Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_06-cv-00381/USCOURTS-caed-1_06-cv-00381-5/pdf.json

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

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______________________________________________________________________________

- PROPOSED - ORDER GRANTING PLAINTIFF’S MOTION TO STAY PROCEEDINGS

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA - FRESNO DIVISION

JOHN DEERE INSURANCE COMPANY n/k/a

SENTRY SELECT INSURANCE COMPANY,

Plaintiff,

v.

UNIVERSAL UNDERWRITERS GROUP,

UNIVERSAL UNDERWRITERS INSURANCE

COMPANY and DOES 1 through 50, inclusive

Defendants.

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CASE NO.: 1:06-cv-00381 LJO-SMS

ORDER GRANTING PLAINTIFF’S

MOTION TO STAY THE

PROCEEDINGS

1. PLAINTIFF’S MOTION TO STAY.

Plaintiff, John Deere Insurance Company n/k/a Sentry Select Insurance Company (“Sentry”)

filed the present Motion to Stay the Proceedings regarding Plaintiff’s First Amended Complaint on

October 31, 2007. Defendant, Universal Underwriters Insurance Company (“Universal”) filed its

Opposition on November 19, 2007. Sentry filed a Reply on November 29, 2007. 

Upon review of the above-referenced pleadings, on December 4, 2007, the Honorable Sandra

M. Snyder, United States Magistrate Judge, vacated the hearing on the Motion to Stay the

Proceedings pursuant to Local Rule 78-230(h), granted the Motion to Stay the Proceedings (Doc. No.

30) and vacated the present summary judgment briefing schedule (Doc. No. 33).

Case 1:06-cv-00381-LJO -SMS Document 37 Filed 01/07/08 Page 1 of 5
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______________________________________________________________________________

- PROPOSED - ORDER GRANTING PLAINTIFF’S MOTION TO STAY PROCEEDINGS

2. BACKGROUND.

A. The Insurance Coverage Declaratory Relief Actions:

Sentry filed the present action for declaratory relief and reimbursement against Universal on

April 5, 2006. This action is hereinafter referred to as “Sentry v. Universal.”

Both Sentry and Universal insure Sanders Oldsmobile-Cadillac, Inc. (“Sanders”) and Sentry

v. Universal concerns the insurance coverage for Sanders. 

Sentry also filed an action (John Deere Insurance Company n/k/a Sentry Select Insurance

Company v. Sanders Oldsmobile-Cadillac, et al. - Case No. 1:07cv0010 LJO SMS) for declaratory

relief and reimbursement against Sanders in the U.S. District Court, Central District of California,

Fresno Division. This action is hereinafter referred to as “Sentry v. Sanders.”

 B. The Underlying Actions:

The following state court third party actions against Sanders underlie the insurance coverage

declaratory relief actions. These actions are as follows:

Zavala, et al. v. Sanders, et al. (Stanislaus County Superior Court Case No. 311180) This

action was tried and a defense verdict obtained.

Allen, et al. v. Sanders, et al. (Stanislaus County Superior Court Case No. 311249) This

action was filed in May 2002 and settled before trial in April 2004.

Dominguez, et al. v. Sanders, et al. (Stanislaus County Superior Court Case No. 3112349)

This action was also filed in May 2002. After a jury and bench trial, it was found that the plaintiffs

had sustained no monetary damages but that Sanders’ conduct was predatory. Restitution was

awarded to the plaintiffs. On appeal, this verdict was reversed and remanded to the California

Superior Court where it is presently being litigated.

C. Procedural Background:

Sentry filed its complaint in Sentry v. Universal on April 5, 2006. On July 28, 2006, Sentry

filed a Notice of Voluntary Dismissal without prejudice and a First Amended Complaint. This

action seeks contribution from Universal for the amounts expended by Sentry in the defense and

settlement in Allen.

On January 3, 2007, Sentry filed its complaint in Sentry v. Sanders, an action for declaratory

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- PROPOSED - ORDER GRANTING PLAINTIFF’S MOTION TO STAY PROCEEDINGS

relief and reimbursement against Sanders for the amounts expended in the settlement of Allen and

for the amounts expended in the defense of Sanders in Allen and Dominguez. Sentry filed an

amended complaint on January 5, 2007.

On February 6, 2007, Universal filed a Notice of Related Action, stating that Sentry v.

Sanders is related to Sentry v. Universal, asserting the following: 

“The Sanders action is related to the instant action in that both cases question the coverage

obligations of . . . . Sentry . . . . with respect to an underlying lawsuit against Sanders . . . entitled Allen

. . . . In the instant case, Sentry seeks reimbursement from Universal of the amounts it paid to defend

and indemnify Sanders . . . . In the Sanders Action, Sentry apparently seeks reimbursement of the

same amounts from Sanders . . . . to the extent Sentry is seeking reimbursement of the same

amounts from different parties in different cases, there is a risk of inconsistent judgments.”

“Due to the overlapping factual and legal issues, coordination of these cases for case management

and discovery purposes will conserve judicial resources, promote an efficient determination of these

disputes and avoid inconsistent judgments.”

On February 13, 2007, the Court set a summary judgment briefing schedule in Sentry v.

Universal.

On April 13, 2007, Sanders filed a motion to stay Sentry v. Sanders pending the resolution of

the underlying Dominguez state court action on the grounds that this would avoid factual

inconsistencies and advisory opinions.

On May 24, 2007, pursuant to the parties’ stipulation, the Court in Sentry v. Universal

continued the summary judgment schedule for another ninety days.

On August 9, 2007, the Honorable Sandra M. Snyder, United States Magistrate Judge,

granted Sanders’ motion to stay Sentry v. Sanders and made the following findings:

“The resolution of the issues before this Court turns on factual questions that are intertwined with

issues in the underlying actions.” 

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Although the Allen action is final, the case was settled without factual findings and discovery will

therefore be necessary to resolve the declaratory relief issues . . . . there is a great deal of overlap in

the Allen and Dominguez actions . . . . So, while the Allen action is final, the discovery necessary to

resolve the coverage issues is very similar to the discovery in Dominguez, and going forward on Allen

would result in a needless waste of judicial resources.

.....

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______________________________________________________________________________

- PROPOSED - ORDER GRANTING PLAINTIFF’S MOTION TO STAY PROCEEDINGS

. . . . the outcome of the underlying Dominguez action will be dispositive of many of the issues before

this Court, i.e., the scope of Plaintiff’s duty to defend and indemnify. Moreover, along with the risk of

duplicative litigation comes the risk of inconsistent outcomes.”

On August 29, 2007, pursuant to the parties’ stipulation, the Court in Sentry v. Universal

continued the summary judgment schedule an additional ninety days. 

On November 21, 2007, pursuant to the parties’ stipulation, the Court in Sentry v. Universal

continued the summary judgment schedule an additional sixty days.

3. FINDINGS.

A. Legal Standard:

Courts have the discretion to stay insurance coverage actions until after the underlying

actions have been decided. Courts may stay an insurance coverage action to avoid inconsistent

determinations that could prejudice an insured. Montrose Chemical Corp. of Calif. v. Superior Court

(1993) 6 Cal.4 287. California Ins. Guarantee Assoc. v. Superior Court (1991) 231 Cal.App.3 1617. th rd

Additionally, Courts “possess discretion in determining whether and when to entertain an

action under the Declaratory Judgment Act, even when the suit otherwise satisfies the subject matter

jurisdictional prerequisites.” Wilton v. Seven Falls Co. (1995) 515 U.S. 277; Brillhart v. Excess

Ins. Co. (1942) 316 U.S. 491.

B. Analysis:

In Sentry v. Sanders, this Court found that the resolution of the insurance issues turns on

factual questions that are intertwined with issues in the underlying actions and made the following

additional findings:

1. There are unresolved factual issues in Dominguez that pertain to Allen and are relevant to

the issues relating to Sentry’s insurance coverage. 

2. There is a great deal of overlap in the Allen and Dominguez actions and while the Allen

action is final, the discovery necessary to resolve the coverage issues is very similar to the

discovery in Dominguez. 

3. Going forward on Sentry v. Sanders may result in needless factual determinations that

would result in a needless waste of judicial resources.

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- PROPOSED - ORDER GRANTING PLAINTIFF’S MOTION TO STAY PROCEEDINGS

Based upon these factors, this Court granted Sanders’ motion to stay Sentry v. Sanders.

Sentry v. Universal involves the same insured and the same insurance coverage as respects

Allen. Universal has asserted as a defense to this action that Sentry’s policy did not provide coverage

for Allen and that Sentry acted as a volunteer in defending and indemnifying Sanders in Allen. 

Universal, in its Notice of Related Action, admits that Sentry v. Sanders and the present action

should be related and coordinated due to a “risk of inconsistent judgments” and because of “overlapping

factual and legal issues.” Resolution of the coverage issues in Sentry v. Universal turns on factual

questions that are intertwined with issues in Dominguez. 

If Sentry v. Universal is not stayed, then there will be a significant risk of inconsistent

findings that may prejudice Sanders. A stay of this action will avoid factual inconsistencies and

inconsistent results.

There is no prejudice to Universal if this action is stayed and it has not asserted any.

Based upon the above, the Court therefore GRANTS plaintiff’s motion to stay the instant

action and VACATES the summary judgment briefing schedule set by the Court on November 21,

2007.

IT IS SO ORDERED.

Dated: January 7, 2008 /s/ Sandra M. Snyder 

icido3 UNITED STATES MAGISTRATE JUDGE

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