P.3d 266, 180 Wash. App. 37 (Wash. Ct. App. 2014).

321 P.3d 266 (Bunch v. Nationwide Mutual Insurance) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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