United States District Court, W.D. Oklahoma
ZURICH AMERICAN INSURANCE CO., and STEADFAST INSURANCE CO., Plaintiffs,
JOSHUA LEE WELCH; ALFONSO ZUBIA, and MARIA ZUBIA, Defendants.
MILES-LAGRANGE UNITED STATES DISTRICT JUDGE.
the Court is defendants Alfonso Zubia and Maria Zubia's
(“the Zubias”) Motion to Dismiss, filed October
27, 2017. On November 17, 2017, plaintiffs filed their
response. On November 22, 2017, the Zubias filed their reply,
and on December 11, 2017, they filed their Notice of
Supplemental Authority. On November 29, 2017, defendant
Joshua Lee Welch (“Welch”) filed his Joinder in
Zubia Defendants' Motion to Dismiss and Reply in Support,
and on December 7, 2017, plaintiffs filed their response to
Welch's joinder. Based upon the parties' submissions,
the Court makes its determination.
December 29, 2016, the Zubias filed a lawsuit against Welch,
J-W Energy Company, and J-W Power Company in the District
Court of Oklahoma County, State of Oklahoma. In that lawsuit,
the Zubias allege that on August 30, 2016, a truck driven by
Welch collided with a car driven by Mr. Zubia in which Mrs.
Zubia was a passenger, injuring both of them. The Zubias
further allege that at the time of the accident, Welch was
acting in the course and scope of his employment with J-W
Energy Company and J-W Power Company. Finally, the Zubias
allege that the August 30, 2016 collision resulted from the
negligence of Welch, J-W Energy Company, and J-W Power
Company. In July 2017, J-W Energy Company and J-W Power
Company filed a motion for summary judgment in which they
asserted that Welch was not acting in the course and scope of
his employment when the company truck that he was driving
collided with the Zubias' car. On December 8, 2017, the
state court judge denied the motion for summary judgment.
October 3, 2017, plaintiffs filed this action for declaratory
judgment, seeking a declaration that they have no duty to
defend or indemnify Welch in connection with the state
lawsuit. In the alternative, plaintiffs seek a declaration
that Welch exceeded the scope of consent to use the truck he
was operating at the time of the accident and that Welch has
no insurance coverage under the subject policies in excess of
the statutory minimum compulsory insurance limit. Defendants
now move this Court to dismiss or stay this action on the
grounds that the state lawsuit involves substantially the
same issue as that raised in the instant case.
assert that in light of the pending state lawsuit, this Court
should exercise its discretion to dismiss this action, or, in
the alternative, should stay the instant action pending final
resolution of the state lawsuit. Defendants contend that the
state lawsuit, like the instant action, concerns the factual
question of whether Welch was acting in the course and scope
of his employment at the time of the August 30, 2016
collision. Defendants further contend that proceeding with
the instant case would unduly interfere with the orderly and
comprehensive disposition of the state lawsuit.
assert that the issue in the instant action does not concern
whether Welch was acting in the scope of his employment at
the time of the accident or whether J-W Power Company is
vicariously liable for Welch's acts and/or omissions but
rather concerns whether Welch was using the subject truck
with permission at the time of the accident and whether Welch
is insured under the policies issued by plaintiffs.
Plaintiffs contend that this is a separate issue from that
pending in the state lawsuit. Plaintiffs, therefore, contend
that proceeding with the instant action would not unduly
interfere with the orderly and comprehensive disposition of
the state lawsuit and that neither a dismissal nor a stay of
this action is warranted.
The Supreme Court held in Wilton v. Seven Falls Co.
that district courts have “unique and substantial
discretion” in determining whether to declare the
rights of litigants when duplicative state proceedings exist.
515 U.S. at 286-87, 115 S.Ct. 2137. This discretion is
conferred upon the district courts by the Declaratory
United States v. City of Las Cruces, 289 F.3d 1170,
1179-80 (10th Cir. 2002). In exercising this discretion, a
court should consider the following five factors:
 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 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
State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d
979, 983 (10th Cir. 1994).
carefully reviewed the parties' submissions, and having
considered the Mhoon factors, the Court finds that
proceeding with the instant action would unduly interfere
with the orderly and comprehensive disposition of the state
lawsuit and that the Court should exercise its discretion and
decline to hear the instant action. First, the Court finds
that the issue in the instant case - whether Welch was using
the subject truck with permission - is the same as one of the
issues raised in the state lawsuit - whether Welch was acting
in the course and scope of his employment. The facts that
would be used to determine scope of employment in the state
lawsuit are the same facts that would be used to determine
scope of permission in the instant action. In fact, the Court
finds that the facts that determine scope of permission are
so intertwined with those determining scope of employment as
to be practicably inseparable.
the Court finds that this action would not settle the full
controversy. This Court might find that Welch had permission
to use the truck and there was coverage, while a jury in the
state lawsuit might find that Welch was not acting within the
scope of his employment, which would indicate there perhaps
was no coverage, or vice versa; rather than settling the
controversy, the conflicting decisions in the two cases would
create more controversy. Additionally, the Court finds this
action would not serve the useful purpose of clarifying the
legal relations at issue but could likely cause the legal
relations at issue to be less clear. The Court also finds
that it is possible, based upon the timing of the filing of
this action, that plaintiffs are using this action for the
purpose of procedural fencing or to provide an ...