Great American Assurance Co. v. Discover Property & Casualty Insurance
779 F. Supp. 2d 1158
D. Mont.2011Background
- Great American (Illinois) and Discover (Ohio) dispute which insurer provides primary coverage for a Texas auto accident that killed James Volk.
- Three policies are at issue: Great American’s bobtail policy (potentially covering Sammons’ insured), Discover’s primary and excess trucking policies for Sammons, all with $1,000,000 limits.
- Texas litigation was filed against Jones and Sammons; Discover defended for 16 months, then tendered defense to Great American, which declined; settlements followed: Jones’ settlement paid by Great American; Sammons’ remaining claims settled by Discover.
- Great American seeks a declaratory judgment that its policy is non-primary or excess; it also seeks indemnity or contribution and fees/costs.
- Discover counterclaims for a judicial determination that Great American is primary and seeks reimbursement for defense costs incurred in the Texas case.
- The federal action was brought in Montana federal court while a parallel state case existed in Texas; the court elected to abstain and dismiss the federal action, declining jurisdiction over state-law coverage disputes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal abstention is proper in a state-law insurance-coverage dispute | Great American argues for abstention due to parallel Texas proceedings and unsettled Montana law. | Discover contends for jurisdiction, arguing Brillhart factors and Hungerford are not satisfied to require dismissal. | Abstain; court dismisses for parallel-state proceedings and unsettled Montana conflicts-law issues. |
| What law governs the insurance-coverage dispute (Montana vs. Texas choice-of-law) | Great American advocates Montana law applying under Mitchell and subsequent Montana authority. | Discover suggests Texas law would govern under Restatement-188 art and Tucker’s approach. | Montana choice-of-law governs; Montana law would apply, but abstention renders the merits moot. |
| Whether the presence of a parallel Texas action nullifies federal jurisdiction under Hungerford and related tests | Great American emphasizes comity and the parallel case’s relevance to the coverage question. | Discover emphasizes the need to resolve duties despite parallel action should federal court hear the case. | Parallel Texas action warrants dismissal to avoid duplicative state-law determinations. |
Key Cases Cited
- Dizol, 133 F.3d 1220 (9th Cir. 1998) (Declaratory judgments are discretionary; avoid unnecessary state-law rulings)
- Hungerford, 53 F.3d 1019 (9th Cir. 1995) (parallel state proceedings weigh against federal jurisdiction in insurance cases)
- Karussos, 65 F.3d 796 (9th Cir. 1995) (affirms Hungerford abstention where parallel state case exists)
- Mitchell, 68 P.3d 703 (Mont. 2003) (place of performance governs contract interpretation absent a choice-of-law provision)
- Wamsley, 178 P.3d 102 (Mont. 2008) (reaffirms place-of-performance rule; Restatement § 188 factors applied after place-of-performance)
- Modroo, 191 P.3d 389 (Mont. 2008) (addresses when to apply Restatement § 188(2) vs § 6(1) with/without choice-of-law provision)
- Tucker, 215 P.3d 2 (Mont. 2009) (limits place-of-performance weight; endorses Restatement § 188(2) analysis in certain contexts)
- Kominsky, 2010 WL 4920903 (D. Mont. Nov. 29, 2010) (discusses conflict with Tucker; not essential to outcome here)