United States District Court, E.D. Pennsylvania
Insurance Company ("Mercury") is seeking a
declaration, pursuant to the Declaratory Judgment Act, 28
U.S.C. § 2201(a), that it has no duty to defend or
indemnify Rita Ann D'Amato ("Mrs. D'Amato")
under a homeowner's insurance policy. Defendants move to
dismiss the action for lack of subject matter jurisdiction.
Christopher Williams sued D'Amato in state court after he
was attacked and injured by her husband and daughter. In that
action, he alleged that D'Amato's negligence caused
his injuries because she allowed her husband, a convicted
felon, to illegally possess a firearm in her home, and
because she encouraged her husband and daughter to leave the
family home with the intention of assaulting him.
insured D'Amato's home at the time of the incident.
The policy defines D'Amato, as well as her husband and
daughter, as "insured." However, it explicitly
excludes liability insurance coverage for "bodily
injury" or "property damages" which is
expected or intended by an insured. Mercury has defended
D'Amato in the state court action for a year and a half
pursuant to a reservation of rights. The trial of the action
is scheduled to occur shortly.
Declaratory Judgment Act provides that "any court of the
United States, upon the filing of an appropriate pleading,
may declare the rights and other legal relations of
any interest party seeking such declaration, whether or not
further relief is or could be sought." 28 U.S.C. §
2201 (emphasis added). The Act is unique in that it does not
require federal courts to exercise jurisdiction, but leaves
it to the court's discretion. See State Auto. Ins. v.
Summy, 234 F.3d 131 (3d Cir. 2000); see also Wilton
v. Seven Falls Co., 515 U.S. 277, 286 (1995)
(recognizing that district courts have "unique and
substantial discretion in deciding whether to declare the
rights of litigants" under the Declaratory Judgment
deciding whether to exercise jurisdiction, the first issue to
address is whether there is a parallel state proceeding.
Kelly v. Maxum Specialty Ins. Grp., 868 F.3d 274,
282 (3d Cir. 2017) (quoting Reifer v. Westport Ins.
Corp., 751 F.3d 129, 146 (3d Cir. 2014)). A parallel
state proceeding "is a pending matter 'involving the
same parties and presenting [the] same opportunity for
ventilation of the same state law issues.'"
Id. at 284 (quoting Wilton, 515 U.S. at
283). In Kelly, the Third Circuit held that a
declaratory judgment action by an insurer is not parallel to
a state court action against an insured to determine
liability merely because some issues may eventually overlap.
Here, Mercury is not a party to the state court action;
whether Mercury has a duty to defend or indemnify D'Amato
has not been raised in the state court action; and, no party
has filed a declaratory action in state court. Thus, the
state court action is not a parallel action. See also
Terra Nova Ins. Co. v. 900 Bar, Inc., 887 F.2d 1213,
1219 (3d Cir. 1989) (noting that a state tort action and an
insurer's federal declaratory judgment action over
coverage were non-parallel).
the absence of a pending parallel state proceeding in this
matter "militates significantly in favor of exercising
jurisdiction, " there are other factors that play into
the analysis including: (1) the likelihood that a federal
court jurisdiction will resolve the uncertainty of obligation
which gave rise to the controversy; (2) the convenience of
the parties; (3) the public interest in settlement of the
uncertainty of the obligation; (4) the availability and
relative convenience of other remedies; (5) a general policy
of restraint when the same issues are pending in a state
court; (6) avoidance of duplicative litigation; (7)
prevention of the use of the declaratory action as a method
of procedural fencing or as a means to provide another forum
in a race for res judicata; and, (8) (in the
insurance context), an inherent conflict of interest between
an insurer's duty to defend in a state court and its
attempt to characterize that suit in federal court as falling
within the scope of a policy exclusion. Reifer, 751
F.3d at 146.
Reifer factors do not point strongly in either
direction. On the one hand, the present litigation will
resolve uncertainty between the parties and will support
convenience, the first and second factors. On the other hand,
there is no public interest in the settlement of the
uncertainty and there are other available remedies
(i.e. proceeding in state court), the third and
fourth factors. There is no parallel proceeding so the fifth
and seventh factors point in favor of exercising
jurisdiction, however, the pending state court action may
blunt Mercury's desire for a declaratory judgment if a
verdict is rendered in favor of the defense, raising the
specter of unnecessary and duplicative litigation, the
seventh factor. The final factor - the inherent conflict
between a duty to defend in state court and an insurer's
actions in federal court - is neutral because "[t]he
same conflict of interest exists when the insurer asserts
that the suit falls within the scope of a policy exclusion in
state court - different forum, same moral hazard."
Scottsdale Ins. Co. v. RSE Inc., 303 F.R.D. 234, 240
(E.D. Pa. 2014).
the Reifer factors are non-exhaustive and other
factors counsel in favor of declining jurisdiction. First,
one party objects to federal jurisdiction. See State Auto
Ins. Cos. v. Summy, 234 F.3d 131, 136 (3d Cir. 2000)
(finding that the "vigorous objection to the District
Court's assumption of jurisdiction should have weighed in
favor of refusing to entertain" a declaratory judgment
action by an insured). Second, by filing the present action after
a year and a half of litigation in state court, and on the
eve of trial, Plaintiff is engaging in a type of
"procedural fencing" and distraction that the Third
Circuit was concerned about in Reifer. See Reifer,
751 F.3d at 146. Third, the issue raised in this case does
not concern novel issues of law. More specifically, the law
concerning the scope of an insurer's duty to defend an
insured from an action arising out of the intentional acts of
a third party is well settled in Pennsylvania. See
Donegal Mut. Ins. Co v. Baumhammers, 938 A.2d 286 (Pa.
2007). Where "the state law is firmly established, there
would seem to be even less reason for the parties to resort
to the federal courts." Summy, 234 F.3d at 136.
For the reasons set forth above, the Court declines to
exercise jurisdiction over this matter. An appropriate order
 Defendants ask the Court to adopt the
analysis of the district court in Reifer, where
Judge Brann refused to exercise jurisdiction in a similar
Declaratory Judgment Act case by an insurer simply because
there was "no federal interests at stake."
Reifer v. Westport Ins. Corp.,943 F.Supp.2d 506,
510 (M.D. Pa. 2013). Although the Third Circuit affirmed the
result of the district court, it did so on other grounds -
that the issues raised by the case involved matters of
unsettled state law. Moreover, it criticized the lower
court's approach, stating "[w]e would have preferred
the District Court to squarely address the alleged novelty of
Reifer's state law claims." Reifer, 751
F.3d at 149. Thus, Reifer stands for the ...