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BITCO General Ins. Corp. v. Dash Building Material Center, Inc.

United States District Court, E.D. Louisiana

March 18, 2019

BITCO GENERAL INSURANCE CORPORATION, ET AL.
v.
DASH BUILDING MATERIAL CENTER, INC., ET AL.

          ORDER & REASONS

          LANCE M. AFRICK, UNITED STATES DISTRICT JUDGE.

         Before the Court is defendant Dash Building Material Center, Inc.'s (“Dash”) motion[1] to abstain and dismiss this case pursuant to the Brillhart/Wilton doctrine. For the following reasons, the motion is denied.

         I.

         This declaratory action arises out of an insurance contract dispute between Dash and the plaintiffs, BITCO General Insurance Corporation and BITCO National Insurance Company (collectively, “BITCO”). On May 9, 2018, Don Fontenelle (“Fontenelle”), who is not a party to this lawsuit, filed a petition for damages against Dash in Louisiana state court, alleging that Dash and other defendants caused him to be exposed to asbestos which, in turn, caused him to contract mesothelioma.[2] Dash tendered its defense in the state court lawsuit to BITCO, seeking indemnity based on an alleged general liability insurance policy.[3] On August 21, 2018, BITCO conditionally agreed to provide a defense to Dash until further notice.[4]

         On January 29, 2019, the plaintiffs in the state court proceeding filed a third supplemental and amending petition, adding BITCO as a defendant in its capacity as Dash's insurer.[5] However, before BITCO was added as a defendant, it filed the present action in this Court against Dash pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201. BITCO asserts that Dash cannot prove the existence of a policy issued to Dash by BITCO that would cover the allegations made by Fontenelle. As a result, BITCO requests that the Court declare that BITCO has no duty to defend or indemnify Dash for the related claims or, alternatively, to declare that BITCO is only liable for its pro rata share of costs incurred on behalf of Dash in the state court lawsuit.[6] Dash moves the Court to abstain from deciding this action, and dismiss the case altogether, pursuant to the Brillhart/Wilton doctrine.[7]

         II.

         A.

         As a threshold matter, the parties disagree about which abstention doctrine applies. The Brillhart/Wilton doctrine applies only to cases that are exclusively declaratory in nature. See Southwind Aviation, Inc. v. Bergen Aviation, Inc., 23 F.3d 948, 951 (5th Cir. 1994). “[W]hen an action involves coercive relief, the district court must apply the abstention standard set forth in Colorado River Water Conservation District v. United States, 424 U.S. 800, 817. . . (1976)” instead. New England Ins. Co. v. Barnett, 561 F.3d 392, 394-95 (5th Cir. 2009). Unlike other circuits, the Fifth Circuit has adopted a bright-line rule: any claim for coercive relief requires application of the Colorado River doctrine.[8] Id. at 395. Therefore, to determine which abstention doctrine applies, the Court must first decide whether BITCO's federal case is a purely declaratory action.

         Having reviewed the parties' briefing on the matter, the Court concludes that the action is not purely declaratory because “it involves a request for monetary . . . relief.” American Guarantee & Liability Co. v. Anco Insulations, Inc., 408 F.3d 248, 250-51 (5th Cir. 2005). In American Guarantee, the plaintiff-insurer sought a declaration that it did not owe a duty to the defendants to defend them in a separate lawsuit in state court. See Id. at 251. However, because the plaintiff also sought restitution for amounts that it had paid to defend the defendants in state court, the Fifth Circuit held that the application of the Colorado River standard was appropriate. Id. This case is nearly identical: as a corollary to BITCO's alternative claim for declaratory relief, it seeks reimbursement from Dash for any defense costs it incurs in the state court proceeding.[9]

         Indeed, in American Guarantee, the Fifth Circuit noted that the Colorado River doctrine applied even if the plaintiff's restitution claim was “merely ancillary” to its claim for declaratory relief. Id. at 251 n.15; see also Black Sea Inv., Ltd. v. United Heritage Grp., 204 F.3d 647, 652 (5th Cir. 2000). Because BITCO's complaint includes a request for reimbursement, application of the Brillhart/Wilton doctrine is inappropriate. See Diamond Offshore Co. v. A&B Builders, Inc., 302 F.3d 531, 539- 40 (5th Cir. 2002), overruled on other grounds, 589 F.3d 778 (5th Cir. 2009); see also Scottsdale Ins. Co. v. A3M Co., Inc., No. 07-3346, 2008 WL 754693, at *2 (E.D. La. Mar. 19, 2008) (Vance, J.) (holding that, because the plaintiff asserted a claim for restitution in addition to its claim for declaratory relief, the Colorado River abstention analysis applied).[10]

         In its order requesting briefing on the issue of which abstention doctrine applies, the Court specifically asked the parties to argue the relevance and significance of Massachusetts Bay Insurance Company v. Lewis, No. 10-585, 2011 WL 1261145 (M.D. La. Mar. 31, 2011)-a case with facts similar to this one.[11] In Massachusetts Bay, the Court rejected the argument, now urged by BITCO, that a request for reimbursement of defense costs “wholly related” to the central claim for declaratory relief constituted coercive relief. Id. at *5. But the court relied in part on the fact that there was no claim for injunctive relief before it. It did not analyze whether the request for reimbursement could be accurately characterized as a claim for monetary relief. See Id. Based on the Fifth Circuit's holding in American Guarantee, this Court finds that it does. Because BITCO's complaint requests more than just declaratory relief, the Court must apply the Colorado River doctrine.

         B.

         Having determined that the Colorado River doctrine applies, the Court must decide whether abstention is proper. Typically, “the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction” because the federal court's obligation to exercise its given jurisdiction is “virtually unflagging, ” Colorado River, 424 U.S. at 817. Accordingly, “[u]nder the Colorado River standard, [a] district court's discretion to dismiss is ‘narrowly circumscribed.'” New England, 561 F.3d at 395 (quoting Colorado River, 424 U.S. at 817). A federal court may only abstain from exercising its jurisdiction “based on considerations of ‘[w]ise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.'” Murphy v. Uncle Ben's, Inc., 168 F.3d 734, 737-38 (5th Cir. 1999) (quoting Colorado River, 424 U.S. At 817).[12]

         The Colorado River abstention analysis is only available, however, if the state and federal court proceedings are parallel. American Guarantee, 408 F.3d at 252; Stewart v. Western Heritage Ins. Co., 438 F.3d 488, 491 & n.3 (5th Cir. 2006). As a general rule, proceedings are parallel when “they involv[e] the same parties and the same issues.” Diamond Offshore, 302 F.3d at 540 (quoting RepublicBank Dallas Nat'l Ass'n v. McIntosh, 828 F.2d 1120, 1121 (5th Cir. 1987)); see also American Guarantee, 408 F.3d at 252. The Fifth Circuit has acknowledged that “‘it may be that there need not be applied in every instance a mincing insistence on precise identity' of parties and issues.” African Methodist Episcopal Church v. Lucien, 756 F.3d 788, 797 (5th Cir. 2014) (quoting McIntosh, 828 F.2d at 1121). To determine whether the proceedings are sufficiently parallel to warrant a Colorado River ...


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