ALPS Property & Casualty Insurance Company v. Snyder ( 2021 )

1 The Honorable Barbara J. Rothstein 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE WESTERN DISTRICT OF WASHINGTON 7 AT SEATTLE 8 ALPS PROPERTY & CASUALTY INSURANCE COMPANY, 9 Plaintiff, 10 11 v. Civil Action No. 2:21-cv-859-BJR 12 MARA A. SNYDER, et al. ORDER GRANTING MOTION TO DISMISS 13 Defendants. 14 15 16 17 I. INTRODUCTION 18 Defendant Robert Keith McKay, individually and on behalf of the former marital 19 community comprised of Robert Keith McKay and Tiffany Ann McKay (“McKay”), moves this 20 Court to dismiss this action or, in the alternative, stay the matter. Plaintiff ALPS Property & 21 Casualty Insurance Company (“ALPS”) opposes the motion. Having reviewed the motion and 22 23 opposition thereto, the record of the case, and the relevant legal authority, the Court will grant the 24 motion and dismiss this action without prejudice. The reasoning for the Court’s decision follows. 25 26 27 1 II. BACKGROUND 2 Defendant Mara Snyder is an attorney in Whatcom County, Washington. In May 2019, 3 McKay retained Snyder to represent him in divorce proceedings in Whatcom County Superior 4 Court. McKay alleges that during the representation, Snyder misappropriated approximately 5 $325,000.00 from the marital estate, failed to appear for mediation and settlement conferences, 6 7 and billed him for motions and filings that were never completed or filed. McKay further alleges 8 that he was forced to retain replacement counsel because of Snyder’s alleged misdeeds. 9 Thereafter, McKay filed suit against Snyder in Whatcom County Superior Court, alleging causes 10 of action for breach of fiduciary duty, civil contempt, and conversion and theft (“the Underlying 11 Lawsuit”). 12 ALPS provides professional liability insurance to Snyder (“the Policy”); in May 2021, 13 McKay notified ALPS of the Underlying Lawsuit and sought indemnity under the Policy. ALPS 14 15 initiated this action pursuant to 28 U.S.C. §§ 2201 and 2202 seeking a judicial declaration that 16 there is no coverage or indemnity under the Policy for the claims asserted in the Underlying 17 Lawsuit. With the instant motion, McKay requests that this Court decline to exercise jurisdiction 18 over the matter and dismiss it or, in the alternative, stay this matter pending resolution of the 19 Underlying Lawsuit. 20 III. DISCUSSION 21 Nearly a century ago, the United States Supreme Court in Brillhart v. Excess Ins. Co. of 22 23 America, 316 U.S. 491 (1942) clarified that a district court has broad discretion to stay or dismiss 24 actions seeking declaratory judgment, even when jurisdiction exists. See Huth v. Harford Ins. Co. 25 of the Midwest, 298 F.3d 800, 802 (9th Cir. 2002) (“The exercise of jurisdiction under the Federal 26 Declaratory Judgment Act [] is committed to the sound discretion of the federal district courts.”). 27 1 As the Supreme Court explained “[o]rdinarily it would be uneconomical as well as vexatious for a 2 federal court to proceed in a declaratory judgment suit where another suit is pending in state court 3 presenting the same issues, not governed by federal law, between the same parties.” Brillhart, 316 4 U.S. at 495. Therefore, a district court may choose to abstain from exercising jurisdiction when 5 circumstances warrant it. See Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995). A district court 6 7 should consider three factors when considering abstention under Brillhart: whether doing so will 8 “avoid[] needless determination of state law issues; discourage[e] forum shopping; and avoid[] 9 duplicative litigation.” R.R. Street & Co. Inc. v. Transport Ins. Co., 656 F.3d 966, 975 (9th Cir. 10 2011) (quoting Government Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir. 1998). 11 This Court concludes that abstention under Brillhart is appropriate here. First, the sole 12 basis for this Court’s jurisdiction in this case is diversity jurisdiction. There are no issues of 13 federal law; instead, resolution of this declaratory judgment action requires application of 14 15 Washington insurance law. See Continental Cas. Co. v. Robsac Industries, 947 F.2d 1367, 1371 16 (9th Cir. 1991) overruled in part on other grounds (“[I]nsurance law [is] an area that Congress has 17 expressly left to the states through the McCarren-Ferguson Act.”). And, as the Ninth Circuit has 18 made clear, “federal interest is at its nadir” where “the sole basis of jurisdiction is diversity of 19 citizenship”. Id. Thus, the first Brillhart factor—federal courts should avoid needlessly 20 determining state-law issues— favors abstention in this case. 21 The second Brillhart factor is neutral because there is no evidence that ALPS engaged in 22 23 forum shopping by filing this action. 24 The third Brillhart factor—avoidance of duplicative litigation—weighs in favor of 25 abstention. Here, ALPS claims that at least some of Snyder’s alleged misdeeds are excluded from 26 policy coverage and this determination necessarily turns on resolution of the factual allegations 27 1 alleged in the Underlying Lawsuit. In other words, ALPS asks this Court to resolve the very same 2 factual issues already pending in state court, rendering this lawsuit duplicative of the Underlying 3 Lawsuit. ALPS argues that the Underlying Lawsuit is not duplicative of this lawsuit because it is 4 not a party in the state court action. However, complete identity of parties is not necessary to 5 render lawsuits duplicative. See, e.g., Charter Oak Fire Ins. Co. v. Conway Constr. Co., 2014 WL 6 7 6655395 (Nov. 24, 2014) (declining to exercise jurisdiction over matter based, in part, on the 8 existence of duplicative litigation in state court even though insurance company was not a party to 9 the state court action). Here, the Underlying Lawsuit and this action indisputably involve identical 10 nuclei of operative facts. Not only would it be a waste of judicial resources to have two courts 11 weigh in on those facts, doing so runs the risk of conflicting outcomes, something that should be 12 avoided where possible. 13 IV. CONCLUSION 14 15 For the foregoing reasons, the Court concludes that the Brillhart factors weigh in favor of 16 abstention and, therefore, grants McKay’s motion and declines to exercise jurisdiction over this 17 matter. The case is HEREBY DISMISSED without prejudice. 18 Dated this 21st day of October 2021. 19 A 20 21 B arbara Jacobs Rothstein U.S. District Court Judge 22 23 24 25 26 27