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Victoria Automobile Insurance Co. v. Rider

United States District Court, E.D. Missouri, Southeastern Division

February 16, 2018

VICTORIA AUTOMOBILE INSURANCE COMPANY, Plaintiff,
v.
MATTHEW RIDER and M.I.-S., a minor, by KASANDRA ILER, her Next Friend Defendants.

          MEMORANDUM AND ORDER

          STEPHEN N. LIMBAUGH, JR. UNITED STATES DISTRICT JUDGE

         Plaintiff Victoria Automobile Insurance Company (“Insurer”) brought this declaratory judgment action against defendants Matthew Rider (“Driver”) and M.I.-S. (“Child”) seeking a judgment that it owes no duty to defend or indemnify Driver. Insurer moved for summary judgment (#26), and Driver moved to dismiss, or in the alternative, to stay proceedings (#37) based on an abstention theory. Both motions are ripe. Driver's motion to dismiss, or in the alternative, to stay proceedings is denied, and Insurer's motion for summary judgment is granted.

         I. Factual Background

         Back on October 5, 2015, Insurer issued a policy (“Initial Policy”) of automobile insurance to Bruce Rider, Driver's father. The Initial Policy covered two vehicles: a Lincoln and a 2002 Chevrolet Trailblazer (“Blazer”). Driver was entitled to certain rights under the Initial Policy because he was listed as a driver and lived with his father. Driver's father was the primary driver of the Lincoln, while Driver was the primary driver of a 1999 Blazer. It seems that Driver's father meant to insure the 1999 Blazer, but due to a mix up, the Initial Policy insured the 2002 Blazer-a vehicle the Riders neither owned nor drove.

         Two months later, in December 2015, Driver's mother called Insurer and removed the Blazer from the Initial Policy. Of course, this lowered the Initial Policy's premiums. The same day, Insurer sent an amended declaration page (#28-10) to the Rider home, but Driver's Mother claimed they never received it. The amended declaration page noted that it superseded any prior declaration. On January 8, 2016, Driver's father paid the lower premium. Then, at some point in the middle of January, Driver's mother claims she called Insurer and added the Blazer back to the Initial Policy. No document, recording, or anyother piece of evidence confirms this.

         At the beginning of February, Driver's mother called Insurer and complained about the monthly premium payment. She explained that-because she removed the Blazer from the Initial Policy-she was told the monthly premium payment would drop from $68.05 (for two vehicles) to roughly $25 (for the Lincoln), and she wanted to know why the payment had not dropped. The representative explained that the premium had dropped to $27.05, but the payment also included a $10 installment fee. So $37.05 was the correct monthly premium for the Lincoln, and Driver's mother paid it at the end of the call. A voice recording confirms this call.

         At the beginning of March, Driver's father paid the $37.05 premium. The same day, Insurer sent Driver's father a renewal offer, which required an initial payment of $100 and five later monthly payments of $64.00. About a week later, Driver's mother called Insurer to complain about the renewal offer. She thought the $100 payment was too high for “one vehicle” and threatened to get auto insurance elsewhere. Insurer explained that the premiums had gone up because Driver-who, again, was listed as a driver on the Initial Policy-had received a driving violation. A voice recording also confirms this call. The next month, Driver's Father paid the $100 and renewed the policy (“Renewed Policy”).

         A month later, on May 11, 2016, Driver was taking his wife, who was in labor, to the hospital. Driver suddenly slowed down and was hit by a semi. Driver's wife did not survive, but Child was delivered and did survive. The Renewed Policy was effective at the time of the accident, and two months after the accident, Insurer sent the Riders a Proof of Insurance Letter (#10-1). This letter listed both the Lincoln and Blazer, and it noted that the Blazer was removed from the Initial Policy on December 5, 2016. Of course, this was an error because the removal date was five months after the date on the Proof of Insurance Letter. The Blazer was actually removed from the Initial Policy on December 5, 2015, not 2016. Insurer later corrected the error and sent a new letter

         II. Procedural Background

         Child sued Driver, the trucker, and the trucker's employer in state court. Driver sought coverage and demanded that Insurer defend the state court lawsuit and indemnify him for any adverse judgment. Insurer defended Driver under a reservation of rights and right to withdraw, pending its own investigation of coverage. Insurer investigated and determined the Blazer that Husband was driving was not insured under the Renewed Policy. It denied coverage, withdrew representation, and filed this declaratory judgment, asking the Court for a declaration that it has no duty to defend or indemnify Driver (#1). Driver counterclaimed and asked the Court to reform the Initial Policy by adding the 1999 Blazer-the vehicle involved in the accident-in place of the 2002 Blazer-the vehicle actually listed in the Initial Policy.

         Later, Child and Driver agreed to arbitrate their claims, and Child dismissed Driver without prejudice from the underlying state action. Then, Husband moved to dismiss or stay (#37) Insurer's declaratory judgment claim based on an abstention theory. Husband claimed the arbitrator would either (1) enter an award for Insurer, mooting the declaratory judgment claim, or (2) enter an award for Child, who will then confirm the award and file a state garnishment action against Insurer, and federal courts always dismiss or stay the declaratory judgment action in that situation due to the parallel state court proceeding. Insurer opposed the motion, claiming there is no parallel state court proceeding currently pending, a necessary condition to abstention.

         Child and Driver arbitrated their claims, and the arbitrator entered an award in favor of Child. Child filed a petition to confirm the arbitration award in state court, and Insurer intervened to challenge the award. After Insurer intervened, Driver filed a cross-claim against Insurer for coverage. Next, Child filed a “Notice of Parallel State Court Proceeding” (#50) to bring the cross-claim to this Court's attention. In the Notice, Child argued that the state court proceeding is now a “parallel proceeding” and asked this Court to stay the declaratory judgment action. Insurer then moved to strike the Notice (#51) because the Notice asked for relief but failed to do so in a motion. Driver did not respond to the motion to strike, and the time for doing so has passed. Finally, Insurer removed the state court action, and it plans to ask that federal court to transfer the action to this Court.

         III. Motion to Dismiss (#37)

         Driver urges the Court to dismiss or stay the declaratory judgment claim because (1) this Court lacks subject matter jurisdiction and (2) state court is the ...


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