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National Union Fire Insurance Company of Pittsburgh, P.A. v. Plaquemines Parish Government

United States District Court, E.D. Louisiana

December 30, 2014

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA
v.
PLAQUEMINES PARISH GOVERNMENT, Section:

ORDER AND REASONS

JAY C. ZAINEY, District Judge.

Before the Court is a Motion to Dismiss on Grounds of Abstention (Rec. Doc. 8) filed by defendant Plaquemines Parish Government ("PPG"). Plaintiff National Union Fire Insurance Co. of Pittsburgh, PA ("National Union") opposes the motion. The motion, set for hearing on December 3, 2014, is before the Court on the briefs without oral argument.[1]

I. BACKGROUND

In July of 2005, National Union issued a "bumbershoot" liability policy to PPG, apparently insuring PPG against a wide variety of claims for personal injury and property damage. In late August of 2005, a significant portion of Plaquemines Parish flooded in the aftermath of Hurricane Katrina. In April of 2006, Melvin J. Burmaster, a resident of Plaquemines Parish, filed a lawsuit against PPG in the Twenty-Fifth Judicial District Court, Parish of Plaquemines, State of Louisiana, alleging that PPG's negligence in failing to maintain the East Bank Protection Levee System caused the flooding damage to his property. Burmaster later amended his petition to reflect that he had filed it as a representative of a class of those similarly situated as well as in his individual capacity.

The state court litigation is ongoing. In 2009, National Union was named as a defendant in the state court class action lawsuit via Louisiana's Direct Action Statute. Plaintiffs and National Union filed cross motions for summary judgment in state court disputing applicability and coverage of the policy issued by National Union to PPG. PPG filed a position paper on the motions agreeing with plaintiffs' contentions as to the extent of the policy coverage.

The trial court found that "under the policy, PPG is responsible for the first $1, 000, 000.00 (one million) of liability, and that National Union would be responsible for the next $10, 000, 000.00 (ten million)." (Rec. Doc. 8-7, at 4). National Union did not appeal the state trial court's decision on coverage.

On July 15, 2014, National Union filed the present action in federal court seeking a declaration that this same insurance policy does not cover damages asserted against PPG by residents of Plaquemines Parish.

PPG argues that National Union is attempting to get "a second bite at the apple" by submitting the question of coverage of the policy to this Court after the state court has already provided an answer - an answer which National Union chose not to appeal. Looking to the factors in St. Paul Ins. Co. v. Trejo, 39 F.3d 585 (5th Cir. 1994), PPG contends that the Court should exercise its discretion in abstaining from or dismissing the case.

National Union argues that PPG's motion should be denied for two primary reasons: 1) PPG has since allegedly reached a "settlement"[2] with the plaintiffs in which it agreed to remain in the lawsuit but only as a "nominal defendant, " undermining any arguments it now makes for this Court to abstain for reasons of judicial efficiency and fairness; and 2) National Union reserved its right to argue alternative grounds for exclusion in the state court proceeding and now presents those arguments for the first time. Applying the same Trejo factors, National Union expands on these contentions in arguing for denial of PPG's motion.

II. DISCUSSION

The Declaratory Judgment Act, 28 U.S.C. § 2201, et seq., provides that a court "may declare the rights and other legal relations of any interested party seeking such declaration." Odeco Oil & Gas Co. v. Bonnette, 4 F.3d 401, 403-04 (5th Cir. 1993)(quoting 28 U.S.C.A. § 2201(a) (West 1994)). It is well established in this circuit that a court need not provide declaratory judgment relief on request, as this is a matter left to the district court's sound discretion. Id. (citing Rowan Companies, Inc. v. Griffin, 876 F.2d 26, 28 (5th Cir. 1989); Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 601 (5th Cir. 1983)). Federal courts have a "virtually unflagging obligation... to exercise the jurisdiction given them, " Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976), but "[i]n the declaratory judgment context, the normal principle that federal courts should adjudicate claims within their jurisdiction yields to considerations of practicality and wise judicial administration." Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995).

The court may consider a variety of factors in determining whether to decide a declaratory judgment suit. Odeco Oil & Gas Co., 4 F.3d at 403-04. Relevant factors the district court must consider in determining whether to dismiss a declaratory judgment include: 1) whether there is a pending state action in which all of the matters in controversy may be fully litigated, 2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant, 3) whether the plaintiff engaged in forum shopping in bringing the suit, 4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist, 5) whether the federal court is a convenient forum for the parties and witnesses, and 6) whether retaining the lawsuit in federal court would serve the purposes of judicial economy. Trejo, 39 F.3d at 590-91.

The Fifth Circuit has explained that these factors can be grouped into and summarized in three categories: federalism, fairness, and efficiency. Sherwin-Williams Co. v. Holmes Cnty., 343 F.3d 383, 390-91 (5th Cir. 2003).

The first category of concerns weighs in favor of abstention or dismissal. The ongoing state court litigation involves both PPG and National Union, and that court has ruled on the extent of coverage of the National Union policy. Any further matters regarding the policy can be resolved in the state court proceedings. See Sherwin-Williams Co., 343 F.3d at 392 (noting that an ongoing state ...


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