Old Republic Union Ins. Co. v. Tillis Trucking Co., Inc.

Decision Date14 October 1997
Docket NumberNo. 97-6179,97-6179
Citation124 F.3d 1258
Parties11 Fla. L. Weekly Fed. C 625 OLD REPUBLIC UNION INSURANCE COMPANY, Plaintiff-Appellant, v. TILLIS TRUCKING CO., INC.; Tillis Land & Timber Co.; Willie Ray Pride; Malachi Moses, Defendants-Appellees. Non-Argument Calendar.
CourtU.S. Court of Appeals — Eleventh Circuit

J. Robert Persons, Atlanta, GA, Harry Cole, Hill, Hill, Carter, Franco, Cole & Black, P.C., Montgomery, AL, Hugh C. Griffin, Diane I. Jennings, Lord, Bissell and Brook, Chicago, IL, for Plaintiff-Appellant.

J. Keith Givens, Joseph D. Lane, Dotham, AL, for Moses.

David B. Chancellor, Beasley, Wilson Allen, Main and Crow, Montgomery, Al, for Tillis.

David B. Byrne, Jr., Robison & Belser, P.A., Montgomery, AL, for Willie Pride.

Appeal from the United States District Court for the Middle District of Alabama.

Before TJOFLAT, COX and CARNES, Circuit Judges.

CARNES, Circuit Judge:

This case arises from the efforts of Old Republic Union Insurance Company ("Old Republic") to avoid payment of a state court judgment against its insured and, alternatively, to have its obligations under certain insurance policies determined by a federal court instead of state court. Old Republic sought to do that by instituting a declaratory judgment action in federal district court. Relying on principles of federalism and comity, including those embodied in Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), and its progeny, the district court dismissed the lawsuit without prejudice, in favor of pending state court proceedings. We affirm.

I. BACKGROUND

On December 14, 1994, a tragic accident occurred between a Tillis Trucking Company tractor-trailer driven by Willie Ray Pride and an automobile driven by Cynthia Moses who died as a result of the accident. Together with the co-administrators of the estate, Mrs. Moses' husband, Malachi Moses, brought a wrongful death action in Dale County, Alabama, against Pride, Tillis Trucking Company, and its related company, Tillis Land & Timber (collectively, the "Tillis Companies").

Old Republic insures the Tillis Companies under both a commercial automobile liability policy and a general liability policy. Accordingly, Old Republic provided a defense to all the defendants in the wrongful death action, while maintaining that it was potentially responsible for a judgment only up to the $1,000,000 policy limit of the commercial automobile policy. Moses and independent counsel for the Tillis Companies contended that Old Republic would also be liable under the terms of the general liability policy for any judgment in excess of that policy limit.

At trial, Old Republic moved to intervene in order to submit interrogatories to the jury for the purpose of establishing whether liability was based on any theory that would implicate the general liability policy in addition to the commercial automobile policy. Initially, the state court granted Old Republic's motion for intervention, but it later reversed that ruling. Accordingly, Old Republic's proposed interrogatories were not submitted to the jury. On September 17, 1996, the jury returned a verdict against Pride and Tillis Trucking, awarding Moses $7,000,000 in punitive damages. 1

Three days later, on September 20, 1996, Old Republic filed a declaratory judgment action in federal district court, seeking the following declarations: (1) the Alabama Wrongful Death Statute, Ala.Code § 6-5-410, is unconstitutional; (2) the Alabama Wrongful Death Statute, if constitutional, cannot be constitutionally enforced against Old Republic or any other insurer; (3) Old Republic's liability to the defendants cannot exceed the $1,000,000 policy limit of its commercial automobile insurance policy with the insured.

On October 18, 1996, Moses and the co-administrators filed a second state lawsuit against Old Republic, Tillis Trucking, and Pride. That lawsuit requested the state court to: (1) enter an order requiring Old Republic to pay the limit of the commercial automobile policy to the plaintiffs, and (2) conduct a jury trial to determine the existence and application of coverage under the general liability policy. Tillis Trucking answered and filed a cross-claim against Old Republic, seeking compensatory and punitive damages for Old Republic's failure to settle the prior wrongful death action.

On February 5, 1997, the district court dismissed Old Republic's declaratory judgment action without prejudice in favor of the pending second state action. Relying on principles of federalism and comity, including those embodied in Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), and its progeny, the district held that exercise of jurisdiction over the declaratory judgment action would be "contrary to the established doctrines which discourage such interference with state courts." District Court Op. at 12-13. This appeal followed.

II. STANDARD OF REVIEW

"Since its inception, the Declaratory Judgment Act has been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants." Wilton v. Seven Falls Co., 515 U.S. 277, 284, 115 S.Ct. 2137, 2142, 132 L.Ed.2d 214 (1995). "Consistent with the nonobligatory nature of the remedy, a district court is authorized, in the sound exercise of its discretion, to stay or to dismiss an action seeking a declaratory judgment...." Id. at 286, 115 S.Ct. at 2143. Accordingly, the Supreme Court has directed that "district courts' decisions about the propriety of hearing declaratory judgment actions, which are necessarily bound up with their decisions about the propriety of granting declaratory relief, should be reviewed for abuse of discretion," id. at 288, 115 S.Ct. at 2144, and we apply that standard here.

III. ANALYSIS

The district court declined to exercise jurisdiction over Old Republic's declaratory judgment action, relying on "considerations of practicality and wise judicial administration." District Court Op. at 9 (quoting Wilton, 515 U.S. at 286, 115 S.Ct. at 2143). Among those considerations were the abstention principles of Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), particularly as illuminated by the Supreme Court's subsequent decision in Middlesex County Ethics Committee v. Garden State Bar Association, 457 U.S. 423, 102 S.Ct. 2515, 73 L.Ed.2d 116 (1982). As we shall explain, those principles alone are sufficient to prevent the district court's decision from being an abuse of discretion. 2

As the district court implicitly recognized, a declaration that the Alabama Wrongful Death Statute is unconstitutional would have the effect of enjoining the state court from enforcing the $7,000,000 wrongful death judgment entered against the Tillis Companies and from entertaining the subsequent state action brought by Moses and the co-administrators against Old Republic seeking partial satisfaction of that judgment from the policies of insurance.

Under Younger v. Harris and its progeny, federal district courts must refrain from enjoining pending state court proceedings except under special circumstances. See Younger, 401 U.S. at 53-54, 91 S.Ct. at 755. Under Samuels v. Mackell, 401 U.S. 66, 73, 91 S.Ct. 764, 768, 27 L.Ed.2d 688 (1971), the principles of Younger apply to declaratory judgments that would effectively enjoin state proceedings. Accordingly, the principles of Younger have direct application to this case. 3

Although Younger itself only concerned state criminal proceedings, its principles have been extended to prohibit federal courts from enjoining state court civil proceedings where important state interests are involved:

The policies underlying Younger are fully applicable to noncriminal judicial proceedings when important state interests are involved. The importance of the state interest may be demonstrated by the fact that the noncriminal proceedings bear a close relationship to proceedings criminal in nature.... Proceedings necessary for the vindication of important state policies or for the functioning of the state judicial system also evidence the state's substantial interest in the litigation. Where vital state interests are involved, a federal court should abstain unless state law clearly bars the interposition of the constitutional claims.....

The question in this case is threefold: first, do [the proceedings] constitute an ongoing state judicial proceeding; second, do the proceedings implicate important state interests; and third, is there an adequate opportunity in the state proceedings to raise constitutional challenges.

Middlesex County Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 432, 102 S.Ct. 2515, 2521, 73 L.Ed.2d 116 (1982) (citations and internal quotation marks omitted).

Applying the Middlesex factors to this case, it is readily apparent that the first factor is met. Clearly, there is an ongoing state judicial proceeding in this case that effectively would be enjoined if the federal court declared the Alabama Wrongful Death Statute to be unconstitutional: the state court enforcement action brought by Moses and the co-administrators. It is of no moment that the state court action was filed after Old Republic filed its federal declaratory judgment action. The Supreme Court has made it plain that the principles of Younger apply with equal force in the context of subsequently filed state court proceedings, so long as those "state court proceedings are initiated 'before any proceedings of substance on the merits have taken place in federal court.' " Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229, 238, 104 S.Ct. 2321, 2328, 81 L.Ed.2d 186 (1984) (quoting Hicks v. Miranda, 422 U.S. 332, 349, 95 S.Ct. 2281, 2292, 45 L.Ed.2d 223 (1975)).

Skipping the second factor for the moment, it is also clear that Old Republic has an adequate opportunity to raise in state court any constitutional objections it has to the Alabama Wrongful Death Statute. Certainly, Alabama...

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