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Premier Automation Contractors, Inc. v. Everest National Insurance Co.

United States District Court, D. Oregon, Portland Division

October 17, 2019



          John V. Acosta United States Magistrate Judge


         Plaintiff Premier Automation Contactors, Inc. ("Premier") brought this action seeking a declaratory judgment that it was properly insured for an underlying occurrence in Oregon by Defendant Everest National Insurance Company ("Everest"), or in the alternative, that Everest committed silent fraud against Premier and must be equitably estopped from denying coverage. Premier moves to stay this action under the doctrine established by Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976), pending resolution of a related state administrative proceeding. Everest opposes the motion, arguing the state administrative proceeding will not resolve the issues raised here.

         The court finds the actions are not substantially similar, and the other Colorado River factors weigh in favor of a denial of a stay. Accordingly, Premier's motion to stay is DENIED.


         Premier is a Michigan corporation with its principal place of business in Michigan. (Compl, ECF No. 1, ¶ 7.) Everest is a Delaware corporation with its principal place of business in New Jersey. (Compl. ¶ 8.) Premier is a contracting business that provides skilled workers to a variety of construction companies throughout the United States. (Compl., Ex. A, at 2.) On September 26, 2018, Tim Rios, one of Premier's employees, suffered a fatal injury while working at a job site in Hillsboro, Oregon. (Id.; Def.'s Opp'n to Mot. Stay, ECF No. 20 ("Def.'s Opp'n"), at 3.) At the time of Mr. Rios's death, Premier had a liability and workers' compensation insurance policy (the "Policy") with Everest. (Compl. ¶ 10.) Central to the parties' dispute is whether the Policy provided workers' compensation coverage for work in Oregon at the time of Mr. Rios's death. (Compl. ¶ 11.) Everest denies it covered Premier for work in Oregon at the time of Mr. Rios's death. (Def.'s Opp'n, at 2-3.)

         On January 2, 2019, [1] Premier filed a complaint in Oregon State Court seeking a declaration that Everest covered Premier for work in Oregon, or alternatively, that Everest engaged in silent fraud and should be estopped from denying coverage. (Compl., Ex. A.) Premier sought to avoid the prospect of defending a wrongful death suit and avoid facing a "noncompliant employer" penalty assessed by the Oregon State Workers' Compensation Division for failure to carry proper insurance. (Compl, Ex. A, at 8-9.) On February 13, 2019, Everest timely removed the case to this court based on diversity jurisdiction. (Compl, ECF No. 1.)

         On January 22, 2019, the State of Oregon entered a final order in a civil penalty action against Premier finding it was a "noncomplying employer." (Pl.'s Mot. Stay, ECF No. 17, at 2.) Premier immediately appealed the order. (Id.) The State took no action on the appeal until July 12, 2019, when it assigned the civil penalty action to a State Administrative Law Judge ("ALJ"). (Pl.'s Mot. Stay, Ex. C.) Premier now asks for an indefinite stay of the proceedings in this court pending resolution of the state administrative proceeding.

         Legal Standard

         Generally, the pendency of an action in state court does not bar proceedings concerning the same matter in a federal court having jurisdiction. McClellan v. Carlan, 217 U.S. 268, 282 (1910). Rather, federal courts have a "virtually unflagging obligation" to exercise their jurisdiction. Colorado River, 424 U.S. at 817. However, in the interest of wise judicial administration, a federal court may abstain from exercising its jurisdiction due to the presence of a concurrent state proceeding under certain "limited" and "exceptional" circumstances. Id. at 818. Thus, when faced with parallel state and federal proceedings, the court must ascertain whether "exceptional" circumstances and the "clearest of justifications" exist to justify the surrender of jurisdiction. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25-26 (1983).

         Several factors are relevant to determining whether abstention is appropriate. The threshold question is whether the parallel proceedings are "substantially similar." Nakash v. Marciano, 882 F.2d 1411, 1416 (9th Cir. 1989). "[T]he existence of a substantial doubt as to whether the state proceedings will resolve the federal action precludes granting of a stay." Intel Corp. v. Advanced Micro Devices, Inc., 12 F.3d 908, 913 (9th Cir. 1993); see also Holder v. Holder, 305 F.3d 854, 870 (9th Cir. 2002) ("[I]t is 'dispositive' that the state court judgment will not resolve all of the issues before the federal court[.]"). The remaining non-exclusive factors include those originally considered by the Supreme Court in Colorado River: (1) whether either court has assumed jurisdiction over property to the exclusion of other courts; (2) the inconvenience of the federal forum; (3) the desirability of avoiding piecemeal litigation; and (4) the order in which jurisdiction was obtained by the concurrent forums. Colorado River, 424 U.S. at 818-19. This list of considerations was subsequently expanded by the Supreme Court to include: (5) whether state or federal law provides the rule of decision on the merits; and (6) whether the state-court proceeding can adequately protect the rights of the parties. Moses, 460 U.S. at 23, 26. Finally, in the Ninth Circuit, courts also should consider whether exercising jurisdiction would promote forum shopping. R.R. Street & Co. Inc. v. Transport Ins. Co., 656 F.3d 966, 979 (9th Cir. 2011).

         Determining whether a federal court should abstain from hearing a federal claim because of parallel litigation in state court does not rest on a "mechanical" application of these factors. Moses, 460 U.S. at 16. Rather, when considering abstention under the Colorado River doctrine, a court should carefully balance these factors as they apply in a given case. Id. The weight of these factors may vary greatly from case to case depending on the particular circumstances. Id. "No one factor is necessarily determinative; a carefully considered judgment taking into account both the obligation to exercise jurisdiction and the combination of factors counseling against that exercise is required." Colorado River, 424 U.S. at 818-19. Any doubt as to whether a factor exists should be resolved against a stay. Travelers Indem. Co. v. Madonna, 914 F.2d 1364, 1369 (9th Cir. 1990).


         Premier asks the court to stay this proceeding pending the resolution of a parallel state administrative proceeding. In doing so, Premier invokes Landis v. N. Am. Co.,299 U.S. 248 (1936), for the proposition that the court has inherent authority "to control the disposition of causes on its docket with economy of time and effort for itself, for counsel, and for litigants." Id. at 254. Premier then argues that the court should grant a stay using the factored analysis of Colorado River without explicitly referring to that case. The court notes at the outset that, where a party has requested a stay based on the existence of a parallel state proceeding, the court should analyze the motion ...

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