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Spirit Commercial Auto Risk Retention Group v. GNB Trucking, Inc.

United States District Court, D. New Mexico

November 14, 2017

SPIRIT COMMERCIAL AUTO RISK RETENTION GROUP, Plaintiff,
v.
GNB TRUCKING, INC., ERIC HEIN, WENDY HEIN, and LEE HUNT as Personal Representative of the Estate of RILEY HEIN, Defendants.

          MEMORANDUM OPINION AND ORDER DISMISSING CASE WITHOUT PREJUDICE BASED ON BRILLHART ABSTENTION DOCTRINE

         THIS MATTER comes before the Court upon a Motion to Dismiss Complaint for Declaratory Judgment Pursuant to the Brillhart Abstention Doctrine or, Alternatively to Stay While Underlying State Action is Proceeding, filed on September 29, 2017 by Defendants Eric Hein, Wendy Hein, and Lee Hunt as personal representative of the Estate of Riley Hein (collectively, the “Heins”) (Doc. 4). Having reviewed the parties' pleadings and the applicable law, the Court finds that Defendants' motion is well-taken and, therefore, is granted in that this case shall be dismissed without prejudice.

         BACKGROUND

         This is an insurance coverage dispute. In November 2015, GNB Trucking, Inc. (“GNB Trucking” or “GNB”) was hired by a property broker, Choptank Transport, Inc., to transport a load of frozen bread from Muncie, Indiana to Compton, California with a drop-off date of November 14, 2015. Despite being hired as the carrier, GNB did not transport the load itself, but instead hired Barkandhi Express, Inc., a motor carrier alleged to be unsafe, pursuant to a “sub hauler” contract that had been executed in October 2015. While traveling through New Mexico, the Barkandhi truck hired by GNB collided with a car driven by the Heins' 16 year-old son Riley, causing his death. The Barkandhi Express semi-truck involved in the crash is not listed on GNB Trucking's insurance policy issued by Spirit. In this federal action, Spirit seeks a declaration that it owes no duty to GNB Trucking, the Heins or any other person or entity for claims arising out of the underlying action.

         An underlying wrongful death case is currently proceeding in state court. The state action was filed in the First Judicial District, County of Santa Fe on November 18, 2016. As plaintiffs in that action, the Heins sued GNB Trucking and the New Mexico Department of Transportation in a wrongful death action. See Hein et al. v. The New Mexico Dep't of Transportation, et al., No. D-101-CV-2016-01541; see Doc. 1-1 (Am. Compl.) & Doc. 10-1 (Sec. Am. Compl.).

         DISCUSSION

         The Heins filed the instant motion seeking a dismissal-or in the alternative, a stay-of these federal proceedings. They claim that the controversy regarding coverage should be heard in the pending state case under New Mexico's Declaratory Judgment Act because nothing can be decided in this federal lawsuit until the issues in the underlying state case are decided. See Doc. 4, n.1).[1] Plaintiff, the insurer in this case, contends that this coverage action involves different issues than those that are in the underlying state court wrongful death suit and so the request to dismiss or stay this federal action should be denied.

         I. Relevant Law

         The Declaratory Judgment Act vests federal courts with power and competence to issue a declaration of rights. 28 U.S.C. § 2201. While this statute vests the federal courts with power and competence to issue a declaration of rights, see Public Affairs Assocs., Inc. v. Rickover, 369 U.S. 111, 112, (1962) (per curiam), the question of whether this power should be exercised in a particular case is vested in the sound discretion of the district courts. St. Paul Fire and Marine Ins. Co. v. Runyon, 53 F.3d 1167, 1168 (10th Cir. 1995). In Brillhart v. Excess Ins. Co., 316 U.S. 491 (1942), the United States Supreme Court made it clear that district courts are “under no compulsion to exercise . . . jurisdiction” under the Declaratory Judgment Act, noting that “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.” Id. at 494. Instead, the district court should determine whether the lawsuit “can better be settled in the proceeding pending in the state court.” Id. This question involves a consideration of whether the matters being heard in the state court action are essential to a determination of the collateral federal action, or whether the issue being raised in the federal declaratory action involves no matter-factual or legal-at issue in the state case. In other words, this Court must consider whether the questions in controversy between the parties to this federal lawsuit “can better be settled in the proceeding pending in the state court.” Brillhart, 316 U.S. at 494; see also Wilton v. Seven Falls Co., 515 U.S. 277, 283 (1995) (framing question as “whether the claims of all parties in interest can satisfactorily be adjudicated in [the state court] proceeding”) (quoting Brillhart, 316 U.S. at 495).

         In deciding whether or not to hear a declaratory judgment action, a court considers various factors, including these:

(1) whether a declaratory action would settle the controversy;
(2) whether it would serve a useful purpose in clarifying the legal relations at issue;
(3) whether the declaratory remedy is being used merely for the purpose of “procedural fencing” or “to provide an arena for a race to res judicata”;
(4) whether 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 more effective.

St. Paul Fire and Marine Ins. Co. v. Runyon, 53 F.3d 1167, 1169 (10th Cir. 1995) (citing State Farm Fire & Casualty Co. v. Mhoon, 31 F.3d 979, 983 (10th Cir.1994)).

         II. Facts Relating to Policy at Issue

         The Heins claim that this federal action should be dismissed or at least stayed because nothing can be decided in this separate federal lawsuit until the underlying issues in the state case are decided. They acknowledge that the Barkandhi Express semi-truck that was involved in the November 13, 2015 crash was not listed on the policy issued to GNB Trucking by Spirit, but contend that the truck may still be insured under the following section of the policy:

         C. Certain Trailers, Mobile Equipment And Temporary Substitute Autos

         If Liability Coverage is provided by this coverage form, the following types of vehicles are also covered "autos" for Liability Coverage:

1. "Trailers" with a load capacity of 2, 000 pounds or less designed primarily for travel on public roads.
2 "Mobile equipment" while being carried or towed by a covered "auto" 3. Any "auto" you do not own while used with the permission of its owner as a temporary substitute for a covered "auto" you own that is out of ...

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