The opinion of the court was delivered by: Stein, District Judge.
Plaintiff insurance company seeks a declaratory judgment that
it has no duty to defend or indemnify defendant policyholder in
an underlying personal injury action due to the policyholder's
failure to notify plaintiff of the claim in a timely fashion.
The policyholder has moved to dismiss the complaint and the
insurance company has cross-moved for summary judgment. A
parallel proceeding is pending in New Jersey state court. For
the reasons set forth below, this Court declines to exercise
jurisdiction over this declaratory action pursuant to
28 U.S.C. § 2201 and the complaint is dismissed.
In September 1997, plaintiff Commercial Underwriters Insurance
Company ("Commercial"), a California corporation with its
principal place of business in that state, issued a commercial
general liability insurance policy to Glowmaster Corporation, a
New Jersey corporation with its principal place of business in
New Jersey. Glowmaster sells portable stoves and butane fuels at
wholesale. Commercial's New York office handled the underwriting
and issuance of that policy.
On October 11, 1997, during the term of the policy, Elizabeth
Dicenso was injured in Virginia when a propane heating unit
allegedly manufactured by Glowmaster exploded, severely injuring
her. Almost two years later — in August 1999 — Dicenso filed a
personal injury action against Glowmaster and others in Virginia
state court, seeking $1.5 million in compensatory damages.
On November 22, 1999 — approximately three months after the
personal injury action was started — Commercial filed this
action in the Southern District of New York, seeking a
declaratory judgment that it has no duty to defend or indemnify
Glowmaster with respect to the underlying Dicenso action.
Commercial contends that Glowmaster failed to provide adequate
and timely notice of Dicenso's injury and claim as required by
One month later, on December 21, 1999, Glowmaster filed a
complaint in the Superior Court of New Jersey, Bergen County,
("New Jersey action") against Commercial seeking a declaratory
judgment and damages for breach of the duty of good faith and
fair dealing and breach of fiduciary duty.
Glowmaster has moved to dismiss this action on four grounds:
that (i) this Court should abstain from exercising its
jurisdiction pursuant to 28 U.S.C. § 2201; (ii) this Court
should dismiss the complaint for lack of personal jurisdiction
pursuant to Fed.R.Civ.P. 12(b)(2); (iii) venue is improper
pursuant to Fed.R.Civ.P. 12(b)(3); and (iv) this Court is an
inconvenient forum pursuant to 28 U.S.C. § 1404(a). Commercial
has cross moved for summary judgment.
A district court derives its power to decide a declaratory
action from the Declaratory Judgment Act. See
28 U.S.C. § 2201(a). The U.S. Supreme Court has "repeatedly characterized
the Declaratory Judgment Act as `an enabling Act, which confers
a discretion on the courts rather than an absolute right upon
the litigant.'" Wilton v. Seven Falls Co., 515 U.S. 277, 287,
115 S.Ct. 2137, 132 L.Ed.2d 214 (1995) (quoting Public Service
Com'n of Utah v. Wycoff Co., Inc., 344 U.S. 237, 241, 73 S.Ct.
236, 97 L.Ed. 291 (1952)). The U.S. Supreme Court has cabined
the issue of when district courts should accept jurisdiction
where a parallel state proceeding is pending:
Ordinarily it would be uneconomical as well as
vexatious for a federal court to proceed in a
declaratory judgment suit where another suit is
pending in a state court presenting the same issues,
not governed by federal law, between the same
parties. Gratuitous interference with the orderly and
comprehensive disposition of a state court litigation
should be avoided.
Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 495, 62
S.Ct. 1173, 86 L.Ed. 1620 (1942); see also Wilton, 515 U.S. at
282-83, 115 S.Ct. 2137.
"Federal and state proceedings are `concurrent' or `parallel'
for purposes of abstention when the two proceedings are
essentially the same; that is, there is an identity of parties,
and the issues and relief sought are the same." National Union
Fire Ins. Co. v. Karp, 108 F.3d 17, 22 (2d Cir. 1997). In
considering its discretion, the district court "should examine
the scope of the pending state court proceeding and the nature
of defenses open there." National Union Fire Ins., 108 F.3d at
22. A non-exclusive list of factors includes: (1) whether the
claim of all parties in interest can be adjudicated in the
parallel state proceeding; (2) whether necessary parties have
been joined; (3) whether those parties are amendable to process
in that proceeding; (4) whether the case involves any federal
questions of law; (5) avoiding duplicative proceedings; and (6)
forum shopping. See Wilton, 515 U.S. at 282-83, 115 S.Ct.
2137; National Fire Ins. Co., 108 F.3d at 22; Reliance Ins.
Co. of Illinois v. ...