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Ewart v. State Farm Mutual Automobile Insurance Co.

United States District Court, E.D. Pennsylvania

June 6, 2017

KRISTYN EWART
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

          MEMORANDUM OPINION

          Savage, J.

         In this declaratory judgment action removed from the state court calling for the interpretation of the notice and waiver requirements governing stacked coverage of uninsured motorist benefits under Pennsylvania law, the question is whether we should decline to exercise jurisdiction. At the center of the dispute is whether an automobile insurer must obtain new waivers of stacked coverage each time a car is added to a policy. Because the issue is evolving in the state courts and is unsettled, we shall decline to exercise jurisdiction and remand to the state court.

         Background

         Kristyn Ewart was injured in a single-vehicle accident on March 21, 2013.[1] At the time, she was a passenger in an uninsured vehicle.[2] She made a claim for uninsured motorist benefits under her parents' automobile insurance policy issued by State Farm Mutual Automobile Insurance Company.

         The policy was originally issued on March 22, 2006 and renewed continuously through the time of the accident. When Michael Ewart, Kristyn's father, first applied for the policy, he selected bodily injury coverage limits of $100, 000 per person and $300, 000 per accident, and lower uninsured motorist coverage limits of $15, 000 per person and $30, 000 per accident.[3] He rejected stacked uninsured motorist coverage.[4]Again, on May 8, 2009, he signed a form waiving stacked uninsured motorist coverage.[5]That was the last time he rejected stacked uninsured motorist coverage.

         From the inception of the policy through the time of the accident, vehicles were added and removed. The policy initially covered two vehicles.[6] From October 2007 to March 2008, it covered three vehicles; from February to March 2012, one vehicle.[7] On the date of the accident, the policy covered two vehicles.[8] Michael did not sign new acknowledgements of uninsured and underinsured motorist coverage selections, and did not sign a rejection of stacked uninsured motorist coverage each time he replaced or added a new vehicle to the policy.[9]

         On her claim for uninsured motorist benefits, State Farm paid Kristyn $15, 000.[10]She demanded that State Farm pay her $200, 000, the limits of the liability coverage stacked for the two vehicles on her father's policy. State Farm refused, relying on Michael's selection of lower uninsured motorist benefits limits and his rejection of stacked coverage when he first applied for coverage.[11]

         Kristyn then filed a complaint in the Philadelphia County Court of Common Pleas. In her complaint, she seeks only a declaration that she is entitled to uninsured motorist coverage to the limit of the bodily injury liability coverage of $100, 000 and stacked for the two vehicles on the policy. She calls for an interpretation of the notice and waiver requirements of the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa. Cons. Stat. § 1701 et seq. (MVFRL).

         State Farm removed the case based on diversity jurisdiction. Kristyn moves to remand, asking us to abstain from exercising jurisdiction over an action involving only questions of Pennsylvania law. There is no pending related case in the state court.

         Analysis

         Under the Declaratory Judgment Act, a federal court “may declare the rights and other legal relations of any interested party seeking such declaration.” 28 U.S.C. § 2201(a) (emphasis added). As the statutory language makes clear, the federal court's subject matter jurisdiction over actions seeking declaratory relief is discretionary. Reifer v. Westport Ins. Co., 751 F.3d 129, 134 (3d Cir. 2014) (citing Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494 (1942)).

         In Reifer, the Third Circuit answered the question whether a federal court may decline to exercise jurisdiction over a declaratory judgment action where there are no pending parallel state proceedings. It held that the existence or non-existence of parallel state proceedings is only one factor to consider in deciding whether to exercise jurisdiction. Reifer, 751 F.3d at 144. Although the absence of pending parallel state proceedings strongly favors exercising jurisdiction, it does not require a federal court to exercise jurisdiction. Id. The absence of parallel state proceedings creates a rebuttable presumption in favor of exercising jurisdiction. Rarick v. Federated Serv. Ins. Co., 852 F.3d 223, 226 (3d Cir. 2017).

         Before declining jurisdiction, the federal court must engage in a rigorous balancing test to ensure that the lack of parallel state proceedings is “outweighed by opposing factors.” Reifer, 751 F.3d at 144. A non-exhaustive list of those factors are:

(1) the likelihood that a federal court declaration will resolve the uncertainty of obligation which gave rise ...

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