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Trustgard Insurance Co. v. Fagan

United States District Court, M.D. Pennsylvania

July 31, 2018

LYNN M. FAGAN, individually and d/b/a BRIGHT FUTURES SOBER LIVING HOMES and CHERYL LOCONTE, individually and as Administratrix of the ESTATE OF AMANDA M. LACONTE, Defendants.


          A. Richard Caputo United States District Judge

         Presently before this Court is a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) filed by Defendant Cheryl LoConte. This motion will be denied because diversity jurisdiction exists and there is neither a parallel state court proceeding pending alongside the instant federal action nor any additional circumstances, which would compel this Court to decline to exercise its jurisdiction. However, Counts III, IV, V and VI of the Complaint will be dismissed without prejudice because they are not ripe for review.

         I. Background

         A. Factual Background

         Amanda M. LoConte (“Amanda”) had a history of abusing controlled substances. Specifically, Amanda battled addictions to heroin, morphine, and alcohol. In an effort to control her addictions, Amanda considered moving into a sober living community.

         In July of 2015, Amanda contacted Defendant Lynn M. Fagan (“Fagan”) regarding the possibility of moving into one of Fagan's sober living residences in Scranton, Pennsylvania. These residences-operated under the name Bright Futures Sober Living Homes (“Bright Futures”)-are managed by New View Homes, Inc. (“New View”) (collectively with Fagan, “Defendants”). The mission of these organizations was to provide “a home in which residents could live a sober, independent life while still providing structure support, guidance, and discipline.” (Compl., Ex. A at ¶ 17.) Further, these organizations aimed to provide for the “security . . . of the residents and others in recovery.” (Compl., Ex. A at ¶ 13.)

         The Complaint alleges that Amanda explained her history of drug addiction, and, in response, Fagan informed Amanda about the wide variety of services offered at Bright Futures. These services ranged from frequent and random drug testing to mandatory counseling meetings. At bottom, Fagan ensured Amanda that Bright Futures would provide a cost effective, safe, and structured environment for her recovery.

         Amanda moved into the Bright Futures on July 22, 2015. While Amanda resided at Bright Futures-paying $525.00 per month in rent-the Complaint alleges that the Defendants never provided Amanda any meaningful services. For example, Fagan promised Amanda frequent and random drug testing. (Compl., Ex. A at ¶ 13(b).) But Amanda was only tested one time during her time at Bright Futures. (Compl., Ex. A at ¶ 22.)

         On September 5, 2015, Amanda died in her room at Bright Futures due to the combined pharmacological effects of morphine and alcohol.

         B. Procedural History

         Following Amanda's death, her mother, Cheryl LoConte, individually and as the Administratrix of her daughter's estate (collectively “LoConte”), filed a Complaint in the Lackawanna County Court of Common Pleas. (Compl., Ex. A.) That Complaint alleged causes of action against Defendants Fagan, Bright Futures and New View for (1) Survival; (2) Wrongful Death; (3) Violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law; and (4) Negligence per se. Plaintiff Trustgard Insurance Company (“Trustgard”) is currently providing a defense to Defendants pursuant to Defendants' Dwelling Fire Policy, which was effective from April 22, 2015 to April 22, 2016.

         On April 2, 2018, Trustgard filed the instant declaratory action seeking to determine whether it has a duty to defend and indemnify Defendants. Trustgard believes that it does not owe Defendants such duties because the policy does not cover: (1) “Bodily injury or property damage arising out of the use, sale, manufacture, delivery, transfer or possession by any person of a Controlled Substance(s) as defined by the Federal Food and Drug Law at 21 U.S.C.A. Sections 811 and 812;” (2) “Bodily injury or property damage arising out of the business pursuits of an insured;” (3) "Bodily injury or property damage caused by the willful, malicious or intentional act of any person, including any claims alleging negligent supervision, negligent entrustment, or negligent failure to control against any insured arising out of the willful, malicious, or intentional act;” and (4) “Liability assumed under an oral contract or agreement by an insured or under a contract or agreement in connection with any business of an insured.” (Compl. at ¶¶ 25, 26, 28, 29, 31.)

         On June 4, 2018, LoConte filed a motion to dismiss Trustgard's declaratory action pursuant to Federal Rule of Civil Procedure 12(b)(1). This motion has been fully briefed and is ripe for review.

         II. Discussion

         A. Declaratory Judgment Act: Abstention

         LoConte argues that even though this court has jurisdiction pursuant to 28 U.S.C. § 1332[1], I should decline to exercise jurisdiction over this action because the Complaint seeks declaratory relief absent a federal interest. Trustgard disagrees and argues that I should exercise jurisdiction in this case because there is no parallel proceeding in state court and no additional circumstance exist to compel ...

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