ST. LOUIS – A federal judge has denied a motion to dismiss an action that would determine an insurance company’s obligation to its insured clients who are embroiled in state litigation under two insurance policies.
Plaintiffs Amco Insurance Co. and Depositors Insurance Co. filed a request for declaratory judgment in U.S. District Court for the Eastern District of Missouri Eastern Division in July 2019 after defendants Harold Barnett and Charles Taylor sued their insured clients in state court. Amco and Depositors alleged they do not owe a duty to defend Columbia Maintenance and others under the insurance policy.
“An actual immediate controversy exists among the parties as to whether insurance coverage is afforded under the policies for the claims asserted and the alleged damages sought against defendants in the underlying lawsuit,” stated Russell F. Watters, attorney for the insurers in their motion to dismiss.
All defendants filed motions to dismiss, including Columbia Maintenance Co., MK Maintenance LLC, MK Maintenance and William Hausman.
“Depositors and AMCO filed this complaint for declaratory judgment, dragging their own insured into yet another lawsuit in a different jurisdiction, hoping to stretch him and his resources so thin that he would be left with no choice but to give up and default,” wrote Hausman’s attorney James R. Wyrsch.
Both the Barnett and Taylor lawsuits are pending in St. Louis County Circuit Court, according to a press release.
“The Columbia defendants have retained personal counsel to represent them since depositors and AMCO refused to provide a defense or indemnification,” Wyrsch stated in his client's motion to dismiss.
In their bid to dismiss declaratory judgment by the federal court, defendants employed the doctrine of abstention, according to the March 11 decision. U.S. District Judge Stephen R. Clark settled the issue by determining that a parallel proceeding involving the same parties or the same issues did not exist.
“The scope of a district court's discretion to abstain from exercising jurisdiction under the Declaratory Judgment Act depends upon whether a 'parallel' state court action exists," Clark wrote. "If so, a district court enjoys broad discretion, guided by considerations of judicial economy. If not, district courts have more limited discretion to abstain.
“...Thus, the court will not abstain from the exercise of jurisdiction in this matter. Accordingly, it is hereby ordered that the motion to dismiss of defendant Charles Taylor is denied. It is further ordered that the motion to dismiss of defendants Columbia Maintenance Co., MK Maintenance LLC, Columbia Maintenance Co., doing business as MK Maintenance, and William Hausman is denied. It is further ordered that the motion to dismiss of defendant Harold Barnett is denied.”