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Malone v. State Farm Mutual Auto Insurance Co.

United States District Court, D. Nevada

November 8, 2017

THERESA T. MALONE, Plaintiffs,
v.
STATE FARM MUTUAL AUTO INSURANCE COMPANY, Defendants.

          ORDER

         Presently before the court is defendant State Farm Mutual Auto Insurance Company's motion to dismiss. (ECF No. 5). Plaintiff Theresa T. Malone filed a response (ECF No. 7), to which State Farm replied (ECF No. 8).

         I. Facts

         This is a breach of contract action arising from an automobile accident that occurred on August 15, 2013. Malone alleges that while she was in her parked vehicle in a parking lot in Las Vegas, Nevada, a car backed into her and caused her medical and incidental damages. She claims that at the time of the accident, she maintained an underinsured motorist coverage policy (number 088-0200F23-28) with State Farm.

         On July 9, 2015, Malone filed a negligence suit in state court against John Mooney, the purported tortfeaser who was operating the vehicle that allegedly caused the August 15, 2013 accident. (ECF No. 5-2). In December 2016, State Farm intervened in that litigation. (ECF No. 5-3). Malone now claims that she cannot recover the full amount of damages arising from the accident from her state-court suit against Mooney.

         Therefore, Malone filed the present action against her underinsured motorist policy carrier, State Farm, in state court on May 2, 2017, alleging three causes of action: (1) breach of contract; (2) violation of the Unfair Claims Practices Act; and (3) breach of the covenant of good faith and fair dealing/bad faith, all related to State Farm's alleged failure to compensate Malone under the policy. (ECF No. 1 at 5-13).

         State Farm removed the action to federal court on June 5, 2017. (ECF No. 1).

         State Farm now moves to dismiss the action pursuant to Federal Rule of Civil Procedure 12(b)(6), or, in the alternative, to stay proceedings, on grounds that dismissal or a stay is warranted under Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976), because the parties are currently involved in parallel proceedings in state court-namely, the state case between plaintiff Malone and the alleged tortfeasor, Mooney. (ECF No. 5).

         II. Legal Standard

         State Farm argues that Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976), warrants dismissal because the parties are currently involved in parallel proceedings in state court that will resolve the issues in the present litigation. (ECF No. 5).

         In Colorado River, the Supreme Court derived a list of factors that weigh in favor of dismissing a federal suit “due to the presence of a concurrent state proceeding.” Id. Federal courts must consider: “(1) whether either the state or federal court has exercised jurisdiction over a res; (2) the inconvenience of the federal forum; (3) the desirability of avoiding piecemeal litigation; and (4) the order in which the forums obtained jurisdiction.” 40235 Washington St. Corp. v. Lusardi, 976 F.2d 587, 588 (9th Cir. 1992) (citing Colorado River, 424 U.S. at 818). Further, federal courts must consider (5) whether state or federal law controls issues in each of the cases and (6) whether the state proceeding is adequate to protect the parties' rights. Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 23, 26 (1983).

         However, the United States Supreme Court has repeatedly emphasized that dismissal or abstention under the Colorado River doctrine is reserved “only [for] exceptional circumstances; only the clearest of justifications will warrant dismissal.” Id. at 2. “But we emphasize that our task in cases such as this is not to find some substantial reason for the exercise of federal jurisdiction by the district court; rather, the task is to ascertain whether there exist ‘exceptional' circumstances, the ‘clearest of justifications, ' that can suffice under Colorado River to justify the surrender of that jurisdiction.” Id. at 25-26. The existence of a state court case that asks some of the same questions as a federal case is not grounds, without much more, for dismissal or abstention under the Colorado River doctrine.

         III. Discussion

         The litigation in the state court case and in this court are not substantially similar: in the state court action pending below, it appears on this record that Malone has not filed a cause of action against State Farm under the underinsured motorist policy, while in this action, she has. While several of the key factual and legal questions in these two cases will be the same, they are not identical or substantially similar because a victory for Malone in the state court action would not result in a monetary judgment against State Farm, as it would here. Therefore, the state proceeding is not adequate for the adjudication of ...


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