Liberty Mutual Fire Insurance Company v. Qwest Corporation, 1:24-cv-02626

Liberty Mutual Fire Insurance Company filed a declaratory judgment action against Qwest Corporation (d/b/a CenturyLink QC) regarding its obligations under a commercial general liability insurance policy issued to Dycom Industries, Inc.
Qwest was named as a defendant in three lawsuits related to the 2021 Marshall Fire in Boulder County, Colorado, allegedly involving a CenturyLink telecommunications line.
Qwest claims additional insured status under the Liberty Mutual policy due to a contract Dycom or its subsidiary Pauley Construction purportedly entered, requiring Qwest to be named on certain insurance policies.
Liberty Mutual is currently providing Qwest a defense subject to a reservation of rights but contests both Qwest’s insured status and the scope of any potential coverage or indemnification under the policy.
Qwest moved to stay discovery pending a motion to dismiss arguing, among other things, lack of subject matter jurisdiction and discretionary dismissal under the Declaratory Judgment Act.
Magistrate Judge Starnella reviewed the request for a stay using the String Cheese Incident five-factor test.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Stay of discovery pending motion to dismiss	Has a strong interest in expeditious resolution; ongoing costs; delay risks evidence loss and urgent obligations.	Meritorious motion to dismiss; Plaintiff not prejudiced as current costs paid by Dycom; discovery burdensome.	Denied; factors mostly weigh against stay.
Plaintiff’s interest in moving discovery	Delay risks prejudice due to ongoing underlying action, costs, and evidence preservation.	No immediate prejudice since deductible not met and Plaintiff not currently paying defense.	Weighs against a stay.
Defendant’s burden by proceeding with discovery	Discovery burdensome especially if motion to dismiss granted; requests for written and ESI discovery, depositions, and expert engagement.	Standard discovery not excessive; burdens inherent in litigation.	Weighs in favor of stay.
Nonparties’ and public’s interests	Dycom and Pauley (nonparties) have interest in expedited resolution; public interest in clarity for settlements.	No extra burden to nonparties if stayed; public interest best served by avoiding unnecessary litigation.	Weighs against stay.

String Cheese Incident, LLC v. Stylus Shows, Inc., 2006 WL 894955 (D. Colo. Mar. 30, 2006) (sets out five-factor test governing stays of discovery)
State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d 979 (10th Cir. 1994) (sets out discretion factors in Declaratory Judgment Act cases)
Green v. New Mexico, 420 F.3d 1189 (10th Cir. 2005) (nonmoving party may respond to new material in reply briefs)

Note: Most cited cases use WL citations, but the two above are included due to their corresponding official reporter citations.