The opinion of the court was delivered by: Susan Webber Wright United States District Judge
Plaintiff Cooper Industries, Inc., ("Cooper") brings this action for a declaratory judgment against Automobile Club Inter-Insurance Exchange ("AAA") to determine the allocation of liability for indemnity between insurers. After careful consideration, and for reasons that follow, the Court declines to exercise its discretion to entertain this action for declaratory relief. Accordingly, the case will be dismissed, without prejudice, and the pending motions for summary judgment will be denied as moot.
On June 7, 2002, Terry L. Hudson, an employee of Cooper's subsidiary, Cooper Bussman, Inc., ("Cooper Bussman"), was involved in an automobile accident while driving a rental car in Van Buren County, Arkansas. Hudson rented the car to drive to a training seminar related to his employment.
On May 26, 2005, the driver and a passenger of another car involved in the accident, Ryan Larussa and Chantelle Larussa, filed suit against Hudson, seeking damages for injuries they allegedly sustained in the accident. See Larussa, et al. v. Hudson, et al., 4:05CV00808 GTE (E.D. Ark.).
At the time of the accident, Cooper had liability coverage under a commercial auto policy issued by Pacific Employers Insurance Company, and Hudson had liability coverage under a personal auto policy issued by AAA. The parties stipulate that Hudson qualifies as an insured under the Pacific Employers policy.
On June 22, 2004, almost one year before the Larussas filed suit against Hudson, Cooper commenced this action, pursuant to the Court's diversity jurisdiction and the Declaratory Judgment Act. By way of relief, Cooper asks the court to enter the following declaratory judgment:
[T]hat the policy of insurance issued by AAA to Terry L. Hudson affords the primary liability coverage for the benefit of Terry L. Hudson with respect to the claims being asserted against him by Ryan Joseph Larussa and Chantelle Larussa; that any obligation on the part of Cooper Industries, Inc. to provide indemnity to Terry L. Hudson will arise only after exhaustion of the limits of the policy issued by AAA to Terry L. Hudson . . . .
Cooper filed a motion for summary judgment, and AAA responded with a cross motion for summary judgment, seeking a declaration that its policy provides excess coverage only. The AAA policy contains an "other insurance" clause,*fn1 which reads as follows:
If there is other applicable liability insurance, we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide for a vehicle you do not own shall be excess over any other insurance unless such vehicle is loaned to you by a person, firm, or corporation engaged in the business of selling, repairing or servicing motor vehicles and such vehicle is used by any covered person:
1. For demonstration purposes; or
2. As a temporary substitute for your covered auto which is out of normal use because of its breakdown, repair, ...