United States District Court, N.D. Oklahoma
STATE FARM TIRE AND CASUALTY COMPANY, an Illinois Corporation, Plaintiff,
1 ABERDEEN ENTERPRIZES II, INC.; an Oklahoma Corporation; 2 JIM D. SHOFNER; 3 RENITA SHOFNER; 4 ROBERT SHOFNER; 5 OKLAHOMA SHERIFFS' ASSOCIATION; 6 MIKE WATERS; 7 R.B. HAUF; 8 HARLAN MOORE; 9 MICHEAL BOOTH; 10 SHANNON SMITH; 11 TONY HEAD; 12 CHRIS WEST; 13 JIM WEIR; 14 CLAY SANDER; 15 BOBBY WHITTINGTON; 16 ROGER LEVICK; 17 CARLY GRAFF; 18 RANDY FRAZIER; 19 DAVID SMITH; 20 KENDALLIA KILLMAN; 21 LINDA MEACHUM; 22 CHRISTOPHER CHOATE; 23 IRA LEE WILKINS; and 24 MELANIE HOLMES. Defendants.
OPINION AND ORDER
TERENCE C. KERN UNITED STATES DISTRICT JUDGE
the Court are the (1) Motion to Stay (Doc. 35), filed by
Defendants Aberdeen Enterprizes, II, Inc., Jim D Shofner,
Renita Shofner, Robert Shofner, Oklahoma Sheriffs'
Association, Mike Waters, R B Hauf, Harlan Moore, Michael
Booth, Shannon Smith, Tony Head, Chris West, Jim Weir, Clay
Sander, Bobby Whittington, and Roger Levick
(“Underlying Defendants'”) and (2) Motion
for Leave to File Two Motions for Summary Judgment (Doc. 36),
filed by Plaintiff State Farm Fire and Casualty Company
(“State Farm”). For reasons discussed below, both
motions are DENIED.
Wilkins initially filed No. 17-cv-606 (“Underlying
Action”) in the Northern District of Oklahoma on
November 2, 2017. The case was a putative class action
against Underlying Defendants and others. After considerable
motion practice, Ira Lee Wilkins, along with Carly Graff,
Randy Frazier, David Smith, Kendallia Killman, Linda Meachum,
Christopher Choate, and Melanie Holmes (“Underlying
Plaintiffs”) filed their Second Amended Complaint
(“SAC”) on September 21, 2018. The SAC is 102
pages and names sixty-six (66) defendants. In the SAC,
Underlying Plaintiffs allege ten claims against varying
combinations of the Underlying Defendants and other
Defendants in the Underlying Action, including various
statutory, constitutional, and common law claims. Working in
groups, all Defendants in the Underlying Action have filed
motions to dismiss, which are currently pending. The Court in
the Underlying Action has delayed entering a scheduling order
pending the resolution of several motions, including
Underlying Defendants' motions to dismiss, and it does
not appear that discovery is currently ongoing.
Defendants have demanded that State Farm pay for their
defense in the Underlying Action, and indemnify them for
monetary damages pursuant to State Farm Businessowners
Insurance Policies 96-73-6754-7 and 96-B1-W299-2
(“Policies”). Additionally, Aberdeen has made a
demand on State Farm to indemnify it under the Policies for
its defense and indemnity of at least fifty-four (54) of the
defendants in the Underlying Action. State Farm is providing
a defense to the Underlying Defendants in the Underlying
Action subject to a reservation of rights, including the
right to bring a declaratory judgment action. (Doc. 2; Doc.
37, pg. 6.) State Farm is also apparently paying the costs
and expenses of Aberdeen's defense of the at least
fifty-four (54) defendants in the Underlying Action. (Doc.
36, pg. 2.)
on December 17, 2018, State Farm brought the instant action
against Underlying Defendants and Underlying Plaintiffs. It
seeks declaratory judgment that the Policies do not provide
coverage for the damages the Underlying Plaintiffs seek from
the Underlying Defendants in the Underlying Action, and as
such State Farm has no duty to defend or indemnify them.
(Doc. 2.) Underlying Defendants and Underlying Plaintiffs
have all filed Answers. (Docs. 13, 15, 20, and 30.)
Motion to Stay (Doc. 35)
Defendants request that the Court stay this case pending the
resolution of the motions to dismiss in the Underlying
Action. Under the Declaratory Judgment Act, a federal court
“may declare the rights and other legal relations of
any interested party seeking such declaration.” 28
U.S.C. § 2201. However, the federal courts possess
“unique and substantial discretion in deciding whether
to declare the rights of litigants, ” even when the
suit otherwise satisfies subject matter jurisdictional
prerequisites, and are therefore not required to entertain
such a case. See Wilton v. Seven Falls Co., 515 U.S.
277, 282-86 (1995). If the Court finds that it should not
exercise jurisdiction over a declaratory judgment action, it
must also consider whether Plaintiff's claims should be
dismissed without prejudice or stayed. See United States
v. City of Las Cruces, 289 F.3d 1170, 1192-93 (10th Cir.
2002). The Tenth Circuit has articulated several factors to
guide district courts in their exercise of such substantial
(1) whether a declaratory action would settle the
controversy; (2) whether it would serve a useful purpose in
clarifying the legal relations at issue; (3) 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”; (4) whether use of a
declaratory action would increase friction between our
federal and state courts and improperly encroach upon state
jurisdiction; and (5) whether there is an alternative remedy
which is better or more effective.
State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d
979, 983 (10th Cir. 1994).
Mhoon addressed a parallel state court proceeding,
the policy undergirding these factors-clarifying and
eliminating uncertainty from legal relations-apply equally to
the parallel federal court proceeding, and other district
courts have similarly applied Mhoon in such
circumstances. See, e.g., Colony Ins. Co. v.
Global Power Generation Serv. Corp., No. 17-cv-2690-EFM,
2018 U.S. Dist. LEXIS 137008, *16 (D. Kan. Aug. 14, 2018)
(denying a motion to dismiss or stay a declaratory judgment
action in a case with a parallel federal court action because
the parties failed to address the Mhoon factors);
Firstline Sec., Inc. v. Alarm.com Inc. (In re
Firsline Sec. Inc.), 415 B.R. 553, 559-560 (D. Utah Apr. 2,
2009) (Court considered the Mhoon factors to stay
the case pending the resolution of a motion in the underlying
federal bankruptcy case).
their Reply, Underlying Defendants contend for the first time
that the Mhoon factors do not apply
here. Because this argument was raised for the
first time on reply, and State Farm has therefore not had a
meaningful opportunity to respond, the Court finds it
improper to consider this argument. See United States v.
Herget, 585 Fed.Appx. 948, 950-51 (10th Cir. 2014).
Moreover, the Court notes that Underlying Defendants have
failed to present a plausible alternative to the
Mhoon factors-the test cited in their Reply appears
to be based on the Court's power under Federal Rule of
Civil Procedure(“Rule”) 26(c) to stay discovery
pending its decision on a dispositive motion in the same
case. As the relevant dispositive motions are not pending in
this case, the test is inapplicable.