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ORDER 1

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT TACOMA

PHILADELPHIA INSURANCE

COMPANY,

Plaintiff,

v.

VISION ONE LLC, 

Defendant.

No. C06-5010 RBL

ORDER GRANTING

DEFENDANT’S MOTION

TO STAY

This matter is before the Court on Defendant Vision One LLC’s Motion to Stay or Dismiss [Dkt.

#12]. Vision One argues that the Court should grant its motion for three reasons: (1) to avoid having a

federal court needlessly determine issues of state law; (2) to discourage forum shopping; and (3) to avoid

duplicative litigation. For the reasons below, the Court GRANTS Vision One’s motion and stays this

action.

The underlying accident that gave rise to this case occurred at a construction site on October 1,

2005, when a concrete slab collapsed and injured several workers. The workers brought claims against

Vision One, a Washington company. Vision One contacted its insurance company, Philadelphia Insurance,

a Pennsylvania corporation, to report the claims and seek coverage under its policy. On October 11, 2005,

Philadelphia notified Vision One that it was investigating the claim. On November 21, 2005, while

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ORDER 2

Philadelphia was investigating the claim, an engineering firm, BT&Associates, prepared a report

summarizing the causes of the collapse and attributing it to the “shoring design” and “[s]everal problems

with the shoring installation.” Defendant’s Motion to Stay at 3. On January 3, 2006, Philadelphia notified

Vision One that it was denying coverage because the policy excludes coverage for accidents that are the

result of “deficient design or specifications,” or “faulty materials or workmanship.”

On January 10, 2006, Philadelphia filed this declaratory judgment action, seeking a declaration that

under the policy, it has no obligation to defend or indemnify Vision One. On May 7, 2006, Vision One

answered Philadelphia’s complaint and counterclaimed, seeking a declaration that Philadelphia’s policy

does provide coverage. Vision One also claims that Philadelphia handled Vision One’s insurance claim in

bad faith, for which Vision One seeks damages.

On March 9, 2006, Vision One filed suit in Pierce County Superior Court. It named Philadelphia

and the concrete subcontractor at the construction site, D&D, as defendants. D&D is a Washington

corporation. Vision One now seeks a stay or dismissal of this proceeding pending resolution of the state

court proceeding.

DISCUSSION

This federal court action features two kinds of claims: each party’s claim for declaratory judgment

and Vision One’s counterclaim for damages. All claims arise under state law. This Court has jurisdiction

over all claims by virtue of diversity of citizenship. 28 U.S.C. §1332. The issue the Court is asked to

resolve–whether to stay proceedings in this Court in deference to proceedings in Pierce County–is

governed by two different analyses, each corresponding to one of the two kinds of claims.

A. Both Parties’ Claims for Declaratory Judgment

Federal courts have a “virtually unflagging obligation” to exercise the jurisdiction given to them. 

Colorado River Water Conser. Dist. v. U.S., 424 U.S. 800, 871 (1976). However, under the Declaratory

Judgment Act, even when subject matter jurisdiction is otherwise proper, the exercise of jurisdiction over a

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ORDER 3

declaratory judgment action is discretionary, not mandatory. See Snodgrass v. Provident Life and

Accident Ins. Co., 147 F.3d 1163, 1166-67 (9th Cir. 1998). One instance in which federal courts

ordinarily should decline to exercise jurisdiction over a declaratory action is when parallel state court

proceedings are pending. Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1366 (9th Cir. 1991). The

district court must balance the fact that state court proceedings are pending with concerns of judicial

administration, comity, and fairness to the litigants. Id. at 1367.

Here, Vision One argues that this Court should stay proceedings in federal court in deference to

state court proceedings for three reasons: (1) to avoid having a federal court needlessly determine issues of

state law; (2) to discourage forum shopping; and (3) to avoid duplicative litigation. See Continental

Casualty Co. v. Robsac Industries, 947 F.2d 1367, 1371 (9th Cir. 1991) (citing Chamberlain, 931 F.2d at

1366).

First, Vision One argues that state courts, not federal courts, should determine issues of insurance

law wherever possible. It cites the McGarran-Ferguson Act, 15 U.S.C. §§1011-12, to show that insurance

law is an area of law that Congress has expressly left to states. Insurance law is the province of the state. 

Vision One’s argument is supported by ample authority discouraging federal courts from needlessly

determining issues of state law. See Chamberlain, 931 F.2d at 1366.

Second, Vision One argues that the Court can prevent forum shopping in this matter by deferring to

the state court. However, depending on one’s perspective, Vision One, not Philadelphia, could be viewed

to have shopped for the forum of Vision One’s preference when it filed suit in state court two months after

Philadelphia initiated this suit in federal court. Under these circumstances, when it is possible that both

parties are doing what they can to land in the forum of their choice, an argument against forum shopping is

not persuasive.

Vision One’s third argument is that this Court should stay proceedings to avoid duplicative

litigation. Vision One correctly argues that resolution of the coverage questions raised in the federal court

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ORDER 4

proceedings and the liability questions raised in the state court proceedings will depend on the same factual

question: whether the underlying accident was the result of “deficient design or specifications,” “faulty

materials or workmanship,” or some other cause. One can neatly distinguish the state court liability

question from the federal court coverage question, but the factual determination on which each court will

rely to resolve these questions are indistinguishable. For this reason, allowing both the federal and state

proceedings to go forward may result in inconsistent results. 

Therefore, in order to avoid duplicative proceedings and inconsistent results with regard to the

operative facts, and in deference to Congress’s mandate that insurance law is to be governed by the states,

this Court declines to exercise jurisdiction over the declaratory judgement claims before it.

B. Defendant Vision One’s Counterclaim for Damages

The other kind of claim before the Court is Vision One’s counterclaim for damages. The Ninth

Circuit has held that when there is a claim for declaratory relief coupled with another claim, such as a

counterclaim for bad faith, the district court generally should entertain the other claim. Chamberlain, 931

F.2d at 1367. The Ninth Circuit has also referred to such other claims as “independent claims,” or claims

that exist independent of any request for purely declaratory relief. Snodgrass, 147 F.3d at 1167. When an

action features an independent claim, that claim is not subject to the discretionary jurisdictional rule under

the Declaratory Judgment Act. Id. In other words, the district court has less discretion to refrain from

exercising jurisdiction over an independent claim.

For independent claims, the standard for determining whether to stay the case is the presence of

“exceptional circumstances,” a standard that has been well articulated in Colorado River and its progeny. 

See Pence v. Lightning Rod Mutual Ins. Co., 203 F. Supp. 1025, 1029-30 (S.D. Ind. 2002) (citing

Colorado River, 424 U.S. at 817; Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460

U.S. 1, 19 (1983); Arizona v. San Carlos Apache Tribe, 463 U.S. 545, 570 (1983), and Will v. Calvert

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1

The Seventh Circuit lists 10 factors that help determine whether exceptional circumstances exist:

1) the difficulties posed when a state and federal court assume jurisdiction over the same res;

2) the relative inconvenience of the federal forum;

3) the need to avoid piecemeal litigation;

4) the order in which the state and federal proceedings were filed;

5) whether state or federal law provides the rule of decision;

6) whether the state action protects the federal plaintiff’s rights;

7) the relative progress of the state and federal proceedings;

8) the presence or absence of concurrent jurisdiction;

9) the availability of removal;

10) the vexatious or contrived nature of the federal claim.

Pence, 203 F. Supp. at 1030 (citing Sverdrup Corp. v. Edwardsville Community Unit School Dist. No. 7, 125

F.3d 546, 549-550 (7th Cir. 1997).

ORDER 5

Fire Ins. Co., 437 U.S. 655, 666 (1978)).1 More specifically, the Ninth Circuit has held that when the

court is faced with a claim for declaratory judgement, coupled with an independent basis for jurisdiction,

the Declaratory Judgment Act should be interpreted to avoid piecemeal litigation. Snodgrass, 147 F.3d at

1167.

Several considerations persuade the Court to refrain from exercising jurisdiction over Vision One’s

independent bad faith claim in this case. First, as discussed above, state insurance law provides the rule of

decision. Second, refraining from exercising jurisdiction will accomplish two goals: it will avoid piecemeal

litigation and conserve judicial resources. The Court cannot accomplish either goal by exercising

jurisdiction here. On one hand, if this Court decides to exercise jurisdiction on the damages claim alone,

piecemeal litigation will result because this Court’s decision will depend on whether the state court

concludes that coverage exists. On the other hand, if this Court decides to exercise jurisdiction over all

claims, the Court will analyze the same or similar facts as the state court will analyze. The result will be

duplicative at best, and inconsistent at worst. Third, removal is not available to prevent piecemeal

litigation. In the state action, Defendants Philadelphia and D&D are non-diverse from the Plaintiff, Vision

One. Finally, there is no showing that either party will be inconvenienced or prejudiced by pursuing all

claims in state court. 

Based on these exceptional circumstances, and in the interest of comity and judicial economy, the

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ORDER 6

Court will abstain from entertaining the claims before it.

CONCLUSION

The Court GRANTS Defendant’s Motion to Stay [Dkt. #12]. 

Pursuant to this Order, it appears that this matter will remain in an inactive status for a substantial

period of time. The Court therefore directs the clerk to enter a STATISTICAL TERMINATION of this

action. Counsel should note that this termination is intended solely to remove this matter from the Court’s

docket of active pending cases in order to alleviate congestion of the Court’s docket. At such time as the

parties deem this litigation to be in a posture to proceed before this Court, they shall file a motion to

reopen and the matter will proceed. The motion to reopen shall be filed in the above-referenced cause

number. No new case need be filed, nor will additional filing fees be required. For purposes of statutes of

limitations, the Court deems the filing date of this litigation to be and to remain the original filing date of

the above-entitled case.

All pending motions, deadlines, and hearings, if any, shall be stricken as moot.

IT IS SO ORDERED. 

DATED this 19th day of April, 2006.

A

RONALD B. LEIGHTON

UNITED STATES DISTRICT JUDGE

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