United States District Court, D. Maryland
Catherine C. Blake United States District Judge.
Pennsylvania National Mutual Casualty Insurance Company
(“Penn National”) brought this action against
Stewart J. Levitas (“Levitas”), State Real
Estate, Inc. (“SRE, ” and collectively with
“Levitas, ” the “Levitas Parties”),
Tajah Jeffers, and Tynae Jeffers, requesting a declaratory
judgment that Penn National's responsibility for the
final judgments awarded to the Jeffers only extends to its
pro-rata time on the risk.
before the court is the Jeffers' motion to dismiss or
stay. (Defs.' Mot. Dismiss or Stay, ECF No. 18). Penn
National filed a response in opposition, (Pl.'s Resp.
Opp'n to Mot. Dismiss or Stay, ECF No. 22), to which the
Jeffers replied. (Defs.' Reply to Resp. to Mot., ECF No.
25). The motions are fully briefed, and no oral argument is
necessary. See Local Rule 105.6 (D. Md. 2016). For
the reasons stated below, the motion to stay will be granted
and the case stayed pending resolution of Case No.
24-C-16-003198 in the Circuit Court for Baltimore City.
case arises out of lead paint exposure at 2116 Hollins Street
in Baltimore, Maryland (the “Property”). (Compl.
¶¶ 11, 14, ECF No. 1). During the time period in
question, Levitas owned and SRE managed the Property.
(Id. ¶ 13). The Levitas Parties contracted with
Penn National to insure the Property, among others, under
contract 2300007180 (“Insurance Contract”), with
coverage beginning November 27, 1991 and ending August 1,
1997. (Id. ¶ 9). The Insurance Contract
included commercial general liability coverage. (Id.
Tajah Jeffers resided at the Property from March 17, 1994,
until March 26, 1998. (Id. ¶ 21). Tajah
exhibited elevated blood-lead levels from September 24, 1993,
up to her last elevated blood-level test on June 2, 1998.
Plaintiff Tynae Jeffers resided at the Property from the date
of her birth on November 8, 1996, until March 26, 1998.
(Id. ¶ 22). Tynae exhibited elevated blood-lead
levels from May 14, 1997, up to her last elevated blood-lead
level test on November 25, 1998.
August 23, 2013, the Jeffers plaintiffs filed a lawsuit
against the Levitas Parties and Penn National in the Circuit
Court for Baltimore City, Case No. 24-C-12-005059 (the
“Underlying Case”), requesting damages as a
result of their exposure to lead paint while residing at the
Property. (Compl., Ex. A, Tajah Jeffers, et al. v.
Stewart Levitas et al. Compl., ECF No. 1-1). The Levitas
Parties requested defense and indemnification from Penn
National under the Insurance Contract, which Penn National
agreed to provide subject to a reservation of rights. (Compl.
¶¶ 16-19). At the conclusion of the five-day trial,
the jury returned a verdict in favor of Tajah and Tynae
Jeffers and final judgment was entered in the amount of $2,
413, 134.33 and $1, 650, 619.33, respectively. (Compl. Ex. B,
Notice of R. J., ECF No. 1-2; Compl. Ex. C, Cir. Ct. of
Baltimore City Or., ECF No. 1-3).
an unsuccessful appeal, (Defs.' Mot. Dismiss or Stay, Ex.
C, Ct. App. Md. Or., ECF No. 18-4), the Levitas Parties have
yet to satisfy the judgment in the Underlying Case.
(Defs.' Mot. Dismiss or Stay 4, ECF No. 18). The Jeffers
sent a letter to Penn National on May 5, 2016, demanding
satisfaction of the judgment. (Defs.' Mot. Dismiss or
Stay, Ex. D, Demand Letter, ECF No. 18-5). On May 19, 2016,
the Jeffers filed an action against Penn National in the
Circuit Court for Baltimore City, Case No. 24-C-16-003198,
seeking the full amount of the judgment entered in the
Underlying Case. (Defs.' Mot. Dismiss or Stay 4). Penn
National followed suit by filing this declaratory judgment
action on June 13, 2016.
court has diversity jurisdiction over the case, 28 U.S.C.
§ 1332(a), because the parties are diverse and the
amount in controversy exceeds $75, 000. The suit is brought
pursuant to the Declaratory Judgment Act, 28 U.S.C. §
2201(a), as the sole relief sought in the complaint is the
declaration of the parties' rights under the insurance
contract. The central question presented by defendants in
their motions is whether the court should exercise its
discretion to issue a declaratory judgment.
Declaratory Judgment Act is “an enabling Act, which
confers a discretion on the courts rather than an absolute
right upon the litigant.” Wilton v. Seven Falls
Co., 515 U.S. 277, 287 (1995) (quoting Public Serv.
Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 241
(1952)). Even where a declaratory judgment action
“otherwise satisfies subject matter jurisdictional
prerequisites, ” the district court “possess[es]
discretion” in determining whether to entertain the
suit. Id. at 282; see also Brillhart v. Excess
Ins. Co., 316 U.S. 491, 494 (1942). The Fourth Circuit
has long recognized “the discretion afforded to
district courts in determining whether to render declaratory
relief.” Aetna Cas. & Sur. Co. v. Ind-Com Elec.
Co., 139 F.3d 419, 421-22 (4th Cir. 1998). This
discretion is especially “crucial when . . . a parallel
or related proceeding is pending in state court.”
New Wellington Fin. Corp. v. Flagship Resort Dev.
Corp., 416 F.3d 290, 297 (4th Cir. 2005).
determining whether to exercise jurisdiction in a declaratory
judgment action, the district court must “weigh
considerations of federalism, efficiency, and comity.”
United Capitol Ins. Co. v. Kapiloff, 155
F.3d 488, 493 (4th Cir. 1998) (quoting Nautilus Ins. Co.
v. Winchester Homes, Inc., 15 F.3d 371, 376
(4th Cir. 1994)); see also New Wellington Fin.
Corp., 416 F.3d at 297. The Fourth Circuit has
articulated four factors for district courts to consider when
determining whether to abstain from exercising jurisdiction
over a declaratory judgment action during the pendency of a
parallel state proceeding:
(1) [W]hether the state has a strong interest in having the
issues decided in its courts; (2) whether state courts could
resolve the issues more efficiently than the federal courts;
(3) whether the presence of “overlapping issues of fact
or law” might create unnecessary
“entanglement” between the state and federal
courts; and (4) whether the federal action is mere