Allstate Prop. & Cas. Ins. Co. v. Cogar

• Decision Date: 13 May 2013
• Docket Number: Civil Action No. 1:12CV175.
• Citation: 945 F.Supp.2d 681
• Parties: ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY, Plaintiff, v. Nathan COGAR, Kenneth Jackson, Roxie L. Sirbaugh, Rita UTT, Serious Diesel, LLC, and Mario Orellana, Defendants.
• Court: U.S. District Court — Northern District of West Virginia

945 F.Supp.2d 681

ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY, Plaintiff,

v.Nathan COGAR, Kenneth Jackson, Roxie L. Sirbaugh, Rita UTT, Serious Diesel, LLC, and Mario Orellana, Defendants.

Civil Action No. 1:12CV175.

United States District Court, N.D. West Virginia.

May 13, 2013.

Brent K. Kesner, Tanya M. Kesner, Kesner, Kesner & Bramble, PLLC, Charleston, WV, for Plaintiff.

Peter G. Zurbuch, Robert C. Chenoweth, Busch, Zurbuch & Thompson, PLLC, Elkins, WV, Christopher B. Denson, Taylor Law Office, Morgantown, WV, Mark E. Gaydos, Woodrow E. Turner, McNeer Highland McMunn & Varner LC, C. Paul Estep, Steven L. Shaffer, Estep & Shaffer LC, Kingwood, WV, for Defendants.

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS [DKT. NOS. 7, 8, 10, 11] AND DISMISSING CASE WITHOUT PREJUDICE

IRENE M. KEELEY, District Judge.

Allstate Property and Casualty Insurance Company (“Allstate”) brought this declaratory judgment action, seeking a determination of the parties' rights and responsibilities under an insurance policy issued to Nathan Cogar (“Cogar”). Pending before the Court are four motions to dismiss from 1) Cogar and Serious Diesel, LLC (“Serious Diesel”) (dkt. no. 11), 2) Roxie L. Sirbaugh (“Sirbaugh”) (dkt. no. 7), 3) Cogar (dkt. no. 8), and 4) Kenneth Jackson (“Jackson”) (dkt. no. 10). For the reasons that follow, the Court GRANTS the defendants' motions and DISMISSES this case WITHOUT PREJUDICE.

I.

A.

Cogar is the owner and operator of Serious Diesel, a vehicle repair and service business. According to Allstate's complaint, on June 16, 2011, Sirbaugh was operating a 1997 Chevrolet Blazer traveling north on West Virginia State Route 92. (Dkt. No. 1 at 2). Cogar, who was operating a 2005 Chevrolet Silverado owned by Jackson, allegedly turned in front of Sirbaugh's vehicle, causing Sirbaugh to cross the center of the roadway and strike a 2000 Ford Explorer owned and operated by Rita Utt (“Utt”). Id. at 2–3. The collision allegedly caused Utt's vehicle to be pushed backward into a 1998 Kenworth truck owned and operated by Mario Orellana (“Orellana”). Id. at 3.

According to Allstate's complaint, on the date of the accident, Cogar was insured under an Allstate auto policy, Policy No. 9 28 981961 11/03 (the “Policy”), effective May 3, 2011, to November 3, 2011. Id. at 3. Allstate alleges that, at the time of the collision, Cogar was operating Jackson's vehicle in his capacity as owner and operator of Serious Diesel for the purpose of repairing the vehicle. Id. at 3. Similarly, Cogar states that at the time of the accident he was “test-driving the vehicle with the permission of Jackson in his capacity as the owner and operator of Serious Diesel, LLC.” (Dkt. No. 9 at 1).

Cogar tendered a claim to Allstate immediately after the June 16, 2011 accident, and, in a letter dated June 22, 2011, Allstate denied coverage based on the business operations exclusion in Cogar's Policy. (Dkt. No. 9–1 at 2).

B.

In or around September 2012,¹ Sirbaugh filed suit against Cogar, Jackson, and Serious Diesel in the Circuit Court of Preston County, West Virginia, to recover for the damages she suffered as a result of the accident on June 16, 2011. Neither Utt nor Orellana is named as a party to Sirbaugh's suit.

On November 21, 2012, Allstate advised Cogar that, although his Policy did not cover the accident, it would nevertheless provide him with a “courtesy defense” subject to a full reservation of rights. (Dkt. No. 9–2 at 5). Then, on December 3, 2012, Allstate filed this declaratory judgment action, seeking the following declarations:

1. “That the Allstate Policy does not extend to provide coverage for the defense or indemnification of Cogar for those claims arising from the June 16, 2011 motor vehicle accident”; and

2. “That Allstate has no duty to defend or indemnify Cogar or any other entity as to those claims arising from the June 16, 2011 motor vehicle accident.”

(Dkt. No. 1 at 6).

Subsequently, on January 8, 2013, Cogar and Serious Diesel filed a motion in the Preston County proceeding seeking leave to file a third-party complaint against Allstate (dkt. no. 9–3), which Special Judge Larry Starcher granted on January 14, 2013. (Dkt. No. 20–1 at 2).

The third-party complaint in state court seeks the following declarations:

1. “That the Policy does extend to provide coverage for the defense and indemnification of Nathan Cogar for all claims arising from the June 16, 2011 motor vehicle accident”;

2. “That Allstate has a duty to defend and indemnify Nathan Cogar for all claims arising from the June 16, 2011 motor vehicle accident”; and

3. “That Allstate has a duty to pay all attorney fees and costs which Nathan Cogar has incurred as a result of Allstate's failure to defend Nathan Cogar.”

(Dkt. No. 9–3 at 9).

The defendants contend that this Court should dismiss Allstate's declaratory action or issue a stay pending determination of the insurance coverage issues in the parallel state court proceeding.

C.

According to Allstate's complaint, on June 16, 2011, the date of the accident, the Policy “insured a 2006 Ford F250 truck, with liability limits of $100,000 per person and $300,000 per occurrence.” (Dkt. No. 1 at 3). Id. In pertinent part, the Policy provides:

We will pay those damages which an insured person is legally obligated to pay because of:

1. bodily injury sustained by any person; and

2. property damage.

Under these coverages, your policy protects an insured person from liability for damages arising out of the ownership, maintenance or use, loading or unloading of an insured auto.

We will defend an insured person sued as the result of a covered auto accident, even if the suit is groundless or false. We will choose the counsel. We may settle any claim or suit if we believe it is proper. We will not defend an insured person sued for damages arising out of bodily injury or property damage which is not covered by this policy.

* * *

Insured Persons

1. While using your insured auto:

a) you,

b) any resident relative, and

c) any other licensed driver using it with your permission.

2. While using a non-owned auto:

a) you, and

b) any resident relative using a private passenger auto or utility auto.

The use of a non-owned auto must be with the owner's permission.

* * *

Insured Autos

* * *

4. A non-owned auto used by you or a resident relative with the owner's permission. This auto must not be available or furnished for the regular use of an insured person.

* * *

Definitions

1. We, Us, or Our means the company shown on the Policy Declarations of the policy.

2. Auto means a land motor vehicle with at least four wheels designed for use on public roads.

3. Bodily Injury means bodily injury, sickness, disease or death.

* * *

6. You or Your means the resident policyholder named on the Policy Declarations and that policyholder's resident spouse.

* * *

Exclusions—What is not covered

We will not pay for any damages an insured person is legally obligated to pay because of:

* * *

2. bodily injury or property damage arising out of auto business operations such as repairing, servicing, testing, washing, parking, storing, or selling of autos. However, coverage does apply to you, resident relatives, partners or employees of the partnership of you or a resident relative when using your insured auto.

(Dkt. No. 9–4 at 8–10).

The final paragraph of the preceding excerpt is what is generally known as a “business operations exclusion.” The parties dispute whether, based on this exclusion, the Policy covers the June 16, 2011 accident.

II.

The Federal Declaratory Judgment Act provides that district courts “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). This power is discretionary, and the Fourth Circuit has explained that “a declaratory judgment action is appropriate ‘when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and ... when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.’ ” Centennial Life Ins. Co. v. Poston, 88 F.3d 255, 256 (4th Cir.1996) (quoting Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 325 (4th Cir.1937)). “[A] declaration of parties' rights under an insurance policy is an appropriate use of the declaratory judgment mechanism.” United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 494 (4th Cir.1998).

However, a declaratory judgment action “should not be used ‘to try a controversy by piecemeal, or to try particular issues without settling the entire controversy, or to interfere with an action which has already been instituted.’ ” Id. at 256–57 (citing Quarles, 92 F.2d at 325). “When a related state proceeding is underway, a court considering a declaratory judgment action should specifically consider whether the controversy ‘can better be settled in the proceeding pending in state court.’ ” Centennial Life, 88 F.3d at 257 (citing Brillhart v. Excess Ins. Co., 316 U.S. 491, 495, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942)). “[A] federal court should ‘[o]rdinarily’ decline, for reasons of efficiency and comity, to grant declaratory relief ‘where another suit is pending in a state court presenting the same issues, not governed by federal law, between the same parties.’ ” Nautilus Ins. Co. v. Winchester Homes, Inc., 15 F.3d 371, 377 (4th Cir.1994), overruled on other grounds byWilton v. Seven Falls Co., 515 U.S. 277, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995) (quoting Brillhart, 316 U.S. at 495, 62 S.Ct. 1173).

In making its determination, the Court should consider “the nature and scope of the state proceeding,” whether all parties' claims can be satisfactorily adjudicated in that proceeding, and “ ‘the same considerations of federalism, efficiency, and comity that traditionally inform a federal court's discretionary decision whether to abstain from exercising jurisdiction over state-law...