Nationwide Assurance Company v. CO Apartments LLC - Insurance Coverage Declaratory Judgment

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April 24, 2026 Get Citation Alerts Download PDF Add Note

Nationwide Assurance Company, et al. v. CO Apartments LLC d/b/a Colonial Oaks Apartments, et al.

District Court, W.D. Kentucky

• Citations: None known
• Docket Number: 3:25-cv-00769

• Precedential Status: Unknown Status

• Opinion

• Authorities (16)

• Cited By (0)

• Summaries (0)

• Similar Cases (2.4K)

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Trial Court Document

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION

NATIONWIDE ASSURANCE )
COMPANY, et al., )
) Civil Action No. 3:25-CV-769-CHB
Plaintiffs, )
)
v. ) MEMORANDUM OPINION
) AND ORDER
CO APARTMENTS LLC d/b/a )
COLONIAL OAKS APARTMENTS, et )
al., )
)
Defendants. )

---

This matter is before the Court on two motions. First, Defendant Peggy Miles filed a
Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b) (“Motion to Dismiss”), [R. 10], in which
Defendant Miles asks the Court to decline jurisdiction over the complaint for declaratory relief,
[R. 17], filed by Plaintiffs Nationwide Assurance Company and Nationwide Mutual Insurance
Company (collectively, “Nationwide”). See [R. 1]. Nationwide responded, [R. 14], and Miles
replied. [R. 19]. Shortly thereafter, Nationwide sought and obtained a Clerk’s entry of default
against Defendants Alltrade Service Solutions, LLC and CO Apartments, LLC, pursuant to Federal
Rule of Civil Procedure 55(a). [R. 20]; [R. 21]. Nationwide has now moved the Court for entry of
a default judgment against these defendants, pursuant to Rule 55(b), specifically requesting a
default judgment declaring that Nationwide has no duty to defend or indemnify these Defendants
in a related state court proceeding. [R. 22]. For the reasons set forth herein, the Court will grant
the Motion to Dismiss, [R. 15], and deny as moot the Motion for Default Judgment, [R. 22].
I. BACKGROUND
On November 20, 2024, Miles filed suit in Jefferson Circuit Court in Jefferson County,
Kentucky, against CO Apartments LLC (“CO Apartments”) and Alltrade Services Solutions LLC
(“Alltrade”). [R. 1, ¶ 7]; [R. 1-5 (State Court Complaint)]. CO Apartments and Alltrade owned
and operated the apartment complex, Colonial Oaks Apartments, where Miles lived in December
2023, when she slipped and fell in the bathroom of her apartment. See [R. 1-5, ¶¶ 3, 5, 10]. In her
state court complaint, Miles alleged that that her fall resulted from a leaking ceiling in the

bathroom, for which she had previously submitted seventy-eight maintenance requests. [R. 1, ¶ 7].
Miles alleged that CO Apartments and Alltrade “had a duty to maintain and keep [the] premises
safe for the use of [their] patrons as well as to use reasonable care to avoid causing injury to others,”
but due to their “negligent acts/and or omissions,” she “was injured by a dangerous condition
created and/or not properly maintained” by CO Apartments and Alltrade. [R. 1-5, ¶¶ 9–10].
CO Apartments was served with a copy of the state court complaint on November 23, 2024.
[R. 1, ¶ 8]; [R. 1-6].1 Alltrade was served on December 3, 2024. [R. 1, ¶ 9]; [R. 1-7]. On May 30,
2025, after CO Apartments and Alltrade failed to appear in the state court matter, Miles moved for
default judgment. [R. 1, ¶ 10]; [R. 1-8]. On June 11, 2025, the state court granted the motion,

entered a default judgment as to liability, and scheduled a damages hearing. [R. 1, ¶ 11]; [R. 1-9].
The damages hearing was initially scheduled for August 18, 2025, but was eventually continued
to October 28, 2025. [R. 1-9]; [R. 14-8].
On October 21, 2025, CO Apartments notified its insurer, Nationwide, of the lawsuit. [R. 1,
¶ 13]. Nationwide had previously issued Business Owners Policy, Policy No. ACP
BP013120081194 (“Primary Policy”) to CO Apartments for the policy period of June 9, 2023
through June 9, 2024. [R. 1, ¶ 21]; [R. 1-16]. Nationwide had also issued an Umbrella Policy,

1 The complaint alleges that CO Apartments was served on November 23, 2025. [R. 1, ¶ 8]. However, the Court
understands this to be a typo, and the attachments to the complaint indicate that CO Apartments was served on
November 23, 2024. See, e.g. [R. 1-6]. The Court makes no ruling as to whether this service was proper and effective.
Policy No. ACP CU 013120081194, to CO Apartments for the same policy period. [R. 1, ¶ 22];
[R. 1-17]. Under these policies, Nationwide has the duty to indemnify and defend CO Apartments
against any lawsuit seeking damages for “bodily injury” or “property damage” resulting from an
“occurrence,” as those terms are defined by the policies. See, e.g., [R. 1, ¶¶ 24–26]. However, the
policies require the insured to notify Nationwide of any occurrences that may result in a claim.

See, e.g., id. at ¶¶ 27–28. Specifically, the policies require the insured to notify Nationwide “as
soon as practicable.” Id. ¶ 27.
On October 27, 2025, Nationwide issued a reservation of rights letter and denial to CO
Apartments and Alltrade. Id. ¶ 15; [R. 1-12]. In the letter, Nationwide disclaimed coverage for the
state court claims due to the insureds’ failure to promptly notify Nationwide of the lawsuit, as
required by the policies. See [R. 1-12].
Nationwide also retained defense counsel to appear in the state court lawsuit on behalf of
CO Apartments and Alltrade.2 [R. 1, ¶ 16]. Through counsel, CO Apartments and Alltrade sought
to set aside the default motion and leave to file a late answer. Id. On October 28, 2025, the state

court held a hearing on the motion, but it denied the motion and continued with the previously
scheduled damages hearing. Id. at ¶ 18. On November 26, 2025, the state court awarded damages
to Miles in the amount of $816,190.73. Id. at ¶ 19; [R. 1-14].
On December 5, 2025, counsel for CO Apartments and Alltrade filed a Motion to Alter,
Amend, or Vacate Judgment (“Motion to Alter, Amend, or Vacate”), [R. 14-13], and a Motion to
Stay Execution of the final judgment. [R. 14-14]. Those motions are fully briefed and remain
pending in the state court lawsuit. [R. 10, pp 3–4]; [R.19-1].

2 Nationwide makes much of the fact that Miles refers to state court defense counsel as “Nationwide’s retained
counsel” or “Nationwide’s counsel.” [R. 14, p. 5]. It is clear from Miles’s briefing, however, that she understands that
Nationwide hired counsel to represent CO Apartments and Alltrade in the state court litigation, and that Nationwide
is not a party to that lawsuit. See generally [R. 10]; [R. 19].
On December 9, 2025, four days after the Motion to Alter, Amend, or Vacate was filed in
the state court matter, Nationwide initiated the present lawsuit. [R. 1]. In its complaint for
declaratory relief, Nationwide asserts diversity jurisdiction under 28 U.S.C. § 1332 and seeks to
invoke the Declaratory Judgment Act, 28 U.S.C. § 2201. Id. ¶¶ 30, 49. Specifically, Nationwide
alleges that the state court claims are not covered by the insurance policies because CO Apartments

and Alltrade failed to notify Nationwide of the occurrence and the lawsuit. Id. ¶¶ 32–48. As such,
Nationwide seeks a declaratory judgment that it is “not obligated to defend and/or indemnify
Defendant CO Apartments and/or Alltrade Services Solutions LLC with respect to the claims
asserted by Defendant Peggy Miles in the underlying lawsuit under the Primary Policy or the
Umbrell Policy.” Id. at 19.
Miles was served on or about January 23, 2026. [R. 11]. She thereafter filed the pending
Motion to Dismiss. [R. 10]. In her motion, she argues that the Court should decline to exercise
jurisdiction under the Declaratory Judgment Act, citing the factors set forth in Grand Trunk
Western Railroad Co. v. Consolidated Rail Corp., 746 F.2d 323 (6th Cir. 1984). That motion is

now fully briefed. [R. 14]; [R. 19].
Shortly thereafter, Nationwide sought and obtained a Clerk’s entry of default against
Defendants Alltrade Service Solutions, LLC and CO Apartments, LLC, pursuant to Federal Rule
of Civil Procedure 55(a). [R. 20]; [R. 21]. Nationwide has now moved the Court for entry of a
default judgment against these defendants, specifically requesting a default judgment declaring
that Nationwide has no duty to defend or indemnify these defendants in the related state court
proceeding. [R. 22].
For the reasons set forth herein, the Court will grant the Motion to Dismiss, [R. 15], decline
to exercise its jurisdiction under the Declaratory Judgment Act, and deny as moot the Motion for
Default Judgment, [R. 22].
II. ANALYSIS
The Declaratory Judgment Act provides that, “[i]n a case of actual controversy within its
jurisdiction, . . . any court of the United States, upon the filing of an appropriate pleading, may
declare the rights and other legal relations of any interested party seeking such declaration, whether

or not further relief is or could be sought.” 28 U.S.C. § 2201 (a) (emphasis added). As the use of
the permissive “may” suggests, “a district court’s ability to hear an action under the Declaratory
Judgment Act does not compel it to do so.” Grange Mut. Ins. Co. v. Safeco Ins. Co. of America, 565 F. Supp. 2d 779, 785 (E.D. Ky. 2008) (citing Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491,
494–95 (1942)). Rather, “this act ‘[c]onfers on federal courts unique and substantial discretion in
deciding whether to declare the rights of litigants.’” Id. (quoting Wilton v. Seven Falls Co., 515
U.S. 277, 286 (1995)); see also Cardinal Health, Inc. v. National Union Fire Ins. Co. of Pittsburgh,
PA, 29 F.4th 792, 801 (6th Cir. 2022) (“We afford district courts ‘substantial discretion to exercise
jurisdiction in the first instance, because facts bearing on the usefulness of the declaratory judgment

remedy, and fitness of the case for resolution, are peculiarly within their grasp.’” (quoting Scottsdale
Ins. Co. v. Flowers, 513 F.3d 546, 554 (6th Cir. 2008))).
However, “[d]istrict courts must exercise this discretion cautiously.” Id.; see also W. World
Ins. Co. v. Hoey, 773 F.3d 755, 759 (6th Cir. 2014) (explaining that Court’s discretion under the
Declaratory Judgment Act “must not be unguided”); but see Cardinal Health, 29 F.4th at 801 (explaining that the Sixth Circuit is reluctant to reverse a lower court’s decision to abstain under
Grand Trunk, and noting that it has “generally only done so when the district court did not engage
in the Grand Trunk analysis at all” (citations omitted)). As courts within the circuit have previously
explained, “We are, after all, courts of limited jurisdiction. And, if our decision to keep a matter
does nothing more than cause the parties to engage in litigation on two fronts, we are neither
furthering the interests of justice nor preserving parties’ resources.” Grange, 565 F. Supp. 2d at
785 (internal citations omitted). The Sixth Circuit has similarly “cautioned district courts not to
jump into the middle of ongoing litigation,” noting that “declaratory judgment actions seeking an
advance opinion of indemnity issues are seldom helpful in resolving an ongoing action in another

court.” Id. (quoting Bituminous Cas. Corp. v. J & L Lumber Co., 373 F.3d 807, 812 (6th Cir. 2004))
(internal quotation marks omitted). Nevertheless, “no per se rule exists against exercising
jurisdiction” under the Declaratory Judgment Act. Id. (citing Bituminous, 373 F.3d at 812–13).
The Sixth Circuit has identified two general principles to determine whether it would be
appropriate to accept jurisdiction over a declaratory judgment action:
The two principal criteria guiding the policy in favor of rendering declaratory
judgments are (1) when the judgment will serve a useful purpose in clarifying and
settling the legal relations in issue, and (2) when it will terminate and afford relief
from the uncertainty, insecurity, and controversy giving rise to the proceeding. It
follows that when neither of these results can be accomplished, the court should
decline to render the declaration prayed.

Grand Trunk, 746 F.2d at 326 (citation omitted). With these general principles in mind, the Sixth
Circuit articulated five factors to guide district courts as they consider whether to exercise
jurisdiction under the Declaratory Judgment Act:
(1) whether the declaratory action would settle the controversy;
(2) whether the declaratory action would serve a useful purpose in clarifying the
legal relations in issue;
(3) whether the declaratory remedy is being used merely for the purpose of
“procedural fencing” or “to provide an arena for a race for res judicata;”
(4) whether the use of a declaratory action would increase friction between our
federal and state courts and improperly encroach upon state jurisdiction; and
(5) whether there is an alternative remedy which is better or more effective. Id. (citation omitted). The Court will consider each of the Grand Trunk factors in turn.
Before doing so, however, the Court briefly addresses Nationwide’s argument that “[it]
properly brought this action in federal court pursuant to 28 U.S.C. § 1332” by invoking diversity
jurisdiction. [R. 14, pp. 15–16, 17]. “[F]ederal jurisdiction under [the Declaratory Judgment Act]
is not the same as diversity or federal question jurisdiction because the statute ‘confer[s] on federal
courts unique and substantial discretion in deciding whether to declare the rights of litigants.’”
Certain Underwriters at Lloyd’s, London v. Abundance Coal, Inc., No. 12-39-ART, 2012 WL

3067579 (E.D. Ky. July 27, 2012) (quoting Wilton, 515 U.S. at 286). Thus, even where diversity
jurisdiction exists, the Court may still decline to exercise discretionary jurisdiction under the
Declaratory Judgment Act. As such, the Court turns to the Grand Trunk factors.
A. Factor One
The first Grand Trunk factor asks “whether the declaratory action would settle the
controversy.” Id. In the Sixth Circuit, “[t]wo lines of precedent seem to have developed in our
jurisprudence regarding consideration of this first factor in the context of an insurance company’s
suit to determine its policy liability.” Flowers, 513 F.3d at 555. The key distinction between these
two lines of precedent is whether the declaratory action must settle the controversy in the state

court action, or whether it need only settle the insurance coverage dispute. Some cases hold that
“a declaratory relief action can settle the insurance coverage controversy not being addressed in
state court, even though it will not help resolve the underlying state court action.” Id. (citations
omitted). “A different group of cases, however, has found that, while such declaratory actions
might clarify the legal relationship between the insurer and the insured, they do not settle the
ultimate controversy between the parties which is ongoing in state court.” Id. (citations omitted).
The Sixth Circuit has examined the reasoning for this split and has “suggested that the
contrary results found in these cases might be explained by their different factual scenarios.” White
Pine Ins. Co. v. McIntosh, 5:21-238-KKC, 2022 WL 2512771, *5 (E.D. Ky. July 6, 2022) (citing
Flowers, 513 F.3d at 555); see also Flowers, 513 F.3d at 555–56 (discussing the two lines of
precedent). For example, in cases involving “fact-based question[s] of state law” already before
the state court, the Sixth Circuit has found that declaratory relief in the federal court would not
settle the controversy. See Flowers, 513 F.3d at 555 (discussing Bituminous); Bituminous, 373
F.3d at 814–13 (explaining that this factor weighed against exercising jurisdiction where key

factual issues would be resolved in two independent state court proceedings); Frankenmuth Mutual
Ins. Co. v. Balis Campbell, Inc., 510 F.Supp.3d 482, 491–92 (E.D. Ky. 2020) (finding this factor
weighed in favor of exercising jurisdiction where only the duty to defend was at issue, meaning
that coverage issue could be resolved without further development of the facts); General Star Nat’l
Ins. Co. v. Terry Flinchum CPA, Inc., 6:22-CV-189-CHB, 2023 WL 3956150, *13 (June 12, 2023)
(finding that the coverage issues could be resolved by looking only to the allegations in the
complaint, meaning no relevant facts needed to be developed in state court and this factor weighed
in favor of exercising jurisdiction); Nautilus Ins. Co. v. KC Diamond Sports Studio, LLC, No. 21-
63-DLB, 2022 WL 2911656 (E.D. Ky. July 22, 2022) (explaining that factual determinations

regarding a party’s bodily injuries and damages, which were before the state court, were necessary
to determining whether the insurance company owed a duty to indemnify).
The Sixth Circuit has also found that this first factor weighs against exercising jurisdiction
where a declaratory judgment would not be binding on all relevant parties, such as when a state-
court party is not joined in the federal action. See, e.g., id. (discussing Bituminous); Travelers
Indem. Co. v. Bowling Green Prof. Assoc., PLC, 495 F.3d 266, 272 (6th Cir. 2007) (noting that
certain parties who may be affected by the Court’s declaratory judgment were not joined in the
federal action and therefore concluding that the first two factors weighed against exercising
jurisdiction); Bituminous, 373 F.3d at 814 (finding that a declaratory judgment would not settle
the controversy because a relevant party in the state court proceeding was not made party to the
federal action).
Thus, this first factor presents a case-specific inquiry. See, e.g., White Pine Ins. Co., 2022
WL 2512771, at *5. Some common factual considerations include:
whether the question was already being or could be considered in state court,
whether the parties were the same in state and federal court, whether parties in the
state action would be bound by the federal court action to which they were not a
part, whether the issue was one being developed by state court discovery, and
whether the scope of coverage or obligation to defend was before the state court. Id. (quoting Grange, 565 F. Supp. 2d at 786); see also Flowers, 513 F.3d at 555–56 (discussing
factual differences between the two lines of cases).
In the present case, the parties in the state court proceeding, namely, Miles, CO
Apartments, and Alltrade, are all parties in this federal proceeding. As such, the relevant parties in
the state court action would be bound by a declaratory judgment from this Court. Thus, at least
some of the factual considerations cited above weigh in favor of exercising jurisdiction.
For its part, Nationwide also argues that this first factor weighs in favor of exercising
jurisdiction, arguing that it is not a party to the state court proceeding, and “[t]he subject matter of
that controversy does not pertain to insurance coverage, late reporting to an insurer, or the
obligation to defend,” issues which are instead only before this federal court. [R. 14, p. 9].
Nationwide also argues that a final, appealable judgment has been entered in the state court
providing, and as such, there is no pending dispute in that court. Id. Moreover, Nationwide argues,
even if the state court judgment is not final, any resolution of disputed factual matters in the state
court proceeding “would be wholly unhelpful to this declaratory relief action because it does not
involve insurance coverage.” Id. The Court disagrees. First, to the extent Nationwide argues that a final judgment has
concluded the state court proceedings, it fails to recognize that the state court defendants, through
counsel hired by Nationwide, filed a Motion to Alter, Amend, or Vacate, [R. 14-13], and a Motion
to Stay Execution of the final judgment. [R. 14-14]. Both motions remain pending. See [R. 19-1].
The state court action therefore remains open and active. And importantly, the state court
defendants’ Motion to Alter, Amend, or Vacate is premised on the argument that they were not

properly served with notice of the state court suit and instead first received notice of Miles’s claims
on October 17, 2025, at which time they “promptly contacted” Nationwide. [R. 14-13, p. 2]; see
also id. at 6–7. Thus, the state court defendants have raised in the state court lawsuit the very
coverage-related issues (or at least closely related issues) which Nationwide now seeks to litigate
in this federal lawsuit, that is, whether the insured entities timely notified Nationwide of the state
court claim.
When coverage-related issues are not before the state court, some courts have found that
this first Grand Trunk factor weighs in favor of exercising jurisdiction. See White Pine, 2022 WL
2512771, at *7 (collecting cases). But in the present case, the coverage-related issue (i.e., when

the insureds received notice of the state court lawsuit and whether they promptly notified the
insurer) is being litigated in the state court, via the Motion to Alter, Amend, or Vacate filed by the
state court defendants. See [R. 14-12]. And while that issue may not involve novel or complex
issues of state law, it does present factual questions that are also being decided in the state court
matter.
The Court is also mindful that “competing policy considerations of consolidating litigation
into one court versus permitting a party to determine its legal obligations as quickly as possible”
counsel against exercising discretion. Flowers, 513 F.3d at 555; see also Grange, 565 F. Supp. 2d
at 788–89 (acknowledging that a federal declaratory action would resolve the discrete question
before the Court but recognizing that it would not “settle the ultimate controversy”). For this
reason, and for those set forth above, the Court finds that the first Grand Trunk factor weighs
against exercising jurisdiction. See generally Crestbrook Ins. Co. v. Hatfield, No. 5:24-CV-096-
CHB, 2024 WL 4784965, at *7–8 (E.D. Ky. Nov. 14, 2024) (ruling similarly where the coverage
issue was also being litigated in the state court via a third-party complaint).

B. Factor Two
Factor two considers “whether the declaratory action would serve a useful purpose in
clarifying the legal relations in issue.” Grand Trunk, 746 F.2d at 326. This factor “is closely related
to the first factor and is often considered in connection with it.” Flowers, 513 F.3d at 557 (citing
Travelers, 495 F.3d at 271–72). “Indeed, it is almost always the case that if a declaratory judgment
will settle the controversy, then it will clarify the legal relations in issue.” Id. (citing Bituminous, 373 F.3d at 814; Northland Insurance Co. v. Stewart Title Guaranty Co., 327 F.3d 448, 454 (6th
Cir. 2003)).
As with the first factor, a split has developed among Sixth Circuit jurisprudence

“concerning whether the district court decision must only clarify the legal relations presented in
the declaratory judgment action or whether it must also clarify the legal relations in the underlying
state action.” Id. (citations omitted). In Flowers, the Sixth Circuit found “the former line of
precedent to be more persuasive than the latter.” Id. It explained,
The requirement that the judgment clarify the legal relationships of the parties is
based upon our desire for the declaratory judgment to provide a final resolution of
the discrete dispute presented. While the parties may have other tortious or
contractual relationships to clarify in state court, our concern in considering the
second Grand Trunk factor in such cases is with the ability of the federal
declaratory judgment to resolve, once and finally, the question of the insurance
indemnity obligation of the insurer. Thus, we focus only on whether a federal
declaratory judgment will clarify the legal relationships presented to the district
court. Id. Thus, in Flowers, the Court found that the second factor supported the district court’s
exercise of jurisdiction, as it clarified the legal relations at issue in that case—“namely, the
contractual duties of indemnification owed by [the insurance company] to the [declaratory
defendant].” Id. The Court noted that, “[w]hile [the declaratory action] did not clarify all of the
legal relationships at issue in the state court action, the district court’s decision did not create any
confusion about the resolution of those issues,” nor would it “confuse the state court’s analysis of
[the] liability issues.” Id. In more recent decisions, the Sixth Circuit again affirmed the lower
courts’ exercise of jurisdiction, finding no abuse of discretion as to the second Grand Trunk factor
where the declaratory action clarified the legal relationships of the parties to the declaratory action,

but not the state court litigation. See United Specialty Ins. Co. v. Cole’s Place, 936 F.3d 386, 398–
99 (6th Cir. 2019); Massachusetts Bay Ins. Co. v. Christian Funeral Directors, Inc., 759 Fed.
App’x 431, 438 (6th Cir. 2019).
The Court acknowledges that the requested declaratory judgment will resolve certain
coverage issues between Nationwide and the state court defendants, CO Apartments and Alltrade.
More specifically, it will resolve the question of whether any coverage, for defense or indemnity,
is available to those state court defendants. Resolution of these coverage issues will not necessarily
resolve all of the issues in the state court matter, of course. The state court must still determine
whether there is any basis for vacating its judgment, and if so, the issues of liability and/or damages
may be relitigated. However, while the requested declaratory judgment in this case will “not

resolve the relative rights of all parties in the state-court litigation, it does determine whether the
insurer must continue defending the insured party.” United Specialty, 936 F.3d at 399. For these
reasons, and under the Sixth Circuit’s decision in Flowers and recent decisions like United
Specialty, the Court finds this action will clarify the legal relations of the parties in this case.
However, the Court is mindful that “exercising jurisdiction would serve only a limited
purpose in clarifying the legal relations at issue.” White Pine, 2022 WL 2512771, at *9.3 If this
Court exercises jurisdiction, it must then go on to decide the coverage-related issues which are at
the heart of the state court defendants’ Motion to Alter, Amend, or Vacate. In doing so, the Court
could also be forced to decide disputed facts relevant to that state court motion. Thus, this Court

“could either reach the same conclusion as the state court, in which case the declaration would
have been unnecessary and the federal litigation a waste of judicial resources, or . . . [this Court]
could disagree with the state court, resulting in inconsistent judgments.” Corporex Development
& Construction Management, LLC v. Baker Concrete Construction, Inc., No. 2:24-186-DCR, 2025 WL 836566, at 3 (E.D. Ky. Mar. 17, 2025) (quoting Bituminous, 373 F.3d at 816) (internal
quotation marks omitted). “Thus, even if the controversy is ‘settled’ in one forum, it will frustrate
the efficient expenditure of judicial resources.” Id. (emphasis in original). As such, and giving the
benefit of the doubt to Nationwide on the issue, the Court finds that this second factor is, at best,
neutral. See Crestbrook, 2024 WL 4784965, at9 (ruling similarly); but see Corporex, 2025 WL

836566, at *3–4 (considering similar concerns and finding that the first and second factors weighed
against exercising jurisdiction).
C. Factor Three
Under the third Grand Trunk factor, the Court asks whether the declaratory judgment
action “is being used merely for the purpose of ‘procedural fencing’ or ‘to provide an arena for a
race for res judicata.’” Grand Trunk, 746 F.2d at 326. As to this factor, the Sixth Circuit has
explained that “[f]iling a declaratory judgment action in a forum separate from the underlying

3 This Court previously found in Abundance Coal that the declaratory action would clarify the legal relationships
among the parties, but it nevertheless found that this factor weighed in favor of dismissal, stressing that the declaratory
judgment must “serve a truly ‘useful purpose’ by clarifying the legal relationships among the parties.” No. 12-39-
ART, 2012 WL 3067579 at *6 (citations omitted).
litigation is not considered improper by itself.” Massachusetts Bay, 759 Fed. App’x at 439 (citing
Flowers, 513 F.3d at 558). However, plaintiffs who file their suits shortly before the corresponding
state court action is filed, “and who seem to have done so for the purpose of acquiring a favorable
forum,” are subject to scrutiny under this factor. Flowers, 513 F.3d at 558 (quoting AmSouth Bank
v. Dale, 386 F.3d 763, 788 (6th Cir. 2004)) (internal quotation marks omitted).

Typically, courts are “reluctant to impute an improper motive to a plaintiff where there is
no evidence of such in the record.” Id. (citations omitted). When no such evidence exists, courts
often give the “benefit of the doubt” to the declaratory plaintiff and find that the third factor is
neutral. See, e.g., Bituminous, 373 F.3d at 814; Cardinal Health, 29 F.4th at 797 (acknowledging
that some inconsistency in the way it has treated the third factor in the absence of evidence of
procedural fencing, but finding no abuse of discretion where district court deemed the third factor
neutral). In such cases, “this factor should be afforded little weight.” Massachusetts Bay, 759 Fed.
App’x at 439 (citing Travelers, 495 F.3d at 272); see also United Specialty, 936 F.3d at 399 (explaining that this factor “usually does not weigh heavily in the analysis”).

In the present case, Miles insists that she “has not forum shopped, but Nationwide has.”
[R. 10, p. 10]. Specifically, Miles notes that Nationwide hired counsel to represent CO Apartments
and Alltrade in the state court proceeding, and through that counsel, proceeded to file various
motions, but Nationwide nevertheless “runs to this Court for declaratory relief.” Id. This behavior,
Miles argues, “smacks of forum shopping.” Id. In response, Nationwide again characterizes the
state court matter as having been resolved by final judgment, which, it argues, “end[ed] the
litigation such that no controversy would exist in state court for the declaratory judgment to be
litigated.” [R. 14, p. 10]. Regardless, Nationwide continues, it filed this declaratory suit after the
state court litigation began, and as a result, it is “entitled to a presumption of proper motivation.” Id. at 10–11 (citing Auto-Owners Ins. Co. v. Egnew, 152 F. Supp. 3d 868, 877 (E.D. Ky. 2016)).
The Court harbors concerns of procedural fencing in this action. True, this federal
declaratory action was filed December 9, 2025, over one year after Miles filed her complaint in
state court on November 20, 2024. See [R. 1]; [R. 1-5]. Generally, courts “‘do not make a finding
of procedural fencing if the declaratory-judgment plaintiff filed after the commencement of

litigation in state court.’” Employers Mutual Casualty Co. v. Clifford, No. 5:23-271-KKC, 2024
WL 2221445, *3 (May 15, 2024) (quoting Cole’s Place, 936 F.3d at 399). And, as noted above,
“[f]iling a declaratory judgment action in a forum separate from the underlying litigation is not
considered improper by itself.” Massachusetts Bay, 759 Fed. App’x at 439 (citing Flowers, 513
F.3d at 558).
Nevertheless, the Court cannot overlook the timeline and circumstances of these related
cases. First, while Nationwide filed this declaratory action over a year after the state court litigation
began, it was not notified of the state court litigation until October 21, 2025. [R. 1, ¶ 13]. Thus, it
filed this declaratory action just over a month after it became aware of the state court lawsuit, and

perhaps more importantly, only thirteen days after the state court issued its damages award in favor
of Miles and only four days after the state court defendants, through counsel hired by Nationwide,
sought to alter, amend, or vacate that state court judgment. See [R. 1-14]; [R. 14-13]. When
Nationwide then filed this suit seeking a declaratory judgment that it owed no duties to defend or
indemnify the state court defendants, it did so knowing that those same state court defendants had
previously failed to appear in the state court lawsuit, resulting in a default judgment against them.
[R. 14, p. 3]. Nationwide also knew that Alltrade was dissolved in 2023 and had never notified
Nationwide about the lawsuit. Id. at 3; [R. 14-7, p. 2]. Nationwide then sued these same defendants
in another forum where they again predictably failed to appear, ensuring Nationwide a Clerk’s
entry of default, see [R. 21], and the ability to seek a default judgment, [R. 22], prior to the
resolution of the state court Motion to Alter, Amend, or Vacate.
This could suggest that Nationwide utilized the Declaratory Judgment Act in this federal
forum “for the purpose of ‘procedural fencing.’” Grand Trunk, 746 F.2d at 326. That is, it appears
that Nationwide sought a quick declaratory judgment by way of default, thereby ensuring that it

would no longer have to defend the state court defendants in the ongoing state court dispute (if the
state court granted the Motion to Alter, Amend, or Vacate), nor indemnify them for the hefty state
court judgment (if the state court denied the motion). While this may not be “per se evidence of
procedural fencing,” it is certainly concerning. See Coporex Development, 2025 WL 836566, at
*3. The Court therefore finds that this third factor “slightly weighs towards a decision to decline
jurisdiction.” Id.4
D. Factor Four
The fourth factor asks “whether the use of a declaratory action would increase friction
between our federal and state courts and improperly encroach upon state jurisdiction.” Grand

Trunk, 746 F.2d at 326. Like factors one and two, this factor focuses on the presence of novel or
complicated state law or factual issues. See, e.g., United Specialty, 936 F.3d at 400 (“For purposes
of the fourth Grand Trunk factor, it is important simply to note that the question does not involve
novel or complicated state-law or factual issues.”); Admiral Ins. Co. v. Fire-Dex, LLC, No. 22-
3992, 2023 WL 3963623, *3–4 (emphasizing that the coverage dispute turned on a novel issue of
state law). On this point, the Supreme Court has warned that “a district court might be indulging

4 Even if this Court were to give the benefit of the doubt to Nationwide and find no evidence of procedural fencing,
“this factor should be afforded little weight in cases where . . . there is no evidence of procedural fencing.”
Massachusetts Bay, 759 Fed. App’x at 439 (citing Travelers, 495 F.3d at 272). Accordingly, this third factor would
be neutral, the Court would afford it little weight, and, on balance, the Grand Trunk factors would still weigh in favor
of declining jurisdiction, for the reasons explained herein.
in ‘[g]ratuitous interference’” if it permits a federal declaratory relief action to proceed when
“another suit involving the same parties and presenting opportunity for ventilation of the same
state law issues is pending in state court.” Flowers, 513 F.3d at 559 (quoting Wilton, 515 U.S. at
283). “However, ‘the mere existence of a state court proceeding is not determinative of improper
federal encroachment upon state jurisdiction.’” Id. at 560 (quoting Allstate Ins. Co. v. Green, [825

F.2d 1061, 1067](https://www.courtlistener.com/opinion/492421/allstate-insurance-company-v-green/#1067) (6th Cir. 1987)).
The Sixth Circuit has identified three subfactors to aid courts in considering this factor:

(1) whether the underlying factual issues are important to an informed resolution
of the case;
(2) whether the state trial court is in a better position to evaluate those factual issues
than is the federal court; and
(3) whether there is a close nexus between underlying factual and legal issues and
state law and/or public policy, or whether federal common or statutory law
dictates a resolution of the declaratory judgment action.

Bituminous, 373 F.3d at 814–15 (citing Scottsdale Ins. Co. v. Roumph, 211 F.3d 964, 968 (6th Cir.
2000)); see also United Specialty, 936 F.3d at 396 (reciting the three subfactors). The Court
addresses each subfactor in turn.
i. Subfactor 1
Under the first subfactor, the Court must consider “whether the underlying factual issues
are important to an informed resolution of the case.” Bituminous, 373 F.3d at 814 (citing Roumph, 211 F.3d at 968). As this Court has explained,
[w]hen the liability issues central to the state court proceeding are distinct from
those central to the federal court proceeding, federal jurisdiction is appropriate, but
when “the issue raised in federal court will require making factual findings that
might conflict with similar findings made by the state court,” the Court should
decline to exercise its jurisdiction.

Grange, 565 F. Supp. 2d at 789 (citing Flowers, 513 F.3d at 560). For example, in Flowers, the
parties agreed that the issues raised in the federal declaratory action were distinct from those raised
in the state court litigation. Flowers, 513 F.3d at 560. Because the issues were distinct, that
subfactor weighed in favor of exercising jurisdiction. Id.; see also Grange, 565 F. Supp. 2d at 789.
Similarly, in United Specialty, the Sixth Circuit found this factor to weigh in favor of exercising
jurisdiction because a comparison of the state court complaint and the federal declaratory judgment
complaint revealed “no as-yet-unresolved factual issues [in the state court case] that stand between

[the] federal court and its informed resolution of the coverage question.” 936 F.3d at 400; see also
Wilcoxson v. Principal Life Ins. Co., 1:23-CV-00111-GNS-HBB, 2024 WL 1776390, at *4 (W.D.
Ky. April 24, 2024) (“In cases seeking a declaration regarding ‘the scope of insurance coverage,’
the Sixth Circuit has ‘recognized that such questions can sometimes be resolved as a matter of law
and do not require factual findings.’” (quoting Flowers, 513 F.3d at 560)). On the other hand, if
the declaratory judgment action is dependent on factual findings that will be made by the state
court or on an unresolved question of state law, this subfactor weighs against exercising
jurisdiction. See Massachusetts Bay, 759 F. App’x at 439– 440; Bituminous, 373 F.3d at 815;
Travelers, 495 F.3d at 272.

As to this first subfactor, Miles argues that, if the Court accepts jurisdiction, “it runs the
risk of making factual findings that might conflict with similar findings in the pending state court
action, including but not limited to waiver of any defenses Nationwide may have had to the state
court’s default judgment.” [R. 10, p. 11]. In response, Nationwide argues that the underlying
factual issues in the state court lawsuit have already been resolved, as evidenced by the state court’s
judgment. [R. 14, p. 13]. And the factual issues relating to the state court defendants’ liability are
not “relevant to the insurance coverage question presented in this declaratory action.” Id. “Further,” Nationwide argues, “the issue of CO Apartments and Alltrade defaulting in Jefferson
Circuit Court is a wholly different issue than rights and obligations under the insurance policy that
is the subject matter of this Declaratory Judgment Action.” Id. at 14.
The Court disagrees. In making this last argument, Nationwide characterizes the factual
issues in this case as follows: “when CO apartments and Alltrade notified Nationwide of this claim,
and whether that notice was provided as soon as practicable as required by the insurance
policies.” Id. (emphasis added). Indeed, as already explained, the insurance policies require the

insureds to notify Nationwide of the lawsuit “as soon as practicable.” See [R. 1, ¶ 27]. Thus, to
determine whether CO Apartments and Alltrade provided notice of the state court action “as soon
as practicable,” this Court must first determine when the state court defendants were notified of
the underlying state court lawsuit. This factual question, in turn, overlaps with the factual questions
currently pending in the state court proceeding, such as whether proper service was made on the
state court defendants. In that litigation, CO Apartments and Alltrade, through counsel hired by
Nationwide, seek to vacate the state court judgment, arguing that they did not receive proper notice
of the state court lawsuit. See, e.g., [R. 14-13 (“The Defendants have argued and maintain that they
did not receive actual notice of the Plaintiff’s Complaint.”)].

Simply put, the factual issues at play in this federal declaratory action overlap significantly
with the issues before the state court by virtue of the state court defendants’ Motion to Alter,
Amend, or Vacate.5 As such, this declaratory judgment action is dependent on the factual findings
of the state court, and this case does not involve “separate and distinct issues from the liability
issues litigated in [the state court].” Frankenmuth, 510 F.Supp.3d at 496; see also White Pine, 2022
WL 2512771, at *12 (ruling similarly). This first subfactor therefore weighs against exercising
jurisdiction.

5 Moreover, even if the factual issues in the present matter did not overlap significantly with those in the state court
lawsuit, the factors, on balance, may nevertheless counsel toward declining jurisdiction.
ii. Subfactor 2
This second subfactor “focuses on which court, federal or state, is in a better position to
resolve the issues in the declaratory action.” Flowers, 513 F.3d at 560. Typically, this subfactor
weighs in favor of exercising jurisdiction “when the state law is clear and when the state court is
not considering the issues.” Id. For example, “when an insurance company ‘[is] not a party to the

state court action, and neither the scope of insurance coverage nor the obligation to defend [is]
before the state court . . . a decision by the district court on these issues would not offend principles
of comity.’” Id. (quoting Northland, 327 F.3d at 454); see also Cardinal Health, 29 F.4th at 799 (“If ‘the state law is clear and . . . the state court is not considering the issues,’ this subfactor has
less force.” (quoting Flowers, 513 F.3d at 560)). However, when the declaratory action involves
novel issues of state law, it usually weighs against jurisdiction because “[w]e generally consider
state courts to be in a better position to evaluate novel questions of state law.” Bituminous, 373
F.3d at 814 (citing Travelers, 495 F.3d at 272). However, “novelty is not the only concern.”
Abundance Coal, No. 12-39-ART, 2012 WL 3067579, at *4 (holding that while the state-law

questions were not particularly novel, “this case involves only questions of state law . . .
indicat[ing] the possibility of friction with the state court”). In some cases, the Sixth Circuit has
placed greater emphasis on the state court’s superior ability to resolve questions of state law,
“without immediately pointing to the novelty of the state law issues.” Id. (citing Bituminous, 373
F.3d at 815).
With respect to this second subfactor, both parties agree that the pending issues do not
involve novel questions of state law. See [R. 10, p. 12]; [R. 14, p. 15]. Regardless, district courts
in this circuit have repeatedly emphasized that, with respect to this subfactor, “novelty is not the
only concern.” Frankenmuth, 510 F.Supp.3d at 497 (quoting Abundance Coal, No. 12-39-ART, 2012 WL 3067579, at *4) (internal quotation marks omitted); see also General Star, 2023 WL
3956150, at *17. Much like the present case, those cases presented questions of state, not federal
law. See Frankenmuth, 510 F.Supp.3d at 497; General Star, 2023 WL 3956150, at *17. This Court
explained that, “novel or not,” the state law issue could be resolved by the state court, which had
a “superior ability to apply its own law.” Frankenmuth, 510 F.Supp.3d at 497; General Star, 2023

WL 3956150, at *17; see also Grange, 565 F. Supp. 2d at 790 (“Since this is an insurance action,
the state court is better situated to decide the issue, weighing against jurisdiction.”). The Court
found that this weighed against the exercise of jurisdiction. Frankenmuth, 510 F.Supp.3d at 497;
General Star, 2023 WL 3956150, at *17.
Nevertheless, in this case, Nationwide insists that this subfactor weighs in favor of
exercising jurisdiction because “the state court is not/did not consider the insurance coverage
issues.” [R. 14, p. 15]. But the Court has already explained that, while the state court may not be
tasked with interpreting the insurance policy’s notice provisions, it must still determine when the
state court defendants received sufficient notice of the state court lawsuit and whether they

promptly provided notice to Nationwide—issues that bear directly on the request for declaratory
relief currently pending in this Court. As such, the coverage-related issues, which involve
questions of state law, are squarely before the state court, which will have a more complete picture
of the facts before it. As a result, the Court finds that the state court is in a better position to
determine the issues of fact and law raised by this declaratory action. This second subfactor
therefore weighs against exercising jurisdiction. See White Pine Ins. Co., 2022 WL 2512771, at
*12 (noting that the issue of insurance coverage was already before the state court via a bad faith
claim, a fact which weighed against exercising jurisdiction); see also Flowers, 513 F.3d at 560 (“[W]hen an insurance company ‘[is] not a party to the state court action, and neither the scope of
insurance coverage nor the obligation to defend [is] before the state court . . . a decision by the
district court on these issues would not offend principles of comity.’” (quoting Northland, 327
F.3d at 454)).
iii. Subfactor 3
Under the third subfactor, the Court must consider “whether there is a close nexus between

underlying factual and legal issues and state law and/or public policy, or whether federal common
or statutory law dictates a resolution of the declaratory judgment action.” Bituminous, 373 F.3d at
814–15 (citing Roumph, 211 F.3d at 968). In other words, this subfactor “focuses on whether the
issue in the federal action implicates important state policies and is, thus, more appropriately
considered in state court.” Flowers, 513 F.3d at 561. For example, in cases involving insurance
contract interpretation issues, the Sixth Circuit has held that such issues are generally “questions
of state law with which the Kentucky state courts are more familiar and, therefore, better able to
resolve.” Id. (quoting Travelers, 495 F.3d at 273) (internal quotation marks omitted). This is true
because “[t]he states regulate insurance companies for the protection of their residents, and state

courts are best situated to identify and enforce the public policies that form the foundation of such
regulation.” Id. (quoting Bituminous, 373 F.3d at 815) (internal quotation marks omitted); but see
Northland, 327 F.3d at 454 (finding that the Court’s exercise of jurisdiction would not create
friction between the state and federal courts).
As to this subfactor, Miles argues that “[t]his case clearly presents a public policy issue.”
[R. 10, p. 13]. More specifically, she argues that “state courts are better positioned to consider the
state public policy issues that will no doubt govern whether [the] coverage exception applies,” and
“there is no federal common or statutory law dictating resolution of” this federal case. Id. Nationwide, on the other hand, argues that this federal case does not involve questions “that would
implicate important state policies” because it is a merely a “contract dispute between an insurance
company and its insureds regarding whether the insured complied with policy conditions.” [R. 14,
p. 16]. In making this argument, Nationwide emphasizes that the questions at issue in this case
requires only “a straightforward application of established Kentucky insurance law.” Id. While this may be true, the Court nevertheless finds that “this federal lawsuit implicates

state policy that could be frustrated by the Court’s exercise of jurisdiction.” General Star, 2023
WL 3956150, at *18 (citing Frankenmuth, 510 F.Supp.3d at 497). The Sixth Circuit has made
clear that “[i]nterpretation of Kentucky insurance contracts is guided by state public policy.
Despite the clear indications from the Kentucky courts regarding how such an issue should be
resolved, Kentucky courts are in a better position to resolve the insurance policy interpretation in
this case.” Flowers, 513 F.3d at 561. This Court agrees with that analysis. See, e.g., Frankenmuth,
510 F.Supp.3d at 497. Furthermore, the Sixth Circuit recently endorsed that same analysis in
United Specialty, holding that “even in cases where state law has not been difficult to apply, this
court has usually found that the interpretation of insurance contracts is closely entwined with state

public policy.” 936 F.3d at 401. The nexus between the legal issues in this case, which relate to
the interpretation of the insurance policies, and state policy is clear. “Relatedly, the lack of nexus
between the state law issues presented and the federal forum is obvious—‘[n]o federal-law
questions are involved in the coverage issue’ before the Court.” Frankenmuth, 510 F.Supp.3d at
498 (quoting United Specialty, 936 F.3d at 401); see also Cardinal Health, 29 F.4th at 800 (explaining that in cases where “there are ‘no federal laws . . . at issue,’ this subfactor ‘weighs
against exercising jurisdiction” (quoting Massachusetts Bay, 759 F. App’x at 440); Massachusetts
Bay, 759 F. App’x at 440 (“[N]o federal laws are at issue. This . . . weighs against exercising
jurisdiction.”). Simply put, “[t]his case does not turn on federal law, but rather Kentucky’s
interpretation of its insurance contracts—state law that is ‘guided by state public policy.’”
Frankenmuth, 510 F.Supp.3d at 498 (quoting Flowers, 513 F.3d at 561); see also General Star, 2023 WL 3956150, at *18. This subfactor therefore weighs strongly against exercising jurisdiction.
In sum, each of the three subfactors weigh against exercising jurisdiction, and the fourth
Grand Trunk factor therefore weighs against exercising jurisdiction.

E. Factor Five
Under the final Grand Trunk factor, the Court must consider “whether there is an
alternative remedy which is better or more effective.” Grand Trunk, 746 F.2d at 326. In many
cases involving insurance coverage issues, the Sixth Circuit has held that an alternative remedy is
available through a declaratory judgment under state law or an indemnity action in the state court
at the conclusion of the liability proceedings. See, e.g., United Specialty, 936 F.3d at 401–01;
Massachusetts Bay, 759 Fed. App’x at 441–42; Travelers, 495 F.3d at 273; Bituminous, 373 F.3d
at 816–17; Manley, Bennett, McDonald & Co. v. St. Paul Fire & Marine Ins. Co., 791 F.2d 460,
462–63 (6th Cir. 1986). In those cases, the Court noted that the coverage issues involved questions

of state law; they did not require application of federal common or statutory law. However, the
Sixth Circuit has also acknowledged that “it is not clear whether such alternative remedies are
better or more effective than a federal declaratory action.” Flowers, 513 F.3d at 562; see also Penn-
Star Ins. Co. v. Aral, Inc., 2:23-166-DCR, 2024 WL 992480, *3 (E.D. Ky. Mar. 7, 2024)
(acknowledging that insurers may seek declaratory judgments in state court or file indemnity
actions, “[b]ut the availability of such alternatives does not necessarily make them better or more
effective than federal declaratory actions”); White Pine Ins. Co., 2022 WL 2512771, at *14
(reciting similar language). On this issue, Sixth Circuit “precedent is split regarding whether the
possibility of seeking a declaratory judgment or an indemnity action in state court counsels against
the district court exercising jurisdiction.” Flowers, 513 F.3d at 562 (citations omitted); see also
Cardinal Health, 29 F.4th at 801 (noting that “[o]ur precedent is ‘somewhat inconsistent’ with
respect to the fifth factor” (quoting Massachusetts Bay, 759 F. App’x at 441)).
The Sixth Circuit provided some clarification on this issue in Flowers. In that case, the
Sixth Circuit explained that, “rather than applying a general rule,” the inquiry on this fifth factor

“must be fact specific, involving consideration of the whole package of options available to the
federal declaratory plaintiff.” Flowers, 513 F.3d at 562. There, the insurer sought a declaratory
judgment that it had no duty to indemnify a therapist employed by the insured, a mental health
services provider, in a state emotional distress suit stemming from the therapist’s sexual affair with
a patient. Id. at 550–51. The Court noted that, under those circumstances, a state declaratory action
would have been better than federal declaratory action “[i]n many ways.” Id. For example,
“Kentucky courts are in a superior position to resolve undecided questions of state law such as
whether a therapist’s sexual activities with his client are outside the scope of his employment.” Id.
at 562. The Kentucky courts would also have been able to combine the two actions, thereby

allowing a single judge to resolve all issues. Id. However, the Sixth Circuit also acknowledged that
Kentucky law provided clear guidance on this issue, so a federal declaratory action was not “clearly
inferior.” Id. On the other hand, an indemnity action would not have been a superior remedy, because
the insurer had attempted to join the state court action but had been prevented from doing so. Id. Even if the insurer joined the state court action, it would be required to wait until the liability issues
were resolved before determining its obligations to the therapist. Id. “Such a delayed alternative
would be worse, not better, than seeking a federal declaratory judgment.” Id. More recently,
however, the Sixth Circuit upheld the district court’s determination that this factor weighed against
exercising jurisdiction because a state court declaratory judgment action “would provide [the
insurance company] with the same remedy it seeks in federal court, [and] the state remedy has the
advantage of allowing the state court to apply its own law.” United Specialty, 936 F.3d at 401.
In the present case, Miles argues that Nationwide had several alternative remedies available
to it, including filing a declaratory judgment action in state court, intervening in the underlying

state court action, or filing a declaratory action in this Court after the state court proceedings end.
[R. 10, p. 14]. In response, Nationwide insists that it is entitled to invoke this Court’s diversity
jurisdiction, [R.14, pp. 17–18], an argument that this Court has already disposed of. See supra
Section II. Nationwide also argues that there “would be no efficiency gained” from filing a separate
action in state court, and there would ne no “comity benefit from having two separate proceedings
in state court rather than one proceeding in state court and one in federal court.” [R.14, p. 18].
Lastly, Nationwide argues that “waiting to file an indemnity action at the conclusion of the state
court lawsuit is not a better or more effective alternative.” Id. But in support of this argument,
Nationwide merely points to the fact that the state court has entered a judgment in the state court

lawsuit, which Miles has sought to finalize. Id. From this, but with no further explanation,
Nationwide argues that it “needs a determination now of whether it has a duty to defend or
indemnify so that it can determine its obligations.” Id.
True, a state indemnity action at the end of the state court proceeding would, in many cases,
be an inferior remedy. See Flowers, 513 F.3d at 562 (finding that “[s]uch a delayed alternative
would be worse, not better, than seeking a federal declaratory judgment”); White Pine Ins. Co., 2022 WL 2512771, at *14 (reciting similar language). Indeed, it requires the insurer “to wait until
the liability issues are resolved before determining its obligations.” White Pine Ins. Co., 2022 WL
2512771, at *14 (citing similar reasons for finding an indemnity action to be an inferior alternative
remedy). In this case, however, as Nationwide has repeatedly emphasized, the state court litigation
has resulted in a finding of liability and a damages award; the only remaining issue before the state
court is the pending Motion to Alter, Amend, or Vacate. In the event that the state court denies
that motion, Nationwide need not wait long for the state court litigation to conclude.
Regardless, a declaratory action in state court is a better option than this federal declaratory

action. First, the specific coverage issues before this court involve questions of state law. Even
assuming Kentucky law is clear on that issue, and a federal court could “confidently apply it
without fear of creating conflicts with the Kentucky courts or intruding on their jurisdiction, United
Specialty, 936 F.3d at 400, “Kentucky courts remain in a superior position to interpret that state
law and apply it to the facts of this case.” Frankenmuth, 510 F.Supp.3d at 500 (citing Flowers, 513
F.3d at 562).
Thus, a state declaratory action would provide Nationwide with the same remedy that it
seeks from this Court, and moreover, “the state remedy has the advantage of allowing the state
court to apply its own law.” United Specialty, 936 F.3d at 401; see also Massachusetts Bay, 759

Fed. App’x at 441 (acknowledging that “Tennessee courts are in a superior position to resolve
questions of state law”). Furthermore, a state court could combine the two actions (assuming both
actions are filed in the same court), allowing a single judge to resolve all issues and avoiding the
potential for confusing scheduling problems, issues with the orderly presentation of facts, and res
judicata issues. See Flowers, 513 F.3d at 562 (“The Kentucky courts might also have been able to
combine the two actions so that all issues could be resolved by the same judge.”); Massachusetts
Bay, 759 Fed. App’x at 441 (recognizing that the “Tennessee courts ‘might also have been able to
combine the two actions so that all issues could be resolved by the same judge.’” (quoting Flowers, 513 F.3d at 562)); Employers Mutual Casualty Co. v. Clifford, 5:23-271-KKC, 2024 WL 2221445,
at *3 (E.D. Ky. May 15, 2024) (“A declaratory action in Kentucky state court also has the
advantage of efficiency, allowing the coverage issue and the underlying state court action to be
resolved by the same judge. That would allow the parties to litigate all the issues on one front,
rather than two.”); Abundance Coal, No. 12-39-ART, 2012 WL 3067579, at *5 (citation omitted).
Moreover, Nationwide does not argue—and the Court has no reason to believe—that Nationwide’s

interests would not be adequately protected in a state court declaratory action or that the state court
is not in a position to “define its own law in a fair and impartial manner.” Bituminous, 373 F.3d at
816–17 (quoting Am. Hom Assur. Co. v. Evans, 791 F.2d 61, 63 (6th Cir. 1986)).
For these reasons, the Court finds that a declaratory action in state court is a better remedy
than this federal declaratory action, and this fifth factor therefore weighs heavily against accepting
jurisdiction. See Cardinal Health, 29 F.4th at 801 (finding that district court did not abuse its
discretion in deciding that this factor weighs against jurisdiction “given the availability of [a state
court] declaratory action and the fact that the case involves solely state law issues” (citations
omitted); Frankenmuth, 510 F.Supp.3d at 498–501 (similarly finding that the fifth factor weighs

heavily against exercising jurisdiction where the insurance company could pursue the same
declaratory relief in the state court); General Star, 2023 WL 3956150, at *18–19 (same); but see
Penn-Star Ins. Co., 2024 WL 992480, at *4 (finding that “judicial efficiency counsels against
exercising jurisdiction” but “does not weigh so heavily as to tip the scales one way or the other
overall”).
F. Balancing the Factors
The Sixth Circuit has never articulated the relative weight of each Grand Trunk factor,
acknowledging instead that the factors are not always equal. Flowers, 513 F.3d at 563; Cardinal
Health, 29 F.4th at 797; Admiral at *2. This Court has explained, however, that “[t]he most
important consideration in exercising this discretion [under the Declaratory Judgment Act] is
whether retaining jurisdiction interferes with state-court litigation.” Abundance Coal, No. 12-39-
ART, 2012 WL 3067579, at *2. The Sixth Circuit has also indicated that “[t]he relative weight of
the underlying considerations of efficiency, fairness, and federalism will depend on [the] facts of
the case.” Hoey, 773 F.3d at 759; Admiral, at *2. In other words, the Court must balance the five

Grand Trunk factors on a case-by-case basis. When balancing these five factors, the Court is
afforded “unique and substantial” discretion. Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995).
In this case, the second Grand Trunk factor is at best neutral, the remaining four factors
each weigh in favor of declining jurisdiction. Moreover, “considerations of efficiency, fairness,
and federalism,” Hoey, 773 F.3d at 759, also weigh against exercising jurisdiction. First, the parties
are already litigating the coverage-related issues in the state court through the Motion to Alter,
Amend, or Vacate. If this Court accepts jurisdiction, it forces the parties to engage in litigation on
two fronts “to receive a simple declaration of rights under an insurance contract—a matter that
could easily be handled by the state courts that are more familiar with Kentucky insurance law in

the first place.” Grange, 565 F. Supp. 2d at 791. In fact, the state court “is positioned to decide
every issue amongst all the parties in this matter, allowing the parties to fight this battle on a single
front.” Id. Furthermore, a federal declaratory action would deprive a state court of the opportunity
to interpret and apply its own law. Moreover, since the issue here is not one of federal law but
instead involves state-regulated insurance contracts, an issue which this Court has no special
interest, this Court is not a superior forum. By declining to exercise its substantial discretion to
hear the case, this Court does not “rob” the insurance company of anything. See id. at 791–92.
Indeed, Nationwide has an adequate (perhaps even superior) remedy via a state court declaratory
judgment action. Id. at 792.
Lastly, the Court notes that it should not exercise jurisdiction under the Declaratory
Judgment Act “unless it serves a useful, practical purpose.” Id. (quoting Panhandle E. Pipe Line
Co., 177 F.2d at 944). “[I]f our decision to keep a matter does nothing more than cause the parties
to engage in litigation on two fronts, we are neither furthering the interests of justice nor preserving
parties’ resources.” Id. at 785 (citations omitted). Accordingly, for the reasons set forth above, the

Court finds that the Grand Trunk factors, when considered together and balanced against
considerations of efficiency, fairness, and federalism, weigh heavily against the exercise of
jurisdiction. See Frankenmuth, 510 F.Supp.3d at 498 (balancing the Grand Trunk factors similarly
and declining jurisdiction even where some factors weighed in favor of accepting it); White Pine
Ins. Co., 2022 WL 2512771, at *15 (balancing the factors and declining jurisdiction, citing similar
concerns); General Star, 2023 WL 3956150, at *19–20 (same).
III. CONCLUSION
As set forth above, under the facts of this case, the second Grand Trunk factor is at best
neutral, and the remaining four factors each weigh in favor of declining jurisdiction. Having

balanced these five factors with “underlying considerations of efficiency, fairness, and
federalism,” and, considering the unique facts of this case, the Court will exercise its broad
discretion to decline jurisdiction over this matter under the Declaratory Judgment Act. See Wilton, 515 U.S. at 286 (recognizing that district courts are afforded “unique and substantial” discretion
under the Declaratory Judgment Act).
Accordingly, IT IS HEREBY ORDERED as follows:
1. Defendant Peggy Miles’s Motion to Dismiss, [R. 10], is GRANTED.
2. Plaintiffs’ Motion for Default Judgment, [R. 22], is DENIED as moot.
3. The Court declines to exercise its discretion under the Declaratory Judgment Act, 28
USS.C. § 2201, and this matter is DISMISSED WITHOUT PREJUDICE. The
Clerk of Court SHALL STRIKE this case from the Court’s active docket.
4. A separate judgment shall issue.
This the 24th day of April, 2026.

al sone .
EPS, i Conse Heuroond
SI 2d Bi cLariAHorN Boom,
a BN lie ay » UNITED STATES DISTRICT COURT JUDGE
WOME —CEASTERN AND WESTERN DISTRICTS OF
a KENTUCKY

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