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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

IRONSHORE INDEMNITY, INC. and 

IRONSHORE SPECIALTY INSURANCE 

COMPANY,

 Plaintiffs,

 v.

SYNERGY LAW GROUP, LLC and 

BARTLEY J. LOETHEN

 Defendants.

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12 CV 800

Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiffs Ironshore Indemnity, Inc. and Ironshore Specialty Insurance Company 

(collectively “Ironshore”) filed suit against Synergy Law Group, LLC and Bartley J. Loethen 

seeking a declaratory judgment that Ironshore is not required to defend or indemnify Defendants 

under two insurance policies. In February of 2012, Defendants moved to dismiss, arguing that 

Ironshore’s Complaint in federal court should be dismissed under the “first to file” rule in light 

of a Third-Party Complaint previously filed by Defendants against Ironshore in an ongoing state 

court action. On May 30, 2012, the Court denied Defendants’ Motion to Dismiss without 

prejudice, but stayed this action pending resolution of Ironshore’s Motion to Sever or Dismiss 

the Third Party Complaint in State Court. The Circuit Court of Cook County has since denied 

Ironshore’s Motion to Sever and has scheduled a hearing on Ironshore’s Motion to Dismiss for

January of 2013. Based on these developments, this Court lifted its stay in this case on 

December 17, 2012 in order to determine whether the Court should dismiss this action in favor 

of the ongoing state court case under the Colorado River doctrine. For the reasons stated herein, 

Ironshore’s Complaint for declaratory relief is dismissed.
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BACKGROUND

I. The Underlying Actions

In 2006, Synergy drafted a Shareholders’ Agreement for one of its former client’s, 

Gaston Advertising, Inc. In 2008, Rena Zito, a shareholder holding 20 percent of Gaston stock, 

sued Gaston in the Circuit Court of Cook County claiming that she was owed over $1 million 

under the terms of the Shareholders’ Agreement (the “Zito I Lawsuit”). Gaston retained Synergy 

to defend it in the Zito I Lawsuit and Synergy appeared on behalf of Gaston in October of 2008. 

Zito moved for summary judgment in February of 2010. 

On March 26, 2010, Synergy applied for lawyers’ professional liability insurance with 

Ironshore. As part of the application for insurance, Synergy responded “No” to the question 

“Are you or any members of [sic] employees of your firm aware of any fact, circumstance, or 

situation which might reasonably be expected to give rise to a claim?” (Id. ¶ 27.) The 

application also gave the following warning: “You must report any known claim, suit, or 

incident, act or omission that may in the future give rise to a claim or suit, to your current 

professional liability insurer before the claims-reporting period under that policy expires.” (Id. ¶ 

28.) In reliance on Synergy’s application, Ironshore issued the first of the two policies to 

Synergy with a policy period from May 1, 2010 to May 1, 2011 (the “First Policy Period”). (Id. 

¶¶ 30-32.) The policy provided coverage for claims first made and reported to Ironshore during 

the First Policy Period. (Id. ¶ 33.) The policy also provided:

The insurer shall not be liable to make any payments in connection with any 

Claim made against any Insured: ... alleging, arising out of, based upon or 

attributable to Professional Legal Services if an Insured, prior to the effective date 

of the first Lawyers Professional Liability Policy issued by the Insurer to the 

Insured, had knowledge of the circumstances that gave rise to the Claim and 

reason to believe that a Claim might result.
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(Id. ¶ 35.) 

On August 9, 2010, the State Court granted summary judgment against Gaston in the Zito 

I Lawsuit finding Gaston liable on the option to purchase shares at a price per share based on the 

equation contained in the Shareholders’ Agreement. (Id. ¶ 24.) The court further stated in its 

Order that it “would be hard pressed to find [Gaston] exercised reasonable care when it erred 

either by drafting the Shareholder’s [sic] Agreement to result in a per-share calculation or in 

calculating the value owed if it exercised its option to purchase [Zito’s] shares.” (Id. ¶ 25.) On 

September 13, 2010, the court entered a judgment in favor of Zito and against Gaston in the 

amount of $1,267,090. (Id. ¶ 26.)

On January 5, 2011, Synergy provided a memorandum, drafted by Loethen, to notify 

Ironshore of a potential claim by Gaston against Synergy for malpractice (the “Synergy 

Memorandum”) (Id. ¶ 46.) In that memorandum, Loethen explained the nature of the Gaston 

situation, describing the professional services provided by Defendants to Gaston from 2006 to 

2010, including but not limited to the Shareholders’ Agreement, Gaston’s attempt to repurchase 

Zito’s shares with Defendants’ assistance, Synergy’s subsequent involvement with Gaston, and 

the resulting Zito I Lawsuit. (Id. ¶ 47.) On January 28, 2011, Ironshore acknowledged receipt of 

the Synergy Memorandum and hired counsel to represent Synergy, consistent with its duty to 

defend, and subject to a full reservation of rights. (Id. ¶¶ 48-49.) On April 21, 2011, Ironshore 

issued a letter to Synergy stating that it had no duty to defend or indemnity Synergy in 

connection with the potential claim by Gaston because Synergy was aware, no later than October 

of 2008 when the Zito I Lawsuit was filed, of the circumstances surrounding the Gaston situation 

and that those circumstances might give rise to a claim. (Id. ¶ 50.) Ironshore also advised 

Synergy that Ironshore was “prepared to file a declaratory judgment action immediately,” but 
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that the policy contained a “Dispute Resolution Clause” that precluded the commencement of 

judicial proceedings until 90 days after the termination of a non-binding mediation. (Id. ¶ 51.) 

The parties participated in mediation on July 19, 2011 and subsequently entered into a standstill 

agreement which was effective from October 17, 2011 through December 15, 2011. (Id. ¶ 53.) 

Meanwhile, on September 19, 2011, Gaston sued Defendants for malpractice in State 

Court (the “Gaston Lawsuit”), alleging that Synergy erred in drafting the Shareholders’ 

Agreement and failed to properly defend Gaston in the Zito I Lawsuit, each resulting in judgment 

against Gaston in the Zito I Lawsuit. Synergy notified Ironshore of the Gaston Lawsuit on 

October 14, 2011. (Id. ¶ 54.) On November 16, 2011, Ironshore’s counsel issued a letter on 

behalf of Ironshore stating that because the Gaston Lawsuit involved the same, related, and/or 

continuous Professional Legal Services and a common nucleus of facts as those described in the 

Synergy Memorandum and the Zito I Lawsuit, the matters would be considered a single claim 

that Ironshore had no duty to defend or indemnify. (Id. ¶ 55.) On December 22, 2011, Zito filed 

a second suit, this time directly against Defendants, for aiding and abetting Gaston’s breach of 

fiduciary duty (the “Zito II Lawsuit”). Defendants’ counsel notified Ironshore’s counsel of the 

Zito II Lawsuit on January 12, 2012. (Id. ¶ 56.) On January 30, 2012, Ironshore’s counsel issued 

a letter on behalf of Ironshore notifying Defendants that coverage would be denied, again due to 

the lawsuit’s relatedness to the Zito I Lawsuit and the Synergy Memorandum. (Id. ¶ 57.)

On January 20, 2012, after seeking coverage from Ironshore for the Zito II Lawsuit but 

before receiving notification of Ironshore’s denial, Defendants filed a Third-Party Complaint 

against Ironshore in the Gaston Lawsuit, alleging breach of contract and bad faith against 

Ironshore. The Third Party Complaint also asserts claims against Richmond Insurance Group, 

LLC (“Richmond”), an insurance broker, and Ironshore Insurance Services, LLC, a claims agent, 
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both associated with the Policies. Ironshore filed the present action in federal court thirteen days 

later on February 3, 2012. Shortly thereafter, Ironshore moved to dismiss or sever the Third 

Party Complaint in the Gaston Lawsuit and Defendants moved to dismiss Ironshore’s Complaint

seeking declaratory judgment here.

II. The Court’s Previous Ruling on Defendants’ Motion to Dismiss 

On May 30, 2012, this Court issued a written Opinion denying Defendants’ Motion to 

Dismiss, without prejudice, and staying the case pending resolution of Ironshore’s Motion to 

Dismiss or Sever Defendants’ Third Party Complaint in the Gaston Lawsuit. In that Opinion, the 

Court noted that the parties had mistakenly identified the issue before the Court as an application 

of the “first to file” rule, which applies to cases simultaneously litigated in two federal courts. 

See Dkt. No. 21, p. 3. The Court explained that where the first-filed case has been filed in an 

Illinois state court, the issue of whether to abstain from hearing the federal case falls under the 

doctrine of Colorado River abstention. Id. The Court also stated that where, as here, the federal 

action seeks declaratory relief, courts apply the Wilton/Brillhart doctrine to determine whether to 

stay or dismiss the federal case in favor of parallel litigation in state court. Id.

After determining that the Third Party Complaint in the Gaston Lawsuit and the action 

before this Court were parallel, involving “substantially the same parties ... contemporaneously 

litigating substantially the same issues in two fora,” the Court exercised its discretion and 

abstained from proceeding further with the prosecution of Ironshore’s Complaint. Id. (quoting 

Envision Healthcare, Inc. v. PreferredOne Ins. Co., 604 F.3d 983, 986 (7th Cir. 2010). Although 

the Court recognized that it could, “in the sound exercise of [its] discretion, stay or dismiss an 

action seeking a declaratory judgment in favor of an ongoing state case,” Envision, 604 F.3d at 

986 (emphasis added), it decided to stay rather than dismiss the instant case based on a provision 
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in the Policies stating that both the insurer and the insured submit to suit in any court of 

competent jurisdiction in the United States, provided, that Ironshore retains any and all rights to 

remove an action to a United States District Court. (Id.) 

III. Subsequent Developments in the State Court Proceeding

After issuing its Opinion and staying this case, the Court waited patiently for several 

months for the State Court to issue a ruling on Ironshore’s Motion to Sever or Dismiss the Third 

Party Complaint. On June 28, 2012, this Court held a status and was informed that the parties 

were still awaiting a ruling from the State Court, which had “kicked [the case] until midAugust.” Based on this representation the Court rescheduled another status for August 23, 2012. 

At the August 23 status hearing, Ironshore’s counsel appeared before this Court and 

conveyed that a ruling on its Motion to Sever would be delayed because the judge in the Gaston 

Lawsuit (Judge Taylor) had been replaced pursuant to a Motion for Change of Judge.1

 Counsel 

for Ironshore also stated that the Motion to Sever had been renoticed before the new judge 

(Judge Barkowitz), and was set to be presented in early September. Counsel for Ironshore 

explained that the motion would likely be taken under advisement in early September because 

Judge Barkowitz had not yet familiarized himself with the Gaston Lawsuit. In light of these 

developments, the Court set a new status date for October 10, 2012. 

The October 10 status hearing was equally uneventful. Counsel for the Defendants 

informed the Court that a second Motion for Change of Judge had been filed in the Gaston 

Lawsuit by a different party and that the case was now before a third judge (Judge Tailor). The 

Court maintained its stay on these proceedings and set a status hearing for November 7, 2012. 

 1 Under Illinois law, each party in a civil action is “entitled to one substitution of judge without cause as a 

matter of right.” 735 ILCS 5/2-1001(a)(2)(i). 
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On November 7, the parties informed the Court that Ironshore’s Motion to Sever would 

be heard by Judge Tailor on December 13, 2012. Counsel for Ironshore also conveyed that by 

December 13, Ironshore’s Motion to Dismiss the Third Party Complaint in the Gaston Lawsuit 

would also be fully briefed. Counsel for Ironshore stated further that Ironshore planned to file a 

stipulation stating that it did not intend to raise certain defenses with respect to the claims against 

it in the Gaston Lawsuit. According to Ironshore’s counsel, this stipulation would lead to the 

dismissal of the insurance broker (presumable Richmond) as a defendant, the only party 

preventing complete diversity and removal of the Third Party Complaint to federal court. 

Ironshore’s counsel also informed the Court that complete diversity would result in the event that 

its Motion to Sever was granted. Based on these representations, the Court set a new status date 

for December 17, 2012. 

At the December 17 status hearing, Ironshore stated that its Motion to Sever in the 

Gaston Lawsuit had been denied, and that its Motion to Dismiss, which was now fully briefed, 

would be heard in January. Ironshore’s counsel also informed the Court that it had submitted an 

affidavit in the state court proceeding to the same effect as the stipulation discussed at the 

November 7 status hearing. Ironshore’s counsel explained that the Third Party Complaint

against it in State Court would become removable to federal court once the insurance broker was 

dismissed. Defendants’ counsel responded by stating that it believed there was no basis for the 

stipulation, and that in any case the Third Party Complaint was not susceptible to removal 

because it was part of the larger Gaston Lawsuit. At the conclusion of the December 17 status 

hearing, the Court lifted its stay on these proceedings and informed the party that it would issue a 

ruling on whether this Court should stay or dismiss this case pursuant to the doctrine of Colorado 

River abstention.
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DISCUSSION

Generally speaking, “the pendency of an action in the state court is no bar to proceedings 

concerning the same matter in the Federal court.” Huon v. Johnson & Bell, Ltd., 657 F.3d 641 at 

645 (7th Cir. 2011) (quoting Colorado River Water Cons. Dist. v. United States, 424 U.S. 800, 

817 (1976)). In Colorado River, the United States Supreme Court “create[d] a narrow exception 

to that rule, allowing federal courts in some exceptional cases to defer to a concurrent state-court 

case as a matter of ‘wise judicial administration, giving regard to conservation of judicial 

resources and comprehensive disposition of litigation.’ ” Id. (quoting Colorado River, 424 U.S. 

at 817). Courts engage in a two-part inquiry when determining whether abstention under the 

Colorado River doctrine is appropriate. Tyrer v. City of South Beloit, Ill., 456 F.3d 744, 754 (7th 

Cir. 2006)). First, the Court must decide whether the two suits are “parallel.” Huon v. Johnson 

& Bell, Ltd., 657 F.3d 641, 646 (7th Cir. 2011). Assuming the cases are parallel, the district 

court must then consider “whether exceptional circumstances justify abstention.2” Tyrer, 456 

F.3d at 751; Adkins, 644 F.3d at 500. 

The Colorado River framework favors abstention in this case. Ironshore’s federal 

declaratory judgment action and the Third Party Complaint in the Gaston Lawsuit involve 

substantially the same parties contemporaneously litigating substantially the same issues in two 

 2 The Seventh Circuit has identified 10 nonexclusive factors that a district court should weigh in deciding whether to 

abstain under the Colorado River doctrine. Adkins, 644 F.3d at 500-01. These factors are:

(1) whether the state has assumed jurisdiction over property; (2) the inconvenience of the federal 

forum; (3) the desirability of avoiding piecemeal litigation; (4) the order in which jurisdiction was 

obtained by the concurrent forums; (5) the source of governing law, state or federal; (6) the 

adequacy of state-court action to protect the federal plaintiff’s rights; (7) the relative progress of 

state and federal proceedings; (8) the presence of absence of concurrent jurisdiction; (9) the 

availability of removal; and (10) the vexatious and contrived nature of the federal claim.

Id. (quoting Tyrer, 456 F.3d at 754). 
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different forums. See Huon v. Johnson & Bell, Ltd., 657 F.3d 641, 646 (7th Cir. 2011) (defining 

“parallel litigation”). Furthermore, it is likely that the state litigation will dispose of all claims 

presented in Ironshore’s federal case. See Adkins v. VIM Recycling, Inc., 644 F.3d 483, 498 (7th 

Cir. 2011)). Additionally, a majority of the “exceptional circumstances” factors – including the 

desirability of avoiding piecemeal litigation, the order in which jurisdiction was obtained by the 

concurrent forums, the source of governing law, state or federal, the adequacy of state-court 

action to protect the federal plaintiff’s rights, the relative progress of state and federal 

proceedings, and the presence of absence of concurrent jurisdiction – all counsel in favor of 

abstention. 

However, the Court need not resort to the Colorado River doctrine here. The Seventh 

Circuit has explained that “[t]he decision to stay an action under the Declaratory Judgment Act 

does not require the court to reach for a judicially-created abstention doctrine. Rather, the Act 

itself provides the district court with the necessary discretion.” Medical Assur. Co., Inc. v. 

Hellman, 610 F.3d 371, 378 (7th Cir. 2010).3

 That discretion allows the court to “determin[e] 

whether and when to entertain an action under the Declaratory Judgment Act, even when the suit 

otherwise satisfies subject matter jurisdictional prerequisites.” Wilton v. Seven Falls Co., 515 

U.S. 277, 282 (1995) (citing Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 495 (1942)). 

Thus in determining whether to stay or dismiss a declaratory judgment action in the face of 

parallel state court proceedings, “the normal principle that federal courts should adjudicate 

claims within their jurisdiction yields to considerations of practicality and wise judicial 

 3 Despite its statutory underpinnings, the decision to stay or dismiss a federal declaratory judgment action is 

often referred to as “Wilton/Brillhart abstention,” taking the name of the two cases from which the doctrine 

originated: Wilton v. Seven Falls Co, 515 U.S. 282-90, 286 (1995), and Brillhart v. Excess Ins. Co. of America, 316 

U.S. 491, 495 (1942). See Hellman, 610 F.3d at 378 (recognizing courts’ use of the term “Wilson/Brillart

abstention,” but noting the term “is not entirely accurate, as [“abstention”] normally refers to a group of judiciallycreated doctrines”); Envision Healthcare, Inc. v. PreferredOne Ins. Co., 604 F.3d 983, 986 (7th Cir. 2010).
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administration. 4” Id. at 288. 

In Wilton, the Supreme Court specifically rejected the argument that “exceptional 

circumstances” under the Colorado River doctrine must exist in order to justify abstention in a 

declaratory judgment action. Id. at 286 (reasoning that “[n]either Colorado River, which upheld 

the dismissal of federal proceedings, nor [Moses H. Cone Memorial Hospital v. Mercury Constr. 

Corp., 460 U.S. 1 (1983)], which did not, dealt with actions brought under the Declaratory 

Judgment Act, 28 U.S.C. § 2201(a).”); see also R.R. Street & Co., Inc. v. Vulcan Materials Co., 

569 F.3d 711, 714-15 (7th Cir. 2009). The Court explained that “[d]istinct features of the 

Declaratory Judgment Act ... justify a standard vesting district courts with greater discretion in 

declaratory judgment actions than permitted under the ‘exceptional circumstances’ test of 

Colorado River and Moses H. Cone ...” 515 U.S. at 283. The Wilton Court also relied on the 

text of the Declaratory Judgment Act itself, which provides that a court “may declare the rights 

and other legal relations of any interested party seeking such declaration.” Id. (citing 28 U.S.C. § 

2201(a) (adding emphasis)). This “textual commitment to discretion, and the breadth of leeway 

[the Court has] always understood it to suggest, distinguish[es] the declaratory judgment context 

from other areas of law in which concepts of discretion surface.” Id. at 286-87 (citations 

omitted); see also Envision Healthcare, Inc. v. PreferredOne Ins. Co., 604 F.3d 983, 984 (7th 

Cir. 2010) (noting that Wilton/Brillhart discretion arises from the text of the Declaratory 

Judgment Act itself). Thus, “ ‘there is ... nothing automatic or obligatory about the assumption 

of jurisdiction by a federal court’ to hear a declaratory judgment action.” Id. at 288 (quoting E. 

 4 The Court recognizes that “[e]ven if there is no parallel proceeding, the district court still has discretion to 

decline to hear a declaratory judgment suit.” Medical Assur. Co., 610 F.3d at 379 (citations omitted). However, the 

doctrine has been found to apply most often where a parallel case is pending in state court. See, e.g., Nationwide Ins. 

Co. v. New United, Inc., No. 11-cv-3182, 2012 WL 1866358 (N.D. Ill. May 22, 2012); Cincinnati Ins. Co. v. 

Silvestri Paving Co., No. 10 C 07971, 2011 WL 4686437, at *2 (N.D. Ill. Oct. 4, 2011)
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Borchard, Declaratory Judgments, 313 (2d ed. 1941)). Courts in this Circuit consider the 

following factors in determining whether to abstain under Wilton/Brillhart:

[W]hether the declaratory suit presents a question distinct from the issues raised 

in the state court proceeding, whether the parties to the two actions are identical, 

whether going forward with the declaratory action will serve a useful purpose in 

clarifying the legal obligations and relationships among the parties or will merely 

amount to duplicative and piecemeal litigation, and whether comparable relief is 

available to the plaintiff seeking declaratory judgment in another forum or at 

another time.

Medical Assur. Co, 610 F.3d at 379 (citing Nationwide Ins. v. Zavalis, 52 F.3d 689, 695 (7th Cir. 

1995)); see also Hartford Cas. Ins. Co. v. Const. Builders in Motion, Inc., No. 11 C 7498, 2012 

WL 645982, at *2 (N.D. Ill. Feb. 28, 2012) (applying Zavalis factors); Ryan Intern. Airlines, Inc. 

v. East Trust SUB-2, No. 10 C 50135, 2011 WL 893041, at *4 (N.D. Ill. Mar. 14, 2011) (same). 

Under the Zavalis framework, Dismissal of Ironshore’s federal declaratory judgment 

action is appropriate here. First, the suit before this Court does not present any questions that are 

distinct from the issues raised in the state court proceedings. Ironshore filed its Complaint 

seeking a declaration that it does not have a duty to defend and/or indemnify Defendants in 

connection with the Shareholders’ Agreement and the subsequent Gaston and Zito Lawsuits. 

Although Defendants’ Third Party Complaint in the Gaston Lawsuit takes the form of a breach 

of contract and bad faith claim, it is asking the court to resolve the rights and obligations of the 

parties under the same insurance policies at issue here. Thus both courts here are being asked to 

decide precisely the same legal issue: whether Ironshore owes Defendants a duty to indemnify it 

for any loss incurred in the Gaston and Zito Lawsuits. Such similarities virtually guarantee that 

both cases can be resolved by examining much of the same evidence. See, e.g., Huon v. Johnson 

& Bell, Ltd., 657 F.3d 641, 647 (finding that important to the determination is “whether both 

cases would be resolved by examining largely the same evidence”) (citing Fru-Con Constr. 
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Corp. v. Controlled Air, Inc., 574 F.3d 527, 536 (8th Cir. 2009); Tyrer v. City of South Beloit, 

Ill., 456 F.3d 744, 752 (7th Cir. 2006)).

Second, every party to the action before this Court is also a party in the proceedings 

before the State Court. Thus both cases involve “substantially the same parties.” The fact that 

additional parties are present in the Gaston Lawsuit is of little consequence here, as suits need 

not be identical to be parallel and the mere presence of additional parties or issues in one case 

will not necessarily bar a finding that cases are parallel. See AAR Int’l, Inc. v. Nimelias Entr., 

S.A., 250 F.3d 510, 518 (7th Cir. 2001). What is of consequence is the fact that every party in 

this case will have the opportunity to litigate the same claims in another forum. Also, the fact 

that the parties have taken (or found themselves in) different postures in the two proceedings 

does not change the analysis. In Envision, the Seventh Circuit stated specifically that the fact 

that the parties in the federal declaratory judgment case were part of a third-party suit in state 

court and not an original action did not affect whether the suits were parallel. 604 F.3d at 987

(citing TruServ Corp. v. Flegles, Inc., 419 F.3d 584, 592 (7th Cir. 2005). 

Third, allowing the declaratory judgment action before this Court to proceed further will 

not serve a useful purpose in clarifying the legal obligations and relationships among the parties. 

Rather, it will result in litigation that is duplicative of proceedings already taking place in state 

court. As discussed above, the issue Ironshore seeks to resolve before this court – whether it has 

a duty to indemnify Defendants for any loss incurred in the Gaston and Zito Lawsuits – will be 

resolved through litigation of the Third Party Complaint in the Gaston Lawsuit. Both cases also 

involve the same underlying set of facts, the same insurance policies, and each complaint seeks 

to apply and interpret the same section of those policies. Finally, comparable relief from the 

State Court is available to Ironshore. Not only will Ironshore be able to resolve the controversy 
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at issue here by litigating the Third Party Complaint in the Gaston Lawsuit, it may also bring a 

claim against Defendants under the Illinois Declaratory Judgment Act, 735 ILCS 5/2-701. See 

TruServ Corp. v. Flegles, Inc., 419 F.3d 584, 592 (7th Cir. 2005) (observing in the Colorado 

River context that “[t]he question is not whether the suits are formally symmetrical, but whether 

there is a substantial likelihood that the [state court] litigation will dispose of claims presented in 

the federal case.”) (internal quotations omitted).

The Zavalis framework aside, the Seventh Circuit has made clear that the “classic 

example” of when abstention is proper occurs where, as here, “solely declaratory relief is sought 

and parallel state proceedings are ongoing.” Envision Healthcare, Inc. v. PreferredOne Ins. Co., 

604 F.3d 983, 986 (7th Cir. 2010). The law is clear that “at least where another suit involving 

the same parties and presenting opportunity for ventilation of the same state law issues is 

pending in a state court, a district court might be indulging in ‘gratuitous interference’ if it 

permitted the federal declaratory action to proceed.” Wilton, 515 U.S. at 282 (quoting Brillhart, 

316 U.S. at 495 (“[I]t would be uneconomical as well as vexatious for a federal court to proceed 

in a declaratory judgment suit where another suit is pending in a state court presenting the same 

issues, not governed by federal law, between the same parties”)). 

As this Court noted in its May 30 Opinion, the Seventh Circuit upheld the dismissal of a 

federal declaratory judgment action in a strikingly similar case. In Envision Healthcare, Inc. v. 

PreferredOne Ins. Co., Envision, a wholesale insurance broker, sold health insurance policies 

provided by the defendant health insurance company, PreferredOne, to an insured that 

subsequently underwent two knee operations. 604 F.3d at 984. After taking a closer look at the 

insured’s policy application, PreferredOne discovered that the insured had failed to disclose a 

preexisting condition. Id. at 985. On that basis, PreferredOne rescinded the policy and refused to 
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pay for the insured’s second knee operation and subsequent hospital stay. Id. The insured sued 

PreferredOne in Minnesota state court for breach of contract, claiming that he answered all of the 

questions in the application truthfully and that he relied on Envision’s agent to accurately 

complete the form. Id. PreferredOne filed a third-party complaint in the Minnesota action 

against Envision and its agent for indemnification for any adverse judgment in the suit filed by 

the insured. Id. Two days later, Envision, like Ironshore here, filed a declaratory judgment 

action against PreferredOne in federal court seeking a declaration that it had no duty to 

indemnify PreferredOne. Id. After filing its federal suit, Envision also filed a motion to dismiss 

the third-party complaint in the Minnesota case. Id. That motion was denied, and the Minnesota 

case was allowed to move forward. Id. The district court subsequently dismissed the federal 

declaratory judgment action under the Wilton/Brillhart abstention doctrine, finding that the two 

cases were parallel actions because they involved the same parties and presented the same legal 

issue: whether Envision owed PreferredOne a duty to indemnify. Id. 

The Seventh Circuit upheld the district court’s decision to dismiss the federal case, noting 

that the Supreme Court has made clear that the Wilton/Brillhart doctrine applies “in a diversity 

case where a declaratory judgment is sought and a parallel state proceeding also exists.” 

Envision, 604 F.3d at 986 (citing Wilton, 515 U.S. at 283; Provident Tradesmens Bk. & Tr. Co. v. 

Patterson, 390 U.S. 102, 126 (1968)); see also R.R. Street Co., 569 F.3d at 715 (“There is no 

doubt that a court may dismiss or stay an action under the Wilton/Brillhart abstention doctrine 

where solely declaratory relief is sought.”). Because “the same precise legal question [was to] be 

answered in both suits: whether Envision owes PreferredOne a duty to indemnify it for any loss 

incurred in the [Insured’s] suit,” the court found the district court’s decision to dismiss the 

federal case appropriate. Id. at 987. 
15

The circumstances here are virtually identical to those in Envision. As described above, 

this Court’s analysis under the Zavalis framework, the underlying facts, legal issues, and parties 

are either identical or substantially similar in both cases. As in Envision, both courts here are 

being asked to decide whether Ironshore owes Defendants a duty to indemnify it for any loss 

incurred in the Gaston and Zito Lawsuits. Accordingly, the Court finds it appropriate to exercise 

its discretion under the Wilton/Brillhart doctrine and abstain from proceeding further with this 

case.5

In its previous Opinion, this Court cited a provision in Section X, Paragraph O of the 

Policies as a basis for staying, as opposed to dismissing, this case. That provision states: 

“Nothing in this condition constitutes or shall be understood to constitute a waiver of right of the 

Insurer to commence an action in any court of competent jurisdiction within the United States, 

[or] to remove an action to a United States District Court.” See Complaint, Ex. E, Section X(O). 

Because Ironshore may have been able to remove the Third Party Complaint to federal court in 

the event its Motion to Sever was granted, the Court determined that issuing a stay was the more 

prudent measure at the time because any case properly removed from the State Court could then 

be consolidated with the instant case and remain before this Court. However, because the State 

Court has since denied Ironshore’s Motion to Sever, this Court sees no reason to issue another 

stay and sit idly while the same parties move forward to litigate the same issues in a different 

forum, or while Ironshore seeks other avenues to reach a federal forum.6

 Nor does it serve the 

 5 In addition to determining whether proceedings are parallel, courts in this district have stated that “the 

Court must determine whether the non-declaratory claims are independent of the declaratory claims” when applying 

the Wilton/Brillhart doctrine. Steadfast Ins. Co. v. Ballantine, No. 12 C 2646, 2012 WL 5304207, at *2 (N.D. Ill. 

Oct. 25, 2012) (citing R.R. Street & Co., Inc., 569 F.3d 711, 716-17 (7th Cir. 2009)). The Court need not engage in 

this second inquiry here, as Ironshore’s Complaint does not contain any non-declaratory judgment claims. 6 Based on representations made by Ironshore’s counsel in open court, the state court action may become removable 

to federal court should the State Court dismiss Richmond, the only defendant in that case breaking complete 
16

interests of judicial economy to proceed with a federal declaratory judgment action that involves 

the same underlying facts, insurance policies, legal issues, and parties as a case that has already 

begun to develop and is likely to remain in state court. Section X of the Policies makes clear that 

Ironshore has not waived its right to remove an action to federal court. However, this contractual 

provision cannot force the Court into sweeping the Wilton/Brillhart doctrine under the rug or 

overcome the Declaratory Judgment Act’s “textual commitment to discretion.” Accordingly, the 

Court finds dismissal under the Wilton/Brillhart doctrine appropriate in this case. 

CONCLUSION

For the reasons stated, Ironshore’s Complaint for declaratory relief is dismissed

________________________________________

Virginia M. Kendall

United States District Court Judge

Northern District of Illinois

Date: February 25, 2013

 diversity.