amendments had been forbidden . . . .'" Abex Br. at 2 (quoting Transcript of Proceedings, September 19, 1995, p.39, 1. 25 - 40, 1.1). Abex therefore complains that the third-party defendants are engaged in a scheme to deny it its day in court on those issues. Abex has also cross-moved for sanctions against Maryland Casualty on the ground that Maryland Casualty's Rule 11 motion is frivolous.
Defendants argue that Abex's contentions merely obscure the relevant issues. They point out that the instant case involves the same parties, insurance policies and properties as the action in California state court. They maintain that it is of no moment that the FCEP federal claim could not be brought in state court because both actions involve the same contractual obligations regardless of any specific triggering event. Defendants contend that "[a] straightforward comparison of the New Jersey third party complaint and the California Fourth Amended Complaint reveals that the FCEP breach of contract, duty to defend and duty to indemnify claims are the same." Maryland Cas. Repl. Br. at 3.
The insurers do admit that Abex's bad faith claim is unique to the federal action, but point out that, contrary to Abex's assertion, the California court did not absolutely preclude further amendment of the state complaint; it simply required plaintiffs to seek leave of court before any further amendment. See California Case Management Order # 2. Defendants contend that Abex had all of the information necessary to bring its bad faith claim in California and its failure to have done so in a timely fashion constitutes waiver. They therefore argue that through this action, Abex is simply attempting an end-run around the California court to avoid having to argue the issue of its alleged waiver there.
Standard of Review
Because the parties ask the Court to consider documents outside of the pleadings, the Court converts these motions to dismiss to motions for summary judgment pursuant to Rule 12(b) of the FRCP.
Summary judgment is appropriate where the moving party establishes that there is no genuine issue of material fact and that it is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The movant must show that if the evidence submitted were reduced to evidence admissible in court, it would be insufficient to permit the non-moving party to carry its burden of proof. Celotex v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).
Once the moving party has carried its burden under Rule 56, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts in question." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). The opposing party must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations or denials of its pleadings. Sound Ship Building Co. v. Bethlehem Steel Co., 533 F.2d 96, 99 (3d Cir.), cert. denied, 429 U.S. 860, 50 L. Ed. 2d 137, 97 S. Ct. 161 (1976).
At the summary judgment stage, the court's function is not to weigh the evidence and determine the truth of the matter, but rather it is to determine whether there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). In making this determination, the Court must construe the facts and inferences in a light most favorable to the non-moving party. Id.
Because of the "virtually unflagging obligation" of the federal courts to exercise the jurisdiction given them, as a general rule, it is appropriate for a district court to refuse to exercise jurisdiction in favor of a parallel state court action only under exceptional circumstances. Colorado River Water Conservation District v. United States, 424 U.S. 800, 817-18, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976) (establishing abstention analysis); Moses H. Cone Memorial Hosp. v. Mercury Constr. Co., 460 U.S. 1, 16, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983) (referring to Colorado River "exceptional circumstances" test). It is, however, well settled that a district court's discretion to defer to a state court is significantly broader when the federal action is one for declaratory judgment. See e.g., Brillhart v. Excess Ins. Co., 316 U.S. 491, 495, 86 L. Ed. 1620, 62 S. Ct. 1173 (1942); Wilton v. Seven Falls Co., 515 U.S. 277, 286, 132 L. Ed. 2d 214, 115 S. Ct. 2137 (1995) ("Distinct features of the Declaratory Judgment Act, we believe, justify a standard vesting district courts with greater discretion in declaratory judgment actions than that permitted under the "exceptional circumstances" test of Colorado River and Moses H. Cone.") And the Third Circuit has held that "a dismissal appropriate under the broader standard of the Declaratory Judgment Act should be effected without resort to the more limited doctrine of abstention." United States v. Commonwealth of Penn., Dept. of Envtl. Resources, 923 F.2d 1071, 1074 (3d Cir. 1991).
Here the third-party complaint asserts four separate causes of action: two seek a declaration that the insurers are obligated to defend and indemnify Abex, and two seek damages for the insurers' refusal to do so. Because the California action deals squarely with at least three of these issues and is significantly more advanced in its litigation status than the action at bar, the Court finds that a stay is appropriate under both the Colorado River and Brillhart analyses.
A. Colorado River Analysis
As a general rule, "the pendency of a case in state court will not bar federal litigation. . . concerning the same issues if the federal court has jurisdiction." Trent v. Dial Med. of Florida, Inc., 33 F.3d 217, 223 (3d Cir. 1994). However, in "exceptional circumstances," Colorado River allows a district court, under "considerations of wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation," 424 U.S. at 817, to abstain in favor of a pending state court action.
The "exceptional circumstances" required by Colorado River allow abstention only when the federal and state court actions are "parallel." "Generally, cases are parallel so as to justify abstention. . . when they involve the same parties and claims." Trent, 33 F.3d at 223. The Third Circuit has admonished that "it is important. . . that only truly duplicative proceedings be avoided. When the claims, parties, or requested relief differ, deference may not be appropriate." Complaint of Bankers Trust Co. v. Chatterjee, 636 F.2d 37, 40 (3d Cir. 1980) (emphasis added).
The third-party action before the Court is clearly parallel to the California lawsuit. The fourth amended complaint in the California action reads:
Plaintiffs seek a declaratory judgment. . . that the defendants are obligated to pay the costs and expenses, including but not limited to the costs of investigation and defense, associated and connected with claims, suits and other proceedings, brought against plaintiffs seeking damages because of property damage and personal injury and bodily injury (including without limitation claims of personal injury and bodily injury alleging causes of action such as, but not limited to, negligence, nuisance, trespass, wrongful eviction, interference with use and enjoyment of property and strict liability. . . .) which allegedly arose from plaintiffs' business ownership and operations.