WCM Successfully Opposes Defendant’s Motions to Dismiss and Remand (PA)
In Harleysville Worcester Insurance Company v. Pediatric Associates of Westmoreland Ltd, WCM Partners Robert Cosgrove and Colleen Hayes successfully defeated defendant Pediatric Assoc. of Westmoreland, Ltd.’s (“PAW”) Motion to Dismiss or, in the Alternative, Remand to State Court. By way of brief background, plaintiff Harleysville Worcester Ins. Co. filed a declaratory judgment action asserting it does not owe PAW defense or indemnity with respect to an underlying state court action as the pertinent policies do not provide coverage.
In evaluating PAW’s Motion, the United States District Court for the Western District of Pennsylvania first considered whether the case should be dismissed as to PAW. In doing so, the Court determined Harleysville Worcester Ins. Co. (“Harleysville”) and PAW fundamentally disagree about Harleysville’s obligations under the relevant insurance policies. The Court held the parties’ fundamental disagreement constituted a controversy under the Declaratory Judgment Act, which warranted denial of PAW’s Motion to Dismiss.
Next, the Court analyzed PAW’s Motion to Remand in accordance with the standards established by the Court of Appeals for the Third Circuit’s holding in Reifer v. Westport Ins. Corp., 751 F.3d 129 (3d Cir. 2014). As set forth in Reifer, the Court considered the following factors to assess its jurisdiction over the lawsuit:
(1) the likelihood that a federal court declaration will resolve the uncertainty of obligation which gave rise to the controversy;
(2) the convenience of the parties;
(3) the public interest in settlement of the uncertainty of obligation;
(4) the availability and relative convenience of other remedies;
(5) a general policy of restraint when the same issues are pending in a state court;
(6) avoidance of duplicative litigation;
(7) prevention of the use of the declaratory action as a method of procedural fencing or as a means to provide another forum in a race for res judicata; and
(8) (in the insurance context), an inherent conflict of interest between an insurer’s duty to defend in a state court and its attempt to characterize that suit in federal court as falling within the scope of a policy exclusion.
See Harleysville Worcester Ins. Co., 2020 WL at *2.
Weighing the foregoing 8 factors – with the understanding that the Court may look to other case law or considerations – the Court concluded that judicial economy is best served by retaining jurisdiction over the action. In support of this conclusion, the Court reasoned, inter alia, no underlying state court action related to the heart of the lawsuit existed, a ruling on the action would resolve the issue of whether Harleysville is required to defend or indemnify PAW and the parties already appeared before the Court.
In sum, this ruling serves as a reminder of the emphasis the District Courts in the Third Circuit place on the Reifer factors when determining whether to retain jurisdiction or remand to state court.
Congratulations to Bob and Colleen on Harleysville Worcester Insurance Company v. Pediatric Associates of Westmoreland Ltd, No. CV 19-1251, 2020 WL 5544413, at *1 (W.D. Pa. Sept. 16, 2020), and thanks to Lauren J. Berenbaum for her contribution to this post. Please contact Vincent F. Terrasi with any questions.