Canal Indem. Co. v. WILBURN CONTAINER X-PRESS, INC., 94-911.
| Decision Date | 24 July 1995 |
| Docket Number | No. 94-911.,94-911. |
| Citation | 907 F. Supp. 185 |
| Parties | CANAL INDEMNITY COMPANY v. WILBURN CONTAINER X-PRESS, INC., et al. |
| Court | U.S. District Court — Middle District of Louisiana |
COPYRIGHT MATERIAL OMITTED
Larry Michael Roedel, John O. Shirley, Sr., David Alva Woolridge, Jr., Roedel, Parsons, Forrester, Hill & Koch, Baton Rouge, LA, for Canal Indemnity Company.
Donald T. Carmouche, Talbot, Sotile, Carmouche, Marchand & Marcello, Donaldsonville, LA, for Wilburn Container X-Press Incorporated.
Thomas James Wagner, Eric D. Suben, Wagner, Bagot & Gleason, New Orleans, LA, for Flexi-Van Leasing, Inc.
John G. Gomila, Jr., Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, LA, for Travelers Insurance Company and New Orleans Cold St.
Kevin Lawrence Cole, Hailey, McNamara, Hall, Larmann & Papale, Metairie, LA, for Winston R. Clark, Mary B. Clark and Trinity Universal Insurance.
Stephen Kenneth Conroy, Stassi, Griffith & Conroy, LLC, Metairie, LA, for J & M Distribution Services.
RULING ON DEFENDANTS' MOTION TO STAY OR DISMISS
This matter is before the Court on defendants' motions to stay or, in the alternative, to dismiss. Defendants request this Court to abstain from hearing the merits of this declaratory judgment action. Because this Court believes this matter should be decided in state court, it grants defendants' motions and dismisses this suit without prejudice.
On July 19, 1993 several vehicles were involved in an accident on Interstate 10 in Ascension Parish. As a result of the accident, seven suits were filed in the state courts of Texas and Louisiana. Specifically, by July 19, 1994, one case had been filed in a Texas state court1 and six cases had been filed in Louisiana state courts — five cases in the 23rd Judicial District Court for the Parish of Ascension,2 and one in the 24th Judicial District Court for the Parish of Jefferson.3
On July 26, 1994 plaintiff, Canal Indemnity Company (hereinafter "Canal"), filed suit in this Court seeking a declaration of its rights pursuant to an insurance policy it issued to Wilburn Container X-press, the owner of one of the vehicles involved in the accident. Canal contends that because the policy was canceled twenty-seven days before the accident, it is not obligated to pay any related losses. Canal claims that resolution of its declaratory judgment action will "eliminate the risk of inconsistent decisions among"4 the state courts and permit more convenient litigation of this matter.
Because several state court actions were pending when this suit was filed, defendants immediately requested5 this Court to abstain from issuing a declaratory judgment. Defendants have not argued the merits of the case; they have only argued the issue of abstention.
To date, Canal has received summary judgment in its favor in one of the Louisiana state court actions, has settled another,6 and is not involved in the Texas state court action. Thus, Canal is currently involved in only four lawsuits all of which are pending in Louisiana state courts. Interrogatories have been propounded in three of those actions.7 Similar discovery has taken place in this declaratory judgment action.
For the following reasons, the Court finds that the narrow exception of Travelers Ins. v. Louisiana Farm Bureau Federation8 does not apply under the facts of this case. The Court also finds that Texas Employers' Ins. Ass'n v. Jackson9 and the Anti-Injunction Act require abstention.
In Travelers, the declaratory plaintiff, an insurance company, had been sued by nineteen plaintiffs in various state courts. Seeking declaratory judgment, Travelers filed one lawsuit in federal court against all of those claimants for the purpose of resolving all of the state court claims consistently and completely. After two years of active litigation in federal court, the claims against all but one defendant, Ashley Hurdle, had been resolved. At that stage of litigation, this Court, reviewing Jackson and the then recent Torch, Inc. v. LeBlanc,10 directed the parties to brief the issue of abstention. Miss Hurdle neither supported nor opposed abstention. This Court abstained from deciding the case, and the Fifth Circuit reversed setting forth an exception to the general rule announced in Jackson.
In reversing this Court, the Fifth Circuit found that the Anti-Injunction Act and Jackson would ordinarily preclude the district court in similar cases from issuing a declaratory judgment. However, the court held that because a declaration of plaintiff's rights in that case would be consistent with the purposes of the Declaratory Judgment Act and defendant had "waived" her right to argue that the state court should have been given priority, the case fell within a very small exception to the general rule against issuance of declaratory judgment when state court actions are pending. Finally, the Fifth Circuit held that the balance of factors to be considered in determining whether to abstain favored retaining the case.
Thus, Travelers establishes a three step analysis for determining whether a declaratory judgment should be issued when state court actions of the same matters are pending at the time the suit for declaratory judgment is filed.11 First, the district court must determine whether the Anti-Injunction Act and Jackson ordinarily preclude declaratory judgment (mandatory abstention).12 Second, if the general rule announced in Jackson precluding declaratory judgment is triggered, the court must look to the specific facts of the case to determine whether the rule actually applies, i.e. whether the action is in "the very small class of highly distinguishable cases which are exceptions" to that general rule.13 Third, if the action is excepted from the general rule, the court must balance14 the purposes of the Declaratory Judgment Act and decide whether it should issue a declaratory judgment or abstain (permissive abstention).
In this case, all four state court actions pending against Canal were filed before this action for declaratory judgment. The state claims involve the same issue of coverage plaintiff seeks to have resolved here.18 Under the facts of this case, the Court may not enjoin the state court proceedings under the Anti-Injunction Act. A federal court "may not grant an injunction to stay proceedings in a State court except as expressly authorized by Congress"19 or by the Act itself.20 None of the exceptions provided expressly by Congress or by the Act itself apply in this case.21 Therefore, issuing a declaratory judgment in this case generally would be tantamount to issuing an injunction and therefore is generally prohibited by the Anti-Injunction Act through Jackson. However, Travelers describes a small class of cases that are carved from the Jackson rule and consequently are not effected by the Anti-Injunction Act. In these rare cases, therefore, declaratory judgment is not precluded by the Anti-Injunction Act.
The court in Travelers believed that the facts of that case brought it within a "very small class of highly distinguishable cases which are exceptions to the broad rule announced in Jackson."22 However, the court did not define the exact characteristics of this small class of cases. Because the Fifth Circuit emphasized the extremely limited nature of this exception, it appears this Court must confine Travelers to its facts.
The court in Travelers focused on two facts to justify excepting that case from Jackson's general rule precluding issuance of declaratory judgment. First, the court noticed that Travelers brought its action for declaratory judgment neither to nullify its opponent's suit in state court nor to change forums; instead, it had brought suit in federal court merely to avoid great multiplicity of lawsuits in various forums throughout Louisiana and possibly Mississippi. This goal, according to the court, is entirely consistent with the purposes of the Declaratory Judgment Act.23 Second, the court found that the declaratory defendant had "waived any right to argue that the district should have given priority to her state suit."24
The ambiguity of the Travelers's exception to the rule announced in Jackson is obvious: Does the test for the exception require both multiplicity of pending state lawsuits and waiver or may either suffice? Because this Court must confine Travelers to its facts, it must consider how the Fifth Circuit used the term "waiver" in Travelers. In other words, the Court believes facts of Travelers are more important than the mere term "waiver" in determining whether the exception to Jackson applies.
In Travelers, the fact that there were multiple lawsuits pending in various state district courts gave rise to the risk of inconsistent judgments. Additionally, the existence of those lawsuits indicated that the declaratory plaintiff filed its suit...
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