I Do Declare!

Starr Indem.& Liab. Ins. Co. v. Camenzind Dredging Inc., No.19-CV-00694-LHK, 2019 U.S. Dist. LEXIS 177412, 2019WL 5102571 (N.D.Cal. Oct. 11, 2019).

By:Brendan Bowen

In this decision, the United States District Court forthe Northern District of California denied a motion to dismiss or stay aninsurer’s pending declaratory judgment action. Applying the test laid out bythe United States Supreme Court in Brillhart, thetrial judge found no reason to decline exercise of its jurisdiction to grantdeclaratory relief.[1]In so doing, the court drew a clear distinction between the establishment of adefendant’s liability and determination of the scope of an insurer’s coveragein maritime cases.

In July of 2017, Paul Williams filed a complaint inCalifornia state court against Camenzind Dredging, Inc. (“Camenzind”), and MBMarine, Inc. (“MBI”). The complaint alleges that Williams suffered a kneeinjury while working aboard a Camenzind/MBI vessel, which was a result of misconductby Camenzind/MBI and the vessel’s unseaworthy condition. In October of 2017,Camenzind gave notice of the complaint to Starr Indemnity and LiabilityInsurance Company (“Starr”), requesting defense and indemnity. While Starrinsured Camenzind under three separate policies at the time, Starr found thatnone of those policies covered the pending suit or related claims. In Februaryof 2019, the insurer filed the instant action in Federal District Court, which soughta declaratory judgment of no duty to defend or indemnify Camenzind forWilliam’s injury or related litigation.[2] Camenzindsubsequently brought a motion to dismiss Starr’s complaint or alternatively,stay the case.

The Declaratory Judgment Act provides district courtswith broad “discretion to dismiss a federal declaratory judgment action when‘the questions in controversy.  .  . can be settled in a pending state court.”[3] Inthe instant case, the court reached its decision using the three-factor testlaid out in Brillhart v. Excess Ins. Co. of Am.Specifically, the court examined whether the action’s dismissal would (1) avoidneedless determination of state law issues, (2) discourage litigants fromfiling declaratory actions as a means of forum shopping, and (3) avoidduplicative litigation.[4]

First, the court found that the case would not callfor needless determination of state court issues. Despite the underlyingcontract dispute, the case will likely involve federal admiralty law. Therefore,this factor weighed against abstention. [5]

Second, the court found no evidence that Starr forumshopped. Starr was not party to the state court litigation and filed theinstant action under both diversity and original admiralty jurisdictions.  In the absence of any contradictory evidence,the court found this factor weighed against abstention.[6]

Third, the court found that the case would not resultin duplicative litigation. The underlying state tort case concerns Camenzind’s personalinjury liability and not the extent of Starr’s policy coverage. With little orno overlap between the state and federal case issues, the court found that thisfactor weighed against abstention.[7]

Lastly, the court considered the application ofadditional factors set forth by the Ninth Circuit in Gov't Employees Ins.Co. v. Dizol.[8]However, the parties in this case provided only “cursory,” or nonexistent,arguments on these factors. Because the three Brillhart factors alreadyweighed against abstention, the court declined to consider the additional Dizolfactors.[9] Consequently, the DistrictCourt denied Camenzind’s motion to dismiss or stay the case.

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[1]Starr Indem. & Liab.Ins. Co. v. Camenzind Dredging, Inc., No. 19-CV-00694-LHK, 2019 WL 5102571, at *12 (N.D. Cal. Oct. 11,2019).

[2] Id. at *2.

[3]See id.at *4 (citing 28 U.S.C.A. § 2201).

[4] See Starr Indem. & Liab. Ins. Co. v. Camenzind Dredging, Inc., No. 19-CV-00694-LHK, 2019 WL 5102571, at *5 (citingBrillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 495 (1942)).

[5]Starr Indem. & Liab. Ins. Co. v. CamenzindDredging, Inc., No. 19-CV-00694-LHK,2019 WL 5102571, at *6-7.

[6] Id. at *7-9.

[7] Id. at *9-11.

[8] Id. at *11 (discussing Gov't Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1227 (9th Cir. 1998)).

[9] Starr Indem. & Liab. Ins. Co. v. CamenzindDredging, Inc., No. 19-CV-00694-LHK,2019 WL 5102571, at *11.