Bristol W. Ins. Co. v. Salas

• Citation: 469 F.Supp.3d 1175
• Decision Date: 25 June 2020
• Docket Number: No. 18-cv-01066-RB-JFR,18-cv-01066-RB-JFR
• Parties: BRISTOL WEST INSURANCE COMPANY, Plaintiff, v. Bryana SALAS, Defendant.
• Court: U.S. District Court — District of New Mexico

469 F.Supp.3d 1175

BRISTOL WEST INSURANCE COMPANY, Plaintiff,

v.Bryana SALAS, Defendant.

No. 18-cv-01066-RB-JFR

United States District Court, D. New Mexico.

Filed June 25, 2020

Jeffrey M. Mitchell, Daniel J. O'Brien, Law Office of O'Brien and Padilla, P.C., Albuquerque, NM, for Plaintiff.

Devi Maria Schmidt, Jonathan D. Woods, Prince, Schmidt, Korte & Baca, LLP, Santa Fe, NM, for Defendant.

MEMORANDUM OPINION AND ORDER

ROBERT C. BRACK, SENIOR U.S. DISTRICT JUDGE

Monique Esquibel held a car insurance policy through Plaintiff Bristol West Insurance Company (Bristol). Defendant Bryana Salas allegedly lived with Esquibel and believed that she was insured through the uninsured motorist provision in Esquibel's policy, which covers residents of the insured's household. On April 15, 2018, Salas sustained physical injuries and car damage when she was involved in an accident with another driver. Bristol refused her claim, stating that she did not fit within the policy's definition of "uninsured motorist." Bristol filed suit in this Court, seeking a declaratory judgment on the contract provision, while Salas brought this same issue, among several others, before a New Mexico state court. Salas now moves to dismiss the federal action. After considering the Mhoon factors, the Court declines to exercise jurisdiction and will grant Salas's Motion to Dismiss.

I. Background

Bristol is a "foreign insurance company authorized to write and sell insurance" in New Mexico. (Doc. 1 (Compl.) ¶ 1.) On March 25, 2018, Bristol issued an insurance policy to Esquibel to cover four vehicles: a 2001 Chevrolet Silverado, a 2004 Pontiac Sunfire, a 2015 Chevy Silverado, and a 2016 GMC Sierra. (Id. ¶¶ 7–8.) The coverage included $50,000 per person and $100,000 for each vehicle. (Id. ¶ 8.) Esquibel listed no other drivers under the policy. (Id. ¶ 12.)

Salas allegedly lived with Esquibel. (Id. ¶ 28.) On April 15, 2018, Salas was involved in a car accident with Aaron Sanchez. (Id. ¶ 20.) Sanchez was insured through Progressive Direct Insurance Company (Progressive). (Id. ¶ 21.) As a result of the collision, Progressive "tendered [its] liability coverage policy limits of $25,000 to Bryana Salas" on February 14, 2019. (Id. ¶ 22.) In addition, Salas "made a claim for uninsured motorist benefits against the Bristol West policy[,]" believing that Esquibel's insurance covered her. (Id. ¶ 23.) However, Salas was driving a 2000 Chevrolet truck "registered in the name of Frank and Lupe Gold" and "insured under a policy issued by State Farm ...." (Id. ¶¶ 13–15.)

The Bristol policy states that it will pay "all sums which an insured person is legally entitled to recover as damages from the owner or operator of an uninsured motorist's vehicle ...." (Id. ¶ 24.) Per the policy, Bristol defines "insured person" to include "family members" or residents of the household. (Id. ¶¶ 25–27.) At issue is whether Salas constituted an insured person under the terms of the Bristol policy at the time of the accident through her residence at Esquibel's home.

Bristol filed a Complaint in federal court on November 15, 2019, asking for a declaratory judgment "that Bryana Salas was not a ‘resident’ of the household of Monique Esquibel such that she is not entitled to" uninsured motorist benefits. (Id. ¶ 30.) On December 2, 2019, Salas filed a state court lawsuit that included this same declaratory judgment issue regarding the Bristol insurance policy, and also brought forth several additional claims and parties.¹ (Doc. 4-1.)

II. Discussion

Bristol brought this lawsuit under the Declaratory Judgment Act, which states that a court "may declare the rights and other legal relations of any interested party seeking such declaration ...." 28 U.S.C. § 2201(a). District "courts are ‘under no compulsion’ to exercise jurisdiction under" the Declaratory Judgment Act. Century Sur. Co. v. Roybal , Civ. No. 11-1107 BB/ACT, 2012 WL 13005437, at *2 (D.N.M. Aug. 23, 2012) (quoting Brillhart v. Excess Ins. Co. of Am. , 316 U.S. 491, 494, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942) ; citing Wilton v. Seven Falls Co. , 515 U.S. 277, 282, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995) ). Brillhart held that "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." 316 U.S. at 495, 62 S.Ct. 1173 ; see also Allstate Fire & Cas. Ins. Co. v. Sharp , No. CV 18-1049 RB/KK, 2019 WL 4575609, at *2 (D.N.M. Sept. 20, 2019) (applying Brillhart ).

The party seeking a declaratory judgment must show that an actual controversy exists. Surefoot L.C. v. Sure Foot Corp. , 531 F.3d 1236, 1240 (10th Cir. 2008). This party must convince the court to exercise jurisdiction through "a number of case-specific factors," or Mhoon factors. Id. (citing State Farm Fire & Cas. Co. v. Mhoon , 31 F.3d 979, 982 (10th Cir. 1994) ). Specifically, the test asks the following questions,

[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 for a race to res judicata; [4] whether use of a declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction; and [5] whether there is an alternative remedy which is better or more effective.

Mid-Continent Cas. Co. v. Vill. at Deer Creek Homeowners Ass'n, Inc. , 685 F.3d 977, 980–81 (10th Cir. 2012) (quoting Mhoon, 31 F.3d at 983 ).

a. The first two Mhoon factors weigh against the Court exercising jurisdiction.

"The first two Mhoon factors focus on the degree of identity between the parties and issues in the state and federal suits." Roybal , 2012 WL 13005437, at *2 (citing United States v. City of Las Cruces , 289 F.3d 1170, 1183 (10th Cir. 2002) ). Salas argues that the first two Mhoon factors weigh in her favor because "in addition to seeking declaratory relief regarding the coverage issue, the state court complaint includes additional claims by Ms. Salas against Bristol West for breach of contract and extra-contractual claims relating to its unlawful conduct." (Doc. 4 at 6.) Salas also claims that Bristol "misrepresented the coverage available under the policy with respect to which she was an intended beneficiary...." ( Id. ) In Farmers Insurance Co. of Arizona v. Castillo , the court held that the first two Mhoon factors disfavor federal jurisdiction when the state case included the same parties, the same issue, as well as additional tort claims against the insurer. See 17-CV-389 MV/SCY, 2019 WL 1383531, at *1, 3–4 (D.N.M. Mar. 27, 2019) ; see also Sharp , 2019 WL 4575609, at *3 (same). When the insurance company is a party in both federal and state court, there is no need for the declaratory judgment action in federal court because the state court has the capacity to resolve the entire matter. Mhoon , 31 F.3d. at 984. Conversely, in Mhoon , where the federal court appropriately exercised jurisdiction, the insurer was not a defendant in the state case. Id. at 982–83. Like Castillo and Sharp —and unlike Mhoon —Plaintiff Bristol is a party in both actions, and the same declaratory judgment issue rests in both courts.

Nevertheless, Bristol claims that a declaratory judgment on the policy interpretation would settle the controversy in both actions. (Doc. 10 at 3.) The insurer also cautions that Salas "should not be permitted to rush to the state courthouse with a collection of complicated and unrelated claims simply to disrupt Bristol's option to assert its rights in the federal court." (Id. at 5.) In the Court's view, Bristol's warning is exaggerated. Farmers Insurance Co. of Arizona v. Komis provides the Court with guidance regarding this concern. See No. 1:17-cv-00703 WJ/JHR, 2017 WL 6372663 (D.N.M. Dec. 12, 2017). There, Farmers filed the declaratory judgment action in federal court prior to Komis filing in state court. Id. at *1. But because the parties in the federal case were also parties in the state case, the lone declaratory judgment action in federal court served no "useful purpose" given that the state court would decide the same issues. Id. at 3. "The relevant inquiry here is ‘whether the claims of all parties in interest can satisfactorily be adjudicated in the state court proceeding.’ " Id. (quoting Wilton , 515 U.S. at 283, 115 S.Ct. 2137 ; citing St. Paul Fire & Marine Ins. Co. v. Runyon , 53 F.3d 1167, 1169 (10th Cir. 1995) ).

The circumstances here are nearly identical to those in Sharp and Komis . Bristol and Salas are parties in both cases. The issue of whether Salas constitutes a member of the household is also presented in both cases. Bristol contends that the Court's declaratory judgment would terminate the case between the parties (Doc. 10 at 4), but Salas filed claims beyond breach of contract in state court—including breach of the covenant of good faith and fair dealing, misrepresentation, as well as violations of the New Mexico Unfair Practices Act and the Unfair Insurance Claims Practices Act (UICPA) (Doc. 4 at 4). Salas, however, argues that the "state court action is significantly different from the federal suit, as it joins additional plaintiffs, Mrs. Esquibel and vehicle passenger, Ms. Martinez, and additional defendants ...." (Doc. 4 at 7.) As a result, Salas believes the controversy will remain without regard to the federal court's action on Bristol's contract language. (Id. ) The Court sides with Salas here. While the breach of covenant of good faith and misrepresentation claims may be intimately tied to the declaratory judgment decision as Bristol posits (Doc. 10 at 4), this Court in Sharp held that a state claim under the UICPA constituted a separate cause of action that stood in state court regardless of the federal court's declaratory...