1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 CERTAIN UNDERWRITERS AT Case No.: 21-CV-1158 JLS (WVG)

LLOYD’S, LONDON,

12

ORDER (1) GRANTING

Plaintiff, 13 DEFENDANT’S REQUEST FOR v. JUDICIAL NOTICE; (2) GRANTING 14

DEFENDANT’S MOTION TO STAY;

HILL, KERTSCHER & WHARTON,

15 (3) DENYING PLAINTIFF’S

LLP; DOUGLAS R. KERTSCHER;

MOTIONS FOR DEFAULT

16 ROBERT R. JOSEPH; DARYL

JUDGMENT; AND (4) GRANTING

MOODY; MAST NINE, INC.; UAS

17 PLAINTIFF’S EX PARTE MOTION

INVESTMENTS, LLC; LEUCADIA

TO EXTEND TIME TO SERVE

18 INVESTMENT HOLDINGS, INC.;

SUMMONS AND ALLOWING

RONALD E. STADTMUELLER,

19 SERVICE BY PUBLICATION ON Defendants. DARYL MOODY 20

21 (ECF Nos. 6, 23, 42, 43) 22 23 Presently before the Court is Defendant Ronald E. Stadtmueller, Chapter 7 Trustee 24 for Leucadia Group, LLC’s (the “Trustee”) Motion to Dismiss, or, in the alternative, Stay 25 the Complaint (“Mot.,” ECF No. 6), as well as the Trustee’s Request for Judicial Notice in 26 support of the same (“RJN,” ECF No. 6-1). Plaintiff Certain Underwriters at Lloyd’s, 27 London (“Plaintiff” or the “Underwriters”) filed an Opposition to the Motion (“Opp’n,” 28 ECF No. 25), and the Trustee filed a Reply in Support of the Motion (“Reply,” ECF No. 1 26). Defendants Hill, Kertscher & Wharton, LLP (“HKW”); Douglas R. Kertscher; and 2 Robert R. Joseph (collectively, the “HKW Defendants”) filed a Notice of Joinder in the 3 Trustee’s Motion to Stay Proceedings and Request for Judicial Notice (ECF No. 15). 4 Plaintiff also has filed Motions for Default Judgment against Defendants Leucadia 5 Investment Holdings, Inc.; Mast Nine, Inc.; and UAS Investments, LLC (ECF Nos. 42, 6 43), as well as an Ex Parte Motion to Extend Time to Serve Summons and Complaint and 7 for Order Allowing Service on Daryl Moody by Publication (ECF No. 23). The Court took 8 these matters under submission without oral argument pursuant to Civil Local Rule 9 7.1(d)(1). See ECF Nos. 24, 44. Having carefully reviewed Plaintiff’s Complaint 10 (“Compl.,” ECF No. 1), the Parties’ arguments, and the law, the Court rules as follows. 11 BACKGROUND 12 The Underwriters issued a professional liability insurance policy (the “Policy”) to 13 the Georgia law firm HKW and attorneys Douglas R. Kertscher and Robert R. Joseph. 14 Compl. ¶ 14. There are two malpractice lawsuits pending against the HKW Defendants 15 arising from legal advice the HKW Defendants provided in litigation in California and 16 Georgia. See id. ¶¶ 18, 21–22. First, Georgia resident Daryl Moody (“Mr. Moody”) and 17 his Georgia entities Mast Nine, Inc.; UAS Investments, LLC; and Leucadia Investment 18 Holdings, Inc. (collectively, the “Moody Defendants”) filed a legal malpractice action 19 against the HKW Defendants in Cobb County Superior Court on April 28, 2017. Id. ¶ 21; 20 see Moody v. Hill, Kertscher & Wharton, LLP, No. 17-A-1127 (Ga. Sup. Ct. 2017) (the 21 “Underlying Georgia Action”). Second, Leucadia Group LLC, which is currently the 22 subject of Chapter 7 bankruptcy proceedings, filed a professional negligence action against 23 the HKW Defendants and others in San Diego Superior Court on August 31, 2018. Compl. 24 ¶ 22; see Stadtmueller v. Hill, Kertscher & Wharton, LLP, No. 37-2018-00044438-CU- 25 BC-CTL (Cal. Sup. Ct. 2018) (the “Underlying California Action”). 26 I. The Georgia Declaratory Relief Action 27 On May 16, 2017, one month after the Moody Defendants filed the Underlying 28 Georgia Action against the HKW Defendants, the Underwriters filed a separate declaratory 1 relief action in Georgia state court against the HKW Defendants and Mr. Moody. See 2 Certain Underwriters at Lloyd’s, London v. Moody, No. 17103671 (Ga. Sup. Ct. 2017) (the 3 “Georgia Declaratory Relief Action”). The Georgia Declaratory Relief Action seeks an 4 adjudication that the Policy does not cover the Underlying Georgia Action brought by the 5 Moody Defendants against the HKW Defendants. See ECF No. 6-2. Plaintiff advanced 6 several arguments as to why the Policy did not provide coverage. Relevant to the present 7 action, Plaintiff argued coverage was barred because (1) the claims in the Underlying 8 Georgia Action arose from an incident that occurred before the effective date of the Policy; 9 (2) the conditions for the claims to be covered had not been met; and (3) the HKW 10 Defendants had knowledge of the incident that would form the basis of the Moody 11 Defendant’s claim prior to the effective date of the Policy. Id. ¶¶ 68–70. 12 The Georgia Declaratory Relief Action proceeded to summary judgment, where 13 Plaintiff argued that the court should hold that the Underwriters “have no legal duty to 14 provide for a defense or to indemnify any of the [HKW] Defendants for any judgment, 15 settlement, or claim in the [Underlying Georgia Action].” ECF No. 6-3 at 37. Plaintiff 16 prevailed at summary judgment. See ECF No. 6-4. The Georgia court found that the Policy 17 did not cover any of the claims in the Underlying Georgia Action because the claims were 18 made prior to the Policy’s effective date, and the HKW Defendants had pre-Policy 19 knowledge of the incident that they could reasonably expect to form the basis of Mr. 20 Moody’s claim. Id. at 19. 21 On June 15, 2020, the Court of Appeals of Georgia overturned the lower court’s 22 summary judgment ruling. See ECF No. 6-5. The appellate court held that there were 23 issues of material fact as whether the HKW Defendants had pre-Policy knowledge and that 24 the lower court erred in finding the Moody Defendants’ claim was made prior to the 25 effective date of the Policy. Id. at 17–18. On June 9, 2021, the HKW Defendants filed a 26 motion in the state court requesting leave to amend their answer and assert a counterclaim 27 against the Underwriters. See Georgia Declaratory Relief Action, ECF No. 151. The 28 Georgia Court granted the motion, and the HKW Defendants subsequently filed a 1 counterclaim seeking declaratory judgment that the Policy obligates Plaintiff to defend and 2 indemnify the HKW Defendants in the Underlying Georgia Action. See id., ECF No. 153. 3 II. The Present Action 4 On June 23, 2021, fourteen days after the HKW Defendants asserted their 5 counterclaim in Georgia state court, Plaintiff filed the present action. The Complaint seeks 6 a determination that “the Policy is rescinded ab initio based on material misrepresentations 7 in the HKW Defendants’ application for the policy, and that the policy therefore provides 8 no coverage to any of the HKW Defendants.” Compl. ¶ 16. Alternatively, Plaintiff seeks 9 a judgment declaring that the Policy by its terms provides no coverage for the Underlying 10 California Action and the Underlying Georgia Action. Id. ¶ 17. The Underwriters named 11 the HKW Defendants; the Moody Defendants; Leucadia Investment Holdings, Inc.; and 12 the Trustee as defendants. See generally Compl. 13 The HKW Defendants answered Plaintiff’s Complaint on August 25, 2021. ECF 14 No. 7. In lieu of answering, the Trustee filed the present Motion to Dismiss or Stay the 15 Complaint. See generally Mot. The HKW Defendants filed a Notice of Joinder in Part in 16 the Trustee’s Motion, limited to the Trustee’s request to stay the proceedings until the 17 Georgia Declaratory Relief action has concluded. ECF No. 15. 18 REQUEST FOR JUDICIAL NOTICE 19 As an initial matter, the Trustee requests that the Court take judicial notice of several 20 documents filed in the Georgia Declaratory Relief Action. See generally RJN. Plaintiff 21 does not oppose the Trustee’s request, and the HKW Defendants joined in the Trustee’s 22 request. 23 As a general rule, a district court cannot rely on evidence outside the pleadings in 24 ruling on a Rule 12(b)(6) motion without converting the motion into a Rule 56 motion for 25 summary judgment. See United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003) (citing 26 Fed. R. Civ. P. 12(b); Parrino v. FHP, Inc., 146 F.3d 699, 706 n.4 (9th Cir. 1998)). “A 27 court may, however, consider certain materials—documents attached to the complaint, 28 documents incorporated by reference in the complaint, or matters of judicial notice— 1 without converting the motion to dismiss into a motion for summary judgment.” Id. at 908 2 (citing Van Buskirk v. CNN, 284 F.3d 977, 980 (9th Cir. 2002); Barron v. Reich, 13 F.3d 3 1370, 1377 (9th Cir. 1994); 2 James Wm. Moore et al., Moore’s Federal Practice § 12.34[2] 4 (3d ed. 1999)). Federal Rule of Evidence 201(b) provides that “[t]he court may judicially 5 notice a fact that is not subject to reasonable dispute because it: (1) is generally known 6 within the trial court’s territorial jurisdiction; or (2) can be accurately and readily 7 determined from sources whose accuracy cannot reasonably be questioned.” “Judicially 8 noticed facts often consist of matters of public record, such as prior court proceedings . . . 9 or other court documents.” Botelho v. U.S. Bank, N.A., 692 F. Supp. 2d 1174, 1178 (N.D. 10 Cal. 2010) (citation omitted); see also Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 11 741, 746 n.6 (9th Cir. 2006) (The court “may take judicial notice of court filings and other 12 matters of public record.”). While “[a] court may take judicial notice of the existence of 13 matters of public record, such as a prior order or decision,” it should not take notice of “the 14 truth of the facts cited therein.” Marsh v. San Diego Cty., 432 F. Supp. 2d 1035, 1043 15 (S.D. Cal. 2006). 16 The Court therefore takes judicial notice of the existence of the documents from the 17 Georgia Declaratory Relief Action attached to the Trustee’s Request for Judicial Notice, 18 but not the truth of the facts cited therein. See Harris v. Cty. of Orange, 682 F.3d 1126, 19 1131–32 (9th Cir. 2012) (stating a federal court may take judicial notice of “documents on 20 file in federal or state courts”). Accordingly, the Court GRANTS the Trustee’s Request 21 for Judicial Notice. 22 MOTION TO DISMISS OR STAY 23 I. Legal Standard 24 The Declaratory Judgment Act provides in relevant part: “In a case of actual 25 controversy within its jurisdiction . . . any court of the United States, upon the filing of an 26 appropriate pleading, may declare the rights and other legal relations of any interested party 27 seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. 28 § 2201(a) (emphasis added). Because “the Declaratory Judgment Act is ‘deliberately cast 1 in terms of permissive, rather than mandatory, authority,’” Gov’t Emps. Ins. Co. v. Dizol, 2 133 F.3d 1220, 1223 (9th Cir. 1998) (quoting Pub. Serv. Comm’n of Utah v. Wycoff Co., 3 344 U.S. 237, 250 (1952) (Reed, J., concurring)), once jurisdiction is established, courts 4 have discretion whether to entertain an action for a declaratory judgment. Pub. Affairs 5 Assocs., Inc. v. Rickover, 369 U.S. 111, 112 (1962); Brillhart v. Excess Ins. Co. of Am., 6 316 U.S. 491, 494. But “this discretion is not unfettered,” and “[a] District Court cannot 7 decline to entertain such an action as a matter of whim or personal disinclination.” Dizol, 8 133 F.3d at 1223 (quoting Pub. Affairs Assocs., Inc., 369 U.S. at 112). Indeed, “this 9 discretionary jurisdictional rule does not apply to ‘[c]laims that exist independent of the 10 request for a declaration.’” Scotts Co. v. Seeds, Inc., 688 F.3d 1154, 1158 (9th Cir. 2012) 11 (quoting Snodgrass v. Provident Life & Accident Ins. Co., 147 F.3d 1163, 1167 (9th Cir. 12 1998)). Consequently, “[a] district court may, in its discretion, stay or dismiss a federal 13 case in favor of related state proceedings: (1) when an action seeks only declaratory relief 14 . . . , or (2) when exceptional circumstances exist.” Id. (citing Wilton v. Seven Falls Co., 15 515 U.S. 277, 282–88 (1995); Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 16 U.S. 1, 14 (1983)). If an action seeking declaratory judgment presents an actual case or 17 controversy and fulfills jurisdictional prerequisites, a district court must make a 18 discretionary determination that entertaining the action is appropriate. Id. at 1222–23. 19 Though discretionary, “the court must decide whether to exercise its jurisdiction by 20 analyzing the factors set out in Brillhart v. Excess Ins[urance] Co., 316 U.S. 491 (1942), 21 and its progeny.” Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 669 (9th Cir. 2005). 22 “Essentially, the district court ‘must balance concerns of judicial administration, comity, 23 and fairness to the litigants.’” Am. States Ins. Co. v. Kearns, 15 F.3d 142, 144 (9th Cir. 24 1994) (citing Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1367 (9th Cir. 1991)). 25 Brillhart sets forth a non-exclusive list of factors advising that a “district court should avoid 26 needless determination of state law issues; it should discourage litigants from filing 27 declaratory actions as a means of forum shopping; and it should avoid duplicative 28 litigation.” Dizol, 133 F.3d at 1225. A number of other considerations may be relevant: 1 wcohnettrhoevre rtshye; wdehceltahreart otrhye dacetciloanra tworilyl ascettitolen walill l asseprevcet sa oufs etfhuel 2 purpose in clarifying the legal relations at issue; whether the 3 declaratory action is being sought merely for the purposes of procedural fencing or to obtain a ‘res judicata’ advantage; or 4 whether the use of a declaratory action will result in 5 entanglement between the federal and state court systems. In addition, the district court might also consider the convenience 6 of the parties, and the availability and relative convenience of 7 other remedies.

8 Id. 9 The Ninth Circuit in Dizol outlined the rule that, in general, a court should not 10 decline to entertain a claim for declaratory judgment “when other claims are joined with 11 [the] action for declaratory relief (e.g., bad faith, breach of contract, breach of fiduciary 12 duty, rescission, or claims for other monetary relief).” Id. (internal citation omitted). “If a 13 federal court is required to determine major issues of state law because of the existence of 14 non-discretionary claims, the declaratory action should be retained to avoid piecemeal 15 litigation.” Id. at 1225–26 (internal citation omitted). If the district court has subject matter 16 jurisdiction over the monetary claim alone and the monetary claim need not necessarily be 17 joined with the declaratory action, the court should follow the general rule in Dizol. United 18 Nat’l Ins. Co. v. R & D Latex Corp., 242 F.3d 1102, 1113 (9th Cir. 2001). 19 II. Analysis 20 The Trustee requests that the Court “dismiss[] or stay[]” the action “pending 21 resolution of the currently pending [Georgia Declaratory Relief Action].” Mot. at 2. The 22 Trustee claims that this action “is an attempt at forum shopping and it is improper.” Id. at 23 5. The Trustee argues that Plaintiff waited three years after Leucadia filed the Underlying 24 California Action to bring the present action, and that the Parties have extensively litigated 25 the same coverage issue asserted in the Complaint in the Georgia Declaratory Relief 26 Action. Id. In response, Plaintiff claims that the Court does not have discretion to dismiss 27 or stay the action because its Complaint asserts coercive claims for rescission and 28 reimbursement of costs. Opp’n at 1. Alternatively, if the Court were to find this is a 1 declaratory relief action, Plaintiff argues that the Brillhart factors weigh in favor of this 2 action proceeding in this Court. Id. 3 First, the Court determines that the statutory requirements for diversity jurisdiction 4 are met: the Underwriters are an unincorporated association whose members are citizens 5 of the United Kingdom, Compl. ¶ 1; HKW and Leucadia Investment Holdings, Inc. were 6 both incorporated in Georgia with their principal places of business in Georgia, id. ¶¶ 2, 8; 7 Douglas R. Kertscher, Robert R. Joseph, and Daryl Moody are residents of Georgia, id. 8 ¶¶ 3–4, 9; Ronald E. Stadmueller is a resident of California, id. ¶ 7; and Leucadia Group 9 LLC is a California limited liability company, id. ¶ 6. The Underwriters also allege that 10 “the amount in controversy exceeds $75,000, exclusive of attorney’s fees, interests, and 11 costs.” Id. ¶ 19. Consequently, the complete diversity and statutory amount-in-controversy 12 requirements are met. See 28 U.S.C. § 1332. 13 Second, the Court must determine whether Plaintiff seeks relief independent of its 14 declaratory relief claims, thereby mandating federal jurisdiction. Plaintiff argues that this 15 action includes claims for coercive relief, specifically rescission and reimbursement of 16 defense costs, and therefore the Court lacks discretion to stay or dismiss this case. Opp’n 17 at 4. The Ninth Circuit has instructed that when a district court is “determin[ing] whether 18 there are claims in the case that exist independent of any request for purely declaratory 19 relief,” the court must examine whether the claims “would continue to exist if the request 20 for a declaration simply dropped from the case.” Snodgrass, 147 F.3d at 1167–68. The 21 Court will first examine Plaintiff’s argument that it has asserted a separate claim for 22 rescission, then Plaintiff’s argument that its prayer for reimbursement of defense costs 23 mandates jurisdiction. 24 Plaintiff asserts two claims in the Complaint: “Declaratory Relief as to Rescission 25 and Cancellation of Insurance Policy for Misrepresentation, Concealment and 26 Nondisclosure” and “Declaratory Relief as to Coverage.” Compl. at 16–17. Plaintiff 27 explicitly seeks “a declaration from the Court that [Plaintiff] may rescind the Policy,” id. 28 ¶ 76, or “a judicial determination as to the rights and duties of each party under the Policy,” 1 id. ¶ 85; see also id. at Prayer (requesting that the Court “enter a declaratory judgment” in 2 its favor). Plaintiff relies on out-of-Circuit authority to argue that it has asserted a 3 rescission claim distinct from its declaratory relief claims. Opp’n at 4 (quoting Home Ins. 4 Co. v. Townsend, 22 F.3d 91, 92 (5th Cir. 1994)). In Townsend, the Fifth Circuit ruled that 5 an insurer’s claim for rescission was not a claim for declaratory relief because the insurer 6 “plainly asks for rescission.” Id. The insurer’s complaint asserted claims for “Recission 7 of the 1990 Policy” and “Rescission of the 1992 Policy.” Id. The Fifth Circuit relied on 8 the plain language of the insurer’s complaint to find that these claims were not solely for 9 declaratory relief. Id. Townsend is distinguishable from the present case because the plain 10 language of Plaintiff’s Complaint seeks solely declaratory relief. See Compl. at 16–17. 11 Plaintiff seeks a declaration that it has no duty to defend the HKW Defendants in the 12 Underlying California Action and the Underlying Georgia Action or that Plaintiff may 13 rescind the Policy. Without these declaratory relief claims, Plaintiff’s request for rescission 14 would not exist. Therefore, Plaintiff’s rescission request is not independent and does not 15 mandate the Court exercise jurisdiction in this case. 16 Additionally, Plaintiff’s prayer for reimbursement of defense costs is derivative of 17 its declaratory judgment claims. See United Nat. Ins. Co. v. R&D Latex Corp., 242 F.3d 18 1102, 1112 (9th Cir. 2001) (finding monetary claim for reimbursement was not 19 independent of declaratory claim, but rather “derivative” of it). Plaintiff will not receive 20 reimbursement of costs unless the Court finds there is no coverage under the Policy. Here, 21 “the request for a declaration lies at the heart of the action[.]” Snodgrass, 147 F.3d at 1167. 22 Therefore, the Court finds Plaintiff does not seek any relief independent of its declaratory 23 relief claims, and the Court is not required to exercise jurisdiction in this matter. 24 Third, the Court must examine the Brillhart factors articulated by the Supreme Court 25 and elaborated upon in subsequent Ninth Circuit precedent to determine whether to 26 exercise its discretion to dismiss or stay this declaratory relief action. The Parties do not 27 dispute that the issues involving the Policy are governed by Georgia state law. See ECF 28 No. 1-8 at 5, 18 (stating the law governing the Policy is Georgia state law). Therefore, the 1 decision of Plaintiff’s declaratory relief claim as to rescission and prayer for reimbursement 2 of defense costs will require the Court to apply Georgia law. The only reason Plaintiff is 3 in federal court is on diversity grounds. This suggests that the federal interest in this matter 4 is at its lowest. 5 Although the present action and the Georgia Declaratory Relief Action are not 6 identical, the actions are parallel. See Am. Nat. Fire Ins. Co. v. Hungerford, 53 F.3d 1012, 7 1017 (9th Cir. 1995), overruled on other grounds by Dizol, 133 F.3d 1220 (“[T]he federal 8 action does parallel the state action in the sense that the ultimate legal determination in 9 each depends upon the same facts.”). Courts often find cases are parallel if they involve 10 common issues of fact, even if the actions involve different parties. See, e.g., Diamond 11 State Ins. Co. v. Fame Operating Co., 917 F. Supp. 736 (D. Nev. 1996). The present action 12 includes all the Parties of the Georgia Declaratory Relief Action but also includes the 13 Trustee and Leucadia Group LLC. Plaintiff claims that there is no jurisdiction over the 14 Trustee and Leucadia in Georgia, and therefore this Court is the only forum that can afford 15 complete relief to the Parties. Opp’n at 8. Although this action also encompasses coverage 16 issues related to the Underlying California Action, the determination of coverage under the 17 Policy involves the same factual allegations Plaintiff advanced and extensively litigated in 18 the Georgia Declaratory Relief Action. Thus, Plaintiff’s request for declaratory relief 19 requires this Court to resolve issues that are similar to those before the Georgia state 20 court—many of which the Georgia court has already ruled on, and which the parties have 21 litigated through appeal. It is not in the interest of judicial economy to have this Court and 22 the Georgia court resolve the same issue of coverage under the Policy for the Underlying 23 Georgia Action. It is also possible that the outcome of the Georgia Declaratory Relief 24 Action will have collateral effect on the unresolved issues in dispute in this action. 25 Additionally, it is clear to the Court that Plaintiff is engaging in forum shopping. 26 The Trustee argues that Plaintiff “now seek[s] a new forum to take a second bite of the 27 apple after the order granting their motion for summary judgment to rescind the policy was 28 reversed on appeal.” Opp’n at 5. The Court agrees. The second Brillhart factor favors 1 “discouraging an insurer from forum shopping.” Am. Cas. Co. of Reading, Pa. v. Krieger, 2 181 F.3d 1113, 1118 (9th Cir. 1999); Dizol, 133 F.3d at 1225 (“[F]ederal courts should 3 generally decline to entertain reactive declaratory actions.”). Forum shopping occurs when 4 a party files a federal declaratory judgment suit “to see if it might fare better in federal 5 court at the same time the insurer is engaged in a state court action.” Krieger, 181 F.3d at 6 1119. A court must look to the “sequence of events” leading to a federal action to 7 determine if a party has engaged in forum shopping. See Int’l Ass’n of Entrepreneurs of 8 Am. v. Angoff, 58 F.3d 1266, 1270 (8th Cir. 1995) (“This sequence of events alerts us to be 9 on guard for ties between the state and federal actions, because the Declaratory Judgment 10 Act is not to be used either for tactical advantage by litigants or to open a new portal of 11 entry to federal court for suits that are essentially defensive or reactive to state actions.” 12 (emphasis in original)). 13 Although Plaintiff claims that this is the only forum that can exert jurisdiction over 14 the Trustee and Leucadia, Plaintiff waited almost three years after Leucadia filed the 15 Underlying California Action to bring this declaratory relief action in federal court. 16 Meanwhile, Plaintiff, the HKW Defendants, and Mr. Moody were litigating many of the 17 issues asserted in the Complaint in the Georgia Declaratory Relief Action. In Georgia, the 18 parties conducted discovery and litigated Plaintiff’s declaratory relief action through 19 summary judgment and appeal. Plaintiff only brought this action after receiving an 20 unfavorable ruling on appeal. C.f. Dizol, 133 F.3d at 1224 (“Some litigants have initiated 21 a federal declaratory action, then claimed error in the trial court’s exercise of jurisdiction 22 upon receiving an adverse decision by the trial court or on appeal.”). Additionally, Plaintiff 23 filed this action only ten days after the HKW Defendants asserted a counterclaim in 24 Georgia seeking adjudication that the Policy is valid and obligates Plaintiff to defend and 25 indemnify the HKW Defendants in the Underlying Georgia Action. The timing of these 26 events and when Plaintiff brought the present action indicates forum shopping. 27 In sum, the Court concludes that the Brillhart factors, along with the additional 28 factors identified in Dizol, cumulatively weigh in favor of the Court staying this case. The 1 Court finds that a stay is necessary to discourage litigants from filing declaratory actions 2 as a means of forum shopping and to avoid duplicative litigation. Cont’l Cas. Co. v. Robsac 3 Indus., 947 F.2d 1367, 1372 (9th Cir. 1991), overruled on other grounds by Dizol, 133 F.3d 4 at 1220 (“[I]f a declaratory judgment suit is defensive or reactive, that would justify a 5 court’s decision not to exercise discretion.” (citing Transamerica Occidental Life Ins. Co. 6 v. Digregorio, 811 F.2d 1249, 1254 n.4 (9th Cir. 1987))). The Court declines the Trustee’s 7 invitation to dismiss this case, as Plaintiff has alleged this is the only forum that may assert 8 jurisdiction over some of the Defendants. Therefore, the Court GRANTS the Trustee’s 9 Motion and STAYS, instead of dismisses, this action pending resolution of the Georgia 10 Declaratory Relief Action. 11 MOTIONS FOR DEFAULT JUDGMENT 12 Plaintiff moved for Default Judgment against Defendants UAS Investments, LLC; 13 Leucadia Investment Holdings, Inc.; and Mast Nine, Inc. (ECF Nos. 42, 43). It is within 14 the Court’s discretion whether to enter a default judgment. Aldabe v. Aldabe, 616 F.2d 15 1089, 1092 (9th Cir. 1980). If entering a final default judgment as to some, but not all, of 16 the parties in an action might lead to logically inconsistent adjudications, the better practice 17 is to wait until either all defendants have defaulted or there has been a complete 18 adjudication of the case. See, e.g., Pfanenstiel Architects, Inc. v. Chouteau Petroleum Co., 19 978 F.2d 430, 432–33 (8th Cir. 1992); In re Uranium Antitrust Litigation, 617 F.2d 1248, 20 1256–57 (7th Cir. 1980). In light of the Court’s findings supra, entering default judgment 21 as to some Defendants in this action could lead to logically inconsistent adjudications. 22 Accordingly, the Court DENIES WITHOUT PREJUDICE Plaintiff’s Motions for 23 Default Judgment (ECF Nos. 42, 43). 24 EX PARTE MOTION REGARDING SERVICE 25 Plaintiff filed an Ex Parte Motion to Extend Time to Serve Summons and Complaint 26 and for Order Allowing Service on Daryl Moody by Publication (ECF No. 23). Plaintiff 27 seeks an Order providing for an additional ninety days to serve Mr. Moody with the 28 Summons and Complaint and allowing service on Mr. Moody by publication. Id. at 1. 1 I. Legal Standard 2 Pursuant to Federal Rule of Civil Procedure 4(e), an individual may be served by 3 “following state law for serving a summons in an action brought in courts of general 4 jurisdiction in the state where the district court is located or where service is made” or by 5 personal service, leaving a copy of the summons and complaint “at the individual’s 6 dwelling or usual place of abode with someone of suitable age and discretion who resides 7 there” or “delivering a copy of each to an agent authorized by appointment or by law to 8 receive service of process.” 9 The Federal Rules of Civil Procedure do not expressly provide for service of process 10 by publication. However, Mr. Moody is located in Georgia, which does provide for service 11 by publication at section 9-11-4(f)(1) of the Georgia Annotated Code. This section 12 provides that, 13 [w]hen the person on whom service is to be made . . . conceals himself or herself to avoid the service of the summons, and the 14 fact shall appear, by affidavit, to the satisfaction of the judge or 15 clerk of the court, and it shall appear, either by affidavit or by a verified complaint on file, that a claim exists against the 16 defendant in respect to whom the service is to be made, and that 17 he or she is a necessary or proper party to the action, the judge or clerk may grant an order that the service be made by the 18 publication of summons[.] 19 20 Ga. Code Ann. § 9-11-4(f)(1)(A). When a party moves for service by publication, the court 21 must “determine whether the movant has exercised due diligence in pursuing every 22 reasonably available channel of information” in attempting to perfect service. Abba Gana 23 v. Abba Gana, 304 S.E. 2d 909, 912 (Ga. 1983). “This inquiry includes ensuring that the 24 movant has exhausted all channels of information of which it was actually aware or could 25 have become aware through the exercise of due diligence.” Progressive Mountain Ins. Co. 26 v. Rangel, No. 3:17-CV-098-TCB, 2017 WL 10087268, at *1 (N.D. Ga. Nov. 14, 2017) 27 (citing Abba Gana, 304 S.E.2d at 913 n.2) (finding that the petitioner demonstrated due 28 diligence because its search for respondents included attempting to personally serve at the 1 last known addresses, performing skip traces, using a private investigator, and speaking 2 with former counsel and neighbors). 3 II. Analysis 4 Plaintiff has demonstrated its diligence in attempting service of process on Mr. 5 Moody. Plaintiff’s process server attempted to personally serve Mr. Moody seven times 6 over the course of eighteen days in the afternoon and evenings at his residence. Affidavit 7 of Gordon Smith (“Smith Aff.”) ¶ 9, ECF No. 23-1. Plaintiff used multiple sources to 8 confirm the address of Mr. Moody’s residence, including searching Westlaw Public 9 Records; the Fulton County, Georgia, Board of Assessors Property Records; court dockets; 10 and the Georgia Secretary of State website. Id. ¶¶ 5–7. Plaintiff also tried unsuccessfully 11 to reach Mr. Moody’s counsel concerning whether Mr. Moody’s counsel would accept 12 service on Mr. Moody’s behalf. Id. ¶ 4. Finally, Plaintiff’s process server made 13 observations that suggest Mr. Moody was deliberately evading service, including lights on 14 in the residence, cars in the driveway, and children playing in the front yard. Id., Ex. A. 15 Plaintiff has made the necessary showing under Georgia law that it has identified the 16 address of Mr. Moody’s residence but has been unable to effect personal service on him 17 despite diligent attempts to do so. Therefore, Plaintiff has carried its burden of 18 demonstrating that service by publication is appropriate. See Progressive Mountain Ins. 19 Co., 2017 WL 10087268, at *1 (granting service by publication where plaintiff utilized a 20 skip trace service, hired a private investigator, and interviewed former neighbors); 21 Chronister v. Butts Cty., No. 5:15-CV-150, 2016 WL 236235, at *1 (M.D. Ga. Jan. 20, 22 2016) (finding service by publication appropriate when the process server made three 23 attempts to serve the defendant, waited 30 minutes during each attempt, and observed 24 various facts indicating the defendant was deliberately evading service); Great Am. Ins. 25 Co. v. Am. Pan & Eng’g Co., No. 3:12-CV-129, 2012 WL 13028207, at *1 (N.D. Ga. Nov. 26 7, 2012) (allowing service by publication when the plaintiff interviewed defendant’s 27 children, neighbors, and former counsel and searched cell phone records). 28 /// 1 As it appears Mr. Moody is evading service, Plaintiff has shown that outside factors 2 ||have prevented timely service upon Mr. Moody. Accordingly, good cause exists for 3 || Plaintiff’s failure to effect service of process upon Mr. Moody and warrants an extension 4 time to do so. Therefore, the Court GRANTS Plaintiff's Ex Parte Motion to Extend 5 || Time to Serve Summons and Complaint and for Order Allowing Service on Daryl Moody 6 || by Publication (ECF No. 23). However, in the interests of ensuring that Mr. Moody has 7 actual notice of the present action, the Court additionally orders Plaintiff to serve Mr. 8 || Moody by mail at his residential address. 9 CONCLUSION 10 In light of the foregoing, the Court GRANTS the Trustee’s Request for Judicial 11 || Notice (ECF No. 6) and STAYS, rather than dismisses, this action pursuant to the Trustee’s 12 Motion to Dismiss, or, in the alternative, Stay the Complaint (ECF No. 6). The Parties 13 ||SHALL FILE a Joint Status Report no more than fourteen (14) days after the date a verdict 14 rendered or settlement is reached in the Georgia Declaratory Relief Action. 15 Additionally, the Court DENIES WITHOUT PREJUDICE Plaintiff's Motions for 16 || Default Judgment (ECF Nos. 42, 43) and GRANTS Plaintiff's Ex Parte Motion to Extend 17 Time to Serve Summons and Complaint and for Order Allowing Service on Daryl Moody 18 || by Publication (ECF No. 23). 19 IT IS SO ORDERED. 20 ||Dated: March 14, 2022 . tt 21 pee Janis L. Sammartino 79 United States District Judge 23 24 25 26 27 28