15 F.3d 142 (9th Cir. 1994), 92-16266, American States Ins. Co. v. Kearns

Docket Nº:92-16266.
Citation:15 F.3d 142
Party Name:AMERICAN STATES INSURANCE COMPANY, Plaintiff-Appellant, v. John V. KEARNS, doing business as Tahoe Boat Company; Tahoe Boat Company; Donzie Marine Corp.; Bruce R. Elworthy; Deere Credit Service, Inc.; Anne B. Marshall, Defendants-Appellees.
Case Date:January 26, 1994
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 142

15 F.3d 142 (9th Cir. 1994)

AMERICAN STATES INSURANCE COMPANY, Plaintiff-Appellant,

v.

John V. KEARNS, doing business as Tahoe Boat Company; Tahoe

Boat Company; Donzie Marine Corp.; Bruce R.

Elworthy; Deere Credit Service, Inc.;

Anne B. Marshall, Defendants-Appellees.

No. 92-16266.

United States Court of Appeals, Ninth Circuit

January 26, 1994

Argued and Submitted Dec. 14, 1993.

Page 143

Kathleen E. Hegen, Boornazian, Jensen & Garthe, Oakland, CA, for plaintiff-appellant.

Barbara G. Archibald, Hardy Erich Brown & Wilson, Sacramento, CA, for defendants-appellees.

Appeal from the United States District Court for the Eastern District of California.

Before: WALLACE, Chief Judge, GARTH [*] and CHARLES WIGGINS, Circuit Judges.

WALLACE, Chief Judge:

American States Insurance Company (American States) appeals from the district court's judgment dismissing its declaratory relief action for lack of jurisdiction. American States sought to establish that under the insurance policy at issue, it has no duty to indemnify or defend Kearns, doing business as Tahoe Boat Company (Tahoe Boat) in a suit brought against Tahoe Boat in state court. The district court's jurisdiction over this diversity suit would be premised on 28 U.S.C. Sec. 2201(a) and 28 U.S.C. Sec. 1332. We have jurisdiction over this timely appeal pursuant to 28 U.S.C. Sec. 1291. We reverse and remand.

I

Tahoe Boat was sued in state court under several theories of liability arising out of the sale of a boat. American States undertook Tahoe Boat's defense with a full reservation of rights, while bringing a diversity suit in federal court under the Declaratory Judgments Act, 28 U.S.C. Sec. 2201, to establish whether it had a duty to defend or indemnify Tahoe Boat. Arguing that it would be prejudiced by revealing possible bases of liability if a summary judgment motion were entertained in the district court, Tahoe Boat moved to stay the declaratory relief action until the state court action was resolved. Instead of deciding whether to stay the action temporarily, the district court examined our recent cases and concluded that the action was not sufficiently ripe and dismissed it for lack of jurisdiction.

We review de novo whether the district court had jurisdiction over the declaratory action. Aydin Corp. v. Union of India, 940 F.2d 527, 527 (9th Cir.1991) (Aydin ).

II

The Declaratory Judgments Act states: "In a case of actual controversy within its jurisdiction ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration." 28 U.S.C. Sec. 2201(a). Two issues are presented to the district court by this statutory pronouncement.

First, the court must inquire whether there is a case of actual controversy within its jurisdiction. Jurisdiction to award declaratory relief exists only in a case of actual controversy. Wickland Oil Terminals v...

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