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Farm Bureau Property & Casualty Insurance Co v. Quartieri

United States District Court, D. New Mexico

August 28, 2018

FARM BUREAU PROPERTY & CASUALTY INSURANCE COMPANY, Plaintiff,
v.
DANIEL G. QUARTIERI, SHELLY C. QUARTIERI, and JERAMIAH GOUIN, Defendants.

          MEMORANDUM OPINION AND ORDER

          ROBERT BRACK SENIOR U.S. DISTRICT JUDGE

         Plaintiff Farm Bureau Property & Casualty Insurance Company (Farm Bureau) presses this Court to decide the insurance coverage dispute underlying this case, despite a parallel state proceeding that involves the same coverage issue. According to Farm Bureau, the defendants do not have standing to sue Farm Bureau in state court, and state proceedings may be unduly delayed by extraneous parties and issues. The defendants counter that parties crucial to the correct disposition of the insurance dispute are present in the state action but absent from this one, that pressing forward may fragment the state court litigation, and that the state court should adjudicate the coverage dispute, which centers entirely on state law. After considering the five Mhoon factors articulated by the Tenth Circuit in deciding whether to exercise jurisdiction in a case such as this, the Court determines that the problems with pressing forward outweigh any benefit gained in doing so, at least for now. Accordingly, the practical and prudent move at this time is to stay the proceedings and see how the litigation unfolds in the state court.

         BACKGROUND

         Defendant Jeramiah Gouin was just 17 years old when he was trampled by a bull and left paralyzed for life. (Doc. 1 at 2.) At the time of his injury, Mr. Gouin was attending “Riding on Faith Bull Riding School and Church Camp, ” a Christian bull-riding camp run by Defendants Daniel Quartieri and Shelly Quartieri. (Doc. 1 at 2.) The Quartieris had insurance coverage provided by Farm Bureau. (Doc. 20 at 2.) When Farm Bureau found out about Mr. Gouin's injury, it retained counsel to defend the Quartieris under a reservation of rights. (Id. at 3.) At the time, no lawsuit had been filed against the Quartieris, and Farm Bureau urged the parties to mediate their differences. (Id.)

         Months later, with no mediation in sight, Farm Bureau filed a declaratory judgment action in this Court, arguing that the incident at the camp was not covered by the Quartieris' insurance policy, so it should be absolved of any responsibility to the Quartieris or Mr. Gouin arising from the incident. (Doc. 1 at 11-13.) After Farm Bureau's declaratory judgment action was filed, the parties scheduled mediation. (Doc. 20 at 3.) With mediation set, Farm Bureau agreed to slow the progress of its lawsuit, consenting to several extensions for the defendants to answer the lawsuit. (Id.)

         But just days before the scheduled mediation, Mr. Gouin canceled the meeting. (Id. at 3.) Mr. Gouin then filed suit in New Mexico's Fourth Judicial District Court, asserting various legal theories against Riding on Faith Camp, the Quartieris, and Farm Bureau, among others. (Doc. 20 at 3-4.) Mr. Gouin's state claims against Farm Bureau are for breach of contract and declaratory judgment. (Id. at 4.)

         In addition to facing claims from Mr. Gouin, Farm Bureau also faces claims from the Quartieris in state court. The Quartieris, co-defendants with Farm Bureau in the state court action, cross-claimed against Farm Bureau for declaratory relief. (Doc. 25 at 1.) Thus, both the Quartieris and Mr. Gouin have claims for declaratory relief against Farm Bureau pending in state court.

         Arguing that this Court should defer to the state court action, Mr. Gouin and the Quartieris have filed motions to dismiss or stay the proceedings here. (Docs. 14 at 1, 15 at 1.)

         DISCUSSION

         The statutory basis for Farm Bureau's request for relief is the Declaratory Judgment Act, which provides that a court with jurisdiction “may declare the rights and other legal relations of any interested party seeking such declaration . . . .” 28 U.S.C. § 2201. The Supreme Court has “repeatedly characterized the Declaratory Judgment Act as ‘an enabling Act, which confers . . . discretion on the courts rather than an absolute right upon the litigant.'” Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995) (quoting Pub. Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 241 (1952)). “Consistent with the nonobligatory nature of the remedy, a district court is authorized, in the sound exercise of its discretion, to stay or to dismiss an action seeking a declaratory judgment . . . .” Id. at 288.

         To guide district courts in exercising their discretion over whether to abstain from a declaratory judgment case, the Tenth Circuit in State Farm Fire & Casualty Co. v. Mhoon laid out five factors to consider:

(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 ...

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