Allstate Ins. Co. v. Wayne County

• Citation: 760 F.2d 689
• Decision Date: 25 April 1985
• Docket Number: No. 84-1279,84-1279
• Parties: ALLSTATE INSURANCE COMPANY, Plaintiff-Appellee, v. WAYNE COUNTY, et al., Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 689

760 F.2d 689

ALLSTATE INSURANCE COMPANY, Plaintiff-Appellee, v. WAYNE COUNTY, et al., Defendants-Appellants.

No. 84-1279.

United States Court of Appeals Sixth Circuit.

Argued Jan. 21, 1985.

Decided April 25, 1985.

Michael M. Hathaway, Vandeveer, Garzia, Tonkin, Keer, Heaphy, Moore, Sills, Poling, Robert Brignall, Detroit, Mich., argued, for defendants-appellants.

Wayne D. Gardner, Randall Bryant, Detroit, Mich., argued, for plaintiff-appellee.

Before CONTIE and WELLFORD, Circuit Judges, and PECK, Senior Circuit Judge.

CONTIE, Circuit Judge.

Wayne County and William Lucas appeal the judgment of the district court granting a declaratory judgment in favor of appellee Allstate Insurance Company pursuant to 28 U.S.C. Sec. 2201. Since we conclude that the district court lacked jurisdiction, we vacate the judgment of the district court and remand with instructions to dismiss.

I.

This case arises from an altercation between Joseph Russo, a Wayne County deputy sheriff, and Christopher Graves in which Russo allegedly shot Graves. On December 10, 1980, Graves filed an action in the Circuit Court for the County of Wayne against Wayne County and Russo. Graves alleged that Russo, acting in his capacity as a deputy sheriff, had shot Graves intentionally, willfully, wantonly, and without just cause, or, in the alternative, that Russo had acted negligently. Graves also filed an action in federal court against Wayne County, Russo, Sheriff William Lucas and several other parties pursuant to 42 U.S.C. Secs. 1981, 1983, 1985(3), 1986, alleging that Russo was acting under color of state law and in his official capacity when he shot Graves. Graves alleged that Russo shot him intentionally, willfully and wantonly, thereby depriving Graves of his civil rights by the shooting and the subsequent malicious prosecution. In July 1982, Russo demanded that appellee Allstate defend these actions pursuant to a homeowner's insurance policy issued by Allstate to Russo.

On December 3, 1982, Allstate filed the instant action against Russo, Graves, Wayne County, Lucas, the Wayne County prosecutor, a Wayne County deputy sheriff, the City of Southgate and two Southgate police officers. Allstate sought a declaratory judgment that Allstate was not obligated to defend or extend coverage to Russo in either the state or federal action. Allstate argued that the incident was not an "occurrence" as defined by the policy, that Russo had expected the injury, that the occurrence did not arise from an accident, and that the injury arose from Russo's participation in his business. Allstate asserted that defendants other than Russo had been joined "because they were in a position that their rights or obligations may be affected by the outcome of the instant suit."

On August 11, 1983, Allstate filed a motion for summary judgment. On March 30, 1984, the district court granted the motion against all defendants, concluding that the allegations of scope of employment in the state complaint and color of state law in the federal complaint required the application of the business pursuits exclusion of the insurance contract, and, therefore, Allstate had no duty to defend. ¹

Russo did not appeal the judgment of the district court. Only appellants Lucas and Wayne County, (hereinafter, "Wayne County"), seek review of the district court's order. ²

II.

Although the justiciability of this dispute or the standing of the parties thereto was not questioned in the district court, ³ these are threshold inquiries which this court is obligated to consider prior to asserting jurisdiction over this appeal. Secretary of State of Maryland v. Joseph H. Munson Company, Inc., --- U.S. ----, 104 S.Ct. 2839, 2846 n. 4, 81 L.Ed.2d 786 (1984); Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 2204, 45 L.Ed.2d 343 (1975); Jet Courier Services, Inc. v. Federal Reserve Bank of Atlanta, 713 F.2d 1221, 1225 (6th Cir.1983); Senter v. General Motors Corp., 532 F.2d 511, 516 (6th Cir.), cert. denied, 429 U.S. 870, 97 S.Ct. 182, 50 L.Ed.2d 150 (1976), "The Declaratory Judgment Act of 1934 [predecessor to 28 U.S.C. Sec. 2201], in its limitation to 'cases of actual controversy,' manifestly has regard to the constitutional provision and is operative only in respect to controversies which are such in the constitutional sense." Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 239-40, 57 S.Ct. 461, 463-64, 81 L.Ed. 617 (1937); ACandS, Inc. v. Aetna Casualty and Surety Co., 666 F.2d 819, 822 (3d Cir.1981) ("A federal court's authority to grant declaratory relief under 28 U.S.C. Sec. 2201 (1976) extends to the article III limits on the court's power to adjudicate disputes."); Western Mining Council v. Watt, 643 F.2d 618, 623 (9th Cir.), cert. denied, 454 U.S. 1031, 102 S.Ct. 567, 70 L.Ed.2d 474 (1981).

Pursuant to Art. III Sec. 2, Cl. 1 of the United States Constitution, the federal courts are courts of limited jurisdiction. Allen v. Wright, --- U.S. ----, 104 S.Ct. 3315, 3324, 82 L.Ed.2d 556 (1984). In fact "[t]he constitutional power of federal courts cannot be defined, and indeed has no substance, without reference to the necessity" to decide actual controversies. Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 471, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982). "Article III obligates a federal court to act only when it is assured of the power to do so, that is, when it is called upon to resolve an actual case or controversy." Id. at 476 n. 13, 102 S.Ct. at 760 n. 13.

A.

The scope of our limited jurisdiction, as expressed in the "case" or "controversy" limitations of Art. III, has been defined through several doctrines, the foremost, perhaps, of which is the standing doctrine. Allen, 104 S.Ct. at 3324; Warth, 442 U.S. at 498, 95 S.Ct. at 2204 ("standing imports justiciability"). The doctrine assures the presentation of legal questions "in a concrete factual context conducive to a realistic appreciation of the consequences of judicial action," Valley Forge Christian College, 454 U.S. at 472, 102 S.Ct. at 758, and "reflects a due regard for the autonomy of those persons likely to be most directly affected by a judicial order." Id. at 473, 102 S.Ct. at 759.

The standing doctrine limits the judicial power of the federal courts to parties who demonstrate "injury in fact." Valley Forge Christian College, 454 U.S. at 473, 102 S.Ct. at 759; Senter, 532 F.2d at 517. There are three components of the "injury in fact" requirement. First, a party must "show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant." Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99, 99 S.Ct. 1601, 1607, 60 L.Ed.2d 66 (1979); Allen, 104 S.Ct. at 3325; Valley Forge Christian College, 454 U.S. at 472, 102 S.Ct. at 758; Warth, 422 U.S. at 498-99, 95 S.Ct. at 2204-05 ("the standing question is whether the plaintiff has 'alleged such a personal stake in the outcome of the controversy' as to warrant his invocation of federal-court jurisdiction and to justify exercise of the court's remedial powers on his behalf."); Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7 L.Ed.2d 663 (1962); Kay v. Austin, 621 F.2d 809, 811 (6th Cir.1980). However, the fact that a person may be collaterally affected by a court's adjudication of another's rights does not necessarily extend the Art. III judicial power to that person. See Warth, 422 U.S. at 499, 95 S.Ct. at 2205.

Second, a party must show that the injury "fairly can be traced to the challenged action of the defendant," Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 41, 96 S.Ct. 1917, 1925, 48 L.Ed.2d 450 (1976), and third, that the injury "is likely to be redressed by a favorable decision," Simon, 426 U.S. at 38, 96 S.Ct. at 1924. Allen, 104 S.Ct. at 3325; Valley Forge Christian College, 454 U.S. at 472, 102 S.Ct. at 758. See Young v. Klutznick, 652 F.2d 617, 623 (6th Cir.1981), cert. denied, 455 U.S. 939, 102 S.Ct. 1430, 71 L.Ed.2d 650 (1982). While this second component "examines the causal connection between the assertedly unlawful conduct and the alleged injury," the third "examines the causal connection between the alleged injury and the judicial relief requested." Allen, 104 S.Ct. at 3326 n. 19; Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 75 n. 20, 98 S.Ct. 2620, 2631 n. 20, 57 L.Ed.2d 595 (1978) (plaintiff must show no more than "that there is a 'substantial likelihood' that the relief requested will redress the injury claimed").

We also recognize that prudential limitations on the rights of parties to litigate in the federal courts have been classified under the general rubric of "standing." We caution, however, that these prudential limitations or "matters of judicial self-governance," Warth, 422 U.S. at 500, 95 S.Ct. at 2206, are separate and apart from those mandatory jurisdictional prerequisites set out above. Valley Forge Christian College, 454 U.S. at 475, 102 S.Ct. at 760 ("neither the counsels of prudence nor the policies implicit in the 'case or controversy' requirement should be mistaken for the rigorous Art. III requirements themselves."); Lewis v. Knutson, 699 F.2d 230, 236 (5th Cir.1983). See Naso v. Sun Refining and Marketing Co., 582 F.Supp. 1566, 1567 (N.D.Ohio 1983). "Those who do not possess Art. III standing may not litigate as suitors in the courts of the United States." Valley Forge, 454 U.S. at 475-76, 102 S.Ct. at 760-61 (footnote omitted). ⁴

Perhaps the most prominent of these prudential limitations is that a party "generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties." Warth v. Seldin, 422 U.S. at 499, 95 S.Ct. at 2205; Joseph H. Munson Company, Inc., 104 S.Ct. at 2846; Valley Forge Christian College, 454 U.S. at 474, 102 S.Ct. at 759; Gladstone, Realtors, ...