Standard Fire Ins. Co. v. Gordon

• Decision Date: 10 June 2005
• Docket Number: No. 04-351S.,04-351S.
• Citation: 376 F.Supp.2d 218
• Parties: The STANDARD FIRE INSURANCE COMPANY, Plaintiff, v. Donald GORDON and Nicole Lea Gordon, Defendants.
• Court: U.S. District Court — District of Rhode Island

376 F.Supp.2d 218

The STANDARD FIRE INSURANCE COMPANY, Plaintiff, v. Donald GORDON and Nicole Lea Gordon, Defendants.

No. 04-351S.

United States District Court, D. Rhode Island.

June 10, 2005.

Ronald P. Langlois, Esq., Smith & Brink, P.C., Providence, RI, for Plaintiff.

Robert E. Flaherty, Warwick, RI, Dennis J. Tente, Coletti & Tente, Cranston, RI, for Defendants.

DECISION AND ORDER

SMITH, District Judge.

This case arises out of an unfortunate accident which occurred at a home owned by Donald Gordon. The accident resulted in personal injury to Donald's daughter, Nicole Lea Gordon. Following the accident, Nicole brought a negligence suit against her father in state court. Donald's insurer, Standard Fire Insurance Company, responded by bringing a declaratory judgment action in this Court against Donald and Nicole, pursuant to the federal Declaratory Judgment Act, 28 U.S.C. § 2201,¹ seeking a determination of its rights and obligations under its insurance contract with Donald. Nicole filed a Motion to Dismiss. The issue for this Court to decide is whether a declaratory judgment action regarding liability insurance coverage should be dismissed in light of the pendency of a related state court tort suit. For the reasons set forth below, the Motion to Dismiss is DENIED.

I. Background

On April 11, 2002, Donald Gordon purchased a house located at 52 Lake Street in Wakefield, Rhode Island. The home was insured by Standard Fire Insurance Company ("Standard" or "Plaintiff") pursuant to a Homeowner's Policy ("the Policy") issued to Donald, with a policy period of April 11, 2002, to April 11, 2003. Some time in June or July 2002, Nicole Gordon and her boyfriend moved into the home. On July 25, 2002, Nicole fell down a set of stairs on the premises and was injured.

Two years passed, and on April 21, 2004, Nicole sued her father, Donald, for negligence in Rhode Island Superior Court. Approximately three months later, on August 17, 2004, Standard brought this action against Nicole and Donald, seeking, among other things, a declaration that it has no duty to defend or indemnify Donald. On October 20, 2004, Nicole and Donald filed their Answer,² and shortly thereafter, on October 25, 2004, Nicole filed a Motion to Dismiss. Standard filed its Opposition on November 15, 2004, and, after receiving a brief extension of time, Nicole filed her Response on December 21, 2004. Oral argument on the Motion to Dismiss was held on January 7, 2005.

II. Standard of Review

Pursuant to Federal Rule of Civil Procedure 12(b)(6), this Court must determine whether the Complaint states any claim upon which relief could be granted. See Fed.R.Civ.P. 12(b)(6). In so doing, the Court accepts all well-pleaded factual assertions as true and draws all reasonable inferences from those assertions in the Plaintiff's favor. See Aybar v. Crispin-Reyes, 118 F.3d 10, 13 (1st Cir.1997). A plaintiff is "required to set forth factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory." Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir.1988).

III. Declaratory Judgment Act and Related State Litigation

"One of the most litigated issues in our system of federalism is what effect a state court action has on a subsequent federal court suit involving the same parties and similar issues." Brayton v. Boston Safe Deposit & Trust Co., 937 F.Supp. 150, 151 (D.R.I.1996). This question of intersecting state and federal jurisdiction lies at the heart of Nicole's Motion to Dismiss. In this case, Nicole has sued her father, Donald, in Superior Court for negligent maintenance of the premises owned by him, while Standard, Donald's insurer, has brought suit against both Nicole and Donald in this Court, seeking declaratory relief under the Declaratory Judgment Act, regarding issues of insurance coverage.

Before turning to the merits of the parties' respective arguments regarding abstention, there is a threshold issue that must be addressed. For reasons unknown to this Court, Donald did not explicitly join in Nicole's Motion to Dismiss (Def.'s Mem. Supp. Dismiss at 4), or bring a separate Motion of his own. It is unclear whether Donald's conspicuous absence was intentional. At first blush, it appears that Donald has no intention of opposing Standard's declaratory judgment action — Donald's attorney (who is different from Nicole's attorney, Dennis J. Tente) filed nothing more than an Answer and a Counterclaim in this action, and did not even bother to appear at the hearing on Nicole's Motion to Dismiss. A more searching inquiry, however, suggests the opposite. Nicole's Response to Standard's Opposition, while requesting relief for Nicole only, is submitted on behalf of both Donald and Nicole, by "their" attorney, Mr. Tente. (Def.'s Response at 9.) While Attorney Tente has not entered a formal appearance on behalf of Donald, this filing constitutes an appearance on behalf of Donald pursuant to Rule 6(a) of the Local Rules of the United States District Court for the District of Rhode Island. Moreover, even if Attorney Tente were not acting as Donald's attorney for this Motion, the filing is strongly indicative of the parties' intent to jointly submit the Motion to Dismiss. Also, at oral argument, Attorney Tente indicated that he believed he was filing the Motion on behalf of both Nicole and Donald. (Hr'g, C.A. 04-351S, 1/7/05 (audio tape on file with district court) (hereinafter, "Hr'g, 1/7/05") ("[Nicole] is really ... pressing all issues that her father would have as a party defendant.").) According to Attorney Tente, counsel for Donald was on board with this assumption. (Id. ("[W]hen we conferenced this case... [Donald's attorney] indicated to the Court that he was more or less joining to some degree in the motion that I was making and in whatever documentation that I was filing with the Court.").)

This Court may therefore treat Nicole's Response as amending her Motion to Dismiss to include Donald, where that appears to be the clear intent of the parties based upon their representations to this Court. Cf. Heyert v. State Farm Mut. Auto. Ins. Co., 2002 WL 5661, at *1 (9th Cir. Jan.2, 2002) (unpublished opinion) (allowing appeal where party's intent to appeal could be fairly inferred). Amendment of the Motion, moreover, will not prejudice Standard, considering that the addition of Donald does not raise any legal arguments not already addressed by Standard (indeed, Nicole contends that she is pressing Donald's legal arguments in the Motion), and does not contribute to any delay. See Britton v. Cann, 682 F.Supp. 110, 113 (D.N.H.1988) (allowing motion to dismiss to be amended to include objection that was inadvertently omitted, where amendment was sought in good faith, plaintiff would not be unduly prejudiced, and case would not be unduly delayed); see generally 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1194 (3d ed.2004).

This approach is also consistent with the practical reality of this case. That is, the objective of Donald and Nicole in this Motion is to persuade this Court to abstain from consideration of Standard's request to have the coverage question resolved in federal court. They argue that this issue should be resolved by one court (the Rhode Island Superior Court) and that they should not have to litigate in two separate courts. Moreover, it is clear as a matter of common sense that Nicole is seeking recovery from Standard to compensate her for her injuries. Presumably, Nicole does not wish to take her father's assets; she needs to sue her father, however, to get to Standard. Nicole's attorney conceded as much at oral argument, noting that Nicole was not truly adverse to her father in the underlying tort suit. (Hr'g, 1/7/05.) So while it would be possible for this Court to read the present Motion in a narrow fashion, dismiss Nicole, and leave Donald as a defendant, this result would fail to address the policy-based abstention arguments raised in support of this Motion. This result would seem to elevate form over substance, and would ignore the parties' (particularly Donald's and Nicole's) apparent intent.

Further, even if Donald's failure to formally join in the Motion is intentional, this Court still has jurisdiction to consider Nicole's Motion and her arguments in favor of abstention. It is well-settled that an insurer may bring a declaratory judgment action regarding liability coverage against an injured third party as well as the insured. Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 274, 61 S.Ct. 510, 85 L.Ed. 826 (1941) (holding that declaratory judgment action presented an actual controversy between insurer and injured third party, where the latter could have proceeded directly against the former in certain limited circumstances pursuant to state law); see also Aetna Cas. & Sur. Co. v. Kelly, 889 F.Supp. 535, 537-38 (D.R.I.1995) (insurance company brought declaratory judgment action against all parties to underlying tort suit, including injured third parties); see generally R.I. Gen. Laws § 27-7-2 (setting forth limited circumstances under which injured third party may proceed directly against insurer). It follows that a third party should therefore be allowed to bring a motion to dismiss such action. Hawkeye-Security Ins. Co. v. Schulte, 302 F.2d 174, 177 (7th Cir.1962) (stating that "[i]t would be anomalous to hold ... that an actual controversy exists between [the injured third party] and [the insurer] and yet deny [the injured third party] the right to participate in the controversy"). Therefore, this Court will consider fully the arguments in favor of abstention brought by Nicole and will consider them as brought on behalf of both Nicole and Donald.

Nicole argues that, as a result of her negligence action pending in state court, Standard's Motion for Declaratory Relief on the insurance coverage issues should be...