United States District Court, N.D. Oklahoma
OPINION AND ORDER
E. DOWDELL UNITED STATES DISTRICT JUDGE
diversity action, the plaintiff, Mesa Underwriters Specialty
Insurance Company (Mesa), seeks a declaratory judgment,
pursuant to 28 U.S.C. § 2201, concerning insurance
coverage issues. According to the Complaint, the insurance
contract at the center of this action is a commercial general
liability policy (the Policy), which was issued to Victor R.
and Suezette Marquez d/b/a Psycho Path and was effective from
September 25, 2015 to November 15, 2015. Mesa alleges that
coverage under the Policy does not exist or is excluded in
relation to the injuries and death of Bradyn L. McClain
was fatally injured in an accident on October 31, 2015 while
at a haunted house allegedly operated by Victor and Suezette
Marquez d/b/a Psycho Path. Bradyn's mother, defendant
Lisa McClain, individually and as the special administrator
of her son's estate, brought an action against the
Marquezes and Psycho Path in state court. That case is
pending in Tulsa County District Court and is styled Lisa
McClain, individually and as Special Administrator of the
Estate of Bradyn L. McClain, a minor v. Psycho Path, LLC, an
Oklahoma limited liability company, and Victor R.
Marquez and Suzette Marquez, individually, Case No.
CJ-2015-4565. There, Ms. McClain seeks damages for her
son's injuries and death.
Court, Mesa seeks a declaration that no coverage exists under
the Policy in relation to the liability alleged by Ms.
McClain in the state court litigation and otherwise with
respect to the incident which resulted in Bradyn's death.
All defendants move to dismiss this action. (See
Doc. 11, 16).
The Marquezes and Psycho Path
Declaratory Judgment Act provides that, “[i]n a case of
actual controversy within its jurisdiction . . . any court of
the United States, upon the filing of an appropriate
pleading, may declare the rights and other legal relations of
any interested party seeking such declaration, whether or not
further relief is or could be sought.” 28 U.S.C. §
2201. The Act authorizes federal courts to make declarations
of rights, but it does not impose a duty to do so. Public
Affairs Assoc., Inc. v. Rickover, 369 U.S. 111, 112
(1962). Whether to entertain a declaratory judgment action is
a matter of discretion of the trial court. Alabama State
Fed'n of Labor v. McAdory, 325 U.S. 450, 462 (1945).
Marquezes and Psycho Path argue that the Court should not
exercise jurisdiction in this declaratory judgment action
because the issues involved in the case at hand are the same
as issues in the state action. (Doc. 16 at 3). The Court
disagrees. The issues in this case are different than those
involved in the state action. In this case, the dispute is
whether Mesa is responsible under its insurance Policy to
cover the state court defendants' liability, if any, in
the state court action. That issue depends on the contract of
insurance between Mesa and the Marquezes, d/b/a Psycho Path.
Mesa is not a party to the state action, and the ultimate
issue there is whether the defendants in that case are liable
for the injuries and death of Bradyn. Although the actions
involve similar circumstances, they do not involve identical
issues, and whether the Policy provides coverage for any
liability in the underlying suit will not necessarily be
determined in the state court action.
have often been willing to exercise jurisdiction to decide
questions relating to the existence of coverage under an
insurance policy, even if the issue is ultimately contingent
on whether the insured party is found liable in the separate
action. See, e.g., Allendale Mut. Ins. Co. v. Kaiser
Engineers, 804 F.2d 592, 594 (10th Cir. 1986). For
example, “[i]nsurers often seek declaratory judgment in
federal court (assuming jurisdiction is appropriate) on
whether they have a duty to defend an insured under the terms
of a liability policy.” Automax Hyundai South,
L.L.C. v. Zurich American Ins. Co., 720 F.3d 798, 810 n.
3 (10th Cir. 2013). A declaratory judgment may also be
appropriate to determine an insurer's prospective
responsibility or duty under a policy, and declaratory
judgment jurisdiction should not be refused merely because of
the pendency of another suit, if the controversy between the
parties will not necessarily be determined in that suit.
See Western Cas. and Sur. Co. v. Teel, 391 F.2d 764,
766 (10th Cir. 1968).
Tenth Circuit has enumerated five factors a district court
should consider in determining whether to exercise
jurisdiction under the Declaratory Judgment Act:
 whether a declaratory action would settle the
controversy;  whether it would serve a useful purpose in
clarifying the legal relations at issue;  whether the
declaratory remedy is being used merely for the purpose of
“procedural fencing” or “to provide an
arena for a race to res judicata;”  whether use of a
declaratory action would increase friction between our
federal and state courts and improperly encroach upon state
jurisdiction; and  whether there is an alternative remedy
which is better or more effective.
State Farm Ins. & Cas. Co. v. Mhoon, 31 F.3d
979, 983 (10th Cir. 1994).
the Mhoon factors, the Court finds it appropriate to
exercise jurisdiction over this declaratory judgment action.
This case will not resolve Ms. McClain's claims in state
court, but it will clarify the legal relations between Mesa
and the defendants in the state court action and will settle
the dispute regarding coverage under the Policy. The
Marquezes and Psycho Path agree that the “single
question to be answered [in this case] is the interpretation
of a contract.” (Doc. 16 at 5). In contrast, the issue
in the pending state action is whether the Marquezes and
Psycho Path are liable for Bradyn's injuries and death.
Thus, Mesa does not seem to be seeking declaratory action for
purposes of “procedural fencing” or racing to res
judicata; the issues are ...