Centennial Life Ins. Co. v. Poston

Decision Date20 June 1996
Docket NumberNo. 95-1038,95-1038
Citation88 F.3d 255
PartiesThe CENTENNIAL LIFE INSURANCE COMPANY, Plaintiff-Appellant, v. Barbara POSTON; Victor Poston, Defendants-Appellees.
CourtU.S. Court of Appeals — Fourth Circuit

ARGUED: Eric Wayne Iskra, Spilman, Thomas & Battle, Charleston, West Virginia, for Appellant. John Frederick Cyrus, Gardner & Cyrus, Huntington, West Virginia, for Appellees. ON BRIEF: Charles L. Woody, Neva G. Lusk, Spilman, Thomas & Battle, Charleston, West Virginia, for Appellant. David M. Pancake, Levy, Trautwein & Pancake, Huntington, West Virginia, for Appellees.

Before WILKINSON, Chief Judge, ERVIN, Circuit Judge, and BUTZNER, Senior Circuit Judge.

Affirmed by published opinion. Judge ERVIN wrote the opinion, in which Chief Judge WILKINSON and Senior Judge BUTZNER joined.

CORRECTED OPINION

ERVIN, Circuit Judge:

The district court dismissed Centennial Life Insurance Company's declaratory judgment action. Because a pending state action will resolve the issue raised in the federal action, along with a number of issues not raised here, we believe that the district court did not abuse its discretion. Therefore, we affirm the decision below.

I.

Soon after Centennial Life Insurance Company issued a health insurance policy to Victor and Barbara Poston, it began to suspect that the insurance application contained material misrepresentations. A hospital requested that Centennial authorize a liver transplant for Victor Poston, and two days later the insurer rescinded the policy. The Postons objected to the notice of rescission.

On June 22, 1994, Centennial brought this diversity action in the district court, seeking a declaration that the insurance policy was void based on the Postons' fraudulent misrepresentations. On August 12, 1994, Barbara Poston initiated a state court action seeking enforcement of the policy and damages, and asserting separate and alternative claims against the insurance agent. On the same day, Poston moved to dismiss the federal action.

The district court found that the issues involved in Centennial's declaratory judgment action could be resolved as efficiently in state court as in federal court, and had in fact been raised in the state proceeding. The court thus concluded that "it should decline jurisdiction over this action in deference to the state court action."

II.

The Federal Declaratory Judgment Act provides that district courts "may declare the rights and other legal relations of any interested party seeking such declaration whether or not further relief is or could be sought." 28 U.S.C.A. § 2201(a). This power has consistently been considered discretionary. See, e.g., Brillhart v. Excess Ins. Co., 316 U.S. 491, 494, 62 S.Ct. 1173, 1175, 86 L.Ed. 1620 (1942); Wilton v. Seven Falls Co., --- U.S. ----, ----, 115 S.Ct. 2137, 2144, 132 L.Ed.2d 214, 225 (1995); Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 324 (4th Cir.1937).

The Fourth Circuit has explained that a declaratory judgment action is appropriate "when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and ... when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding." Quarles, 92 F.2d at 325 (quoting Edwin M. Borchard, Declaratory Judgments 107-09 (1934)). It should not be used "to try a controversy by piecemeal, or to try particular issues without settling the entire controversy, or to interfere with an action which has already been instituted." Quarles, 92 F.2d at 325. The Supreme Court explained that, when a related state proceeding is underway, a court considering a declaratory judgment action should specifically consider whether the controversy "can better be settled in the proceeding pending in the state court." Brillhart, 316 U.S. at 495, 62 S.Ct. at 1176. This consideration should be guided by a number of factors, including the nature and scope of the state proceeding and "whether the claims of all parties in interest can satisfactorily be adjudicated in that proceeding...." Id.; see also Mitcheson v. Harris, 955 F.2d 235 (4th Cir.1992).

Guided by these general principles--as well as "the same considerations of federalism, efficiency, and comity that traditionally inform a federal court's discretionary decision whether to abstain from exercising jurisdiction over state-law claims in the face of parallel litigation in the state courts"--the Fourth Circuit has set forth a number of specific factors for district courts to consider. Nautilus Ins. Co. v. Winchester Homes, Inc., 15 F.3d 371, 376 (4th Cir.1994). These include:

(i) the strength of the state's interest in having the issues raised in the federal declaratory action decided in the state courts; (ii) whether the issues raised in the federal action can more efficiently be resolved in the court in which the state action is pending; [ ](iii) whether permitting the federal action to go forward would result in unnecessary "entanglement" between the federal and state court systems, because of the presence of "overlapping issues of fact or law"[; and (iv) ] whether the declaratory judgment action is being used merely as a device for "procedural fencing"--that is, "to provide another forum in a race for res judicata" or "to achiev[e] a federal hearing in a case otherwise not removable."

Id. at 377.

Last year the Supreme Court addressed the standards under which a district court's decision to stay 1 a declaratory judgment action should be made and reviewed on appeal. Wilton v. Seven Falls Co., --- U.S. ----, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). The Court clearly reaffirmed Brillhart v. Excess Ins. Co., 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942), which it described in terms similarly descriptive of the case before us: "An insurer, anticipating a coercive suit, sought a declaration in federal court of nonliability on an insurance policy." --- U.S. at ----, 115 S.Ct. at 2140, 132 L.Ed.2d at 220. In Brillhart, the district court dismissed the action because of ongoing state litigation. The Wilton Court understood Brillhart to stand for the proposition that, "at least where another suit involving the same parties and presenting opportunities for ventilation of the same state law issues is pending in state court, a district court might be indulging in 'gratuitous interference,' if it permitted the federal declaratory action to proceed." Id. at ----, 115 S.Ct. at 2141, 132 L.Ed.2d at 221 (citation omitted). The Court concluded that district courts in fact possess rather wide discretion in making these decisions:

Consistent with the nonobligatory...

To continue reading

Request your trial
328 cases
  • Jones v. Jones, Civil Action No. 2:16cv93
    • United States
    • U.S. District Court — Eastern District of Virginia
    • September 12, 2016
    ...and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.’ "11 Centennial Life Ins. Co. v. Poston , 88 F.3d 255, 256 (4th Cir.1996) (quoting Aetna Cas. & Sur. Co. v. Quarles , 92 F.2d 321, 325 (4th Cir.1937) ). In contrast, declaratory judgment is ge......
  • South Carolina v. United States
    • United States
    • U.S. District Court — District of South Carolina
    • March 20, 2017
    ...and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.’ " Centennial Life Ins. Co. v. Poston , 88 F.3d 255, 256 (4th Cir. 1996) (quoting Aetna Cas. & Sur. Co. v. Quarles , 92 F.2d 321, 325 (4th Cir. 1937) ). The State's second cause of action sati......
  • Hopeman Bros., Inc. v. Cont'l Cas. Co.
    • United States
    • U.S. District Court — Eastern District of Virginia
    • April 2, 2018
    ...terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding." Centennial Life Ins. Co. v. Poston, 88 F.3d 255, 256 (4th Cir. 1996) (internal quotation marks and citation omitted); see also 10B Charles Alan Wright & Arthur R. Miller, Federal Pr......
  • NOELL CRANE SYSTEMS v. NOELL CRANE & SERVICE
    • United States
    • U.S. District Court — Eastern District of Virginia
    • December 21, 2009
    ...considerable discretion whether to grant declaratory relief, and should only do so in appropriate cases. See Centennial Life Ins. Co. v. Poston, 88 F.3d 255, 256 (4th Cir.1996). One such case is where a plaintiff "has an objective and reasonable apprehension of future litigation, which is o......
  • Request a trial to view additional results
1 books & journal articles
  • Trial Practice and Procedure - John O'shea Sullivan and Ashby L. Kent
    • United States
    • Mercer University School of Law Mercer Law Reviews No. 57-4, June 2006
    • Invalid date
    ...(1942). 176. Ameritas, 411 F.3d at 1330 (quoting Brillhart, 316 U.S. at 495). 177. Id. at 1331 (quoting Centennial Life Ins. v. Poston, 88 F.3d 255, 257 (4th Cir. 1996)). 178. Id. at 1331 n.4. Noting that it had not previously set out the criteria to be applied in cases where district court......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT