Maryland Casualty Co. v. Witherspoon

Page 1179

For Maryland Casualty Company, a corporation, Plaintiff: Brent Adam Kramer, Dean B Herman, Hee Young Lee, LEAD ATTORNEYS, Kaufman Dolowich & Voluck LLP, Los Angeles, CA.

For Reese Witherspoon, an individual, Defendant: Charles J Harder, LEAD ATTORNEY, Harder Mirell and Abrams LLP, Los Angeles, CA.

For Marketing Advantages International Inc, doing business as Emitations.com, Defendant: Daniel H Rylaarsdam, LEAD ATTORNEY, Kilpatrick Townsend, Beverly Hills, CA.

OPINION

Page 1180

HONORABLE RONALD S.W. LEW, Senior United States District Judge.

AMENDED

ORDER RE: DEFENDANT WITHERSPOON'S MOTION TO DISMISS OR STAY ACTION [13] AND DEFENDANT MARKETING ADVANTAGES'S MOTION FOR JOINDER IN MOTION TO DISMISS OR STAY ACTION [19]

Currently before the Court are Defendant Reese Witherspoon's (" Defendant Witherspoon" ) Motion to Dismiss or Stay Action [13] and Defendant Marketing Advantages International, Inc.'s (" Defendant Marketing Advantages" ) Motion for Joinder in Motion to Dismiss or Stay Action [19]. The Court, having reviewed all papers submitted pertaining to these Motions, NOW FINDS AND RULES AS FOLLOWS: The Court GRANTS Defendant Marketing Advantages's Motion for Joinder in Motion to Dismiss or Stay Action, DENIES Defendant Witherspoon's Motion to Dismiss and GRANTS Defendant Witherspoon's Motion to Stay.

Page 1181

I. BACKGROUND

Plaintiff Maryland Casualty Company (" Plaintiff" ) is a property-casualty insurer. Compl. ¶ 3. Defendant Marketing Advantages is a California Corporation, doing business in Los Angeles, California. Id. at ¶ 5.

Plaintiff issued Policy No. PAS 42871047 (" Policy" ) to Defendant Marketing Advantages as the named insured for the period December 22, 2011 to December 22, 2012. Id. at ¶ 7.

On June 20, 2013, Defendant Witherspoon initiated an action in California Superior Court (" the Underlying Action" ) alleging that Defendant Marketing Advantages had been using her name and image extensively in advertisements for the sale of jewelry products without her permission, both throughout the United States and internationally. Id. at ¶ 2, Pl.'s Request for Judicial Notice (" RJN" ), Ex. A.

Plaintiff initiated the present Action seeking declaratory relief and claiming that the Policy does not cover the claims in the Underlying Action. Specifically, Plaintiff requests that this Court declare that Plaintiff has no duty to indemnify Defendant Marketing Advantages, claiming that an Intellectual Property Exclusion in the Policy bars coverage. Compl. ¶ 15. Plaintiff also requests a declaration from this Court that Plaintiff did not and does not have a duty to defend Defendant Marketing Advantages in the Underlying Action under the Policy. Id. at ¶ 21.

Plaintiff initiated this Action against Defendants on October 23, 2013 [1]. On December 10, 2013, Defendant Witherspoon filed a Motion to Dismiss or Stay Action [13]. On December 17, 2013, Defendant Marketing Advantages filed Motion for Joinder in Motion to Dismiss or Stay Action [19]. This matter was taken under submission on January 2, 2014 [28].

II. LEGAL STANDARD

The Declaratory Judgment Act states, " [i]n a case of actual controversy within its jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations of any interested party seeking such declaration." Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 669 (9th Cir. 2005) (citing 28 U.S.C. § 2201(a)). Under the Declaratory Judgment Act, the Ninth Circuit applies a two-part test to determine whether jurisdiction over a claim for declaratory relief is appropriate. Id. The court must first determine if an actual case or controversy exists within its jurisdiction. Id. If so, the court must then decide whether to exercise its jurisdiction by analyzing the factors set out in Brillhart v. Excess Ins. Co., 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942) and its progeny, American States Ins. Co. v. Kearns, 15 F.3d 142 (9th Cir. 2004). Id.

A federal court's broad discretion to abstain in declaratory relief actions empowers it to stay or dismiss such actions in favor of pending state court proceedings involving the same issues and parties. Wilton v. Seven Falls Co., 515 U.S. 277, 286-87, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). 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. Brillhart, 316 U.S. at 495.

The goals for a district court to follow in deciding whether to exercise jurisdiction in a declaratory judgment action when a parallel action is pending in state court are: (1) to avoid needless ...