PRINCETON EXCESS AND SURPLUS LINES INSURANCE COMPANY v. LEXICON TITLE SERVICES, LLC. et al

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
PRINCETON EXCESS AND )
SURPLUS LINES INSURANCE, )
)
Plaintiff, )
)
v. ) Civil Action No. 24-1657 (ABJ)
)
LEXICON TITLE )
SERVICES, LLC, et al., )
)
Defendants. )
____________________________________)
MEMORANDUM OPINION & ORDER
In this insurance coverage action, plaintiff Princeton Excess and Surplus Lines Insurance
Company (“Princeton Excess”) sued Lexicon Title Services, LLC (“Lexicon”), Deidre Brown,
Doma Title Insurance, Inc. (“Doma”), and Rehabit DC, LLC (“Rehabit”) seeking a declaratory
judgment regarding an insurance policy it issued to Lexicon. Compl. [Dkt. # 1] ¶ 1. Lexicon
purchased a professional liability insurance policy from Princeton Excess covering the period
between May 15, 2023 and May 15, 2024. Compl. ¶ 11; Ex. 1 to Compl. [Dkt. # 1-3] (“Insurance
Policy”) at 4. During that period, defendants Doma and Rehabit brought an action against Lexicon
and its sole member, Brown, for breach of contract, negligence, fraud, and trover, see Doma Title
Ins., Inc. v. Lexicon Title Servs., LLC, Civ. Action No. 24-41 (D.D.C. Jan. 5, 2024) (“underlying
action”). Compl. ¶ 3. As Lexicon’s insurer, Princeton Excess attempted to contact Lexicon and
Brown several times in order to defend them against the underlying action, but neither has ever
responded. Compl. ¶ 4.
In this case, Princeton Excess is seeking a declaration that it does not owe Lexicon or
Brown a duty to defend or indemnify them in the underlying action because of their failure to assist
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and cooperate with the investigation and potential defense. Compl. ¶ 2. Princeton Excess also
named Doma and Rehabit in this suit “as parties potentially interested in the declaratory relief
sought.” Compl. ¶ 3.
Doma and Rehabit are indeed interested in this litigation, and pending before the Court is
their motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). Defs, Doma
& Rehabit Mot. to Dismiss [Dkt. # 8] (“Mot.”). The motion has been fully briefed. Pl.’s Opp. to
Mot. [Dkt. # 14] (“Opp.”); Reply to Opp. [Dkt. #15] (“Reply”).
For the reasons stated below, the motion to dismiss is DENIED.
BACKGROUND
Princeton Excess is a New Jersey-based insurance company that issued a “Miscellaneous
Professional Liability Insurance Policy” to Lexicon covering the period from May 15, 2023 to
May 15, 2024. Compl. ¶ 11; Insurance Policy at 4. The policy provided professional liability
coverage to Lexicon, and its partners, officers, and employees, “with respect to their activities
within the scope of their duties in their capacity as such.” Compl. ¶ 12, quoting Insurance Policy
at 13. As one of the conditions of the policy, Lexicon was required to “cooperate and assist”
Princeton Excess in defending against litigation. Compl. ¶ 13. In a section entitled “Assistance
And Cooperation,” the policy provides:
The Insureds shall cooperate with the Company and provide to the
Company all information and assistance which the Company reasonably
requests, including:
1. Attending hearings, depositions and trials;
2. Assistance in effecting settlements;
3. Securing and giving evidence;
4. Obtaining the attendance of witnesses; and
5. Assisting the defense of any Claim covered by this policy.
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An Insured will do nothing that in any way increases the Company’s
exposure under this policy or in any way prejudices the Company’s
potential or actual rights of recovery.
Failure to cooperate with the Company in the defense of a Claim or in the
investigation of a Claim is a breach of this policy and will result in loss of
coverage.
Insurance Policy at 13 (emphasis omitted).
On February 22, 2024, Princeton Excess received notice that Lexicon and its sole member,
Deirdre Brown, had been sued by Doma and Rehabit. Compl. ¶ 16; Ex. 2 to Compl. [Dkt. # 1-4]
at 7. According to the complaint in that action, Lexicon was a “limited agent for the purposes of
issuing title insurance underwritten by Doma,” and it conducted the closing of a property
purchased by Rehabit. Compl., Civ. Action No. 24-41 [Dkt. # 1] (“Doma Compl.”) ¶¶ 8, 20.1 The
property Rehabit purchased was encumbered by a deed of trust for $154,800, and as part of the
closing, Lexicon issued a “Combined Final Settlement Statement” stating that it used $199,505.60
of the amount tendered by Rehabit to pay off the deed of trust. Doma Compl. ¶¶ 10, 12–14. But
the servicer for the deed of trust later notified Doma that it was never paid off, and that the balance
had accumulated to $250,931.05. Doma Compl. ¶ 16. Lexicon and Brown had allegedly
absconded with the money they were supposed to use to pay off the deed, and Doma and Rehabit
then sued them in a four-count complaint alleging breach of contract against Lexicon; negligence
against Lexicon and Brown; fraud against Lexicon and Brown; and trover and conversion against
Brown. Doma Compl. ¶¶ 17, 24–54.
1 “In deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a court
may take judicial notice of public records from other proceedings.” Youkelsone v. Fed. Deposit
Ins. Corp., 910 F. Supp. 2d 213, 221 (D.D.C. 2012), citing Abhe & Svoboda, Inc. v. Chao, 508
F.3d 1052, 1059 (D.C. Cir. 2007).
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On February 28, 2024, Princeton Excess received the contact information for Lexicon,
which was comprised of:
Deirdre P. Brown, J.D.
President
LEXICON TITLE SERVICES LLC
5335 Wisconsin Ave., NW Suite 440
Washington, DC 20015
Office: (202) 221-7481 x101
Fax: (202) 221-7679
dbrown@LexiconTitle.com
Compl. ¶ 16, citing Ex. 2 at 2. The same day, it emailed Brown to schedule a phone call to discuss
the suit brought by Doma and Rehabit. Compl. ¶ 17; Ex. 3 to Compl. [Dkt. # 1-5] at 2. Brown
did not answer, Compl. ¶ 17, and over the next two-and-a-half months, Princeton made several
more attempts to make contact with Lexicon and Brown as the suit against them progressed:
Feb. 29, 2024 Princeton Excess emailed Brown again. Ex. 4 to Compl.
[Dkt. # 1-6] at 2. It also called Lexicon at the number
provided and left a voicemail advising it of the lawsuit and
requesting a call back to discuss. Compl. ¶ 18.
Mar. 5, 2024 Princeton Excess emailed Brown again. Ex. 5 to Compl.
[Dkt. # 1-7] at 2. It also called Lexicon and left another
voicemail. Compl. ¶ 19.
Mar. 14, 2024 Princeton Excess emailed Brown again. Ex. 6 to Compl.
[Dkt. # 1-8] at 2. It also called Lexicon and left another
voicemail. Compl. ¶ 20. Princeton Excess also called and
left another voicemail at a phone number it obtained from
www.houzeo.com that it believed may have belonged to
Brown or Lexicon. Compl. ¶ 20.
Mar. 25, 2024 Doma and Rehabit’s complaint was served on Lexicon, and
the deadline for it to respond was set for April 8, 2024.
Return of Serv. Aff., Civ. Action No. 24-41 [Dkt. # 6]. On
the same day, Doma and Rehabit filed a notice that
defendant Brown had filed for bankruptcy in the United
States Bankruptcy Court for the District of Columbia
(“Bankruptcy Court”). Suggestion of Bankruptcy, Civ.
Action No. 24-41 [Dkt. # 7] at 1.
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Mar. 27, 2024 Princeton Excess learned that Lexicon had been served with
the complaint, and it learned the identity of Brown’s
bankruptcy counsel, Cathy Braxton. Compl. ¶ 21.
Mar. 28, 2024 Princeton Excess called Braxton and informed her of the
lawsuit against Lexicon and Brown. Compl. ¶ 22. It
requested Brown’s contact information, but Braxton advised
that she would not provide the information without first
obtaining consent from Brown. Compl. ¶ 22. Braxton
agreed to provide Princeton Excess’s contact information to
Brown. Compl. ¶ 22. The same day, Princeton Excess
forwarded Braxton a copy of the lawsuit via email, and it
advised her of the April 8 deadline to respond to the
complaint. Ex. 7 to Compl. [Dkt. # 1-9] at 2.
Apr. 1, 2024 Princeton Excess emailed a Reservation of Rights and
Cooperation Notice to Brown and Braxton. Ex. 8 to Compl.
[Dkt. # 1-10] at 2. It also mailed the notice to the address
provided for Lexicon. Id. at 11.
The notice advised Lexicon and Brown that additional
information was needed in order to answer Doma and
Rehabit’s complaint by the April 8 deadline. Id. at 12. It
also explained that “Lexicon’s and Ms. Brown’s failure to
provide information . . . threaten[ed] to prejudice [Princeton
Excess]’s ability to investigate and defend the Lawsuit and
any associated coverage implications.” Id.
Apr. 2, 2024 Princeton Excess sent another email to Brown regarding the
lawsuit, with a copy to Braxton. Ex. 9 to Compl. [Dkt. # 1-
11] at 2. It also called and left another voicemail for
Lexicon. Compl. ¶ 24.
Apr. 3, 2024 Princeton Excess issued a second Reservation of Rights and
Cooperation Notice to Brown and Braxton via email, and to
Lexicon via mail. Ex. 10 to Compl. [Dkt. # 1-12] at 2. It
also mailed a copy to the address Brown had listed in her
bankruptcy proceeding. Id. at 13, 27.
Apr. 4, 2024 Princeton Excess emailed Brown and Braxton again, and it
called and left another voicemail for Lexicon. Compl. ¶ 26,
citing Ex. 12 to Compl. [Dkt. # 1-14] at 2.
Apr. 5, 2024 Princeton Excess emailed Brown and Braxton again, this
time requesting a current mailing address and updated
contact information for Lexicon and its authorized
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representative. Compl. ¶ 27, citing Ex. 13 to Compl. [Dkt.
# 1-15] at 2. It also called Lexicon again and left a
voicemail. Compl. ¶ 27.
Apr. 8, 2024 Doma and Rehabit filed a motion in the underlying
complaint, asking that the defendants be granted an
extension of time to respond. Pls.’ Mot. to Extend Deadline
to Answer Compl., Civ. Action No. 24-41 [Dkt. # 8] at 1.
The motion explained that Doma and Rehabit had been
contacted by a lawyer who “indicated that she [was] likely
to represent Defendants in this action but has not finalized
her engagement nor had sufficient time to review the
Complaint.” Id. The court granted the motion and extended
defendants’ deadline to May 8. Minute Order, Civ. Action
No. 24-41 (Apr. 8, 2024).
Apr. 10, 2024 Princeton Excess called Lexicon to inform it about the
extension, but it encountered an automated message stating
that the number was temporarily unavailable. Compl. ¶ 28.
Princeton Excess then called Braxton and left her a
voicemail explaining the extension of time and requesting
current contact information for Brown. Compl. ¶ 28. It also
emailed Braxton the same. Compl. ¶ 28, citing Ex. 14 to
Compl. [Dkt. # 1-16] at 2.
Apr. 11, 2024 Princeton Excess called Lexicon again and got the same
automatic message. Compl. ¶ 29. It also emailed Brown to
request the current contact information for her or an
authorized representative of Lexicon. Compl. ¶ 29.
Apr. 16, 2024 Princeton Excess called Lexicon again and got the same
automatic message. Compl. ¶ 30. It also emailed Brown
again. Compl. ¶ 30, citing Ex. 15 to Compl. [Dkt. # 1-17] at
2.
Apr. 17, 2024 Princeton Excess mailed its previously issued Reservation of
Rights and Cooperation Notice to Lexicon again. Compl.
¶ 31, citing Ex. 16 [Dkt. # 1-18].
Apr. 24, 2024 Princeton Excess attempted to call Lexicon again and got the
same automatic message stating the number was
unavailable. Compl. ¶ 32.
Apr. 25, 2024 Princeton Excess emailed a third Reservation of Rights and
Cooperation Notice to Brown and Braxton, and it mailed a
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copy to Lexicon’s address, Brown’s address, and Braxton.
Compl. ¶ 33, citing Ex. 17 to Compl. [Dkt. # 1-19] at 2, 16.
May 2, 2024 Princeton Excess called Lexicon and emailed Brown again.
Compl. ¶ 34, citing Ex. 18 to Compl. [Dkt. # 1-20] at 2.
May 3, 2024 Princeton Excess called Lexicon and got the same
temporarily unavailable message. Compl. ¶ 35. It also
issued a fourth Reservation of Rights and Cooperation
Notice via email to Brown and via mail to Lexicon’s address
and Brown’s address. Compl. ¶ 35, citing Ex. 19 to Compl.
[Dkt. # 1-21] at 2, 17. Princeton Excess did not provide a
copy to Braxton because she had advised that she was not
representing Brown in the underlying action and did not
want to be contacted. Compl. ¶ 35.
May 8, 2024 Lexicon and Brown, through counsel, filed a consent motion
to extend their time to respond to Doma and Rehabit’s
complaint. Consent Mot. to Extend Defs.’ Time to Resp. to
Pls.’ Compl., Civ. Action No. 24-41 [Dkt. # 11]. The motion
explained that defendant Brown’s bankruptcy case had been
dismissed, and that “[u]ndersigned counsel are likely to
represent the Defendants in this action but have not been able
to finalize the engagement.” Id. at 1. It noted too that
“[u]ndersigned counsel are specially appearing on behalf of
Defendants.” Id. The Court granted the motion and
extended the deadline to June 7. Minute Order, Civ. Action
No. 24-41 (May 8, 2024).
May 9, 2024 Princeton Excess emailed Brown to advise her of the
extension of time, and asked again for contact information
for an authorized individual with Lexicon. Compl. ¶ 36, Ex.
20 to Compl. [Dkt. # 1-22] at 2.
May 17, 2024 Princeton Excess called Lexicon again, and it emailed
Brown reiterating its request for additional information in
order to file a response to Doma and Rehabit’s complaint by
the June 7 deadline. Compl. ¶ 37, citing Ex. 21 to Compl.
[Dkt. # 1-23] at 2.
On the same day, it mailed a fifth Reservation of Rights and
Cooperation Notice to Lexicon and to Brown. Compl. ¶ 38,
citing Ex. 22 to Compl. [Dkt. # 1-24] at 2. The notice
contained a paragraph highlighted in yellow:
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“Please be advised that the Court has extended the deadline
to file an Answer to the Lawsuit until June 7, 2024.
[Princeton Excess] reiterates that in order to participate in
Lexicon’s and Ms. Brown’s defense and to investigate the
Lawsuit, [Princeton Excess] requires additional information
from Lexicon and Ms. Brown. This includes, but is not
limited to, information necessary to file an Answer to the
Lawsuit by the June 7, 2024 deadline. [Princeton Excess]
reminds Lexicon and Ms. Brown of their obligation to
cooperate with [Princeton Excess] in defense and
investigation of the Lawsuit, as set forth more fully below.
Lexicon’s and Ms. Brown’s failure to provide information to
[Princeton Excess] threatens to prejudice [Princeton
Excess]’s ability to investigate and defend the Lawsuit and
any associated coverage implications. To that end, kindly
contact me immediately . . . during standard business
hours . . . .”
Id. at 2. The insurer detailed the attempts it made to get in
contact with Lexicon and Brown. Id. at 3–6. And it
concluded:
“[Princeton Excess] agrees to participate in Lexicon Title’s
defense of the Claim, subject to a complete and full
reservation of rights. [Princeton Excess] reserves its right to
withdraw from the defense, with or without seeking a
judicial declaration, in the event there are no covered
allegations or Lexicon and/or Ms. Brown fail to satisfy the
Policy’s conditions. In that circumstance, [Princeton Excess]
also reserves the right to limit or deny any duty to
indemnify.”
Id. at 8 (emphasis omitted).
June 6, 2024 Lexicon and Brown, through the same counsel as before,
filed another consent motion to extend their time to respond
to Doma and Rehabit’s complaint. Consent Mot. to Extend
Defs.’ Time to Resp. to Pls.’ Compl., Civ. Action No. 24-41
[Dkt. # 13]. The motion explained again that “undersigned
counsel are likely to represent the Defendants in this action
but have not been able to finalize the engagement.” Id. at 2.
The Court granted the motion and extended their deadline to
July 7. Minute Order, Civ. Action No. 24-41 (June 6, 2024).
After all of that, Princeton Excess filed the instant suit against Lexicon, Brown, Doma, and
Rehabit on June 6, 2024, see Compl., and Rehabit and Doma were served on July 8, 2024. Return
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of Serv. Aff. [Dkt. # 5]; Return of Serv. Aff. [Dkt. # 6]. On that date, Lexicon and Brown filed a
consent motion to stay in the underlying action pending resolution of Princeton Excess’s
declaratory judgment action. Consent Mot. to Stay Matter Pending Resolution of Declaratory J.
Action, Civ. Action No. 24-41 [Dkt. # 17] (“Doma Consent Mot.”); Mem. in Supp. of Doma
Consent Mot., Civ. Action No. 24-41 [Dkt. # 18] (“Doma Consent Mem.”).2 The Court granted
the motion, and it stayed Doma and Rehabit’s lawsuit. Minute Order, Civ. Action No. 24-41 (July
9, 2024).
Lexicon and Brown were served in this case on June 14, 2024 and October 8, 2024. Return
of Serv. Aff. [Dkt. # 9]; Aff. Verifying Serv. [Dkt. # 21]. Since neither has responded or otherwise
entered the lawsuit, Princeton Excess sought and obtained an entry of default, and it has moved
for a default judgment against both. Pl.’s Mot. for Entry of Default & Declaratory J. [Dkt. # 26]
(“Mot. for Default J.”). Doma and Rehabit have opposed that motion too, Defs.’ Doma &
Rehabit’s Opp. to Mot. for Default J. [Dkt. # 27], and it will be the subject of a separate order.
STANDARD OF REVIEW
I. Motion to Dismiss
“To survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) (internal
quotations omitted). In Iqbal, the Supreme Court reiterated the two principles underlying its
decision in Twombly: “First, the tenet that a court must accept as true all of the allegations
contained in a complaint is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678. And
2 Again, the motion explained that counsel for Lexicon and Brown were specially appearing
on behalf of defendants. Doma Consent Mem. at 1, 5.
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“[s]econd, only a complaint that states a plausible claim for relief survives a motion to dismiss.”
Id. at 679, citing Twombly, 550 U.S. at 556.
A claim is facially plausible when the pleaded factual content “allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at
678. “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than
a sheer possibility that a defendant has acted unlawfully.” Id. A pleading must offer more than
“labels and conclusions” or a “formulaic recitation of the elements of a cause of action,” id.,
quoting Twombly, 550 U.S. at 555, and “[t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Id.
In evaluating a motion to dismiss under Rule 12(b)(6), a court “must treat the complaint’s
factual allegations as true and must grant plaintiff ‘the benefit of all inferences that can be derived
from the facts alleged.’” Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000)
(internal citation omitted), quoting Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir. 1979);
see also Am. Nat’l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir. 2011), quoting Thomas v.
Principi, 394 F.3d 970, 972 (D.C. Cir. 2005). Therefore, when considering a motion to dismiss, a
court must construe a complaint liberally in the plaintiff’s favor. Kowal v. MCI Commc’ns Corp.,
16 F.3d 1271, 1276 (D.C. Cir. 1994). Nevertheless, the court need not accept inferences drawn by
the plaintiff if those inferences are unsupported by facts alleged in the complaint, nor must the
court accept plaintiff’s legal conclusions. Id.; see also Browning v. Clinton, 292 F.3d 235, 242
(D.C. Cir. 2002). In ruling upon a motion to dismiss for failure to state a claim, a court may
ordinarily consider only “the facts alleged in the complaint, documents attached as exhibits or
incorporated by reference in the complaint, and matters about which the Court may take judicial
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notice.” Gustave-Schmidt v. Chao, 226 F. Supp. 2d 191, 196 (D.D.C. 2002), citing EEOC v. St.
Francis Xavier Parochial Sch., 117 F.3d 621, 624–25 (D.C. Cir. 1997).
ANALYSIS
Doma and Rehabit have moved to dismiss on the following grounds: (1) the complaint
lack facts sufficient to allege that Lexicon and Brown are noncooperative, and therefore Princeton
Excess still has the duty to defend them; (2) Princeton Excess has failed to establish that Lexicon
and Brown’s lack of cooperation will prejudice its defense; and (3) declaratory judgment would
be premature because Princeton Excess’s “attempt to take itself out of the equation will place the
injured parties of the [u]nderlying [a]ction in an unjust and inequitable position.” Mot. at 4–8.
The motion to dismiss correctly summarizes, see Mot. at 4, but then disregards the standard
that applies to a complaint for declaratory relief at the motion to dismiss stage. The Declaratory
Judgment Act provides:
In 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). The statute limits the court’s authority to cases of “actual controversy,” so
the question of whether “allegations are sufficient to entitle [plaintiff] to the declaratory relief
prayed in its complaint” depends on whether “such a controversy exists.” Maryland Cas. Co. v.
Pac. Coal & Oil Co., 312 U.S. 270, 272 (1941). An actual controversy exists where, “under all
the circumstances, . . . there is a substantial controversy, between parties having adverse legal
interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”
Id. at 273. “The controversy must be definite and concrete,” involving “specific relief through a
decree of a conclusive character, as distinguished from an opinion advising what the law would be
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upon a hypothetical state of facts.” Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S.
227, 240–41 (1937).
The Declaratory Judgment Act states that courts “may” declare the rights of an interested
party. Thus, even when a suit satisfies the “actual controversy” requirement, the court retains
discretion to determine whether and when to entertain the action. See MedImmune, Inc. v.
Genentech, Inc., 549 U.S. 118, 136 (2007) (explaining that the text of the statute “has long been
understood ‘to confer on federal courts unique and substantial discretion in deciding whether to
declare the rights of litigants’”). In the D.C. Circuit, courts typically rely on two criteria to
determine whether a suit for declaratory judgment should move forward: 1) whether the judgment
will serve a useful purpose in clarifying the legal relations at issue, and 2) whether the judgment
will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the
proceeding. Glenn v. Thomas Fortune Fay, 222 F. Supp. 3d 31, 36 (D.D.C. 2016), citing President
v. Vance, 627 F.2d 353, 364 n.76 (D.C. Cir. 1980).
The Court finds that the complaint states a plausible claim for declaratory relief. The
controversy between the parties is concrete: Lexicon and Brown have been sued for conduct
related to Lexicon’s professional title services, and, under the terms of the insurance policy,
Princeton Excess would ordinarily be required to defend and indemnify them. Compl. ¶¶ 3, 11–
13. Despite the insurer’s numerous attempts to contact Lexicon and Brown, it has received no
response and no other cooperation in defending the suit, and now it wants a legal determination
clarifying whether the non-responsiveness violates a condition of the insurance policy that would
absolve Princeton Excess of the duties it would otherwise have with respect to the underlying
action under the policy. Compl. ¶¶ 17–38; Insurance Policy at 13. This means that all parties in
this litigation have a real interest in its outcome.
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Judgment in this case will also clarify the legal relationships between all the parties
involved. A declaratory judgment in favor of Princeton Excess would relieve it of its obligations
to provide coverage to Lexicon and Brown, and clarify whether Doma and Rehabit could seek
monetary recovery from it, should they succeed in the underlying action. And the declaration
would further afford Princeton Excess relief from uncertainty by establishing whether or not it
must continue to defend Lexicon and Brown in the underlying action.
Doma and Rehabit’s motion is largely devoted to attacking the sufficiency of the
allegations concerning plaintiff’s attempts to contact Lexicon and Brown, and whether the facts
alleged overcome the duty to defend or indemnify as a matter of law. Mot. at 4–7. But the focus
of a motion to dismiss a complaint for declaratory judgment is “whether the plaintiff is entitled to
a declaration of rights, not . . . whether it is entitled to a declaration in its favor.” 26 C.J.S.
Declaratory Judgments § 152; 22A Am. Jur. 2d Declaratory Judgments § 162 (“Generally, the test
for the sufficiency of a complaint for declaratory judgment is not whether the plaintiff will succeed
in obtaining the decree the plaintiff seeks but whether the plaintiff is entitled to a declaration of
rights at all.”). The Court has determined that the allegations present an actual controversy
between the parties, and that declaratory relief one way or the other is warranted. That is enough
to survive a motion to dismiss, and Doma and Rehabit have briefed and will be heard on what the
facts show concerning the insurer’s duty to defend and indemnify in connection with the motion
for default judgment
The movants’ concern that a ruling at this time would be “unjust” and “inequitable,” see
Mot. at 8, does not call for a different outcome. “Insurance coverage issues are commonly resolved
in declaratory judgment actions.” Keene Corp. v. Ins. Co. of N. Am., 667 F.2d 1034, 1040 n.8
(D.C. Cir. 1981); see Hepburn v. Penn. Indem. Corp., 109 F.2d 833, 833 (D.C. Cir. 1939) (“[T]he
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Declaratory Judgment Act may furnish a convenient and appropriate remedy for use in many cases
where a controversy has arisen over the coverage of an automobile liability insurance policy.”).
Insurers who owe a duty to defend or indemnify often seek declarations of nonliability even prior
to the initiation of the suit they are to defend, and courts often find “sufficient ‘immediacy and
reality’ in this situation to warrant the issuance of declaratory judgment.” Nat’l R.R. Passenger
Corp. v. Consol. Rail Corp., 670 F. Supp. 424, 429 (D.D.C. 1987), citing Haworth, 300 U.S. at
244 and Maryland Casualty Co., 312 U.S. at 273–74; see Application of Declaratory J. Acts to
Questions in Respect of Ins. Pol’ys, 142 A.L.R. 8 (“[I]t has been held or conceded in numerous
cases that an insurer is entitled to be advised by means of a declaratory judgment whether or not it
is obligated to defend and indemnify the insured against claims upon which suits are threatened or
have already been brought.”).
Doma and Rehabit state summarily that they will be prejudiced if Princeton Excess is
allowed to pursue a declaratory judgment, but circumstances indicate that if this suit were stayed,
Princeton Excess would have to defend Lexicon and Brown in the underlying action, with the
question of whether it was actually obligated to do so to be decided after it has already expended
its resources. Moreover, it was Doma and Rehabit’s own preference to let the coverage action
proceed first; after the insurer filed suit, Doma and Rehabit agreed to stay the underlying action
pending the resolution of this case. See Doma Consent Mot. at 1; Mem. in Supp. of Doma Consent
Motion. at 1.
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CONCLUSION
For all the reasons stated above, the Court finds that the complaint states a claim that
Princeton Excess is entitled to a declaration of rights and the motion to dismiss [Dkt. # 8] is
DENIED.
AMY BERMAN JACKSON
United States District Judge
DATE: February 10, 2026
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