Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_07-cv-01341/USCOURTS-azd-2_07-cv-01341-0/pdf.json

Parties Involved:
Brent John Bartell
Defendant
Rea-Ann Nicole Fuzy
Defendant
Great American Assurance Company
Plaintiff

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Great American Assurance Company, 

Plaintiff, 

vs.

Brent John Bartell, through his courtappointed guardian and conservator, Kim

Hoesel; Rea-Ann Nicole Fuzy, a single

woman, 

Defendants. 

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No. CV 07-1341-PHX-EHC

ORDER

This action arises from an automobile collision in May 2003 in which Defendant

Bartell was severely injured. (Dkt. 7, p. 2). On June 22, 2007, in Maricopa County Superior

Court, Case No. CV 2004-009728, a jury found in favor of Bartell and against defendants

Rea-Ann Nicole Fuzy and Mesa Soccer Club, Inc. (“MSC”), among others; fault was

apportioned at 82 percent against Fuzy and 1 percent against MSC. The jury found that

Bartell’s total damages were $7,000,000, that Fuzy acted as the agent of MSC, and that Fuzy

and MSC were jointly and severally liable for Fuzy’s apportioned fault, which was in excess

of $5,000,000. (See Dkt. 7, Exh. 1). The judgment is currently on appeal. Plaintiff Great

American Assurance Company (“Great American”) filed this action seeking a declaratory

judgment that coverage is not available to Defendant Fuzy under the relevant insurance

policy issued by Great American.

Case 2:07-cv-01341-EHC Document 16 Filed 04/28/08 Page 1 of 7
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Defendant Bartell’s Rule 12(b) Motion to Dismiss (“Motion to Dismiss”) (Dkt. 7) was

filed October 16, 2007. Great American Assurance Company’s Response in Opposition to

Defendant Bartell’s Rule 12(b) Motion to Dismiss (Dkt. 8) was filed October 30, 2007, and

the Reply Memorandum of Defendant Bartell in Support of His Motion to Dismiss (“Reply”)

(Dkt. 11) was filed November 8, 2007. Defendant Fuzy’s Joinder in Rule 12(B)(6) Motion

to Dismiss (Dkt. 9) was filed November 2, 2007.

Plaintiff Great American Assurance Company’s Motion to Strike New Arguments from

Defendant Bartell’s Reply in Support of His Motion to Dismiss and Alternatively, Motion to

File Surreply in Opposition to Defendant’s Motion to Dismiss (“Motion to Strike”) (Dkt. 12)

was filed November 26, 2007. Great American contends Bartell introduced three new

arguments in his Reply, thereby preventing Great American from responding to them.

Motion to Strike

First, Great American alleges that Bartell presents Huth v. Hartford Ins. Co., 298 F.3d

800 (9th Cir. 2002) as controlling authority for his pending Motion to Dismiss. (Dkt. 12, pp.

2-3). However, Bartell was rebutting Great American’s argument that Gov’t Employees Ins.

Co. v. Dizol, 133 F.3d 1220 (9th Cir.1998) overruled several cases relied upon by Bartell in

his Motion to Dismiss. The reference to Huth stands for nothing more. (See Dkts. 12-14).

Second, Great American objects to Bartell’s contention that if the joint and several

judgment against Fuzy and MSC is affirmed, Great American’s action for declaratory

judgment would be moot, and therefore, a waste of this Court’s time and resources. (Dkt. 11,

pp. 8-9). Great American has now acknowledged that MSC’s liability is covered by its

policy (Dkt. 11, Exh. 2); there is no question that the final outcome of the state court case

will impact Great American. 

Third, Great American claims that because several cases relied upon by Bartell are

unpublished, they cannot be cited pursuant to Ninth Circuit Rule 36-3, and therefore should

be stricken. However, according to the Ninth Circuit, Rule 36-3 “quite clearly prohibits

citations only of our unpublished dispositions; it does not apply to unpublished dispositions

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1

The statute provides that “[i]n a case of actual controversy within its jurisdiction . .

. any court of the United States, upon the filing of an appropriate pleading, may declare the

rights and other legal relations of any interested party seeking such declaration, whether or

not further relief is or could be sought. Any such declaration shall have the force and effect

of a final judgment or decree and shall be reviewable as such. 28 U.S.C. § 2201 (a).

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issued by any other courts within our circuit or elsewhere.” Renick v. Dun & Bradstreet

Receivable Mgmt. Servs., 290 F.3d 1055, 1058 (9th Cir.2002).

Motion to Dismiss

“The exercise of jurisdiction under the Federal Declaratory Judgment Act, 28 U.S.C.

§ 2201(a), is committed to the sound discretion of the federal district courts.” Huth, 298 F.3d

at 802. If a party timely objects to the exercise of discretionary jurisdiction under the

Declaratory Judgment Act, “the district court must make a sufficient record of its reasoning

to enable appropriate appellate review.” Gov’t Employees Ins. Co. v. Dizol, 133 F.3d 1220,

1225 (9th Cir. 1998).

Defendant Bartell argues that pursuant to 28 U.S.C. § 2201 (a)1

, the Court has broad

discretion to refuse to entertain Great American’s request for relief under the Federal

Declaratory Judgment Act. (See Dkt. 7, pp. 3-4). In fact, generally, “federal courts should

abstain from exercising their jurisdiction in a declaratory judgment action over disputes

between insurance companies and their insureds in which the merits must be decided under

state law.” Allstate Ins., Co. v. Liberty, No. 07-596-AA, 2007 WL 4165745, at *1 (D.Or.

November 17, 2007) (quoting Polido v. State Farm Mut. Auto. Ins. Co., 110 F.3d 1418, 1424

(9th Cir.1997) overruled on other grounds, Dizol, 133 F.3d 1220 (1998)).

Great American, on the other hand, argues that Polido, upon which Liberty relies, was

“effectively overruled” by Dizol. (Dkt. 8, p. 5). It incorrectly contends that any reliance on

Polido is “misplaced.” “[T]he Dizol court explicitly limited its holding. It held only that a

district court need not decide sua sponte whether jurisdiction under [28 U.S.C.] § 2201(a)

should be declined, and that the appellate court need not decide sua sponte whether the

district court abused its discretion in exercising discretionary jurisdiction.” Huth v. Hartford

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It is this same rebuttal to which Great American claimed “ambush” and requested the

reference to Huff be stricken or, in the alternative, that it be given the opportunity to respond

in a Surreply.

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Ins. Co., 298 F.3d 800, 803 (9th Cir.2002) (citing Dizol 133 F.3d at 1227).2 Thus, the Huth

decision does not impact the Polido findings on any other issues.

Great American further argues that, according to Dizol, “there is no presumption in

favor of abstention in declaratory actions generally, nor in insurance coverage cases

specifically.” Dizol, 133 F. 3d at 1225. Nevertheless, this does not dictate a presumption that

insurance coverage cases should be entertained by the federal courts. Indeed, looking to the

same paragraph, it is clear that the statement was made within the context of an action for

declaratory relief joined with other claims, such as breach of contract or rescission. See

Dizol, 133 F.3d at 1225. In those cases, the district court should not generally remand or

decline to retain the declaratory relief action when it must still preside over other related

claims. Here, the only claim is the request for declaratory relief. Moreover, the Dizol court

later adds that “these are considerations for the district court, which is in the best position to

assess how judicial economy, comity and federalism are affected in a given case.” Dizol, 133

F.3d at 1226.

Both parties agree that the three Brillhart factors must be considered by a

federal court in deciding whether to exercise its discretion under the Federal Declaratory

Judgment Act. See Brillhart v. Excess Ins. Co., 316 U.S. 491 (1942). The factors are : 1)

avoiding needless determination of state law issues; 2) avoiding duplicative litigation; and

3) discouraging litigants from forum shopping. Liberty, 2007 WL 4165745, at *1 (citations

omitted). 

1) Avoiding Needless Determination of State law Issues

The parties do not dispute that the issues before the Court are strictly governed by

state law. Bartell argues that, in particular, federal courts should be reluctant to determine

“unsettled state law issues.” Polido, 110 F.3d at 1422 (“Exercise of the district court’s

discretionary jurisdiction under Brillhart furthers the policy against needlessly deciding

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Because Great American refers to the pending state court proceeding in its briefs, the

Court construes this contention as a requirement that there must exist a pending parallel state

court proceeding.

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Great American argues the Hungerford case does not apply because it also was

overruled by Dizol. (Dkt. 8, p. 9). However, as in Polido, Dizol’s narrow holding does not

apply to the discussion here.

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unsettled state law issues, prevents duplicative litigation, and discourages forum shopping.”)

(See Dkt. 11, pp. 2-3).

Great American contends that the state law issues must be complex and there must be

a pending state court proceeding3

 for the federal courts to abstain from accepting jurisdiction.

(Dkt. 8, p. 6). It argues that the current action fails both. Great American argues that “this

case involves run-of-the-mill coverage issues that are not complex.” (Dkt. 8, p. 6). However,

the case upon which it relies does not hold that the action must be complex, but rather, that

it is one of many factors, including the existence of a pending parallel state action, that a

district court should consider in deciding whether or not to abstain from said action.

Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1367 (9th Cir.1991) (finding district court

properly retained declaratory judgment action because it was joined with other claims).

Polido also does not refer to requirements that the state law issues be complex or that an

existing parallel action is pending in state court to abstain from exercising jurisdiction.

2) Avoiding Duplicative Litigation

Great American emphasizes that the pending state case is the underlying liability

action, the issues in which are distinct from the coverage issues here, and as a result, is not

a parallel case: the pending state court action deals with negligence issues, whereas the

declaratory judgment action deals with contract interpretation of the insurance policy. (Dkt.

8, pp. 8-9). Therefore, Great American argues this is not duplicative litigation. (Dkt. 8, p.11).

While there are some distinct differences, the Ninth Circuit found there were

important similarities. See Am. Nat’l Fire Ins. Co. v. Hungerford, 53 F.3d 1012, 1017 (9th

Cir.1995).4 The Hungerford Court acknowledged that in such circumstances, the cases are

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not parallel because, while the facts are the same, the legal issues are different. Nonetheless,

“the federal action does parallel the state action in the sense that the ultimate legal

determination in each depends upon the same facts. And, there is an alternate state remedy

by which the legal determination sought in the federal declaratory judgment action may be

made on the basis of a well-developed factual record, rather than on the basis of a barren

record.” Hungerford, 53 F.3d at 1017. Great American accurately points out that there is a

“full trial record” of the underlying tort action. (Dkt.8, p. 10). That record is in state court.

3) Discouraging Litigants from Forum Shopping 

Bartell contends that Great American’s suit in this Court is a reactive declaratory

judgment action because it was filed in response to a pending state court lawsuit. (Dkt. 7,

p.6). Great American argues it is not reactive because it is not responding to a previouslyfiled state court declaratory action. Rather, it contends that a declaratory judgement action

by an insurance company against its insured during the pendency of a “‘non-removable’ state

court action presenting the same issues of state law is ‘reactive’ litigation.” (Dkt. 8, p. 8).

Great American cites Cont’l Cas. Co. v. Robsac Indus., 947 F.2d 1367, 1372 (9th Cir.1991)

for the latter proposition. Great American is correct that this is an example of a reactive

declaratory judgment action; it does not limit, however, reactive litigation in insurance

declaratory judgment actions to those with a “non-removable” element.

More importantly, Great American was the Plaintiff in a virtually identical case in

which the federal court refused to retain jurisdiction. See Great Am. Assurance Co. v.

McCormick, C 05-02175 CRB, 2005 WL 3095972 (N.D.Cal. November 15, 2005). The

pending state court cases were tort actions, not state declaratory relief actions. The

McCormick court nonetheless held that Great American’s lawsuit was indeed a “reactive

declaratory action: Great American filed this action in response to the state plaintiffs’

lawsuits.” McCormick, 2005 WL 3095972 at *2. The court noted that Great American’s

argument that it was not forum-shopping was without merit because “[i]t could have filed a

declaratory relief action in state court . . . where such action could have been related to and

coordinated with the pending state court actions.” McCormick, 2005 WL 3095972 at *2

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(citation omitted). This is the situation here. Great American has at its disposal Ariz. Rev.

Stat. § 12-1831, Arizona’s version of the Federal Declaratory Judgment Act.

Thus, in determining whether to exercise its discretionary jurisdiction to reach

the merits in an action for declaratory relief, the dispositive question is not

whether the pending state proceeding is “parallel,” but rather, whether there

was a procedural vehicle available to the insurance company in state court to

resolve the issues raised in the action filed in federal court. If a state court

remedy is available to the insurer, the district court must consider whether

circumstances exist that overcome the “presumption that the entire suit should

be heard in state court.” Chamberlain, 931 F.2d at 1367.

Polido, 110 F.3d at 1423.

There is nothing about this case to indicate that the presumption is overcome; the state

court is the proper forum for Great American’s request for declaratory relief.

Accordingly,

IT IS ORDERED that Plaintiff’s Motion to Strike (Dkt. 12) is denied.

IT IS FURTHER ORDERED that Defendants’ Motion to Dismiss (Dkt. 7) is

granted; therefore, this action is dismissed.

DATED this 28th day of April, 2008.

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