United States Fidelity & Guaranty Co. v. Lee Investments LLC (551 F. Supp. 2d 1069, 2008)

United States District Court for the Eastern District of California 2008-03-18

Citations

Full opinion text

MEMORANDUM DECISION GRANTING IN PART AND DENYING IN PART LEE INVESTMENTS LLC’S MOTION TO VACATE PARTIAL JUDGMENT ON JURY VERDICT UPON MULTIPLE CLAIMS INVOLVING MULTIPLE PARTIES OR TO ALTER OR AMEND PARTIAL JUDGMENT PURSUANT TO RULES 59(e) and 60(a) & (b), FEDERAL RULES OF CIVIL PROCEDURE (Doc. 704)

OLIVER W. WANGER, District Judge.

Lee Investments LLC (hereafter Lee) moves for an Order vacating the “Partial Judgment on Jury’s Verdicts Upon Multiple Claims Involving Multiple Parties” (hereafter Partial Judgment), (Doc. 681), entered on March 1, 2007 in favor of United States Fidelity & Guaranty Company (hereafter USF & G), American Specialty Insurance Services, Inc. (hereafter American Specialty or ASI), and Aon Risk Services Inc. of Central California Risk Services (hereafter Aon).

The Partial Judgment states:

This ease was tried before a jury commencing January 29, 2007, and concluded upon the return, by the jury, of its verdicts on February 26, 2007. The case involves more than one claim for relief, including counter-claims and third-party claims and involved multiple parties. The parties have reserved, by written stipulation and order: USF & G’s alter ego claims against Richard K. Ehrlich, an individual, et al., the determination of the amount of attorneys’ fees and interest claimed by USF & G; and the claim of Aon Risk Services Inc. of Central California Insurance Services (“Aon”) for relief based on the tort of another. All other claims of the parties were adjudicated by the jury, including USF & G’s claim for rescission based on fraud; all claims of Lee Investments LLC, dba The Island, a California limited liability company. Any claims as to Diane Conley have been determined by the parties’ stipulation.

Due to the prior delay in, complexity and contentiousness of this litigation, to avoid uncertainty and inconsistent verdicts, there is no just reason for delay and partial judgment should now therefore be entered.

Based on the jury’s written verdicts returned in open court February 26, 2007, the following verdicts were rendered:

A. The jury’s verdicts finding in favor of USF & G on its claim for rescission finding fraud and intentional concealment; finding against Lee on all Lee’s defenses of statutory waiver, common law waiver, estoppel, unreasonable delay, wrongful conduct, and awarding USF & G restitution damages in the amount of $875,034.99.

B. On Lee’s claims against USF & G, American Specialty and Aon, finding in favor of USF & G, American Specialty, and Aon and against Lee on all Lee’s claims for fraud/intentional misrepresentation; concealment; conspiracy; negligent misrepresentation; and negligence. Finding against Lee and in favor of Aon on Lee’s claim for breach of an oral contract against Aon. Finding in favor of USF & G, American Specialty and Aon and against Lee on all their defenses to Lee’s claims based on fraud of Lee; negligent misrepresentation by Lee; es-toppel against Lee; wrongful conduct by Lee; common law waiver against Lee; as to Aon against Lee due to Lee’s intentional tort as superseding cause; as to Aon, no unreasonable delay by Lee; and in favor of Aon and against Lee on Aon’s defense of assumption of risk.

C.On all Aon’s claims against Lee, finding in favor of Aon and against Lee on Aon’s claims for intentional misrepresentation, negligent misrepresentation and that Lee was 100% comparatively at fault; in favor of Aon’s claim of negligence against Lee; that Aon was not negligent. Finding in favor of Aon and against Lee on all Lee’s affirmative defenses to Aon’s claims, including fraud, negligent misrepresentation, estoppel, no wrongful conduct by Aon; no common law waiver by Aon, no unreasonable delay by Aon.

Accordingly, on each of these claims and defenses, JUDGMENT IS ENTERED AS FOLLOWS:

1. In favor of USF & G and against Lee for rescission and USF & G shall recover from Lee restitutionary damages of $875,034.99;

2. Against Lee on all Lee’s defenses to USF & G’S claims for rescission;

3. Against Lee on all its claims and in favor of USF & G, American Specialty and Aon against Lee and in favor of USF & G, American Specialty and Aon on all their affirmative defenses to Lee’s claims;

4. In favor of Aon on all its claims and against Lee; and against Lee in favor of Aon on all on [sic] Lee’s affirmative defenses to Aon’s claims; and

5. USF & G, American Specialty and Aon shall recover costs of suit.

Lee moves pursuant to Rules 59(e) and 60(a) and (b), Federal Rules of Civil Procedure, asserting as grounds:

1. The Partial Judgment is void in that the California Workers’ Compensation Appeals Board (WCAB) has and had exclusive jurisdiction;

2. The Court committed clear error and its decisions have been manifestly unjust in denying Lee judgment as a matter of law on USF & G’S original and amended complaint for rescission in that:

a. This Court does not have jurisdiction and the complaint fails to state a claim upon which relief can be granted;

b. California law does not permit a workers’ compensation insurer to impose a condition or expectation on a workers’ compensation policy except by endorsement to the policy and then the insurer may only terminate the policy in accordance with its cancellation provisions;

c. As a condition or exception to Lee’s workers’ compensation policy, Matthew Sackett’s August 11, 1998 facsimile to William Hildebrand was required to be, but was not, clear plain and conspicuous;

d. Christy Platt’s August 12, 1998 letter to Matthew Sackett was not admissible under the parol evidence rule because it was related to and contradicted Lee’s workers’ compensation policy;

e. An application was required as a matter of law;

f. USF & G was bound as a matter of law by its report of Diana Conley’s accident as being within Classification Code 9016 and there was no evidence that any of Lee’s employees’ activities fell outside a water park classification code.

3.The Court committed clear error and its decisions have been manifestly unjust in denying Lee judgment as a matter of law on the counterclaim of Aon for the reasons set forth above and in that Lee did not make a misrepresentation to Aon, Aon did not rely on any representation, and reliance, if any, by Aon was not a substantial factor in causing harm to Aon;

4. The Partial Judgment erroneously does not require USF & G to return all premiums Lee paid;

5. The Partial Judgment erroneously references FRCP 55(b) as the basis for the judgment;

6. The Partial Judgment erroneously states that Lee has stipulated that USF & G’s alleged alter ego claims are reserved for later determination when Lee has previously objected to the inclusion of these claims in the litigation at all and the Court on its own set them for separate trial;

7. The Partial Judgment erroneously states that Lee stipulated to a determination of Diana Conley’s claims;

8. The Partial Judgment prematurely awards restitution and erroneously fails to include as issues remaining for further trial (a) whether USF & G actually paid and is the real party in interest respecting any amount for which its seeks restitution, and (b) USF & G’s breach of its duty to defend Lee in this action and the WCAB proceeding.

A. Governing Standards.

With regard to a motion to alter or amend judgment pursuant to Rule 59(e), Federal Rules of Civil Procedure, 11 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2nd § 2810.1, explains:

Since specific grounds for a motion to amend or alter are not listed in the rule, the district court enjoys considerable discretion in granting or denying the motion. However, reconsideration of a judgment after its entry is an extraordinary remedy which should be used sparingly. There are four basic grounds upon which a Rule 59(e) motion may be granted. First, the movant may demonstrate that the motion is necessary to correct manifest errors of law or fact upon which the judgment is based. Second, the motion may be granted so that the movant may present newly discovered or previously unavailable evidence. Third, the motion will be granted if necessary to prevent manifest injustice. Serious misconduct of counsel may justify relief under this theory. Fourth, a Rule 59(e) motion may be justified by an intervening change in controlling law. The Rule 59(e) motion may not be used to relitigate old matters, or to raise arguments or present evidence that could have been raised prior to the entry of judgment. Also, amendment of the judgment will be denied if it would serve no useful purpose. [Footnotes omitted]

Rule 60(a), Federal Rules of Civil Procedure, provides that “[clerical mistakes in judgments, orders or other parts of the records and errors therein arising from oversight or omission may be corrected by the court ... on the motion of any party

Rule 60(b), Federal Rules of Civil Procedure, provides in pertinent part:

On motion and upon such terms as are just, the court may relieve a party ... from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; ... (3) ... misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) ... it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment.

Other than reciting these standards, Lee does not otherwise refer to them in its memorandum of points and authorities. While some of the claims are easily relata-ble to these standards, others are not. For instance, what is the mistake, inadvertence or excusable neglect of Lee, and what is the misrepresentation or other misconduct of an adverse party? In addition, Lee does not set forth the standards governing resolution of a Rule 60(b) motion on these two grounds. The Ninth Circuit in Lafarge Conseils et Etudes, S.A. v. Kaiser Cement & Gypsum Co., 791 F.2d 1334, 1338 (9th Cir.1986), explains:

A motion brought under 60(b)(6) must be based on grounds other than those listed in the preceding clauses ... Clause 60(b)(6) is residual and ‘must be read as being exclusive of the preceding clauses.’ In addition, the clause is reserved for ‘extraordinary circumstances.’

B. WCAB Exclusive Jurisdiction.

Lee asserts that the Partial Judgment is void because the WCAB had and has exclusive jurisdiction over USF & G’s claim for rescission of the workers’ compensation insurance policy.

By Order filed on October 23,1999 (Doc. 21), the Honorable Robert E. Coyle denied the motion to dismiss filed by then Defendant Diana Conley and joined by Lee. Conley and Lee moved to dismiss this action pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure, for failure to state a claim upon which relief can be granted, on the ground that the WCAB has exclusive jurisdiction over the controversy. Judge Coyle ruled in pertinent part:

California Labor Code § 5300(a) provides that a proceeding for the “recovery of compensation, or concerning any right or liability arising out of or incidental thereto” “shall be instituted before the appeals board and not elsewhere”.

In arguing that the allegations of Fidelity’s Complaint are subject to the exclusive jurisdiction of the WCAB pursuant to Section 5300(a), defendants rely on a number of California cases.

Thus, defendants refer the court to General Acc. Etc. Corp. v. Indus. Acc. Com., 196 Cal. 179, 237 P. 33 (1925). General Acc., Fire & Life Assur. Corp. involved a review by the California Supreme Court of an award made by the Industrial Accident Commission in favor of the dependents of a deceased employee, the sole [issue] presented to the Commission being whether the petitioner insurance company was, on the day of the fatal accident, the insurance carrier of the employer. The employer had applied for a workers’ compensation insurance policy but had not paid the premium for it. On the day the employee was killed, the employer presented the premium check to his insurance agent, not advising the agent of the accident until two days later. The insurance company petitioned the Commission to rescind the policy because of fraud in the procurement of the policy. The California Supreme Court reversed the award of the Commission on the ground that the Commission’s finding was not supported by any evidence. On appeal, the Supreme Court stated in pertinent part:

It is the contention or suggestion of respondent Commission that the dependents of the employee have an enforceable right against petitioner under the alleged policy even though the employer be cut off from any remedy against petitioner. We are unable to understand what principle of law would give the dependents of the employee a cause of action against petitioner upon a contract which is void or voidable as to the employer ... We may assume that any defense available to the Insurance Company ... against ... the employer, would be equally available against the employee or his dependents.’ Whether the foregoing quotation be regarded as doctrine or dicta, it would seem to express an unimpeachable principle of law____

There can be no doubt but that the Commission is vested by constitutional and legislative power to hear and determine every issue raised by the parties to this controversy, including the validity of the policy and the question of fraud alleged in its procurement and that the parties are not required to invoke either a court of law or equity in the determination of said question.

196 Cal. at 190-191, 237 P. 33.

Defendants also rely on Bankers Indem. Ins. Co. v. Indus. Acc. Com., 4 Cal.2d 89, 94-98, 47 P.2d 719 (1935), wherein the Supreme Court held that Industrial Accidents Commission “has been invested with the power and authority to hear and determine equitable issues, including those arising in a controversy involving the reformation of a written instrument” and that the Supreme Court “was ... in accord with the policy of the law which invests in one tribunal the power to dispose of the whole controversy involving the right of the injured employee to secure just compensation for the injury sustained by him.” 4 Cal.2d at 98, 47 P.2d 719.

Conley argues that the critical fact that brings this case within the exclusive jurisdiction of WGAB is that the outcome of this controversy will determine her rights to recovery of workers’ compensation benefits.

Conley refers the court to United States Fidelity and Guaranty Company v. Superior Court, 214 Cal. 468, 6 P.2d 243 (1931). In USF & G, in a proceeding before the Commission in which the employer and the insurance company were defendants, the employee procured a compensation award against the defendants. In the proceeding before the Commission, the employer and the insurance company filed answers presenting the issue whether the insurance company was the compensation carrier for the employer at the time of the accident. The Commission found that the insurance company was not then the insurance carrier for the employer and ordered the insurance company released and discharged. No appeal was taken and the Commission’s award became final. Some months later, the employer sued the insurance company for breach of the insurance contract, seeking damages for termination of the insurance policy without notice as required by the policy. The insurance company unsuccessfully demurred on the ground of lack of jurisdiction. The insurance company petitioned for a writ of prohibition. The California Supreme Court held that issues relating to the existence, at the time of the injury, of an insurance policy affording coverage and issues relating to the enforcement against the insurance company of any liability for compensation or for the payment of the work-mans’ compensation award had reached a final determination in the proceedings before the Commission. However, the Supreme Court held, to the extent the action is one for damages for breach of contract to issue and keep in effect the insurance, the complaint stated a cause of action within the jurisdiction of the Superior Court. In so holding, the Supreme Court explained:

The cause of action for damages does not involve the construction of an insurance policy with respect to coverage thereunder, the recovery of compensation or incidental liability or the enforcement against an insurance carrier of compensation liability; it attempts to set forth purely a claim for damages based upon the breach of a contract to insure in a controversy affecting only the employer and the insurance carrier, no rights of the employee being involved. The mere circumstance that the damage claimed is the exact amount of the compensation award to the employee does not change the essential nature of the action and the court should not be prevented from proceeding with it.

214 Cal. at 471-472, 6 P.2d 243.

Defendants further refer the court to Hartford Acc. & Indem. Co. v. Indus. Acc. Com., 216 Cal. 40, 13 P.2d 699 (1932). In Hartford Acc. Etc. Co., the Commission ordered the employer to obtain a surety bond as a prerequisite to the issuance to the employer of a certificate of self-insurance to secure the payment to its employees of workers’ compensation benefits. The employer obtained a surety bond from Hartford. During the time the bond was in force, claims were made by the employees which awards were covered by the bond. Thereafter, in the district court, a receiver was appointed for all of the property and assets of the employer. The receiver stopped payment of the workers’ compensation awards. At the time the receiver did so, the total amount of the awards exceeded the amount of the bond. The employees then petitioned the Commission for an order requiring Hartford, as surety on the bond, to pay or provide payment of the compensation remaining unpaid on account of the workers’ compensation awards. Hartford appeared in the Commission proceedings. The Commission ordered Hartford to pay the amount of the bond. On appeal, Hartford argued that the Commission had no jurisdiction to render an award against the surety on a self-insurer’s bond. The Supreme Court rejected this argument, holding that the provisions of the workers’ compensation act regulating a self-insurer employer and providing for the giving of a bond are one method of securing the payment of compensation and, therefore, within the grant of power to the Commission. Id. at 45-46, 13 P.2d 699. The Supreme Court further held that the employees’ petition was a “proceeding for the recovery of compensation, or concerning any right or liability arising out of or incidental thereto” and that, therefore, “[t]here can be no question of the jurisdiction of the Commission to entertain such a proceeding and to determine all issues arising therein and to render an award in accordance with the facts presented to it.” Id. at 46, 13 P.2d 699. The Supreme Court further stated in pertinent part:

Petitioner complains that the granting of relief against it in the proceedings before the ... Commission deprived it of legal and equitable rights to which it would otherwise be entitled. These rights petitioner claims are given it under sections 2845 and 2846 of the Civil Code and section 1050 of the Code of Civil Procedure. If petitioner is entitled to any rights under these sections of the code which it could not enforce before the Commission, it might be relegated to the courts for the purpose of enforcing them. This result would not affect the jurisdiction of the Commission if the Constitution and statutes have conferred jurisdiction upon the Commission to determine the matter involved. However, if the Commission is vested with jurisdiction over any given subject matter, it has the power to hear and determine every issue raised by the parties in the controversy ... In such cases the parties are not required to resort to the courts.

Id. at 47, 13 P.2d 699.

Fidelity argues that Section 5300(a) does not cover a claim for rescission of an insurance policy because a claim for rescission does not involve “the recovery of compensation, or concerning any right or liability arising out of or incidental thereto.” Fidelity asserts that it does not contend that Conley cannot proceed before the WCAB for the recovery of workers’ compensation benefits against Lee Investments but, rather, that the WCAB does not have jurisdiction of the claim for rescission of the Policy. Fidelity argues that the Supreme Court’s decision in General Acc. Etc. Corp. is not controlling on this issue. In so arguing, Fidelity notes that no issue concerning the Commission’s jurisdiction was raised by the insurance company in the appeal because the insurance company was the petitioner. In addition, Fidelity notes that the insurance company in General Acc. Etc. Corp. did not seek rescission of the policy in proceedings before the Commission but rather a determination that the insurance company was not liable.

Fidelity notes that the type of relief that can be granted by the court and by the WCAB differs. Thus, the trial court cannot award workers’ compensation benefits, and the WCAB cannot award damages for injuries. La Jolla Beach & Tennis Club, Inc. v. Industrial Indemnity Co., 9 Cal.4th 27, 35, 36 Cal.Rptr.2d 100, 884 P.2d 1048 (1994); Scott v. Industrial Acc. Com., 46 Cal.2d 76, 82-83, 293 P.2d 18 (1956). In State Comp. Ins. Fund v. Ind. Acc. Com., 20 Cal.2d 264, 125 P.2d 42 (1942), the California Supreme Court held that the Commission was “without jurisdiction to adjudicate a supplemental controversy involving rights of contribution and reimbursement between two insurance carriers jointly and severally responsible for the payment of a compensation award.” Id. at 266, 125 P.2d 42. In so holding, the Supreme Court distinguished General Acc. Etc. Corp. v. Indus. Acc. Com., and Bankers Indem. Ins. Co. v. Indus. Acc. Com., explaining in pertinent part:

While petitioner concedes that the jurisdiction of the commission is limited to the settlement of disputes arising out of the relationship of the employer to his employee, it urges that once this status is established the commission has judicial power to determine any controversy whatsoever that may develop between parties in interest respecting the compensation awarded. Upon this basis the petitioner contends that its application for an adjustment of its obligation to make compensation payments falls within the scope and intent of the ... constitutional provision referable to the insurance features of the ‘system of workman’s compensation’ and the legislative enactment adopted in pursuance thereof. In support of its argument the petitioner first cites several decisions of this court wherein it was held that in determining the liability of an insurance carrier for compensation to an injured employee, the commission had the power to determine all issues of law and fact upon which the liability of the insurance carrier depended ... But in those cases the respective questions regarding the insurance aspect of the proceeding before the commission arose in connection with the rendition of an award in favor of an injured employee or his dependents and necessarily were involved in the enforcement of the compensation benefits contemplated under the basic liability of the employer to his employee. The present situation is readily distinguishable in that here the right of action in the employee to enforce his claim was finally determined by the joint and several award in his favor against the insurance carriers which had assumed the obligation of the respective employers in the premises. By such award the employee was assured of the scheduled payments, and the employers were discharged from all liability therefor. This adjudication concluded the authority of the commission to act in the matter. Any controversy between the insurance carriers relative to the burden of payment of the award for which both have been held responsible concerns neither the employee nor the joint employers in their essential relationship. Application for the adjustment of such dispute obviously is not a proceeding for the recovery of compensation’ nor does it involve ‘any right or liability arising out of or incidental thereto.’ The fact that the petitioner has joined the employee as a nominal party in this proceeding cannot change the basic character of the litigation as an independent claim having no relation to the enforcement of benefits allowed the employee under the system of workman’s compensation established in this state. The petitioner is seeking an award in its favor based on a claim wholly distinct from the right of an employee to recover compensation for an industrial injury. These considerations plainly indicate that the commission is not vested with constitutional or legislative power to determine the issues involved in a proceeding supplemental to the adjudication of the liability of the employer to his employee, and the petitioner must seek its relief in the ordinary courts

Id. at 267-268, 125 P.2d 42.

Here, as noted, the Complaint alleges that Fidelity has paid benefits to Conley under the Policy because her claims, but for the rescission of the Policy, would be covered by the Policy.

Fidelity further argues that, contrary to Conley’s assertion, the outcome of this Complaint for rescission will not determine Conley’s right to recovery of compensation benefits. In so arguing, Fidelity notes that, pursuant to California Labor Code § 3715(a), an employee whose employer has failed to secure the payment of compensation under the workers’ compensation laws may, in addition to proceeding to proceeding against the employer by civil action, “file his or her application with the appeals board for compensation and the appeals board shall hear and determine the application for compensation in like manner as in other claims and shall make the award to the claimant as he or she would be entitled to receive if the employer had secured the payment of compensation as required .... ” Section 3715(a) further requires the employer to pay the award so ordered or furnish a bond to do so. If the employer fails to pay the award or post the bond as ordered pursuant to Section 3715(a), “the award, upon application by the person entitled thereto, shall be paid ... from the Uninsured Employers Fund .... ” California Labor Code § 8716(a). Therefore, Fidelity argues, if rescission is granted, Conley can recover benefits from her employer or from the Uninsured Employers Fund.

The court concludes that this motion to dismiss is denied on this ground. The court is not persuaded that Fidelity’s claim for rescission is within the exclusive jurisdiction of the WCAB because Fidelity has paid the benefits under the Policy. That Fidelity sues to recover the benefits paid (less premium) from the employer on a theory of rescission does not affect Conley’s proceedings before the WCAB or her entitlement to benefits.

Judge Coyle’s denial of the motion to dismiss for lack of jurisdiction is contended by Lee to have required Lee to file a counterclaim against USF & G or risk loss of the counterclaim under Rule 13(a), Federal Rules of Civil Procedure. See discussion infra. Lee filed its counterclaim on February 7, 2000. (Doc. 40). A decision by a Workers’ Compensation WCJ issued on October 20, 1999, found that the WCAB has subject matter jurisdiction over the issue of rescission of the USF & G policy issued to Lee. On December 24, 1999, the WCAB denied USF & G’s petition for reconsideration of the decision of the WCJ and ruled that the matter be held in abeyance by the WCJ pending disposition of Conley’s motion for reconsideration by Judge Coyle. After USF & G’s petitions for review were denied by the California Court of Appeal, Fifth Appellate District and the California Supreme Court, Conley moved for reconsideration by Judge Coyle of his ruling denying the motion to dismiss. Lee did not join in Conley’s motion for reconsideration. Conley’s motion for reconsideration was denied by Order filed on August 17, 2000 (Doc. 57). Judge Coyle ruled in pertinent part:

In moving for reconsideration, Conley relies on the decisions of the WCAB that the WCAB has exclusive jurisdiction over the rescission claim because, if the Policy is rescinded, there will be an impact on Conley’s ability to receive benefits. The WCJ ruled that

While there is available to the injured worker the Uninsured Employers Fund there is often significant delay in obtaining access to that fund and on occasion the Fund is not adequately funded for the year and they run out of the means to maintain benefit payments. Also if the rescission [sic] action is pending in Federal Court, UEF would not pick up benefits for the applicant on the basis that the issue of whether or not the employer was insured for workers [sic] compensation liability had not been decided. A final decision in Federal Court could be delayed for a significant period of time, whereas the Board’s procedures are set up for a prompt resolution of issues. From a reading of the cases cited in the briefs and also referred to in the Federal Court’s decision the distinguishing fact as to which forum has jurisdiction over the rescission [sic] of the contract issue appears to be whether or not the applicants [sic] access to benefits is going to be affected. If they are then the WCAB has jurisdiction if not then the civil courts (federal or state) have jurisdiction. For the reasons discussed above the WCALJ is of the opinion that if the Board finds that they do not have jurisdiction then there would be a significant impact on the applicant’s ability to receive benefits in a timely manner.

This ruling is now final in the California courts because of the denials of Fidelity’s petitions for review.

However, in a supplemental brief filed on March 9, 2000, Fidelity notes that Lee Investments had filed a counterclaim against, [sic] Fidelity, AON [sic] Risk Services, American Speciality [sic] Insurance Services, Inc., and American Speciality [sic] Risk Management Services, LLC, alleging causes of action for breach of fiduciary duty, fraud, conspiracy to defraud, and negligent misrepresentation. Fidelity contends that, because the allegations of the counterclaim arise out of the same facts as the complaint for rescission, all of the issues in the Complaint will be before the court in any event. Even if the Complaint for Rescission is dismissed for lack of jurisdiction, Fidelity’s claim for rescission would be a compulsory counterclaim to Lee Investments’ counterclaim. Therefore, the court will have to decide the rescission claim. Furthermore, any decision by the WCAB concerning Fidelity’s claim for rescission would not be binding on the counterdefendants, because they are not and cannot be parties to the workers’ compensation proceedings. Therefore, Fidelity contends, Lee Investments’ counterclaim provides an independent basis for this court to deny Conley’s Application for Reconsideration.

The court notes that Conley has not responded to these grounds for denial of the Application for Reconsideration. This failure persuades the court that the Application for Reconsideration should be denied. While the decision by the WCAB is entitled to deference, the court remains persuaded that its initial decision was not contrary to law. The filing of Lee Investments’ counterclaim is another reason for this court to exercise its jurisdiction.

Lee’s contention that the Partial Judgment is void because of the exclusive jurisdiction of the WCAB is without merit. As explained in 11 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2nd § 2862, pp. 326-329:

A judgment is not void merely because it is erroneous. It is void only if the court that rendered it lacked jurisdiction of the subject matter, or of the parties, or if it acted in a manner inconsistent with due process of law.

Lee’s argument about “exclusive jurisdiction” confuses the issue. “The jurisdiction of the federal courts — their power to adjudicate — is a grant of authority to them by Congress and thus beyond the scope of litigants to confer.” Neirbo Co. v. Bethlehem Shipbuilding Corporation, 308 U.S. 165, 167, 60 S.Ct. 153, 84 L.Ed. 167 (1939). This Court had subject matter jurisdiction over this action by virtue of diversity of citizenship, which subject matter jurisdiction may not be enlarged or contracted by state law. See Begay v. Kerr-McGee Corp., 682 F.2d 1311, 1315 (9th Cir.1982) (“Although the states have the power to prevent the federal court from granting relief in a diversity case by denying the substantive right of action asserted, they ‘have no power to enlarge or contract the federal jurisdiction.”); Beach v. Owens-Corning Fiberglas Corp., 728 F.2d 407, 409 (7th Cir.), cert. denied, 469 U.S. 825, 105 S.Ct. 104, 83 L.Ed.2d 48 (1984) (“Even though Indiana law vests exclusive jurisdiction over cases such as this one in its Industrial Disputes Board, a federal court properly may exercise jurisdiction over them. State law cannot be construed to enlarge or contract federal jurisdiction.”). Lee’s contention that the Partial Judgment must be vacated because of the exclusive jurisdiction of the WCAB is an issue relating to failure to state a claim upon which relief can be granted. See discussion infra. Its argument that the federal court lacks diversity subject matter jurisdiction over this case is misplaced and is no basis for setting aside judgment.

Lee’s motion on this ground is DENIED.

C. Claims of Clear Error and Manifest Injustice By Not Granting Lee Judgment as a Matter of Law on the Original and Amended Complaints of USF & G.

1. WCAB Had and Has Exclusive Jurisdiction.

Lee asserts that USF & G’s Complaint and Amended Complaint fail to state a claim upon which relief can be granted because the WCAB had and has exclusive jurisdiction.

Lee relies on a state case, Gilford v. State Compensation Ins. Fund, 41 Cal.App.3d 828, 834 (1974) (“ ‘ “Where there is any reasonable doubt as to the jurisdiction, the courts must resolve such doubts in favor of jurisdiction of the commission.” ’ ”), and argues that Judge Coyle’s rulings were clearly in error and manifestly unjust:

Ms. Conley now faces precisely the concerns that the WCJ expressed. If there were any reasonable doubt, which there is not, about the exclusive jurisdiction of the WCAB to decide the rescission issue ..., that doubt must be resolved in favor of the exclusive jurisdiction of the WCAB.

Lee preserved its position regarding the exclusive jurisdiction of the WCAB by joining Ms. Conley’s initial motion. The denial of that motion compelled Lee to file a compulsory counterclaim and to otherwise protect its rights in this action. It was manifestly unjust and clear error for the court to deny the initial motion and then, having erroneously put Lee to the necessity of filing a compulsory counterclaim, to use that counterclaim as a basis to say the motion to dismiss was properly granted in the first place.

Since USF & G’s complaint was the entire action when the original motion to dismiss was filed, the entire action should have been dismissed on the original motion. Had it been, Lee would not have filed a counterclaim nor a third party complaint. The judgment is therefore void in its entirety.

USF & G and Aon oppose this motion, contending that Judge Coyle’s rulings were correct as a matter of law. As a matter of practicality, Connelly has received and continues to receive full workers’ compensation benefits which have been fully paid by USF & G under a reservation of rights.

Rule 59(e) may not be used to relitigate old matters, or to 21 raise arguments or present evidence that could have been raised prior to the entry of judgment. That is what Lee is doing here. Lee’s motion to amend or alter the partial judgment pursuant to Rule 59(e) on the ground that the WCAB had and has exclusive jurisdiction is DENIED.

USF & G argues that Judge Coyle’s decision that the district court had jurisdiction over USF & G’s complaint for rescission was binding on the WCAB because the district court first obtained jurisdiction over the complaint. USF & G acknowledges that Ms. Conley’s initial application for workers’ compensation benefits was filed before USF & G filed the complaint for rescission in the district court. However, USF & G contends, Ms. Conley’s initial application named only The Island and GAB Business Services and only sought liability for temporary disability indemnity and did not seek adjudication of any claim for rescission by USF & G against Lee. USF & G filed its complaint for rescission in the district court on April 26, 1999. USF & G contends that the declaration of readiness to proceed seeking arbitration by the WCAB of the rescission complaint was not filed by Conley until two months later. USF & G cites Scott v. Industrial Accident Commission, 46 Cal.2d 76, 293 P.2d 18 (1956).

In Scott, the California Supreme Court issued a writ of prohibition to halt proceedings in a matter before the Industrial Accident Commission until a final judgment was reached in a superior court action in which damages were sought for the same injuries as were involved in the Industrial Accident Commission matter. The California Supreme Court ruled:

The question thus presented is whether the Industrial Accident Commission may, and should, be required to suspend the exercise of its jurisdiction in the proceeding before it because of the pen-dency of the action in the superior court or on appeal therefrom. The issue is not one of simultaneous exercise of general concurrent jurisdiction; it is, rather, the right of proceeding simultaneously in two tribunals, the jurisdiction of each of which is essentially exclusive of the other, but each of which has the power to make a determination of jurisdiction which, when final, will be conclusive upon the other.

Id. at 81, 293 P.2d 18. The Supreme Court noted that

General principles applicable to controversies in which the same parties and the same subject matter are involved are these: When two or more tribunals in this state have concurrent jurisdiction, the tribunal first assuming jurisdiction retains it to the exclusion of all other tribunals in which the action might have been initiated. Thereafter another tribunal, although it ordinarily might originally have taken jurisdiction, may be restrained by prohibition if it attempts to proceed.

Id. The Supreme Court concluded that “the general rule long recognized as governing tribunals whose jurisdiction is generally concurrent should be applied here where jurisdiction to determine jurisdiction is concurrent.” Id. at 89, 293 P.2d 18.

Lee replies that California Insurance Code § 11653 defines “employer” to include the employer’s workers’ compensation insurer. USF & G was a party to Ms. Conley’s initial application for workers’ compensation benefits as a matter of law and, therefore, the WCAB had jurisdiction over USF & G more than one month before this action for rescission was commenced. Further, Lee replies that USF & G’s reliance on Scott is misplaced because the jurisdiction of the WCAB was exclusive even of this court’s jurisdiction to determine jurisdiction. Lee argues:

Here, there was no basis for the District Court to have any jurisdiction to determine the rights of Conley and Lee against USF & G. Unlike Scott, Conley did not sue Lee in this court seeking damages upon a theory that Conley was not within the course and scope of employment. Conley did not otherwise tender to the District Court a prece-dential jurisdictional (‘precedential jurisdiction’ herein shall refer to concurrent jurisdiction to determine jurisdiction) issue that the District Court could properly decide to determine whether the District Court had exclusive jurisdiction to proceed with the rescission action.

Aon argues that, even if, arguendo, it is concluded that the WCAB had exclusive jurisdiction over USF & G’s rescission claim and the Partial Judgment for USF & G on rescission were vacated for failure to state a claim, such a ruling should not affect the rest of the Partial Judgment:

In such an event, it would be an abuse of discretion for this Court not to continue to exercise its supplemental jurisdiction over (and confirm its judgment concerning) Lee’s claims and defenses against all other parties, and Aon’s claim and defenses against all other parties.

Lee replies that had the motion to dismiss been granted, Lee would have never filed a counterclaim:

Hence, Aon cannot use the existence of that counterclaim, which the improper retention of jurisdiction in this court forced Lee to file, as a basis to contend that the partial judgment ought not to be vacated. Had the complaint been dismissed, there would be no basis whatsoever for supplemental jurisdiction because there were no other claims filed at that time.

Lee further argues that, even if it is proper at this time to examine supplemental jurisdiction over Lee’s counterclaim and third party complaint, supplemental jurisdiction should not be retained:

First, there is a strong preference for dismissal of supplemental claims where all claims over which the court had original jurisdiction have been dismissed, even if there have been extensive proceedings in federal court ... Second, the fundamental question whether or not there was a misrepresentation that would allow rescission of the subject policy is necessarily precedent to whether Lee could have any liability to Aon.... [T]he question whether the USF & G policy should be rescinded is exclusively committed to the jurisdiction of the ... WCAB ... It is thus a state law issue that substantially predominates ... Third, the existence of the parallel proceedings before the WCAB ... strongly supports dismissal of the entire action rather than retention of Lee’s counterclaim and third party complaint.

Lee’s position concerning the exercise of supplemental jurisdiction is categorically meritless. The district court has discretion to retain pendent claims and may consider the resources invested in a case. See Schneider v. TRW, Inc., 938 F.2d 986, 993-995 (9th Cir.1991).

Lee assumes, arguendo, if there were “concurrent precedential jurisdiction for both the WCAB and this court”, i.e., that the district court had jurisdiction to determine whether or not the jurisdiction of the WCAB was exclusive under the circumstances, the Scott rule required this court to honor the final decision of the WCAB in favor of the WCAB’s exclusive jurisdiction. Lee cites a state case, Aetna Casualty & Surety Co. v. Aceves, 233 Cal.App.3d 544, 284 Cal.Rptr. 477 (1991).

In Aceves, Aetna filed an action in the Superior Court before Aceves began proceedings before the WCAB. On appeal, Aetna argued that the Superior Court had jurisdiction to determine its own jurisdiction, and because Aetna filed the Superior Court action first, the Superior Court’s determination took priority. Relying on Scott v. Industrial Accident Commission, supra, the Court of Appeals agreed. 233 Cal.App.3d at 551-554, 284 Cal.Rptr. 477.

Lee also argues that it is immaterial that the WCAB would not afford the same remedy to USF & G that it might otherwise have in the district court. Lee refers to Goetz v. Aetna Casualty and Surety Company, 710 F.2d 561 (9th Cir.1983). In Goetz, the Goetzes filed an action with the Industrial Accident Commission when Aet-na failed to pay accrued benefits. The Board issued an award against Aetna, which paid part of the award and failed to pay the balance. The Goetzes filed a complaint in the district court alleging that Aetna’s conduct in delaying and refusing to pay workers’ compensation benefits due them violated California Insurance Code § 790.03(h). The district court granted Aetna’s motion to dismiss on the ground that the court lacked jurisdiction over the subject matter of the action because California law vested exclusive jurisdiction of the dispute in the Appeals Board. 710 F.2d at 563. On appeal, the Goetzes argued that the California workers’ compensation scheme violates the equal protection clause of the Fourteenth Amendment. In rejecting this argument, the Ninth Circuit ruled:

The Goetzes’ equal protection argument challenges not classifications apparent from the face of a statute but categories which result from the differing reaches of the workers’ compensation and unfair practices laws. While the challenge is unusual, we do not reject it for this reason. A statute does not escape equal protection scrutiny simply because it does not expressly effect the objectionable variation ... The California workers’ compensation law does not arbitrarily deprive claimants of their rights, however. The remedy provided by section 5814 of the Labor Code may not be as effective as that provided by section 790.03 of the Insurance Code, but this is merely an aspect of the exclusivity trade-off underlying the workers’ compensation statute. The respective legislative classifications reasonably relate to the legitimate state ends underlying the workers’ compensation and unfair practices statutes. Since they ‘advancef ] legitimate legislative goals in a rational fashion ..., they do not offend equal protection.

Id. at 564. It is “completely irrelevant in this case”, Lee contends, that the “district court cannot award workers’ compensation benefits and the WCAB cannot award damages for injuries.”

USF & G argues that, because Conley abandoned any effort to challenge the jurisdiction of this Court, Lee cannot now do so. USF & G notes that Lee did not join in Conley’s Application for Reconsideration but, instead, filed on December 17, 1999, a motion to file a counterclaim in this action against USF & G, ASI, and Aon. (Doc. 27). The motion was granted by Magistrate Judge Snyder on January 26, 2000. (Doc. 37) Lee’s counterclaim was filed on February 7, 2000. (Doc. 40). Lee was ordered to file an amended counterclaim by Order filed on August 17, 2000, (Doc. 58), which Lee did on August 31, 2000. (Doc. 59). On January 24, 2001, a Stipulation Dismissing Diana Conley from Action Without Prejudice was ordered, (Doc. 73), wherein USF & G, ASI, and Diana Conley stipulated in pertinent part:

1. The above-captioned action shall be dismissed without prejudice as to defendant Diana Conley only.

2. Diana Conley shall be bound by all orders, findings, conclusions, determinations, decrees, stipulations, judgments, and/or settlements made, entered or entered into, as the case may be, in or in connection with the above-captioned action, in the same manner and to the same extent as if Diana Conley had continued to be a party to said action and had participated in the litigation therein.

According to the Declaration of Bruce T. Smyth filed in opposition to Lee’s motion, (Docs.738-740):

14. On April 18, 2006, seven years after Diana Conley filed her application for benefits before the WCAB, and faced with an imminent trial in this court, Lee filed a ‘declaration of readiness’ to have USF & G’s complaint adjudicated by arbitration by the WCAB. USF & G promptly filed objections to the declaration of readiness and request for arbitration and reply memorandum to Lee’s opposition. Conley subsequently filed a declaration of readiness also ... At a settlement conference before the Honorable Adrienne Allen, Workers Compensation Administrative Law Judge, on May 22, 2006, Conley withdrew her declaration of readiness and request for arbitration. Judge Allen then set a continued settlement conference before the presiding judge of the San Bernardino Division of Workers Compensation Appeals Board, Honorable Charles Regnell, for June 13, 2006. At the settlement conference on June 13, 2006, Judge Reg-nell held that a trial should be conducted on the issue of whether the matter should not be sent to arbitration, based on the contentions of USF & G that Lee had warned [sic] and/or was estopped from asserting the jurisdiction of the WCAB, and set another settlement conference, which subsequently [sic] held on August 29, 2006.

15. At that conference, Lee’s counsel asserted that the counsel for USF & G in the workers compensation matter, Greg Geisler of Morse, Geisler & Callis-ter, in fact had previously represented Lee. The WCAB accordingly set another status conference for September 26, 2006 to consider the threshold issue of whether there was a conflict of interest by virtue of Mr. Geisler’s alleged representation. On November 15, 2006, the parties entered into a stipulation for the exchange of information and discovery in connection with Lee’s subsequent motion before the WCAB to disqualify Mr. Geisler and Charston, Revich & Cham-berlin, LLP. The Court set a conference for December 13, 2006, which was subsequently continued to late January, 2007. On January 26, 2007, at the request of counsel for USF & G because of the trial in this matter, the status conference before the WCAB was continued to May 2, 2007.

16.USF & G contends that its complaint for rescission of the insurance policy has been resolved by the jury’s verdict and the partial judgment. Lee in any event failed to bring the complaint for rescission to adjudication by the WCAB, first by failing to take any action to do so for seven years and then by delaying any action by a frivolous motion to disqualify USF & G’s counsel. If USF & G’s complaint had not been resolved in this Court, Lee would still need (1) to have the issue of disqualification of USF & G’s counsel heard by the WCAB and (2) then have the issues of whether Lee waived and/or was es-topped from asserting the jurisdiction of the WCAB tried by the WCAB. Because the judgment of rescission against Lee in this Court bars its claim before the WCAB, Lee cannot proceed in that forum.

USF & G and Aon argue that Lee’s assertion that Judge Coyle’s denial of Conley’s initial motion to dismiss compelled Lee to file a compulsory counterclaim and to otherwise protect its rights in this action and that it was manifestly unjust and clear error to use that counterclaim as a basis to say the motion to dismiss was properly granted in the first place is without merit and does not justify granting Lee’s motion. First, Lee argues that it had to assert its counterclaims in this court or lose them, because they would have been barred by the statute of limitations and such claims could not be pursued before the WCAB, which did not have jurisdiction over the claims for fraud, negligent misrepresentation, breach of oral contract and negligence alleged by an alleged policyholder against the insurer and did not have jurisdiction of claims against the managing general agent, ASI. Further, it is argued:

Nothing forced Lee to file its claims in federal court. Lee could have preserved its claims by filing them in state court or by entering into a tolling agreement with USF & G. Other options were available to Lee as well. Lee and Ms. Conley could have petitioned the Ninth Circuit for a writ to review the denial of Conley’s motion. Lee and Ms. Conley also could have sought permission from the Ninth Circuit to take an interlocutory appeal under 28 U.S.C. § 1292(b). Instead, Lee chose to litigate its claims in this Court and aggressively pursued them through summary judgment and trial.

Lee replies that USF & G and Aon cite no authority that the filing of the counterclaim rendered Lee’s objections to jurisdiction moot:

Parties do not waive objections properly made and preserved by continuing to participate in the litigation after their objections have been overruled. The pertinent question is whether Lee had filed a counterclaim before the motion to dismiss was brought and decided. No such counterclaim had been filed.

USF & G argues that Lee has waived any right and is estopped to seek adjudication of USF & G’s complaint by the WCAB by failing to proceed in that forum for seven years. USF & G notes that Lee did not assert that the WCAB had jurisdiction in its Answer, as an affirmative defense or otherwise. Lee did not join in Ms. Conley’s application for reconsideration of the motion to dismiss but, rather, filed a counterclaim and expressly sought to have the District Court adjudicate the issues in USF & G’s Complaint by moving for summary judgment. USF & G contends that Lee waited until after its motion for summary judgment had been denied, “after its phony threat of bankruptcy had been rejected by USF & G,” and until trial was imminent before filing a “declaration of readiness” for arbitration before the WCAB. (Citing Sea World Corp. v. Superior Court, 34 Cal.App.3d 494, 110 Cal.Rptr. 232 (1973)) and Magliulo v. Superior Court, 47 Cal.App.3d 760, 121 Cal.Rptr. 621 (1975), USF & G contends that Lee has waived any right to seek and is es-topped from obtaining adjudication before the WCAB.

Lee replies that it has not waived and is not estopped to have the WCAB adjudicate the rescission issue. Lee asserts that Sea World is inapposite:

Here ... Conley and Lee promptly moved this court to dismiss the action based on the exclusive jurisdiction of the WCAB and did not submit to this court for decision any precedential jurisdictional question of fact as occurred when the employer in Sea World asked the Superior Court to decide the issue of course and scope of employment. USF & G confuses waiver of the right to have a tribunal determine an issue of concurrent jurisdiction to determine jurisdiction, such as course and scope of employment, with waiver of a right of general jurisdiction once found. A party can waive having the WCAB determine a precedential jurisdictional issue like course and scope of employment by submitting that issue to the court for it to decide under its concurrent jurisdiction to determine jurisdiction, but one cannot waive the general jurisdiction of either tribunal once that has been found nor can a tribunal’s exercise of its own general jurisdiction be a subject of es-toppel.

USF & G and ASI have not cited a single case that holds that general jurisdiction can be waived or that the exercise of such jurisdiction, once obtained, can somehow be estopped. Although there may be other remedies for a party’s alleged delay in pursuing remedies before a tribunal that has general jurisdiction, USF & G have not pursued any such other remedies. Sea World and its progeny are inapplicable to the facts of this case.

In its reply brief, Lee contends that USF & G’s failure to join the Uninsured Employers’ Fund (UEF) as a party to this action requires that the judgment be vacated. This contention has never been raised in this action. To advance it in a reply is improper. It should not be considered, but is treated to the extent of USF & G’s response.

Lee contends that, “[biased on the un-contradicted evidence of the inadequacy of the UEF,” the only way that the UEF could provide adequate compensation for Conley is by establishing “that there is coverage under the USF & G workers’ compensation policy.” Under California Labor Code § 5600, Lee asserts, “it is evident that the UEF’s claim for coverage under the USF & G policy falls within the exclusive jurisdiction of the WCAB”, citing Rinaldi v. Workers’ Compensation Appeals Bd., 196 Cal.App.3d 571, 242 Cal.Rptr. 895 (1987). Lee refers to Aetna Casualty & Surety Co. v. Aceves, supra, 233 Cal.App.3d at 554-555, 284 Cal.Rptr. 477:

A trial court has discretion whether or not to exercise an action for declaratory relief. Aceves contends that the trial court abused its discretion by taking jurisdiction in this case, because the court created the possibility of inconsistent judgments.

If an employer is found to be uninsured, an injured employee has certain rights to proceed against the Uninsured Employers Fund (Fund), which was set up to pay judgments obtained against uninsured employers. (Lab.Code, § 3715 et seq.) The Fund was not named in Aet-na’s suit, and the judgment in that suit therefore cannot bind the Fund ... Aceves asserts that the Fund might be able to demonstrate to the WCAB that Aetna did insure Chesler at the time of the accident. If so, the Fund would not be liable to Aceves, and Aceves would be left with an unenforceable judgment against Chesler.

Aetna does not directly respond to this argument. Instead, it contends that the superior court’s final determination concerning insurance coverage would be binding on the WCAB. Aetna states that ‘sound public policy [limits] litigation by preventing a party who has had one fair trial on an issue from again drawing it into controversy.’ ... This proposition, although legally sound, does not respond to Aceves’ argument. The WCAB is a decisionmaking forum, not a party to be bound by a prior judgment. The Fund, in contrast, is commonly joined as a party in cases involving controversies over insurance coverage of employers. As the court explained in Rinaldi v. Workers’ Comp. Appeals Bd. (1987) 196 Cal.App.3d 571, 242 Cal.Rptr. 895 ..., ‘Rinaldi, as the Director of the Department of Industrial Relations of the State of California, is the state official responsible for administering the Uninsured Employers Fund. The fund was created to ensure that workers employed by illegally uninsured employers are not deprived of workers’ compensation benefits (Lab.Code, § 3716, subd. (b)). Rinaldi is aggrieved by the Board’s order, for he is required to pay the award if the employer fails to do so. (Lab.Code, § 3716, subd. (a)).’ (Id. at p. 572, fn. 1, italics added.) Thus, although the declaratory judgment is conclusive as to Aceves, it cannot be binding on the Fund. (See Scott, supra, 46 Cal.2d at p. 83, 293 P.2d 18.)

Aetna contends that because Aceves agreed in the settlement agreement not to pursue any personal liability against Chesler in a workers’ compensation proceeding, there was no realistic possibility of inconsistent judgments. Determination of this issue would require us to determine the interpretation of and enforceability of the settlement agreement. That issue was not presented for resolution in the trial court and is not properly before us on appeal. See, e.g., Labor Code section 5001, which states, ‘No release of liability or compromise agreement is valid unless it is approved by the appeals board .... ‘ ... The record contains no suggestion that such approval has been obtained.

The issue of possible inconsistent judgments was properly raised before the trial court, yet no measures were taken to lessen or avoid prejudice to Aceves ... A trial court’s exercise of discretion under section 1061 will be upheld on appeal unless an abuse of discretion is clearly shown. The test of abuse of discretion is ‘whether or not the trial court exceeded the bounds of reason, all of the circumstances before it being considered ... ’ ... Under the circumstances presented in this case, we conclude that the trial court did abuse its discretion in granting declaratory judgment when the Fund was not joined as a party.

Relying on Aceves, Lee argues that USF & G likewise failed to join the UEF and the UEF is not bound by the Partial Judgment:

The risk of inconsistent judgments is likewise present between a judgment by this court that USF & G is entitled to rescind and to restitution as to Lee, and one by the WCAB in favor of the UEF that USF & G’s policy was not rescinded and USF & G remains liable for Conley’s workers’ compensation benefits. Presumably, USF & G never joined the UEF to this action for fear that the UEF’s involvement would cause the court to recognize that exclusive jurisdiction and the proper forum under the Buford and Colorado River abstention doctrines lay with the WCAB.

Judge Coyle’s Order denying the motion to dismiss also denied Lee’s request for abstention under Buford and Colorado River. Lee’s reference in the reply brief is the first contention by Lee that the abstention rulings were in error.

In its sur-reply brief, USF & G contends that it “is simply outrageous and in bad faith that Lee would wait eight years after the case had been filed and after trial and in a Reply brief to its own motion to vacate t