ORDER
I. Introduction
This case involves a dispute between two insurance companies, Great American Assurance Company (“Great American”) and Discover Property and Casualty Insurance Company (“Discover”), as to which insurer’s policy provides primary coverage for liability arising from a fatal automobile accident in Texas. Great American brings this action against Discover seeking a declaratory judgment that Great American’s policy does not cover the loss, or in the alternative, that any coverage under Great American’s policy is secondary to Discovers policy. Great American also seeks indemnity or contribution from Discover for all payments by Great American on behalf of the insured, as well as its attorney’s fees and costs in this action.
Discover filed a counterclaim requesting a judicial determination that Great American’s policy is primary, and that Great American is obligated to reimburse Discover for fees and costs incurred in defending the underlying litigation. The matter is set for a bench trial on May 23, 2011, and the parties have filed cross motions for summary judgment. There is also a pending motion in limine in which Discover seeks to exclude the testimony of Gary Zadick, Great American’s insurance law expert. Because this is a coverage dispute governed by state law, I decline to exercise *1161 jurisdiction. When the federal action was filed there was a pending parallel state case. Furthermore, given the unsettled state of Montana law, and the timing of the federal suit, abstention is warranted to discourage forum shopping.
II. Factual Background
Gerald Jones drove as a trucker for Sammons Trucking from 2003 to October 2009. Sammons is a Missoula-based trucking company. On January 16, 2008, Jones was driving his tractor and attached flatbed trailer in Texas when he collided with a pick-up truck driven by James Volk, killing Volk. At the time of the accident Jones, a resident of Bonham, Texas, was “deadheading,” the trucking industry term for driving a tractor and trailer without a load. The tractor Jones was driving bore Sammons’ name and logo, and Jones was in the process of purchasing the tractor (over time) from Sammons pursuant to a “Contract for Equipment Purchase.” The week before the accident, Jones was dispatched from his home in Bonham, Texas, to Norman, Oklahoma to pick up a load for Sammons. After hauling that load to Stockton, California, Jones picked up a second load in Union City, California, and carried it to its drop-off point in Avondale, Arizona. Jones spent several days in Arizona before returning home to Bonham, Texas without a load. It was on the drive from Arizona to Bonham, Texas that the accident in question took place.
There are three insurance policies at the heart of this dispute. One policy, issued by Plaintiff Great American, is a non-trucking or “bobtail” policy intended to cover Jones for losses suffered while the tractor is used other than in the business of trucking. The parties dispute whether the Great American policy also covered Sammons as an insured. Defendant Discover had issued two policies, one primary and one excess, which insured Sammons’ trucking equipment for losses incurred in the business of trucking. Each of the three policies carries a policy limit of one million dollars.
Jones and Sammons were sued in Texas state court by the estate and survivors of James Volk (the “Texas case”). Discover defended both Jones and Sammons in the Texas case for 16 months, before tendering the defense of the case against Jones and Sammons to Great American. Discover made the tender to Great American based on its view that Great American’s policy was the primary coverage for the loss resulting from the accident in Texas. Great American chose not to defend Jones or Sammons in response to the tender, and Discover continued to defend both for several more months until the claims against Jones were settled. Settlement occurred when Great American agreed to pay $999,999.99 on behalf of Jones to the plaintiffs in the Texas case. Great American filed this declaratory judgment action the same day, and claims its only reason for paying the settlement was to avoid exposure to a bad faith claim. Soon after the settlement of the claims against Jones, Discover paid the Texas plaintiffs $800,000 to settle the remaining claims against Sammons.
Great American now seeks to be indemnified by Discover for the settlement proceeds it paid on behalf of Jones, arguing that Discover’s policies are primary and Great American’s policy, if it applies at all, is excess coverage. Discover has counterclaimed seeking to be reimbursed for the cost of defending Jones in the Texas ease from the date of the tender to Great American until the date of settlement.
III. Analysis
A. Declaratory Judgment Act
Although the parties are diverse, the Court has the discretion to choose whether to exercise jurisdiction because both the complaint and counterclaim seek
*1162
declaratory relief. Under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201(a), a district court has discretion to determine whether consideration of the action is appropriate.
Government Employees Insurance Company v. Dizol,
The Declaratory Judgment Act is “deliberately cast in terms of permissive, rather than mandatory, authority. The Act gave the federal courts competence to make a declaration of rights; it did not impose a duty to do so.”
Dizol,
The district court should avoid needless determination of state law issues; it should discourage litigants from filing declaratory actions as a means of forum shopping; and it should avoid duplicative litigation. If there are parallel state proceedings involving the same issues and parties pending at the time the federal declaratory action is filed, there is a presumption that the entire suit should be heard in state court.
Dizol,
Before proceeding to application of the
Brillhart
factors, it should first be
*1163
noted that there are no non-discretionary claims in the Amended Complaint that would warrant retention of jurisdiction. Although Great American and Discover each seek an award of money damages, their claims are viable only if they prevail in their claims for declaratory relief on the issue of coverage. A court does not forfeit its discretionary power where a request for monetary relief is wholly dependent on a favorable ruling on the claim for declaratory relief.
Kolstad v. Trinity Universal Ins. Co. of Kansas,
Turning to the
Brillhart
factors, this case presents insurance coverage questions that are strictly the province of state law. Regulation of insurance companies is an authority conferred to the states as a matter of federal law.
See
15 U.S.C. § 1012(a) (“The business of insurance ... shall be subject to the laws of the several States which relate to the regulation or taxation of such business.”). In the insurance coverage context, comity concerns are “particularly weighty,” such that jurisdiction is found not warranted in “the general run of insurance coverage cases.”
Employers Reinsurance Corp. v. Karussos,
[C]ourts should generally decline to assert jurisdiction in insurance coverage and other declaratory relief actions presenting only issues of state law during the pendency of parallel proceedings in state court unless there are circumstances present to warrant an exception to that rule.
Hungerford,
The Texas litigation constitutes a parallel state court proceeding under the Hungerford rule because it was pending as of the date of filing of this action and it arises from the same factual circumstances, i.e., the accident in Texas. See Doc. No. 34-4. Accordingly, declination to exercise jurisdiction is proper unless there are circumstances present to warrant an exception to the general rule. No such circumstances are present here.
Karussos
presented a coverage dispute in which one insurance company sought a declaratory judgment that it had no duty to defend or indemnify the insured and that a second insurer had issued the policy providing primary coverage.
Karussos is directly on point. This case is a dispute between two insurers filed during the pendency of a related and parallel underlying action against the insured in state court arising from the same set of facts. The resolution of the coverage dispute between Great American and Discover must be judged according to state law, and there are no independent non-discretionary state claims. There are no exceptional circumstances that warrant departure from the Hungerford rule.
Although strict application of Karussos compels dismissal, the Court is not necessarily required to decline to exercise jurisdiction. But there is another consideration, not present in Karussos, that makes the case for abstention here even stronger. If I retain jurisdiction the first task in resolving the case on summary judgment would be to determine whether the coverage dispute is governed by Montana law or Texas law.
What follows is a diversion into the current state of Montana’s choice of law rules, which is necessary to illustrate a point that bears on the Court’s decision whether to retain jurisdiction: this case not only calls on the Court to decide state law matters, but it would require the Court to address one of those matters — choice of law — without the benefit of clear guidance from the Montana Supreme Court.
The court has subject matter jurisdiction over this case due to the diversity of the parties under 28 U.S.C. § 1332, and therefore must apply state substantive law to the state law claims.
Mason and Dixon Intermodal, Inc. v. Lapmaster Intern. LLC,
Montana’s approach to choice-of-law questions in insurance disputes was fairly settled before the Montana Supreme Court’s decision in
Tucker v. Farmers Ins. Exch.,
Relying on its earlier decisions in
Kemp v. Allstate Ins. Co.,
§ 188. Law Governing in Absence of Effective Choice of Law by the Parties (1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in § 6.
Restatement (Second) of Conflict of Laws § 188(1).
Section 6 of the Restatement states in part:
§ 6. Choice-of-Law Principles
(1) A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law.
(2) When there is no such directive, the factors relevant to the choice of the applicable rule of law include ...
Restatement (Second) of Conflict of Laws § 6.
The
Mitchell
court’s first step in applying the Restatement was to ascertain whether Montana had a statute governing choice of law as contemplated by § 6(1).
Mitchell,
The Mitchell court relied on Kemp to conclude that Montana was the place of performance because it was where the loss occurred and where the insured obtained judgment:
We have held that where an insurance contract designates the place of performance to be any state where a claim arises, performance occurs where the insured obtains judgment. Kemp,601 P.2d at 23 . It logically follows, that the place of performance is also the place where an insured is entitled to receive benefits, has incurred accident related expenses, or is entitled to judgment.... *1166 Montana is the place of performance pursuant to Mitchell’s policies because Mitchell was working and living in Montana at the time of the accident; the underinsured tortfeasor’s vehicle was insured in Montana; Mitchell’s medical expenses were incurred in Montana; Mitchell settled with the Haas’ insurers for the policy limit giving rise to the underinsured motorist claim in Montana; and judgment concerning the accident will be rendered and paid in Montana.
Mitchell,
As recently as 2008, the Montana Supreme Court reaffirmed
Mitchell’s
command to apply Mont Code Ann. § 28-3-102 in insurance cases and look to the place of performance when deciding which jurisdiction’s law applies in the absence of a choice-of-law provision.
See Wamsley v. Nodak Mut. Ins. Co.,
Montana is where the accident occurred and the damages arose. It is the site of the personal injury action filed by the Estate, and the forum in which an order of judgment against Stanton, the Montana tortfeasor, has been rendered. Moreover, Nodak has already paid the Estate $200,000.00 in UIM claims submitted by the Estate’s counsel in Montana. Therefore, we conclude the District Court did not err in holding that Montana law should apply to the stacking and coverage issues before us.
Wamsley,
Soon after
Wamsley,
the Montana Supreme Court decided
Modroo v. Nationwide Mut. Fire Ins. Co.,
[W]e will not apply the law of the state chosen by the parties if three factors are met: (1) if, but for the choice-of-law provision, Montana law would apply under § 188 of the Restatement; (2) if Montana has a materially greater interest in the particular issue than the state chosen by the parties; and (3) if applying the state law chosen by the parties would contravene a fundamental policy of Montana.
Modroo,
The
Modroo
court held that the first prong of the test had been met because
*1167
under
Mitchell,
Montana is the place of performance and therefore Montana law would apply but for the choice of law provision.
Under Montana law, the law of the place of performance governs a contract’s interpretation unless the terms of the insurance contract provide otherwise. Mitchell, ¶ 20. When insurance policies contain no choice-of-law provisions, we need not consider whether Montana possesses a materially greater interest in the contract issue than another state. Restatement (Second) of Conflict of Laws § 188. In Mitchell, the insurance policies did not include a choice-of-law provision. Thus, once we determined that Montana constituted the place of performance, we next considered whether Mitchell was entitled to recover UIM damages under Montana law, without analyzing whether Montana had a materially greater interest than California. Mitchell, ¶¶ 22-24; accord Wamsley v. Nodak Mut. Ins. Co.,2008 MT 56 , ¶¶ 42-44,341 Mont. 467 , ¶¶ 42^14,178 P.3d 102 , ¶¶ 42-44. In this case, however, in light of the parties’ choice-of-law provision specifying that Ohio law governs the interpretation of the personal auto policy, we must determine whether Montana has a materially greater interest in the issue than Ohio. If we determine that Montana has a materially greater interest, we then analyze whether applying Ohio law would violate Montana public policy. 5
Modroo,
Less than a year after
Modroo,
Montana’s choice-of-law jurisprudence took a confusing turn in
Tucker. Tucker
presented an insurance coverage dispute similar in its facts to
Mitchell
and
Wamsley;
the insured was killed in a car accident in Montana, but was an out-of-state resident insured by a policy issued in her home state (Idaho), and the insurance contract at issue did not contain a choice-of-law provision.
Tucker,
Straightforward application of
Mitchell’s
place-of-performance rule would have quickly resolved the choice-of-law question in favor of Montana, as it was the site of the accident and the state in which the insured obtained judgment. But rather than deciding the matter based on the place of performance, the
Tucker
court proceeded to apply the factor-based approach § 188(2) of the Restatement (Second) of Conflict of Laws.
Having settled on the factor-based test under Restatement § 188(2), 6 the Tucker court then concluded that Idaho law should govern the interpretation of the insurance contract:
We are left to resolve a dispute that centers on the interpretation of the Idaho insurance policies issued to Idaho residents by corporations doing business in Idaho. Montana’s interest in this dispute derives solely from its status as the place of performance. This fact does not create a materially greater interest in this dispute among Idaho parties that would warrant applying Montana law.
In discounting the importance of the place of performance in its analysis, the
Tucker
court stated, “The place of performance bears little weight in choice-of-law determinations, however, when the place of performance is uncertain or unknown at the time of contracting.”
Like the insurance policies in Mitchell, the policies at issue in this case all contemplate the state in which the loss occurred (in this case Texas) as a potential place of performance. The “Truckers Coverage Form” of the Discover Insurance Policy describes the “coverage territory” to include “The United States of America,” Doc. No. 32-12 at 37, and the Discover Excess Policy incorporates the coverage terms of the underlying Discover Insurance Policy. Doc. No. 35-1 at 9. The Great American policy’s coverage area includes “the United States of America.” Doc. No. 37-2 at 1. The accident occurred in Texas, the underlying tort case was filed in Texas, and the insurers paid settlements under the contracts in Texas. There is no doubt that under Mitchell, Texas law would apply to this dispute.
However,
Tucker
is also directly applicable to the facts of this case, and although it is a closer question, it is likely that under
Tucker
Montana law would apply. The insurance policies were negotiated and issued in Montana by insurance companies doing business in Montana. Sammons is a
*1169
Montana business, and while Jones is a Texas resident, the Great American policy under which he was insured was procured on his behalf by Sammons in Montana.
Tucker,
Although the Montana Supreme Court has not expressly overruled Mitchell, and in fact cited Mitchell favorably in Tucker, it is most difficult to reconcile Tucker and Mitchell in this case. One commentator has called the Tucker opinion “shocking.” Greg Munro, Auto Policy Conflicts of Law in Montana, Trial Trends Autumn 2010 21, 34. Professor Munro gives an apt description of the confusion created by Tucker:
Perhaps most stunning is the court’s application of this process in Tucker in 2009, a case in which the policy contained no choice-of-law provision. Application of the Restatement there previously dictated looking to our state’s statutory directive, MontCode Ann. § 28-3-102, which would mean applying the place of performance standard. The court has never overturned Kerrvp, Mitchell, or Kilmer. Why would it be analyzing “materially greater interest” in a case where there is no choice of law provision?
The Montana Supreme Court has a tradition of protecting auto policy insureds by clearly identifying policy provisions that are repugnant as against public policy. The end result of the Modroo, Tenas, and Tucker cases in the last two years is a confused abandonment of Montana’s materially greater interest in its public policy protection .... This interest needs to be inserted back into the decisions and not “conflated” into a reversal of thirty years of well-reasoned precedent without expressly overruling that precedent. Until 2008, Montana law has been quite clear in the area of law applicable to out-of-state policies. Ignoring the principles established in such cases as Kemp, Youngblood, Casarotto, and Mitchell introduces an unpredictability in the decisions.
Id. at 35-36.
There is only one reported decision in which a court has confronted
Tucker’s
conflict with
Mitchell.
In
Kominsky v. Dave Smith Chevrolet Oldsmobile Pontiac Cadillac, Inc.,
Determination of the proper choice-of-law analysis was less problematic in Kominsky than it is in this case, because in Kominsky Idaho law would have been the proper choice of law regardless of whether the court applied the factor-based approach of Restatement § 188(2) or the place-of-performance rule under Restatement § 6(1). Nevertheless, Judge Ostby declined to directly address the conflict. She ably maneuvered her reasoning so that Tucker was non-essential to the outcome. Tucker cannot be so deftly dealt *1170 with here because it is directly on point and is the most recent Montana Supreme Court pronouncement on conflicts of law. Likewise I cannot simply disregard Mitchell and the legion of other cases standing uniformly for the application of Restatement § 6(1) where the parties have failed to agree on a choice of law, particularly where those cases have not been overruled and continue to be cited favorably. The difference between this case and Kominslcy is that Judge Ostby, with tort and contract claims before her, had no choice but to resort to conjecture to resolve the choice-of-law question. Here, whether to exercise jurisdiction over this case is within the Court’s discretion. The unsettled state of Montana law in this area counsels in favor of declining jurisdiction.
In fact, the current state of Montana’s conflicts of law jurisprudence, and the timing of
Tucker,
raise the specter of another of the
Brillhart
factors, and that is the need to discourage forum shopping. From Great American’s perspective, the application of Montana’s substantive law is preferable to that of Texas.
7
Before
Tucker,
there would have been no incentive for Great American to file this action in federal district court in Montana, because Montana’s choice-of-law rule would clearly have called for Texas law to apply. On July 21, 2009, the
Tucker
opinion was issued, casting doubt on the continued validity of
Mitchell
and rendering Montana a more appealing venue for Great American. Texas has no state statute that would be applicable to these insurance policies under Restatement § 6(1), and so a Texas court would apply the factor-based approach of Restatement § 188(2).
Reddy Ice Corp. v. Travelers Lloyds Ins. Co.,
The existence of a novel issue of state law prompted this Court to decline to exercise jurisdiction over an insured’s action seeking declaratory relief against an insurer in
Kolstad.
The issue in
Kolstad
was whether an uninsured motorist policy covers emotional damages.
[Ijnsurance is an area principally regulated by the state where “comity concerns” are “particularly weighty.” Karussos,65 F.3d at 799 . Trinity has a forum available in state court for the resolution of the issue. Finally, Trinity has a state court remedy in the declaratory action originally filed in state court. *1171 Accordingly, in the light of the above discussion and the case law reviewed therein, I find that federal jurisdiction is not appropriate in this declaratory action.
Id.
While the confusion wrought by
Tucker
does not technically present a novel issue of state law, the' situation is largely analogous to
Kolstad.
The first task required in this case would be to apply Montana law in an area where the law is unsettled and the state’s policy concerns relative to the regulation of the insurance industry are paramount. Moreover, in
Kolstad,
there was no parallel state court action; the litigation removed to this Court was the only case.
This is an insurance coverage dispute between two insurance companies, one based in Illinois and one based in Ohio, regarding an automobile accident and subsequent state court litigation occurring in Texas. The substantive law that resolves the dispute will be state law, and the determination of which state’s law to follow requires the application of an unsettled area of Montana law if jurisdiction is kept here. There was parallel litigation in Texas at the time this case was filed, and the state courts of both Texas and Montana provide forums for the resolution the dispute between Great American and Discover. Under these circumstances, it is proper to decline to exercise jurisdiction and dismiss the case.
IV. Conclusion
To paraphrase Robert Frost:
I shall be telling this with a sigh somewhere ages and ages hence: Two lines of cases diverged in the Montana Supreme Court and I,
I took the one less traveled by, AND that has made all the difference because the case is DISMISSED.
I decline to exercise jurisdiction over the state law claims for declaratory relief at issue in this case. The pending motions (dkt. ## 27, 42, 48, and 51) are DENIED as moot, and the Clerk of Court is directed to close the case.
Notes
. Of course, a case seeking declaratory relief must also present an actual case or controversy and meet statutory jurisdictional prerequisites.
Dizol,
. Although it has not contested this Court's jurisdiction, Discover accuses Great American of "fil[ing] this suit in Montana for the precise purpose of avoiding a Texas Supreme Court decision that emasculates Great American's case.” Doc. No. 49 at 7.
.Although
Brillhart
remains the "philosophic touchstone” for the exercise of a district court's jurisdiction under the Declaratory Judgment Act,
Dizol,
(1) "whether the declaratory action will settle all aspects of the controversy”; (2) whether it "will serve a useful purpose in clarifying the legal relations at issue”; (3) whether it "is being sought merely for the purposes of procedural fencing or to obtain a ‘res judicata' advantage”; (4) whether "the use of a declaratory action will result
*1163 in the entanglement between federal and state court systems”; (5) convenience of the parties and “the availability and relative convenience of other remedies.”
Kolstad v. Trinity Universal Ins. Co. of Kansas,12 F.Supp.2d 1101 , 1105 n. 1 (quoting Dizol,133 F.3d at 1225 n. 5).
. While such sua sponle appellate examination of jurisdiction would no longer be appropriate after Dizol, the Karussos court's analysis remains instructive for this Court’s consideration of its jurisdiction in the first instance.
. The court in
Modroo
went on to conclude that Montana had no materially greater interest than Ohio, and therefore applied Ohio contract law without taking up the third prong of the test, i.e., whether Ohio law conflicts with Montana public policy.
. The contacts to be considered in § 188(2) are "(a) the place of contracting; (b) the place of negotiation of the contract; (c) the place of performance; (d) the location of the subject matter of the contract; and (e) the domicil, residence, nationality, place of incorporation and place of business of the parties.” Restatement (Second) of Conflict of Laws § 188(2).
. Although it would require more careful research before a definitive recommendation can be made, it appears quite possible that the application of Texas law would be fatal to Great American's claims.
See Mid-Continent Ins. Co. v. Liberty Mutual Ins. Co.,
. The applicable Texas statute directs that Texas law shall apply if "(1) the insurance proceeds are payable to a Texas citizen or inhabitant; (2) the policy is issued by an insurer doing business in Texas; and (3) the policy is issued in the course of the insurer’s business in Texas.”
Reddy Ice,