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Encompass Insurance Co. v. Nunley

United States District Court, C.D. California

December 8, 2014

ENCOMPASS INSURANCE COMPANY, Plaintiff,
v.
JAMES NUNLEY; MICHELLE HUNLEY; LORI BRAGG; NUNLEY RACING LLC; GREAT VALLEY BUILDERS, INC.; LA TULA INVESTMENTS, LLC; DRIVEN MOTORSPORTS; SCORE INTERNATIONALL, INC.; KARLA ERIKSSON; TRENT ERIKKSON, by and through his Guardian ad Litem, KARLA ERIKSSON; and TREVOR ERIKSSON, by and through his Guardian ad Litem, KARLA ERIKSSON, Defendants

For Encompass Insurance Company, Plaintiff: Lawrence J Sher, Michael M Pollak, LEAD ATTORNEYS, Pollak Vida and Fisher, Los Angeles, CA.

For James Nunley, Michelle Nunley, Nunley Racing LLC, Great Valley Builders Inc, La Tula Investments LLC, Driven Motorsports, Defendants: Jay A Christofferson, Wanger Jones Helsley PC, Fresno, CA.

For Lori Bragg, Defendant: Peter S Doody, Higgs Fletcher and Mack, San Diego, CA.

For Score International Inc, Defendant: Jonathan Allan Nese, Jonathan A Nese, Attorney at Law, Pasadena, CA.

For Karla Eriksson, Defendant: Amanda L McClintock, Girardi & Keese, Los Angeles, CA.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS OR STAY PROCEEDINGS (DOCKET NUMBERS 13, 14 & 27)

DEAN D. PREGERSON, United States District Judge.

Presently before the Court are Defendants' Motions to Dismiss or Stay Proceedings. (Dkt. Nos. 13, 14, 27.) Having considered the parties' submissions and heard oral arguments, the Court adopts the following order.

I. BACKGROUND

This case arises out of an automobile accident that took place in the vicinity of an off-road race in Mexico on November 25, 2012. (Defs.' RJN, Ex. A, ¶ 1.) Lori Bragg, who was driving, lost control of the vehicle, which rolled several times. (Id. at ¶ 2.) One of the occupants, Mark Eriksson, was killed in the accident. (Id.) His survivors, Karla, Trent, and Trevor Eriksson, filed a wrongful death suit against Bragg. (Id. generally.) The suit also named as defendants Driven Motor Sports, allegedly the " sponsor" of Bragg's racing team, and Score International, allegedly the " sanctioning body" of the off-road race. (Id. at ¶ ¶ 9, 11.) These two defendants are sued under a theory of negligent entrustment.

The parties in that action later amended the filings to add Greg and Michelle Nunley, Nunley Racing LLC, Great Valley Builders, and La Tula Investments (collectively, " Nunley Defendants") as defendants to either the original complaint or Score International's subsequent cross-complaint. (Defs.' RJN, Exs. J-N; Def. Bragg's Mot. Dismiss or Stay at 3.) Numerous other parties were also added to the action, but they are not currently parties to this case. (Id.)

Plaintiff is an insurer with whom Greg and Michelle Nunley have an insurance contract. (Nunley Defs.' Mem. P. & A. at 1.) It is defending the Nunley Defendants in the state action. (Id.) It has filed this action in federal court seeking a declaration that it is not required to defend or indemnify any of the defendants in the state action. (Id. at 1-2; Compl. generally.) Plaintiff's Complaint alleges that " there is no coverage available" under the insurance policy because of several " exclusions" to coverage provided for in the contract. (Compl. at ¶ ¶ 12, 15, 18, 21, 24, 27, 30, 33, 36.)

II. LEGAL STANDARD

Where a plaintiff seeks solely declaratory relief in a matter related to a pending state court action, it is within the district court's discretion to dismiss or stay the federal action. Wilton v. Seven Falls Co., 515 U.S. 277, 288, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). " In the declaratory judgment context, the normal principle that federal courts should adjudicate claims within their jurisdiction yields to considerations of practicality and wise judicial administration." Id.

" The district court should avoid needless determination of state law issues; it should discourage litigants from filing declaratory actions as a means of forum shopping; and it should avoid duplicative litigation. If there are parallel state proceedings involving the same issues and parties pending at the time the federal declaratory action is filed, there is a presumption that the entire suit should be heard in state court. The pendency of a state court action does not, of itself, require a district court to refuse federal declaratory relief. Nonetheless, federal courts should ...


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