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GEICO Indemnity Co v. Littles

United States District Court, D. Arizona

September 28, 2016

GEICO INDEMNITY COMPANY, Plaintiff,
v.
BRAD LITTLES, Defendant.

          ORDER

          H. Russel Holland United States District Judge

         Motion to Dismiss

         Defendant moves to dismiss plaintiff's complaint.[1] This motion is opposed.[2] Oral argument was requested but is not deemed necessary.

         Background

         In 2014, defendant Brad Littles purchased a Harley Davidson motorcycle which he then insured with plaintiff, GEICO Indemnity Company.[3] Plaintiff alleges that in the process of obtaining his motorcycle insurance, defendant declined underinsured motorist (UIM) coverage.[4]

         Plaintiff alleges that on November 21, 2015, defendant was a passenger in a vehicle that was involved in single vehicle accident.[5] Defendant was allegedly injured in the accident and claims that his medical bills exceed $159, 000.[6] Plaintiff alleges that defendant settled his claim with the driver of the vehicle for policy limits of $15, 000.[7] Defendant then made a claim under his policy with plaintiff, seeking $100, 000 in UIM coverage.[8]Defendant contends that UIM coverage is available under his policy with plaintiff because any alleged rejection of that coverage was ineffective because plaintiff did not comply with Arizona law when offering him UIM coverage.

         On April 19, 2016, plaintiff commenced this diversity action in which it seeks a declaration that the “UIM coverage in the Policy is not applicable and is not owed to Defendant[.]”[9]

         Pursuant to Rule 12(b)(1), Federal Rules of Civil Procedure, defendant now moves to dismiss plaintiff's complaint.

         Discussion

         A Rule 12(b)(1) motion is brought to raise a challenge to the court's subject matter jurisdiction. Here, defendant is not arguing that this court lacks subject matter jurisdiction over plaintiff's claim under the Declaratory Judgment Act. Rather, defendant contends that the court should decline to exercise its jurisdiction under the Act.

         “The Declaratory Judgment Act uses permissive language.” R.R. Street & Co. Inc. v. Transport Ins. Co., 656 F.3d 966, 975 (9th Cir. 2011). The Act provides that federal courts “may declare the rights and other legal relations of any interested party” in a declaratory judgment action. 28 U.S.C. § 2201(a) (emphasis added).

         “In evaluating whether to hear a declaratory judgment action, a district court must first determine ‘whether there is an actual case or controversy within its jurisdiction.'” Lexington Ins. Co. v. Silva Trucking, Inc., Case No. 2:14-CV-0015 KJM CKD, 2014 WL 1839076, at *5 (E.D. Cal. May 7, 2014) (quoting Am. States Ins. Co. v. Kearns, 15 F.3d 142, 143 (9th Cir. 1994)). Here there is an actual controversy within the court's diversity jurisdiction. The completely diverse parties disagree as to the availability of $100, 000 of UIM coverage.

         “The court must then decide ‘whether to exercise its discretion by analyzing the factors set out in Brillhart....“ Id. (quoting Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 669 (9th Cir. 2005)). The Brillhart factors are: “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.” Government Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir. 1998). Additional factors the court may consider are

“whether the declaratory action will settle all aspects of the controversy; whether the declaratory action will serve a useful purpose in clarifying the legal relations at issue; whether the declaratory action is being sought merely for the purposes of procedural fencing or to obtain a ‘res judicata' advantage; or whether the use of a declaratory action will result in entanglement between the federal and state court systems. In addition, the district court might ...

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