1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Larry Theis, et al., No. CV-22-00791-PHX-SMB
10 Plaintiffs, ORDER
11 v.
12 American Family Mutual Insurance Company, et al., 13 Defendants. 14 15 Pending before the Court is Larry and Solveig Theis’ (collectively “Plaintiffs”) 16 Motion to Remand (Doc. 12.), and Motion to Strike (Doc. 14.), portions of Defendants’ 17 (“American Family’s”) Answer. Also before the Court is American Family’s Motion to 18 Transfer Venue to the District of Minnesota. (Doc. 20.) The Court has considered all three 19 fully briefed motions and the relevant legal authority. For the following reasons, the Court 20 will grant Plaintiffs’ Motion to Remand. The Court will deny American Family’s Motion 21 to Transfer Venue and defer ruling on Plaintiffs’ Motion to Strike to Arizona State Court. 22 I. BACKGROUND 23 Plaintiffs are Minnesota residents that live in Arizona during winter. (Doc. 1-1 at 24 22 ¶ 25.) In March 2021, Larry was riding Solveig’s 1996 Harley Davidson motorcycle 25 (“Motorcycle”) when he crashed into a stopped vehicle. (Id. at 14 ¶¶ 5–6.) The Motorcycle 26 was insured by American Family under policy number 0608-8137-01-80-SCYC-MN 27 (“Policy). (Id. at 15 ¶ 8.) 28 In March 2022, Plaintiffs requested declaratory relief in Arizona State Court, 1 seeking declarations that: (1) Arizona law applied to Plaintiffs’ underinsured motorist 2 (“UIM”) coverage, and (2) Plaintiffs can stack UIM coverage “of all applicable insurance 3 policies” issued by American Family. (Id. at 23–24.) American Family removed this 4 lawsuit to this Court two months later. (See Doc. 1.) 5 II. DISCUSSION 6 In their Motion to Remand, Plaintiffs contend the factors from Brillhart v. Excess 7 Ins. Co. of Am. warrant abstention. 316 U.S. 491 (1942). Federal courts have a “virtually 8 unflagging obligation” to exercise the jurisdiction given to them. Colo. River Water 9 Conservation Dist. v. United States, 424 U.S. 800, 817 (1976). Abstention is thus 10 permissible only in limited circumstances. United States v. Morros, 268 F.3d 695, 703 (9th 11 Cir. 2001). 12 In Brillhart, the Supreme Court held “it would be uneconomical as well as vexatious 13 for a federal court to proceed in a declaratory judgment suit where another suit is pending 14 in a state court presenting the same issues, not governed by federal law, between the same 15 parties.” 316 U.S. at 495. Brillhart set forth multiple factors to guide a district court’s 16 discretion in declaratory judgment cases. See Gerdes v. GEICO Indem. Co., No. CV-10- 17 2165-PHX-GMS, 2011 WL 649046, at *1 (D. Ariz. Feb. 11, 2011). Under those factors, 18 a district court should: (1) “avoid needless determination of state law issues”; (2) 19 “discourage litigants from filing declaratory actions as a means of forum shopping”; and 20 (3) “avoid duplicative litigation.” Gov’t Emps. Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th 21 Cir. 1998) (citing Cont’l Cas. Co. v. Robsac Indus., 947 F.2d 1367, 1371–73 (9th Cir. 22 1991)) (overruled on other grounds by Dizol). 23 1. Needless Determination of State Law Issues 24 Plaintiffs contend abstention is appropriate because this case involves a needless 25 determination of state law issues, namely UIM coverage. A needless determination of state 26 law “may involve an ongoing parallel state proceeding regarding the precise state law issue, 27 an area of law Congress expressly reserved to the states, or a lawsuit with no compelling 28 federal interest (e.g., a diversity action).” 757BD LLC v. Nat’l Union Fire Ins. Co. of 1 Pittsburgh, PA, 330 F.Supp.3d 1153, 1162 (D. Ariz. 2016) (quoting Burlington Ins. Co. v. 2 Panacorp, Inc., 758 F.Supp.2d 1121, 1142 (D. Haw. 2010) (internal quotation marks 3 omitted)). Insurance coverage is generally a state law issue that warrants a state court’s 4 adjudication. See GEICO Gen. Ins. Co. v. Tucker, No. CV-13-02072-PHX-GMS, 2014 5 WL 1713766, at *2 (D. Ariz. Apr. 30, 2014). “However, there is no presumption in favor 6 of abstention in declaratory actions generally, nor in insurance coverage cases 7 specifically.” Dizol, 133 F.3d at 1225. Declaratory judgment actions based on insurance 8 coverage therefore involve a district court’s routine exercise of diversity jurisdiction. 9 Diamond State Ins. Co. v. Red’s Blue Goose Saloon Inc., No. CV-11-145-BLG-RFC, 2012 10 WL 1898641, at *2 (D. Mont. May 23, 2012). 11 Plaintiffs argue this factor favors abstention because this case involves “important 12 Arizona UIM insurance issues.” (Doc. 12 at 4.) Plaintiffs further argue that the Court’s 13 retention of jurisdiction would deprive “Arizona state courts of the opportunity to continue 14 to develop uniform UIM insurance coverage law and policy.” (Id. at 5.) The Court is 15 unpersuaded that retention would require needless determination of state law issues 16 because UIM coverage cases are well developed in Arizona. See, e.g., Taylor v. Travelers 17 Indem. Co. of Am., 9 P.3d 1049, 1059 (Ariz. 2000) (Arizona’s statute “expressly allows the 18 preclusion of stacking UIM coverages”). However, resolution of this action rests 19 exclusively on state law so the Court finds this factor weighs in favor of abstention. 20 2. Forum Shopping 21 Plaintiffs contend American Family’s removal of this case to federal court and 22 subsequent Motion to Transfer to the District of Minnesota “appears to be blatant ‘forum 23 shopping.’” (Doc. 17 at 8.) The Court and relevant caselaw reject that contention. See 24 Huth v. Hartford Ins. Co. of the Midwest, 298 F.3d 800, 804 (9th Cir. 2002) (forum 25 shopping is not apparent simply because one party prefers state resolution and the other 26 prefers federal resolution). The goal of this Brillhart factor is to prevent “reactive” 27 litigation—such as an insurer filing a federal declaratory action “during the pendency of a 28 non-removable state court action presenting the same issues of state law.” Devs. Sur. and 1 Indem. Co. v. Coyote Creek Constr. Inc., No. CV-20-00914-PHX-SRB, 2021 WL 2 1930270, at *6 (D. Ariz. Jan. 11, 2021) (quoting R.R. St. & Co. Inc. v. Transp. Ins. Co., 3 656 F.3d 966, 976 (9th Cir. 2011)) (internal quotation marks omitted). 4 American Family’s removal to federal court is a consequence of Plaintiffs’ filing 5 suit in Arizona State Court. But American Family’s removal is not reactive “in the sense 6 that it is trying to obtain some sort of undue advantage.” Id. (citing 757BD LLC, 330 7 F.Supp.3d at 1166). There is no pending, non-removable state court action addressing 8 Plaintiffs’ raised issues. And whether transfer to the District of Minnesota is proper 9 involves a separate, independent inquiry that is irrelevant if the Court remands. The Court 10 finds this factor favors retention. 11 3. Avoiding Duplicative Litigation 12 The Court finds this factor favors retention, or is at least neutral, because the parties 13 agree this lawsuit is not duplicative of any state court action. (Doc. 12 at 3–4; Doc. 15 at 14 5–6.) 15 4.
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Larry Theis, et al., No. CV-22-00791-PHX-SMB
10 Plaintiffs, ORDER
11 v.
12 American Family Mutual Insurance Company, et al., 13 Defendants. 14 15 Pending before the Court is Larry and Solveig Theis’ (collectively “Plaintiffs”) 16 Motion to Remand (Doc. 12.), and Motion to Strike (Doc. 14.), portions of Defendants’ 17 (“American Family’s”) Answer. Also before the Court is American Family’s Motion to 18 Transfer Venue to the District of Minnesota. (Doc. 20.) The Court has considered all three 19 fully briefed motions and the relevant legal authority. For the following reasons, the Court 20 will grant Plaintiffs’ Motion to Remand. The Court will deny American Family’s Motion 21 to Transfer Venue and defer ruling on Plaintiffs’ Motion to Strike to Arizona State Court. 22 I. BACKGROUND 23 Plaintiffs are Minnesota residents that live in Arizona during winter. (Doc. 1-1 at 24 22 ¶ 25.) In March 2021, Larry was riding Solveig’s 1996 Harley Davidson motorcycle 25 (“Motorcycle”) when he crashed into a stopped vehicle. (Id. at 14 ¶¶ 5–6.) The Motorcycle 26 was insured by American Family under policy number 0608-8137-01-80-SCYC-MN 27 (“Policy). (Id. at 15 ¶ 8.) 28 In March 2022, Plaintiffs requested declaratory relief in Arizona State Court, 1 seeking declarations that: (1) Arizona law applied to Plaintiffs’ underinsured motorist 2 (“UIM”) coverage, and (2) Plaintiffs can stack UIM coverage “of all applicable insurance 3 policies” issued by American Family. (Id. at 23–24.) American Family removed this 4 lawsuit to this Court two months later. (See Doc. 1.) 5 II. DISCUSSION 6 In their Motion to Remand, Plaintiffs contend the factors from Brillhart v. Excess 7 Ins. Co. of Am. warrant abstention. 316 U.S. 491 (1942). Federal courts have a “virtually 8 unflagging obligation” to exercise the jurisdiction given to them. Colo. River Water 9 Conservation Dist. v. United States, 424 U.S. 800, 817 (1976). Abstention is thus 10 permissible only in limited circumstances. United States v. Morros, 268 F.3d 695, 703 (9th 11 Cir. 2001). 12 In Brillhart, the Supreme Court held “it would be uneconomical as well as vexatious 13 for a federal court to proceed in a declaratory judgment suit where another suit is pending 14 in a state court presenting the same issues, not governed by federal law, between the same 15 parties.” 316 U.S. at 495. Brillhart set forth multiple factors to guide a district court’s 16 discretion in declaratory judgment cases. See Gerdes v. GEICO Indem. Co., No. CV-10- 17 2165-PHX-GMS, 2011 WL 649046, at *1 (D. Ariz. Feb. 11, 2011). Under those factors, 18 a district court should: (1) “avoid needless determination of state law issues”; (2) 19 “discourage litigants from filing declaratory actions as a means of forum shopping”; and 20 (3) “avoid duplicative litigation.” Gov’t Emps. Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th 21 Cir. 1998) (citing Cont’l Cas. Co. v. Robsac Indus., 947 F.2d 1367, 1371–73 (9th Cir. 22 1991)) (overruled on other grounds by Dizol). 23 1. Needless Determination of State Law Issues 24 Plaintiffs contend abstention is appropriate because this case involves a needless 25 determination of state law issues, namely UIM coverage. A needless determination of state 26 law “may involve an ongoing parallel state proceeding regarding the precise state law issue, 27 an area of law Congress expressly reserved to the states, or a lawsuit with no compelling 28 federal interest (e.g., a diversity action).” 757BD LLC v. Nat’l Union Fire Ins. Co. of 1 Pittsburgh, PA, 330 F.Supp.3d 1153, 1162 (D. Ariz. 2016) (quoting Burlington Ins. Co. v. 2 Panacorp, Inc., 758 F.Supp.2d 1121, 1142 (D. Haw. 2010) (internal quotation marks 3 omitted)). Insurance coverage is generally a state law issue that warrants a state court’s 4 adjudication. See GEICO Gen. Ins. Co. v. Tucker, No. CV-13-02072-PHX-GMS, 2014 5 WL 1713766, at *2 (D. Ariz. Apr. 30, 2014). “However, there is no presumption in favor 6 of abstention in declaratory actions generally, nor in insurance coverage cases 7 specifically.” Dizol, 133 F.3d at 1225. Declaratory judgment actions based on insurance 8 coverage therefore involve a district court’s routine exercise of diversity jurisdiction. 9 Diamond State Ins. Co. v. Red’s Blue Goose Saloon Inc., No. CV-11-145-BLG-RFC, 2012 10 WL 1898641, at *2 (D. Mont. May 23, 2012). 11 Plaintiffs argue this factor favors abstention because this case involves “important 12 Arizona UIM insurance issues.” (Doc. 12 at 4.) Plaintiffs further argue that the Court’s 13 retention of jurisdiction would deprive “Arizona state courts of the opportunity to continue 14 to develop uniform UIM insurance coverage law and policy.” (Id. at 5.) The Court is 15 unpersuaded that retention would require needless determination of state law issues 16 because UIM coverage cases are well developed in Arizona. See, e.g., Taylor v. Travelers 17 Indem. Co. of Am., 9 P.3d 1049, 1059 (Ariz. 2000) (Arizona’s statute “expressly allows the 18 preclusion of stacking UIM coverages”). However, resolution of this action rests 19 exclusively on state law so the Court finds this factor weighs in favor of abstention. 20 2. Forum Shopping 21 Plaintiffs contend American Family’s removal of this case to federal court and 22 subsequent Motion to Transfer to the District of Minnesota “appears to be blatant ‘forum 23 shopping.’” (Doc. 17 at 8.) The Court and relevant caselaw reject that contention. See 24 Huth v. Hartford Ins. Co. of the Midwest, 298 F.3d 800, 804 (9th Cir. 2002) (forum 25 shopping is not apparent simply because one party prefers state resolution and the other 26 prefers federal resolution). The goal of this Brillhart factor is to prevent “reactive” 27 litigation—such as an insurer filing a federal declaratory action “during the pendency of a 28 non-removable state court action presenting the same issues of state law.” Devs. Sur. and 1 Indem. Co. v. Coyote Creek Constr. Inc., No. CV-20-00914-PHX-SRB, 2021 WL 2 1930270, at *6 (D. Ariz. Jan. 11, 2021) (quoting R.R. St. & Co. Inc. v. Transp. Ins. Co., 3 656 F.3d 966, 976 (9th Cir. 2011)) (internal quotation marks omitted). 4 American Family’s removal to federal court is a consequence of Plaintiffs’ filing 5 suit in Arizona State Court. But American Family’s removal is not reactive “in the sense 6 that it is trying to obtain some sort of undue advantage.” Id. (citing 757BD LLC, 330 7 F.Supp.3d at 1166). There is no pending, non-removable state court action addressing 8 Plaintiffs’ raised issues. And whether transfer to the District of Minnesota is proper 9 involves a separate, independent inquiry that is irrelevant if the Court remands. The Court 10 finds this factor favors retention. 11 3. Avoiding Duplicative Litigation 12 The Court finds this factor favors retention, or is at least neutral, because the parties 13 agree this lawsuit is not duplicative of any state court action. (Doc. 12 at 3–4; Doc. 15 at 14 5–6.) 15 4. Other Factors 16 American Family also argue the considerations of comity and judicial economy 17 favor retention. (Doc. 15 at 9.) See Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995) 18 (“[T]he normal principle that federal courts should adjudicate claims within their 19 jurisdiction yields to considerations of practicality and wise judicial administration.”). 20 American Family argues that the case will be needlessly delayed by requiring the state 21 court to become familiar with factual and legal issues that this Court is already familiar 22 with. However, this case is in its early stages, and neither the Court nor the parties have 23 devoted much time or expense litigating this case. The Court’s decision on Plaintiffs’ 24 Motion to Remand did not involve in depth factual findings. 25 The Court concludes that the Brillhart factors cumulatively favor abstention of 26 jurisdiction. Thus, the Court will grant Plaintiffs’ Motion to Remand and deny American 27 Family’s Motion to Transfer as moot. The Court will also defer ruling on Plaintiffs’ 28 Motion to Strike to Arizona State Court, pursuant to this order of remand. 1 II. CONCLUSION 2 Accordingly, 3 IT IS ORDERED granting Plaintiffs’ Motion to Remand. (Doc. 12.) 4 IT IS FURTHER ORDERED that the Clerk of the Court shall remand this case to 5 || the Maricopa County Superior Court. 6 IT IS FURTHER ORDERED denying American Family’s Motion to Transfer 7\| Venue to the District of Minnesota (Doc. 20.), and deferring decision on Plaintiffs’ Motion 8 || to Strike (Doc. 14.) to Maricopa County Superior Court. 9 Dated this 20th day of September, 2022. 10 _ ul Sas > 2 > fonorable Susan M, Brovich 13 United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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