Wednesday, December 13, 2023

Federal Court Applies Abstention Doctrine To Declaratory Judgment Action

In the case of Assoc. Ind. Ins. Co., Inc. v. 101 West Lehigh, LLC, No. 2:23-CV-03736-CFK (E.D. Pa. Oct. 31, 2023 Kenney, J.), the Motion of a necessary party/Defendant to dismiss a declaratory judgment action was denied.

The underlying matter involved a fatal shooting incident at a gas station. The Plaintiff insurance company filed a declaratory judgment action on the issue of the duty to defend or indemnify certain Defendants involved in the underlying case.

The Plaintiff insurance company included the estate of the deceased individual as a necessary party Defendant.

That necessary party Defendant filed a Motion to Dismiss pursuant to the abstention doctrine. The necessary party Defendant argued that the coverage action should be dismissed in light of the federal court’s limited discretionary authority to review insurance coverage issues where there was a pending state court proceeding that did not implicate federal interest.

This motion was denied. The federal court initially noted that it had subject matter jurisdiction based upon the diversity and the amount in controversy.

Because the federal action involve a request for declaratory relief only and involved a question of insurance coverage, the court addressed the issue of its abstention authority under the analysis set forth in Reifer v. Westport Ins. Corp., 751 F.3d 129 (3d. Cir. 2014) and State Auto Ins. Co. v. Summy, 234 F.3d 131 (3d. Cir. 2000).

Applying the factors required by those decisions, the federal court in this case initially confirmed that there was no parallel state proceeding because the state court action as focused on the issue of liability while this federal court action involved coverage questions. The federal court noted that the absence of a parallel state court proceeding favored the federal court’s exercise of its jurisdiction.

The court in this case additionally found that the application of the remaining factors weighed in favor of the federal court retaining jurisdiction over the declaratory judgment action. As such, the Motion to Dismiss was denied.

Anyone wishing to review a copy of this decision may click this LINK.  The Court's companion Order can be found at this LINK.

Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (Nov. 24, 2023).

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