Wilton v. Seven Falls Co., 901 F. Supp. 243 (S.D. Tex. 1993)

Michael A. Orlando, Meyer, Orlando & Evans, Houston, TX, for Plaintiffs.

Werner A. Powers, Haynes & Boone, Dallas, TX, for Defendants.

HITTNER, District Judge.

Pending before this Court is a motion to dismiss or to stay filed by defendants Seven Falls Company, Margaret Hunt Hill, Estate of A.G. Hill, Lyda Hill, Alinda H. Wikert, and U.S. Financial Corporation. After having considered the motion, the submissions of the parties, and the applicable law, the Court determines that this action should be stayed.

Plaintiffs Leslie Wilton, on behalf of himself and as a representative of certain Underwriters at Lloyd's of London, and certain Institute of London Underwriters companies filed this action, seeking a declaration of their rights and obligations under five different insurance policies issued to the defendants.

Plaintiffs have denied coverage and defense obligations under the policies for claims pending against defendants in Winkler County, Texas and Dallas County, Texas (collectively, the "Heritage Group claims").

*244 In September 1992, before this action was filed, the lawsuit pending in Winkler County proceeded to trial, and the court entered a jury verdict against the defendants in excess of $100 million. After receiving notice of the verdict, plaintiffs filed a declaratory judgment suit identical to the present action on December 9, 1992.

That suit was dismissed without prejudice pursuant to an agreement of counsel which required defendants to give plaintiffs notice of any intent to commence litigation in the future. Such notice was given on February 23, 1993, and plaintiffs filed this action later that day. On March 26, 1993, defendants filed a suit in Travis County, Texas, against the plaintiffs for, among other things, breach of contract and breach of the duty of good faith and fair dealing. In the instant motion, defendants seek to dismiss or to stay this action pending the conclusion of the related suit in Travis County.

The district court, in its discretion, may provide declaratory relief. 909 Corp. v. Village of Bolingbrook Police Pension Fund, 741 F. Supp. 1290, 1292 (S.D.Tex.1990) (citing Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 601 (5th Cir. 1983)). To determine if declaratory relief is appropriate, the court may consider whether the declaratory judgment action was filed in anticipation of a trial on the same issues in state court. Rowan Companies, Inc. v. Griffin, 876 F.2d 26, 29 (5th Cir.1989) (citing Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494-5, 62 S. Ct. 1173, 1175-76, 86 L. Ed. 1620 (1942)); 909 Corp., 741 F. Supp. at 1292. The court may also consider whether granting relief will result in piecemeal litigation. Granite State Ins. Co. v. Tandy Corp., 762 F. Supp. 156, 157 (S.D.Tex.1991), aff'd, 959 F.2d 968 (1992) (citations omitted).

The state court lawsuit pending in Travis County encompasses the coverage issues raised by the plaintiffs in this action. The plaintiffs are already parties to that suit and may assert their claims as defenses or counterclaims. Resolving the plaintiffs' claims in this Court, however, would not dispose of the Travis County suit. Further, when the plaintiffs originally filed this suit in December 1992, they did so in anticipation of litigation after receiving notice of the Winkler County verdict. See 909 Corp., 741 F. Supp. at 1292-93 (disallowing forum shopping in the guise of a declaratory judgment action). Thus, the Court finds that exercising jurisdiction to grant declaratory relief would result in the piecemeal adjudication of the plaintiffs and defendants' coverage dispute and would reward plaintiffs' attempts to forum shop. A stay of these proceedings is therefore appropriate.

Based on the foregoing, the Court ORDERS that defendants' motion to dismiss or to stay is GRANTED IN PART. This action hereby STAYED pending resolution of Margaret Hunt Hill, et al. v. Leslie Wilton, et al., No. 93-03542, currently pending in the 299th Judicial District Court of Travis County, Texas.