Great Divide Insurance Company v. Bear Mountain Lodge, LLC, 3:15-cv-00189

On July 7, 2013, a DeHavilland DHC-3 Otter operated by Rediske Air crashed en route to Bear Mountain Lodge; the pilot and all passengers died. Plaintiffs (survivors/estates) filed multiple consolidated tort suits in the District of Alaska implicating Rediske Air, Rediske Family Defendants, Bear Mountain Lodge, LLC (BML), and others.
BML was insured under a Great Divide policy in effect at the time; Great Divide issued a reservation-of-rights and agreed to defend BML while reserving coverage defenses.
Great Divide sued for a declaratory judgment seeking a determination that three policy exclusions bar coverage: (1) Aircraft Exclusion, (2) Designated Operations Exclusion, and (3) Contractors Exclusion.
BML moved for summary judgment asking the court to find those exclusions inapplicable; while that motion was pending, Rediske Family Defendants moved to stay the declaratory action to avoid duplicative litigation and potential preclusive effects.
Great Divide agreed to stay proceedings as to the Aircraft and Designated Operations exclusions but opposed staying adjudication of the Contractors Exclusion; the court heard argument and reserved the right to revisit a stay later if needed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether to stay the declaratory action as to all three exclusions	Great Divide: court should decide Contractors Exclusion now because it may resolve coverage and clarify legal relations	Rediske Family: stay required to avoid duplicative discovery, litigation, and preclusion problems	Partial stay granted: court will decide Contractors Exclusion but stays Aircraft and Designated Operations exclusions
Whether deciding Contractors Exclusion would cause duplicative discovery with underlying tort suits	Great Divide: Contractors issue is a limited contract-formation question (offer, acceptance, consideration) that can likely be resolved on existing record without broad discovery	Rediske Family: factual overlap (relationship/control between BML and Rediske Air) will produce duplicative, costly discovery	Court: factual/legal issues distinct enough; limited factual scope means little/no duplication; proceed on Contractors Exclusion
Whether ruling on Contractors Exclusion would create collateral estoppel in tort litigation	Great Divide: existence of a contract is distinct from liability/control and would not preclude later arguments about control/agency	Rediske Family: a finding of contract could be used against defendants in tort suits	Court: existence of a contract does not determine control/agency; no dispositive preclusive effect; proceed

Gov’t Employees Ins. Co. v. Dizol, 133 F.3d 1220 (9th Cir. 1998) (district court discretion and prudential factors govern declaratory-judgment jurisdiction)
Provident Tradesmens Bank & Tr. Co. v. Patterson, 390 U.S. 102 (U.S. 1968) (coverage and tort suits may share facts but remain distinct if legal issues differ)
Cont’l Cas. Co. v. Coastal Sav. Bank, 977 F.2d 734 (2d Cir. 1992) (factual overlap does not automatically bar declaratory relief)
Standard Fire Ins. Co. v. Gordon, 376 F. Supp. 2d 218 (D.R.I. 2005) (declining dismissal where factual overlap did not justify staying coverage action)