Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_06-cv-00289/USCOURTS-alsd-1_06-cv-00289-0/pdf.json

Parties Involved:
Doris Bailey
Defendant
Arthur Dale
Defendant
Mary Grayson
Defendant
William Guy
Defendant
Brent Powell
Defendant
Progressive Specialty Insurance Company
Plaintiff
Bennie Scarbrough
Defendant

Document Text:

1 Under the E-Government Act of 2002, this is a written opinion and therefore is

available electronically. However, it has been entered only to decide the motion or matter

addressed herein and is not intended for official publication or to serve as precedent.

2 The facts are far more colorful than this cold recitation in the Complaint might

suggest. Indeed, it appears that at approximately 10:00 p.m. on the evening in question, Powell

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

PROGRESSIVE SPECIALTY )

INSURANCE COMPANY, )

 )

Plaintiff, )

 )

v. ) CIVIL ACTION 06-0289-WS-C

 )

DORIS BAILEY, et al., )

 )

Defendants. )

ORDER

This matter is before the Court on defendant Doris Bailey’s Motion to Dismiss or, in the

Alternative, to Stay (doc. 6). The Motion has been briefed and is ripe for disposition at this

time.1

 Additionally, defendant Brent Powell has filed a Joinder in the Motion to Dismiss (doc.

23) in which he adopts all arguments set forth in Bailey’s Motion.

I. Background.

This declaratory judgment action seeks federal resolution of certain insurance coverage

issues arising from and pending in an ongoing state court lawsuit. On March 18, 2006, Doris

Bailey (“Bailey”) filed suit in the Circuit Court of Choctaw County, Alabama, against Marengo

Forest Products, Inc. (“Marengo Forest”), Brent Powell (“Powell”), and certain other parties not

relevant to this Order. Bailey alleges that, on or about September 18, 2005, Marengo Forest and

Powell were negligent or wanton when a motor vehicle owned by Marengo Forest and operated

by Powell struck Bailey while she was a pedestrian in the parking lot of a bar called the Hot

Shots Club, causing her certain injuries.2

 The state court action remains pending in Choctaw

Case 1:06-cv-00289-WS-C Document 24 Filed 07/25/06 Page 1 of 13
and his wife climbed in the heavy-duty pick-up truck that Marengo Forest had provided him for

use in the course of his employment, and proceeded to drive approximately 40 to 50 miles to the

Hot Shots Club in Coffeeville, Alabama. Upon arrival, Powell apparently consumed eight to ten

beers before participating in a bar brawl. During the ensuing fisticuffs, Powell brandished a

hydraulic hose from the truck as a weapon by swinging it to and fro in the Hot Shots parking lot. 

Ultimately, Powell and his wife got back in the truck to extricate themselves from the fracas. As

they drove away, it is alleged, the truck struck and injured Bailey.

3 Although the parties’ filings do not reflect it, the Court assumes that the

Progressive-provided counsel has withdrawn from representation of Powell in the Bailey Action,

given Powell’s election to proceed with retained counsel of his own choosing.

4 In late June 2006, Progressive filed a motion to dismiss the third-party complaint

in the Bailey Action, on the grounds that this federal declaratory judgment action was already

underway when the third-party complaint was filed and Alabama Code § 6-5-440 prohibits

multiple lawsuits on the same subject matter. The Court’s understanding is that this motion has

not yet been ruled on by the Choctaw County Circuit Court.

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County Circuit Court at this time, where it bears the caption Doris Bailey v. Marengo Forest

Products, Inc., et al., CV-06-32-JTB (the “Bailey Action”).

On June 1, 2006, Powell filed an answer in the Bailey Action, by and through an attorney

furnished by Marengo Forest’s commercial auto insurer, Progressive Specialty Insurance

Company (“Progressive”). Progressive was not originally named as a defendant in the Bailey

Action. Just four days after answering, however, Powell filed another answer in the Bailey

Action, this time via his own personal attorney.3

 Concurrently with his second answer, Powell

filed a third-party complaint against Progressive in the Bailey Action. In that pleading, Powell

asserted that Progressive was taking the position that it did not owe Powell coverage for Bailey’s

claim because his use of the truck exceeded the parameters of the permission granted him by

Marengo Forest. By its terms, the third-party complaint seeks a declaratory judgment that

Progressive’s insurance policy affords coverage to Powell for the claims raised by Bailey and

that Progressive has a duty to defend and to indemnify Powell in connection with the Bailey

Action.4

On May 9, 2006, some six weeks after the Bailey Action commenced, but nearly a month

before Powell filed his third-party complaint in state court, Progressive filed its Complaint for

Declaratory Judgment in this District Court to commence this action. Named defendants include

Case 1:06-cv-00289-WS-C Document 24 Filed 07/25/06 Page 2 of 13
5 None of the Potential Claimants are parties to the Bailey Action, nor have they

otherwise initiated legal proceedings against Powell to date. Nonetheless, the Court surmises

that the Potential Claimants own other vehicles in the Hot Shots parking lot that were allegedly

struck by the truck as Powell drove away. (See Opposition Brief, at 1.)

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Bailey and Powell, as well as four potential claimants (Arthur Dale, Mary Grayson, William

Guy, Bennie Scarbrough) (the “Potential Claimants”) who have been identified as possibly

having claims against Powell for property damage arising from the events at Hot Shots.5

 In a

veritable mirror image of Powell’s third-party complaint in the Bailey Action, Progressive seeks

a declaration from this Court that its commercial auto policy for Marengo Forest did not afford

coverage to Powell. More precisely, Progressive contends that it owes neither indemnity nor a

defense to Powell in the Bailey Action or in any suits that might be brought by the Potential

Claimants, inasmuch as Powell was using the truck without Marengo Forest’s permission and

therefore was not an insured at the time of the Hot Shots incident. Progressive further asserts

that coverage is lacking because Powell’s conduct does not constitute an “accident” under

applicable policy provisions.

Defendant Doris Bailey now comes forward with a Motion to Dismiss or, in the

Alternative, to Stay, in which she argues that this Court should decline to exercise jurisdiction

over Progressive’s declaratory judgment action because (a) Bailey and Powell are parties in both

the state and federal actions; (b) “the same insurance coverage issues Progressive has raised in

this action have now been raised in the state court action”; (c) the coverage issues raised by

Progressive are governed exclusively by state law; (d) those issues can be more effectively and

efficiently resolved in the ongoing state court proceedings; and (e) the exercise of federal

jurisdiction here would waste judicial resources, multiply the litigation burdens on the parties,

risk inconsistent rulings, and foster an appearance of disregard for the authority and expertise of

the state court. (Motion to Dismiss, ¶¶ 7-11.) Progressive opposes this Motion.

II. Legal Standard.

Progressive’s claims in this action were brought pursuant to 28 U.S.C. § 2201, seeking “a

declaratory judgment establishing the parties’ rights under a contract of insurance.” (Complaint,

¶ 3.) But it is well-settled that the Declaratory Judgment Act is properly “understood to confer

on federal courts unique and substantial discretion in deciding whether to declare the rights of

Case 1:06-cv-00289-WS-C Document 24 Filed 07/25/06 Page 3 of 13
6 Ven-Fuel is in line with extant Supreme Court jurisprudence. More than 60 years

ago, the Supreme Court opined that it would be both “uneconomical” and “vexatious” for a

federal district court to proceed with a declaratory judgment action, concurrently with ongoing

proceedings involving the same parties and same legal issues (not arising under federal law) in

state court. Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 495, 62 S.Ct. 1173, 86 L.Ed.

1620 (1942). The Brillhart Court admonished lower courts scrupulously to avoid what it termed

“[g]ratuitous interference with the orderly and comprehensive disposition of a state court

litigation.” Id.

7 These considerations have been echoed by other appellate courts. See, e.g.,

Government Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir. 1998) (federal court

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litigants.” Wilton v. Seven Falls Co., 515 U.S. 277, 286, 115 S.Ct. 2137, 132 L.Ed.2d 214

(1995). Indeed, the Supreme Court has “repeatedly characterized the Declaratory Judgment Act

as an enabling Act, which confers a discretion on the courts rather than an absolute right upon

the litigant.” Id. at 287 (citations omitted). As the Eleventh Circuit recently observed, the Act

“only gives the federal courts competence to make a declaration of rights; it does not impose a

duty to do so.” Ameritas Variable Life Ins. Co. v. Roach, 411 F.3d 1328, 1330 (11th Cir. 2005). 

“The desire of insurance companies ... to receive declarations in federal court on matters of

purely state law has no special call on the federal forum.” State Auto Ins. Companies v. Summy,

234 F.3d 131, 136 (3rd Cir. 2000); see also Prudential Ins. Co. of America v. Doe, 140 F.3d 785,

789 (8th Cir. 1998) (“The Supreme Court’s decision in Wilton ... vests the district courts with

broad discretion in deciding whether to hear a declaratory judgment action.”).

Consistent with the foregoing, it has long been recognized in this Circuit that a district

court has discretion to “decline to entertain a declaratory judgment action on the merits when a

pending proceeding in another court will fully resolve the controversy between the parties.” 

Ven-Fuel, Inc. v. Department of the Treasury, 673 F.2d 1194, 1195 (11th Cir. 1982).6 Last year,

the Eleventh Circuit reinforced Ven-Fuel and furnished district courts with considerable

guidance in how to wield their discretion under the Declaratory Judgment Act where there are

parallel state proceedings. In Ameritas, the court emphasized that federalism, comity, and

efficiency require district courts to balance federal and state interests in determining how to

exercise their discretion to hear a declaratory judgment action when confronted with a parallel

state action. 411 F.3d at 1330-31.7

 To assist district courts in this endeavor, the Ameritas court

Case 1:06-cv-00289-WS-C Document 24 Filed 07/25/06 Page 4 of 13
“should discourage litigants from filing declaratory actions as a means of forum shopping; and it

should avoid duplicative litigation”); Mitcheson v. Harris, 955 F.2d 235, 237-39 (4th Cir. 1992)

(citing as reasons to dismiss declaratory actions the philosophy of judicial federalism, as well as

pragmatic concerns of efficiency and comity).

8 In Manuel v. Convergys Corp., 430 F.3d 1132 (11th Cir. 2005), the Eleventh

Circuit reiterated that the decision to hear a declaratory judgment action is discretionary, that

there can be no rigid or mechanical application of the Declaratory Judgment Act, and that a vast

spectrum of considerations is available to district courts deciding whether to hear such an action. 

See id. at 1135, 1137-38.

9 Movant aids neither her cause nor the Court by omitting a factor-by-factor

analysis of the Ameritas guideposts, and by failing to proffer any substantive rebuttal to the

methodical analysis presented in Progressive’s opposition brief.

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promulgated a non-exhaustive set of “guideposts” to be considered, including: (i) the state’s

interest in deciding the matter; (ii) whether a judgment in the federal action would completely

resolve the controversy; (iii) whether the declaratory judgment action would clarify the parties’

legal relations; (iv) whether the federal action is a form of “procedural fencing” being utilized

“to provide an arena for a race for res judicata or to achieve a federal hearing in a case not

otherwise removable”; (v) whether a ruling in the federal action would increase friction between

federal and state courts or otherwise encroach on state proceedings; (vi) whether a superior

alternative remedy exists; (vii) whether underlying facts are important to informed resolution of

the matter; (viii) whether the state court is better situated than the federal court to evaluate those

facts; and (ix) the nexus (if any) between the underlying issues and state law/policy, and whether

federal common or statutory law requires resolution of the declaratory action. See id. at 1331;8

see also Lexington Ins. Co. v. Rolison, --- F. Supp.2d ----, 2006 WL 1594151, *7-*11 (S.D. Ala.

May 17, 2006) (applying Ameritas guideposts in context of declaratory judgment action filed by

insurer after entry of state court judgment against putative insured). 

III. Application of Ameritas Guideposts.

Consistent with Ameritas, the Court will now consider and apply each of its nine

guideposts in assessing the propriety of exercising jurisdiction over Progressive’s declaratory

judgment action under the specific circumstances presented here.9

The first Ameritas factor concerns “the strength of the state’s interest in having the issues

Case 1:06-cv-00289-WS-C Document 24 Filed 07/25/06 Page 5 of 13
10 Progressive’s argument to the contrary misguidedly suggests that Alabama has no

interest in resolving this dispute apart from the entirely commonplace fact that Alabama law will

provide the rule of decision. (Opposition Brief, at 3.) For the reasons stated above, the Court

finds that Alabama has a much more compelling interest in deciding these issues than

Progressive would acknowledge.

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raised in the federal declaratory action decided in the state courts.” 411 F.3d at 1331. Alabama

state courts undoubtedly have a substantial interest in deciding the issues raised in this lawsuit. 

The underlying Bailey Action is being litigated in an Alabama state court, and any ruling on

Progressive’s insurance coverage for Powell in this action may have profound implications for

that state court litigation. Moreover, this action concerns the proper interpretation of an

insurance policy issued to an Alabama business (Marengo Forest) for its activities in Alabama,

and whether that policy extended coverage to an Alabama citizen (Powell) for his alleged

wrongs to another Alabama citizen (Bailey) during an incident that occurred in Alabama. 

Alabama law will supply the rule of decision with respect to these questions. Under these

circumstances, the State of Alabama has a considerable interest in deciding these coverage

issues. See Lexington, 2006 WL 1594151, at *7 (determining that Alabama has substantial

interest in deciding Alabama state law issues concerning interpretation of insurance contract

issued to an Alabama business, with respect to an Alabama judgment).10

Next, we examine “whether the judgment in the federal declaratory action would settle

the controversy.” Ameritas, 411 F.3d at 1331. This question is unequivocally answered in the

negative. Progressive’s declaratory judgment action encompasses only a fraction of the legal

issues that have been joined in the Bailey Action, and would in no way address or resolve any of

Bailey’s claims against Powell, Marengo Forest, or anybody else. After this Court adjudicated

the coverage issues animating this declaratory judgment action, and irrespective of the manner in

which those issues were decided, the Choctaw County Circuit Court would be left to implement

that ruling and address the merits of Bailey’s claims against Powell. By contrast, both the

coverage issues pertaining to Powell and the issues of Powell’s liability to Bailey are pending

before the state court in the same proceeding. Allowing the Choctaw County Circuit Court to

address all of those issues would avoid the fragmented, piecemeal litigation that Progressive

Case 1:06-cv-00289-WS-C Document 24 Filed 07/25/06 Page 6 of 13
11 In so concluding, the Court gives due consideration to Progressive’s point that the

Potential Claimants have been joined as defendants in this action, but not in the Bailey Action. 

The centerpiece of Progressive’s opposition is that any ruling by the Bailey court on coverage

issues would not be res judicata as to those absent Potential Claimants and might force

Progressive to relitigate the same coverage issues concerning Powell in subsequent lawsuits that

those Potential Claimants might someday bring. (Opposition Brief, at 4.) This contention is

unpersuasive for three reasons. First, Progressive has made no showing that it could not join

those Potential Claimants in the Bailey Action, but has instead simply argued that it would be

“unnecessarily cumbersome” to do so. (Id.) Second, and more importantly, it is sheer

speculation on Progressive’s part that insurance coverage issues will ever arise with respect to

the Potential Claimants. In the 10 months since the Hot Shots incident, none of those Potential

Claimants have sued Powell for property damage. Nor is there any indication that suit is

imminent. Indeed, Progressive has been unsuccessful in serving process on three of the four

Potential Claimants in the two and a half months that this action has been pending, and the fourth

Potential Claimant, William Guy, has taken no action other than filing a pro se answer

categorically denying all allegations of the Complaint. By all appearances, there is no live case

or controversy as between Progressive and the Potential Claimants that might warrant entry of a

declaratory judgment at this time. As to the Potential Claimants, any coverage determination by

this Court would be an improper advisory ruling on an illusory, hypothetical dispute. Third,

Progressive glosses over the fact that any claims that the Potential Claimants might have against

Powell are for property damage only, consisting of fender-bender type damage when their

automobiles were struck by Powell’s truck as it left Hot Shots. It is exceedingly unlikely that

any of the Potential Claimants’ property damage claims could come anywhere near the $75,000

threshold required for federal subject matter jurisdiction to attach. As such, the Court harbors

grave doubt that federal jurisdiction exists over Progressive’s declaratory judgment action to the

extent that Progressive seeks a declaration of its rights vis a vis the Potential Claimants. See,

e.g., First Transit, Inc. v. City of Racine, 359 F. Supp.2d 782, 785 (E.D. Wis. 2005) (“Where a

plaintiff sues two or more defendants in a diversity case, it must satisfy the amount in

controversy requirement against each defendant unless the defendants are jointly liable.”);

Wonders Trust v. Deaton, Inc., 200 F.R.D. 473, 478 (M.D. Fla. 2000) (“In an action against

multiple unrelated defendants, a plaintiff relying on § 1332 must satisfy the amount-incontroversy requirement with respect to each individual defendant” unless defendants are jointly

liable). In sum, then, the Potential Claimants’ presence in this case and absence from the Bailey

Action is irrelevant to the Ameritas analysis because (a) Progressive has not shown that it cannot

join the Potential Claimants in the Bailey Action, (b) no case or controversy now exists and it is

entirely speculative that any case or controversy will ever exist between Progressive and

Potential Claimants over the Hot Shots incident, and (c) federal jurisdiction over the portions of

this declaratory judgment action that relate to the Potential Claimants is quite tenuous.

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seeks to impose via its declaratory judgment action. Clearly, this factor favors abstention.11

Third, the Court must consider “whether the federal declaratory action would serve a

useful purpose in clarifying the legal relations at issue.” Id. There can be no serious question

Case 1:06-cv-00289-WS-C Document 24 Filed 07/25/06 Page 7 of 13
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that determining whether Powell is an “insured” and whether the Hot Shots events were an

“accident” for purposes of the Progressive policy would bring the parties’ legal relations into

sharper relief. Of course, the pending declaratory claims in the Bailey Action place the state

court in an equally advantageous position to clarify the parties’ legal relations. The question is

not whether the Progressive-Powell legal relationship will or will not be clarified. It

undoubtedly will. The question is whether this Court or the Choctaw County Circuit Court will

be the one to do the clarifying. As such, while this factor militates in favor of exercising

jurisdiction, it does so only weakly.

The fourth factor identified by Ameritas is “whether the declaratory remedy is being used

merely for the purpose of ‘procedural fencing’ – that is, to provide an arena for a race for res

judicata or to achieve a federal hearing in a case otherwise not removable.” Id. Notwithstanding

Progressive’s protestations to the contrary, there is ample evidence that it has utilized this action

as a tool in a race for res judicata. A short time after Progressive initiated this declaratory

judgment action in federal court, Powell filed a third-party complaint in state court seeking

declaratory relief against Progressive. Progressive has aggressively sought to stamp out the

third-party complaint in state court by invoking Ala. Code § 6-5-440 for the proposition that

Alabama law forbids a plaintiff from prosecuting two Alabama actions at the same time for the

same cause and against the same party. Thus, the record shows that after filing this federal

action, Progressive has attempted to wield it to seal off Powell’s access to a state forum for these

coverage issues. Such conduct falls fairly within this Court’s definition of “procedural fencing”

for Ameritas purposes. Moreover, to endorse this kind of two-step dance would be to collapse

the multi-faceted Ameritas test into a single-factor benchmark of who reaches the courthouse

first. By filing a federal declaratory action before the aggrieved plaintiff seeks declaratory relief

in state court, an insurer could guarantee a federal forum by summoning § 6-5-440 to smite down

the state declaratory claims, leaving only the federal action. This approach does violence to the

principles enunciated in Ameritas, as well as the rationale of the Supreme Court in Brillhart and

Wilton. For these reasons, the “procedural fencing” factor favors declination of federal

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12 The Court also finds unpersuasive Progressive’s suggestion that Powell has

engaged in procedural fencing by not filing an answer in this action in a timely manner, even as

he filed a third-party complaint in the Bailey Action. (Opposition Brief, at 5.) The inference is

that Powell has somehow been dragging his feet to slow these federal proceedings, all to the

advantage of the parallel state proceedings. However, this inference is unwarranted and

inappropriate on the present record. On June 27, Powell’s counsel filed a Motion for Extension

of Time (doc. 16) in this action, explaining that an office miscommunication had led him to

assume incorrectly that his Joinder in Motion to Dismiss had been filed in this action while he

was out of town, when in fact it had not. There appears no reason to doubt the veracity of

counsel’s innocuous explanation for this oversight, and the Court finds no evidence of chicanery

by Powell in that regard. 

13 In that regard, this Court would be bound to honor any decisions reached by the

Choctaw County Circuit Court concerning Progressive’s defense and indemnity obligations to

Powell. See 28 U.S.C. § 1738 (state judicial proceedings are entitled to “the same full faith and

credit in every court within the United States”); American Surety Co. v. Baldwin, 287 U.S. 156,

166, 53 S.Ct. 98, 77 L.Ed. 231 (1932); Harbuck v. Marsh Block & Co., 896 F.2d 1327, 1328-29

(11th Cir. 1990). In the well established spirit of judicial comity, this Court will not review,

revisit or interfere with decisions rendered by Alabama state courts. This Court is not an

appellate court for decisions rendered in Alabama state courts. 

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jurisdiction here.12

Fifth, Ameritas counsels district courts to consider “whether the use of a declaratory

action would increase the friction between our federal and state courts and improperly encroach

on state jurisdiction.” 411 F.3d at 1331. It would. Identical claims for declaratory relief are

now before the state court and this Court. If this Court asserted jurisdiction, that decision might

effectively force the Choctaw County Circuit Court to dismiss Powell’s third-party complaint

under § 6-5-440 and hold the Bailey Action in suspended animation while awaiting a ruling from

this Court as to whether Progressive must furnish a defense to Powell. Needless to say, wresting

legal issues away from the state court, obliging it to stand idly by until this Court rules on those

issues, and then expecting it to implement this Court’s rulings (whether it agrees with them or

not) is a recipe for undue encroachment and heightened friction. The result would be equally

unfavorable if this Court asserted jurisdiction and the Bailey court permitted Powell’s third-party

complaint to proceed. In that event, a veritable footrace would ensue between federal and state

courts to resolve the issues first, with the faster court’s disposition becoming binding on the

slower court’s through the alchemy of res judicata.

13 Nothing good can come from such an

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14 In arguing otherwise, Progressive reiterates its concerns over the Potential

Claimants and its possible inability to join them in the Bailey Action. (Opposition Brief, at 6

n.4.) This consideration has already been exhaustively considered and rejected in note 11, supra,

and will not be revisited here. Suffice it to say that the nominal presence of the Potential

Claimants in this litigation and their absence from the Bailey Action in no way renders the state

court alternative inferior to or less effective than this declaratory judgment action.

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arrangement, so this guidepost also points unwaveringly in the direction of abstention.

The sixth Ameritas factor calls for consideration of “whether there is an alternative

remedy that is better or more effective.” 411 F.3d at 1331. In the posture of this case, litigating

the coverage issue in the Bailey Action exclusively is a vastly superior remedy to conducting

double-tracked litigation in two courts. Unquestionably, Progressive can fully litigate its claims

for declaratory judgment against Powell and Bailey in the existing Choctaw County Circuit

Court proceedings, with both coverage and liability issues to be decided by the same court in an

integrated manner without federal interference. This alternative is clearly better and more

effective.14

Combining the seventh and eighth Ameritas factors, the Court examines “whether the

underlying factual issues are important to an informed resolution of the case” and, if so,

“whether the state trial court is in a better position to evaluate those factual issues than is the

federal court.” Id. Both of these questions are answered in the affirmative. The heart of this

declaratory judgment action is Progressive’s claim that Powell did not have permission from

Marengo Forest to use the truck on the evening of September 18, 2005 and that the Hot Shots

events were not an “accident” under the applicable policy. Neither argument can be evaluated

without an in-depth study of the facts and determinations of what actually transpired on

September 18, 2005. The Choctaw County Circuit Court will already be examining those events

in connection with Bailey’s claims against Powell and Marengo Forest, so that court would not

need to review them anew to resolve Progressive’s insurance coverage issues. Rather than

having two courts duplicate effort in scrutinizing and assessing the underlying facts, a far more

sensible and efficient approach is for the state court that is already tasked with examining those

facts in the underlying case to apply those same facts to the pending claims for declaratory relief.

Ninth and finally, Ameritas directs district courts to consider “whether there is a close

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nexus between the underlying factual and legal issues and state law and/or public policy, or

whether federal common or statutory law dictates a resolution of the declaratory judgment

action.” Id. This factor unambiguously weighs in favor of abstention. Progressive’s Complaint

raises exclusively state law issues and implicates exclusively state law public policies, with no

reference whatsoever to federal common or statutory law.

Considered collectively, the Ameritas guideposts weigh heavily in favor of abstention. 

This declaratory judgment action turns on Alabama state law issues relating to whether

Progressive’s insurance policy provides coverage to Powell in connection with certain state-law

claims brought in an Alabama state court concerning events that occurred in Alabama between

Alabama residents. All of the legal and factual issues raised by Progressive in this action against

Bailey and Powell are also at issue in the currently pending Choctaw County action. These

points support abstention. See Sherwin-Williams Co. v. Holmes County, 343 F.3d 383, 390-91

(5th Cir. 2003) (“if the federal declaratory judgment action raises only issues of state law and a

state case involving the same state law issues is pending, generally the state court should decide

the case and the federal court should exercise its discretion to dismiss the federal suit”); ITT

Industries, Inc. v. Pacific Employers Ins. Co., 427 F. Supp.2d 552, 561 (E.D. Pa. 2006)

(describing wasteful, inefficient outcome if both federal court and state court ruled on parallel

actions, with duplication, piecemeal resolution of issues, and encroachment on other

proceedings). As one appellate court sagely put it, “[i]t hardly husbands scarce judicial

resources to allow separate suits stemming from the same overall controversy and involving

overlapping issues to proceed on parallel tracks.” Mitcheson v. Harris, 955 F.2d 235, 239 (4th

Cir. 1992). What’s more, this action cannot completely and finally resolve this dispute, but will

leave various issues for resolution in the Choctaw County action irrespective of the outcome of

the declaratory issues in federal court. That kind of piecemeal litigation, and the ensuing

friction, gratuitous interference, and unease between state and federal courts confronted with

precisely the same issues presented by the same litigants, counsels against exercising jurisdiction

here. See Ameritas, 411 F.3d at 1332 (finding that allowing declaratory judgment action to

proceed would amount to gratuitous interference with more encompassing, currently pending

state court action); Centennial Life Ins. Co. v. Poston, 88 F.3d 255, 257 (4th Cir. 1996) (“at least

where another suit involving the same parties and presenting opportunities for ventilation of the

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same state law issues is pending in state court, a district court might be indulging in ‘gratuitous

interference,’ if it permitted the federal declaratory action to proceed”) (citations omitted). 

In short, taking to heart Wilton’s concerns of “practicality and wise judicial

administration,” the Court finds that those virtues would be poorly served by retaining

jurisdiction here, inasmuch as the same exclusively state law issues presented in this case are

presently being litigated by the same parties in a parallel state court proceeding, this action

includes only a subset of the matters being litigated in the state court, and this action has been

invoked by Progressive in a strategy to freeze coverage issues out of the state court proceeding. 

Furthermore, it appears that all parties to this action will have full and adequate recourse to

litigate all legal issues presented herein in the Bailey Action. See Wilton, 515 U.S. at 283

(suggesting that abstention determination ought to consider whether claims of all parties in

interest can satisfactorily be adjudicated in state court proceeding). For all of these reasons, the

Court will decline to exercise jurisdiction.

IV. Remedy.

Having determined that Wilton discretion is in play, and having applied the Ameritas

guideposts to conclude that abstention will promote the interests of practicality, comity and

efficient, wise administration of justice, the Court now must decide whether to dismiss or stay

this action.

In Wilton, the Supreme Court observed that “where the basis for declining to proceed is

the pendency of a state proceeding, a stay will often be the preferable course, because it assures

that the federal action can proceed without risk of a time bar if the state case, for any reason,

fails to resolve the matter in controversy.” 515 U.S. at 288 n.2; see also Gatewood Lumber, Inc.

v. Travelers Indem. Co., 898 F. Supp. 364, 369 (S.D. W.Va. 1995) (staying declaratory judgment

action, rather than dismissing it under Wilton, “to alleviate the risk of a possible time bar to

otherwise viable causes if the State action fails to resolve all matters in controversy”). However,

numerous courts engaging in abstention pursuant to Brillhart and Wilton have instead elected to

dismiss the declaratory action without prejudice. See, e.g., Ameritas, 411 F.3d at 1332 (finding

no abuse of discretion in district court’s decision to dismiss declaratory judgment action in favor

of parallel state court action); Summy, 234 F.3d at 136 (vacating district court’s decision to

exercise jurisdiction over declaratory judgment action and remanding with instructions that the

Case 1:06-cv-00289-WS-C Document 24 Filed 07/25/06 Page 12 of 13
15 See generally Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 731, 116 S.Ct.

1712, 135 L.Ed.2d 1 (1996) (recognizing that federal courts have power to dismiss cases based

on abstention principles where the relief being sought is equitable or discretionary).

-13-

complaint be dismissed pursuant to Wilton); Poston, 88 F.3d at 258 (affirming dismissal of

declaratory judgment action without prejudice where parallel state court action contained

defendant and issues not present in federal action); St. Paul Fire & Marine Ins. Co. v. Johnson

Homes of Meridian, Inc., 2005 WL 2739141, *10 (S.D. Ala. Oct. 24, 2005) (abstaining from

hearing declaratory judgment action in favor of parallel state court proceeding and dismissing

declaratory judgment action).15

Dismissal is warranted here for two reasons. First, in contrast to the concerns articulated

in Wilton and Gatewood, no party has suggested that there would be any reasonable risk of a

time bar in the Bailey Action with respect to Progressive’s claims asserted here, so as to render a

stay appropriate. Second, if this action were stayed, perverse incentives might be created for

Progressive to waylay Powell’s third-party complaint for declaratory relief in the Bailey Action

in hopes that it might be able to litigate those coverage issues in federal court after the stay is

lifted. Thus, granting a stay could conceivably yield the type of forum-shopping and piecemeal

litigation that Wilton/Brillhart abstention was designed to prevent. Based on these

considerations, and in the absence of countervailing argument by the parties, this action will be

dismissed, rather than stayed.

V. Conclusion.

For all of the foregoing reasons, defendant Doris Bailey’s Motion to Dismiss (doc. 6) is

granted. This action is hereby dismissed without prejudice pursuant to Wilton/Brillhart

abstention, to enable the parties to litigate all issues pertaining to this dispute in the parallel

lawsuit currently pending in Choctaw County Circuit Court. A separate judgment will enter.

DONE and ORDERED this 25th day of July, 2006.

s/ WILLIAM H. STEELE 

UNITED STATES DISTRICT JUDGE

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