State Farm Mutual Automobile Insurance Company v. A & D Brown Enterprises Inc, 5:20-cv-00436

A fatal crash on Jan 15, 2020: a student driver (A.R.) was instructed to stop on an exit ramp; a trailing driver (Sammual Pace) rear‑ended the vehicle, killing passenger H.S.
H.S.’s parents (Nick and Charla Shaffer) sent State Farm notice and a preservation/spoliation letter, then filed a state tort suit against third parties on March 6, 2020.
State Farm produced a Confirmation of Coverage on March 13, 2020 (showing $100,000 per‑person UM limits per vehicle for 25 vehicles) and paid $100,000 on April 10, 2020 for the vehicle H.S. occupied.
Shaffers demanded $2,500,000 (arguing per‑vehicle UM limits stack); State Farm later refused to pay beyond $100,000 and on May 12, 2020 filed a federal declaratory‑judgment action seeking coverage rulings.
Shaffers and A.R.’s guardian (Cheekia Rogers) moved to dismiss or stay the federal declaratory action as impermissible procedural fencing because the parallel state action (which includes State Farm as a party) can resolve the same state‑law coverage issues.
The district court applied the Tenth Circuit’s Mhoon factors, concluded the declaratory suit was anticipatory/procedural fencing, found all Mhoon factors favored declining jurisdiction, and dismissed the federal case without prejudice.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the district court should exercise jurisdiction over State Farm’s declaratory action	Wilton discretion should be exercised; federal forum is efficient and the issue is narrow (coverage only)	Declaratory action is anticipatory; state court can and will decide the same issues; procedural fencing	Court declined jurisdiction under Mhoon factors and dismissed without prejudice
Whether the declaratory action would settle/clarify the controversy	Declaratory action would resolve coverage limits and clarify obligations	State court already can and will adjudicate coverage as part of breach claims	First and second Mhoon factors favored declining jurisdiction (state action likely resolves issues)
Whether State Farm engaged in procedural fencing (race to federal court)	Brought suit before being added to state action; argued timing was proper and defensive	Filed declaratory suit immediately after denying demand to gain forum advantage; clear signs of procedural fencing	Court found anticipatory filing constituted procedural fencing; third Mhoon factor favored dismissal
Whether to stay or dismiss if jurisdiction declined	A stay could preserve federal forum if needed later	State court will adjudicate all coverage issues; no need to retain federal case	Court dismissed the federal action without prejudice rather than staying it

Wilton v. Seven Falls Co., 515 U.S. 277 (1995) (Declaratory Judgment Act gives federal courts broad discretion to decline to entertain declaratory suits)
State Farm Fire & Casualty Co. v. Mhoon, 31 F.3d 979 (10th Cir. 1994) (Articulates factors for exercising/declining jurisdiction in declaratory cases)
United States v. City of Las Cruces, 289 F.3d 1170 (10th Cir. 2002) (District court must explain choice to stay or dismiss declaratory action; asks whether state proceedings will likely adjudicate federal claims)
St. Paul Fire & Marine Ins. Co. v. Runyon, 53 F.3d 1167 (10th Cir. 1995) (Anticipatory declaratory filings can constitute procedural fencing warranting dismissal)
ARW Exploration Corp. v. Aguirre, 45 F.3d 1455 (10th Cir. 1995) (Appellate review requires district court to articulate reasons for dismissal/stay)
Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976) (Principles regarding federal courts’ jurisdictional obligations and abstention considerations)
St. Louis Baptist Temple v. FDIC, 605 F.2d 1169 (10th Cir. 1979) (Federal courts may take judicial notice of related proceedings in other courts)