United States District Court, E.D. Louisiana
ORDER AND REASONS
J. BARBIER UNITED STATES DISTRICT JUDGE.
the Court is a Motion to Dismiss Under Rule 12(b)(6) or
Stay on Grounds of Abstention (Rec. Doc. 11) filed by
defendant, the City of Kenner (“Kenner
Defendant”). Also before the Court is a Motion to
Dismiss Declaratory Judgment Action (Rec. Doc. 12) filed
by defendant, Sondra Cantin, the natural tutrix of the minor,
R.C. (“Cantin Defendants”). Plaintiff, GeoVera
Specialty Insurance Company (“Plaintiff”),
opposes both motions (Rec. Doc. 13). Cantin Defendants filed
a reply (Rec. Doc. 17). Having considered the motions and
legal memoranda, the record, and the applicable law, the
Court finds that the motions should be
AND PROCEDURAL HISTORY
litigation arises out of a fire that occurred on February 19,
2018 at the abandoned Kenner High School owned by Kenner
Defendant. Plaintiff alleges that news reports indicate that
Stephen and Sondra Cantin's minor son, R.C., and other
minors intentionally started a fire that demolished the
interior of the first and second floors of the high school.
The Kenner Police Department subsequently charged R.C. with
simple arson in violation of La. R.S. 14:52. Kenner Defendant
contends that the cost to restore the building will exceed
to the fire, Plaintiff issued a homeowners' policy
numbered FL00001131 with a policy period of September 9, 2017
to September 9, 2018 to Stephen Cantin and Sondra Cantin as
the named insureds. Following the fire incident, the
Cantins' insurance agent notified Plaintiff of Kenner
Defendant's damages claim on June 11, 2018. On June 12,
2018, Plaintiff issued a reservation of rights letter to the
Cantins through their attorney, advising that information
discovered during the investigation indicated that the fire
was caused by arson and that certain limitations and
exclusions may apply to exclude coverage for the loss.
additional investigation, on September 13, 2018, Plaintiff
filed the instant declaratory judgment action in this Court
to determine an actual case and controversy between the
parties regarding their respective rights and obligations
under the Cantins' homeowners' policy. Plaintiff
seeks a judgment declaring that it has no duty to provide
coverage and no duty to defend or indemnify the Cantins under
their homeowners' policy with respect to the claims
asserted by Kenner Defendant against the Cantins.
weeks after Plaintiff filed the instant declaratory judgment
action, Kenner Defendant filed suit in the 24th
Judicial District Court for the Parish of Jefferson against
the Cantins and Plaintiff, the other minors involved in the
fire, and several insurers of the other minor defendants. The
insurers, including Plaintiff, are joined in the state suit
under the Louisiana Direct Action Statute. The state court
petition asserts that the insurers are liable in
solido for all damages sustained by Kenner Defendant.
Both Kenner Defendant and Cantin Defendants filed motions
asking this Court to exercise its discretion to dismiss
Plaintiff's declaratory judgment action due to the
pendency of the state court suit.
Declaratory Judgment Act provides, in relevant part:
“In a case of actual controversy within its
jurisdiction ... any court of the United States, upon the
filing of an appropriate pleading, may declare the rights and
other legal relations of any interested party seeking such
declaration, whether or not further relief is or could be
sought.” 28 U.S.C. § 2201(a). In Wilton v.
Seven Falls Co., 515 U.S. 277 (1995), the United States
Supreme Court made clear that, because the Declaratory
Judgment Act is “‘an enabling Act, which confers
a discretion on the courts rather than an absolute right upon
the litigant, '” the district court has
“unique and substantial discretion in deciding whether
to declare the rights of litigants.” Id. at
287-88. Even when a declaratory judgment action is
justiciable and within the Court's authority to decide,
the Court must still determine whether to exercise its
discretion to decide or dismiss the action.
Sherwin-Williams Co. v. Holmes Cnty., 343 F.3d 383,
387 (5th Cir. 2003) (citing Orix Credit All., Inc. v.
Wolfe, 212 F.3d 891, 895 (5th Cir. 2000)).
United States Court of Appeals for the Fifth Circuit has
identified a three-step inquiry for determining whether to
decide or dismiss a complaint for declaratory relief.
Orix, 212 F.3d at 895; see also Sherwin-Williams
Co., 343 F.3d at 387. The first step requires a
determination of whether the declaratory judgment action is
justiciable. Id. (citing Rowan Cos. v.
Griffin, 876 F.2d 26, 27-28 (5th Cir. 1989)).
“Second, if it has jurisdiction, then the district
court must resolve whether it has the ‘authority'
to grant declaratory relief in the case presented.”
Orix, 212 F.3d at 895 (citing Travelers Ins. Co.
v. La. Farm Bureau Fed'n, Inc., 996 F.2d 774, 776
(5th Cir. 1993)). “Third, the court has to determine
how to exercise its broad discretion to decide or dismiss a
declaratory judgment action.” Id. (citing
Travelers, 996 F.2d at 778). At issue in the present
case is the third step of this inquiry.
Fifth Circuit employs the Brillhart standard when a
district court is considering whether to abstain from
exercising jurisdiction over an action solely for declaratory
relief. Woodward v. Sentry Select Ins. Co., No.
03-2481, 2004 WL 834634, at *2 (E.D. La. Apr. 16, 2004)
(Berrigan, J.) (citing Black Sea Inv., Ltd. v. United
Heritage Corp., 204 F.3d 647, 6452 (5th Cir. 2000)).
Under the Brillhart standard, a federal court has
discretion to stay or dismiss a declaratory judgment action
where there is a pending state court suit between the same
parties that presents the same issues, and where that state
court suit could adequately settle the dispute. Id.
(citing Brillhart v. Excess Ins. Co. of Am., 316
U.S. 491, 495 (1942)). The district court has “no
compulsion to exercise [its] jurisdiction, ” and the
court has discretion to grant a motion to dismiss the
declaratory judgment action. See Brillhart, 316 U.S.
determining whether to abstain under Brillhart, the
district court “should ascertain whether the questions
in controversy between the parties to the federal suit, and
which are not foreclosed under the applicable substantive
law, can better be settled in the proceeding pending in the
state court.” Id. The district court must look
to three broad categories of factors: (1) the proper
allocation of decision-making between state courts and
federal courts; (2) fairness and improper forum shopping; and
(3) efficiency. Sherwin-Williams Co. v. Holmes
Cnty., 343 F.3d 383, 390-91 (5th Cir. 2003). To evaluate
each of these broad categories, the Fifth Circuit uses the
seven Trejo factors:
(1) whether there is a pending state action in which all of
the matters in controversy ...