Opinion
Civ. No. 99-3851, SECTION "C" (2).
February 17, 2000.
ORDER AND REASONS
Defendant RB Falcon Drilling USA, Inc. ("Falcon"), arguing that this Court should not exercise its jurisdiction in this case in favor of a pending state court action, moves this court to dismiss this declaratory judgment action. Plaintiffs North Central Oil Corporation ("North Central") and Commercial Underwriters Insurance Company ("CU") contend that resolution of this case is proper before this Court and thus oppose Falcon's motion to dismiss. For the reasons explained below, the Court determines that it will not exercise its jurisdiction over this case.
I. BACKGROUND
Oride and Betty Perro filed suit against Falcon on August 30, 1999 in the case of Ordie Perro, et al. v. RB Falcon Corp., No. 126,502, Division "C," 32nd Judicial District Court for the Parish of Terrebonne, seeking recovery for alleged injury aboard a Falcon vessel. On November 16, 1999, Falcon filed a Third Party Demand against North Central and certain underwriters, with the underwriters later being dismissed without prejudice. Thereafter, on December 23, 1999, North Central and CU, one of its insurers, filed this action in this Court, seeking a declaration that North Central does not owe defense or indemnity to Falcon for the claims brought by the Perros under the terms and conditions of a Falcon-North Central Master Drilling Agreement. The Master Drilling Agreement may apply in the Perros's case because Falcon was allegedly performing certain work for North Central at the time of Ordie Perro's injury.
II. ANALYSIS
The Declaratory Judgment Act, 28 U.S.C. § 2201, provides that a district court "may declare the right and other legal relations of any interested party . . ." Id. at § 2201(a). The Act thus "`confers a discretion on the courts [to decide whether or not to hear a declaratory action] rather than an absolute right upon the litigant.'" Wilton v. Seven Falls Co., 515 U.S. 277, 287, 115 S.Ct. 2137, 2143, 132, L.Ed.2d 214 (1995) (quoting Public Service Commission v. Wycoff Co., 344 U.S. 237, 241, 73 S.Ct. 236, 239, 97 L.Ed. 291 (1952)). Because the declaratory judgment remedy is discretionary,
a district court is authorized, in the sound exercise of its discretion, to stay or to dismiss an action seeking a declaratory judgment before trial or after all arguments have drawn to a close. In the declaratory judgment context, the normal principle that federal courts should adjudicate claims within their jurisdiction yields to considerations of practicality and wise judicial administration.Wilton, 515 U.S. at 288, 115 S.Ct. at 2143.
In Wilton, the Supreme Court concluded that a district court "acted within its bounds in staying [an] action for declaratory relief where parallel proceedings, presenting opportunity for ventilation of the same state law issues, were underway in state court." Id. at 290, 115 S.Ct. at 2144. However, the Supreme Court declined to "delineate the outer boundaries" of a district court's discretion in retaining or dismissing a declaratory action. Id.
The United States Court of Appeals for the Fifth Circuit has however provided guidance to district courts in this Circuit on this issue. The Fifth Circuit has identified six factors for district courts to consider in determining whether to entertain a declaratory action. Those factors are:
1) whether there is a pending state action in which all of the matters in controversy can be fully litigated . . . [;] 2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant . . . [;] 3) whether the plaintiff engaged in forum shopping in bringing the suit . . . [;] 4) whether possible inequities in allowing the declaratory action plaintiff to gain precedence in time or to change forums exist [;] . . . 5) whether the federal court is a convenient forum for the parties and for witnesses [;] . . . and 6) whether retaining the lawsuit in federal court would serve the purposes of judicial economy.Travelers Insurance Co. v. Louisiana Fram Bureau Federation, Inc., 996 F.2d 774, 778 (5th Cir. 1993) (internal citations omitted). These factors are not exclusive. See id.
Even though a district court has wide discretion to determine whether it will exercise its jurisdiction in a declaratory judgment action where related state court proceedings are pending, that discretion is not boundless. In Agora Syndicate, Inc. v. Robinson Janitorial Specialists, Inc., 149 F.3d 371 (5th Cir. 1998), the Fifth Circuit held that a district court abused its discretion where it dismissed an insurance company's declaratory judgment suit in deference to an underlying liability case pending in state court in which the insurance company was not a party. See id. at 372. The court reasoned that, without the insurance company as a party to the underlying suit, the state proceedings were not truly "parallel." Id. at 373. The insurance company "could only bring the insurance issues before the state courts by affirmatively intervening in the pending liability action or commencing a separate, independent declaratory judgment action in state court." Id. Because the federal declaratory action had been pending for over a year when the district court dismissed the action sua sponte, the Fifth Circuit reasoned that it would be inefficient to force the insurance company to file another suit in state court to resolve the coverage issue. See id. Moreover, the issues of liability to be decided in state court had no direct bearing on the issues of coverage involved in the declaratory action, and, likewise, a decision by the federal court on coverage issues would not affect resolution of the liability issues in state court. See id. Finally, the court stated that the state law issues involved in the case would not complicate federal adjudication because the federal courts had considered these same insurance issues previously. See id.
In the instant case, Falcon argues that the Travelers factors favor dismissal of the declaratory judgment action. North Central and CU, on the other hand, argue that, because CU is not a party to the underlying state suit, Agora dictates that this Court retain jurisdiction over this action. The Court finds, however, that Agora is clearly distinguishable and thus that this action should be dismissed in deference to the pending state court action.
The issue central in Agora is not present in the instant action. There, an insurance company not party to the underlying state liability case sought a determination by a federal court of its obligations for defense and indemnity in the underlying case. In the instant action, however, North Central, a third-party defendant in the underlying state liability case, seeks a determination of its obligations under a Master Drilling Agreement. CU, North Central's insurer, is not a party to the underlying state liability case; however, the issue before this court is North Central's obligations, not those of CU. If North Central is obligated to defend and/or indemnify Falcon in the liability action, it is possible that CU might then be obligated to defend and/or indemnify North Central. But that possible obligation is of no moment to this Court because that issue has not been raised in the instant suit. Moreover, that possible obligation is merely hypothetical until such time as North Central's obligations to Falcon are determined.
As stated above, the issue before this Court is what obligation, if any, does North Central owe to Falcon under the Master Drilling Agreement between the parties. By way of Falcon's third-party demand, that same issue is presently before the state court hearing the underlying liability action. Thus the matter in controversy before this Court can be fully litigated in the state court action. It is therefore clearly inefficient for this Court to adjudicate the matter. Moreover, if this Court were to rule on the issue before the state court rules, as is quite likely given the speed with which this Court's docket generally moves in comparison with the state court docket, North Central could use this Court's ruling on coverage obligations to preclude the state court's adjudication of the same issue. This Court thus finds that the Travelers factors overwhelmingly indicate that this Court should dismiss the current proceedings in favor of their resolution in the underlying liability action.
In fact, Falcon brought the issue in state court several weeks before North Central filed suit in this Court. Falcon filed its Third Party Demand on November 16, 1999 and then served North Central on December 3, 1999. North Central then filed this suit on December 23, 1999.
The Court notes that in Agora the district court dismissed the case sua sponte after it had been sitting on the court's docket for over a year. See 149 F.3d at 373. The instant case has been on this Court's docket for fewer than two months.
Moreover, this Court's refusal to adjudicate the issue of coverage under the Master Drilling Agreement will not force North Central to bring an independent declaratory judgment action in state court because, unlike the situation in Agora, that issue is already pending in the underlying liability action.
III. CONCLUSION
Therefore, considering the briefs of the parties, the applicable law, the record, and all other relevant materials, it is proper for this Court to decline to exercise its jurisdiction over this matter.
Accordingly,
IT IS ORDERED that Defendant RB Falcon Drilling USA, Inc.'s Motion to Dismiss Complaint for Declaratory Relief is hereby GRANTED. This action is DISMISSED without prejudice and shall not be refiled pending the outcome of the previously filed state court proceedings, Ordie Perro, et al. v. RB Falcon Corp., No. 126,502, Division "C," 32nd Judicial District Court for the Parish of Terrebonne.
New Orleans, Louisiana, this 17th day of February, 2000.