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Allstate Insurance Co. v. Ignatius

United States District Court, S.D. Mississippi, Eastern Division

March 29, 2019

ALLSTATE INSURANCE COMPANY PLAINTIFF
v.
JOE IGNATIUS, et al. DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          KEITH STARRETT, UNITED STATES DISTRICT JUDGE.

         For the reasons below, the Court denies Defendants' Motion to Abstain and Dismiss [12].

         A. Background

         Plaintiff issued a homeowners' insurance policy to Defendants Joe and Joanne Ignatius. Defendants Jamie and Misty Farris filed a lawsuit against the Ignatius Defendants in the Chancery Court of Forrest County, Mississippi, alleging that they breached a real estate contract by making false representations about the condition of the property. The Ignatius Defendants submitted two separate notices of the claim to Plaintiff, demanding indemnity and defense under the policy. Plaintiff denied the claim on both occasions, asserting that there was no coverage under the policy.

         Plaintiff filed this declaratory judgment action, requesting that the Court declare that it has no duty to defend or indemnify the Ignatius Defendants against the suit by the Farris Defendants. The Ignatius Defendants filed a Motion to Abstain and Dismiss [12], arguing that the Court should exercise its discretion under the Declaratory Judgment Act to abstain from hearing Plaintiff's claims.

         B. Discussion

         When considering whether to decide or dismiss a declaratory judgment action, “a district court must engage in a three-step inquiry. First, the court must determine whether the declaratory action is justiciable.” Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000). “Second, if it has jurisdiction, then the district court must resolve whether it has the ‘authority' to grant declaratory relief in the case presented. Third, the court has to determine how to exercise its broad discretion to decide or dismiss a declaratory judgment action.” Id. The first two steps are not in dispute, but Defendants Joe and Joanne Ignatius argue that the Court should exercise its discretion to abstain from hearing this case.

         “[D]istrict courts possess discretion in determining whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional prerequisites.” Wilton v. Seven Falls Co., 515 U.S. 277, 282, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). The Fifth Circuit outlined seven nonexclusive factors for district courts to consider when deciding whether to decide or dismiss a declaratory judgment action:

(1) whether there is pending a state action in which all of the matters in controversy may be fully litigated;
(2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant;
(3) whether the plaintiff engaged in forum shopping in bringing the suit;
(4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist;
(5) whether the federal court is a convenient forum for the parties and witnesses;
(6) whether retaining the lawsuit would serve the purposes of ...

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