Esurance Insurance Company v. Maxie
2:17-cv-12509
E.D. Mich.Nov 8, 2017Background:
- Esurance issued a homeowners policy covering property at 7288 Canterbury Dr., Romulus, MI; Seterus, Inc. holds the mortgage and is insured under the mortgagee clause.
- A fire occurred on April 14, 2016; Maxie submitted a sworn proof of loss and Esurance paid $9,275.48 for additional living expenses while investigating the claim.
- Esurance concluded Maxie did not primarily reside at the Canterbury property (alleging a renter, Brian Glenn, lived there), and alleged misrepresentation, concealment, and noncooperation; Esurance denied the claim.
- Maxie sued Esurance in Wayne County Circuit Court for breach of contract in December 2016; discovery closed October 30, 2017, and state trial was scheduled for March 2018.
- Esurance filed this federal declaratory-judgment action seeking a declaration that the policy is void ab initio, reimbursement of payments made, and subrogation/assignment rights as to Seterus; Esurance invoked diversity jurisdiction.
- The district court found the Grand Trunk factors favored abstention and dismissed the federal declaratory action without prejudice.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court should exercise jurisdiction over declaratory-judgment action under the Declaratory Judgment Act | Esurance: diversity jurisdiction exists and the action will resolve coverage and related rights (policy voidness, reimbursement, subrogation) | Maxie: federal court should decline because state action is pending and the DJA grants discretion to abstain; Esurance is forum-shopping | Court: Declined to exercise jurisdiction and dismissed without prejudice — Grand Trunk factors favor abstention |
| Whether the declaratory action would settle the controversy and clarify legal relations | Esurance: federal declaratory judgment will settle coverage dispute | Maxie: state action already presents the ultimate controversy; federal action would duplicate and risk inconsistent rulings | Court: The action would settle and clarify but, given other factors, this supports abstention |
| Whether filing federal action was improper procedural fencing or forum shopping | Esurance: filed after state discovery adverse ruling but argues no improper motive | Maxie: Esurance filed in federal court after losing a discovery motion to game jurisdiction | Court: Found procedural fencing concern credible; factor favors abstention |
| Whether state court is an adequate alternative (personal jurisdiction / subpoena concerns) | Esurance: claims it may not be able to subpoena Georgia-based non-party witnesses in state court | Maxie: Michigan courts have limited personal jurisdiction here and are an adequate forum | Court: Rejected Esurance’s subpoena argument; Michigan courts provide jurisdiction and adequate remedy — favors abstention |
Key Cases Cited
- Wilton v. Seven Falls Co., 515 U.S. 277 (1995) (DJA jurisdiction is discretionary)
- Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942) (federal courts should consider abstaining from declaratory actions when a parallel state proceeding exists)
- Bituminous Cas. Corp. v. J & L Lumber Co., 373 F.3d 807 (6th Cir. 2004) (insurer declaratory actions seeking advance indemnity rulings in diversity cases are seldom helpful where a state action is ongoing)
- Grand Trunk W. R. Co. v. Consolid. Rail Corp., 746 F.2d 323 (6th Cir. 1984) (sets factors for deciding whether to exercise jurisdiction under the DJA)
- Scottsdale Ins. Co. v. Flowers, 513 F.3d 546 (6th Cir. 2008) (discusses competing approaches to whether a declaratory action settles the controversy)