Nat'l Trust Ins. Co. v. S. Heating & Cooling Inc.

• Decision Date: 03 September 2021
• Docket Number: No. 20-11292,20-11292
• Citation: 12 F.4th 1278
• Parties: NATIONAL TRUST INSURANCE COMPANY, Plaintiff - Appellant, v. SOUTHERN HEATING AND COOLING INC, Steven Hoge, as Personal Representative of the Estate of Billy Carl Hoge, deceased and as Personal Representative of the Estate of Mary Ellen Hammon Hoge, Defendants - Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

12 F.4th 1278

NATIONAL TRUST INSURANCE COMPANY, Plaintiff - Appellant,

v.SOUTHERN HEATING AND COOLING INC, Steven Hoge, as Personal Representative of the Estate of Billy Carl Hoge, deceased and as Personal Representative of the Estate of Mary Ellen Hammon Hoge, Defendants - Appellees.

No. 20-11292

United States Court of Appeals, Eleventh Circuit.

September 3, 2021

Stephen D. Christie, Patrick W. Franklin, Miller Christie & Kinney, PC, Birmingham, AL, for Plaintiff-Appellant.

Robert Victor Wood, Jr., Matthew T. Dukes, John A. Wilmer, Wilmer & Lee, PA, Huntsville, AL, for Defendant-Appellee Southern Heating and Cooling Inc.

David Leon Ashford, Devan Lanay Byrd, Steven Hughston Nichols, Christopher Scott Randolph, Jr., Hare Wynn Newell & Newton, LLP, Birmingham, AL, for Defendant-Appellee Steven Hoge.

Before JORDAN, BRASHER, and ANDERSON, Circuit Judges.

JORDAN, Circuit Judge:

The Declaratory Judgment Act, 28 U.S.C. § 2201(a), provides in relevant part that in "a case of actual controversy ... any court of the United States ... may declare the rights and legal relations of any interested party seeking such declaration." As the permissive text suggests, a district court has discretion in deciding whether to entertain an action under the Act. See Wilton v. Seven Falls Co. , 515 U.S. 277, 282–83, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). In this appeal we address the role that parallel proceedings play in the exercise of discretion under § 2201(a).

I

Carl and Mary Hoge died from carbon monoxide poisoning in January of 2018 at their Alabama home. Their son, Steven Hoge, sued Southern Heating and Cooling, Inc. and others in Alabama state court for wrongful death. He alleged that Southern Heating had failed to properly service the heating and air conditioning (HVAC) unit at the Hoges’ home, resulting in the release of dangerous levels of carbon monoxide. Specifically, Mr. Hoge claimed that, in two service calls weeks before his parents died, Southern Heating did not correct a misalignment of the HVAC unit's furnace burner. That misalignment purportedly caused the fire that generates heat inside the furnace to ignite outside of the location within the furnace where it is intended to burn. The furnace therefore generated excessive amounts of carbon monoxide that accumulated in the home and eventually killed Carl and Mary.¹

National Trust Insurance Company, the commercial liability insurer for Southern Heating, then filed suit in federal court against Mr. Hoge and Southern Heating (but not any of the other state-court defendants) under the Declaratory Judgment Act, 28 U.S.C. § 2201(a). National Trust—which is not a party in the Alabama state court action—sought a declaration that it has no duty to defend or indemnify Southern Heating because there is no coverage under its policy. According to National Trust, carbon monoxide is a "pollutant" that comes within a pollution exclusion in the policy issued to Southern Heating.

Mr. Hoge moved to dismiss National Trust's declaratory judgment action, and Southern Heating agreed with his position. They argued that whether carbon monoxide falls within the insurance policy's definition of "pollutants" is unresolved under Alabama law and is therefore a decision to be left to the Alabama courts. In addition, they asserted that the pollution exclusion has a "hostile fire exception" which applies because the misalignment of the HVAC unit's furnace burner caused the fire to burn in the wrong location. So, even if carbon monoxide were a pollutant under the insurance policy, the district court would nevertheless be required to decide whether the Hoges’ deaths fall within the hostile fire exception. That inquiry would include determining the alignment of the burner and the extent to which any misalignment was responsible for the Hoges’ deaths. That analysis, according to Mr. Hoge and Southern Heating, would significantly overlap with the factual evaluation that the Alabama state court will undertake to determine liability in the wrongful death action. Those and other issues counseled against the district court resolving National Trust's declaratory judgment action.

The district court, exercising its discretion, declined to entertain National Trust's declaratory judgment action and dismissed it without prejudice. First, it found that the Alabama state court action was parallel to the federal declaratory judgment action. See D.E. 33 at 10. Second, it concluded that the non-exhaustive guideposts set out in Ameritas Variable Life Ins. Co. v. Roach , 411 F.3d 1328, 1331 (11th Cir. 2005), weighed in favor of not hearing National Trust's action. See D.E. 33 at 10–13.

National Trust now appeals. Reviewing for abuse of discretion, see Wilton , 515 U.S. at 288, 115 S.Ct. 2137, we affirm. When relevant, the degree of similarity between concurrent state and federal proceedings is a significant consideration in deciding whether to entertain an action under the Declaratory Judgment Act. Here the district court properly took into account that similarity in its consideration of the Ameritas guideposts. The district court's perspective may not be the only way to view the two proceedings at issue, but it is a permissible way to look at them, and that is enough to constitute a reasonable exercise of discretion.²

II

In Ameritas , we set out the following non-exclusive guideposts for district courts to consider in deciding whether to adjudicate, dismiss, or stay a declaratory judgment action under § 2201(a) :

(1) the strength of the state's interest in having the issues raised in the federal declaratory action decided in the state courts;

(2) whether the judgment in the federal declaratory action would settle the controversy;

(3) whether the federal declaratory action would serve a useful purpose in clarifying the legal relations at issue;

(4) whether the declaratory remedy is being used merely for the purpose of "procedural fencing"—that is, to provide an arena for a race for res judicata or to achieve a federal hearing in a case otherwise not removable;

(5) whether the use of a declaratory action would increase the friction between our federal and state courts and improperly encroach on state jurisdiction;

(6) whether there is an alternative remedy that is better or more effective;

(7) whether the underlying factual issues are important to an informed resolution of the case;

(8) whether the state trial court is in a better position to evaluate those factual issues than is the federal court; and

(9) whether there is a close nexus between the underlying factual and legal issues and state law and/or public policy, or whether federal common or statutory law dictates a resolution of the declaratory judgment action.

Ameritas , 411 F.3d at 1331.

National Trust contends that the Ameritas guideposts become relevant only when there are parallel state and federal proceedings. The district court seemingly agreed. It explained that "parallelism is a necessary [consideration], but not [a] determinative [one]," and it considered parallelism as a discrete, threshold requirement. See D.E. 33 at 9–10. National Trust, however, disagrees with the district court's conclusion that the proceedings in this case are parallel. Mr. Hoge and Southern Heating respond that the existence of parallel proceedings is not a threshold requirement. To this National Trust replies, in the alternative, that whether concurrent actions are parallel should be given significant weight in deciding whether to exercise discretion under the Declaratory Judgment Act. Because it maintains that the district court's finding on parallelism is wrong, National Trust submits that the dismissal was an abuse of discretion. We address National Trust's main and alternative arguments below.

A

To the extent that National Trust is asking us to create a bright-line rule that a district court cannot decline to entertain an action under the Declaratory Judgment Act unless there are parallel proceedings, its request comes too late given our existing precedent. We have already upheld district court dismissals of declaratory judgment claims in situations where there were no pending parallel proceedings. See Stevens v. Osuna , 877 F.3d 1293, 1311–13 (11th Cir. 2017) (declaratory judgment sought as to closures of immigration proceedings: no pending parallel proceedings in federal immigration court and federal district court); Cambridge Christian School, Inc. v. Florida High School Athletic Ass'n, Inc. , 942 F.3d 1215, 1251–52 (11th Cir. 2019) (declaratory judgment sought as to Establishment Clause claims under the U.S. and Florida Constitutions: no pending parallel proceedings in state court and federal district court). Cf. 17A Charles Alan Wright et al., Federal Practice and Procedure § 4247 n.5 (4th ed. 2021) ("[T]he substantial similarity of the issues in the state and federal proceedings is only one factor in the ... analysis, not an absolute requirement.").

Those cases, however, arose outside of the tort/insurance coverage context at issue here, and could arguably be distinguished on that ground. To eliminate any doubt, we now expressly hold that the existence of a parallel proceeding is not a prerequisite to a district court's refusal to entertain an action under § 2201(a). The Declaratory Judgment Act "confer[s] on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants," Wilton , 515 U.S. at 286, 115 S.Ct. 2137, and nothing in the text of § 2201(a) mentions parallel proceedings. So "discretion under the ... Act does not turn on the existence of parallel proceedings." Hellman , 610 F.3d at 378-79. Accord Specialty Ins. Co. v. Cole's Place, Inc ., 936 F.3d 386, 398 (6th Cir. 2019) ; Reifer v. Westport Ins. Corp. , 751 F.3d 129, 143 (3d Cir. 2014) ; Sherwin-Williams Co. v. Holmes Cnty. , 343 F.3d 383, 394 (5th Cir. 2003) ; United States v. City of Las Cruces, 289 F.3d 1170, 1183 (10th Cir. 2002) ; Aetna Cas. & Sur. Co. v. Ind-Com Elec. Co .,...