American Commerce Insurance Company v. Fox et al

PAGE 1 – OPINION AND ORDER
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
AMERICAN COMMERCE INSURANCE
COMPANY, a foreign insurance company,
Plaintiff,
v.
TANYA AND TROY FOX,
Defendants.
Case No. 3:26-cv-00836-IM
ORDER GRANTING MOTION TO
DISMISS
Ashley J. Stevens, 222 Etruria St., Seattle, WA 98109. Attorney for Plaintiff.
Julie R. Vacura & Thomas G Bode Jr., 121 SW Morrison St. Suite 700, Portland, OR 97204.
Attorneys for Defendants.
IMMERGUT, District Judge.
After a landslide on a neighboring property destroyed an Oregon home, the homeowners’
insurance company, American Commerce Insurance Company (Plaintiff), denied full coverage for
the losses under a contract provision excluding losses resulting from a landslide or “land use.”
Compl., ECF 1 ¶ 3. Shortly afterward, homeowners Tanya and Troy Fox (Defendants), sent
Plaintiff a demand letter, claiming that Oregon law permits denial of coverage only when the policy
exclusion is the “efficient proximate cause” of the loss. Bode Decl., ECF 11, Ex.1 at 3. Pursuant
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to this Court’s diversity jurisdiction and jurisdiction under the federal Declaratory Judgment Act,
see generally 28 U.S.C. §§ 2201-02, Plaintiff then filed a Complaint for Declaratory Relief, in
which Plaintiff requests that this Court determine that no coverage exists under Oregon law.
Compl., ECF 1 ¶¶ 4-5. Weeks later, Defendants filed their own action in Oregon Circuit Court,
claiming, among other things, that the denial was a breach of the parties’ insurance contract under
Oregon law. See ECF 11 at 11-12. The action remains pending in state court. Id. Before this Court
is Defendants’ Motion to Dismiss Plaintiff’s Complaint, ECF 11, under the state law abstention
doctrine established by Brillhart v. Excess Ins. Co., 316 U.S. 491 (1942). This Court, concluding
that the Brillhart doctrine applies, declines to further hear the action. Defendants’ Motion to
Dismiss, ECF 11, is granted, and Plaintiff’s Complaint, ECF 1, is dismissed with prejudice.
STANDARDS
“District courts possess discretion in determining whether and when to entertain an action
under the Federal Declaratory Judgment Act, even when the suit otherwise satisfies subject matter
jurisdictional prerequisites.” Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995); see also 28
U.S.C. § 2201(a) (“[The district court] may declare the rights and other legal relations of any
interested party seeking such declaration[.]”) (emphasis added). In an exercise of such discretion,
the district court may dismiss an action for a declaratory judgment when the district court
determines that parallel proceedings in the state court present a better opportunity to determine
common issues of state law. Wilton, 515 U.S. at 290. In deciding whether abstention is appropriate,
a district court applies the Brillhart factors and considers whether withholding declaratory relief
and dismissing the action would (1) avoid needless determination of state law issues; (2) avoid
duplicative litigation; and (3) discourage forum shopping. Inari Medical, Inc. v. McCaskey, 733 F.
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Supp. 3d 998, 1004 (D. Or. 2024) (citing R.R. St. & Co. Inc. v. Transp. Ins., 656 F.3d 966, 975
(9th Cir. 2011)).
DISCUSSION
This court holds that each of the Brillhart factors favors dismissal of this matter.
First, retaining jurisdiction would needlessly require this Court to determine issues of
state law. Plaintiff asks this Court to determine whether coverage exists for the claimed loss of
Defendants’ home. Compl., ECF 1 ¶ 5. This determination would specifically require this Court
to resolve ambiguous terms within the insurance agreement pursuant to Oregon’s contract and
land use laws, including terms of art (e.g., “land use”). See ECF 11 at 5. Furthermore, as Plaintiff
describes in the request for relief, such an analysis would also require this Court to determine
whether the events precipitating the landslide that damaged the home qualify as “efficient and
proximate causes of [the] loss” that permit exclusion from coverage under Oregon’s insurance
laws. See Compl., ECF 1. ¶ 4. While Plaintiff argues that this type of analysis is routine for the
federal courts, Plaintiff does not dispute that the issues raised are exclusively those of state law.
Given that Plaintiff’s complaint raises no issue of federal law or interest, resolving the federal
complaint would require the Court to needlessly wade into the muddy waters of state law.
Second, this Court finds that the present case threatens duplicative state court litigation.
The parties are currently litigating Defendants’ complaint in the state circuit court. The Oregon
Circuit Court’s resolution of Defendants’ state law breach of contract and negligence claims
turns on the questions of contract, land use, and insurance law that form Plaintiff’s request for
declaratory relief. While each of the claims at issue in the declaratory action can and likely will
be resolved by the state court, this Court’s resolution of the present federal case would not settle
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PAGE 4 – OPINION AND ORDER
all aspects of the controversy between the parties. Consequently, it would needlessly waste
judicial resources to determine the same issue pending before the state court. See Gov’t Emps.
Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (“If there are parallel state proceedings involving the same
issues and parties[,] . . . there is a presumption that the entire suit should be heard in state
court.”).
Third, and finally, Plaintiff’s decision to bring suit in federal court raises suspicion of
forum shopping, favoring dismissal under Brillhart’s remaining factor. Cases filed in the federal
court in anticipation of state law litigation present federalism concerns. See Inari, 733 F. Supp.
3d at 1005 (quoting Budget Rent-A-Car v. Crawford, 108 F.3d 1075, 1081 (9th Cir 1997)).
Though timing may be relevant to the analysis, it is only one of several considerations relevant to
whether a district court should retain jurisdiction of a declaratory judgment action; indeed, the
Brillhart factors “sometimes compel a court to decline to entertain an earlier-filed action.” R.R.
Street & Co., 656 F.3d at 976 (citation modified). Because Plaintiff filed the complaint before
Defendants initiated state law proceedings, Plaintiff claims that the filing was not “reactive” and
thus did not target a particular forum. See ECF 13 at 5. However, Plaintiff’s complaint came
merely 13 days after receiving a demand letter in which Defendants announced an intent to sue
pursuant to rights under state law should Plaintiff fail to begin negotiations. ECF 11-1 at 3. Thus,
Plaintiff’s course of action appears to have been taken in anticipation of state law proceedings,
raising concerns of forum shopping which favor dismissal. See Inari, 733 F. Supp. 3d at 1005
(finding Brillhart favors dismissal of a case brought after the other party filed a demand letter
which discussed possible claims under California law).
In sum, the Brillhart factors counsel against this Court’s exercise of its jurisdiction under
the Declaratory Judgment Act to retain the dispute. Accordingly, and because Plaintiff did not
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request leave to amend or offer any reason why a future amendment could change the analysis,
this Court dismisses the case with prejudice.
CONCLUSION
This Court GRANTS Defendants’ Motion to Dismiss, ECF 11. This case is DISMISSED
with prejudice.
IT IS SO ORDERED.
DATED this 8th day of October, 2026.
/s/ Karin J. Immergut
Karin J. Immergut
United States District Judge
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