NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

:

ONEBEACON INSURANCE COMPANY, : CIVIL ACTION NO. 11-870 (MLC)

:

Plaintiff, : O P I N I O N

:

v. :

:

FELICIA BONANNO RUSSELL, :

et al., :

:

Defendants. :

 :

A PERSON named Ronald B. Smith (“Smith”) brought an action

in New Jersey state court to recover damages for, inter alia,

legal malpractice (“State Tort Action”) against Felicia Bonanno

Russell, Ronald J. Sama, and Sama & Russell LLC (“Insureds”). 

(Dkt. entry no. 1, Compl. at 2; see id., Ex. A, State Tort Action

Complaint.) The State Tort Action remains pending. (Compl. at

3, 8.) OneBeacon Insurance Company (“Insurer”) provided coverage

to the Insureds. (Id. at 5.) The Insurer brought this separate

action against the Insureds for a judgment declaring that the

Insurer is not obligated to defend and indemnify the Insureds in

the State Tort Action (“Declaratory Judgment Action”). (See id.)

THE INSURER could either (1) be named in the State Tort

Action as a defendant, as a third-party defendant, or in some

other capacity, or (2) bring the declaratory-judgment claims in

the appropriate state court and seek to have them consolidated

with the State Tort Action. A determination as to any claim in

the Declaratory Judgment Action would necessarily affect — and

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thus interfere with — the State Tort Action. As a result, this

Court must abstain from adjudicating the Declaratory Judgment

Action. See Wilton v. Seven Falls Co., 515 U.S. 277, 280-90

(1995) (upholding Brillhart v. Excess Ins. Co., 316 U.S. 491

(1942)); see also Atl. Mut. Ins. Co. v. Gula, 84 Fed.Appx. 173,

174-75 (3d Cir. 2003) (affirming judgment dismissing complaint

for, inter alia, reasons discussed above); Nationwide Mut. Ins.

Co. v. Lowe, 95 F.Supp.2d 274, 276-77 (E.D. Pa. 2000) (abstaining

in federal action even though insurer not named in state action,

because deciding insurance-coverage issue raised in federal action

would affect — and thus interfere with — underlying state action).

THE DECLARATORY JUDGMENT ACTION (1) is, as the Court’s

shorthand reference suggests, a declaratory-judgment action

involving insurance-coverage issues under state law, (2) concerns

issues that will be raised in the State Tort Action, and (3)

could be adjudicated by the same judge overseeing the State Tort

Action. As a result, the Complaint in the Declaratory Judgment

Action should be dismissed. See Williams v. State Auto Prop. &

Cas. Ins. Co., No. 08-4983, 2009 WL 1119502, at *2-3 (E.D. Pa.

Apr. 24, 2009) (remanding action concerning insurance coverage,

and noting “the possibility of interfering with the state court

cases regarding the same matter is substantial” because the

conduct of certain parties would need to be addressed in both the

underlying state action and the removed declaratory-judgment

2

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action). The dismissal will be without prejudice to the Insurer

to recommence the Declaratory Judgment Action in the appropriate

state court within 30 days, as the limitations period is tolled

by the filing of a federal complaint. See Jaworowski v.

Ciasulli, 490 F.3d 331, 333-36 (3d Cir. 2007); Galligan v.

Westfield Ctr. Serv., 82 N.J. 188, 191-95 (1980).1

THE COURT, in view of the pending State Tort Action, must

“promote judicial economy by avoiding duplicative and piecemeal

litigation”. State Auto Ins. Cos. v. Summy, 234 F.3d 131, 135

(3d Cir. 2001). It appears that “[t]he desire of insurance

companies and their insureds to receive declarations in federal

court on matters of purely state law has no special call on the

federal forum”. Id. at 136. For good cause appearing, the Court

will issue an appropriate order and judgment.2

 s/ Mary L. Cooper 

MARY L. COOPER

United States District Judge

Dated: April 29, 2011

 The Court notes that Smith should have been named in the 1

Declaratory Judgment Action. See N.J.S.A. § 2A:16-56 (stating

that when declaratory relief is sought, all those having an

interest that would be affected by the declaration must be made

parties to the proceeding). For instance, the interests of Smith

would certainly be affected if the Insureds are found to be

liable in the State Tort Action, but have no insurance coverage

related to any claims.

 The Court notes that the Insurer also failed to properly 2

assert the citizenship of Sama & Russell LLC, which is a limited

liability company, and not a corporation. See Zambelli Fireworks

Mfg. Co. v. Wood, 592 F.3d 412, 418-20 (3d Cir. 2010).

3

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