Meanwhile, GRC's insurer, Mid-Continent Casualty Company (“MCC”), filed a declaratory judgment action in a federal court in Florida to determine the scope of its obligations, if any, to indemnify GRC.

Five months later, Ms. DiCarlo filed a motion for proceedings supplementary in the Underlying Action to determine GRC's rights under the MCC insurance policies and to implead MCC.

The next day, Ms. DiCarlo asked the federal court to dismiss MCC's action or to abstain. She argued that the MCC declaratory judgment action concerned the same parties and issues pending in the Underlying Action.

MCC countered that its declaratory judgment action should be resolved in the federal court under the “first-filed” rule, under which the court with initial jurisdiction would hear the case after parties initiated parallel litigation in separate courts.

The Court's Decision

The court granted Ms. DiCarlo's motion, concluding that it would not exercise jurisdiction over MCC's declaratory judgment action.

In its decision, the court found the first-filed rule “inapplicable.” It said that precedent from the U.S. Court of Appeals for the Eleventh Circuit seemed “clear” that the rule did not apply when one case was filed in federal court and the other was in state court. Because MCC filed its declaratory judgment action in federal court while the Underlying Action was in state court, the court reasoned, the first-filed rule did not apply.

The court then stated that even if the first-filed rule applied, it could not evaluate the rule's application on its merits (that is, whether the declaratory judgment action was parallel to the Underlying Action).

The court reasoned that, until the state court ruled on Ms. DiCarlo's motion for proceedings supplementary, there was no way to determine whether the Underlying Action involved the same parties and issues as MCC's declaratory judgment action.

In the court's view, that information was “essential to the analysis, both for deciding to exercise jurisdiction over a declaratory action and for evaluating the first-filed rule,” and it dismissed MCC's action without prejudice.

The court added that even if it applied the first-filed rule, MCC's declaratory judgment action was not necessarily the first-filed case because it was not clear that MCC was correct that Ms. DiCarlo's motion for proceedings supplementary was, in effect, “an entirely new lawsuit.”

The court concluded that it would not exercise jurisdiction over MCC's declaratory judgment action because the state court had not yet determined whether MCC would be impleaded as a party in the proceedings supplementary and, if so, whether MCC would raise the same issues that it raised in its federal action.

The case is Mid-Continent Casualty Co. v. G.R. Construction Management, Inc., No.: 2:18-cv-688-FtM-38UAM (M.D. Fla. June 7, 2019). Attorneys involved include: For Mid-Continent Casualty Company, a foreign corporation, Plaintiff: Pedro E. Hernandez, LEAD ATTORNEY, Ronald L. Kammer, Daniel C. Shatz, Nicole Di Pauli Gould, Hinshaw & Culbertson, LLP, Coral Gables, FL.