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

Decision Date31 October 2015
Docket NumberNo. 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.
CourtU.S. District Court — District of New Mexico

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 Plaintiffs

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


James O. Browning


THIS MATTER comes before the Court on Defendants C.R. Gurule, Inc., Clyde Gurule, Darlene Gurule, and the Estate of Christian Gurule's Motion for Dismissal or Stay, filed May 19, 2015 (Doc. 4)(“Motion”). The Court held a hearing on the Motion on July 29, 2015. The primary issues are: (i) whether the Court should retain jurisdiction over a declaratory judgment action asking the Court to determine whether an insurance policy covers the accident that killed Christian Gurule; and (ii) whether the Court should abstain from hearing the case under the abstention doctrines announced in Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971)

(“Younger ”), and in Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) (“Colorado River ”). The Court hesitates to decline federal jurisdiction when a plaintiff properly brings a case before the Court, and the Younger and Colorado River doctrines do not require the Court to abstain. Under the particular and unique circumstances of the case, however, the Court will nonetheless grant the Gurules' Motion and decline jurisdiction, however, because the factors the Tenth Circuit announced in State Farm Fire and Casualty Co. v. Mhoon, 31 F.3d 979 (10th Cir.1994) (White, J.)(Mhoon), all suggest that the Court should decline to exercise federal jurisdiction.


Plaintiff Nationwide Mutual Insurance Company 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. See Motion at 2–3. The Hartford's uninsured motorist coverage 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 I insured under the policy and that two vehicles were insured under the policy, entitl[ing] Defendants to stacked coverage 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 in federal court. See Complaint ¶ 1, at 1.


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 ¶ 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 ¶ 3, at 1. Nationwide Insurance contends that it rejected the Gurules' claim because “only one vehicle was insured under the applicable policy.” Complaint ¶ 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 alleged 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). See Response at 3. Nationwide Insurance's Motion to Dismiss aims to dismiss the Gurules' declaratory judgment action seeking a declaration that the policy covers Christian Gurule—the same issue now before the Court.

The Gurules then filed this Motion, 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 at 1. They argue 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 at 1. They ask 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 at 1–2. Finally, the Gurules state that the abstention doctrines in Younger

and Colorado River compel the Court to decline jurisdiction. See Motion at 12–14.

Nationwide Insurance responded to the Gurules' Motion on June 3, 2015 (Doc. 12)(“Response”). It contends that “nothing in the Declaratory Judgment Act prohibits a court from deciding a purely legal question concerning contract interpretation which arises in the context of a controversy presenting other factual issues.” Response at 4. Nationwide Insurance agrees with the Gurules that the Tenth Circuit's decision in Mhoon,

which describes the factors courts should consider in deciding whether to hear declaratory judgment actions, controls the Court's decision. See Response at 4–5. Nationwide Insurance contends that these factors weigh in favor of the Court finding that it has jurisdiction. See Response at 5–6. Additionally, Nationwide Insurance argues that the Supreme Court's abstention doctrines, as stated in Younger and Colorado River, do not compel the Court to decline jurisdiction. See Response at 12–14.

The Gurules replied to Nationwide's Response on June 17, 2015. See Defendants C.R. Gurule, Inc., Clyde Gurule, Darlene Gurule, and the Estate of Christian Gurule's Reply to Nationwide Mutual Insurance Company's Response to Motion for Dismissal or Stay (Doc. 12), filed June 17, 2015 (Doc. 14) (“Reply”). The Gurules emphasize that the third Mhoon

factor—whether the plaintiff engaged in procedural fencing—indicates that the Court should abstain from exercising jurisdiction, because “Nationwide has engaged in procedural fencing and is using this Declaratory Judgment action to provide an arena for a race to res judicata .” Reply at 2. They assert that [i]t was apparent to Nationwide that the Gurules would add Nationwide as a party to the state court action if the [insurance policy] claim was denied.” Reply at 3. They argue that, to avoid being named as a defendant in the state law judgment, Nationwide Insurance waited “nearly three weeks” to inform the Gurules that Nationwide denied their insurance claim, so that Nationwide could file a case in federal court. Reply at 5.

The Court held a hearing on the Motion on July 29, 2015. The parties primarily discussed the five Mhoon

factors. The discussions first revealed that the case involved “factual issues that may require a trial,” largely “because the language of the [policy] is somewhat ambiguous.” Tr. at 10:8–11 (Gorman). The Gurules stated that they would potentially need to hold a Mark V hearing3 “with regard to the language of the policy...

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