Court Opinion

ID: 3203278
Source: CourtListenerOpinion
Date Created: 2016-05-13 14:01:16.679596+00
Date Added: 2024-06-11T09:19:12.975351
License: Public Domain

Case: 15-13331    Date Filed: 05/13/2016   Page: 1 of 9

                                                        [DO NOT PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                       FOR THE ELEVENTH CIRCUIT
                         ________________________

                               No. 15-13331
                           Non-Argument Calendar
                        __________________________

                     D.C. Docket No. 1:15-cv-20582-KMM

GEICO GENERAL INSURANCE COMPANY, a foreign insurance company,

                                                Plaintiff - Appellant,

versus

MICHAEL J. KASTENOLZ,
as co-personal representative of the
Estate of Emerson Michael Kastenolz,
KATHLEEN KASTENOLZ,
as co-personal representative of the
Estate of Emerson Michael Kastenolz,
CARLOS LACAYO,
BARRY MUKAMAL,
as court appointed receiver for Carlos Lacayo, Kathleen
Kastenholz Michael Kastenholz as co-personal representatives
of the estate of Emerson Michael Kastenholz,

                                                Defendants - Appellees.

                         ________________________

                  Appeal from the United States District Court
                      for the Southern District of Florida
                        ________________________

                               (March 11, 2016)
              Case: 15-13331     Date Filed: 05/13/2016   Page: 2 of 9

Before WILSON, JORDAN and ROSENBAUM, Circuit Judges.

PER CURIAM:

      Geico General Insurance Company appeals the district court’s dismissal of

its 28 U.SC. § 2201 complaint for declaratory relief. Geico sought a judicial

determination that it had no obligation to provide liability insurance coverage for a

multi-million dollar wrongful death judgment.

                                         I

      On March 5, 2011, Carlos Lacayo struck and killed five pedestrians while

driving his mother’s car. At the time, Mr. Lacayo was insured under a liability

policy issued by Geico. Under the policy, Geico promised to “defend any suit for

damages payable under the terms of this policy,” conditioned on Mr. Lacayo's

cooperation and assistance in the defense of any claims. One of Mr. Lacayo’s

victims was Emerson Kastenholz, son of Kathleen and Michael Kastenholz.

      Soon thereafter, the Kastenholzes, as co-personal representatives of their

son’s estate, filed a wrongful death action against Mr. Lacayo in the Circuit Court

of Miami–Dade County, Florida. In July of 2011, Mr. Lacayo fled the United

States after being charged with DUI manslaughter. Consequently, Mr. Lacayo did

not cooperate or assist in the defense of the wrongful death claims against him.

Geico defended the lawsuit under a reservation of rights based on Mr. Lacayo's

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failure to cooperate. In December of 2013, the jury returned a verdict of $15.35

million in favor of the Kastenholzes.

      In November of 2014, the Kastenholzes and Barry Mukamal, the state–court

appointed receiver for Mr. Lacayo, filed a state court action against Geico and Cole

Scott & Kissane, the law firm representing Mr. Lacayo, for bad faith and legal

malpractice. In February of 2015, Geico commenced this federal declaratory

judgement action seeking a determination that there was no insurance coverage for

Mr. Lacayo or the Kastenholzes under the policy. Shortly thereafter, the

Kastenholzes amended the pending state court complaint to include a claim for

declaratory relief, requesting a determination that the wrongful death judgment was

covered under the policy because Geico had failed to satisfy the requirements of

the Florida Claims Administration Statute, Fla. Stat. § 627.426, and thereby

waived its coverage defense.

      The Kastenholzes and Mr. Mukamal then filed a motion to dismiss the

federal declaratory judgment action. Finding that that the federal and state–court

actions were parallel proceedings and that the existence of insurance coverage was

a question best decided by the state court, the district court chose to abstain from

exercising its jurisdiction over the declaratory judgement action and granted the

motion to dismiss.

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                                              II

       We review the dismissal of a complaint seeking a declaratory judgment for

abuse of discretion. Wilton v. Seven Falls Co., 515 U.S. 277, 289–90 (1995). A

district court may abuse its discretion in the following ways:

       [1] when a relevant factor that should have been given significant
       weight is not considered; [2] when an irrelevant or improper factor is
       considered and given significant weight; and [3] when all proper
       factors, and no improper ones, are considered, but the court, in
       weighing those factors, commits a clear error of judgment.

Ameritas v. Variable Life Ins. Co. v. Roach, 411 F.3d 1328, 1330 (11th Cir. 2005)

(internal quotations and citations omitted). The abuse of discretion standard means

that, when deciding a matter, the district court “has a range of choice, and its

decision will not be disturbed as long as it stays within that range and is not

influenced by any mistake of law.” Id. In the case of declaratory judgment actions,

the district court’s range of choice is substantial. Wilton, 515 U.S. at 277

(“[F]ederal courts [have] unique and substantial discretion in deciding whether to

declare the rights of litigants.”).

       When deciding whether to abstain from exercising jurisdiction over a

declaratory judgment action due to parallel state proceedings, a federal court

should consider the following factors:

       (1) the strength of the state's interest in having the issues raised in the
       federal declaratory action decided in the state courts;

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      (2) whether the judgment in the federal declaratory action would
      settle the controversy;

      (3) whether the federal declaratory action would serve a useful
      purpose in clarifying the legal relations at issue;

      (4) whether the declaratory remedy is being used merely for the
      purpose of “procedural fencing”—that is, to provide an arena for a
      race for res judicata or to achieve a federal hearing in a case otherwise
      not removable;

      (5) whether the use of a declaratory action would increase the friction
      between our federal and state courts and improperly encroach on state
      jurisdiction;
      (6) whether there is an alternative remedy that is better or more
      effective;
      (7) whether the underlying factual issues are important to an
      informed resolution of the case;
      (8) whether the state trial court is in a better position to evaluate those
      factual issues than is the federal court; and

      (9) whether there is a close nexus between the underlying factual and
      legal issues and state law and/or public policy, or whether federal
      common or statutory law dictates a resolution of the declaratory
      judgment action.

Ameritas, 411 F.3d at 1331. These factors are neither absolute nor exclusive,

and courts may choose how many and which ones to consider. Id.

                                          III

      In its analysis, the district court considered eight of the nine factors, omitting

the fourth factor. The court concluded that every analyzed factor weighed in the

favor of abstention.

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      As an initial matter, much of Geico’s argument on appeal relies on the first-

filed rule, which “provides that when parties have instituted competing or parallel

litigation in separate courts, the court initially seized of the controversy should hear

the case.” Collegiate Licensing Co. v. Am. Cas. Co. of Reading, Pa., 713 F.3d 71,

78 (11th Cir. 2013). Geico asserts that the first-filed rule applies not only to

situations involving parallel federal proceedings, but also when there are parallel

proceedings in state and federal courts. Additionally, Geico claims that the first-

filed action in the present situation is not the Kastenholzes’ state court action for

bad faith and misrepresentation, but the declaratory judgment action it filed in

federal court. Even if we were to agree with Geico’s characterization, the Ameritas

factors presuppose the existence of a prior filed federal declaratory action.

Ameritas, 411 F.3d at 1329-1332 (establishing the nine factors for consideration

where the plaintiff had filed a federal declaratory action before the defendant filed

his state claim). Therefore, to the extent that Geico relies on the actions’

chronological order, its argument fails.

      In relation to factors two, three, and six, Geico argues that the state court

cannot settle all the actions because a bad faith claim under Florida law is not ripe

until the issue of coverage has been decided. Instead, Geico asserts that the federal

district court can decide all the claims at once by ruling on the existence of

coverage. But the Kastenholzes have amended their complaint to include a

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declaratory judgment claim on the issue of coverage, and the state court has

already begun determining the issue of coverage by issuing a partial summary

judgment on Geico’s compliance with the Florida Claims Administration Statute.

Moreover, the district court found that, regardless of its ruling on the issue of

insurance coverage, litigation in state court would continue. Thus, allowing

multiple proceedings where a state court is capable of resolving all the issues

would not further judicial efficiency. Accordingly, we find that the district court

did not abuse its discretion in finding that factors two, three, and six favored

abstention.

      Geico also argues that the district court erred in ruling that factors seven and

eight leaned towards abstention. The resolution of the coverage issue will hinge on

(1) whether Mr. Lacayo failed to cooperate with Geico and (2) whether Geico

violated the Florida Claims Administration Statute (and thereby waiving any

coverage defense). As to factor seven, the answers to these questions are based on

factual determinations surrounding the conduct of the relevant actors.

Consequently, the underlying factual issues are important to an informed resolution

of the case. As to factor eight, the district court found that because litigation

between the parties had been in state court for three years, and the relevant

questions concern facts occurring during that litigation, the state court was best

positioned to address the underlying factual issues. Geico argues that the district

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court failed to take into account the differences between the respective actions and

that the state court was in no better position to resolve the dispute than was the

district court. We conclude, however, that the district court’s analysis was within

its permissible range of choice. Thus, we find that the district court did not abuse

its discretion in finding that factors seven and eight lean towards abstention.

      Finally, Geico maintains that the district court erred in determining that

factors one, five, and nine weighed in favor of abstention and that “the weight

[given to these factors] is far out of proportion with its significance in this case.”

The district court found that only Florida law governs the substantive issues in the

case, and Geico agrees on this point. Additionally, the district court found that

Geico’s action only has policy implications for Florida insurance contracts, so it

concluded that exercising federal jurisdiction would encroach on Florida’s strong

interest in the resolution of the case. Although the district court found that these

factors leaned heavily towards abstention, there is no evidence that it gave them

unwarranted weight in relation to the other factors, especially since all the analyzed

factors leaned towards abstention. Geico may disagree with these findings, but

“[u]nder an abuse of discretion standard, we will leave undisturbed a district court's

ruling unless we find that the district court has made a clear error of judgment, or

has applied the wrong legal standard,” Ameritas, 411 F.3d at 1332. We find no

such error here.

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                                            IV

      Accordingly, we affirm the district court’s dismissal of Geico’s declaratory

judgment action.

      AFFIRMED.

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