United States District Court, N.D. California
ORDER DENYING PLAINTIFF'S MOTION TO STAY Re: Dkt.
ILLSTON United States District Judge
the Court is plaintiff Henstooth Ranch LLC's
(“Henstooth's”) motion to stay. Dkt. No. 15.
Pursuant to Civil Local Rule 7-1(b), the Court determines
that this matter is appropriate for resolution without oral
argument and hereby VACATES the hearing scheduled for April
14, 2017. For the reasons set forth below, the Court DENIES
November 2015, Sonoma Land Trust (“SLT”) sued
Henstooth and its members, Peter and Toni Thompson, in Sonoma
County Superior Court for violation of a conservation
easement (the “SLT Action”). See SLT
Action Complaint (Dkt. No. 1-1) at 88-106. SLT alleges that
Henstooth and the Thompsons violated the easement by
constructing a new road, removing an old oak tree, and
causing other property damage. Id. SLT asserts three
causes of action: (i) violation of the conservation easement;
(ii) breach of contract; and (iii) cutting, carrying off, or
injuring trees. Henstooth tendered the SLT Action to
Burlington under a liability insurance policy and Burlington
denied coverage. Complaint (Dkt. No. 1-1) at ¶¶
15-16. Trial in the SLT Action is set to begin on June 2,
2017. Leslie Decl. (Dkt. No. 15-1) ¶ 6.
filed this declaratory relief action in Contra Costa County
Superior Court on November 21, 2016 and served defendant
Burlington Insurance Company (“Burlington”) on
December 20, 2016. See Notice of Removal (Dkt. No.
1) ¶ 6; id. Ex. 1, Complaint (Dkt. No. 1-1) at
Burlington removed the action to this Court on January 3,
2017. The complaint seeks a declaration of rights under
liability insurance policies and that Burlington, as insurer,
has a duty to defend or indemnify Henstooth in the SLT
Action. Id. Henstooth now moves to stay this case
pending resolution of the SLT Action. Mot. (Dkt. No. 15).
district court has discretion to stay or dismiss an action
for declaratory relief over which it has jurisdiction.”
Century Sur. Co. v. Byal, No. 10-3917-WHA, 2011 WL
2550832, at *2 (citing Wilton v. Seven Falls Co.,
515 U.S. 277, 288 (1995)); see also Clinton v.
Jones, 520 U.S. 681, 706 (1997) (“The District
Court has broad discretion to stay proceedings as an incident
to its power to control its own docket.”). “If
there are parallel state proceedings involving the same
issues and parties pending at the time the federal
declaratory relief action is filed, there is a presumption
that the entire suit should be heard in state court.”
Gov't Emps. Ins. Co. v. Dizol, 133 F.3d 1220,
1225 (9th Cir. 1998) (citation omitted). However,
“[t]he pendency of a state court action does not, of
itself, require a district court to refuse federal
declaratory relief.” Id. “[T]here is no
presumption in favor of abstention in declaratory actions
generally, nor in insurance coverage cases
courts in the Ninth Circuit utilize the Brillhart
factors as their “philosophic touchstone” in
considering whether to stay or dismiss an action for
declaratory relief. Id. & n.5; see Brillhart v.
Excess Ins. Co. of Am., 316 U.S. 491 (1942); Am.
States Ins. Co. v. Kearns, 15 F.3d 142 (9th Cir. 1994).
The Brillhart factors guide district courts to
“avoid needless determination of state law issues; . .
. discourage litigants from filing declaratory actions as a
means of forum shopping; and . . . avoid duplicative
litigation.” Dizol, 133 F.3d at 1225.
Additionally, a court may consider “whether the
declaratory action will settle all aspects of the
controversy”; whether it “will serve a useful
purpose in clarifying the legal relations at issue”;
whether declaratory relief “is being sought merely for
the purposes of procedural fencing or to obtain a ‘res
judicata' advantage”; or whether the action
“will result in entanglement between the federal and
state court systems.” Id. at 1225 n.5 (citing
Kearns, 15 F.3d at 145 (Garth, J., concurring)).
“In addition, the district court might also consider
the convenience of the parties, and the availability and
relative convenience of other remedies.” Id.
party argues that the Court should dismiss this case under
Wilton and its progeny. Nor has plaintiff requested
a remand; it seeks only to stay this action for its
convenience. This order focuses only on plaintiff's
request for a stay.
initial matter, the Court places particular emphasis on the
fact that Henstooth filed this declaratory relief action, not
Burlington. Henstooth claims it filed this action to
“preserve and assert its rights under the policy,
” yet it faced no imminent statutory or contractual
deadline to file. Mot. at 3. Now, much of Henstooth's
motion to stay this action is based upon the prejudice it
will purportedly face in having to “fight a two-front
war.” The second “front” - this declaratory
relief action - is of Henstooth's own creation. As such,
Henstooth's claims of prejudice in this regard are
Court now turns to the relevant Brillhart factors to
determine whether a stay is appropriate here. Henstooth
argues that this declaratory relief action would
“require needless determination of state law issues and
duplicative litigation.” Mot. at 10. Henstooth argues
that many factual issues in this case will overlap with those
in the SLT Action, such as “what precipitated the tree
removal and also the subsequent alleged property damage, what
did Henstooth Ranch and the Thompsons do, what were Henstooth
Ranch and the Thompsons supposed to do, who (if anyone) is at
fault, and who is ultimately responsible.” Id.
(citing Leslie Decl. ¶ 10).
on the record, the Court does not see a significant overlap
between the two actions. The SLT Action will turn on, among
other things, whether the defendants' removing trees,
building a road, and damaging land violated SLT's
conservation easement. This declaratory relief action turns
on whether the property damage is a covered
“occurrence” (i.e., accident) under the
Burlington insurance policy. In this action, Burlington will
seek to prove that Henstooth acted intentionally in building
a road, moving a tree, and causing other damage. Findings on
this issue would not interfere with the state court's
determination of whether Henstooth or the Thompsons violated
the SLT easement. While some discovery will overlap between
the two actions, the overlap is not likely to be significant
or prejudicial. In the Court's view, this action can be
resolved without any prejudice to Henstooth in the SLT
Action, especially where the SLT Action will likely proceed
to final judgment well ahead of this case. See Great Am.
Ins. Co. v. Superior Court, 178 Cal.App.4th 221, 235
further argues that “[t]here is no inconvenience or
prejudice to Burlington by having to wait a few extra
months” before proceeding with this declaratory relief
action, but that Henstooth will face significant prejudice in
having to litigate two actions simultaneously. Reply (Dkt.
No. 23) at 4-5. As set forth above, however, Henstooth's
arguments about fighting a “two-front war” ...