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Canal Insurance Co. v. Paul Cox Trucking

October 2, 2006


The opinion of the court was delivered by: Judge Conner


Presently before the court is the motion to dismiss (Doc. 12) of defendant Andrew David Kurey, Jr. ("Kurey"). Kurey argues that this case is unnecessarily duplicative of a state action currently pending in Huntingdon County, Pennsylvania (hereinafter "the underlying case"),*fn1 and that the court should decline to exercise jurisdiction. For the following reasons, the court concludes that declining jurisdiction is not warranted, and the motion will be denied.

I. Statement of Facts*fn2

This case arises from a one-vehicle accident in which Kurey was injured while a passenger in a tractor-trailer operated by defendant Paul Cox, Jr. ("Cox"). On the day of the accident, Cox had agreed to transport a load of pretzels for defendant Class 1 Transport, Inc. ("Class 1"), from Altoona, Pennsylvania to Class 1's facility in McVeytown, Pennsylvania.*fn3 (Doc. 13, Ex. A ¶¶ 20-21, 23-24.) Cox owned the tractor he was operating at the time of the accident; however, the trailer was owned by Class 1. (Doc. 8 ¶ 14.) At the time of the accident, Cox had completed his work for the day and was driving to his home, with Kurey as a passenger.*fn4

(Doc. 8 ¶¶ 14, 26-27.) As a result of the accident, Kurey initiated the underlying case in state court against Cox and Class 1. (Doc. 8 ¶ 13.)

Plaintiff Canal Insurance Company ("Canal") issued Cox an insurance policy covering his tractor for a period that included the date of the accident. (Doc. 8 ¶ 10.) The dispute in this case centers on several liability exclusions contained in the policy, including an occupant hazard exclusion and an abandonment of work exclusion.*fn5 Generally, the occupant hazard exclusion does not provide coverage for non-commercial passengers, while the abandonment of work exclusion does not provide coverage when the insured is not engaged in "work." (See Doc. 8, Ex. A at 9, 19.) There is also a dispute as to the effect of the policy's Motor Carrier Safety Form 90 ("MCS-90") endorsement, which is required by federal law for trucks engaged in interstate commerce.*fn6 (See Doc. 8, Ex. A at 17-18.)

On October 26, 2005, Canal commenced the instant action, seeking a declaration that it neither owes Cox coverage nor has a duty to defend or indemnify Cox against Kurey's state claims. Specifically, Canal asserts that application of the policy's occupant hazard exclusion and/or abandonment of work exclusion obviates its responsibility to cover Cox. Canal also seeks a declaration that the policy's MCS-90 endorsement does not apply because Cox was not involved in interstate commerce at the time of the accident. In the alternative, Canal seeks a declaration that Cox must reimburse Canal should the MCS-90 endorsement, or any other federal statute, obligate Canal to pay.*fn7 (See Doc. 1.) In response, Kurey filed the instant motion to dismiss, arguing that the matter sub judice is unnecessarily duplicative of the underlying case and that the court should exercise its discretion to decline jurisdiction over this matter. The motion has been fully briefed and is ripe for disposition.

II. Standard of Review

The Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202, vests the federal courts with jurisdiction to "declare the rights and other legal relations of any interested party seeking such declaration." See State Auto Ins. Cos. v. Summy, 234 F.3d 131, 133 (3d Cir. 2000). The Supreme Court has characterized the Declaratory Judgment Act as "an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant." Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995) (internal quotations omitted) (citations omitted). Thus, district courts "wield broad and selective discretion" in determining whether to entertain a declaratory judgment action. State Farm Mut. Auto Ins. Co. v. Lavanture, 2006 WL 1344051, at *2 (M.D. Pa. May 16, 2006).

III. Discussion

Although vested with jurisdiction by the Declaratory Judgment Act, the courts are under "no compulsion to exercise that jurisdiction." Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494 (1942). To the contrary, the courts should decline to grant declaratory relief when such relief "would impinge on a state proceeding . . . [or] result in a conflict between the decisions of state and federal courts." Travelers Ins. Co. v. Davis, 490 F.2d 536, 544 (3d Cir. 1974). In other words, the federal courts should not permit a declaratory judgment action to be used as a "method of procedural fencing, or as a means to provide another forum in a race for res judicata." Terra Nova Ins. Co. v. 900 Bar, Inc., 887 F.2d 1213, 1225 (3d Cir. 1989).

However, the mere pendency of a similar state court proceeding does not preclude a district court from granting declaratory relief. United States v. Commw. of Pa., Dep't of Envtl. Res., 923 F.2d 1071, 1075 (3d Cir. 1991). Instead, a district court may proceed with a declaratory judgment action if it presents issues that cannot adequately be addressed in state court. Id.; see also Wilton, 515 U.S. at 282. In determining whether to proceed despite a pending state court action, a federal court should consider: (1) "the scope of the pending state court proceeding,"(2) the presence of issues of federal law, and (3) the presence of unsettled issues of state law.*fn8 Brillhart, 316 U.S. at 495; see also Summy, 234 F.3d at 136.

A. Scope of Pending State Court Proceeding

When a pending state proceeding and a federal declaratory proceeding present "the same issues . . . between the same parties," the federal court should decline to exercise jurisdiction in deference to the state court.*fn9 Brillhart, 316 U.S. at 495; see also Summy, 234 F.3d at 135-36. However, when different parties or issues are involved, the federal court may appropriately use declaratory relief as a method of resolving those issues that fall ...

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