Lexington Insurance Co., Inc. v. Conve AVS Vega Mesa LLC, et al., No. 16-5389, D. N.J.; 2016 U.S. Dist. LEXIS 138483 (D.N.J. Oct. 4, 2016)

New Jersey federal court determines Brillhart abstention remains “robust” and dismisses an insurer’s declaratory judgment complaint without prejudice.

An insurer filed a declaratory judgment action seeking a declaration that it owed no duty to defend its insured in an underlying state tort action. The federal court determined that the underlying claims against the insured were such that a coverage determination would require substantive determinations into the insured’s conduct and whether it performed its services in a proper manner—all determinations that would duplicate those to be performed in the state action and, thus, Brillhart abstention doctrine should apply. Under Brillhart, federal courts should not preempt state courts from handling cases that were first filed in state court. The insurer argued that a recent Third Circuit opinion, Reifer, attempted to curb the trend of federal courts abstaining under Brillhart, but the federal court cited to a number of cases, post-Reifer, that abstained from declaratory judgment actions based upon Brillhart. Practically, when filing declaratory judgment actions in federal court, insurers and their attorneys should keep the Brillhart doctrine in mind.


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