United States District Court, W.D. Missouri, Western Division
ORDER ABSTAINING AND DISMISSING CASE WITHOUT
declaratory judgment action concerns insurance coverage for
an automobile collision. Plaintiff GEICO Casualty Company
(“GEICO”) seeks a declaration that the policy it
issued to Daniel and Deborah Clymens does not cover an
accident involving a moving truck driven by Patricia
Hollandsworth. Daniel Clymens helped Hollandsworth rent the
truck, and while intoxicated she crashed it into a motorcycle
ridden by Richard Aguilar. The Court now, on its own motion,
exercises its discretion to abstain from hearing the suit and
DISMISSES it in favor of a pending and parallel state
GEICO automobile policy insures Daniel and Deborah Clymens.
The only vehicle listed on the policy is a 2005 Toyota Sienna
XLE. The policy has an “each person” bodily
injury liability limit of $25, 000 and an “each
occurrence” bodily injury liability limit of $50, 000.
The policy extends coverage to relatives of the named
insureds who reside in the insureds' household and, under
certain circumstances, to insureds operating non-owned autos.
It also obligates GEICO to defend the insured in any suit for
damages payable under the policy.
13, 2013, Clymens and Hollandsworth rented a Ford E450 U-Haul
truck so that Hollandsworth could move from the Clymens's
to a new residence. The owner of the U-Haul refused to rent
to Hollandsworth because she lacked a valid driver's
license and was visibly intoxicated. Thus, Clymens alone
signed the rental agreement. Hollandsworth, however, paid for
the rental with her debit card. The next day, Hollandsworth
drove the U-Haul truck while still intoxicated and hit
Aguilar as he was riding his motorcycle, severely injuring
sued Hollandsworth in state court in August 2017.
Hollandsworth sought indemnification from GEICO under the
Clymens's policy. GEICO denied coverage and offered to
defend her subject to a reservation of rights. Hollandsworth
rejected GEICO's defense and, unbeknownst to GEICO,
entered into an agreement with Aguilar under Mo. Rev. Stat.
§ 537.065 (the “537 Agreement”) (Doc. 31-1),
whereby she assigned to Aguilar her rights under the GEICO
policy and her claims against GEICO.
537 Agreement, Hollandsworth acknowledged fault for causing
the accident, agreed not to dispute liability, and agreed to
submit the issue of damages “to a judge.” She
also agreed to pursue all claims against GEICO
for extra-contractual damages or bad faith and/or for
[GEICO's] failure to settle and/or for negligence or
breach of fiduciary duty (or however the claim may be
denominated) arising out of [GEICO's] failure to earlier
settle the claim brought against her.
further stated that she would “fully cooperate in any
claim or cause of action” against GEICO, including
being named as a party plaintiff. She assigned to Aguilar
“all interests, causes of action, and rights of
action” against GEICO. In exchange, Aguilar agreed to
recover only from GEICO rather than from Hollandsworth's
February 22, Hollandsworth informed GEICO that she was
rejecting its defense under a reservation of rights. She also
requested that counsel retained by GEICO withdraw from her
case. The next day, GEICO replied that it was considering
whether to withdraw its reservation of rights and defend her.
On February 28, Hollandsworth notified GEICO that she had not
been advised of GEICO's position. She gave GEICO until
5:00 p.m. that evening to withdraw its reservation and defend
her unconditionally. GEICO chose not to do so.
informed GEICO of the 537 Agreement on March 3. Shortly
thereafter, on March 7, GEICO moved to intervene as a matter
of right in the state court lawsuit. On March 15, Aguilar
dismissed without prejudice his state court action against
Hollandsworth. About one hour later, GEICO filed this federal
action seeking a declaratory judgment that it owed no duty to
defend or indemnify Hollandsworth with respect to the 2013
collision. Aguilar and Hollandsworth filed separate motions
to dismiss this case, arguing that Aguilar's dismissal of
the state court action rendered the declaratory action moot.
The Court denied these motions (Doc. 14).
entered into an agreement (Doc. 21-3) on May 4 to submit
their underlying dispute to binding arbitration. As part of
the agreement, Hollandsworth agreed not to accept
representation at the arbitration from any attorney or firm
selected by GEICO, or to “file any post-arbitration
motions challenging the award, any post-trial motions after
the court enters judgment, or any notice of appeal.”
The agreement reiterated that Aguilar would seek to recover
only from the GEICO policy proceeds and any potential claim
arbitrator heard evidence on June 4, and, on July 16, issued
his decision awarding Aguilar approximately $8 million in
economic damages, $20 million in non-economic damages, and $7
million in punitive damages against
Hollandsworth. On August 8, Aguilar filed an application
in state court to confirm the $35 million award. GEICO moved
unsuccessfully to intervene in this proceeding, and, on
October 24, the state court entered the award. GEICO appealed
this decision, while Aguilar filed a separate state
garnishment action against the insurance company, alleging
that GEICO acted in bad faith and breached its duty to
defend. In that suit Aguilar seeks garnishment of the policy
proceeds, as well as compensatory and punitive damages. He
argues that GEICO's actions render it liable for the
entire underlying judgment.
moved jointly to dismiss (Doc. 46) or stay (Doc. 64) this
action. They requested that the Court abstain from hearing
the case due to the pending state garnishment proceeding. The
Court denied the motions (Doc. 74) because the parties had
already conferred under Rule 16, taken several depositions,
and fully briefed ...