Aetna Cas. & Sur. Co. v. Kelly

• Decision Date: 05 July 1995
• Docket Number: Civ. A. No. 94-0285-T.
• Citation: 889 F. Supp. 535
• Parties: AETNA CASUALTY & SURETY COMPANY v. Michael E. KELLY, Stephen Kelly, Matthew T. Kelly, John Jones, AGL John Doe No. 1, John Doe No. 2, Cynthia Lewis, David R. Wood Roman Catholic Bishop of Providence, a Corporation Sole, the Most Reverend Louis E. Gelineau, the Most Reverend Raymond A. Beaulieu, the Diocese of Providence, Inc., Kenneth Angell, Jerome Fioretti, Reverend Roger Marot, Reverend Edward Cardente, Catholic Youth Organization of the Diocese of Providence, Inc., Robert Marcantonio, William O'Connell, Edmund Mackerel, Richard Meglio, Alfred R. Desrosiers, James M. Silva.
• Court: U.S. District Court — District of Rhode Island

889 F. Supp. 535

AETNA CASUALTY & SURETY COMPANY v. Michael E. KELLY, Stephen Kelly, Matthew T. Kelly, John Jones, AGL John Doe No. 1, John Doe No. 2, Cynthia Lewis, David R. Wood Roman Catholic Bishop of Providence, a Corporation Sole, the Most Reverend Louis E. Gelineau, the Most Reverend Raymond A. Beaulieu, the Diocese of Providence, Inc., Kenneth Angell, Jerome Fioretti, Reverend Roger Marot, Reverend Edward Cardente, Catholic Youth Organization of the Diocese of Providence, Inc., Robert Marcantonio, William O'Connell, Edmund Mackerel, Richard Meglio, Alfred R. Desrosiers, James M. Silva.

Civ. A. No. 94-0285-T.

United States District Court, D. Rhode Island.

June 29, 1995.

As Corrected: July 5, 1995.

COPYRIGHT MATERIAL OMITTED

Ronald P. Langlois, Providence, RI, John P. Graceffa, Gallagher & Gallagher, P.C., Boston, MA, and Laura M. Gregory, Boston, MA, for Aetna Cas. & Sur. Co., plaintiff.

Paul P. Baillargeon, North Smithfield, RI, for David R. Wood, Roman Catholic Bishop of Providence, a Corp. Sole, defendant.

Paul V. Reynolds, Boyer, Reynolds & DeMarco, Ltd., Providence, RI and William T. Murphy, Providence, RI, for Louis E. Gelineau, Most Reverend, Raymond A. Beaulieu, Most Reverend, Diocese of Providence, Inc., Kenneth Angell, Jerome Fioretti, Roger Marot, Reverend, Edward Cardente, Reverend, and Catholic Youth Organization of Diocese of Providence, Inc., defendants.

Gerald C. DeMaria, Higgins, Cavanagh & Cooney, Providence, RI, for Robert Marcantonio, defendant.

James T. McCormick, McKenna & McCormick, Providence, RI, for William C. O'Connell and Edmund Micarelli, defendants and for James M. Silva, defendant.

Marc DeSisto, DeSisto Law Offices, Providence, RI, for Richard Meglio and Alfred R. Desrosiers, defendants.

Susan E. McGuirl, Richard C. Bicki, Cerilli, McGuirl & Bicki, Providence, RI, and Lise M. Iwon, Laurence and Iwon, Wakefield, RI, for Michael E. Kelly, Stephen B. Kelly, and Matthew T. Kelly, defendants.

Richard Daniel Prentiss, R. Daniel Prentiss and Assoc., P.C., Providence, RI, for John Jones, AGL and for John Doe # 2, defendant.

Richard Daniel Prentiss, R. Daniel Prentiss and Assoc., P.C., Providence, RI and Mitchell S. Riffkin, Warwick, RI, for John Doe # 1, defendant.

Arlene Marie Violet, Arlene Violet & Law Assoc., East Providence, RI, for Cynthia Lewis, defendant.

MEMORANDUM AND ORDER

TORRES, District Judge.

This is an action for a declaratory judgment brought pursuant to 28 U.S.C. § 2201. It is presently before the Court for consideration of a motion for a stay. The issue presented is whether a declaratory judgment action regarding liability insurance coverage should be stayed until state and federal court tort litigation from which it arises is resolved. For reasons stated below, the motion to stay is granted in part and denied in part.

Background

This case arises from nine separate tort actions (the "underlying litigation") brought by persons who claim that they were sexually assaulted by priests of the Roman Catholic Diocese of Providence (the Diocese) between 1972 and 1975. Three of those actions are pending in this Court and the others are pending in the Rhode Island Superior Court.

The defendants in the underlying litigation (the "tort defendants") are the individual priests accused of perpetrating the assaults (the "priests"), the Bishop, the Diocese and various diocesan officials (collectively referred to as the "diocesan defendants"). The claims against the diocesan defendants are based on the doctrine of respondeat superior as well as on allegations that they were negligent in hiring and/or supervising the priests and that they failed to take appropriate preventive action after learning of the priests' propensities. The tort defendants claim to be insured under one or more policies of liability insurance issued by Aetna Casualty & Surety Company, Inc. (Aetna) to the Bishop and the Diocese.

Aetna brought this action against all of the parties to the underlying litigation and seeks a declaration that it has no obligation to defend or indemnify any of the tort defendants. The complaint pointedly refrains from acknowledging that any policies were issued to the tort defendants but recites a litany of reasons why no coverage would be afforded if such policies exist. Those reasons run the gamut from averments that the tort defendants have violated various policy provisions (e.g., that they failed to provide timely notice of the incidents giving rise to the tort claims) to assertions that no coverage is provided for the intentional conduct alleged or for the punitive damages being claimed by the tort plaintiffs.

The diocesan defendants have moved to stay this action on the ground that resolution of the coverage questions would require determination of factual issues presented in the underlying litigation, thereby resulting in piecemeal litigation and unjustifiable duplication of effort. Aetna disputes that contention and, at the Court's direction, has submitted a proposed plan for limiting discovery to those issues that Aetna asserts are not raised in the underlying litigation.

Discussion

I. The General Principles

The general rule is that federal courts have a "virtually unflagging obligation ... to exercise the jurisdiction given them." Colorado River Water Conservation District v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 1246, 47 L.Ed.2d 483 (1976). Therefore, ordinarily, a federal court may neither dismiss nor stay an action merely because a similar action is pending in state court. Id.; Gonzalez v. Cruz, 926 F.2d 1, 3 (1st Cir. 1991). See also, Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 28, 103 S.Ct. 927, 943, 74 L.Ed.2d 765 (1983). ("A stay is as much a refusal to exercise federal jurisdiction as a dismissal.").

However, a federal court may refrain from acting in "exceptional circumstances" where deferring to the state court litigation would "clearly serve an important countervailing interest." Colorado River, 424 U.S. at 813, 96 S.Ct. at 1244 (quoting County of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 189, 79 S.Ct. 1060, 1063, 3 L.Ed.2d 1163 (1959)). For example, the doctrine of abstention permits a federal court to decline to exercise its jurisdiction when resolution by state courts would be more consonant with principles of federalism and comity or would avoid the need to decide federal constitutional issues. Moses H. Cone, 460 U.S. at 14-15, 103 S.Ct. at 936-37; Colorado River, 424 U.S. at 814-16, 96 S.Ct. at 1244-46 (summarizing types of abstention).

Even when the doctrine of abstention does not apply, a stay may be appropriate if proceeding with the federal suit would be inconsistent with "wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation." Colorado River, 424 U.S. at 817, 96 S.Ct. at 1246 (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183, 72 S.Ct. 219, 221, 96 L.Ed. 200 (1952)). However, because "wise judicial administration" is not as weighty a countervailing factor as principles of federalism or proper constitutional adjudication, this exception to the "unflagging obligation" to exercise jurisdiction is narrower than the abstention exception. Id. at 818, 96 S.Ct. at 1246-47. Consequently, a refusal to act for reasons of wise judicial administration generally requires "the clearest of justifications." Colorado River, 424 U.S. at 819, 96 S.Ct. at 1247.

There is no "hard and fast rule" for determining what constitutes "exceptional circumstances" justifying a stay on grounds of wise judicial administration. Moses H. Cone, 460 U.S. at 15, 103 S.Ct. at 936-37. Under Colorado River, that determination requires consideration of a variety of factors that include:

1. Which court first assumed jurisdiction over any property that may be the subject of the litigation;

2. The inconvenience of the federal forum;

3. The desirability of avoiding piecemeal litigation;

4. The order in which jurisdiction was obtained by the concurrent forums; and

5. Whether federal or state law "provides the rule of decision on the merits."

Moses H. Cone, 460 U.S. at 15, 23, 103 S.Ct. at 936-37, 941 (quoting Colorado River, 424 U.S. at 818-19, 96 S.Ct. at 1246-47).

The comparative weight assigned to each factor depends on the circumstances of each case. Id. at 15-16, 103 S.Ct. at 936-37. Accordingly, a district court is obliged to make "a carefully considered judgment taking into account both the obligation to exercise jurisdiction and the combination of factors counseling against that exercise." Colorado River, 424 U.S. at 818-19, 96 S.Ct. at 1247.

At one time there was a split of authority regarding whether the principles set forth in Colorado River apply to declaratory judgment actions. The disagreement derived from the fact that, under the Federal Declaratory Judgment Act, a district court "may" award declaratory relief but is "under no compulsion to exercise its jurisdiction." 28 U.S.C. § 2201(a); Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494, 62 S.Ct. 1173, 1175, 86 L.Ed. 1620 (1942); Cardinal Chemical Co. v. Morton International, Inc., ___ U.S. ___, n. 17, 113 S.Ct. 1967, n. 17, 124 L.Ed.2d 1 (1993) (Declaratory Judgment Act affords district court some discretion whether to exercise jurisdiction); El Dia, Inc. v. Hernandez Colon, 963 F.2d 488, 493 (1st Cir.1992).

Some courts attached little or no significance to the permissive language in the Declaratory Judgment Act and applied the "exceptional circumstances" test of Colorado River to declaratory judgment actions in the same way that they were applied to other kinds of cases. See Terra Nova Ins. Co., Ltd. v. 900 Bar, Inc., 887 F.2d 1213, 1221 (3rd Cir.1989) (citing cases). Other courts reasoned that, because of the statute's permissive language, declaratory judgment cases do not create the same unflagging obligation to exercise jurisdiction that exists...