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Essentia Insurance Co. v. Clark

United States District Court, E.D. Michigan, Northern Division

May 14, 2018

ESSENTIA INSURANCE COMPANY, Plaintiff,
v.
GEORGE M CLARK, JR., Defendant.

          OPINION AND ORDER GRANTING MOTION TO DISMISS AND DENYING MOTION TO INTERVENE

          THOMAS L. LUDINGTON UNITED STATES DISTRICT JUDGE.

         On January 30, 2018, Plaintiff Essentia Insurance Company (“Essentia”) filed a complaint seeking declaratory judgment and naming George Clark (“Clark”) as the Defendant. ECF No. 1. On March 2, 2018, Clark filed a motion to dismiss wherein he argues that the Court should abstain from exercising jurisdiction over this action for declaratory relief. ECF No. 7. In the motion, Clark explains that a state court action is pending which will resolve the questions raised by Essentia's present action. A week later, the Titan Indemnity Company (“Titan”) filed a motion to intervene as a plaintiff. ECF No. 8. For the following reasons, the motion to dismiss will be granted and the motion to intervene will be denied.

         I.

         A.

         At the pleading stage, all well-pleaded factual allegations are assumed to be true. Essentia “is a Missouri insurance company with its principal place of business in Virginia.” Compl. at 1, ECF No. 1. Clark is a resident of Saginaw, Michigan. Id. at 2.

         On June 7, 2016, Essentia issued a “classic automobile policy . . . with effective coverage . . . to June 7, 2017 . . . to Clarence Farver for a 1989 Mercedes-Benz 300E.” Id. As required by Michigan law, the policy “provided no-fault personal protection insurance [“PIP benefits”].” Id. Mr. Farver died on January 3, 2017, leaving behind a will which is currently being probated in the Saginaw County Probate Court. Id. at 3. The will allegedly names Katherine Stone as the personal representative of the estate and directs that all of Mr. Farver's tangible personal property, including his motor vehicles, be delivered to Ms. Stone in her individual capacity. Id.

         Despite the provisions of the will, Clark was operating the 1989 Mercedes-Benz on March 28, 2017, when he was severely injured in a single-vehicle accident. Id. Clark subsequently made a claim for personal protection insurance benefits from Essentia, relying upon the policy issued to the late Mr. Farver. Id. “During the course of Essentia's investigation, Clark and his wife . . . provided statements in which they alleged that Farver gave them the vehicle before he died.” Id. at 3-4. The Clarks have provided “a purported signed title from Farver, ” but Essentia alleges that the “purported signature of Farver on the title is not Farver's signature.” Id. at 4. And Essentia further alleges that Clark's attorney has admitted that the “title to the vehicle was never legally transferred to Clark after Farver's death.” Id. Clark maintains that he “reasonably believed he could use the Vehicle after Farver's death.” Id. Essentia disagrees.

         Essentia's complaint advances one count seeking a declaratory judgment that Clark unlawfully took the vehicle in question such that Clark is not entitled to personal insurance protection benefits under M.C.L. § 500.3113(a).

         B.

         On February 6, 2018 (one week after Essentia filed its complaint seeking declaratory judgment), Clark filed a state court action against Progressive Michigan Insurance Company, Titan Indemnity Company, and Essentia Insurance Company. State Court Compl., ECF No. 7, Ex. 1.

         In the state court complaint, Clark alleges that, sometime before Clark was injured in the accident, state court Defendant Progressive “executed and delivered to Plaintiff's spouse, Marianne Maurer Clark, . . . a certain automobile policy . . . that included a Michigan Personal Injury Protection Endorsement.” Id. at 2. The policy issued to Ms. Clark did not identify her husband as a named insured or driver. Id. at 3.

         The state court complaint also explains that, at the time of Clark's accident, he was driving a Mercedes-Benz vehicle titled in the name of and registered to Clarence Farver. Id. The Mercedes was insured by state court Defendant Essentia. Similarly, the state court complaint alleges that “[a]t some point before Clarence Farver's death, Defendant Titan Indemnity Company executed and delivered to Farver . . . a certain automobile Policy . . . insuring a second motor vehicle owned by Farver.” Id. at 4. The Titan Policy “provided security for payment of No Fault PIP benefits as an insurer of Clarence Farver, the ‘owner or registrant of [the vehicle involved in Clark's accident].” Id. (emphasis in original) Clark alleges that his use of the Mercedes was “permissive, based on antemortem representations of Farver.” Id.

         Clark asserts, first, that “Defendant Progressive is obligated to provide statutorily mandated coverage for PIP benefits to and on behalf of Plaintiff.” Id. at 5. He alternatively believes that “Defendants Titan and Essentia stand in the same level of priority” regarding his claim for PIP benefits, and that they “are obligated to provide statutorily mandated coverage for PIP benefits.” Id.at 4-5.

         II.

         In his motion to dismiss, Clark argues that the Court should abstain from exercising jurisdiction over this suit because the dispositive issue raised by Essentia will be resolved in a currently pending state court suit. The general rule is that “the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction.” McClellan v. Carland, 217 U.S. 268, 282 (1910). See also RSM Richter, Inc. v. Behr Am., Inc., 729 F.3d 553, 557 (6th Cir. 2013) (“The Supreme Court has repeatedly held . . . that the mere pendency of a state-court case concerning the same subject matter as a federal case is not reason enough to abstain.”). But, in limited circumstances, abstention is warranted. Although federal courts generally have a “virtually unflagging obligation . . . to exercise the jurisdiction given them, ” Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976), “[e]xercise of jurisdiction under the Declaratory Judgment Act, 28 U.S.C. § 2201(a) is not mandatory.” Bituminous Cas. Corp. v. J & L Lumber Co., 373 F.3d 807, 812 (6th Cir. 2004). See also Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 495 (1942) (“Ordinarily it would be uneconomical as well as vexatious for a federal court to proceed in a declaratory judgment suit where another suit is pending in a state court presenting the same issues, not governed by federal law, between the same parties. Gratuitous interference with the orderly and comprehensive disposition of a state court litigation should be avoided.”).

         And the Sixth Circuit has cautioned that, in “insurance coverage diversity cases, . . . ‘declaratory judgment actions seeking an advance opinion on indemnity issues are seldom helpful in resolving an ongoing action in another court.'” Bituminous Cas. Corp. at 812 (quoting Manley, Bennett, McDonald & Co. v. St. Paul Fire & Marine Ins. Co., 791 F.2d 460, 463 (6th Cir.1986)). “Such actions for an advance determination in the nature of an advisory opinion should normally be filed, if at all, in the court that has jurisdiction over the litigation which gives rise to the indemnity problem. Otherwise confusing problems of scheduling, orderly presentation of fact issues and res judicata are created.” Manley, 791 F.2d at 463.

         The Sixth Circuit has identified five factors with relevance to question of whether a district court should exercise jurisdiction over a suit for declaratory judgment:

(1) whether the declaratory action would settle the controversy;
(2) whether the declaratory action would serve a useful purpose in clarifying the ...

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