UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

EMIR IBRAHIMOVIC,

Plaintiff & Counter-Defendant, Case No. 09-12907

Honorable David M. Lawson

v. 

MEDMARC CASUALTY INSURANCE CO.,

Defendant, Counter-Claimant, &

Third-Party Plaintiff,

v.

DAVID W. ZIMMERMAN,

Third-Party Defendant

_________________________________________/

ORDER FOR SUPPLEMENTAL BRIEFING

Plaintiff Emir Ibrahimovic commenced this lawsuit under this Court’s diversity jurisdiction

seeking a declaration of the responsibilities of defendant Medmarc Casualty Insurance Company to

provide indemnity under a legal malpractice insurance policy issued to one David Zimmerman, a

Michigan attorney. According to the complaint, Mr. Ibrahimovic was injured in an automobile

accident and sought advice from Zimmerman as to his right to recover compensation for his loss.

Zimmerman concentrated his practice in the area of worker’s compensation, so he referred

Ibrahimovic’s automobile case to an office mate, attorney Robert Mazzara. There is a factual

dispute over whether Zimmerman continued to represent Mr. Ibrahimovic in the auto crash case

along with Mazzara. It appears that the auto case was settled; however, Mazzara allegedly

misappropriated the settlement proceeds. Ibrahimovic then commenced an action in the Macomb

County, Michigan circuit court against Zimmerman and Mazzara’s estate (Mazzara reportedly

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committed suicide after Ibrahimovic’s auto case was settled) alleging legal malpractice. Medmarc

undertook to represent Zimmerman in that case under a reservation of rights. Medmarc did not

insure Mazzara and, of course, did not represent him in the legal malpractice matter.

In the present action, Ibrahimovic did not join Zimmerman as a party, even though

Ibrahimovic seeks a declaration of rights on the scope of Medmarc’s liability coverage of

Zimmerman, its insured. Medmarc answered the complaint, filed a counterclaim, and filed a thirdparty complaint joining Zimmerman as a third-party defendant. The plaintiff filed a motion for

summary judgment alleging that Medmarc waived the right to rely on its exclusion by not specifying

that ground in its reservation of rights, Medmarc is estopped from denying coverage based in part

on representations to Zimmerman by its insurance adjuster, and the policy exclusions should be

construed in favor of coverage. The Court scheduled the motion for oral argument on December 21,

2009. 

The Court questions whether (1) Zimmerman is named properly as a third-party defendant;

(2) the parties are properly aligned; (3) the Court has subject-matter jurisdiction under a proper

alignment of the parties; and (4) the Court ought to exercise its discretionary jurisdiction under the

Declaratory Judgment Act. Federal Rule of Civil Procedure 14, which governs third-party practice,

allows joinder of “a nonparty who is or may be liable to [the third-party plaintiff] for all or part of

the claim against it.” Fed. R. Civ. P. 14(a)(1). As the Sixth Circuit recently explained, “Rule 14(a)

does not allow a third-party complaint to be founded on a defendant’s independent cause of action

against a third-party defendant, even though arising out of the same occurrence underlying plaintiff’s

claim, because a third-party complaint must be founded on a third party’s actual or potential liability

to the defendant for all or part of the plaintiff’s claim against the defendant.” Am. Zurich Ins. Co.

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v. Cooper Tire & Rubber Co., 512 F.3d 800, 805 (6th Cir. 2008) (citing United States v. Olavarrieta,

812 F.2d 640, 643 (11th Cir. 1987)). It appears to the Court that Medmarc’s claim against

Zimmerman would not meet the criteria required under Rule 14.

On the other hand, Zimmerman probably is a necessary party and should have been joined

by the plaintiff as a defendant in the present action. If that were the case, complete diversity may

not exist, and the Court would not have subject-matter jurisdiction under 28 U.S.C. § 1332. 

If the Court has subject matter jurisdiction, there still is a question whether the Court ought

to exercise its jurisdiction to entertain this action for a declaratory judgment. Although the federal

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

River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976), the exercise of

jurisdiction under the Declaratory Judgment Act, 28 U.S.C. § 2201(a), is not mandatory, Brillhart

v. Excess Ins. Co., 316 U.S. 491, 494 (1942), and at times the better exercise of discretion favors

abstention. “By the Declaratory Judgment Act, Congress sought to place a remedial arrow in the

district court’s quiver; it created an opportunity, rather than a duty, to grant a new form of relief to

qualifying litigants.” Scottsdale Ins. Co. v. Roumph, 211 F.3d 964, 969 (6th Cir. 2000) (quoting

Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995)). Abstaining from that opportunity generally

“rest [s] on considerations of ‘[w]ise judicial administration, giving regard to conservation of

judicial resources and comprehensive disposition of litigation.’” Colo. River, 424 U.S. at 817

(quoting Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 183 (1952)). Declining

jurisdiction is always a sensible option to consider in declaratory judgment actions seeking an

opinion on insurance coverage impacting litigation pending in another court, for although there is

no per se rule prohibiting such actions in federal court, see Allstate Ins. Co. v. Green, 825 F.2d 1061,

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1066 (6th Cir. 1987), “[s]uch actions . . . should normally be filed, if at all, in the court that has

jurisdiction over the litigation giving rise to the indemnity problem.” Bituminous Cas. Corp. v. J

& L Lumber Co., Inc., 373 F.3d 807, 812 (6th Cir. 2004) (quoting Manley, Bennett, McDonald &

Co. v. St. Paul Fire & Marine Ins. Co., 791 F.2d 460, 463 (6th Cir. 1986)).

The Sixth Circuit has “repeatedly held in insurance coverage diversity cases that ‘declaratory

judgment actions seeking an advance opinion on indemnity issues are seldom helpful in resolving

an ongoing action in another court.’” Bituminous Cas., 373 F.3d at 812 (quoting Manley, 791 F.2d

at 463); see also AM South Bank v. Dale, 386 F.3d 763 (6th Cir. 2004) (citing 10B Wright, Miller

& Mary Kay Kane § 2765 at 638 (3d ed. 1998)) (“[I]t is not one of the purposes of the declaratory

judgments act to enable a prospective negligence action defendant to obtain a declaration of

non-liability.”). However, “[t]hat is not to say that there is a per se rule against exercising

jurisdiction in actions involving insurance coverage questions.” Bituminous Cas., 373 F.3d at

812-13. Instead, several factors have been articulated by the Sixth Circuit to be considered by a

district court faced with a complaint seeking relief under the declaratory judgment act:

1) whether the declaratory action would settle the controversy;

2) whether the declaratory action would serve a useful purpose in clarifying the legal

relations in issue;

3) whether the declaratory remedy is being used merely for the purpose of

“procedural fencing” or “to provide an arena for a race for res judicata.”

4) whether the use of a declaratory action would increase friction between our

federal and state courts and improperly encroach upon state jurisdiction; and

5) whether there is an alternative remedy which is better or more effective.

Grand Trunk W. R.R. Co. v. Consol. Rail Co., 746 F.2d 323, 326 (6th Cir. 1984); see also

Bituminous Cas., 373 F.3d at 814-15, Roumph, 211 F.3d at 968.

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The Court believes that the parties should have an opportunity to address these procedural

and jurisdictional issues before the Court decides them. Therefore, the Court will allow the parties

to file supplemental briefs discussing the four issues noted above.

Accordingly, it is ORDERED that the parties may file supplemental briefs discussing

whether (1) Zimmerman is named properly as a third-party defendant; (2) the parties are properly

aligned; (3) the Court has subject-matter jurisdiction under a proper alignment of the parties; and

(4) the Court ought to exercise its discretionary jurisdiction under the Declaratory Judgment Act,

as elaborated above, on or before January 18, 2010. The supplemental briefs may not exceed 15

pages.

s/David M. Lawson 

DAVID M. LAWSON

United States District Judge

Dated: December 22, 2009

PROOF OF SERVICE

The undersigned certifies that a copy of the foregoing order was served

upon each attorney or party of record herein by electronic means or first

class U.S. mail on December 22, 2009.

s/Teresa Scott-Feijoo 

TERESA SCOTT-FEIJOO

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