United States District Court, N.D. Georgia, Atlanta Division
SAFECO INSURANCE CO. OF INDIANA, Plaintiff,
DAVID PEARSON, et al., Defendants.
OPINION AND ORDER
W. THRASH, JR. UNITED STATES DISTRICT JUDGE.
a declaratory judgment action. It is before the Court on the
Defendants David and Elizabeth Pearson's Motion to
Dismiss [Doc. 8]. For the following reasons, the
Defendants' Motion to Dismiss is GRANTED.
dispute stems from Safeco's partial denial of coverage
under a homeowner's insurance policy that had been
purchased by the Pearsons. The Pearsons are Florida
domiciliaries, while Safeco is an Indiana corporation with
its principal place of business in
Massachusetts. On January 29, 2016, Mr. Pearson
discovered that a water heater had malfunctioned and caused
water damage to their home. The parties seem to agree that
the water heater malfunction caused water damage to the home,
but the dispute centers around the amount Safeco paid to the
Pearsons. The Pearsons argue that subsequent mold damage was
covered under the Policy and that Safeco has refused to pay
for it. Safeco counters that the Pearsons are merely upset
about Safeco's valuation of the damage and that there is
no issue of coverage.
result of this dispute, the Pearsons first filed suit against
Safeco and Big Red Construction Company, the Georgia
contractor that had been hired for remediation, in state
court on May 22, 2017. At the time of filing, the Pearsons
submitted documents necessary for service on Big Red and
Safeco to the DeKalb County and Gwinnett County Sheriffs'
Offices, respectively. The Gwinnett County Sheriff served
Safeco just three days later, on May 25, 2017, but the DeKalb
County Sheriff did not serve Big Red until June 21, 2017. In
the meantime, Safeco filed a Notice of Removal on June 15,
2017, based on diversity jurisdiction. The Pearsons filed a
Motion to Remand, arguing that the ability for cases to be
removed should not turn on the timing of service. When this
Court disagreed, the Pearsons voluntarily dismissed their
case on September 1, 2017.
same day, Safeco filed the present action in this Court.
Before the Pearsons waived service, however, they renewed
their action against Safeco and Big Red pursuant to O.C.G.A.
§ 9-2-61(a) by refiling their complaint in the state
court of Cobb County on September 7, 2017. This time around,
Big Red was served the same day the Complaint was filed, and
Safeco was served on September 12. Safeco again attempted to
remove that case to this Court, but the Court recently
ordered it remanded back to state court for lack of subject
matter jurisdiction. The Pearsons now move to dismiss the
present action and they also seek attorney's fees.
Declaratory Judgment Act, which gives federal courts the
authority to declare the rights of litigants by issuing
declaratory judgments, is “an enabling Act, which
[means that it] confers a discretion on the courts rather
than an absolute right upon the
litigant.” “It only gives the federal courts
competence to make a declaration of rights; it does not
impose a duty to do so.”The Supreme Court has warned,
however, that this power should be used sparingly, especially
in cases such as this where it has the potential to interfere
with ongoing state court litigation. In cases in which it would
be “uneconomical” and “vexatious” for
a federal court to hear a declaratory judgment action
concurrently with state litigation, district courts are
generally advised to abstain from hearing such
Ameritas Variable Life Ins. Co. v. Roach,
Eleventh Circuit developed a detailed test to guide district
courts in their discretion under the Declaratory Judgment
Act. First, courts must determine if there is ongoing
parallel litigation in state court. Generally speaking,
“[a] parallel action is one involving the same parties
and the same issues.” If there is ongoing parallel
state litigation, then courts must apply the
Ameritas multi-factor test in an effort to balance
state and federal interests.
Parallel State Litigation
a case in which there is clearly ongoing parallel state
litigation. Though Safeco did remove the companion case to
federal court, this Court recently remanded that case for
lack of subject matter jurisdiction. Furthermore, that case
involves both the same parties and the same issues. Though
the state litigation includes an extra party - Big Red - it
still includes both the Pearsons and Safeco. And though the
causes of action are different from this litigation (as one
would expect when the parties are reversed), both actions are
ultimately about who owes what to whom.
argues that the issues are not the same because Safeco is
seeking adjudication on a narrow issue that may not be
addressed in the state litigation, namely, whether the
Pearsons have complied with an appraisal requirement that is
a condition precedent to suit. Safeco essentially contends
that courts should only abstain in situations where the
issues presented in both cases are exactly the same.
The Court disagrees, for to hold otherwise would invite
constant federal interference in state litigation, and would
consistently undermine a plaintiff's choice of forum. Any
time a plaintiff filed a dispute over coverage in state
court, insurers could simply file declaratory judgment
actions in seeking appraisal in federal court. By doing so,
insurers would be able to avail themselves of a federal forum
in where they would not otherwise have been able to, despite
the fact that they could just as easily have asserted the
issue in the state litigation. Instead, the better approach
is to abstain whenever (1) the issues in both cases are
substantially similar, even if they are not identical, (2)
they are based on substantially the same facts, (3) and the
party seeking a declaration has the ability to raise their
specific issue in the parallel litigation. Following
this approach both preserves the plaintiffs' choice of
forum, while also giving defendants the opportunity to file
claims which would not otherwise be adjudicated.
as the Court has already said, both actions are ultimately
about who owes what to whom as a result of the water heater
overflow and its aftermath. Though the state court litigation
does not currently address the issue of appraisal, it is not
the Pearsons' responsibility to argue Safeco's case.
It is still entirely possible for Safeco to raise the issue
of appraisal itself. Indeed, Safeco did just that in its
motion to dismiss filed in the state litigation before this
Court remanded the case. Of course, the state court may or
may not reach the issues Safeco wants it to reach, but that
is that court's prerogative. Courts are in the business
of resolving disputes, not deciding every issue a party
brings up. Safeco has the opportunity to raise the issue of
appraisal in a state case ultimately addressing the issue of
who owes what to the Pearsons. That is enough for the two
actions to be considered parallel.
found the two actions to be parallel, the Court now analyzes
the present action under the Ameritas test. In
Ameritas, the Eleventh Circuit laid out nine factors
for district courts to consider when deciding whether to
(1) the strength of the state's interest in having the
issues raised in the federal declaratory action decided ...