Opinion
Case No. A05-0051 CV (RRB).
July 22, 2005
ORDER DENYING MOTION TO DISMISS COMPLAINT FOR DECLARATORY RELIEF OR MOTION TO STAY ACTION PENDING RESOLUTION OF STATE COURT ACTION
I. INTRODUCTION
Before the Court is Defendant Zane S. Domaika with a Motion to Dismiss Complaint for Declaratory Relief or in the Alternative Motion to Stay Declaratory Action Pending Resolution of State Court Action (Docket No. 9). Defendant argues the Court should stay the declaratory action presently before it because: (1) Plaintiff State Farm Fire and Casualty Company has failed to meet the amount in controversy requirements of 28 U.S.C. § 1332(a) necessary to establish personal jurisdiction; and (2) no actual controversy exists. Plaintiff opposes and argues Defendant's motion should be denied because: (1) the Court has jurisdiction by way of diversity pursuant to 28 U.S.C. § 1332(a); (2) actual controversies exist; (3) federal courts enjoy wide discretion to hear declaratory actions; and (4) there is no valid reason to stay the declaratory relief action. Plaintiff is correct on all four counter-arguments.
Clerk's Docket No. 12 at 5-6.
II. FACTS
On or about December 5, 2003, Randell Cox, a non-party in the matter presently before the Court, was severely injured when the automobile he was operating struck a horse, which was owned by Defendant, while Cox was traveling on the Glenn Highway. Cox made a claim for damages against Defendant, and Defendant sought coverage under a State Farm Homeowners' Policy, Form FP-7955 AK, policy number 02-21-3802-8, issued by Plaintiff. Plaintiff, in turn, filed the present action, asking the Court to declare that the policy does not cover the accident.
III. STANDARD OF REVIEW
On defendant's motion to dismiss for lack of personal jurisdiction, the plaintiff has the burden of proof and is "obligated to come forward with facts, by affidavit or otherwise, supporting personal jurisdiction."
Amba Marketing Systems, Inc. v. Jobar Intern., Inc., 551 F.2d 784, 787 (9th Cir. 1977).
When the Court rules without conducting an evidentiary hearing, the plaintiff need only make "a prima facie showing of jurisdictional facts through the submitted materials in order to avoid a defendant's motion to dismiss."
In determining whether [the plaintiff] has met this burden, uncontroverted allegations in [the] complaint must be taken as true, and "conflicts between the facts contained in the parties' affidavits must be resolved in [the plaintiff's] favor for purposes of deciding whether a prima facie case for personal jurisdiction exists."
Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). "The plaintiff, however, must eventually establish jurisdiction by a preponderance of the evidence either at a pretrial evidentiary hearing or at trial."Hi-Pac, Ltd. v. Avoset Corp., 980 F. Supp. 1134, 1137 (D. Haw. 1997) (citation omitted).
American Tel. Tel. Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588-89 (9th Cir. 1996) (citation omitted).
IV. DISCUSSION
A. Because all of the jurisdictional elements required for diversity have been met, to include the amount in controversy, the Court has original jurisdiction pursuant to 28 U.S.C. § 1332(a).
Inasmuch as the amount in controversy is determined at the time of filing, and inasmuch as Plaintiff's Complaint for Declaratory Relief (Docket No. 1), "on its face, alleges in good faith that the amount in controversy `exclusive of interest and costs, exceeds the value of the sum of $75,000,'" the Court concludes all requisite jurisdictional elements have been met and are supported by competent proof, including the amount in controversy. That the amount in controversy has been alleged in "good faith" is further supported by the value of the liability and defense cost coverage afforded by the policy, as well as the value of the underlying tort action as claimed by Plaintiff at the time of filing.
Clerk's Docket No. 12 at 12 (quoting Clerk's Docket No. 1 at 2).
Id. at 23. See Pachinger v. MGM Grand Hotel-Las Vegas, Inc., 802 F.2d 362, 363 (9th Cir. 1986) ("[T]he sum claimed by the plaintiff controls if the claim is apparently made in good faith."); see also Budget Rent-A-Car Inc., v. Higashiguchi, 109 F.3d 1471, 1473 (9th Cir. 1997) ("A claim in excess of the requisite amount, made in good faith in the complaint, satisfies the jurisdictional requirement.") (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938)).
"[I]n a declaratory judgment action, brought either by the insured or the insurer as to the validity of the entire contract between the parties, the amount in controversy is the face value of the policy." 14B Charles Alan Wright, Arthur R. Miller Edward Cooper, Federal Practice and Procedure § 3710 (3d ed. 1998). Consequently, whereas Defendant's first "cause of action calls into question the validity of the entire policy which, as to Cox's claim against Domaika, consists of $300,000-plus liability coverage and unlimited coverage for defense," Clerk's Docket No. 12 at 14, the Court concludes the amount in controversy clearly exceeds the $75,000 jurisdictional threshold of 28 U.S.C. 1332(a). Moreover, "[w]hen the applicability of liability coverage to a particular occurrence is at issue in a declaratory relief action, the amount in controversy is the value of the underlying potential tort action." Clerk's Docket No. 12 at 15 (citing Budget Rent-A-Car Inc. v. Higashiguchi, 109 F.3d 1471, 1473 (9th Cir. 1997)).
B. An actual controversy exists where, as here, an insurer brings a declaratory action against an insured.
A review of the case or controversy requirement reveals an actual controversy exists when, as is the case here, an insurer brings a declaratory judgment action to establish whether is has a duty to defend and/or indemnify its insured in a pending state court liability suit.
American States Ins. Co. v. Kearns, 15 F.3d 142, 144 (9th Cir. 1994) (citing Maryland Casualty v. Pacific Coal Oil Co., 312 U.S. 270 (1941)).
C. The Court exercises its discretion to entertain Plaintiff's declaratory relief action.
It is well-established that "there is no per se rule against the court exercising its jurisdiction to resolve an insurance coverage dispute when the underlying liability suit is pending in state court." Hence, in balancing the "concerns of judicial administration, comity, and fairness to the litigants," the Court concludes it is well within its discretion to entertain declaratory relief in this matter and does so.
Id. at 145.
Id. at 144 (citation omitted).
D. There is no valid reason to stay Plaintiff's declaratory relief action.
Finally, inasmuch as the Court concludes there is no valid reason to stay Plaintiff's declaratory relief action, Defendant's Alternative Motion to Stay Declaratory Action Pending Resolution of State Court Action (Clerk's Docket No. 9) is hereby DENIED.
V. CONCLUSION
For the aforesaid reasons, Defendant's Motion to Dismiss Complaint for Declaratory Relief or in the Alternative Motion to Stay Declaratory Action Pending Resolution of State Court Action (Docket No. 9) is hereby DENIED. This matter shall proceed forward in due course.