United States District Court, D. Alaska
ORDER AND OPINION [Re: Motion at docket 65]
JOHN W. SEDWICK SENIOR UNITED STATES DISTRICT JUDGE
I. MOTION PRESENTED
At docket 65, Defendants Rediske Family Limited Partnership and JB Leasing Company, LLC (collectively Rediske Family Defendants) move for an order staying the declaratory judgment action brought by Plaintiff Great Divide Insurance Company (“Great Divide”). Defendants Bear Mountain Lodge, LLC; Merrill M. McGahan; Lauri B. Johnson; and Merrill Marie McGahan (collectively “BML”) filed a conditional non-opposition at docket 67. Great Divide partially opposes the motion at docket 75. Rediske Family Defendants reply at docket 76. Oral argument was heard on May 9, 2016.
On July 7, 2013, Walter Rediske, owner and chief pilot of Rediske Air, LLC (“Rediske Air”) was transporting guests in a deHavilland DHC-3 Otter aircraft to the Bear Mountain Lodge when the plane crashed following its takeoff from the Soldotna Airport. Walter Rediske and all of the passengers died in the crash. The survivors and estates of the deceased filed various lawsuits related to the crash. They filed one lawsuit in the District of Alaska against Rediske Air, Rediske Family Defendants, and the estate of Walter Rediske. They filed a separate lawsuit in the District of Alaska against BML and other companies that allegedly modified or provided parts to the aircraft involved in the crash. One of the companies then filed a third-party claim against Rediske Air, Rediske Family Defendants, and the estate of Walter Rediske. In a third and separate lawsuit brought in the District of Alaska, the estate of Walter Rediske sued BML and Rediske Family Defendants. They also filed a parallel lawsuit in state court. The three District of Alaska cases have been consolidated. The parties have not informed the court as to the status of the state court case.
Bear Mountain Lodge, LLC is named as the insured on a Great Divide insurance policy that was in effect at the time of the crash. Defendants Merrill M. McGahan, Lauri B. Johnson, and Merrill Marie McGahan are the owners of Bear Mountain Lodge, LLC, and, as such, are potential additional insureds under the policy. BML, through its attorney, reported the litigation to Great Divide. Great Divide sent BML’s attorney a reservation-of-rights letter. The letter explained Great Divide’s position that provisions in BML’s insurance policy may exclude coverage for the claims arising from the airplane crash. In addition, the letter explained that Great Divide would pay the attorneys’ fees and costs BML incurred in the defense of those claims as to which Great Divide had reserved its rights. Two months later, Great Divide filed a complaint for declaratory judgment, asking that the court determine its obligations under BML’s insurance policy. Specifically, Great Divide contends that there are three exclusions in the policy that disclaim coverage for the accident: 1) the “Aircraft Exclusion”; 2) the “Designated Operations Exclusion”; and 3) the “Contractors Exclusion.” BML filed a motion for summary judgment, asking the court to find the three exclusions inapplicable and hold Great Divide liable for coverage under the policy. While the motion for summary judgment was pending, Rediske Family Defendants moved to stay the declaratory judgment action. BML does not oppose a stay, provided Great Divide continues to provide a defense under a reservation of rights. Great Divide has acquiesced in the request to stay proceedings concerning the Aircraft Exclusion and the Designated Operations Exclusion, but contends that the court should not stay proceedings relating to the Contractors Exclusion.
III. STANDARD OF REVIEW
The Declaratory Judgment Act requires that a declaratory judgment action present an actual case or controversy under Article III of the Constitution and be consistent with statutes governing the jurisdiction of federal courts. “If the suit passes constitutional and statutory muster, the district court must also be satisfied that entertaining the action is appropriate.” Such a determination is discretionary and based on prudential considerations. The prudential considerations are as follows:
(1) Avoiding the needless determination of state law issues;
(2) Discouraging the filing of declaratory actions as a means of forum shopping;
(3) Avoiding duplicative litigation;
(4) Resolving all aspects of the controversy in a single proceeding if possible;
(5) Avoiding intervention unless the declaratory action will serve a useful purpose in clarifying the legal relations at issue;
(6) Avoiding procedural fencing or permitting one party to obtain an unjust res judicata advantage ...