United States District Court, D. Arizona
G. MURRAY SNOW, District Judge.
Pending before the Court is Defendant's Motion to Dismiss. (Doc. 7.) For the reasons explained below, that Motion is denied.
In this action under the Federal Declaratory Judgment Act ("FDJA"), GEICO General Insurance Company ("GEICO") seeks a determination of its coverage as to Defendant Gage Tucker. Tucker was a passenger in a truck that was insured with a GEICO policy by Tucker's father. Tucker made a third-party claim against the driver of the truck and received the full $100, 000 bodily injury coverage under his father's policy on the truck. Because the damages from his injuries allegedly exceed the $100, 000 paid, Tucker also seeks payment under his Underinsured Motorist ("UIM") policy with GEICO on another vehicle. The dispute is over whether the coverage under these two policies may be stacked.
In his Motion, Tucker argues three theories for dismissal. First, this Court should choose not to exercise its discretionary authority under the FDJA. Second, this Court should apply non-mutual collateral estoppel. Third, dismissal is also proper on the merits.
I. Discretionary Dismissal under the FDJA
A. The Brillhart Standard
The FDJA states that "[i]n a case of actual controversy within its jurisdiction [with noted exceptions]... any court of the United States... may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). As the Ninth Circuit has explained, the FDJA "was an authorization, not a command. It gave the federal courts competence to make a declaration of rights; it did not impose a duty to do so." Amer. Nat. Fire Ins. Co. v. Hungerford, 53 F.3d 1012 (9th Cir. 1995), overruled on other grounds by Gov't. Emps. Ins. Co. v. Dizol, 133 F.3d 1220, 1227 (9th Cir. 1998) (en banc) (stating that the FDJA is "deliberately cast in terms of permissive, rather than mandatory, authority" (internal citation omitted)).
When determining whether to abstain from an FDJA action, the Ninth Circuit considers the factors set out by the Supreme Court in Brillhart v. Excess Insurance Company of America, 316 U.S. 491 (1942). "The district court  should avoid needless determination of state law issues;  it should discourage litigants from filing declaratory actions as a means of forum shopping; and  it should avoid duplicative litigation." Dizol, 133 F.3d at 1225 ("The Brillhart factors remain the philosophic touchstone for the district court."). The Brillhart court explained that "[o]rdinarily 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" and that "[g]ratuitous interference with the orderly and comprehensive disposition of a state court litigation should be avoided." 316 U.S. at 495.
The Brillhart factors are not exhaustive, and courts may also consider: (1) whether the declaratory action will settle all aspects of the controversy; (2) whether the action will serve a useful purpose in clarifying the legal relations at issue; (3) whether the action is being sought merely for the purposes of procedural fencing or to obtain a "res judicata" advantage; (4) whether the use of the action will result in entanglement between the federal and state court systems; (5) the convenience to the parties; and (6) the availability and relative convenience of other remedies. Dizol, 133 F.3d at 1225 n.5.
B. The Brillhart Factors Do Not Favor Dismissal
1. There is No Needless Determination of State Law Issues
When a FDJA action is filed during the pendency of a state action involving the same parties and issues there is a presumption but not a requirement that the district court should decline jurisdiction and allow the entire suit to be determined in state court. Dizol, 133 F.3d at 1225. Some cases have emphasized that insurance coverage is primarily an issue of state law, making comity concerns in favor of a state court determination "particularly weighty in insurance cases." Emp'rs Reinsurance Corp. v. Karussos, 65 F.3d 796, 798-99 (9th Cir. 1995), overruled in part on other grounds by Dizol, 133 F.3d at 1227 (internal citation omitted). "However, there is no presumption in favor of abstention in declaratory actions generally, nor in insurance coverage cases specifically." Dizol, 133 F.3d at 1225. Most of the Ninth Circuit cases approving a dismissal of the federal action involved parallel state proceedings, but the court has noted that "the absence ...