Progressive N. Ins. Co. v. Ladue

• Decision Date: 09 December 2020
• Docket Number: No. 2:20-cv-3068-DCN,2:20-cv-3068-DCN
• Parties: PROGRESSIVE NORTHERN INSURANCE COMPANY, Plaintiff, v. DONALD LADUE, as Personal Representative of the Estate of Jeremy Ladue, and ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY, Defendants.
• Court: U.S. District Court — District of South Carolina

PROGRESSIVE NORTHERN INSURANCE COMPANY, Plaintiff, v. DONALD LADUE, as Personal Representative of the Estate of Jeremy Ladue,and ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY, Defendants.

No. 2:20-cv-3068-DCN

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA CHARLESTON DIVISION

December 9, 2020

ORDER

This matter is before the court on defendant Donald Ladue's motion to dismiss or stay proceedings, ECF No. 10. For the reasons set forth below, the court denies the motion.

I. BACKGROUND

This declaratory judgment action arises out of an insurance dispute between two insurance companies and their insureds following the death of Jeremy Ladue. Jeremy Ladue was a deputy for the Charleston County Sherriff's Department. In the early morning of April 13, 2020, Jeremy Ladue, while on patrol in an agency-issued vehicle, was involved in a high-speed car accident on Savannah Highway in Charleston County and died as a result of his injuries. At the time of the accident, Jeremy Ladue held an insurance policy (the "Progressive Policy") with plaintiff Progressive Northern Insurance Company ("Progressive"), which provided underinsured motorist ("UIM") bodily injury coverage with a limit of $100,000 and UIM property damage coverage also with a limit of $100,000. Together, the Progressive Policy provided $200,000 in UIM coverage. At the same time, Donald and Regina Ladue, Jeremy Ladue's parents, held an insurance policy (the "Allstate Policy") with defendant Allstate Fire and Casualty Insurance Company ("Allstate"), which also provided UIM bodily injury coverage with a limit of $100,000 and UIM property damage coverage with a limit of $100,000, for a total of $200,000 in UIM coverage. The parties agree that Jeremy Ladue, as a resident relative of his parents, qualified as an insured under the Allstate Policy at the time of the accident.

In a provision titled "Other Insurance", the Progressive Policy states that where "there is other applicable [UIM] coverage," Progressive will only pay Progressive's share of the damages, which the Policy defines as the proportion that Progressive's "limit of liability bears to the total of all available coverage limits." (the "UIM Other Insurance Provision"). ECF No. 1-1 at 21. According to Allstate, the Allstate Policy contains a provision nearly identical to the UIM Other Insurance Provision. See ECF No. 6, Answer ¶ 26.

After the April 13, 2020 accident, the Estate of Jeremy Ladue (the "Estate") made a claim under the Progressive Policy for UIM coverage. On the basis of the UIM Other Insurance Provision, Progressive denied that the Estate was entitled to the full amount of UIM coverage available under the Progressive Policy and tendered a payment of $100,000, half of the Progressive Policy's $200,000 UIM limit. The Estate made a similar claim under the Allstate Policy for UIM coverage, and Allstate similarly denied that full coverage was available and tendered a payment of $100,000, half of the Allstate Policy's $200,000 UIM limit. According to Progressive's complaint, the Estate "seeks to recover the UIM policy limits under the Allstate Policy and the Progressive Policy." ECF No. 1, Compl. ¶ 18.

On August 26, 2020, Progressive filed this action against Donald Ladue ("Ladue"), in his capacity as representative of the Estate, and Allstate, seeking two declaratory judgments. First, Progressive requests a declaration that

Jeremy Ladue has already recovered the maximum amount of UIM coverage to which he is entitled as a result of the April 13, 2020 accident and he is not entitled to recover any additional amounts of UIM coverage as a result of the accident.

Compl., ¶ 26. Second, Progressive requests a declaration that

[Progressive's] proportionate share of the maximum amount of UIM coverage [the] Estate is entitled to recover as a result of the accident is one-third [ ] of $100,000 in UIM bodily injury coverage and $100,000 in UIM property damage coverage - i.e. $33,333.33 in UIM bodily injury coverage and $33,333.33 in UIM property damage coverage.

On September 23, 2020, Allstate answered the complaint and asserted a crossclaim against Ladue as well as a counterclaim against Progressive. In its crossclaim, Allstate seeks a declaration that "Jeremy Ladue cannot stack UIM coverages [and] is limited to a maximum UIM recovery of $100,000 in UIM bodily injury coverage and $100,000 in UIM property damage coverage. ECF No. 6 ¶ 42. In its counterclaim, Allstate seeks a second declaration that

its pro-rata share of the available UIM limit Jeremy Ladue's Estate is entitled to recover as a result of one-half [ ] of $100,000 in UIM bodily injury coverage and $100,000 in UIM property damage coverage - i.e. $50,000 in UIM bodily injury coverage and $50,000 in UIM property damage coverage.

Id. ¶ 51. On October 23, 2020, Ladue also answered Progressive and Allstate's claims and filed a counterclaim against Progressive, which seeks a declaration that the Estate is entitled to the full amount of UIM coverage available under each policy, for a total of $400,000. ECF No. 11 at ¶ 63.

On October 23, 2020, Ladue filed a motion to dismiss or, in the alternative, to stay the case pending resolution of a case currently pending before the South Carolina Court of Appeals. ECF No. 10. On November 5, 2020, Progressive filed a response in opposition. ECF No. 15. The following day, Allstate also responded in opposition, adopting Progressive's response in full. ECF No. 16. On November 10, 2020, Ladue replied. ECF No. 17. The court held a hearing on the matter on December 8, 2020. As such, this matter has been fully briefed and is ripe for the court's review.

II. STANDARD

The Declaratory Judgment Act states that

In a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, 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. Acknowledging Article III's circumscription of federal jurisdiction to "cases and controversies," the Declaratory Judgment Act limits its application to "case[s] of actual controversy," meaning that it "is operative only in respect to controversies which are such in the constitutional sense." Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 240 (1937); see also Volvo Const. Equip. N. Am., Inc. v. CLM Equip. Co., Inc., 386 F.3d 581, 592 (4th Cir. 2004) ("A case meets the actual controversy requirement only if it presents a controversy that qualifies as an actual controversy under Article III of the Constitution."). A declaratory judgment action presents a justiciable controversy where "the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007).

Even where a declaratory judgment action presents a justiciable controversy, the court's exercise of jurisdiction over the action is discretionary. See Wilton v. Seven Falls Co., 515 U.S. 277, 289-90 (1995); see also Trustgard Ins. Co. v. Collins, 942 F.3d 195, 201 (4th Cir. 2019) ("[The Declaratory Judgment] Act gives federal courts discretion to decide whether to declare the rights of litigants."). Such discretion, however, "is not unbounded," and a district court may refuse to entertain a declaratory judgment action only "for good reason." Nautilus Ins. Co. v. Winchester Homes, Inc., 15 F.3d 371, 375 (4th Cir. 1994) (quoting Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 324 (4th Cir. 1937)) (internal quotation marks omitted). The Fourth Circuit calls for "liberal[ ] contru[ction]" of the Declaratory Judgement Act to fulfil "the purpose intended, i.e., to afford a speedy and inexpensive method of adjudicating legal disputes[ ], and to settle legal rights and remove uncertainty and insecurity from legal relationships without awaiting a violation of the rights or a disturbance of the relationships." Id. A court should generally exercise jurisdiction over a declaratory judgment claim "(1) when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and (2) when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding." Quarles, 92 F.2d at 325.

III. DISCUSSION

Ladue requests that the court decline to assert jurisdiction over the instant declaratory judgment action because the action's claims depend upon an allegedly unsettled question of state law, which, Ladue contends, is currently pending before the South Carolina Court of Appeals in an unrelated case, Cox v. State Farm MutualAutomobile Insurance Co., No. 2018CP2200869. In support of his contention, Ladue relies on the factors the Fourth Circuit espoused in Nautilus, 15 F.3d at 375.

In determining whether to exercise jurisdiction over a federal declaratory judgment claim during the pendency of a parallel state court action, the Fourth Circuit instructs district courts to consider four factors:

(1) whether the state has a strong interest in having the issues decided in its courts; (2) whether the state court could resolve the issues more efficiently than the federal court; (3) whether the presence of overlapping issues of fact or law might create unnecessary entanglement between the state and federal court; and (4) whether the federal action is mere procedural fencing in the sense that the action is merely the product of forum shopping.

Great Am. Ins. Co. v. Gross, 468 F.3d 199, 211 (4th Cir. 2006) (citing Nautilus, 15 F.3d at 377). "The Nautilus factors are not a 'mechanical checklist,' and a district court 'should apply them flexibly in light of the particular circumstances of each case.'" Walker v. Liberty Mut. Ins. Co., 2018 WL 573159, at *4 (D.S.C. Jan. 26, 2018) (quoting ...