Home Indemnity Company, New York v. Lechner

• Decision Date: 06 February 1961
• Docket Number: No. 2413-SD-W.,2413-SD-W.
• Citation: 191 F. Supp. 116
• Parties: HOME INDEMNITY COMPANY, NEW YORK, a corporation, Plaintiff, v. Roy A. LECHNER, George A. Lechner, Anna C. Lechner, Tommy H. Berkshire, Rice E. Berkshire, J. M. Dowell and Ollie Dowell, Defendants.
• Court: U.S. District Court — Southern District of California

191 F. Supp. 116

HOME INDEMNITY COMPANY, NEW YORK, a corporation, Plaintiff, v. Roy A. LECHNER, George A. Lechner, Anna C. Lechner, Tommy H. Berkshire, Rice E. Berkshire, J. M. Dowell and Ollie Dowell, Defendants.

No. 2413-SD-W.

United States District Court S. D. California, S. D.

February 6, 1961.

Sterling Hutcheson, San Diego, Cal., Charles F. Sturdevant, Jr., El Centro, Cal., R. Reaves Elledge, Jr., Gray, Cary, Ames & Frye, San Diego, Cal., for plaintiff.

McInnis, Focht & Fitzgerald, San Diego, Cal., for defendants Lechner.

William J. Mansell, Los Angeles, Cal., and Victor A. Gillespie, Brawley, Cal., for defendants Berkshire.

Dickenson, Sattinger & McKee, El Centro, Cal., for defendants Dowell.

WEINBERGER, District Judge.

The amended complaint for declaratory relief states that a controversy exists between plaintiff and defendants herein as to plaintiff's duties and obligations under a certain insurance policy, as to whether Roy A. Lechner, a minor, or his parents are insureds under the policy, and whether plaintiff has any duty to provide the Lechners with a defense in a certain Superior Court action, or to pay any judgment that might be rendered against them in said action.

The policy involved was issued by the plaintiff to Will and Ann Love, and insured their automobile.

The Superior Court action was filed by the Dowells, parents of a minor who was killed in a collision between the insured automobile and the car in which the deceased minor was riding. The latter car was driven by Tommy H. Berkshire, also a minor. The Lechners, the Berkshire minor and his father, Ann Love, one of the named insureds, and their daughter Margie Love are made defendants in the Superior Court action.

All of the defendants in the Superior Court action are made defendants in the declaratory relief action before this Court, except the named insureds and their daughter, who are not parties here.

The Superior Court complaint, in addition to charging negligence against the Berkshires, charges negligence against the Lechners and Ann and Margie Love, alleging that the insured car was being "driven, operated, controlled and managed by Roy A. Lechner, and Margie Love, as the agents, servants and employees of Ann Love, acting within the course and scope of their agency, service and employment, and with the permission and consent, express or implied of said Ann Love * * *."

The Loves have answered in the Superior Court action and have admitted that at the time of the accident the Love automobile was driven by Roy A. Lechner, but have denied all the other allegations specified above.

The complaint for declaratory relief alleges that the Lechners claim:

"Roy A. Lechner was using said 1957 Ford at the time of the alleged collision with the permission of the named insured under said policy and that therefore, Roy A. Lechner, George A. Lechner and Anna C. Lechner are additional insureds under said policy."

The said complaint further alleges that the Lechners claim that the plaintiff insurance company has a duty under said insurance policy to provide them a defense in said Superior Court action; the company states it contends:

"Roy A. Lechner was not driving said 1957 Ford with the permission of the named insured or of any insured under said policy * * * and that neither Roy A. Lechner nor George A. Lechner nor Anna C. Lechner is an insured under said policy and plaintiff denies that it has a duty to defend said three defendants."

It is also alleged in the said complaint:

"There has been no claim made by Willie Lee Love or Ann Love or Margie Love concerning the question of whether Roy A. Lechner, George A. Lechner or Anna C. Lechner are insureds under said policy."

The Berkshires have answered the amended complaint for declaratory relief and have asked that the court declare the Lechners are additional insureds for any claim arising out of the accident and the insurance company is obligated to furnish the Lechners with a defense and to pay any judgment rendered against the Lechners in the Superior Court action.

The Dowells (plaintiffs in the Superior Court action) have not pleaded to the amended complaint for declaratory relief, but to the original complaint they interposed a motion to dismiss based upon grounds similar to the motion of the Lechners hereinafter considered.

The Lechners have moved to dismiss the amended complaint for declaratory relief on several grounds:

A. The complaint herein fails to state a cause of action.

B. The issue of whether or not Roy A. Lechner was operating the 1957 Ford automobile with the permission of the named insured is an issue in the Superior Court action.

C. The issues presented by the complaint herein are not construction of the insurance policy or interpretation of the insurance policy, but an attempt to adjudicate a factual issue of permission between the parties which issue is awaiting decision in the Superior Court action.

D. The Court in its discretion under Rule 57 of the Federal Rules of Civil Procedure, 28 U.S.C.A., should dismiss the action.

On the question of whether a cause of action is stated of which this Court has jurisdiction, we find that jurisdiction of a cause of action for declaratory relief appears from the complaint: the plaintiff is a non-resident, the defendants are residents of California, the statutory amount is present, and there is a justiciable controversy, at least between the insurance company and the Lechners. Section 2201 of Title 28 U.S.C.A.; Maryland Casualty v. Pacific Coal & Oil Co. et al., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826; State Farm Mutual Automobile Insurance Co. v. Bonwell, 8 Cir., 248 F.2d 862, 864.

Once having found jurisdiction under the pleadings in a declaratory relief action, the court is under no compulsion to exercise such jurisdiction. Brillhart v. Excess Insurance Company, 316 U.S. 491, 494, 62 S.Ct. 1173, 86 L.Ed. 1620. The word "may" in Section 2201 of Title 28 U.S.C.A. does not mean "shall", but the discretion granted by the word "may" must be reasonably exercised. Sani-Top, Inc. v. North American Aviation Inc., 9 Cir., 261 F.2d 342, 344.

The reported cases give us several guides in the exercise of that discretion.

Where the claim is made, as here, that another proceeding is pending in a state court in which matters in controversy can be adjudicated, the correctness of such claim has an important bearing on the question of whether jurisdiction should be exercised. Brillhart v. Excess Insurance Company, 316 U.S. 491, 495, 62 S.Ct. 1173, 86 L.Ed. 1620.

Such claim has weight for a great many reasons:

1. The basic axiom that the court which has first acquired jurisdiction of the controversy and of the parties should be permitted to determine all aspects of the controversy without interference from another court. Utilities Insurance Company v. Ledford et al., 6 Cir., 255 F.2d 123, 125.

2. The declaratory relief statute should not be used for the purpose of anticipating the trial of an issue in a court of co-ordinate jurisdiction. The object of the statute is to afford a new form of relief where needed and not to furnish a new choice of tribunals or to draw into federal courts the adjudication of causes properly cognizable by courts of the states. Aetna Casualty & Surety Company v. Quarles, 4 Cir., 92 F.2d 321, 324; National Cancer Hospital of America v. Webster, 2 Cir., 251 F.2d 466, 468.

3. The declaratory relief statute should not be used to secure a judgment which would impinge on a state proceeding and which might result in a conflict between the decisions of state and federal courts. H. J. Heinz Co. v. Owens, 9 Cir., 189 F.2d 505, 508.

4. The statute should not be used to try a case piecemeal. Doby v. Brown, 4 Cir., 232 F.2d 504, 506.

5. Ordinarily it is uneconomical as well as vexatious¹ for a federal court to proceed in a declaratory judgment suit where another suit is pending in a state court presenting the same issues, not governed by federal law, between the same parties. Gratuitous interference with the orderly and comprehensive disposition of state court litigation should be avoided. Brillhart v. Excess Insurance Company, 316 U.S. 491, 494, 495, 62 S.Ct. 1173, 86 L.Ed. 1620.

Plaintiff in the declaratory relief action maintains that it is seeking a declaration as to whether it is obligated to defend the Lechners in the state court action, and whether it shall be liable in damages for any judgment against the Lechners; that the matters set forth in the declaratory relief action involve the question of "coverage"; that the question of "coverage" cannot be adjudicated in the damage action. We agree that the question of insurance cannot be put in issue in the state court action, since plaintiff is not and can never be a party to an action for damages for wrongful death. But we do not agree that "coverage" is the real issue which the insurance company seeks to have heard in its action for declaratory relief. We do not feel that the company is greatly concerned about whether or not it should defend Lechner. It is obligated under the policy to defend the named insureds and has already assumed such defense; and the defense of Lechner would cause no great hardship upon the company. The opinion in State Farm Mutual Automobile Insurance Company v. Bonwell et al., 8 Cir., 1957, 248 F.2d 862, contains pertinent language. There the policy excluded from coverage employees causing negligent injury to a fellow employee. In an action by the insurer for declaratory relief in the District Court, the judge held that the decisive issue in the state court would likely be the same issue as was involved in the federal court, namely, whether decedent was a fellow servant of the driver of the car and was acting within the scope of his employment. The Court of Appeals, in sustaining the dismissal of the declaratory relief action, said: (at page 867)

"* * * Plaintiff has assumed the defense of the state court action against

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