AIG Prop. Cas. Co. v. Green

150 F.Supp.3d 132

AIG Property Casualty Company, Plaintiff,

v.Tamara Green, Therese Serignese, Linda Traitz, and William H. Cosby, Jr., Defendants.

Civil Action No. 15-30111-MGM

United States District Court, D. Massachusetts.

Signed December 15, 2015

William A. Schneider, Gina M. Reppucci, Morrison Mahoney LLP, Boston, MA, for Plaintiff.

Francis D. Dibble, Jr., Jeffrey E. Poindexter, Bulkley Richardson & Gelinas, Springfield, MA, Kim Umanoff, Kirk A. Pasich, Liner LLP, Los Angeles, CA, Joseph Cammarata, Matthew W. Tievsky, Cchaikin, Sherman, Cammarata & Siegel, P.C., Washington, DC, Andrew M. Abraham, Abraham & Associates, P.C., Boston, MA, for Defendants.

MEMORANDUM AND ORDER REGARDING DEFENDANT'S MOTION TO DISMISS OR, IN THE ALTERNATIVE, TO STAY DECLARATORY JUDGMENT ACTION, AND PLAINTIFF'S MOTION TO STAY LITIGATION PENDING OUTCOME OF DECLARATORY JUDGMENT ACTION (Dkt. Nos. 17 and 26)

MASTROIANI, UNITED STATES DISTRICT JUDGE.

I. Introduction

AIG Property Casualty Company (“AIG”) brought this action against William H. Cosby Jr., Tamara Green, Therese Serignese, and Linda Traitz seeking a declaration that it has no duty to defend or indemnify Cosby under two homeowners insurance policies in relation to a defamation case also pending in this court, Green v. Cosby , Case No. 14–cv–30211–MGM (“Underlying Litigation”), brought by Green, Serignese, and Traitz (“Underlying Plaintiffs”). The policies contain similar language stating AIG will cover claims against Cosby for “[d]efamation, libel or slander” but will not cover claims “arising out of any actual, alleged or threatened ... sexual molestation, misconduct or harassment.” (Dkt. No. 1, Compl. ¶¶ 13, 17.) As would be expected, AIG and Cosby disagree about whether the policies cover the claims brought in the Underlying Litigation. That question is not yet before the court, however.

Instead, the only question presently before the court is the sequence in which this action and the Underlying Litigation will be resolved. Cosby asks the court to dismiss on abstention grounds or, in the alternative, to stay this action pending resolution of the Underlying Litigation. (Dkt. No. 17.) In a separate motion, AIG essentially seeks the opposite relief, asking the court to stay the Underlying Litigation pending resolution of this declaratory judgment action. (Dkt. No. 26.) For the following reasons, the court declines to dismiss or stay either action in favor of the other and, therefore, will deny both motions. The court anticipates the insurance issue can be resolved fairly quickly without requiring adjudication of the underlying facts. The Underlying Litigation is still in the very early stages, and this court is in the unique position of presiding over both cases. Accordingly, practical considerations favor proceeding with both actions simultaneously.

II. Background and Procedural History

AIG is an insurance company incorporated in Pennsylvania with its principal place of business in New York. (Compl. ¶ 1.) Green resides in California, Serignese and Traitz reside in Florida, and Cosby resides in Massachusetts. (Id. ¶¶ 2-5.) AIG issued Massachusetts Homeowners Policy No. PCG 006004261 (“Massachusetts Policy”) and Personal Excess Liability Policy No. PCG 006235889 (“Excess Policy”) to Cosby. (Id. ¶ 10, 14.) Both policies were in effect from January 1, 2014 to January 1, 2015. (Id. ¶¶ 11, 15.) The policies require AIG to “pay damages [Cosby] is legally obligated to pay for personal injury or property damage caused by an occurrence covered by this policy anywhere in the world.” (Id. ¶¶ 13, 17.)¹ The policies define “personal injury” as including “[b]odily injury,” “[s]hock, emotional distress, mental injury,” “[i]nvasion of privacy,” and “[d]efamation, libel, or slander.” (Id. , Exs. A and B, at Part I, Definitions.) The Massachusetts Policy also requires AIG to “pay the costs to defend [Cosby] against any suit seeking covered damages for personal injury or property damage, even if the suit is false, fraudulent, or groundless.” (Id. ¶ 13.)

The Massachusetts Policy contains an exclusion which states that it “does not provide coverage for liability, defense costs or any other cost or expense for ... personal injury arising out of any actual, alleged, or threatened by any person: (a) sexual molestation, misconduct or harassment ... or (c) sexual, physical or mental abuse.” (Id. ¶ 13.) Similarly, the Excess Policy contains an exclusion stating it “does not provide coverage for liability, defense costs or any other cost or expense ... [a]rising out of any actual, alleged or threatened: a. Sexual misconduct, molestation or harassment ... or c. Sexual, physical or mental abuse.” (Id. ¶ 17, Ex. B, at Part V, What is Not Covered, Exclusions.)

The Underlying Litigation was commenced on December 10, 2014. (Green v. Cosby , Case No. 14–cv–30211–MGM, Dkt. No. 1.) A second amended complaint, which added Serignese and Traitz as plaintiffs along with Green, was filed on April 16, 2015. (Id. , Dkt. No. 48.)² The second amended complaint asserts defamation claims pertaining to statements issued on behalf of Cosby in response to public allegations of sexual misconduct made by the Underlying Plaintiffs. (Id. ) On December 12, 2014, Cosby notified AIG of the Green lawsuit. (Dkt. No. 19, Decl. of Kimberly A. Umanoff (“Umanoff Decl.”) ¶ 5.) On January 6, 2015, AIG sent Cosby a letter stating that it accepted his claim for the Green lawsuit, subject to a full reservation of rights. (Id. ¶ 7.) On June 26, 2015, AIG filed this declaratory judgment action. (Compl.)³

On September 14, 2015, Cosby filed the motion to dismiss or, in the alternative, to stay this declaratory judgment action. (Dkt. No. 17.) Meanwhile, on October 9, 2015, this court denied Cosby's motion to dismiss the Underlying Litigation, concluding that the second amended complaint alleged actionable defamation claims. See Green v. Cosby , Civil Action No. 14–cv–30211–MGM, 138 F.Supp.3d 114, 2015 WL 5923553 (D.Mass. Oct. 9, 2015). Thereafter, on October 20, 2015, AIG filed its own motion in this action to stay further proceedings in the Underlying Litigation so the insurance issue can be resolved first. (Dkt. No. 26.) The court held a hearing on December 3, 2015, at which counsel for AIG, Cosby, and the Underlying Plaintiffs argued the merits of the two pending motions. (Dkt. No. 41.)

III. Standard of Review

AIG's complaint for declaratory relief invokes the Declaratory Judgment Act, which states “[i]n a case of actual controversy within its jurisdiction ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration.” 28 U.S.C. § 2201(a). This discretionary language signifies that unlike the ordinary case, in which federal courts have a “virtually unflagging obligation” to exercise jurisdiction given to them, Mata v. Lynch , ––– U.S. ––––, 135 S.Ct. 2150, 2156, 192 L.Ed.2d 225 (2015) (quoting Colo. River Water Conservation Dist. v. United States , 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) ), federal courts retain significant flexibility in deciding whether to exercise jurisdiction over declaratory judgment actions. See Wilton v. Seven Falls Co. , 515 U.S. 277, 287, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995) (“We have repeatedly characterized the Declaratory Judgment Act as ‘an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant.’ ” (quoting Public Serv. Comm'n of Utah v. Wycoff Co. , 344 U.S. 237, 241, 73 S.Ct. 236, 97 L.Ed. 291 (1952) )); see also Fuller Co. v. Ramon I. Gil, Inc. , 782 F.2d 306, 308 n. 3 (1st Cir.1986) (“[A] federal court's duty to exercise its jurisdiction is relaxed in the declaratory judgment context.”). “Consistent with the nonobligatory nature of the remedy, a district court is authorized, in the sound exercise of its discretion, to stay or dismiss an action seeking a declaratory judgment ....” Wilton , 515 U.S. at 288, 115 S.Ct. 2137. Thus, “[i]n the declaratory judgment context, the normal principle that federal courts should adjudicate claims within their jurisdiction yields to considerations of practicality and wise judicial administration.” Id.

Even outside of the declaratory judgment context, “federal district courts possess the inherent power to stay pending litigation when the efficacious management of court dockets reasonably requires such intervention.” Marquis v. F.D.I.C. , 965 F.2d 1148, 1154 (1st Cir.1992). However, such “stays cannot be cavalierly dispensed: there must be good cause for their issuance; they must be reasonable in duration; and the court must ensure that competing equities are weighed and balanced.” Id. at 1155.

IV. Discussion

A. Cosby's Motion to Dismiss or, in the Alternative, to Stay this Action (Dkt. No. 17)

Cosby's motion asks this court to dismiss or at least stay this action pending the completion of the Underlying Litigation. He provides three separate grounds for this request. First, Cosby invokes the Wilton / Brillhart abstention doctrine, which provides that “where another suit involving the same parties and presenting opportunity for ventilation of the same state law issues is pending in state court,” a federal court may abstain from exercising jurisdiction over a declaratory judgment action. Wilton , 515 U.S. at 283, 115 S.Ct. 2137 (citing B r illhart v. Excess Ins. Co. of America , 316 U.S. 491, 495, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942) ). Second, Cosby invokes the Colorado River abstention doctrine, which provides that “when state and federal courts are exercising concurrent jurisdiction contemporaneously it may be appropriate in some instances for the federal court to defer to the state court.” Bacardi Int'l v. V. Suarez & Co., Inc. , 719 F.3d 1, 14 n. 17 (1st Cir.2013) (citing Colo. River , 424 U.S. at 817, 96 S.Ct. 1236 ). Third, Cosby cites Montrose Chem. Corp. v. Superior Court , 6 Cal.4th 287, 24...