United States District Court, E.D. Michigan, Southern Division
Jonathan McCormack, Plaintiff: David A. Dworetsky, LEAD
ATTORNEY, Fieger Law, Southfield, MI; Geoffrey N. Fieger,
LEAD ATTORNEY, Fieger, Fieger, Southfield, MI.
Scottsdale Insurance Company, Defendant: Jonathan L.
Schwartz, Meghan Collins, Goldbert Segalla LLP, Chicago, IL.
AND ORDER REMANDING CASE TO STATE COURT
DAVID M. LAWSON, United States District Judge.
case comes to the Court in an unusual posture. The plaintiff,
Jonathan McCormack has alleged in a lawsuit filed in the
Lapeer County, Michigan circuit court that he was injured by
employees of Fat Boys Bar & Grill. The Bar apparently had in
effect a Comprehensive General Liability Insurance Policy
(CGL policy) from Scottsdale Insurance Company. It appears
that there may be a dispute over the extent of insurance
coverage that might attach to the incident in which McCormack
was allegedly injured. So McCormack filed a second action in
Lapeer County seeking a declaratory judgment against
Scottsdale that the larger of two possible coverage limits
($300,000 versus $25,000) applies to his underlying tort
case. However, McCormick did not join the Bar as a defendant
in the declaratory judgment action. And because the
citizenship of the only parties to the declaratory judgment
action is diverse, Scottsdale was able to remove that case to
this Court under 28 U.S.C. § § 1441 and 1332(a)(1).
It also filed a motion to dismiss.
the exercise of jurisdiction under the Declaratory Judgment
Act, 28 U.S.C. § 2201(a), is not mandatory,
Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491,
494, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942), and at times the
better exercise of discretion favors abstention, see
Bituminous Cas. Corp. v. J & L Lumber Co., Inc., 373
F.3d 807, 812 (6th Cir. 2004), the Court ordered the parties
to show cause why the Court should not decline jurisdiction
and remand the case to the state court, where the underlying
tort case is pending. McCormick responded that he has no
objection to a remand. Scottsdale responded by acknowledging
that ordinarily the applicable factors might favor
abstention, but here the Court should exercise jurisdiction
because it would be efficient to dismiss the plaintiff's
declaratory judgment action now rather than having the state
court do it on remand.
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
812-13 (quoting Manley, 791 F.2d at 463); see
also AM South Bank v. Dale, 386 F.3d 763, 786
(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 nonliability." )). 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
(1) whether the declaratory action would settle the
(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
Grand Trunk W. RR. Co. v. Consol Rail Co., 746 F.2d
323, 326 (6th Cir. 1984); see alsoBituminous
Cas., 373 F.3d at 814-15; Scottsdale Ins. Co. v.
Roumph, 211 ...