IN THE UNITED STATES COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JOHN A. KLINK and : CIVIL ACTION

KATHLEEN KLINK :

:

v. :

:

STATE FARM MUTUAL :

AUTOMOBILE INSURANCE CO : NO.: 02-CV-4407

O R D E R

AND NOW, this Day of , 2002, upon consideration of

Plaintiffs’ Petition for Remand and Defendant’s Response in Opposition thereto, it is hereby

ORDERED AND DECREED that Plaintiff’s Petition is DENIED.

BY THE COURT:

 

J.

Case 2:02-cv-04407-RBS Document 5 Filed 08/07/2002 Page 1 of 13
IN THE UNITED STATES COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JOHN A. KLINK and : CIVIL ACTION

KATHLEEN KLINK :

:

v. :

:

STATE FARM MUTUAL :

AUTOMOBILE INSURANCE CO. : NO.: 02-CV-4407

RESPONSE OF DEFENDANT, STATE FARM MUTUAL AUTOMOBILE

INSURANCE COMPANY, IN OPPOSITION TO MOTION FOR REMAND

1-2. Admitted.

3. Denied. Plaintiff John Klink selected and paid for reduced limits of

underinsured motorist coverage.

4. Denied.

5. Denied. State Farm asserts that caselaw in both state and federal courts, and

the statute itself, compel enforcement of the reduced limits of UIM coverage under the

circumstances of this case.

6. Denied. Jurisdiction is proper in this Court and should be retained. By way

of further response, any challenge to the exercise of discretionary jurisdiction would

properly be made through a Motion under Rule 12(b), not a motion for remand.

WHEREFORE, Defendant, State Farm Mutual Automobile Insurance Company,

respectfully urges that the Motion for Remand be denied.

Case 2:02-cv-04407-RBS Document 5 Filed 08/07/2002 Page 2 of 13
Respectfully submitted,

BRITT, HANKINS, SCHAIBLE & MOUGHAN

BY: 

Teresa Ficken Sachs

Attorneys for Defendant

Attorney I.D. No.: 41136

Suite 515, Two Penn Center Plaza

15th & JFK Boulevard

Philadelphia, PA 19102

(215) 569-6900

Date: 

Case 2:02-cv-04407-RBS Document 5 Filed 08/07/2002 Page 3 of 13
IN THE UNITED STATES COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JOHN A. KLINK and : CIVIL ACTION

KATHLEEN KLINK :

:

v. :

:

STATE FARM MUTUAL :

AUTOMOBILE INSURANCE CO. : NO.: 02-CV-4407

MEMORANDUM OF LAW IN

OPPOSITION TO MOTION TO REMAND

I. INTRODUCTION

This is an insurance coverage case brought by the Klinks against State Farm Mutual

Automobile Insurance Company (“State Farm”) in the Court of Common Pleas of

Montgomery County, Pennsylvania. State Farm properly removed the case to the federal

forum. Jurisdiction is based upon diversity of citizenship under 28 U.S.C. §1332(a)(1), and

there is no dispute that the removal was properly accomplished in accordance with 28 U.S.C.

§1446. 

The Klinks are now attempting to have the case remanded on the theory that this

Court’s jurisdiction is discretionary and should not be exercised in this case. The caselaw

relied upon by the Klinks, however, is clearly distinguishable, because that caselaw relates

to federal courts’ discretion to decline jurisdiction where the same parties and issues are

pending in a state court proceeding. That is not the case here, and the Supreme Court’s most

Case 2:02-cv-04407-RBS Document 5 Filed 08/07/2002 Page 4 of 13
recent opinion on this issue suggests that failing to exercise discretionary jurisdiction where

no parallel state proceedings are pending may represent an abuse of that discretion. Wilton

v. Seven Falls Co., 515 U.S. 277, 115 S.Ct.2137, 132 L.Ed. 214 (1995). There is no unusual

state law question, no danger of duplicative or piecemeal litigation, and no reason why this

case cannot be heard even more conveniently and expeditiously in this Court. Accordingly,

the Motion for Remand should be denied. 

II. THE SUMMY CASE IS DISTINGUISHABLE AND A REVIEW OF THAT

CASE AND SUPREME COURT CASELAW SUPPORTS JURISDICTION IN

THIS CASE 

The Klinks rely upon the Third Circuit’s opinion in State Auto Ins. Cos. v. Summy,

234 F.3d 131 (3d Cir. 2001) in support of their argument that this case should be remanded.

However, Summy is clearly distinguishable. In Summy, a personal injury action alleging

injuries to a minor from lead paint exposure was filed in state court (the Court of Common

Pleas of Lancaster County) against the insured/landlord. The landlord’s carrier subsequently

filed a declaratory judgment action in the District Court; the landlord filed a declaratory

judgment action on the same issue (a pollution exclusion) in the state court. All three suits

proceeded, but the federal declaratory judgment action was adjudicated first; the state court

then applied the doctrine of resjudicata in the state declaratory judgment action. On appeal,

the Third Circuit held that under these circumstances, the district court should have declined

to exercise its jurisdiction: 

At the time the court denied [the landlord’s] motion to dismiss,

[the minor’s] personal injury suit and [the landlord’s] petition

for declaratory judgment were both pending in state court

Case 2:02-cv-04407-RBS Document 5 Filed 08/07/2002 Page 5 of 13
before the same judge, who was presumably already familiar

with the insurance policy and with the scientific evidence

available on lead paint poisoning. Judicial efficiency was not

promoted when the District Court also considered this evidence,

as it inevitably had to when deciding the federal declaratory

judgment action. If the District Court had not interfered, the

state court would have been able to develop a coordinated

schedule of briefing and discovery that would have promoted

the efficient resolution of both the declaratory judgment action

and the underlying tort action, thereby conserving judicial

resources as well as those of the parties.

234 F.3d 131, 135-136 (footnote omitted). 

The Third Circuit in Summy listed the following as “relevant considerations” in

determining whether to hear declaratory judgment actions involving insurance coverage

issues:

1. A general policy of restraint when the same issues

are pending in a state court;

2. An inherent conflict of interest between an

insurer’s duty to defend in a state court and its

attempt to characterize that suit in federal court as

falling within the scope of a policy exclusion;

3. Avoidance of duplicative litigation.

Id. at 134, citing United States v. Commonwealth of Pennsylvania, Department of

Environmental Resources, 923 F.2d 1071, 1075 (3d Cir. 1991). The Third Circuit also cited

a law review article which had concluded that district courts may properly refuse to exercise

jurisdiction “where issues before state and federal courts are substantially the same and

entertaining [the federal] action would only duplicate judicial effort.” Id. at 133, citing

Edwin Borchard, Discretion to Refuse Jurisdiction of Actions for Declaratory Judgments,

26 Minn. L. Rev. 677 (1942).

Case 2:02-cv-04407-RBS Document 5 Filed 08/07/2002 Page 6 of 13
In reaching its result, the Third Circuit looked to the cases of Brillhart v. Excess Ins.

Co. of America, 316 U.S. 491, 495, 625 S.Ct. 1173, 86 L.Ed. 1620 (1942) and Wilton v.

Seven Falls Co., 515 U.S. 277, 279, 115 S.Ct. 2137, 132 L.Ed. 2d 214 (1995), both cases

where the discretionary nature of federal declaratory judgment jurisdiction was at issue in

light of “parallel proceedings in state court.” In Brillhart, the Supreme Court held that the

district court had abused its discretion in dismissing a federal declaratory judgment case on

the basis of pending state court litigation without first determining whether all claims being

raised in the federal action could be raised in the pending state court action. The central

focus of the Supreme Court’s opinion was the nature of the federal action vis-a-vis the

ongoing state one:

Ordinarily it 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.

Id. at 495, 62 S.Ct. At 1175-76 (emphasis supplied). It is in those circumstances that the

federal court should ascertain whether the controversy can be better settled in the state court

proceeding. Id.

Subsequently, in Colorado River Water Conservation Dist. v. United States, 424 U.S.

800, 817, 96 S.Ct. 1236, 47 L.Ed. 2d 483 (1976), the Court emphasized that the federal

courts have a “virtually unflagging obligation” to exercise the jurisdiction conferred on them

by Congress and could decline to do so only in “exceptional circumstances.” In Wilton,

however, the Supreme Court clarified that the district courts retain broader discretion in

declaratory judgment actions and that the district court in Wilton had

Case 2:02-cv-04407-RBS Document 5 Filed 08/07/2002 Page 7 of 13
acted within its bounds in staying this action for declaratory

relief where parallel proceedings, presenting opportunity for

ventilation of the same state law issues, were underway in state

court.

Wilton, 515 U.S. 277, 290, 115 S.Ct. 2137, 2144 (emphasis supplied). 

Thus, Summy and the Supreme Court cases upon which it relied all involved analysis

of discretionary jurisdiction where another parallel proceeding was pending in state court.

See also, e.g., Pacific Ins. Co. v. Green Spring Health, 2001 WL 41141 (E.D. Pa. 2001), in

which Judge Schiller granted a motion to dismiss a declaratory judgment action where an

underlying class action which would ultimately resolve the same coverage issues had already

been pending in the court of common pleas for two years. The Pacific opinion cites three

other Eastern District cases in which the courts declined jurisdiction over federal declaratory

judgment actions where there were other cases pending in state court. In one of those, Great

Atlantic & Pacific Tea Company v. Adelco Sales & Service, Inc., 1994 WL 702873 (E.D.

Pa. 1994), the court stated:

In cases involving a request for declaratory judgment that also

involve an on-going state court proceeding, a district court may

decline to entertain jurisdiction. The Third Circuit concluded

that a district court’s analysis of its discretionary right to decline

jurisdiction because of the state proceeding is broader than the

Colorado River abstention doctrine that permits a district court

normally to abstain in only exceptional circumstances. See

Colorado River Water Conservation Dist. v. United States, 424

U.S. 800, 813 (1976). See also Terra Nova Ins. Co. v. 900 Bar,

Inc., 887 F.2d 1213, 1223-24 (3d Cir. 1989).

(emphasis supplied). Cf. Nationwide Mut. Fire Ins. Co. v. Cassel, 881 F.Supp. 133 (E.D.

Pa. 1994) (pending state law case would resolve same issues, and all issues would thus be

Case 2:02-cv-04407-RBS Document 5 Filed 08/07/2002 Page 8 of 13
resolved in one forum); Thompson v. American Fire and Cas. Co., 1992 WL 195342 (E.D.

Pa. 1992) (where the liability case was still ongoing in state court, the federal court’s opinion

as to the extent of liability coverage available would be premature and perhaps advisory).

In fact, even under the Brillhart/Wilton standard, the district court’s discretion to

decline jurisdiction is “not unfettered” and “a parallel state court proceeding is a necessary

prerequisite”. Clay Regional Water v. City of Spirit Lake, Iowa, 193 F.Supp. 2d 1129,

1137, 1139 (N.D. Iowa 2002):

Before analyzing which standard of discretion applies to this

case, a parallel state court proceeding is a necessary

prerequisite to use of either the Colorado River-Moses H.

Cone or Brillhart standards of abstention. See Colorado

River, 424 U.S. at 817-18, 96 S.Ct. 1236; Wilton, 515 U.S. at

279, 115 S. Ct. 2137; Brillhart, 316 U.S. at 495, 62 S.Ct. 1173;

accord Kirkbride v. Continental Cas. Co., 933 F.2d 729, 734

(9th Cir. 1991) (findingColorado River doctrine inapplicable

because there was no concurrent or pending state court

proceeding after case was removed to federal court);

. . . . 

(emphasis supplied). As in Kirkbride, the only state action in this case was the action

removed to this Court, and thus discretionary jurisdiction cannot be declined on this basis.

No Third Circuit or Supreme Court case has authorized declining jurisdiction on this basis,

and the weight of authority in other circuits is to the contrary. See discussion in Kirkbride,

933 F.2d 729 at 733-35. There simply is no concurrent or pending state court proceeding.

Applying the Brillhart analysis, as the Third Circuit did in Summy, leads in this case

to the opposite result. It would be an abuse of discretion to dismiss this case where it is

equally convenient for the parties, there are no concerns of duplicative or piecemeal

Case 2:02-cv-04407-RBS Document 5 Filed 08/07/2002 Page 9 of 13
litigation, there are no unusual legal issues, and there is no reason why the federal court is

not equally competent to resolve the issues. In fact, the Supreme Court in Wilton suggested

(but did not decide) that declining to exercise jurisdiction where there is no parallel state

proceeding may be a circumstance that would constitute an abuse of discretion:

We do not attempt at this time to delineate the outer boundaries

of that discretion in other cases, for example, cases raising

issues of federal law or cases in which there are no parallel state

proceedings. Like the Court of Appeals, we conclude only that

the District Court acted within its bounds in staying this action

for declaratory relief where parallel proceedings, presenting

opportunity for ventilation of the same state law issues, were

underway in state court.

Id. at 290 (emphasis supplied). 

In addition to the Brillhart factors, the Third Circuit had in an earlier opinion

identified several other factors that may be considered in determining whether to extend

discretionary jurisdiction:

(1) the likelihood that a federal court declaration will

resolve the uncertainty of obligation which gave

rise to the controversy;

(2) the convenience of the parties;

(3) the public interest in settlement of the uncertainty

of obligation; and

(4) the availability and relative convenience of other

remedies.

United States v. Commonwealth of Pa., Dept. of Environmental Resources, 923 F.2d 1071,

1075 (3d Cir. 1991). Applying these additional factors likewise weighs in favor of

Case 2:02-cv-04407-RBS Document 5 Filed 08/07/2002 Page 10 of 13
continuing the action in this court: this court’s declaration will resolve the uncertainty that

gave rise to this litigation, it is equally or more convenient for both parties, and will be

resolved more expeditiously here, and because there is no longer any pending state action

and remand is not appropriate (see discussion below), there is no other available or

convenient remedy.

Finally, although the Klinks have characterized their motion as one for remand, such

an order would not be reviewable on appeal (28 U.S.C. §1447(d)), and any discretionary

abstention must be reviewable for abuse of that discretion. Wilton v. Seven Falls Co., 515

U.S. 277, 289-290. See also, e.g., Brillhart, supra (Supreme Court explaining that abuse of

discretion standard must be applied); United States v. Commonwealth of Pa., Dept. of

Environmental Resources, 923 F.2d 1071 (3d Cir. 1991) (district court abused its discretion

in declining to exercise jurisdiction under the Declaratory Judgment Act; the Third Circuit

noted that because the Act should have liberal interpretation, the district court’s discretion

is somewhat circumscribed and the range of the Court of Appeal’s scope of review is

correspondingly enlarged); Summy,supra, (applying abuse of discretion standard). It would

be inconsistent with all of the above caselaw and with the jurisdictional statutes to suggest

that a district court may exercise “discretionary” jurisdiction in a way that renders that

“discretion” absolute and unreviewable. If the Klinks wish to further delay this litigation by

pursuing this argument, they must do so via a motion to dismiss, which would, if it were

granted, be reviewable on appeal.

III. CONCLUSION

Case 2:02-cv-04407-RBS Document 5 Filed 08/07/2002 Page 11 of 13
The Third Circuit has proclaimed that the Declaratory Judgment Act “should have

a liberal interpretation.” United States v. Commonwealth, supra, 923 F.2d 1071 at 1074,

quoting Exxon Corp. v. Federal Trade Commission, 588 F.2d 895, 900 (3d Cir. 1978). For

all of the reasons set forth herein, this Court should exercise its discretion in favor of

jurisdiction over this removed case.

Respectfully submitted,

BRITT, HANKINS, SCHAIBLE & MOUGHAN

BY: 

Teresa Ficken Sachs

Attorneys for Defendant

Attorney I.D. No.: 41136

Suite 515, Two Penn Center Plaza

15th & JFK Boulevard

Philadelphia, PA 19102

(215) 569-6900

Case 2:02-cv-04407-RBS Document 5 Filed 08/07/2002 Page 12 of 13
CERTIFICATE OF SERVICE

I certify that a copy of the Response of Defendant, State Farm Mutual Automobile

Insurance Company, In Opposition to Motion for Remand was mailed this day by regular

U.S. mail to the below listed counsel:

Peter I. Daniele, Esquire

1730 Forest Creed Drive

Blue Bell, PA 19422

 

Teresa Ficken Sachs

Date : 

Case 2:02-cv-04407-RBS Document 5 Filed 08/07/2002 Page 13 of 13