Allstate Ins. Co. v. Mercier

• Decision Date: 04 September 1990
• Docket Number: No. 89-1889,89-1889
• Citation: 913 F.2d 273
• Parties: ALLSTATE INSURANCE COMPANY, Plaintiff Counter-Defendant-Appellee, v. Dawn MERCIER, Adam Mair, Defendants. Appeal of Patricia J. ALLMAND, Personal Representative of the Estate of Wesley Roland Allmand, Deceased, Defendant Counter-Plaintiff.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 273

913 F.2d 273

ALLSTATE INSURANCE COMPANY, Plaintiff Counter-Defendant-Appellee, v. Dawn MERCIER, Adam Mair, Defendants.

Appeal of Patricia J. ALLMAND, Personal Representative of

the Estate of Wesley Roland Allmand, Deceased,

Defendant Counter-Plaintiff.

No. 89-1889.

United States Court of Appeals,

Sixth Circuit.

Argued June 15, 1990.

Decided Sept. 4, 1990.

Joseph Kochis [COR NTC ret] Rosalind Rochkind (argued), Garan, Lucow, Miller, Seward, Cooper & Becker, Detroit, Mich., for plaintiff-appellee.

Carl M. Riseman, F. Anthony Lubkin (argued), Lapeer, Mich., for defendant-appellant.

Before KRUPANSKY and NORRIS, Circuit Judges, and LIVELY, Senior Circuit Judge.

LIVELY, Senior Circuit Judge.

The issue for decision in this appeal is the appropriateness of a federal declaratory judgment determining liability of a party under a contract for tort damages being sought in a state court action. This court has attempted in recent years to prescribe a workable approach to deciding when it is appropriate for a district court to proceed in such cases under the discretionary jurisdiction granted by the Declaratory Judgment Act of 1934, 28 U.S.C. Sec. 2201. See e.g., Grand Trunk W. R.R. Co. v. Consolidated Rail Corp., 746 F.2d 323 (6th Cir.1984); American Home Assurance Co. v. Evans, 791 F.2d 61 (6th Cir.1986); Manley, Bennett, McDonald & Co. v. St. Paul Fire & Marine Ins. Co., 791 F.2d 460 (6th Cir.1986); Allstate Ins. Co. v. Green, 825 F.2d 1061 (6th Cir.1987). Our decisions following Grand Trunk have focused on federal declaratory actions by insurers to obtain

rulings on their duty to indemnify their insureds who have been sued in state tort actions.

I.

Allstate brought this action in the district court seeking a declaration that it owed neither indemnification nor a defense to parties insured under Allstate homeowners policies who had been sued for tort damages in a Michigan state court. Allstate named as defendants its two insureds, Dawn Mercier and Adam Mair, as well as the plaintiff in the state tort action, Patricia J. Allmand, representing the estate of Wesley Roland Allmand. All defendants are Michigan residents. Allstate is a citizen of Illinois for jurisdictional purposes, and jurisdiction in the district court was based on diversity of citizenship.

A.

On October 10, 1988, Patricia Allmand filed an amended complaint in a Michigan court against Dawn Mercier and Adam Mair pursuant to Michigan's Wrongful Death Act, Mich.Comp.Laws Ann. (MCLA) Sec. 600.2922. The complaint alleged that on October 12, 1985, Gary Todd Jaynes drove his car in a southerly direction in the northbound lane of a highway, thereby causing a head-on collision with Wesley Allmand, and that at the time of the collision Jaynes was operating his vehicle at a very high rate of speed and in an intoxicated condition.

The complaint alleged that the defendants Dawn Mercier and Adam Mair owed to the public and Wesley Allmand the following duties:

(a) To refrain from knowingly selling and/or furnishing alcoholic liquor to a person less than 21 years of age pursuant to MCLA Section 436.33 and the common laws;

(b) To make diligent inquiry as to whether a person is less than 21 years of age before selling and/or furnishing a person with alcoholic liquor pursuant to MCLA Section 436.33 and the common laws.

The complaint further alleged that Dawn Mercier and Adam Mair violated these duties by knowingly selling and/or furnishing alcoholic liquor to Jaynes, a person who was then less than twenty-one years of age and by selling and/or furnishing alcoholic liquor to Jaynes without making diligent inquiry as to whether he was less than twenty-one years of age. Finally, the complaint alleged that as a proximate result of Mercier and Mair's negligent acts and/or omissions, Jaynes operated his motor vehicle in an intoxicated condition and caused the collision with Wesley Allmand in which Allmand sustained serious injuries that led to his death.

At the time of the accident in 1985, Dawn Mercier and Adam Mair resided with their parents and were insured persons under Allstate Deluxe Homeowners policies covering their parents' dwellings. In addition to covering the dwellings, the policies provided other coverage including "family liability protection." The summons and complaint filed by Patricia Allmand against Mercier and Mair were tendered to Allstate for coverage and defense under these homeowners policies. Allstate provided a defense to Mercier and Mair under a strict reservation of rights.

B.

Allstate filed this federal action for declaratory relief on February 6, 1989, while Allmand v. Mercier and Mair was pending in state court. Allstate alleged that an actual controversy existed with reference to coverage for the Allmand claims because of two exclusions from family liability protection in the homeowners policies:

Exclusions--Losses We Do Not Cover

1. We do not cover any bodily injury or property damage which may reasonably be expected to result from the intentional or criminal acts of an insured person or which is in fact intended by an insured person.

* * * * * *

5. We do not cover bodily injury or property damage arising out of the ownership, maintenance, use, loading or unloading of any motorized land vehicle or trailer.

These exclusions followed a very broad insuring clause:

We will pay all sums arising from the same loss which an insured person becomes legally obligated to pay as damages because of bodily injury or property damage covered by this part of the policy.

Allstate requested the district court to enter a declaratory judgment finding as follows:

A. That the acts alleged against Dawn Mercier and Adam Mair in ... [Allmand v. Mercier and Mair ] were designed, intended or expected to result in personal injury.

B. That the acts alleged against Dawn Mercier and Adam Mair resulted in bodily injury which arose out of the ownership, maintenance and use of a motorized land vehicle.

C. That the exclusions contained in the Allstate contract of Homeowners Policy void liability coverage for such intentional acts and intended or expected injuries and for bodily injury arising out of the ownership, maintenance and use of a motorized land vehicle.

D. That since Allstate owes no coverage, it is also relieved from providing a defense to Dawn Mercier and Adam Mair and may, accordingly, withdraw counsel presently appearing on behalf of Dawn Mercier and Adam Mair in the underlying lawsuit.

E. That damages sought in the underlying lawsuit are not covered by the Allstate Policies of Deluxe Homeowners Insurance.

Patricia Allmand answered Allstate's complaint. In her answer, she stated that her allegations as to Mercier and Mair did not arise out of the ownership, maintenance or use of any motor vehicle and that their acts did not constitute intentional acts as defined in the policy. Mercier and Mair failed to answer and Allstate has taken a default judgment against them.

After further pleading Allstate made a motion for summary judgment on the basis of the two policy exclusions. There was no discovery, but the district court held a hearing on the summary judgment motion, at which counsel presented arguments that have been repeated on appeal. At the conclusion of the hearing the District Judge advised counsel that he would enter summary judgment for Allstate. In a memorandum opinion filed with the order for summary judgment the District Judge stated that the motor vehicle exclusion relieved Allstate "from its obligations under the policy because the liability giving rise to the tort was triggered by the negligent operation of a motor vehicle." The order for summary judgment stated that Allstate did not owe "any insurance coverage" to Mercier and Mair under the homeowners policies, and further, that it had no "duty to provide a defense" in the state court action. The order concluded, "FURTHER, Allstate Insurance Company is not responsible for any damages obtained in the underlying lawsuit against Dawn Mercier and Adam Mair."

The district court did not refer to the discretionary nature of its jurisdiction under the Declaratory Judgment Act, either at the hearing, in its memorandum opinion, or in its order for summary judgment. Patricia Allmand appeals.

II.

The Declaratory Judgment Act states that "[i]n 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. The Supreme Court has repeatedly emphasized the discretionary nature of the Act. In Public Affairs Press v. Rickover, 369 U.S. 111, 82 S.Ct. 580, 7 L.Ed.2d 604 (1962), the Court stated:

The Declaratory Judgment Act was an authorization, not a command. It gave the federal courts competence to make a declaration of rights; it did not impose a duty to do so. Brillhart v. Excess Ins. Co., 316 U.S. 491, 494, 499 [62 S.Ct. 1173, 1175, 1177-78, 86 L.Ed. 1620 (1942) ]; Great Lakes Co. v. Huffman, 319 U.S. 293, 299-300 [63 S.Ct. 1070, 1073-74, 87 L.Ed. 1407 (1943) ]; Federation of Labor Id. at 112, 82 S.Ct. at 582. More recently, in Green v. Mansour, 474 U.S. 64, 106 S.Ct. 423, 88 L.Ed.2d 371 (1985), the Court stated that the statute " 'is an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant.' " Id. at 72, 106 S.Ct. at 428 (quoting Public Service Comm'n v. Wycoff Co., 344 U.S. 237, 241, 73 S.Ct. 236, 239, 97 L.Ed. 291 (1952)).

                v. McAdory, 325 U.S. 450, 462 [65 S.Ct. 1384, 1390, 89 L.Ed. 1725 (1945) ];  Mechling Barge Lines v. United States, 368 U.S. 324, 331 [82 S.Ct. 337, 341-42, 7 L.Ed.2d 317 (1961) ].  Of course a District Court cannot decline to entertain such an action as a matter of whim or personal disinclination.  "A declaratory judgment, like other forms of equitable relief, should be granted only as a matter of judicial discretion, exercised in the public interest."    Eccles v.

...