Great American Ins. v. Precision Products
U.S. Court of Appeals for the First Circuit
Great American Ins. v. Precision Products
Opinion
USCA1 Opinion
August 7, 1992
[NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 92-1083
GREAT AMERICAN INSURANCE COMPANY
AND AMERICAN NATIONAL FIRE INSURANCE COMPANY,
Plaintiffs, Appellants,
v.
PRECISION PRODUCTS CORPORATION
AND NORTHROP CORPORATION,
Defendants, Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Robert E. Keeton, U.S. District Judge]
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Before
Selya, Circuit Judge,
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Lay,* Senior Circuit Judge,
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and Pieras,** District Judge.
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Seymour Kagan with whom Herzfeld & Rubin, Thomas E. Peisch, Mary
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Elizabeth Van Dyck and Conn, Kavanaugh, Rosenthal & Peisch were on
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brief for appellants.
Kirk A. Pasich with whom Mary K. Barnes, Wendy I. Kirchick, Hill,
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Wynne, Troop & Meisinger, James Dillon, Susan Insoft and Goodwin,
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Procter & Hoar were on brief for appellee, Northrop Corporation.
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* Of the Eighth Circuit, sitting by designation.
** Of the District of Puerto Rico, sitting by designation.
Per Curiam: Great American Insurance Company and
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American National Fire Insurance Company appeal from the order
of the district court1 dismissing their action in that court
under Colorado River Water Conservation District v. United
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States, 424 U.S. 800 (1976), based on the existence of
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parallel proceedings in a California court. We affirm on the
basis of the district court's thorough and well-reasoned
opinion.
Northrop Corporation (Northrop) filed suit in
California in January of 1989 claiming that several of its
insurers failed to acknowledge coverage of property damages
sought in certain environmental litigation brought against
Northrop. In July of 1991, Great American Insurance Company
and American National Fire Insurance Company, who were not
originally named as parties in Northrop's California
litigation, filed this action in the federal district court in
Massachusetts seeking a declaratory judgment that they were
not obligated to defend or indemnify Northrop in the
environmental claims against it; in addition they sought
damages for fraudulent misrepresentation, fraudulent
concealment, and negligent misrepresentation.2
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1The Honorable Robert E. Keeton, United States District Judge
for the District of Massachusetts.
2Plaintiffs urge that the Colorado River doctrine should not
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be applied because of the joinder of the dissimilar fraud
claims filed in the federal court. Cf. McLaughlin v. United
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Virginia Bank, 955 F.2d 930 (4th Cir. 1992). We note that
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these claims arose out of the California litigation involving
acts, witnesses and lawyers all located in California. Judge
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In August of 1991, Northrop amended its complaint in
the California action to add Great American, American National
and twelve other insurance carriers as defendants. Northrop
also filed a motion seeking dismissal of the pending action in
Massachusetts under the Colorado River doctrine, asserting the
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need for deference to parallel state proceedings. After an
analysis of the relevant factors as established in Colorado
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River and subsequent Supreme Court and First Circuit
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precedents, the district court declined federal jurisdiction
and granted Northrop's motion. On appeal, the two insurance
companies challenge the district court's order dismissing its
action as an abuse of discretion. We affirm the order of the
district court.
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Keeton acknowledged the fact that there were non-coverage
claims but observed:
This brings me to one final difficulty regarding the
ultimate disposition of the claims made by plaintiffs.
Although this question has not been addressed in the
precedents, I conclude that since it is within my
discretion to dismiss plaintiffs' coverage claim it is
within my discretion to dismiss the entire action. In so
deciding, however, I recognize that a different answer
might have been reached if plaintiffs' tort claims had
been brought independently. Plaintiffs did not choose
that course, however, and it would be inappropriate for
me to retain jurisdiction over the tort claims only on an
assumption, unsupported by the record, that a choice for
that version of piecemeal litigation has been or would be
manifested. I conclude that dismissal of the entire
claim is appropriate. If plaintiffs wish to contend
otherwise, they may file an appropriate post-judgment
motion within the time allowed by law.
We find no abuse of discretion in Judge Keeton's dismissal.
The overall claims relate to the basic dispute relating to
coverage which is the basis of the declaratory judgment
action.
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The district court addressed each of the Colorado River
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factors, as well as those established in Moses H. Cone
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Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1
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(1983), and Villa Marina Yacht Sales v. Hatteras Yachts, 947
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F.2d 529 (1st Cir. 1991), cert. denied, 112 S. Ct. 1674
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(1992). Under the Colorado River doctrine, federal courts
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must consider: (1) whether either court assumed jurisdiction
over a res; (2) the inconvenience of the federal forum; (3)
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the desirability of avoiding piecemeal litigation; (4) the
order in which the forums obtained jurisdiction; (5) whether
state or federal law controls; (6) the adequacy of the state
forum to protect the parties' rights; and (7) the vexatious or
reactive nature of the federal lawsuit.
The district court noted the irrelevancy of the first
factor and determined that with the exception of the third
factor, application of the remaining factors tilted slightly
in Northrop's favor but not so strongly as to mandate
dismissal. See Moses H. Cone, 460 U.S. at 16 (relevant
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factors to be heavily weighed in favor of the exercise of
jurisdiction); Villa Marina, 947 F.2d at 532. The district
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court's decision to dismiss, however, was based on its concern
about the third factor, the desirability of avoiding piecemeal
litigation.
The district court determined the present case to be
"on all fours" with the facts of Liberty Mutual Insurance Co.
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v. Foremost-McKesson, Inc., 751 F.2d 475 (1st Cir. 1985). In
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McKesson, a DES manufacturer brought suit against all of its
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insurers in California state court while one of its insurers
brought suit in Massachusetts federal court seeking
declaratory judgment as to its rights and obligations under
its insurance policies. We affirmed the district court's stay
of the federal proceedings, stating that
[h]ere, as in Colorado River, piecemeal litigation could
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severely prejudice the rights of one of the parties. If
the federal and state actions were to proceed
concurrently, there is the real possibility that the two
courts might interpret the same standard policy language
differently, with the result that McKesson would find
itself without sufficient liability insurance coverage
from the insurers . . . .
The California action, which was commenced first, is
the more comprehensive of the two. It involves all of
McKesson's insurers and all of the products for which
McKesson faces potential liability. California therefore
is the logical forum for the determination of the
respective rights and obligations of the parties and
serves to further the interest of judicial economy.
Id. at 477 (citations omitted). Moreover, as in McKesson, the
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action here raises no federal issues and "no federal interest
would be served by retaining jurisdiction over the case." Id.
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We concur with the district court's analysis and find
no abuse of discretion.
Judgment affirmed.
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