Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-00856/USCOURTS-caed-2_06-cv-00856-2/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

1

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

ALLSTATE INSURANCE COMPANY,

NO. CIV.S-06-856 LKK/KJM

Plaintiff,

v. O R D E R

RICKEY CARL HUERTA, et al,

Defendants.

 /

Allstate Insurance Company (“Plaintiff”) filed this action

seeking declaratory judgment that it has no duty to defend and

indemnify Rickey and Virginia Huerta (“Defendants”) in a pending

state court tort action. Currently pending before this court is

defendant Virginia Huerta’s motion to dismiss on the grounds that

related state court proceedings make the district court’s

jurisdiction in this declaratory action improper. 

I.

ALLEGATIONS OF THE COMPLAINT

A. The State Court Proceedings 

On March 21, 2004, defendant Rickey Huerta is alleged to have

Case 2:06-cv-00856-LKK -KJM Document 30 Filed 09/13/06 Page 1 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

2

shot Matthew Tallman, then a deputy sheriff with the Sacramento

County Sheriff’s Department. The shooting allegedly took place at

the Huerta home. On that day, Virginia Huerta was the named

insured on a homeowner’s policy provided by Allstate Insurance

Company. The policy covered the Huerta’s home, which was located

at 5741 San Ardo Way in North Highlands, California. Rickey Huerta

was tried and convicted of (1) attempted premeditated murder of a

police officer, (2) assault with a firearm on a police officer, (3)

felon in possession of a firearm and (4) discharge of a firearm

into an occupied dwelling. People v. Rickey Carl Huerta,

Sacramento Superior Court, Case No. 04F02713.

On January 27, 2006, Matthew Tallman commenced a civil

personal injury action in Sacramento Superior Court, Case No. 06

AS 00353 (“Underlying Action”), against defendants seeking

compensatory and punitive damages in excess of $530,000. This case

is still pending in the Superior Court. Virginia Huerta notified

plaintiff of the civil action on March 13, 2006. Ricky Huerta, as

Virginia Huerta’s resident spouse, was an insured person under the

homeowner’s policy. Virginia Huerta requested that plaintiff take

over the defense of the underlying action, which allegedly fell

within the coverage of the homeowner’s policy. Plaintiff agreed

to defend, but reserved the right to contest coverage. Plaintiff

was and is not a party to the underlying action.

B. Federal Complaint Seeking Declaratory Relief

On April 27, 2006 plaintiff filed this federal action seeking

a declaratory judgment that it is not obligated to defend or

Case 2:06-cv-00856-LKK -KJM Document 30 Filed 09/13/06 Page 2 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

3

indemnify defendant in the underlying action. Defendant

subsequently filed the pending motion to dismiss on the grounds

that the related action in state court makes the exercise of

federal jurisdiction over this matter improper.

II.

STANDARDS

On a motion to dismiss, the allegations of the complaint must

be accepted as true. See Cruz v. Beto, 405 U.S. 319, 322 (1972).

The court is bound to give the plaintiff the benefit of every

reasonable inference to be drawn from the "well-pleaded"

allegations of the complaint. See Retail Clerks Intern. Ass'n,

Local 1625, AFL-CIO v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963).

Thus, the plaintiff need not necessarily plead a particular fact

if that fact is a reasonable inference from facts properly alleged.

See id.; see also Wheeldin v. Wheeler, 373 U.S. 647, 648

(1963)(inferring fact from allegations of complaint).

In general, the complaint is construed favorably to the

pleader. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). So

construed, the court may not dismiss the complaint for failure to

state a claim unless it appears beyond doubt that the plaintiff can

prove no set of facts in support of the claim which would entitle

him or her to relief. See Hishon v. King & Spalding, 467 U.S. 69,

73 (1984)(citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). In

spite of the deference the court is bound to pay to the plaintiff's

allegations, however, it is not proper for the court to assume that

"the [plaintiff] can prove facts which [he or she] has not alleged,

Case 2:06-cv-00856-LKK -KJM Document 30 Filed 09/13/06 Page 3 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

4

or that the defendants have violated the . . . laws in ways that

have not been alleged." Associated General Contractors of

California, Inc. v. California State Council of Carpenters, 459

U.S. 519, 526 (1983). 

III.

ANALYSIS

Defendants move to dismiss plaintiff’s declaratory judgment

action on the grounds that it is parallel to and duplicative of the

underlying state tort action. Plaintiff, however, maintains that

the pending state and federal actions present separate issues for

adjudication, and that the court’s jurisdiction in this action is

proper. For the reasons explained herein, the court denies

defendant’s motion to dismiss.

1. Overview of the Declaratory Judgment Act

The Declaratory Judgment Act provides a mechanism by which

parties may define their rights, duties or obligations regarding

a controversy not yet ripe for adjudication. Declarations may be

sought in a broad range of issues, such as contract interpretation.

Insurers may seek a declaratory judgment relating to their coverage

obligations and are entitled to such relief before the underlying

action is finally adjudicated. Allstate Ins. Co. v. Miller, 743

F. Supp. 723, 725-26 (N.D. Cal. 1990).

A declaratory judgment action can be brought in state or

federal court. 28 U.S.C. § 2201(a) (“any court of the United

States ... may declare the rights and other legal relations of any

interested party seeking such declaration”). In order for a

Case 2:06-cv-00856-LKK -KJM Document 30 Filed 09/13/06 Page 4 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

5

declaratory judgment action to be properly brought in federal

court, however, there must be an independent basis for the court’s

jurisdiction, such as diversity jurisdiction. Aetna Cas. Co. v.

Merritt, 974 F.2d 1196, 1199 (9th Cir. 1992) (“We know of no

authority for the proposition that an insurer is barred from

invoking diversity jurisdiction to bring a declaratory judgment

action against an insured on an issue of coverage.”)

When a related action is pending in a state court, federal

courts should avoid unnecessary litigation that is duplicative of

the state court action. Determining whether the related state

action prevents proper federal jurisdiction is discretionary. In

Brillhart v. Excess Ins. Co. of America,315 U.S. 491 (1942), the

Supreme Court sets forth a non-exclusive, but heavily relied upon,

list of factors for a district court to consider in determining

whether to exercise jurisdiction. These include: (1) avoiding

needless determinations of state law issues, (2) discouraging

litigants from forum shopping and (3) avoiding duplicative

litigation. Gov’t Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1225

(9th Cir. 1998).

A pending state action does not necessarily prohibit federal

jurisdiction over a related declaratory judgment action. Though

the district court should consider the scope of the state claims

as it relates to the declaratory action, "[t]he pendency of a state

court action does not, of itself, require a district to refuse

federal declaratory relief.” Gov’t Employees, 133 F.3d at 1225. 

If it is determined that the pending state action is indeed

Case 2:06-cv-00856-LKK -KJM Document 30 Filed 09/13/06 Page 5 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

6

parallel, the district court should generally decline to grant relief

in a related declaratory action. Continental Cas. v. Robsac, 947 F.2d

1367, 1370 (9th Cir. 1991) (over-ruled by Gov’t Employees Ins. Co. v.

Dizol, 133 F.3d 1220 (9th Cir. 1998) on other grounds). 

2. Whether Federal Jurisdiction is Proper in the Case at Bar

Defendants allege that this court’s jurisdiction is improper

because the same factual issues are being litigated in both this

case and the pending state court action. There are several reasons

why the declaratory action before this court is not sufficiently

parallel or similar to the underlying action to justify abstention.

First, the present declaratory action addresses contract

interpretation, which is an issue separate from the underlying tort

action being litigated in state court. This action presents a

discrete legal question as to plaintiff’s contractual duties to

defendant under their insurance policy. The extent of coverage

does not depend on whether defendants are found liable in the

underlying action. The declaratory judgment action simply seeks

a determination as to whether the allegations in the underlying

action are of the nature intended to be covered by the insurance

policy. See Borg v. Transamerica Ins. Co., 47 Cal. App. 4th 448,

454 (1996). In contrast, the underlying action turns on factual

questions relating to liability for injuries incurred by Matthew

Tallman. These factual questions are not present in the action for

declaratory relief. 

Second, plaintiff is not a party to the state litigation, a

factor the court must consider. State Farm v. Thomas, 756 F. Supp.

Case 2:06-cv-00856-LKK -KJM Document 30 Filed 09/13/06 Page 6 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

7

440, 442 (N.D. Cal. 1991). Third, the determination of coverage

will not be addressed in the pending state action. Am. Cas. Co.

v. Krieger, 181 F.3d 1113 (9th Cir. 1999). Similar to the case at

bar, in Krieger, an insurer sought federal declaratory judgment as

to its duty to defend insured in a pending state tort suit. The

state case did not address the coverage issue. Finding that “this

[was] not a case in which the district court was faced with a

request for ‘needless determination of state law issues’”,

retention of jurisdiction was proper. Id. at 1119. In the case

at bar, different parties are litigating different issues in the

state court case as compared to the pending federal action. Thus,

there is no presumption that the declaratory action should be heard

in state court. Gov’t Employees, 113 F.3d at 1225.

A case closely resembling the one at bar came before the

Northern District in 1991. State Farm Ins. Co. v. Thomas, 756 F.

Supp. 440 (N.D. Cal. 1991) (Weigel, J). In Thomas, a home-seller

was sued in state court by the purchaser of their home. The seller

wanted the home-owner’s insurance policy on their old home to cover

the defense of a tort suit brought against them. The Insurer

sought federal declaratory relief as to their coverage duty.

Overlap between the two actions was considered “minimal” because

different questions were being presented and the insurer was not

even a party to the state suit. Id. at 442. The district court

did not consider the pending state tort proceedings as parallel to

the declaratory action or prohibitive to jurisdiction. The federal

court, therefore, was properly able to grant declaratory relief.

Case 2:06-cv-00856-LKK -KJM Document 30 Filed 09/13/06 Page 7 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

8

As in Thomas, the plaintiff in the case at bar is not a party to

the pending state suit, and the underlying tort suit does not

address the insurance coverage issue. 

The court also observes that comity interests are not hindered

by exercise of federal jurisdiction in this action. Contrary to

defendant’s contention, there will be no race to conclusion between

federal and underlying state actions because they address

independent and separate claims. In a similarly postured

declaratory judgment action, the court in Allstate Ins. Co. v.

Chaney, 804 F. Supp. 1219, 1224 (N.D. Cal. 1992) (J. Armstrong)

explained that “[t]o decide whether coverage exists under the

applicable policies, the court merely must determine whether the

allegations in the complaints in the state court actions, even if

accepted as true, give rise to coverage under the policies at

issue.” As noted previously, this is a very different question

from the factual question at issue in the underlying action. Since

this federal action neither intrudes or depends upon the outcome

of the underlying action principles of comity are not violated.

In the case at bar, as in Thomas and Chaney, plaintiff is not

a party in the state court action and the underlying state court

action does not address the issue of insurance coverage. This

present action and the pending state suit are only remotely related

and do not constitute parallel litigation. Interests in avoiding

duplicative litigation and forum shopping are, therefore, not

violated by exercise of the court’s jurisdiction. 

For these reasons, the court finds that the Brillhart factors

Case 2:06-cv-00856-LKK -KJM Document 30 Filed 09/13/06 Page 8 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

9

weigh in favor of retaining federal jurisdiction. This court may

properly exercise jurisdiction over plaintiff’s declaratory

judgment action. 

IV.

CONCLUSION

For the reasons explained above, defendant’s motion to dismiss

is DENIED. 

IT IS SO ORDERED.

DATED: September 13, 2006.

Case 2:06-cv-00856-LKK -KJM Document 30 Filed 09/13/06 Page 9 of 9