IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

EVANSTON INSURANCE COMPANY,

 Plaintiff,

v.

VAN SYOC CHARTERED, et al.

 Defendants.

HON. JEROME B. SIMANDLE

Civil No. 10-6791 (JBS/AMD)

OPINION

APPEARANCES:

Aileen F. Droughton, Esq.

TRAUB LIEBERMAN STRAUS & SHREWSBERRY LLP

322 Highway 35 South, First Floor

Red Bank, NJ 07701

Counsel for Plaintiff

Robert E. Margulies, Esq.

MARGULIES WIND, PC

Harborside Financial Center

Plaza 10- Suite 1201

3 Second Street

Jersey City, NJ 07311

Counsel for Defendant Richard Press, Esq.

SIMANDLE, Chief Judge: 

I. INTRODUCTION

This action is before the Court on the motion of Defendant

Richard Press, Esq., joined by all co-defendants, to dismiss the

Amended Complaint. [Docket Items 22, 23, 25, 28 & 29.] 

Plaintiff Evanston Insurance Company seeks a declaratory judgment

that it owes no duty to defend or indemnify Defendants Van Syoc

Chartered, Clifford Van Syoc, Esq., James E. Burden, Esq., and

Sebastian Ionno, Esq. (“the Van Syoc Defendants”) in an

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underlying malpractice action currently pending before the New

Jersey Superior Court. Defendant Press, who is a plaintiff in

the underlying action, argues that the Court should abstain from

hearing this declaratory judgment action under the abstention

doctrine articulated in Brillhart v. Excess Ins. Co., 316 U.S.

491 (1942) and Wilton v. Seven Falls Co., 515 U.S. 277 (1995). 

Plaintiff opposes the motion, arguing that the Brillhart-Wilton

doctrine does not apply in this circumstance for a number of

reasons, including that the underlying malpractice action is not

sufficiently parallel to the federal declaratory judgment action. 

For the reasons discussed below, the Court will grant Defendant’s

motion to dismiss without prejudice to refiling in the New Jersey

Superior Court.

II. BACKGROUND

For the purposes of this motion, the parties do not dispute

the essential relevant facts, which the Court has largely taken

from Plaintiff’s Amended Complaint. In brief, the instant

declaratory judgment action seeks a declaration that Plaintiff

Evanston Insurance Company does not owe a duty under a

professional malpractice insurance policy to defend or indemnify

certain attorney parties (the Van Syoc Defendants) in an

underlying state malpractice action. The underlying malpractice

action involves the representation of Defendant Cheryl Erhart by

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the Van Syoc Defendants in an appeal before the Third Circuit

Court of Appeals in 2006-2008.

In November of 2000, Erhart sued the City of Atlantic City,

New Jersey, and other defendants for damages related to claims of

employment discrimination, which was shortly thereafter removed

to the United States District Court for the District of New

Jersey. See Erhart v. City of Atlantic City, Civ. No. 00-06209,

2006 WL 2385061 *1 (D.N.J. Aug., 17, 2006). In that action,

Richard Press, Esq. (moving Defendant in the instant motion)

acted as Erhart’s attorney before the District Court. On October

12, 2004, Erhart won a jury verdict including a general damages

award of $208,800 against Atlantic City. Id. A few days later,

at a punitive damages trial, the jury awarded an additional

$500,000 in punitive damages. Id. Atlantic City thereafter

moved for a new trial, which the court granted as to damages

only, and on March 22, 2006, the jury at the new trial returned a

compensatory damages award in favor of Erhart in the amount of

$50,000, and the jury awarded no punitive damages. Id.; Am.

Compl. ¶ 16 [Docket Item 1.] Following further motion practice,

the district court entered final judgment which included various

additional awards of counsel fees and costs. Id. at *4-23; Am.

Compl. ¶ 18. 

Erhart thereafter allegedly decided to appeal the court’s

order granting a new trial and the lesser damages award; to that

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end she retained Defendant Clifford Van Syoc, Esq. and Defendant

Van Syoc Chartered to represent her in her appeal to the Third

Circuit. Am. Compl. ¶ 19. On August 24, 2007, the Third Circuit

dismissed Erhart’s appeal for failure to timely prosecute,

allegedly due to Van Syoc’s failure to file an appellate brief. 

Am. Compl. ¶¶ 22-23. On August 29, 2007, Press allegedly

notified Van Syoc by letter of his and Erhart’s intent to bring a

claim against Van Syoc, apparently for malpractice, unless Van

Syoc managed to vacate the dismissal, and requested that Van Syoc

forward the letter to his insurance carrier, Evanston Insurance

Company. Id. ¶ 24. Van Syoc allegedly did not forward the

August 29, 2007, letter. Id. ¶ 39.

On October 2, 2007, Van Syoc submitted an application to

renew the Van Syoc Firm’s existing Lawyer’s Professional

Liability Policy with Evanston. Id. ¶ 32. The application

allegedly contained a representation by Van Syoc that he was

unaware of any “fact, error, omission, circumstances or situation

that might provide grounds for any claim under the proposed

insurance.” Id. ¶¶ 33-34. Evanston renewed Van Syoc’s policy on

October 4, 2007, allegedly based in part on its reliance on Van

Syoc’s representation regarding the absence of any known claims. 

Id. ¶ 35. The renewed policy includes various exclusions for any

claim made against an insured party under the policy of which the

insured was aware prior to the effective date of the policy. Id.

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¶¶ 36-38.

Meanwhile, Van Syoc, continuing to represent Erhart before

the Third Circuit, filed various motions attempting to vacate the

Circuit’s order dismissing the appeal, the last of which was

denied on July 2, 2008. Id. ¶ 29. On June 30, 2008, Press again

advised Van Syoc to notify Evanston of his and Erhart’s impending

malpractice action. Id. ¶ 30. Van Syoc allegedly first notified

Evanston of the claim on October 8, 2008. Id. ¶¶ 31, 39.

Erhart and Press filed their malpractice complaint against,

inter alia, the Van Syoc Defendants on October 4, 2010 in the

Superior Court of New Jersey, Camden County Law Division (“the

underlying action”). See Docket Number CAM-L-005005-10. Van 1

Syoc notified Evanston of the existence of the summons and

complaint by letter dated October 15, 2010. Am. Compl. ¶ 42. On

November 17, 2010, Evanston notified the Van Syoc Defendants

“that no coverage was available under the policy” for the

malpractice action. Id. ¶ 45. Van Syoc appealed this denial of

coverage, which Evanston affirmed on December 23, 2010. Id. ¶¶

46-47.

Evanston then filed its declaratory judgment Complaint in

 The other named Defendants in this declaratory judgment 1

action are the remaining defendants in the underlying action:

Attorneys Kenneth Wallach, Esq., M. Daniel Perskie, Esq., and the

firm Perskie, Wallach, Fendt & Holtz, P.C. Margulies Cert. Ex.

2. The relationship of these Defendants to Defendants Press,

Erhart, and the Van Syoc Defendants is not relevant to the

instant motion.

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the instant matter in this Court on December 28, 2010, and filed

its Amended Complaint on December 31, 2010. [Docket Items 1 & 4.] 

The instant motion to dismiss was initially filed by Defendant

Richard Press [Docket Item 22], though over the course of the

following month, prior to Plaintiff’s filing opposition, the

other Defendants joined in the motion. [Docket Items 23, 25, 28,

& 29.] In other words, all Defendants favor this Court’s

exercise of Brillhart-Wilton abstention so that this declaratory

judgment action may proceed in state court in coordination with

the related legal malpractice action.

III. DISCUSSION

A. Brillhart-Wilton Abstention Doctrine

This Court exercises diversity jurisdiction, 28 U.S.C. §

1332, solely pursuant to the Declaratory Judgment Act, 28 U.S.C.

§ 2201(a), as the sole relief sought in the Amended Complaint is

the declaration of the parties’ rights under an insurance policy. 

No monetary relief is sought, although it is clear that financial

consequences would flow from a declaration of rights.

Defendant Press moves to dismiss on the basis of an

abstention doctrine initially articulated in Brillhart v. Excess

Ins. Co., 316 U.S. 491 (1942) and clarified in Wilton v. Seven

Falls Co., 515 U.S. 277 (1995). These cases hold that a federal

district court’s jurisdiction under the Declaratory Judgment Act

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is discretionary. Brillhart, 316 U.S. at 494; Wilton, 515 U.S.

at 282. Therefore, the cases held, based on considerations of

judicial economy and efficiency, federal courts act within their

discretion to abstain from hearing a declaratory judgment action

that turns on an application of state law if the issues in

dispute will be addressed in a parallel state court action. 

“[W]hen a federal suit is brought under the Federal Declaratory

Judgments Act, presenting only questions of local laws, the court

is under ‘no compulsion to exercise [ ] jurisdiction’ if a

parallel state court proceeding would address the matters in

controversy between the parties.” Marshall v. Lauriault, 372

F.3d 175, 183 (3d Cir. 2004) (quoting Brillhart, 361 U.S. at

495). “Brillhart makes clear that district courts possess

discretion in determining whether and when to entertain an action

under the Declaratory Judgment Act, even when the suit otherwise

satisfies subject matter jurisdictional prerequesites.” Wilton,

515 U.S. at 282.

The Supreme Court has distinguished this basis for

abstention from other forms of abstention, such as those

discussed in Colorado River Water Conservation Dist. v. United

States, 424 U.S. 800 (1976), where the federal complaint at issue

sought relief other than merely declaratory relief. In Wilton v.

Seven Falls Co., the Supreme Court explained that, in cases such

as Colorado River, where the complaint seeks injunctive relief or

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money damages, “the federal courts have a ‘virtually unflagging

obligation’ to exercise the jurisdiction conferred on them by

Congress” and only “exceptional circumstances” would warrant

dismissal on the basis of abstention. Wilton, 515 U.S. at 284

(quoting Colorado River, 424 U.S. at 813). By contrast, the

Court explained, “[d]istinct features of the Declaratory Judgment

Act, we believe, justify a standard vesting district courts with

greater discretion [to abstain from hearing the action] in

declaratory judgment actions.” Id. at 286. Specifically, the

Court pointed to the discretionary language of the Declaratory

Judgment Act. Id. at 286-87 (“The statute’s textual commitment

to discretion, and the breadth of leeway we have always

understood it to suggest, distinguish the declaratory judgment

context from other areas of law. . .”).2

Thus, the Supreme Court announced that a district court acts

within its discretion to stay or dismiss a declaratory judgment

action “where parallel proceedings, presenting opportunity for

ventilation of the same state law issues, [are] underway in state

court.” Id. at 290. The Third Circuit has announced four

factors for a district court to consider in determining whether

 In particular, the Court pointed to the language of the 2

Declaratory Judgment Act conferring jurisdiction on federal

courts, 28 U.S.C. § 2201(a). See Wilton, 515 U.S. at 286 (“On

its face, the statute provides that a court ‘may declare the

rights and other legal relations of any interested party seeking

such declaration.’”) (emphasis original). 

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to abstain in this circumstance, involving insurance coverage

issues: 

1. Whether “the same issues are pending in a

state court”

2. “an inherent conflict of interest between

an insurer’s duty to defend in 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”; and

4. Whether the declaratory judgment action

raises questions of federal or only state law.

State Auto Insurance Companies v. Summy, 234 F.3d 131, 134-35 (3d

Cir. 2001).

The parties in the instant motion address only the first and

third of these factors, which they describe as (1) whether the

underlying action is “parallel” to the instant action, and (2)

whether abstention in favor of consolidation or coordination in

state court would improve judicial efficiency and economy. 

Defendant argues that dismissal is warranted in this case because

the underlying malpractice action is parallel to the instant

declaratory judgment action and that considerations of judicial

efficiency and economy warrant dismissal of this action so that

the New Jersey Superior Court can address all the related issues

together.

Plaintiff opposes on both grounds. First, Plaintiff argues

that the Brillhart-Wilton abstention doctrine is not applicable

here because the underlying malpractice action is not truly

“parallel” to the instant declaratory judgment action, in that

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distinct factual and legal issues are at stake in the two

different proceedings. Second, Plaintiff argues that efficiency

considerations do not warrant dismissal because the two actions

raise different factual and legal issues. Thus, Plaintiff

argues, if Plaintiff is compelled to raise its insurance coverage

issue in the same New Jersey court that is hearing the underlying

malpractice suit, the Superior Court and the parties will be

compelled to conduct the same discovery and legal argument there

as in this Court. At best, Plaintiff argues, adjudication will

be no more efficient there than here, and, at worst, it may be

prejudicial to Plaintiff if the Superior Court were to attempt to

consolidate the trial of the malpractice issue and the coverage

issue before the same jury. 

The Court will address these two issues in turn.

B. Parallel or Related Actions

Plaintiff suggests that the Court only has discretion to

abstain under the Brillhart-Wilton abstention doctrine when the

underlying state action is strictly parallel to the federal

declaratory judgment action, and that if the actions are not

parallel, then the stricter “exceptional circumstances” standard

of the Colorado River doctrine applies. Plaintiff argues that

“The Wilton standard limits the court’s discretion to those

instances in which parallel state court proceedings are pending

in state court.” Pl.’s Brief in Opposition at 8.

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The Court finds that this is an incorrect reading of Wilton. 

The Wilton Court made it clear that a federal court’s

jurisdiction to hear a declaratory judgment action on a state law

question is always discretionary, and that it is an appropriate

use of that discretion to abstain when there is a parallel action

proceeding in state court. Wilton at 289-290. The Court was

silent on how far the district court’s discretion in declaratory

judgment actions extends.

[D]istrict courts’ decisions about the

propriety of hearing declaratory judgment

actions, which are necessarily bound up with

their decisions about the propriety of

granting declaratory relief, should be

reviewed for 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. 

3

Proceeding from this misunderstanding of Wilton, Plaintiff

 Plaintiff cites the Eighth Circuit case of Scottsdale Ins. 3

Co. v. Detco Indus., Inc., 426 F.3d 994 (8th Cir. 2005) in

support of its reading of Wilton that the district court’s

discretion to abstain is limited to only cases with a parallel

underlying proceeding in state court. For the reasons explained

above, the Court finds this interpretation of Wilton to be too

narrow, finding support in the Third Circuit case of Atlantic

Mut. Ins. Co. v. Gula, 84 F. App’x 173 (3d Cir. 2003), discussed

below.

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argues that the Court lacks discretion to abstain in this case

because the insurance coverage issue at stake in this action is

not presently at issue in the underlying action and is distinct

from the issues that are in dispute there. The underlying

action, Plaintiff argues, raises the issue of whether the

defendants breached a professional duty of care through their

representation of Erhart before the Third Circuit. That issue,

Plaintiff argues, is factually and legally distinct from the

coverage issue raised in this action, which is whether the Van

Syoc Defendants were aware of the Erhart/Press malpractice claims

at the time the coverage renewal application was prepared and

prior to the renewal date in October of 2007. Plaintiff argues

that the coverage issues can be decided in the instant action

without interfering with or disturbing the underlying malpractice

action. Defendant responds that the cases are parallel because

to decide the coverage issue raised in the instant declaratory

action, the Court will necessarily be required to “delve into the

claims of legal malpractice.” 

The question before the Court therefore is not, as Plaintiff

suggests, whether the underlying malpractice action is

sufficiently parallel to qualify for discretionary abstention

under Brillhart-Wilton, but rather, whether the underlying action

is strictly parallel to the instant declaratory judgment action,

and, if not, whether abstention under the Declaratory Judgment

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Act is appropriate in this particular circumstance anyway.

On the issue of whether the actions are strictly parallel,

Plaintiff argues that the Court should apply the definition of

“parallel actions” as it is used in cases considering the

Colorado River abstention. See, e.g., Ryan v. Johnson, 115 F.3d

193, 196 (3d Cir. 1997) (“A threshold issue that must be decided

in any Colorado River abstention case is whether the two actions

are ‘parallel.’ If they are not, then the district court lacks

the power to abstain. . . . Generally, cases are parallel when

they involve the same parties and claims.”) Under Plaintiff’s

articulation of the standard, the underlying action is not

parallel with the declaratory action unless the Van Syoc

Defendants had explicitly filed a declaratory judgment action in

the state court seeking a declaration that Plaintiff Evanston

owes them a duty to defend under the insurance policy.

The Court agrees with Plaintiff that the instant declaratory

judgment action is not strictly parallel to the underlying

malpractice action such that it would satisfy the threshold

inquiry under Colorado River, because Plaintiff Evanston

Insurance Company is not currently a party to the underlying

action, and the insurance coverage issue is not currently

contested in the underlying issue. Further, the Superior Court

action is not addressing the issue of insurance coverage. 

Therefore, the Court must determine whether, despite this lack of

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strict parallelism, the Court should still exercise its

discretion to abstain in this circumstance.

On this issue, Defendant cites to several cases within this

Circuit where courts have exercised discretion to abstain under

the Brillhart-Wilton doctrine despite the absence of exactly

parallel claims being raised in the underlying state action. 

Specifically, Defendant points the Court to the recent District

of New Jersey case of OneBeacon Ins. Co. v. Velicia Bonnano

Russell, Civ. No. 11-870, 2011 U.S. Dist. LEXIS 46312 (D.N.J.,

Apr. 29, 2011). There, the Court dismissed a declaratory

judgment action regarding legal malpractice insurance coverage

despite the fact that the insurance coverage issue had not

explicitly been raised in the state court malpractice proceeding

below, reasoning that “[a] determination as to any claim in the

Declaratory Judgment Action would necessarily affect -- and thus

interfere with -- the State Tort Action.” Id. at *1-2.

Further, the Court finds instructive the Third Circuit’s

non-precedential opinion of Atlantic Mutual Ins. Co. v. Gula, 84

F. App’x 173 (3d Cir. 2003). There, as here, the specific

insurance coverage issue had not yet been raised in the

underlying state tort action, but the Third Circuit found that

the district court did not abuse its discretion by abstaining

from deciding the federal declaratory judgment action, reasoning

that “even if the coverage issue is not currently pending, it

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will as a matter of logic necessarily arise before the matter is

concluded in state court.” Id. at 175.

Similarly, here, the Court reasons that while the coverage

issue is not yet pending in the underlying malpractice action, if

Erhart and Press ultimately prevail against the Van Syoc

defendants, the coverage issue will inevitably arise and be

addressed either as a third-party complaint filed by Van Syoc or

as a separate complaint filed by either Evanston Insurance

Company or Van Syoc. It is also significant that every party in

the related state court malpractice action is a defendant here

and seeks to have the coverage issues litigated in the state

court. Thus, the Court concludes that discretionary abstention

is warranted because of the closely related underlying state

court action.

C. Efficiency and Judicial Economy

On the issue of efficiency and judicial economy, Plaintiff

argues that no efficiency will be gained by dismissing the action

because the issue is not strictly “duplicative” of the underlying

action, and consolidating the insurance coverage action for trial

would be prejudicial to Plaintiff Evanston, citing Krohn v. New

Jersey Full Ins. Underwriters, 316 N.J. Super. 477 (App. Div.

1998), which held that it is inappropriate for counsel in a tort

suit to make the jury aware of insurance coverage issues because

doing so may cause the jury to “recklessly award damages based

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upon the perceived ‘deep pockets’ of the carrier.” Id. at 484. 

Defendant responds that the question of the insurance

coverage issue being consolidated for trial is a red herring, as

no such suggestion has been made. However, Defendant argues, the

coverage issues need not be consolidated for trial before a jury

to benefit from the efficiencies of being consolidated before the

same court. Defendant suggests, for example, that discovery

issues could be addressed more efficiently if consolidated. The

Court looks for guidance, again, to Summy, which stated that

abstention was warranted to avoid “piecemeal litigation.” State

Auto Ins. Cos. v. Summy, 234 F.3d at 135. “[T]he prospects for

coordinated management and alleviation of abrasion are greater

when the litigation is handled under one jurisdictional roof.” 

Id. (quoting Mitcheson v. Harris, 955 F.2d 235, 240 (4th Cir.

1992)).

Applying this reasoning to the current action, the Court

again concludes that this factor favors abstention. The Court

agrees with Defendant that discovery issues could be addressed

more efficiently if the coverage issue is coordinated for case

management with the underlying malpractice issue. See Summy at

135-36 (“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

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underlying tort action, thereby conserving judicial resources as

well as those of the parties.”). All parties to the state court

action agree that the resolution of these cases would be enhanced

by coordinated management in the state court, rather than

retaining the coverage case in federal court. Further, the Court

notes that other issues of case management, such as settlement

negotiations, could potentially be more efficiently addressed if

all interested parties are included in cases pending in the same

court. Consequently, the Court finds that this factor favors

abstention.

D. Issue of State Law

Finally, the Court agrees with Defendant that because the

instant declaratory judgment action involves only an application

of state contract law, this Summy factor also favors abstention. 4

While the Summy court was particularly concerned with whether the

federal declaratory judgment action raised any issues of

unsettled state law, the court also reasoned that the absence of

any questions of federal law, and the presence of settled state

law also weigh in favor of abstention. 

It follows that the state’s interest in

resolving its own law must not be given short

shrift simply because one party or, indeed,

 The Court notes that the parties have argued the motion on 4

the assumption that New Jersey law would control the

interpretation of the insurance contract at issue, but provide no

reasoning or analysis on the point. The Court therefore assumes

without deciding that New Jersey law controls this action.

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both parties, perceive some advantage in the

federal forum. When the state law is firmly

established, there would seem to be even less

reason for the parties to resort to the

federal courts. Unusual circumstances may

occasionally justify such action, but

declaratory judgments in such cases should be

rare.

Summy, 234 F.3d at 136.

IV. CONCLUSION

The Supreme Court and the Third Circuit are clear that the

Court’s exercise of declaratory judgment jurisdiction is

discretionary. When, as here, an insurance declaratory judgment

action raises only an issue of state law, which will inevitably

be addressed in a parallel underlying state court tort action,

and which can be addressed more efficiently by coordination with

the underlying state court action, the district court should

exercise its discretion to abstain from hearing such an action. 

Applying this rule to the present action, and recognizing the

joint wishes of all parties in the related malpractice case to

have this declaratory judgment action proceed in coordinated

fashion in state court, the Court concludes that abstention is

appropriate here, and will consequently grant Defendant’s motion

to dismiss, without prejudice to Plaintiff Evanston’s

recommencing the declaratory judgment action in the Superior

Court of New Jersey, Law Division, Camden County, within thirty

days of the entry of the accompanying Order. The Superior Court

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will presumably coordinate the case management of this

declaratory judgment action with the underlying malpractice case

in accordance with the Superior Court’s usual practices, placing

both related matters under the same judicial roof.

The accompanying Order shall be entered.

March 12, 2012 s/ Jerome B. Simandle 

Date JEROME B. SIMANDLE

Chief United States District Judge

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