Young v. Owners Insurance Company <B><font color=red>DO NOT DOCKET IN THIS CASE ALL ENTRIES ARE TO BE MADE IN THE LEAD CASE 20cv40046 </font></B>

• Court: District Court, D. Massachusetts
• Decided: October 28, 2020
• Docket: 4:20-cv-40134
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Bradley Young, No. CV-20-08077-PCT-DWL

10 Plaintiff, ORDER

11 v.

12 Owners Insurance Company, et al.,

13 Defendants. 14 15 INTRODUCTION 16 In December 2018, Plaintiff Bradley Young sustained injuries when he and his then- 17 wife, Wendy Burdett, were struck by an uninsured motorcyclist. In the aftermath of the 18 incident, Young’s counsel sent a letter to Defendant Progressive Casualty Insurance 19 Company (“Progressive”) asserting that Young was entitled to uninsured motorist benefits 20 under a policy that Progressive had issued to Young and Burdett. In response, Progressive 21 sent a detailed letter to Young’s counsel that identified several reasons why it believed 22 there was no coverage. In this letter, Progressive also announced that it would be filing a 23 declaratory judgment action in Massachusetts, where the underlying policy had been 24 issued, to resolve the parties’ dispute: “Progressive will be filing a Declaratory Judgment 25 Complaint in the United States District Court for the District of Massachusetts to obtain 26 declarations and orders from the Court as to its duties and obligations, if any, under the 27 [policy] issued to Mr. Young and Ms. Burdett. We will forward a courtesy copy of the 28 Complaint to you . . . .” (Doc. 21-2 at 10.) 1 The next day, in an apparent effort to beat Progressive to the courthouse, Young 2 filed this action. He seeks a declaration that he is entitled to uninsured motorist benefits 3 under the policy issued by Progressive as well as under policies issued by two other 4 insurers, Commerce Insurance Company (“Commerce”) and Owners Insurance Company 5 (“Owners”). About two weeks later, Progressive filed its planned lawsuit in Massachusetts, 6 which involves many of the same parties and raises similar issues. 7 Now pending before the Court is Progressive’s motion to dismiss or transfer. (Doc. 8 21.) As explained below, the Court agrees with Progressive that Young should not profit 9 from his anticipatory filing of suit. Thus, Young’s claims against Progressive and 10 Commerce will be transferred to the District of Massachusetts, where they can be resolved 11 as part of Progressive’s parallel action. This outcome avoids the need to resolve 12 Progressive’s other dismissal arguments. Finally, Young’s claim against Owners will not 13 be transferred because Owners is not a party in the Massachusetts action and may not be 14 subject to personal jurisdiction in Massachusetts. Instead, the Court will sever Young’s 15 claim against Owners and retain jurisdiction over it. 16 BACKGROUND 17 I. Underlying Facts 18 The operative complaint alleges as follows. On December 31, 2018, Young and 19 Burdett, who were married at the time, attended a party in Glamis, California. (Doc. 20-1 20 ¶¶ 9, 12.) While they were walking home from the party, an uninsured motorcyclist struck 21 and injured Young. (Id. ¶¶ 13-19.) 22 Young contends his injuries are covered by the uninsured motorist provisions of 23 three different insurance policies—a motorcycle policy issued by Progressive, a 24 commercial automobile policy issued by Owners, and a personal automobile policy issued 25 by Commerce. (Id. ¶ 20.) Progressive and Owners denied coverage, and Commerce has 26 taken the position that its coverage is secondary to the other policies. (Id. ¶¶ 21-22.) 27 Young is a citizen of Arizona. (Id. ¶ 5.) Owners is a citizen of Michigan, 28 Progressive is a citizen of Ohio, and Commerce is a citizen of Massachusetts. (Id. ¶¶ 6-8.) 1 II. Procedural History 2 On April 7, 2020, Progressive sent a 10-page letter to Young’s counsel. (Doc. 21- 3 2.) The letter was in response to an earlier letter from Young’s counsel, which is not part 4 of the record, concerning Young’s claim for uninsured motorist benefits. (Id.) In its letter, 5 Progressive identified several reasons why it was denying coverage. (Id.) On the final 6 page of the letter, Progressive wrote: “Progressive will be filing a Declaratory Judgment 7 Complaint in the United States District Court for the District of Massachusetts to obtain 8 declarations and orders from the Court as to its duties and obligations, if any, under the 9 [policy] issued to Mr. Young and Ms. Burdett. We will forward a courtesy copy of the 10 Complaint to you . . . .” (Id. at 10.) 11 The next day, on April 8, 2020, Young initiated this action against Owners and 12 Progressive, invoking diversity jurisdiction. (Doc. 1 at 1.) 13 On April 14, 2020, the Court ordered Young to file an amended complaint properly 14 alleging the citizenship of each party—including Owners’ and Progressive’s places of 15 incorporation—so the presence or absence of subject matter jurisdiction could be 16 established. (Doc. 6.) 17 On April 23, 2020, Young filed a first amended complaint (“FAC”). (Doc. 7.) It 18 failed to allege Owners’ and Progressive’s places of incorporation. (Id.) 19 On April 27, 2020, the Court ordered Young to amend the complaint for a second 20 time to properly allege Owners’ and Progressive’s places of incorporation. (Doc. 8.) 21 That same day, Progressive initiated an action in the District of Massachusetts, 22 seeking a declaration that it owed no obligation to provide insurance benefits to Young or 23 Burdett. (Doc. 21-3 at 1-2.) Progressive named Young, Burdett, the uninsured 24 motorcyclist, Commerce, and Auto-Owners Insurance Company (“Auto-Owners”)— 25 which is not the same entity as Owners—as defendants. (Id. at 1.) 26 On April 28, 2020, Young filed a second amended complaint (“SAC”), which 27 properly alleged Owners’ and Progressive’s citizenship. (Doc. 9.) 28 On June 30, 2020, Young filed a third amended complaint (“TAC”) adding 1 Commerce as a Defendant. (Doc. 20-1.) Although Commerce has not yet been served in 2 this action (Doc. 39), it has been served in the Massachusetts action (Doc. 37-1). 3 On July 6, 2020, Progressive filed its motion to dismiss or transfer. (Doc. 21.) 4 On July 30, 2020, Owners and Young each filed a response. (Docs. 30, 31.) 5 On August 6, 2020, Progressive filed a reply. (Doc. 34.) 6 On August 21, 2020, the District of Massachusetts stayed Progressive’s action 7 pending, inter alia, this Court’s resolution of Progressive’s motion. (Doc. 37-1.) 8 DISCUSSION 9 I. Federal Comity Rule And Anticipatory Filing 10 A. Parties’ Arguments 11 As noted, Progressive sent a letter to Young’s counsel on April 7, 2020 in which it 12 announced its intention to “fil[e] a Declaratory Judgment Complaint in the United States 13 District Court for the District of Massachusetts to obtain declarations and orders from the 14 Court” concerning its coverage obligations. (Doc. 21-2 at 10.) The very next day, Young 15 filed this action. (Doc. 1.) Thus, by the time Progressive filed suit in Massachusetts on 16 April 27, 2020, this action had already been pending for a few weeks. 17 In its moving papers, Progressive argues that it shouldn’t be penalized for its 18 “laudable” effort to provide notice of its intended suit to Young and that Young shouldn’t 19 be rewarded for his “sharp practice” of filing an anticipatory suit upon receiving such 20 notice. (Doc. 21 at 4-5, 15-16; Doc. 34 at 3-4.) Notably, Young doesn’t address, let alone 21 challenge, these assertions in his response. (Doc. 31.) 22 B. Analysis 23 “[T]he doctrine of federal comity” is “a discretionary doctrine which permits one 24 district to decline judgment on an issue which is properly before another district.” Church 25 of Scientology of Cal. v. U.S. Dept. of Army, 611 F.2d 738, 749 (9th Cir. 1979), overruled 26 on other grounds by Animal Legal Defense Fund v. FDA, 836 F.3d 987 (9th Cir. 2016) (en 27 banc). “The purpose of the comity principle is of paramount importance. The doctrine is 28 designed to avoid placing an unnecessary burden on the federal judiciary, and to avoid the 1 embarrassment of conflicting judgments.” Id. at 750. 2 The federal comity rule is often referred to as the “first-to-file” rule. This is because 3 “[n]ormally sound judicial administration would indicate that when two identical actions 4 are filed in courts of concurrent jurisdiction, the court which first acquired jurisdiction 5 should try the lawsuit and no purpose would be served by proceeding with a second action.” 6 Pacesetter Systems, Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th Cir. 1982). Nevertheless, 7 courts applying the federal comity rule are not required to inflexibly defer to whichever 8 action was filed first. As the Ninth Circuit has explained, “this ‘first to file’ rule is not a 9 rigid or inflexible rule to be mechanically applied, but rather is to be applied with a view 10 to the dictates of sound judicial administration.” Id. In particular, “[t]he circumstances 11 under which an exception to the first-to-file rule typically will be made include bad faith, 12 anticipatory suit, and forum shopping.” Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 13 622, 628 (9th Cir. 1991) (citation omitted). 14 Here, Progressive provided unambiguous notice to Young that it would be filing a 15 declaratory relief action in Massachusetts. In response, Young raced to the courthouse in 16 an apparent effort to be the first party to sue. This was an anticipatory filing. See, e.g., 17 Vantage Mobility, Int’l, LLC v. Braun Corp., 2006 WL 8441367, *2 (D. Ariz. 2006) (“A 18 suit which is filed on receipt of specific, concrete indications that a suit by the defendant 19 was imminent is an anticipatory suit.”) (internal quotation marks omitted); Guthy-Renker 20 Fitness, L.L.C. v. Icon Health & Fitness, Inc., 179 F.R.D. 264, 271 (C.D. Cal. 1998) 21 (“Filing a declaratory action after receipt of an intent to sue letter favors a finding that the 22 first-filed suit was done for anticipatory, forum shopping purposes.”). Thus, the Court 23 concludes that the coverage dispute between Young and Progressive “is properly before 24 another district,” Church of Scientology, 611 F.2d at 749, i.e., the District of Massachusetts, 25 and the federal comity principle counsels in favor of allowing that court to resolve their 26 dispute. 27 To achieve this outcome, the Court will transfer the overlapping claims to the 28 District of Massachusetts in lieu of dismissing them. Cf. Alltrade, 946 F.2d at 628-29 1 (noting that “[a]lthough this court has on past occasions affirmed dismissal of second-filed 2 actions,” the proper remedy is usually to stay or transfer).1 Other courts have followed this 3 approach in analogous circumstances. For example, in Vantage Mobility, Braun accused 4 Vantage of patent infringement and suggested it would file suit if the allegations were not 5 resolved to its satisfaction. 2006 WL 8441367 at *1. In response, Vantage filed a 6 declaratory relief action in the District of Arizona. Id. at *1-2. Three days later, Braun 7 filed the threatened patent infringement action in the Northern District of Indiana, and 8 Braun thereafter filed a motion to dismiss or transfer the Arizona action. Id. at *1-2. The 9 Arizona court granted the motion to transfer, emphasizing that “[t]o allow this case to 10 remain in Arizona would discourage negotiation and settlement and encourage a race to 11 the courthouse to gain the forum of one’s choice. Transferring this case to the Northern 12 District of Indiana is in the interests of justice.” Id. at *3. 13 Similarly, in Sturdy Gun Safe, Inc. v. Rhino Metals, Inc., 2019 WL 652862 (E.D. 14 Cal. 2019), Rhino Metals sent a letter to Sturdy Safe raising allegations of patent 15 infringement and threatening to “pursue [those] claims in federal court.” Id. at *1. About 16 a month later, after the parties’ settlement negotiations reached an impasse, Sturdy Safe 17 filed a declaratory judgment action in the Eastern District of California. Id. at *1. One 18 week later, Rhino filed the threatened patent infringement action in the District of Idaho, 19 and Rhino thereafter filed a motion to transfer or dismiss the California action. Id. at *2. 20 The California court granted the motion to transfer, holding that “it is appropriate to depart 21 from the first-to-file rule because the instant action appears to be an anticipatory suit” and 22 that “the filing of [Sturdy Safe’s] complaint in this court was anticipatory and a method of 23 forum shopping. For the sake of judicial economy and efficiency, and in the interest of 24 justice, the court will transfer this declaratory judgment action to the United States District

25 1 This is one of the outcomes that Progressive sought in its moving papers. Although Progressive didn’t use the magic words “federal comity principle” or “anticipatory filing” 26 when explaining why it is entitled to relief based on Young’s tactics, it identified the first- filed issue as one of the reasons why dismissal or transfer was warranted. (Doc. 21 at 15- 27 16.) Moreover, even if Progressive hadn’t identified this issue in its moving papers, the Court would retain the authority to apply it sua sponte. Hilton v. Apple Inc., 2013 WL 28 5487317, *10 (N.D. Cal. 2013) (“[T]here is authority supporting a district court sua sponte transferring under the first-to-file rule.”) (citations omitted). 1 Court for the District of Idaho.” Id. at *8-9. 2 Thus, the Court will transfer Young’s claim against Progressive to the District of 3 Massachusetts. The Court will also transfer Young’s claim against Commerce to the 4 District of Massachusetts because Commerce is already a party in that action (and has not, 5 in contrast, been served in this action). 6 II. Owners 7 Owners filed a response to Progressive’s motion. (Doc. 30.) Owners contends that 8 it “is not subject to jurisdiction in the state of Massachusetts” and thus, although it “agrees 9 that a declaration resolving the pending coverage issues is necessary and appropriate . . . , 10 should this Court determine that a transfer is appropriate, Owners moves to sever the claims 11 against it so that those claims remain here and are litigated in Arizona.” (Doc. 30 at 1.) 12 Young, in turn, doesn’t directly address Owners’ severance request, although he does state 13 that he “joins and incorporates the arguments set forth” in Owners’ response. (Doc. 31 at 14 7.) Finally, Progressive states in its reply that it is amenable to a transfer to the District of 15 Massachusetts “whether that transfer includes the claims against Owners . . . or not.” (Doc. 16 34 at 1-2.) 17 Given this backdrop, the Court will sever Young’s claim against Owners and retain 18 jurisdiction over that claim. This outcome avoids the need to resolve the merits of Owners’ 19 arguments concerning the existence (or lack thereof) of personal jurisdiction in 20 Massachusetts. Additionally, it would be unnecessary and arguably inappropriate to 21 transfer Young’s claim against Owners to the District of Massachusetts pursuant to the 22 federal comity principle because Progressive has not named Owners as a party in that 23 action—instead, it named a different entity called Auto-Owners. (Compare Doc. 20-1 ¶ 6 24 [“Defendant Owners Insurance Company is a Michigan corporation with its principal place 25 of business in Michigan and is a citizen of Michigan.”] with Doc. 21-3 ¶ 11 [“The 26 Defendant, Auto-Owners Insurance Company (Auto-Owners), is a mutual insurance 27 company incorporated under the laws of Michigan . . . .”]. See also Doc. 30-2 ¶ 7 [“Each 28 company is a separate, legally distinct entity for the purposes of taxation, regulation and 1 || liability.”].) 2 Accordingly, IT IS ORDERED that: 3 (1) Progressive’s motion to dismiss or transfer (Doc. 21) is granted in part and 4|| denied in part. 5 (2) Young’s claims against Progressive and Commerce are severed, and the || Clerk of Court is ordered to transfer Young’s claims against Progressive and Commerce to the District of Massachusetts. 8 (3) This Court will retain jurisdiction over Young’s claim against Owners. 9 Dated this 27th day of October, 2020. 10 11 Lom ee” 12 f CC —— Dominic W. Lanza 13 United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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