Nationwide Mut. Ins. Co. v. C.R. Gurule, Inc.

• Decision Date: 04 January 2016
• Docket Number: No. CIV 15–0199 JB/KBM,CIV 15–0199 JB/KBM
• Parties: Nationwide Mutual Insurance Company, Plaintiff, v. C.R. Gurule, Inc., Clyde Gurule, Darlene Gurule, Deidra Gurule and Dave Elroy Romero, Jr., as personal representative of the estate of Christian Gurule, Defendants.
• Court: U.S. District Court — District of New Mexico

156 F.Supp.3d 1308

Nationwide Mutual Insurance Company, Plaintiff,

v.C.R. Gurule, Inc., Clyde Gurule, Darlene Gurule, Deidra Gurule and Dave Elroy Romero, Jr., as personal representative of the estate of Christian Gurule, Defendants.

No. CIV 15–0199 JB/KBM

United States District Court, D. New Mexico.

Filed January 4, 2016

Gregory L. Biehler, Beall & Biehler, Albuquerque, New Mexico, Attorney for the Plaintiff

David P. Garcia, The Law Firm of David P. Garcia PC, Santa Fe, New Mexico, Robert D. Gorman, Robert D. Gorman, PA, Albuquerque, New Mexico, Attorneys for the Defendants

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING

, UNITED STATES DISTRICT JUDGE

THIS MATTER comes before the Court on Nationwide Mutual Insurance Company's Motion for Reconsideration, filed November 18, 2015 (Doc. 37) (“Motion”). The Court will hold a hearing on January 11, 2016. The primary issues are: (i) whether the Court erred in dismissing the case in deference to the state-court proceedings on the basis of the factors that the Supreme Court of the United States and the United States Court of Appeals for the Tenth Circuit established in State Farm Fire and Casualty Co. v. Mhoon, 31 F.3d 979 (10th Cir.1994)

(White, J.)(“Mhoon ”); and (ii) whether it should change its prior ruling now on the basis that the state-court proceedings are moving slower than the Court anticipated. Because the factors that the Tenth Circuit established as controlling still suggest that the Court should decline to exercise jurisdiction, and because Plaintiff Nationwide Mutual Insurance Company does not present any sound reasons for the Court to grant its Motion to Reconsider under rule 59(e) of the Federal Rules of Civil Procedure, the Court denies the Motion.

FACTUAL BACKGROUND

Nationwide Insurance issued an insurance policy, number 7201351200 (“policy”), to Defendant C.R. Gurule, Inc. for the period of November 10, 2012, through November 10, 2013. See Complaint for Declaratory Judgment ¶¶ 1–5, at 1–2, filed March 9, 2015 (Doc. 1). The Gurules reside in Penasco, New Mexico—near San Miguel County. See Transcript of Motion Proceedings before the Court at 43:19–22 (Gorman)(taken July 29, 2015)(“Tr.”). Clyde and Darlene Gurule own C.R. Gurule, Inc., and their son, Christian Gurule, works there as an employee. See Complaint at 2–3.¹ On May 13, 2013, Anthony Chavez' vehicle struck Christian Gurule's vehicle—a 2007 Volkswagen Jetta—in Bernalillo County, New Mexico. See Complaint ¶ 6, at 2; Motion at 2. The car crash killed Christian Gurule. See Complaint ¶ 6, at 2; Motion at 2. Christian, age twenty-four, “owned the Jetta and insured it through Sentry Insurance at the time of the accident.” Complaint ¶ 7, at 2. Nevada General Insurance Company insured Chavez. See Complaint ¶ 8, at 2.

The Gurules owned an insurance policy through The Hartford Casualty Insurance Company. See Complaint ¶ 9, at 2; Motion at 2. On December 18, 2013, the Gurules filed a Complaint for Wrongful Death in the County of San Miguel, Fourth Judicial District Court, State of New Mexico. See Motion at 2; Gurule v. Nationwide Mutual Ins. Co., D–412–CV–201300502 (4th Jud. Dist. Ct., San Miguel Cnty., N.M.)(Baca, J.).² They joined both Chavez and The Hartford, but the state court subsequently dismissed The Hartford upon settlement with the Gurules. See Motion at 2–3. The Hartford's uninsured motorist coverage allegedly did not fully compensate the Gurules for Christian's death, so they sought underinsured motorist benefits under the Nationwide Insurance policy. See Complaint ¶ 10, at 2.

The Gurules therefore made a claim upon Nationwide Insurance for uninsured motorist coverage under C.R. Gurule Inc.'s policy on December 23, 2014. See Complaint ¶ 10, at 2. Specifically, they asserted that “Christian Gurule was a Class I³ insured under the policy and that two vehicles were insured under the policy, entitl[ing] Defendants to stacked coverage⁴ of $2,000,000.” Complaint ¶ 10, at 2. Nationwide Insurance responded in early January, asking for additional information. See Tr. at 8:1–3 (Gorman). More than one month later, Nationwide Insurance requested additional time to evaluate the claim, and promised to respond by March 27, 2015 or earlier. See Tr. at 8:12–17 (Gorman); Letter from Haley Crawford, Nationwide Mutual Insurance Company Agent, to David Garcia at 1 (dated February 23, 2015), filed May 19, 2015 (Doc. 4)(“Nationwide Letter”). Nationwide Insurance never sent the Gurules any further correspondence regarding the policy claim and instead filed a Complaint for Declaratory Judgment in federal court. See Complaint for Declaratory Judgment ¶ 1, at 1.

PROCEDURAL BACKGROUND

On March 9, 2015, Nationwide Insurance filed this action seeking a declaratory judgment that “Defendants are not entitled to uninsured motorist coverage under the policy.” Complaint for Declaratory Judgment ¶ 10, at 3. Nationwide waited six weeks to serve the Gurules with the Complaint. See Summons Issued as to C.R. Gurule, Inc., Clyde Gurule, Darlene Gurule, Deidra Gurule, and Dave Romero, filed April 21, 2015. Nationwide Insurance asserts that the Court's basis for subject-matter jurisdiction is diversity of citizenship pursuant to 28 U.S.C. § 1332

. See Complaint for Declaratory Judgment ¶ 3, at 1. Nationwide Insurance contends that it rejected the Gurules' claim because “only one vehicle was insured under the applicable policy.” Complaint for Declaratory Judgment ¶ 11, at 2–3.

On March 11, 2015, after realizing that Nationwide Insurance filed a federal lawsuit without informing them of their claim's status, the Gurules filed an amended complaint in state court, adding Nationwide Insurance as a defendant. See Motion at 4. They allege that “Nationwide breached its contract by failing to pay under the contract's uninsured motorist coverage clause and violated the New Mexico Unfair Trade Practices Act, Fraud Act and Insurance Code by failing to investigate and respond in good faith to the Gurules' demand for coverage.” Motion at 4. On April 20, 2015, Nationwide Insurance filed in state court: (i) a Motion to Dismiss the Gurules' Claims for Declaratory Judgment, Breach of Contract and Trade Practices and Fraud Act Violations (“Motion to Dismiss”); and (ii) a Motion to Strike Plaintiffs' First Amended Complaint for Wrongful Death and Declaratory Judgment (“Motion to Strike). Response at 3. Nationwide Insurance's Motion to Dismiss in state court aims to dismiss the Gurules' declaratory judgment action seeking a declaration that the policy covers Christian Gurule's accident—the same issue now before the Court.

1. The Federal Motion for Dismissal.

The Gurules then filed the Motion for Dismissal or Stay on May 19, 2015 (Doc. 4)(“Motion for Dismissal”), requesting “that the Court dismiss or stay” the declaratory judgment action, and “defer to the case long pending in the Fourth Judicial District of the State of New Mexico.” Motion for Dismissal at 1. They argued that the declaratory judgment action involves a state law issue that is already being litigated in the lawsuit filed in state district court on December 18, 2013. See Motion for Dismissal at 1. They asked the Court to “exercise its discretion to decline jurisdiction,” because “it turns on an issue of state law better resolved by the New Mexico state court, which already has in front of it all of the other claims related to the wrongful death of Christian Gurule.” Motion for Dismissal at 1–2.

At the time the Court decided the Motion for Dismissal, the state court had already heard and decided Nationwide Insurance's Motion to Dismiss and Motion to Strike. It denied both motions. See Order Denying Nationwide's Motion to Dismiss Plaintiffs' Claims for Declaratory Judgment, Breach of Contract and Trade Practices and Fraud Act Violations at 1, filed in state court September 3, 2015, filed in federal court September 3, 2015 (Doc. 21) (“State Court Order Denying Motion to Dismiss”); Order Denying Defendants' Motion to Strike Plaintiff's First Amended Complaint for Wrongful Death and Declaratory Judgment at 1, filed in state court September 3, 2015, filed in federal court September 3, 2015 (Doc. 21)(“State Order Denying Motion to Strike”). Nationwide Insurance sent copies of the orders to the Court on September 3, 2015. See Email from Gregory L. Biehler to the Honorable James O. Browning, United States District Court Judge for the District of New Mexico (September 3, 2015), filed September 3, 2015 (Doc. 21). On September 24, 2015, Nationwide Insurance also sent the Court a notice that the Honorable Gerald E. Baca, state court judge for New Mexico's Fourth Judicial District, had recused himself from the case. See Email from Gregory L. Biehler to the Honorable James O. Browning, United States District Court Judge for the District of New Mexico (September 23, 2015), filed September 24, 2015 (Doc. 26)(“Email Regarding J. Baca's Recusal”).

2. The Court's Memorandum Opinion and Order.

The Court declined to exercise jurisdiction over Nationwide Insurance's declaratory judgment action after analyzing the factors that Tenth Circuit precedent requires district courts to consider. Contrary to Nationwide Insurance's suggestion, the Court did not rely solely upon one factor to arrive at its decision. See Motion at 5. Considering only one factor would not be consistent with Tenth Circuit law. In its Memorandum Opinion and Order, the Court thoroughly discussed case law from the Supreme Court of the United States and the Tenth Circuit. See Nationwide Mut. Ins. Co. v. C.R. Gurule, Inc., 148 F.Supp.3d 1206, 1212–16, 2015 WL 7800769, at *4–7 (D.N.M. Oct. 31,2015)

(“MOO ”)(describing the law regarding courts' exercise of discretionary jurisdiction over declaratory judgment actions). The Court explained how the Tenth Circuit in Mhoon,

adopted a five-factor test for evaluating whether a district court should exercise its discretionary jurisdiction over a declaratory judgment action:

[1] whether a declaratory action would settle the

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