Metropolitan Property and Liability Ins. Co. v. Kirkwood

Decision Date15 March 1984
Docket NumberNo. 83-1503,83-1503
Citation729 F.2d 61
PartiesMETROPOLITAN PROPERTY AND LIABILITY INSURANCE CO., Plaintiff, Appellant, v. Bonnie McCosker KIRKWOOD, et al., Defendants, Appellees.
CourtU.S. Court of Appeals — First Circuit

Sterling H. Schoen, Jr., Manchester, N.H., with whom Wiggin & Nourie, Manchester N.H., was on brief, for plaintiff, appellant.

N. Michael Plaut and H. Neil Berkson, Keene, N.H., with whom Bragdon, Berkson & Mangones, Keene, N.H., were on brief, for Bonnie McCosker Kirkwood.

Before COFFIN and BREYER, Circuit Judges, and MALETZ, ** Senior Judge.

BREYER, Circuit Judge.

On April 19, 1982, James Kirkwood shot and killed his stepson, shot and wounded his wife, and then committed suicide. His wife, acting for herself and her son's estate, sought damages from Kirkwood's estate. She and the Kirkwood estate joined in asking Metropolitan Property and Liability Insurance Company to pay the damages according to the terms of Kirkwood's homeowner's insurance policy. Metropolitan believed it was not liable, for the policy covered only negligently inflicted, not intentionally inflicted, injuries. And Metropolitan brought a declaratory judgment action against both wife and estate in federal district court, seeking a determination that Kirkwood had acted intentionally, not negligently. Kirkwood's wife then filed her tort claim against the estate in New Hampshire state court. She claimed (on her own and her son's behalf) that Kirkwood had either acted intentionally or (being drunk) acted negligently. In either event, the estate would be liable. The estate removed the case to federal court.

When the federal judge hearing the declaratory judgment action learned about the tort suit, he dismissed the declaratory judgment action. He reasoned that the issues could be resolved at least as well, if not better, in the tort action. Metropolitan appeals from this dismissal. We conclude that Metropolitan is correct and reverse the district court's dismissal of the declaratory judgment action.

The hornbook law about hearing or dismissing declaratory judgment actions tends to be written in highly general terms. In deciding whether to exercise the power to grant declaratory judgment, given to them by 28 U.S.C. Sec. 2201 and Fed.R.Civ.P. 57, courts look to see whether the declaratory judgment will serve the interests of the litigants or the public. Public Affairs Associates v. Rickover, 369 U.S. 111, 112, 82 S.Ct. 580, 581, 7 L.Ed.2d 604 (1962) (per curiam); 10A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure: Civil Sec. 2759, at 645-51 (2d ed. 1983). Do considerations of efficiency, fairness and practical convenience for the court and parties warrant the court's granting a declaration of rights? Interdynamics, Inc. v. Wolf, 698 F.2d 157, 167 (3rd Cir.1982). Will a declaratory judgment help clarify the legal questions at issue? Will it relieve the uncertainty or insecurity that gave rise to the dispute? President v. Vance, 627 F.2d 353, 364 n. 76 (D.C.Cir.1980); Alsager v. District Court, 518 F.2d 1160, 1163-64 (8th Cir.1975); 10A C. Wright, A. Miller & M. Kane, supra, Sec. 2759, at 646-51 (quoting E. Borchard, Declaratory Judgments 299 (2d rev. ed. 1941)). Will the action expedite resolution of the underlying dispute? See Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 126-28, 88 S.Ct. 733, 746-747, 19 L.Ed.2d 936 (1968). In reviewing a district court's application of these principles in a particular case, the courts of appeals have examined the record quite closely to decide whether the court's decision was "sound" in the circumstances. Doe v. Gallinot, 657 F.2d 1017, 1025 (9th Cir.1981); Hanes Corp. v. Millard, 531 F.2d 585, 591 (D.C.Cir.1976).

Case law has given these general principles a somewhat more specific meaning in the context of insurance disputes. Courts have consistently refused to entertain a declaratory judgment action about insurance coverage when a tort action could resolve the same factual issues. E.g., Indemnity Insurance Co. of North America v. Schriefer, 142 F.2d 851, 853-54 (4th Cir.1944); Employers' Fire Insurance Co. v. Beals, 103 R.I. 623, 630-31, 240 A.2d 397, 402 (1968); A. Windt, Insurance Claims and Disputes Sec. 8.04 (1982); 10A C. Wright, A. Miller, & M. Kane, supra, Sec. 2760, at 665. This practice prevents duplicative proceedings, may allow the insured his choice of forum, and avoids the danger of inconsistent judgments. The Fourth Circuit, however, has noted an important exception--an exception that was not called to the attention of the district court. In Stout v. Grain Dealers Mutual Insurance Co., 307 F.2d 521 (4th Cir.1962), it upheld a district court's decision not to dismiss a declaratory judgment action when a conflict of interest existed that would have prevented the insurance company from managing the insured's defense in an underlying tort suit. In that case, as here, the insured was covered for negligently inflicted, but not intentionally inflicted, injury. The court reasoned that the declaratory judgment action would decide whether the policy required the insurer to defend the tort action. Thus, deciding the declaratory judgment action first would allow the tort action to be tried without the potential conflict between the interests of the insurance company and the insured that would otherwise arise.

The case before us is virtually the same as Stout. In this case, however, the district court decided to dismiss, rather than to retain, the declaratory judgment action. Thus, we must ask whether the particular facts of this case allow the district court to reach a different result than in Stout. We conclude that they do not for two reasons.

For one thing, the district court's opinion itself suggests that the decision does not rest upon detailed knowledge of any individual facts and circumstances relating to this case; nor did the court rely upon its practical familiarity with litigating rules, procedures or their consequences. Rather, the district court simply relied upon the general "declaratory judgment" rule in insurance cases; it did not mention the Stout exception; and oral argument here revealed that no one called this exception to the district court's attention. Had someone done so, the court might well have decided differently.

For another thing, the procedural facts that the...

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    ...the plaintiffs are entitled by federal law to the declaratory and injunctive relief they seek. Cf. Metropolitan Property & Liability Ins. Co. v. Kirkwood, 729 F.2d 61, 63-64 (1st Cir.1984) (even where another remedy exists, declaratory judgment appropriate if alternative is "neither simple ......
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