United States District Court, D. Nevada
J. DAWSON UNITED STATES DISTRICT JUDGE.
the Court is plaintiff National Casualty Company's motion
to stay case (#62) to which defendant Philip Bouchard
responded (#63), and National Casualty replied (#64).
an action for declaratory relief. National Casualty seeks a
determination that it is not obligated to provide a legal
defense to Efren Sotelo in a corresponding state-court case
arising out of a 2014 car accident. Although the parties
dispute the facts of the car accident, the sole question
before this Court is whether Sotelo was a permissive user of
the vehicle at the time of the accident. If so, National
Casualty must provide him a defense in the underlying case
and may also be obligated to indemnify Sotelo. In November,
this Court denied National Casualty's motion for summary
judgment finding a genuine issue of fact whether Sotelo was
insured at the time of the accident. (#59).
Casualty now moves to stay the case pending the outcome of
the state court case, which is scheduled for trial in August
of 2019. Ironically, National Casualty argues that this
action has become duplicative because the state court will
determine the scope of its obligations to Sotelo. In
response, Bouchard questions why National Casualty feels this
case is duplicative now but was not duplicative at summary
judgment, which is a fair question. Bouchard opposes staying
the case and instead argues that National Casualty's
reasoning for a stay justifies dismissing the case entirely.
Bouchard's argument is not without merit. However, the
Court will not dismiss the case sua sponte. Instead, it will
stay this case pending the outcome of the parties' trial
in state court. At that point, Bouchard may renew his
argument to dismiss if he wishes.
Declaratory Judgments Act does not require the Court to
exercise its jurisdiction over declaratory relief actions. On
the contrary, the act is “deliberately cast in terms of
permissive, rather than mandatory, authority.” Pub.
Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237,
250 (1952) (Reed, J., concurring). Due to the permissive
nature of declaratory relief, it is within the Court's
discretion to stay or dismiss an action. Wilton v. Seven
Falls Co., 515 U.S. 277, 288 (1995). Three primary
factors inform the Court's decision to stay or dismiss:
(1) whether the action requires the interpretation of state
law; (2) whether the action is a veiled attempt to forum
shop; and (3) whether the action is duplicative. Govt.
Emps. Ins. Co. v. Dizol 133 F.3d 1220, 1225 (9th Cir.
1998). While not exclusive, these factors provide the Court
with meaningful benchmarks against which it measures the
necessity of exercising its jurisdiction and providing
declaratory relief. Id at 1225 n.5.
is appropriate here because this case is duplicative and
would require this Court to interpret issues of state law.
Most important, this action is duplicative and creates the
risk of inconsistent rulings between the state and federal
courts. The only question before this Court is whether Sotelo
was a permissive user under the insurance policy. National
Casualty must provide Sotelo a legal defense if Sotelo was a
permissive user under the insurance policy at the time of the
accident. Relatedly, Sotelo's status as a permissive user
under the policy may also trigger National Casualty's
duty to indemnify Sotelo. Given that a determination of
Sotelo's status under the policy is inescapable in the
corresponding state court action, this case is duplicative.
Considering the risk of inconsistent findings between the
state and federal courts, the Court sees fit to stay its
determination of these issues until after the parties'
trial in state court.
supporting a stay is that this case requires the Court to
interpret Nevada law. Whether Sotelo was a permissive user
under the policy requires the Court to interpret the
insurance contract, which is governed by state law. The Court
should withhold jurisdiction where parallel proceedings in
state court turn on the same issues as the declaratory relief
action. Dizol 133 F.3d at 1225. Here, the Court must
interpret state contract law to determine the rights and
obligations under the National Casualty insurance policy. The
center of Bouchard's argument is that Nevada law imposes
a duty to defend on every insurer so long as there is the
mere potential for coverage under the policy. See Century
Sur. Co. v. Andrew, 432 P.3d 180, 184 n.4 (Nev. 2018).
National Casualty of course rejects such an absolute rule.
The Court sees no reason to interpret Nevada law while its
own court explores the same issue. See Chamberlain v.
Allstate Ins. Co., 931 F.2d 1361, 1366-67 (9th Cir.
1991) (there is a presumption that an entire suit should be
heard in state court where the declaratory relief action
present parallel issues of state law).
IT IS HEREBY ORDERED that plaintiff National
Casualty Company's motion to stay case (#62) is hereby
GRANTED, and the case shall be stayed
pending the determination of the ...