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Farmers Insurance Co. of Arizona v. Komis

United States District Court, D. New Mexico

December 12, 2017

FARMERS INSURANCE COMPANY OF ARIZONA, Plaintiff,
v.
PETER KOMIS and DORINDA KOMIS, Defendants.

          MEMORANDUM OPINION AND ORDER STAYING CASE PENDING RESOLUTION OF STATE COURT LAWSUIT

         THIS MATTER comes before the Court upon a Motion to Stay Proceedings, filed on October 27, 2017 by Defendants Peter Komis and Dorinda Komis (Doc. 9). Having reviewed the parties' briefs and applicable law, the Court finds that Defendants' motion is well-taken and, therefore, is granted.

         BACKGROUND

         This is an insurance coverage dispute. In September 2014, Peter Komis was assaulted and shot in his driveway by three unidentified assailants. Defendants allege that three unknown men followed Peter Komis home in a car. The assailants parked their car on the street, and approached Mr. Komis in his driveway. The assailants struck Mr. Komis in the head and knocked him to the ground. They attempted to enter his home, but Ms. Komis called the police from the inside. As they left, one of the attackers shot Mr. Komis in the back and buttocks while he was on the ground. The identity of the assailants is unknown.

         Defendants contend that they are entitled to recovery from their own UM/UIM policy with Farmers Insurance Corporation of Arizona (“FICA”), on the basis that the assailants' car was a crucial, active accessory to the attack. Defendants seek compensation from FICA for past and future medical expenses, physical pain and suffering, emotional distress, lost household services, loss of consortium, and loss of enjoyment of life.

         Defendants submitted a demand letter to Plaintiff on April 17, 2017. On July 3, 2017, Plaintiff responded to Defendants' demand letter, rejecting a settlement offer and stating that they would file a complaint for declaratory relief. Two days later, Plaintiff filed this declaratory action pursuant to 28 USC § 2201. FICA seeks a declaration that there is no uninsured motorist coverage over these claims.

         The state action was filed in the First Judicial District, County of Santa Fe on September 29, 2017, after this declaratory action was filed. As plaintiffs in that action, Peter and Dorinda Komis seek determination on the same issues as in this declaratory action. See Peter B. Komis and Dorinda Hopper-Komis v. Farmers Insurance Company of Arizona, First Judicial District, No. D-101-CV-2017-02777. According to counsel, the parties and issues in the state action and in this federal proceeding are identical.

         DISCUSSION

         Defendants filed this motion seeking to stay this federal declaratory action. Defendants argue that the underlying dispute solely involves state law and should be decided by the New Mexico state courts. Plaintiffs argue that this case only involves settled state law, that there is no exceptional circumstance requiring this Court to abstain, and that the Court should follow the first-to-file rule.

         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).

         The discretionary standard under Brillhart v. Excess Ins. Co., 316 U.S. 491 (1942) governs a district court's decision to stay a declaratory judgment during the pendency of parallel state court proceedings. Wilton v. Seven Falls Co., 515 U.S. 277 (1995).[1] District courts are “under no compulsion to exercise . . . jurisdiction” under the Declaratory Judgment Act, as “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.” Brillhart v. Excess Ins. Co., 316 U.S. 491, 494 (1942). 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.” Id.; see also Wilton v. Seven Falls Co., 515 U.S. 277, 283 (1995).

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

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

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