HK Holdings

The Federal District Court for the District of Hawaii remanded the coverage case to state court after applying the Brillhart and Dizol factors. HK Holdings, LLC v. Avemco Ins. Co., 2021 U.S Dist. LEXIS 174039 (D. Haw. Sept. 14, 2021). HK Holding was a limited liability company organized and existing under the laws of the State of Hawaii. It owned a... nd operated the Jade Dynasty Seafood Restaurant. Defendant Avemco Insurance Company was organized and existed under the laws of the State of Maryland. HK Holding held a Employment Practice Liability Insurance Policy issued by Avemco. The policy covered loss for a "Wrongful Employment Act." HK Holdings was sued in a class action in state court. The complaint alleged that gratuity charges applied by the restaurant were not distributed 100% to the non-management employees as tip income. The class action suit alleged several violations of various state statutes. HK Holdings filed suit in state court against Avemco, seeking a declaratory judgment that Avemco had a duty to defend and a duty to indemnify HK Holdings against the class action suit. Avemco removed the compliant to federal district court. HK Holdings filed a Motion to Remand, urging the federal court to avoid needless determinations of Hawaii state insurance law and to avoid duplicative litigation with the on-going class action suit in state court. The federal court noted it had discretion under the Declaratory Judgment Act to exercise its jurisdiction when the complaint was limited to declaratory relief. The court analysed the three factors set forth in Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942) in evaluating whether to decline jurisdiction over a complaint limited to declaratory relief. The court first determined that there were parallel state court proceedings. Both the underlying class action suit and the Declaratory Judgment Complaint involved overlapping factual circumstances. Both cases required factual determinations as to the employment practices of HK Holdings. The existence of the ...Read More