United States District Court, N.D. Alabama, Southern Division
DAVID PROCTOR UNITED STATES DISTRICT JUDGE
matter is before the court on Defendants' Amended Motion
to Dismiss Plaintiff's Amended Petition for Declaratory
Relief. (Doc. # 22). The Motion is fully briefed. (Doc. # 24,
25). In their Motion, Defendants argue
that in addition to this declaratory judgment action, there
is a pending “parallel proceeding” in state
court, and that this court should exercise its discretion and
decline to declare the parties' rights in this case.
After careful review, the court agrees.
December 7, 2016, Plaintiff filed its Complaint in this
declaratory judgment action, which requests this court to
declare the rights and obligations of the parties with regard
to issues of coverage for the alleged loss and destruction of
a 2015 Morbark Flail Chiparvestor chipper. (Doc. # 1). The
Complaint was served on Defendants, and Defendant Southern
Management Services, Inc. (“SMS”) signed a formal
waiver of service. (Doc. # 24 at ¶ 2). On January 5,
2017, Defendants SMS and Raughton filed an action in state
court alleging claims of breach of contract, bad faith, and
fraud against Plaintiff Wesco Insurance Company. (Doc. #
7-2). In the state court action, Defendants SMS and Raughton
also plead other claims arising from the destruction of the
chipper against entities which are not parties in this
declaratory judgment action. (Id. at ¶¶
February 6, 2017, Defendants filed a motion to dismiss which
argued that the court should (1) abstain from hearing this
action under the Wilton/Brillhart doctrine
or (2) dismiss this action for failure to state a claim.
(See Doc. # 7). Following this motion, Plaintiff
filed an Amended Petition for Declaratory Judgment. (Doc. #
15). On March 28, 2017, Defendants filed an amended motion to
dismiss, directed at the operative complaint. (Doc. # 22).
This amended motion again argued that the court should
abstain from hearing this action or dismiss count two of
Plaintiff's Amended Petition. (Id.).
it proceeds under two different theories, Plaintiff's
Complaint in this action sounds exclusively in a request for
declaratory judgment. “[T]he Declaratory Judgment Act
is properly 'understood to confer on federal courts
unique and substantial discretion in deciding whether to
declare the rights of litigants.'" Lexington
Ins. Co. v. Rolison, 434 F.Supp.2d 1228, 1233 (S.D. Ala.
2006) (quoting Wilton v. Seven Falls Co., 515 U.S.
277, 286 (1995)). “[C]ourts in this Circuit have long
recognized that they have discretion to 'decline to
entertain a declaratory judgment action on the merits when a
pending proceeding in another court will fully resolve the
controversy between the parties[, ]'" i.e.,
where a parallel state court action exists. State Farm
Fire and Cas. Co. v. Knight, 2010 WL 551262, *2 (S.D.
Ala. 2010) (citation omitted); Pennsylvania National
Mutual Cas. Ins., Co. v. King, 2012 WL 280656 (S.D. Ala.
2012). The Eleventh Circuit has observed that the Act
“only gives the federal courts competence to make a
declaration of rights; it does not impose a duty to do
so." Ameritas Variable Life Ins. Co. v. Roach,
411 F.3d 1328, 1330 (11th Cir. 2005). “'The desire
of insurance companies ... to receive declarations in federal
court on matters of purely state law has no special call on
the federal forum.'" Lexington Ins. Co.,
434 F.Supp.2d at 1233 (quoting State Auto Ins. Companies
v. Summy, 234 F.3d 131, 136 (3rd Cir.2000)).
court has discretion to “decline to entertain a
declaratory judgment action on the merits when a pending
proceeding in another court will fully resolve the
controversy between the parties." Ven-Fuel, Inc. v.
Department of the Treasury, 673 F.2d 1194, 1195 (11th
Cir. 1982). The Eleventh Circuit has emphasized that
considerations of federalism, comity, and efficiency require
district courts to balance federal and state interests in
determining how (and whether) to exercise their discretion to
hear a declaratory judgment action in the face of a parallel
state action. Ameritas Variable Life Ins. Co., 411
F.3d at 1330-31.
Circuit has explained, “when federal and state
proceedings involve substantially the same parties and
substantially the same issues" they are sufficiently
parallel. Ambrosia Coal and Const. Co. v. Pages
Morales, 368 F.3d 1320, 1330 (11th Cir. 2004)
(addressing the Colorado River abstention analysis);
see Scottsdale Ins. Co. v. Detco Industries, Inc.,
426 F.3d 994, 997 (8th Cir. 2005) (“For purposes of
Wilton abstention analysis, '[s]uits are
parallel if substantially the same parties litigate
substantially the same issues in different forums.").
The Eleventh Circuit has provided a list of factors to inform
federal courts' discretionary decisions about whether to
abstain from exercising jurisdiction over state-law claims in
the face of parallel litigation in the state courts:
(1) the strength of the state's interest in having the
issues raised in the federal declaratory action decided in
the state courts;
(2) whether the judgment in the federal declaratory action
would settle the controversy;
(3) whether the federal declaratory action would serve a
useful purpose in clarifying the legal relations at issue;
(4) whether the declaratory remedy is being used merely for
the purpose of “procedural fencing"- that is, to
provide an arena for a race for res judicata or to achieve a
federal hearing in a case otherwise not removable;
(5) whether the use of a declaratory action would increase
the friction between our federal and state courts and