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State Farm Fire and Casualty Co. v. Ray

United States District Court, E.D. Oklahoma

June 26, 2018

STATE FARM FIRE AND CASUALTY COMPANY, Plaintiff,
v.
(1) CAMERON RAY, (2) JENNIFER RAY, Defendants.

          OPINION AND ORDER

          James H. Payne United States District Judge

         Before the Court is Defendants' Motion to Abstain and Dismiss or Stay (Dkt 64). Plaintiff opposes the requested relief. (Dkt. 67). After consideration of the briefs, and for the reasons stated below, Defendants' Motion is DENIED.

         BACKGROUND

         Plaintiff State Farm Fire and Casualty Company (“State Farm”) filed this declaratory judgment action in this Court against Defendants Cameron Ray (“Cameron”) and Jennifer Ray (“Jennifer”) (together, “Defendants”). State Farm seeks a declaratory judgment pursuant to 28 U.S.C. § 2201, regarding the existence of coverage and its duty to indemnify and defend Cameron or pay medical expenses to Jennifer under a Farm/Ranch policy issued to Cameron by State Farm.

         According to the Complaint, on April 5, 2015, Jennifer was at her home with several friends in Latta, Oklahoma, when Cameron arrived at the home and shot Jennifer and two friends. (Dkt. 2, ¶¶ 8-9). On April 20, 2015, Cameron was charged with seven counts in the District Court of Pontotoc County, Oklahoma, related to the shooting incident, in No. CF-2015-202 (the “Criminal Case”). (Id. ¶ 10). On October 21, 2016, a jury found Cameron guilty on two counts of Assault and Battery with a Deadly Weapon-one count as to Jennifer and one count as to Charles Tad Price-and recommended a sentence of 15 years as to each count. (Id. ¶ 11). Cameron has appealed his conviction, and the appeal remains pending in the Oklahoma Court of Criminal Appeals. (Id. ¶ 13).

         On January 25, 2017, Jennifer sued Cameron in the District Court of Pontotoc County, Oklahoma, in No. CJ-2017-30 (the “Underlying Lawsuit”). The Petition in the Underlying Lawsuit alleges that Cameron was negligent and reckless in injuring Jennifer, and that he acted with reckless disregard for the safety of Jennifer and others. (Id. ¶ 7). Jennifer seeks medical, property, and other expenses, as well as punitive damages, against Cameron. (Id.).

         At the time of the shooting incident, there was in effect a Farm/Ranch policy issued to Cameron by State Farm. (Id. ¶ 14). Jennifer is seeking coverage under this policy for claims she made against Cameron in the Underlying Lawsuit. (Id. ¶ 15). In this declaratory judgment action, State Farm alleges the policy does not cover Jennifer's bodily injury or property damage resulting from the shooting incident, because the policy covers only accidents, not willful or malicious acts by the insured. (Id. ¶¶ 17-23). State Farm further alleges the policy does not cover Jennifer's bodily injury because she was an “insured” under the policy, and the policy excludes bodily injury to any “insured.” (Id. ¶¶ 24-26). The policy defines “insured” to include the insured's spouse if a resident of the insured's household, and State Farm alleges Jennifer and Cameron were married at the time of the shooting incident and Jennifer may have been a resident of Cameron's household. (Id. ¶ 26).

         State Farm also alleges Cameron failed to provide details of the shooting incident in writing to State Farm or its agent as soon as practicable following the incident, which violated the policy's “Duties After Loss” condition and negates coverage. (Id. ¶¶ 27-29). Finally, State Farm alleges Jennifer failed to provide State Farm with a written proof of claim as soon as practicable, which violated the policy's “Duties of an Injured Person” condition of the policy and negates medical payments coverage. (Id. ¶¶ 30-33). State Farm further alleges it has no duty to defend or indemnify Cameron for claims made against him in the Underlying Lawsuit. (Id. ¶ 34).

         Defendants have now moved for this Court to abstain from exercising jurisdiction over this action and dismiss the Complaint. (Dkt. 64). In the alternative, Defendants ask the Court to stay proceedings in this case until pertinent issues in the Underlying Lawsuit and the Criminal Case have been resolved. State Farm opposes all of Defendants' requested relief. (Dkt. 67). The motion is now fully briefed and ripe for review.

         DISCUSSION

         Defendants contend the Court should decline to exercise its jurisdiction over State Farm's declaratory judgment action and either dismiss or stay this case pending resolution of the Underlying Lawsuit. Defendants argue the resolution of this action would not resolve the entire Underlying Lawsuit. Defendants further argue this lawsuit is an improper attempt to characterize Jennifer's negligence claim as an intentional tort claim, which the court in the Underlying Lawsuit already rejected. Defendants contend this case presents the same material issues of fact that are presented in the Underlying Lawsuit, which rest on whether the liability alleged in the Underlying Lawsuit arises from negligence. State Farm disagrees with Defendants' position and asks the Court to retain jurisdiction over this case and proceed without further delay.

         I. Standard of Review

         The Declaratory Judgment Act “confers upon courts the power, but not the duty, to hear claims for declaratory judgment.” Mid-Continent Cas. Co. v. Vill. at Deer Creek Homeowners Ass'n, 685 F.3d 977, 980 (10th Cir. 2012) (citing Wilton v. Seven Falls Co., 515 U.S. 277, 286-87 (1995)); Pub. Affairs Assoc., Inc. v. Rickover, 369 U.S. 111, 112 (1962)). Therefore, whether to entertain a declaratory judgment action is a matter committed to the trial court's sound discretion. Kunkel v. Cont'l Cas. Co., 866 F.2d 1269, 1273 (10th Cir. 1989) (citing Alabama State Fed'n of Labor v. McAdory, 325 U.S. 450, 462 (1945)). In exercising this discretion, the Court is mindful that declaratory judgment can be particularly useful “in actions wherein insurance companies seek to have their liability declared.” Horace Mann Ins. Co. v. Johnson By and Through Johnson, 953 F.2d 575, 579 (10th Cir. 1991).

         When deciding whether to hear a declaratory judgment action, the court ...


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