United States District Court, D. Massachusetts
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Plaintiff,
MARITIME TERMINAL, INC., Defendant.
MEMORANDUM AND ORDER
DENISE J. CASPER, District Judge.
Plaintiff National Union Fire Insurance Company of Pittsburgh, PA ("National Union") has filed this lawsuit against Defendant Maritime Terminal, Inc. ("Maritime") seeking a declaratory judgment that it owes no duty to defend or indemnify Maritime under Warehouse Legal Liability Policy No. XXXXXXXXX ("the Policy") in connection with three pending civil actions. Maritime has moved to stay the declaratory judgment action. D. 12. For the reasons stated below, the Court ALLOWS the motion.
II. Standard of Review
Under the federal Declaratory Judgment Act, this Court "may declare the rights and other legal relations of any interested party seeking such declaration." 28 U.S.C. § 2201(a). The Declaratory Judgment Act is "an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant." Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995) (quoting Public Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 241 (1952)). "By the Declaratory Judgment Act, Congress sought to place a remedial arrow in the district court's quiver; it created an opportunity, rather than a duty, to grant a new form of relief to qualifying litigants. Consistent with the nonobligatory nature of the remedy, a district court is authorized, in the sound exercise of its discretion, to stay or to dismiss an action seeking a declaratory judgment before trial...." Wilton, 515 U.S. at 288.
III. Factual Background
This factual summary is taken from the allegations in National Union's complaint, D. 4. National Union provided liability insurance to Maritime pursuant to the Policy, which operated from April 1, 2013 to April 1, 2014. D. 4 ¶¶ 22-23; see D. 4-6 at 23 (the Policy). The Policy covered "occurrences" during its period of operation that resulted in "liability of [Maritime] imposed upon [it] by law because of loss or damage to personal property owned by customers in the care, custody or control of [Maritime] for storage, under bills of lading, shipping or warehouse receipt...." D. 4 ¶ 24. Maritime's cold storage warehouse at 276 MacArthur Drive, New Bedford, Massachusetts ("the Warehouse") was a covered location under the Policy. Id . ¶¶ 10, 25.
The Policy contained several exclusions and limitations. Exclusion "b" excluded coverage for damages caused by or resulting from "misappropriation, secretion, conversion, infidelity or any dishonest act on the part of [Maritime] or other party of interest, his or their employees or agents, or others to whom the property may be entrusted (carriers for hire excepted)." Id . ¶ 31. Exclusion "e", as amended by Endorsement No. 7, excluded coverage for "loss, damage or expense [caused by] insects, inherent vice, deterioration dampness of atmosphere, inadequate warehouse temperature due to overcapacity, nor for wear and tear." Id . ¶ 29. Exclusion "k" excluded coverage for damages caused by or resulting from the "infidelity" of Maritime's officers, employees or persons to whom the insured property was entrusted. Id . ¶ 30. Exclusion "s" excluded coverage for loss or damages resulting from "breakdown of, failure or improper operating of any refrigeration machinery or equipment, " id. ¶ 27, although Exclusion "s" provided coverage for loss due to spoilage or contamination resulting from "sudden and accidental breakdown of refrigeration equipment" and "the incorrect or improper setting of temperature controls by [Maritime], " id. ¶ 28.
Between February 19, 2014, and September 5, 2014, three seafood companies that had contracted with Maritime to store various frozen seafood products at its New Bedford warehouse - Alaskan Leader Seafoods, LLC ("Alaskan Leaders"), Kyler Seafood, Inc. ("Kyler Seafood") and Hygrade Ocean Products, Inc. ("Hygrade") - separately filed lawsuits ("the Underlying Actions") against Maritime. Id . ¶¶ 7-11; see D. 4-3 (Alaskan Leaders complaint); D. 4-4 (Kyler Seafood complaint); D. 4-5 (Hygrade complaint). Alaskan Leaders filed in the United States District Court for the District of Massachusetts, and Kyler Seafood and Hygrade filed in Bristol Superior Court. D. 4 ¶¶ 7-9. The three complaints allege that Maritime failed to keep the Warehouse between the agreed range of -5°F and -10°F. Id . ¶¶ 8-16. Alaskan Leader alleges that on or about August 24, 2013, it learned that Maritime "was, and had been, maintaining a temperature of °F within the cold store warehouse during the period commencing June 2013 up to and including August 2013, " causing the frozen seafood cargo stored there to suffer "irreparable harm and damage." Id . ¶ 13. Kyler Seafood and Hygrade allege that in or about July or August 2013, Maritime informed them that, "due to certain equipment breakdown at the Warehouse, the appropriate sub-zero temperatures had not been maintained for an unspecified period of time, and that [their] products likely had been compromised." Id . ¶ 14. The plaintiffs in the Underlying Actions allege that in August 2013, Maritime admitted that it had been having difficulties maintaining proper temperatures in the Warehouse and failed to notify them. Id . ¶ 15. They assert numerous claims against Maritime in the Underlying Actions, including breach of contract, breach of bailment, breach of the implied covenant of good faith and fair dealing, negligence and knowing and willful violation of Mass. Gen. L. c. 93A. Id . ¶¶ 17-20.
Maritime requested that National Union defend and indemnify it in the Underlying Actions and the insurer agreed to do so under a reservation of rights. Id . ¶¶ 33-34. National Union now seeks a declaration of its rights, duties and liabilities under the Policy with respect to the Underlying Actions. Id . ¶¶ 1, 35. National Union asserts that it is not obligated to defend or indemnify Maritime. Id . ¶¶ 37-42.
IV. Procedural History
National Union instituted this declaratory judgment action on December 18, 2014. D. 4. Maritime moved to stay the action on February 10, 2015. D. 12. Maritime contends that National Union's rights, duties and liabilities under the Policy are already being litigated in the Underlying Actions and, therefore, the Court should stay National Union's declaratory judgment action pending resolution of the Underlying Actions. Id . The Court heard the parties on the pending motion on June 10, 2015 and took this matter under advisement. D. 24.
"The question for a district court presented with a suit under the Declaratory Judgment Act... is whether the questions in controversy between the parties to the federal suit, and which are not foreclosed under the applicable substantive law, can better be settled in the proceeding pending in the state court.'" Wilton, 515 U.S. at 282 (quoting Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 495 (1942)). The Supreme Court has not provided an exclusive list of factors governing this analysis, but it has noted that district courts should look for guidance to the scope of the pending state court proceedings, the available state court defenses, and whether the claims of all parties in interest can be resolved in the state court proceedings. Id. at 283. Specifically, where "parallel proceedings... presenting opportunity for ventilation of the same state law issues [are] underway in state court, " the Supreme Court held in Wilton that these considerations "clearly support" a court's decision to stay or dismiss a declaratory judgment action. Id. at 290. "A court ...