Citations
- 758 F. Supp. 2d 1121
Full opinion text
ORDER (1) GRANTING DEFENDANT REHMER’S STAY MOTION (2) GRANTING DEFENDANT PSC’S STAY MOTION AND (3) DENYING DEFENDANT NORVA’S MOTION TO DISMISS
ALAN C. KAY, Senior District Judge.
FACTUAL BACKGROUND
This consolidated declaratory judgment action stems from an industrial explosion (“Explosion”) at a used oil recycling plant (“Plant”) in Kapolei, Hawai’i, operated by PSC Industrial Outsourcing, L.P. (“PSC”). On May 30, 2008, PSC entered into a contract agreement (“5/30/2008 Contract”) with a contractor, identified as “Pan Co,” to perform work at the Plant. Macario C. Panajon (“Panajon”), as President, signed the 5/30/2008 Contract on behalf of the contractor. Under this contract, Pan Co promised it carried insurance and that it would include PSC as an additional insured. It also agreed to defend, indemnify, and hold harmless PSC and its agents and employees from and against any and all claims and damages arising out of the contract work.
On October 7, 2008, Pan Co workers, including Sean Miguel Norva (“Sean Norva”), performed work at the Plant. Joel Rehmer (“Rehmer”), a PSC operations manager, was also working at the Plant that day. While Sean Norva was welding on a catwalk, a used oil tank below suddenly exploded. The Explosion killed Sean Norva, injured David Kahookele (“Defendant Kahookele” or “Kahookele”), and caused damage to the Plant and to Bomat, Ltd. d.b.a. Bonded Materials Company (“Bomat”), a concrete production facility nearby.
On October 31, 2008, PSC notified “Pan-Co,” attention “Mr. Mario Panajon,” of claims arising from the Explosion, asked for indemnification, and requested that appropriate insurers be notified. At the time of the Explosion, “Macario C. Panajon dba: Panco” was listed as a Named Insured under a commercial general liability policy (“Policy”) issued by The Burlington Insurance Company (“Burlington”). Burlington received PSC’s October 31, 2008 letter, as well as a subsequent notice that claims had been asserted against Rehmer. On December 10, 2009, Burlington informed PSC that it had no duty to defend or indemnify PSC under the Policy because the 5/30/2008 Contract “is between PSC and Panacorp, Inc., while the Named Insured on the policy is Macario C. Panajon d/b/ Panco, designated an individual on the Declarations Page.... As Panacorp, Inc. is not a Named Insured, PSC’s contract with Panacorp, Inc., does not make PSC an additional insured under the [Burlington] policy issued to Mr. Panajon.”
As described in greater detail below, PSC and Panacorp, Inc. (“Panacorp”) have been sued in three separate state court actions (Rehmer has been sued in one state court action). In each action, PSC has filed a third party-complaint seeking a declaration that it is covered under the Policy. Burlington has filed two actions in this Court. One seeks (1) a declaration that Burlington has no duty to defend or indemnify Panacorp or Norva and (2) reimbursement for the cost of defending Panacorp; another seeks a declaration that Burlington has no duty to defend or indemnify PSC. These federal actions are now consolidated.
PROCEDURAL BACKGROUND
I. The Norva State Court Action
On September 24, 2009, Kimberly Anne Norva, individually and as Personal Representative of the Estate of Sean Miguel Norva (deceased) and as Next Friend of Khelan Norva (a minor), and Maria Marquez (collectively, “Norva”) filed a personal injury action in the Circuit Court of the First Circuit in Hawai’i against PSC and Rehmer. Kimberly Norva, et al. v. PSC Industrial Outsourcing, LP, et al., Civ. No. 09-1-2157-09 PWB (“Norva”).
On October 29, 2009, PSC and Rehmer filed separate answers, counterclaims, and third-party complaints. PSC filed a counterclaim against Norva and a third-party complaint against Panacorp and Burlington. PSC’s third-party complaint sought, among other things, a declaration that PSC is covered under the Policy. Rehmer’s third-party complaint was asserted only against Panacorp, and did not seek declaratory relief.
On November 19, 2010, Norva filed a cross-claim against Panacorp.
On March 19, 2010, PSC and Rehmer moved to amend their respective third-party complaints into a consolidated third-party complaint asserting alter-ego claims against Panajon, the sole owner of Panacorp. The unopposed motion was withdrawn, however, after PSC learned that Panajon and his wife had voluntarily filed for Chapter 13 bankruptcy on April 1, 2010.
On November 29, 2010, the court dismissed PSC’s third-party complaint against Burlington without prejudice to PSC’s asserting such claims against Burlington in a separate lawsuit.
II. The Kahookele State Court Action
On November 9, 2009, Kahookele filed a personal injury action in the Circuit Court of the First Circuit in Hawai’i against Panacorp and PSC. David Kahookele v. Panacorp, Inc., et al., Civ. No. 09-1-2616-11 RAN (“Kahookele ”).
On April 1, 2010, PSC filed a third-party complaint against Norva, Panajon, and Burlington. As in Norva, PSC’s third-party complaint in Kahookele sought a declaration that PSC is covered under the Policy.
On November 10, 2010, the court granted Burlington’s motion to sever PSC’s third-party complaint against Burlington from the remaining claims in Kahookele.
III. The Bomat State Court Action
On September 30, 2010, Bomat and Great American Insurance Company filed a negligence, strict liability, and nuisance action in the Circuit Court of the First Circuit in Hawai’i against PSC d.b.a. Phillips Services Hawaii, PSC Industrial Services, and Panacorp. Bomat, Ltd. v. PSC Industrial Outsourcing, LP, et al., Civ. No. 10-1-2090-09 RAT (“Bomat”).
On October 20, 2010, PSC filed a third-party complaint against Norva, Panajon, and Burlington. As in Norva and Kahookele, PSC’s third-party complaint in Bomat sought a declaration that PSC is covered under the Policy.
On December 1, 2010, Burlington filed a motion to dismiss or to sever the third-party complaint. That motion is scheduled to be heard by the state court on January 18, 2011.
IV. The Consolidated Burlington Federal Action
On December 11, 2009, Burlington filed a complaint (“12/11/09 Complaint”) in this Court against Norva, Panacorp, Panajon, Kahookele, and Rehmer, which sought (1) a declaration that Burlington has no duty to defend or indemnify Panacorp or Norva and (2) reimbursement from Panacorp. Doc. No. 1 (Civ. No. 09-00587). On January 4, 2010, Panacorp and Panajon filed an answer; on March 9, 2010, Norva filed an answer; on March 16, 2010, Kahookele filed an answer; and on March 19, 2010, Rehmer filed an answer. Doc. Nos. 8, 20, 24, 31.
On July 7, 2010, Burlington filed a complaint in this Court (“12/7/10 Complaint”) against PSC, which sought a declaration that Burlington has no duty to defend or indemnify PSC. Doc. No. 1 (Civ. No. 10-00382). PSC filed an answer on August 4, 2010. Doc. No. 12 (Civ. No. 10-00382).
On July 30, 2010, Rehmer moved to stay the action against him (“Rehmer Stay Motion”) based on Panajon’s Chapter 13 bankruptcy petition, the Younger abstention doctrine, and/or the Federal Declaratory Judgment Act. Doc. No. 38. Norva filed a memorandum in opposition to the Rehmer Stay Motion (“Norva Opp’n to Rehmer Stay Motion”) on August 13, 2010. Doc. No. 56. On the same day, Burlington filed a memorandum in opposition to the Rehmer Stay Motion (“Burlington Opp’n to Rehmer Stay Motion”) and Panacorp and Panajon moved to join the Rehmer Stay Motion. Doc. Nos. 57-58. On August 24, 2010, Rehmer filed a reply to Norva’s opposition to the Rehmer Stay Motion and a reply to Burlington’s opposition to the Rehmer Stay Motion (“Rehmer Stay Reply”). Doc. Nos. 62-63.
On August 4, 2010, PSC likewise moved to stay the action against it (“PSC Stay Motion”) based on Panajon’s Chapter 13 bankruptcy petition, the Younger abstention doctrine, and/or the Federal Declaratory Judgment Act. Doc. No. 13 (Civ. No. 10-00382). On August 19, 2010, Burlington filed a memorandum in opposition to PSC’s Stay Motion (“Burlington Opp’n to PSC Stay Motion”). Doc. No. 16 (Civ. No. 10-00382). On August 26, 2010, PSC filed a reply memorandum in support of its stay motion (“PSC Stay Reply”). Doc. No. 20 (Civ. No. 10-00382).
On August 2, 2010, Norva moved to dismiss the 12/11/09 Complaint (“Motion to Dismiss”), and on August 25, 2010, Kahookele moved to join this motion. Doc. Nos. 48, 65.
On August 31, 2010, Magistrate Judge Barry M. Kurren held a hearing on the Rehmer Stay Motion and the PSC Stay Motion. Magistrate Judge Kurren (1) denied these stay motions to the extent they were premised on Panajon’s bankruptcy and (2) reserved the motions for this Court to rule on to the extent they were based on the Younger abstention doctrine and the Declaratory Judgment Act. Doc. Nos. 72, 86; Doc. Nos. 21, 26 (Civ. No. 10-00382). The two Burlington federal actions were consolidated on the same day. Doc. Nos. 72, 74; Doc. Nos. 21, 22 (Civ. No. 10-00382).
On October 8, 2010, PSC and Rehmer filed a statement of no position as to the Motion to Dismiss. Doc No. 89. On October 11, 2010, Burlington filed a memorandum in opposition to the Motion to Dismiss (“Opp’n to Motion to Dismiss”). Doc. No. 90.
On October 13, 2010, Norva filed a supplemental memorandum in opposition to the Rehmer Stay Motion (“Norva Supp’l Opp’n to Rehmer Stay Motion”). Doc. No. 94.
On October 19, 2010, Norva filed an untimely reply to Burlington’s opposition to the Motion to Dismiss (“Reply to Burlington Opp’n to Motion to Dismiss”). Doc. No. 95.
On October 22, 2010, Burlington requested leave to file a supplemental memorandum regarding the state court's dismissal of PSC’s third-party complaint against Burlington in Noma. Doc. No. 96. Burlington attached its supplemental memorandum (“Burlington Supp’l Mem. Re: Noma”) to its request. Id. On the same day, Norva, PSC, and Rehmer each objected to Burlington’s request, alternatively requesting leave to file supplemental replies to Burlington’s supplemental memorandum. Doc. Nos. 97-98. On October 25, 2010, the Court granted Burlington’s request for leave to file a supplemental memorandum and Norva’s and PSC and Rehmer’s request for leave to file supplemental replies. Doc. No. 99.
On November 8, 2010, PSC and Rehmer filed a supplemental reply to Burlington’s supplemental memorandum (“PSC/Rehmer Supp’l Reply Re: Noma ”). Doc. No. 112. On December 6, 2010, supplemental memoranda regarding Burlington’s motion to sever PSC’s third-party complaint against Burlington from the remaining claims in Kahookele were filed by: Norva (“Norva Supp’l Mem. Re: Kahookele ”), Doc. No. 130; PSC and Rehmer (“PSC/Rehmer Supp’l Mem. Re: Kahookele ”), Doc. No. 131; and Burlington (“Burlington Supp’l Mem. Re: Kahookele ”), Doc. No. 132.
On December 17, 2010, Burlington filed a motion for leave to file an amended complaint adding Bomat as a party to the consolidated federal action. Doc. No. 147.
On December 21, 2010, the Court held a hearing on Rehmer’s Stay Motion (and Panacorp and Panajon’s joinder therein), PSC’s Stay Motion, and Norva’s Motion to Dismiss (and Kahookele’s joinder therein).
DISCUSSION
Before the Court are Rehmer’s Stay Motion (and Panacorp and Panajon’s joinder therein), PSC’s Stay Motion, and Norva’s Motion to Dismiss (and Kahookele’s joinder therein). Rehmer’s and PSC’s motions argue that the Court should stay the respective federal actions — -which are now consolidated — pending resolution of the state actions pursuant to Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), and pursuant to the Declaratory Judgment Act. Norva’s motion argues that the Court should dismiss the instant federal action under the Declaratory Judgment Act. The Court agrees with Rehmer and PSC that abstention is appropriate under both Younger and the Declaratory Judgment Act. Moreover, because Burlington seeks damages as well as declaratory relief, the Court finds it appropriate under Younger and Gilbertson v. Albright, 381 F.3d 965 (9th Cir.2004) (en banc), to stay, rather than to dismiss, the instant action. Likewise, the Court, in its discretion, finds that a stay is appropriate under the Declaratory Judgment Act.
I. Younger Abstention
“Under Younger-abstention doctrine, interests of comity and federalism counsel federal courts to abstain from jurisdiction whenever federal claims have been or could be presented in ongoing state judicial proceedings that concern important state interests.” Hawaii Housing Authority v. Midkiff, 467 U.S. 229, 237-38, 104 S.Ct. 2321, 81 L.Ed.2d 186 (1984). Younger requires a court to abstain:
[I]f four requirements are met: (1) a state-initiated proceeding is ongoing; (2) the proceeding implicates important state interests; (3) the federal plaintiff is not barred from litigating federal constitutional issues in the state proceeding; and (4) the federal court action would enjoin the proceeding or have the practical effect of doing so, i.e., would interfere with the state proceeding in a way that Younger disapproves.
San Jose Silicon Valley Chamber of Commerce Political Action Comm. v. City of San Jose, 546 F.3d 1087, 1092 (9th Cir. 2008). All four of these requirements must be “strictly satisfied” for Younger abstention to be proper. AmerisourceBergen Corp. v. Roden, 495 F.3d 1143, 1149 (9th Cir.2007). Moreover, “federal courts should not dismiss actions where damages are at issue; rather, damages actions should be stayed until the state proceedings are completed.” Gilbertson, 381 F.3d at 968.
A. A State-Initiated Proceeding Is Ongoing
“To decide whether there was a pending state judicial proceeding within Younger, we focus on the status of the state court proceeding at the time of the district court’s decision [to abstain under Younger ] .... ” Wiener v. County of San Diego, 23 F.3d 263, 266 (9th Cir.1994) (emphasis added). In Hicks v. Miranda, 422 U.S. 332, 95 S.Ct. 2281, 45 L.Ed.2d 223 (1975), the Supreme Court held that “where state ... proceedings are begun ... after the federal complaint is filed but before any proceedings of substance on the merits have taken place in the federal court, the principles of Younger v. Harris should apply in full force.” Id. at 349, 95 S.Ct. 2281. “Hicks teaches that it is not the filing date of the federal action that matters, but the date when substantive proceedings begin.” M & A Gabaee v. Cmty. Redevelopment Agency of L.A., 419 F.3d 1036, 1039 (9th Cir.2005).
Here, no proceedings of substance on the merits have occurred in the instant federal action, whereas three state-initiated proceedings — Norva, Kahookele, and Bomat — are now ongoing. Two of these proceedings involve the same coverage dispute at issue in the instant federal action: (1) PSC’s third-party declaratory judgment claim against Burlington Kahookele and (2) PSC’s third-party declaratory judgment claim against Burlington Bomat. Burlington Opp’n to Rehmer Stay Motion Ex. D; Burlington Supp’l Mem. Re: Kahookele Ex. D.
The Court recognizes that PSC’s third-party claim against Burlington in Kahookele has been severed, and that Burlington has moved to dismiss or sever PSC’s declaratory claim in Bomat. See PSC/Rehmer Supp’l Reply Re: Norva Ex. D; Burlington Supp’l Mem. Re: Kahookele Exs. B, E. But these claims are still before the state court, and the Court’s inquiry focuses on whether a parallel proceeding is now pending or ongoing. See Wiener, 23 F.3d at 266; see also Bass v. Butler, 258 F.3d 176, 179 (3d Cir.2001) (noting that Younger abstention “provides for federal deference to ongoing, not completed, parallel state proceedings”). Accordingly, the Court is unpersuaded by Burlington’s speculative argument that there are no ongoing or parallel proceedings because Burlington plans at a future date to remove PSC’s severed Kahookele declaratory claim — and, presumably, plans to remove the Bomat declaratory claim if the claim is severed or dismissed and re-filed. See Burlington Supp’l Mem. Re: Norva at 4; Burlington Supp’l Mem. Re: Kahookele at 2-3, 6.
In any event, the underlying state actions constitute ongoing parallel proceedings even apart from PSC’s declaratory judgment claims against Burlington. In Hawaii Housing Authority, the Supreme Court held that Younger applies “whenever federal claims have been or could be presented in ongoing state judicial proceedings that concern important state interests.” 467 U.S. at 237-38, 104 S.Ct. 2321. Here, Burlington could have presented the instant claims for declaratory judgment and reimbursement in the underlying state actions, which are currently ongoing. Consequently, Norva, Kahookele, and Bomat are parallel proceedings for purposes of Younger abstention. See Int’l Fidelity Ins. Co. v. City of New York, 263 F.Supp.2d 619, 633 (E.D.N.Y.2003) (noting that the first prong of Younger requires “a parallel proceeding, pending at the time the federal court action was filed, in which the plaintiff may raise and have adjudicated the same claims it seeks to press in federal court and obtain the same relief’); cf. Rowley v. Wilson, 200 Fed.Appx. 274, 275 (5th Cir.2006) (finding that state proceedings were ongoing for Younger purposes even though the federal lawsuit had additional defendants with additional claims against them).
This conclusion is consonant with Ninth Circuit precedent holding that, for purposes of abstention under the Declaratory Judgment Act, “a state proceeding [is] parallel to a federal declaratory judgment action when: (1) the actions arise from the same factual circumstances; (2) there are overlapping factual questions in the actions; or (3) the same issues are addressed by both actions.” Gemini Ins. Co. v. Clever Constr., Inc., Civ. No. 09-00290 DAE-BMK, 2009 WL 3378593, at *7 (D.Haw. Oct. 21, 2009); see Golden Eagle Ins. Co. v. Travelers Cos., 103 F.3d 750, 754-55 (9th Cir.1996), overruled in part on other grounds by Gov’t Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir.1998) (en banc); Employers Reinsurance Corp. v. Karussos, 65 F.3d 796, 800 (9th Cir.1995), overruled in part on other grounds by Dizol, 133 F.3d at 1227.
First, the instant federal action arises from the same factual circumstances as the three state actions: i.e., the October 7, 2008, explosion at PSC’s used oil recycling plant. Second, and more importantly, there are overlapping factual questions in the federal and state actions. For example, in Norva, Kahookele, and Bomat, PSC has asserted third-party claims against Panacorp and/or Panajon — which have not been dismissed or severed — for breach of contract, misrepresentation, and implied indemnity based on the 5/30/2008 Contract. PSC/Rehmer Supp’l Reply Re: Norva Ex. J (PSC’s and Rehmer’s first amended third-party complaint in Norva); Burlington Opp’n to Rehmer Stay Motion Ex. D (PSC’s third-party complaint in Kahookele); Burlington Supp’l Mem. Re: Kahookele Ex. D (PSC’s third-party complaint in Bomat). Both these third-party claims and the instant federal action require factual determinations regarding the identity of “the Contractor” (1) under the 5/30/2008 Contract and (2) working at the Plant on October 7, 2008. Likewise, there are overlapping factual questions in the state and federal actions as to whether Panacorp was the alter-ego of Panajon. Rehmer Stay Motion at 20-21, 24; PSC/Rehmer Supp’l Reply Re: Norva 4-5, 14-15.
In short, the Court finds that state-initiated proceedings are ongoing.
B. The Proceeding Implicates Important State Interests
The Younger abstention doctrine stems in part from the ‘“vital consideration’ of ‘comity,’ a proper respect for a state’ sovereign ability to have its own courts determine its own law.” Carroll v. Mount Clemens, 139 F.3d 1072, 1075 (6th Cir.1998) (quoting Younger, 401 U.S. at 44, 91 S.Ct. 746). Consequently, the second threshold element of Younger is satisfied when “ ‘the State’s interests in the ongoing proceeding are so important that exercise of the federal judicial power would disregard the comity between the States and the National Government.’ ” AmerisourceBergen, 495 F.3d at 1149 (quoting Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 11, 107 S.Ct. 1519, 95 L.Ed.2d 1 (1987)). “The importance of the interest is measured by considering its significance broadly, rather than by focusing on the state’s interest in the resolution of an individual case.” Baffert v. Cal. Horse Racing Bd., 332 F.3d 613, 618 (9th Cir.2003).
The Court finds that the instant federal action implicates important state interests. Contrary to Burlington’s contention, this is not a “classic ‘one off ease.” Burlington Opp’n to Rehmer Stay Motion at 11. Resolution of the instant federal action would have a significant effect on other cases and would bristle with the comity concerns underlying this Younger requirement. Cf. id. at 10-11. This is because Burlington’s federal claims raise several important and unsettled issues of state law.
At the outset, the Court notes that in the context of abstention under the Declaratory Judgment Act, the Ninth Circuit has emphasized the importance of a state’s interest in regulating insurance:
The traditional rule that “states ha[ve] a free hand in regulating the dealings between insurers and their policyholders,” makes ... comity concerns ... particularly weighty in insurance cases. As the Sixth Circuit has explained in declining to exercise its jurisdiction, “[t]he states regulate insurance companies for the protection of their residents, and state courts are best situated to identify and enforce the public policies that form the foundation of such regulations.” Allstate Ins. Co. v. Mercier, 913 F.2d 273, 279 (6th Cir.1990); see also McCarran-Ferguson Insurance Regulation Act, 15 U.S.C. § 1012(a) (“The business of insurance, and every person engaged therein, shall be subject to the laws of the several States which relate to the regulation or taxation of such business.”).
Employers Reinsurance Corp. v. Karussos, 65 F.3d 796, 799 (9th Cir.1995) (some citations omitted), overruled in part on other grounds by Dizol, 133 F.3d at 1227; see also Continental Cas. Co. v. Robsac Indus., 947 F.2d 1367, 1371 (9th Cir.1991), overruled in part on other grounds by Dizol, 133 F.3d at 1227; Wells Cargo, Inc. v. Transport Ins. Co., 676 F.Supp.2d 1114, 1127 (D.Idaho 2009) (“[W]hen Wells Cargo, who did business in Idaho, alleges a breach of contract and seeks declaratory relief under an insurance company’s failure to perform its obligations with respect to an Idaho environmental cleanup site, the state of Idaho has a substantial interest.” (citing Karussos, 65 F.3d at 799)). That said, there is no presumption in favor of abstention in insurance coverage cases. Dizol, 133 F.3d at 1225. Likewise, not every insurance-related issue will satisfy Younger’s “important state interest” prong.
Here, the instant federal action seeks, inter alia, (1) a declaration that Burlington is not required to defend Panacorp or PSC in Norva or Kahookele and (2) reimbursement from Panacorp for all sums that Burlington has expended in defending it in those actions. As Burlington concedes, the Hawai’i appellate courts have not defined the nature or scope of an insurer’s right to reimbursement for the cost of defending a lawsuit, which it is presently defending, on the ground that it has no duty to defend the suit. Burlington Supp’l Mem. Re: Kahookele at 4; cf. Scottsdale Ins. Co. v. Sullivan Props., Inc. (“Scottsdale II”), Civ. No. 04-00550 HG-BMK, 2007 WL 2247795, at *3-8 (D.Haw. Aug. 2, 2007) (finding that although there was no Hawai’i law on point, the Hawai’i Supreme Court would likely apply equitable principles to allow an insurer to be reimbursed for the cost of defending a lawsuit it was determined, post-settlement, not to have had a duty to defend). Burlington fails to recognize, however, that this Court has explained at length the importance of this very issue. See Exec. Risk Indem., Inc. v. Pac. Educ. Servs., 451 F.Supp.2d 1147, 1163-64 (D.Haw.2006).
In declining to predict how the Supreme Court of Hawai’i would rule on the same right to reimbursement issue present here, Executive Risk stated that “a ruling on reimbursement would be a major decision on Hawaii insurance law that could have a tremendous impact on the duty to defend in hundreds of other cases.” Id. at 1163. This Court continued:
It is not unusual for defense costs in a typical action to be in the tens or hundreds of thousands of dollars. Many insureds are not well-funded entities or individuals. It is easy to imagine the impact of a ruling in Executive Risk’s favor on, say, an insured who is an individual being defended in an automobile accident case, faced with having to reimburse an insurer $25,000 in defense costs. While a party’s financial condition does not erase contractual obligations, this court, in examining whether such obligations even exist, recognizes the impact of any substantive ruling on the reimbursement issue.
Id. at 1164. As Executive Risk demonstrates, Burlington’s entitlement to reimbursement while it is currently defending Panacorp, Norva, and PSC implicates important and unsettled state interests.
The Court further agrees with Rehmer and PSC that the instant federal action involves two other important and unsettled issues of state law.
Burlington alleges that the myriad claims against Norva, Panacorp, and PSC in Kahookele and/or Norva are not covered under the Policy “for at least the reason that Panacorp, Inc. is not an insured under the [Policy] [Burlington] entered into with Mr. Panajon as an individual.” 12/11/09 Complaint ¶ 24; 12/7/10 Complaint ¶ 11. The Declarations page of the Policy identifies the named insured as “Macario C. Panajon dba: Panco,” an “Individual.” Burlington Opp’n to PSC Stay Motion Ex. J. According to Section II of the Policy (“Section II”), “[i]f you are designated in the Declarations” as “[a]n individual, you and your spouse are insureds, but only with respect to the conduct of a business of which you are the sole owner.” Id.
First, it is unclear under Hawai’i law whether Section II “affords coverage to a corporation that is solely-owned by an individual named insured who conducts a business through the corporation.” PSC Stay Reply at 6; Rehmer Stay Reply at 5-8. Burlington argues that this issue is “simple and straightforward” and “does not implicate any unsettled issues of Hawai’i state law,” citing the universal rule that a corporation is a distinct entity from its shareholders. Burlington Opp’n to PSC Stay Motion at 16-17. Burlington also contends this Court has already addressed a similar issue in Allstate Insurance Co. v. Sylvester, Civ. No. 07-00360 SOM/BMK, 2008 WL 2164657, at *1 (D.Haw. May 21, 2008). The Court is unpersuaded by Burlington’s position.
In Sylvester, this Court found that a limited liability company that rented out a beach-front house was not covered under a homeowner’s insurance policy that listed two individuals as the named insureds. Id. at *1, *4. Although Sylvester did not view the issue regarding the named insureds as unsettled, Sylvester buttressed its holding with a lengthy analysis of how the policy at issue there excluded “ ‘bodily injury or property damage arising out of the past or present business activities of an insured person,’ ” and defined “ ‘Business’ as ‘any full or part-time activity of any kind engaged in for economic gain.’ ” Id. at *5 (emphasis in original). Here, by contrast, the commercial general liability policy at issue identifies Panajon as an insured “with respect to the conduct of a business of which [he is] the sole owner.” Burlington Opp’n to PSC Stay Motion Ex. J. Aside from relying on general principles of corporate law, Burlington cites no Hawai’i cases addressing the scope of insurance coverage for a corporation that is solely-owned by an individual named insured.
Moreover, as PSC argues, this issue is not as straight-forward as Burlington contends. PSC Stay Reply at 6-8. Compare Shelby Ins. Co. v. Ford, 265 Ga. 232, 454 S.E.2d 464 (1995) (holding that a policy providing coverage to an appellant “as an individual ‘only with respect to the conduct of a business of which you are the sole owner’ ” did not extend to the appellant’s corporation, a day care center), with id. at 466 (Sears, J., dissenting) (finding that the insurance policy covered appellant’s corporation because appellant was “the sole shareholder and president of the corporation, and exercised close control over the operations of the day care center”), and Elan Pharm. Research Corp. v. Employers Ins., 144 F.3d 1372, 1383 n. 21 (11th Cir.1998) (stating that by “relying on Georgia corporate law and the precise language of the insurance policy, [Shelby ] ignored the plain reality that the individual insured owned and operated both the corporation and the child-care business”). As PSC points out, Hawai’i construes insurance policies liberally and “ ‘in accord with the reasonable expectations of a layperson.’ ” PSC Stay Reply at 7 (quoting Guajardo v. AIG Haw. Ins. Co., 118 Hawai’i 196, 202, 187 P.3d 580, 586 (2008)). Accordingly, the Hawai’i courts may agree with the Shelby dissent’s and the Eleventh Circuit’s view, rather than the view of the Shelby majority.
Second, and relatedly, it is unclear under Hawai’i law whether Section II would provide coverage to a solely-owned corporation that “is the mere alter-ego of the individual named insured.” PSC Stay Reply at 6; Rehmer Stay Reply at 5-9. The Court has been unable to locate Hawai’i cases addressing this issue. And as Rehmer notes, at least one state court has determined that in some circumstances (namely, where a corporate motor carrier is involved), a corporation found to be an alter-ego of its controlling stockholder “ ‘should be considered as a named insured even though the insurance policy is issued in the name of its shareholder doing business under a trade name.’ ” Rehmer Stay Reply at 8-9 (quoting Miller v. Harco Nat’l Ins. Co., 274 Ga. 387, 552 S.E.2d 848, 852 (2001)); cf. Keown v. Tudor Ins. Co., 621 F.Supp.2d 1025, 1032 (D.Haw.2008) (“The court could find no Hawaii caselaw construing the scope of this type of liability insurance exclusion, and Plaintiff argues that caselaw from at least some jurisdictions supports coverage in this instance. By granting Plaintiffs Motion for Remand [under the Declaratory Judgment Act], the Hawaii state courts can determine the proper scope of these exclusions.” (citation omitted)).
In sum, the Court agrees with Rehmer and PSC that “resolution of the[se] issues will have significant consequences for individuals across the state, particularly individual insureds who believe (and reasonably expect) that their solely-owned corporations are insured by Burlington, as well as insureds with policies similar to the one at issue here.” Rehmer Stay Reply at 9. Staying the instant federal action would allow the Hawai’i state courts to determine these important state law issues in the first instance. Rehmer Stay Motion at 9; cf. Keown, 621 F.Supp.2d at 1032.
C. The Federal Plaintiff Is Not Barred From Litigating Federal Constitutional Issues in the State Proceeding
To meet the third requirement for abstention under the Younger doctrine, there must be an adequate opportunity in the state proceedings to raise federal constitutional issues. Gilbertson v. Albright, 381 F.3d 965, 968 (9th Cir.2004) (en banc). The parties do not dispute that this requirement is inapplicable here because Burlington has not raised any federal constitutional issues.
D. The Federal Court Action Would Enjoin the Proceeding or Have the Practical Effect of Doing So
Although “interference with state proceedings is at the core of the comity concern that animates Younger,” abstention under Younger may be appropriate even when the federal proceeding would not “directly interfere” in the ongoing state proceedings. Gilbertson, 381 F.3d at 977-78; see also San Jose Silicon Valley, 546 F.3d at 1096 n. 4. “Thus, Younger abstention is appropriate where a plaintiff seeks declaratory relief, ‘because a declaration has the same practical effect on a state court proceeding as an injunction.’ ” Lake Luciana, LLC v. County of Napa, No. C 09-04131 JSW, 2009 WL 3707110, at *2 (N.D.Cal. Nov. 4, 2009) (quoting Gilbertson, 381 F.3d at 977).
The Court agrees with Rehmer and PSC that the instant federal action would have the practical effect of enjoining the underlying state actions. As discussed supra Section I.A, Burlington’s claims for declaratory relief raise several of the same questions at issue in the state actions. Most obviously, the instant claims mirror PSC’s third-party declaratory judgment claims against Burlington in Kahookele and Bomat. Moreover, in Norva, Kahookele, and Bomat, PSC has asserted third-party claims against Panacorp and/or Panajon — which have not been dismissed or severed — for breach of contract, misrepresentation, and implied indemnity based on the 5/30/2008 Contract. Both these third-party claims and the instant federal action require determinations regarding the identity of “the Contractor” (1) under the 5/30/2008 Contract and (2) working at the Plant on October 7, 2008. Likewise, the state and federal actions both involve the question whether Panacorp was the alter-ego of Panajon. Rehmer Stay Motion at 20-21, 24; PSC/Rehmer Supp’l Reply Re: Norva 4-5,14-15.
Given these overlapping issues, granting a declaration in the instant action would have the practical effect of enjoining the state actions under the doctrine of collateral estoppel. See Gilbertson, 381 F.3d at 982 (finding that a federal court’s decision on the merits of the plaintiffs claims “would have the same practical effect on the state proceeding as an injunction” because the issues raised in the federal complaint “go to the heart of’ the plaintiffs position in state court); Lake Luciana, 2009 WL 3707110 at *3 (finding that a federal action “ ‘would interfere with the state proceeding in a way that Younger disapproves’ ” due to the similarity of the issues raised in the federal and state actions) (quoting San Jose Silicon Valley, 546 F.3d at 1092); N Group LLC v. Hawai'i County Liquor Comm’n, 681 F.Supp.2d 1209, 1238 (D.Haw.2009) (finding that a decision in the federal action “would have the practical effect of enjoining the proceedings before the [state] court” because the federal plaintiff raised “nearly identical” issues in both actions); Rehmer Stay Motion at 20-21; Rehmer Stay Reply at 9-11.
The Court is unpersuaded by Burlington’s argument that AmerisourceBergen mandates a contrary result. Burlington Opp’n to Rehmer Stay Motion at 10-12. The Court is mindful of AmerisourceBergen’s discussion of how the Ninth Circuit and the Supreme Court have “rejected the notion that federal courts should abstain whenever a suit involves claims or issues simultaneously being litigated in state court merely because whichever court rules first will, via the doctrines of res judicata and collateral estoppel, preclude the other from deciding that claim or issue.” 495 F.3d at 1151-52. In the course of this discussion, however, AmerisourceBergen explicitly stated that “abstention to avoid concurrent, duplicative litigation is available in some very limited circumstances — in particular, when the requested relief in federal court is a declaratory judgment.” Id. at 1151 (emphasis added); see also Lake Luciana, LLC v. County of Napa, No. C 09-04131 JSW, 2010 WL 431905, at *2-3 (N.D.Cal. Feb. 2, 2010) (rejecting the argument Burlington raises here, for the same reason).
Likewise, in its analysis of Supreme Court precedent extending Younger to declaratory relief actions, Gilbertson emphasized that if a declaration is “ ‘to be res judicata, ... the federal court has virtually lifted the case out of the State [court] before it could be heard.’ ” Gilbertson, 381 F.3d at 971 (citation omitted). “Thus, the Court recognized that preclusion rules give a declaration of rights the same real effect on a pending state proceeding as an injunction.” Id. Accordingly, Gilbertson held that Younger applies where there is interference that “would have the same practical effect on the state proceeding as a formal injunction,” and, further, that “[p]reclusion rules may be relevant to determining the practical effect of a federal court’s relief.” Id. at 977-78. Finally, Burlington’s reliance on AmerisourceBergen is misplaced because there, the relief requested was “an ordinary judgment requiring an individual to pay breach of contract damages.” 495 F.3d at 1152; see Rehmer Stay Motion Reply at 9-11. Here, of course, Burlington seeks declaratory relief as well as monetary damages.
Thus, the Court finds that the instant federal action, were it now to proceed, would have the practical effect of enjoining the ongoing state actions.
E. Conclusion Regarding Younger Analysis
In summary, the Court finds that all four Younger requirements are strictly satisfied in this case. Moreover, because Burlington seeks monetary damages as well as declaratory relief, the Court finds it appropriate under Younger and Gilbertson to stay, rather than to dismiss, the instant federal action.
In Gilbertson, which involved an action for damages alone under 42 U.S.C. § 1983, the Ninth Circuit held that “federal courts should not dismiss actions where damages are at issue; rather, damages actions should be stayed until the state proceedings are completed.” 381 F.3d at 968. The Court further explained:
[W]hen damages are sought and Younger principles apply, it makes sense for the federal court to refrain from exercising jurisdiction temporarily by staying its hand until such time as the state proceeding is no longer pending. This allows the federal plaintiff an opportunity to pursue constitutional challenges in the state proceeding (assuming, of course, that such an opportunity is available under state law), and the state an opportunity to pass on those constitutional issues in the context of its own procedures, while still preserving the federal plaintiffs opportunity to pursue compensation in the forum of his choice. In this way, neither the federal plaintiffs right to seek damages for constitutional violations nor the state’s interest in its own system is frustrated.
Id. at 981 (emphasis in original). Following the holding in Gilbertson, some district courts within the Ninth Circuit have stayed, rather than dismissed, cases seeking both equitable or injunctive relief and damages. See, e.g., Ambat v. City & County of San Francisco, No. C 07-3622 SI, 2007 WL 3101323, at *6 (N.D.Cal. Oct. 22, 2007); Stein v. Quinn, No. C06-1047P, 2006 WL 3091144, at *2-3 (W.D.Wash. Oct. 27, 2006); Van Fossen v. Sierra Sands Unified Sch. Dist., No. CIVF051167 AWI LJO, 2006 WL 738717, at *4-5 (E.D.Cal. Mar. 22, 2006); see also Potrero Hills Landfill, Inc. v. County of Solano, No. 09-2514-JAM-JFM, 2009 WL 5206709, at *2 (E.D.Cal. Dec. 23, 2009); McClure v. Baker, Civ. No. 07-386-KI, 2008 WL 268361, at *1 (D.Or. Jan. 29, 2008).
The Court follows the practice employed by these district courts. In the Court’s view, although Gilbertson involved a damages claim only, its language and reasoning imply that cases seeking both equitable or injunctive relief and damages should be stayed in their entirety. See Gilbertson, 381 F.3d at 968, 981. This interpretation is buttressed by Canatella v. California, 404 F.3d 1106 (9th Cir.2005), which rejected an appellant-intervenor’s (“Appellant”) argument that a stay was required under Gilbertson. Cf. id. at 1111-12. After discussing Gilbertson, Canatella concluded that “[bjecause [Appellant] s[ought] declaratory and injunctive relief but not damages, the traditional rules of Younger abstention apply. The federal courts must abstain permanently because [Appellant] is asking only that the federal courts stop the state proceedings.” Id. (emphasis added). Canatella suggests that were Appellant to have sought declaratory and injunctive relief as well as damages, Gilbert-son’s stay rule would have applied, rather than the “traditional rules of Younger abstention,” and the federal proceedings would have been stayed.
Accordingly, because Burlington seeks both damages and declaratory relief, the Court will stay, rather than dismiss, the instant federal action.
II. Abstention Under the Declaratory Judgment Act
Under the Declaratory Judgment Act, a district court has the “unique and substantial discretion” to decide whether to issue a declaratory judgment. Wilton v. Seven Falls Co., 515 U.S. 277, 286, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). The Declaratory Judgment Act states that “courts may declare the rights and other legal relations of any interested party seeking such declaration.” 28 U.S.C. § 2201(a) (emphasis added). Therefore, a district court is under no compulsion to exercise its jurisdiction. Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942).
In cases where parallel state proceedings exist, “there is a presumption that the entire suit should be heard in state court.” Gov’t Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir.1998) (en banc) (citing Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1366-67 (9th Cir.1991)). Courts should avoid gratuitous interference as it would be uneconomical and vexatious for a federal court to proceed with a declaratory judgment action in these situations. Wilton, 515 U.S. at 282-83, 115 S.Ct. 2137 (citing Brillhart, 316 U.S. at 495, 62 S.Ct. 1173). However, the existence of a pendent state action does not automatically bar a request for federal declaratory relief. Chamberlain, 931 F.2d at 1367. Courts consider several relevant factors in determining whether to exercise jurisdiction or to dismiss or stay the declaratory judgment proceeding.
In this analysis a court must proceed cautiously, balancing concerns of judicial administration, comity, and fairness to the litigants. Chamberlain, 931 F.2d at 1367. The Supreme Court cautioned district courts to (1) avoid needless determination of state law issues; (2) discourage litigants from filing declaratory actions in an attempt to forum shop; and (3) avoid duplicative litigation. Dizol, 133 F.3d at 1225 (citing Brillhart, 316 U.S. at 494, 62 S.Ct. 1173); Chamberlain, 931 F.2d at 1367. In addition to the Brillhart factors, the Ninth Circuit has suggested that district courts should consider the following additional factors:
“[Wjhether the declaratory action will settle all aspects of the controversy; whether the declaratory action will serve a useful purpose in clarifying the legal relations at issue; whether the declaratory action is being sought merely for the purposes of procedural fencing or to obtain a ‘res judicata’ advantage; or whether the use of a declaratory action will result in entanglement between the federal and state court systems. In addition, the district court might also consider the convenience of the parties, and the availability and relative convenience of other remedies.”
Dizol, 133 F.3d at 1225 n. 5 (citation omitted).
Finally, where a district court declines to exercise jurisdiction over a declaratory judgment action, it “is authorized, in the sound exercise of its discretion, to stay or to dismiss” the action. Wilton, 515 U.S. at 288, 115 S.Ct. 2137 (emphasis added). That said, “a stay will often be the preferable course, because it assures that the federal action can proceed without risk of a time bar if the state case, for any reason, fails to resolve the matter in controversy.” Id. at 288 n. 2, 115 S.Ct. 2137.
Before determining whether abstention is appropriate under Brillhart and Dizol, the Court will consider whether Burlington’s damages claim for reimbursement requires the Court to exercise jurisdiction over the instant matter.
A. Effect of Burlington’s Reimbursement Claim
“[W]hen other claims are joined with an action for declaratory relief (e.g., bad faith, breach of contract, breach of fiduciary duty, rescission, or claims for other monetary relief), the district court should not, as a general rule, remand or decline to entertain the claim for declaratory relief.” Dizol, 133 F.3d at 1225 (citing Chamberlain, 931 F.2d at 1367). Consequently, “[t]he appropriate inquiry for a district court in a Declaratory Judgment Act case is to determine whether there are claims in the case that exist independent of any request for purely declaratory relief, that is, claims that would continue to exist if the request for a declaration simply dropped from the case.” Snodgrass v. Provident Life and Acc. Ins. Co., 147 F.3d 1163, 1167-68 (9th Cir.1998) (per curiam). “In other words, the district court should consider whether it has subject matter jurisdiction over the monetary claim alone, and if so, whether that claim must be joined with one for declaratory relief.” United Nat’l Ins. Co. v. R & D Latex Corp., 242 F.3d 1102, 1113 (9th Cir.2001). If the monetary claim could have been asserted only along with the declaratory claim, and the case is “primarily declaratory in nature,” abstention may be appropriate. See id. at 1112-13.
In R & D Latex, a glue manufacturer (“Mydrin”) was sued in state court and initially defended by one of its insurers (“Travelers”), who had reserved the right to seek reimbursement if it was later determined not to have been under a duty to defend Mydrin. Id. at 1106. Travelers ceased defending Mydrin after allegedly spending $300,000. Id. Mydrin thereafter sought a declaration in California state court that Travelers had been under a duty to defend and indemnify Mydrin in the underlying litigation. Id. at 1108. Travelers removed the action and filed a counterclaim for reimbursement. Id. at 1108-09. On appeal, the Ninth Circuit held that the district court should not have abstained because “Travelers’ reimbursement claim is, in all probability, sufficiently independent under California law to trigger mandatory federal jurisdiction.” Id. at 1115.
According to Burlington, “[t]here is no meaningful distinction between R & D Latex and this case.” Burlington Opp’n to Rehmer Stay Motion at 14. The Court is not convinced, however, as there are several controlling distinctions.
First, as Rehmer and PSC point out, R & D Latex for the most part relied on its “equivocal” assessment that under California law, a claim for reimbursement need not be joined with a claim for declaratory relief. Rehmer Stay Reply at 14-17; see R & D Latex 242 F.3d at 1113-14 (citing Buss v. Superior Court, 16 Cal.4th 35, 65 Cal.Rptr.2d 366, 939 P.2d 766 (1997), for the proposition that “[w]e can see no reason ... why a reimbursement claim must be joined with a claim for declaratory relief’ (emphasis in original)). Unlike the California courts, however, the Hawai’i courts have not defined the nature or scope of an insurer’s right to reimbursement. See supra Section I.B.
Second, the Hawai’i courts have not addressed an insurer’s right to reimbursement in circumstances like those now before the Court, i.e., where an insurer seeks reimbursement while defending an alleged insured in ongoing litigation. Although this Court has analyzed an insurer’s right to reimbursement generally, it did so where the underlying lawsuit had already settled. See Scottsdale I, 2006 WL 505170, at *2; Scottsdale II, 2007 WL 2247795 at *3-8. Similarly, R & D Latex involved a claim for reimbursement where the insurer had already ceased defending its insured. R & D Latex Corp., 242 F.3d at 1106. Accordingly, Scottsdale and R & D Latex Corp. had no occasion to address the issue at bar, and Burlington’s reliance on these cases is misplaced.
Third, assuming Hawai’i courts would recognize a right to reimbursement where an insurer is presently defending an alleged insured in ongoing litigation, the Court finds that such a right would not be available unless (1) the insurer has already obtained a judgment stating that it had no duty to defend the alleged insured or (2) the insurer joins the reimbursement claim with a declaratory claim seeking such a judgment.
Under Hawai’i law, the duty to defend “rests primarily on the possibility that coverage exists. This possibility may be remote, but if it exists, the insurer owes the insured a defense.” Sentinel Ins. Co. v. First Ins. Co., 76 Hawai’i 277, 287, 875 P.2d 894, 904 (1994) (internal brackets omitted, emphasis in original). In Delmonte v. State Farm Fire & Cas. Co., 90 Hawai’i 39, 975 P.2d 1159 (1999), the Hawai’i Supreme Court discussed how a bad faith claim may exist even where it is ultimately determined that an insurer had no duty to defend its insured. Id. at 55, 975 P.2d at 1175. In doing so, it noted that an insurer may be liable for bad faith if it fails to provide a good faith defense at any point before “there are clear grounds for withdrawal”:
[I]f the insurer assumes the defense and, through mishandling of the defense, causes actual harm to the insured, a bad faith claim is cognizable despite a later declaration that the insurer did not have a duty to defend in the first instance. Having assumed the defense, the insurer is under a duty to undertake the defense in good faith until such time as there are clear grounds for withdrawal. In the event of a significant question regarding coverage, the insurer may seek a declaratory judgment. However, in the interim, the insurer must undertake the defense in good faith.
Id. (emphasis added).
Given the holding of Delmonte, Rehmer is right that “allowing an insurer to exercise an independent right to reimbursement ... before it obtains a declaratory judgment would be wholly inconsistent with, and likely constitute a breach of, its duty under established law to undertake the defense in good faith.” Rehmer Stay Reply at 15. Indeed, consistent with its obligations under Delmonte, Burlington has sought a declaration that it has no duty to defend or indemnify Panacorp, and, subsequently, reimbursement from Panacorp “in the event it is determined that [Burlington] had no duty to defend or indemnify [it].” See 12/11/09 Complaint. As Rehmer and PSC further argue, “[p]ut simply, Burlington may not obtain an order of reimbursement from Panacorp while simultaneously undertaking their defense in good faith and before the Court declares that Burlington owes no defense to Panacorp. That would put the horse before the cart.” PSC/Rehmer Supp’l Reply Re: Nona at 10. The Court agrees and is not persuaded by Burlington’s argument that R & D Latex and Scottsdale demonstrate its reimbursement claim renders jurisdiction here mandatory.
In short, the Court finds that Burlington’s reimbursement claim is not “independent” within the meaning of R & D Latex, the instant action is “primarily declaratory in nature,” and the instant action is thus subject to the traditional abstention analysis under the Declaratory Judgment Act. See Valley Forge Ins. v. Admiral Ins. Co., No. C08-1766-JCC, 2009 WL 1175624, at *3 (W.D.Wash. May 1, 2009) (finding abstention permissible where “the issue of contribution necessarily requires a predicate finding as to the obligations of the respective insurers under the policies at issue”); N. Pac. Seafoods, Inc. v. Nat’l Union Fire Ins. Co., No. C06-795RSM, 2008 WL 53180, at *4 (W.D.Wash. Jan. 3, 2008) (finding an action was subject to abstention where breach of contract claims were “inextricably entwined with, and dependent] upon a declaration of coverage, for their resolution”); Keown v. Tudor Ins. Co., 621 F.Supp.2d 1025, 1036 (D.Haw.2008) (Chang, J.) (finding abstention appropriate where a plaintiff sought a declaration that he was entitled to reimbursement yet this claim could not exist “[without a declaration of rights under the subject policy”), aff'd 621 F.Supp.2d 1025, 1032 (D.Haw.2008).
Having concluded that Burlington’s claim for reimbursement does not render jurisdiction mandatory, the Court will now balance the Supreme Court’s three Brillhart factors along with the Ninth Circuit’s Dizol factors to determine whether abstention is appropriate here.
B. Avoiding Needless Determinations of State Law
“A ‘needless determination of state law’ may involve an ongoing parallel state proceeding regarding the ‘precise state law issue,’ an area of law Congress expressly reserved to the states, or a lawsuit with no compelling federal interest (e.g., a diversity action).” Keown, 621 F.Supp.2d at 1031 (quoting Continental Cas. Co. v. Robsac Indus., 947 F.2d 1367, 1371-72 (9th Cir.1991), overruled in part on other grounds by Dizol, 133 F.3d at 1227). However, “[t]he concern in this factor is with unsettled issues of state law, not fact-finding in the specific case.” Nat’l Chiropractic Mut. Ins. Co. v. Doe, 23 F.Supp.2d 1109, 1118 (D.Alaska 1998) (citing Robsac, 947 F.2d at 1371). “When state law is unclear, ‘[a]b-sent a strong countervailing federal interest, the federal court should not elbow its way ... to render what may be an uncertain and ephemeral interpretation of state law.’ ” Allstate Insurance Co. v. Davis, 430 F.Supp.2d 1112, 1120 (D.Haw.2006) (quoting Mitcheson v. Harris, 955 F.2d 235, 238 (4th Cir.1992)).
The Court finds that each of the Robsac considerations are satisfied here, and allowing this action to proceed would result in needless determinations of state law issues. First, as discussed supra Section I.A., Norva, Kahookele, and Bomat are parallel to the instant action. See Gemini Ins. Co. v. Clever Constr., Inc., Civ. No. 09-00290 DAE-BMK, 2009 WL 3378593, at *7 (D.Haw. Oct. 21, 2009) (“[A] state proceeding [is] parallel to a federal declaratory judgment action when: (1) the actions arise from the same factual circumstances; (2) there are overlapping factual questions in the actions; or (3) the same issues are addressed by both actions.”). Second, the instant action “involves insurance law, an area that Congress has expressly left to the states through the McCarran-Ferguson Act.” Robsac, 947 F.2d at 1371 (citing 15 U.S.C. §§ 1011-12). Likewise, there is no compelling federal interest here. See id. (“Where ... the sole basis of jurisdiction is diversity of citizenship, the federal interest is at its nadir.”). Third, as the Court discussed supra Section I.B., the instant action raises several unsettled issues of state law. See Keown, 621 F.Supp.2d at 1032 (declining jurisdiction over a declaratory judgment claim relating to a liability insurance exclusion “to avoid needlessly determining a state law issue that the Hawaii courts have yet to address”).
Accordingly, the Court finds that first Brillhart factor weighs heavily in favor of staying Burlington’s federal action.
C. Discouraging Forum Shopping
“This factor usually is understood to favor discouraging an insurer from forum shopping, i.e., filing a federal court declaratory action to see if it might fare better in federal court at the same time the insurer is engaged in a state court action.” American Cas. Co. v. Krieger, 181 F.3d 1113, 1119 (9th Cir.1999). Where a “declaratory judgment suit is defensive or reactive, that would justify a court’s decision not to exercise jurisdiction.” Robsac, 947 F.2d at 1371. “Typically, ‘reactive declaratory judgment actions’ occur when a party sues in federal court to determine their liability after the commencement of a state court action.” Gemini, 2009 WL 3378593 at *8 (citing Dizol, 133 F.3d at 1225). This Brillhart factor also weighs in favor of declining jurisdiction where “a federal plaintiff seeks declaratory relief in anticipation that a related state court proceeding may be filed.” Budget Rent-A-Car v. Crawford, 108 F.3d 1075, 1081 (9th Cir.1997), overruled in part on other grounds by Dizol, 133 F.3d at 1227.
As Rehmer and PSC argue, the timing in which Burlington filed its federal declaratory claims suggests the instant action was reactive:
• October 29, 2009: PSC files a third-party declaratory judgment claim against Burlington in Norva. Burlington Opp’n to PSC Stay Motion Ex. B.
• November 2k, 2009: PSC sends Burlington a tender demand for defense and indemnity with respect to Kahookele. PSC Stay Motion Ex. M.
• December 1, 2009: PSC serves its third-party complaint in Norva on whom it mistakenly believes to be Burlington’s local insurance agent; the agent forwards PSC’s third-party complaint to Burlington by e-mail. PSC Stay Reply Exs. U, V.
• December 10, 2009: Burlington sends PSC a letter denying coverage with respect to Norva. PSC Stay Motion Ex. N.
• December 11, 2009: Burlington files a federal action against Norva, Panacorp, Panajon, Kahookele, and Rehmer. Doc. No. 1.
• April 1, 2010: PSC files a third-party declaratory judgment claim against Burlington in Kahookele. Burlington Opp’n to PSC Stay Motion Ex. D.
• July 7, 2010: Burlington files a federal action against PSC. Doc. No. 1 (Civ. No. 10-00382).
Based on this chronology, the Court is unpersuaded by Burlington’s argument that it was not forum-shopping when it filed the initial complaint in this action because (1) it had not been properly-served with PSC’s third-party complaint in Norva and (2) PSC’s third-party complaint in Kahookele was four months away from being filed. Burlington Opp’n to PSC Stay Motion at 18-19. “A suit is anticipatory when the plaintiff filed upon receipt of specific, concrete indications that a suit by defendant was imminent.” Z-Line Designs, Inc. v. Bell’O Int’l LLC, 218 F.R.D. 663, 665 (N.D.Cal.2003). Here, Burlington filed the initial complaint in this consolidated action shortly after it had received “specific, concrete indications” that PSC had filed a third-party declaratory judgment claim against it in Norva and that PSC would likely do so the same, imminently, in Kahookele.
The Court is also unpersuaded by Burlington’s speculative and inapposite contention that it is unlikely to remain a party in the underlying state actions. Burlington Opp’n to PSC Stay Motion at 19. Even if Burlington were no longer a party in the state actions at some future point, this would not mean that Burlington’s filing of the instant federal action was free from forum-shopping. PSC Stay Reply at 12-13. Finally, the Court does not agree with Burlington’s claim that PSC’s filing of third-party complaints against it in the three state actions evidences a “forum-shopping scheme.” Burlington Supp’l Mem. Re: Kahookele at 1, 6-7. Although “[fjorum shopping through the filing of declaratory judgment actions is no more appropriate when it favors state over federal jurisdiction,” R & D Latex, 242 F.3d at 1115, PSC impleaded Burlington in Norva before it had any “specific, concrete” indications that Burlington would seek a declaratory judgment in federal court. The Court finds no impropriety in PSC’s impleading of Burlington in the two state actions in which PSC was subsequently named a defendant.
In short, given the circumstantial evidence that Burlington filed the instant federal action in reaction to and/or in anticipation of PSC’s related state court actions, the Court finds that second Brillhart factor weighs in favor of a stay.
D. Avoiding Duplicative Litigation
There is a presumption to decline jurisdiction “[i]f there are parallel state proceedings involving the same issues and parties pending at the time the federal declaratory action is filed.” Dizol, 133 F.3d at 1225. “When ‘another suit involving the same parties and presenting opportunity for ventilation of the same state law issues is pending in state court, a district court might be indulging in gratuitous interference if it permitted the federal declaratory action to proceed.’ ” Stewart Title Co. v. Investors Funding Corp., Civ. No. 09-00455 SOM/KSC, 2010 WL 1904981, at *6 (D.Haw. May 11, 2010) (quoting Wilton, 515 U.S. at 283, 115 S.Ct. 2137). That said, “[t]he pendency of a state court action does not, of itself, require a district court to refuse federal declaratory relief.” Dizol, 133 F.3d at 1225. Further, “there is no presumption in favor of abstention in declaratory actions generally, nor in insurance coverage cases specifically.” Id.
For the reasons discussed supra Sections I.A. and I.D., th