Western District of Pennsylvania admonishes later filing of a parallel state court proceeding as “improper act of procedural fencing.”

The insurer for a law firm in Western Pennsylvania filed a federal action under the Declaratory Judgment Act, seeking a determination by the court as to whether coverage was owed for underlying claims of legal malpractice, breach of contract and breach of fiduciary duty. Over two months after this federal action was filed, counsel for the law firm filed a state court declaratory judgment action, seeking to litigate the same issues. Under Reifer v. Westport Ins. Corp., the existence of a parallel state court proceeding is a key factor for the federal court to consider when evaluating whether to exercise its discretion to not hear a declaratory judgment action. With regard to the strategic act of filing a state court action merely to influence the Reifer analysis, the court held that “[n]ot only is this an ‘improper act of procedural fencing,’ but it is also a waste of judicial economy and resources.” The Western District of Pennsylvania exercised its discretion to retain jurisdiction over the action.

_{Case Law Alerts, 3rd Quarter, July 2016}

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