United States District Court, D. Massachusetts
MEMORANDUM & ORDER
TALWANI, UNITED STATES DISTRICT JUDGE.
action by Plaintiff Atain Specialty Insurance Company
(“Atain”) seeks a declaration that Atain is not
obliged to defend or indemnify its insured, Defendant
Davester LLC d/b/a Embargo (“Embargo”), with
regard to claims in a state court proceeding entitled
Newman Galati v. Hudson Aguiar, Davester, LLC d/b/a
Embargo, and Town Taxi of Cape Cod, Inc., Civ. A. No.
1972-CV-0283 (Barnstable Cty. Super. Ct. June 6, 2019)
(“State Action”). Atain names as Defendants here
the four parties to the underlying action, as well as another
insurer, Hospitality Mutual Insurance Company
(“Hospitality”). Hospitality now asks the court
to stay this action until the conclusion of the State Action.
Motion to Stay [#19]. For reasons stated below,
Hospitality's Motion to Stay [#19] is DENIED as
to the issue of whether Atain has a duty to defend Embargo in
the State Action and GRANTED as unopposed as to the duty to
State Action, Newman Galati asserts that he was a patron of
Embargo, a restaurant, that he was “highly and visibly
intoxicated and unable to manage his own being, ” and
that Embargo employees arranged for and placed him in a taxi
with instructions to transport him home. State Action
Complaint (“State Action Compl.”) ¶ 7,
attached as Ex. 1 to Mem. in Supp. of Mot. to Stay [#20-1].
Galati alleges further that the taxi driver let him exit the
vehicle, and that he was subsequently struck by a car driven
by Hudson Aguiar. Id. at ¶¶ 10, 11. Galati
suffered serious injuries, including amputation of his leg.
Id. at ¶ 26. Galati alleges that Embargo
breached a duty of care for its patrons' safety and
well-being by putting a “highly and visibly intoxicated
Newman Galati into a taxicab instead of calling for medical
services or the police.” Id. at ¶ 22(a).
Galati also asserts claims against Aguiar and Town Taxi of
Cape Cod, Inc. Atain is currently providing Embargo with a
defense, under a reservation of rights. Mem. in Supp. of Mot.
to Stay 4 [#20].
action here, Atain asserts that the insurance policy at issue
excludes coverage for the claims asserted in the State
Action. Opp. to Mot. to Stay 1 [#21]. Atain seeks a
declaration that it has neither a duty to defend nor a duty
to indemnify Embargo (or any other entity) for the claims
made against Embargo in the State Action. Id. On
September 25, 2019, Hospitality filed a motion to stay on the
grounds that the State Action is parallel, as it involves the
same factual issues, and that permitting this litigation to
go forward will create piecemeal litigation. Mem. in Supp. of
Mot. to Stay [#20]. Hospitality further argues that all
parties are amenable to process in the State Action, that
staying this action will avoid uneconomical proceedings, and
that neither case raises issues of federal law. Id.
Atain does not object to staying this case with respect to
its claims regarding the duty to indemnify but opposes a stay
of its claims regarding the duty to defend. Opp. to Mot. to
Stay 1 [#21].
courts possess discretion in determining whether and when to
entertain an action under the Declaratory Judgment Act, even
when the suit otherwise satisfies subject matter
jurisdictional prerequisites.” Wilton v. Seven
Falls Co., 515 U.S. 277, 282 (1995) (interpreting
Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491,
494 (1942)). In exercising that discretion, the court finds
that the underlying action and the duty to defend claim
involve distinct factual and legal disputes. The State Action
is directed to issues of liability relating to Mr.
Galati's injury; whereas the duty to defend the claim is
focused on whether, under the insurance policy at issue,
Atain is obligated to defend the State Action.
the duty to defend can be resolved without adjudication of
the issues in the State Action. Under Massachusetts law, the
duty to defend under an insurance policy arises when
‘“the allegations in a complaint are reasonably
susceptible of an interpretation that states or roughly
sketches a claim covered by the policy terms,'
notwithstanding the possibility that the underlying claim may
ultimately fail, or that the merits of the claim are weak or
frivolous.” Holyoke Mut. Ins. Co. in Salem v.
Vibram USA, Inc., 480 Mass. 480, 484 (2018) (quoting
Billings v. Commerce Ins. Co., 458 Mass. 194, 200
(2010)). See also Mt. Airy Ins. Co. v. Greenbaum,
127 F.3d 15, 19 (1st Cir. 1997) (stating that an insurer is
obligated to defend a claim that falls within a policy's
coverage “[e]ven if the claim is baseless, as it is the
claim which determines the insurer's duty to
defend”) (internal citations omitted). Because the
inquiry as to Atain's duty to defend will focus on the
allegations of the complaint, without adjudication of the
underlying question of whether Embargo will ultimately be
liable in the State Action, the differences between the two
actions weigh against granting a stay. See Atain
Specialty Ins. Co. v. Bos. Rickshaw LLC, 387 F.Supp.3d
157, 160 (D. Mass. 2019) (finding that a question of whether
an insured owed a duty to defend is ripe even if the issue of
liability in the underlying lawsuit is unresolved).
court recognizes that “at least where another suit
involving the same parties and presenting opportunity for
ventilation of the same state law issues is pending in state
court, ” the district court should take care to not
“indulg[e] in ‘[g]ratuitous
interference'” by permitting the federal
declaratory action to proceed. Wilton, 515 U.S. at
283 (citing Brillhart, 316 U.S. at 495).
Accordingly, before denying Hospitality's motion to stay,
the court considers factors that the Supreme Court has
identified as guidance for a district court in determining
whether to exercise jurisdiction, including “the scope
of the pending state court proceedings and the nature of
defenses open there, ” which “in turn, entails
consideration of ‘whether the claims of all parties in
interest can be adjudicated satisfactorily in the state
proceeding, which turns on whether necessary parties have
been joined, whether all necessary parties are amenable to
process in the state proceeding, and the virtue of avoiding
uneconomical proceedings, etc.'” Wilton,
515 U.S. at 283 (quoting Brillhart, 316 U.S. at
495); see also Petricca v. FDIC, 349 F.Supp.2d 64,
67 (D. Mass. 2004) (stating that in determining whether to
exercise its discretion to dismiss or stay an action, a court
should compare the nexus between the two suits and consider
the totality of the circumstances); Travelers Cas. &
Sur. Co. v. Boston Gas Co., 76 F.Supp.2d 59, 62 (D.
Mass. 1999) (applying the Wilton-Brillhart
none of the Wilton-Brillhart factors tilt
in favor of granting a stay. Neither Atain nor Hospitality
are parties in the State Action. Because Atain would have to
bring a separate declaratory judgment action to adjudicate
this matter in state court, the court does not find that the
claims of the parties of interest can be adjudicated
satisfactorily in the existing state proceeding or that all
necessary parties have been joined. See Flectat Ltd. v.
KASL Seabreeze, LLC, 257 F.Supp.3d 152, 156 (D. Mass.
2017). Likewise, because Atain would need to initiate a
separate action in order to seek relief and must defend
Embargo pending that relief, the “virtue of avoiding
uneconomical proceedings” weigh in favor of allowing
the action to proceed here. Wilton, 515 U.S. 277 at
the court finds that the distinctions between the inquiries
weigh in favor of proceeding on the duty to defend claim, and
that the Wilton-Brilhart factors do not
weigh against proceeding in this manner. Atain does not
oppose staying the action as to the duty to indemnify.
Accordingly, the court DENIES Hospitality's Motion to
Stay [#19] with respect ...