Polido v. State Farm Mut. Auto. Ins. Co.
| Decision Date | 08 April 1997 |
| Docket Number | No. 95-16756,95-16756 |
| Citation | 110 F.3d 1418 |
| Parties | 97 Cal. Daily Op. Serv. 2580, 97 Daily Journal D.A.R. 4569 Celeste POLIDO, individually; Matthew K. Polido, a minor person Celeste Polido as guardian, Plaintiffs-Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Gerard D. Lee Loy, Ahmadia & Lee Loy, Hilo, Hawaii, for plaintiff-appellant.
Lisa M. Ginoza, McCorriston Miho Miller Mukai, Honolulu, Hawaii, for defendant-appellee.
Appeal from the United States District Court for the District of Hawaii, Alan C. Kay, District Judge, Presiding. D.C. Nos. CV-94-00657-ACK/FIY, CV-95-00314-ACK/BMK.
Before: WALLACE, SCHROEDER, and ALARCON, Circuit Judges.
This action arises from the accidental shooting of Matthew Polido, by his father Solomon Polido, while they were returning from a hunting trip. Celeste Polido, individually and as guardian of Matthew, filed an action in a Hawaii state court against State Farm Mutual Automobile Insurance Co. ("State Farm") in which she sought a declaration of coverage for Matthew's injuries under an automobile insurance policy issued by State Farm to Celeste Polido and her husband. She also alleged several state law claims for monetary damages. State Farm removed the action to federal court pursuant to 28 U.S.C. § 1441.
Nine months after Celeste Polido filed her claim for declaratory relief in state court, State Farm filed an action in federal court against Solomon, Celeste Polido's husband, pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201. State Farm requested a declaration of its duties, under that same insurance policy, to defend and indemnify Solomon in a pending state court tort action filed by Celeste Polido against her husband. The district court consolidated the two declaratory judgment actions, and entered an order granting summary judgment in favor of State Farm and against Celeste Polido. The order does not refer to the discretionary nature of the district court's jurisdiction. We must decide whether the district court was compelled to exercise its jurisdiction over the declaratory judgment claim filed by Celeste Polido after the dismissal of her monetary claims against State Farm. We conclude that upon dismissal of the removed monetary claims, the district court had the discretion to stay or remand Celeste Polido's removed state law declaratory relief action. We vacate and remand this matter to the district court to give the parties the opportunity to inform the district court whether this is an appropriate case for the exercise of its discretionary jurisdiction.
On July 28, 1992, Matthew Polido was accidentally injured when his father attempted to unload a rifle that he had placed under the front seat of his vehicle in preparation for a hunting trip. State Farm, the insurer of the vehicle, denied coverage under the Polidos' automobile policy.
On July 28, 1994, Celeste Polido, individually and as guardian for Matthew, filed an action in Hawaii state court against State Farm, in which she sought a declaration of coverage under the policy, and alleged claims for monetary damages. 1 On the same day, she also filed a separate action in state court seeking damages from her husband for his alleged negligence in unloading the rifle. State Farm removed the action filed against it by Celeste Polido to the United States District Court for the District of Hawaii on August 26, 1994. On February 22, 1995, Celeste Polido and State Farm stipulated to the dismissal of all claims for "extra-contractual damages" filed by Celeste Polido against State Farm. The stipulation provides: "[T]he only claims remaining for adjudication in this action are those claims seeking a declaration from the court that coverage exists under the applicable automobile policy for medical coverage, no-fault coverage, and liability coverage."
On April 28, 1995, State Farm filed an action in the district court against Solomon Polido pursuant to the Declaratory Judgment Act. State Farm prayed for a declaration that it had no duty to defend or indemnify Solomon Polido in the pending state court tort action filed against him by Celeste Polido. 2
Celeste Polido filed a motion for a summary judgment on May 5, 1995, in her removed state declaratory relief action. She argued that the automobile insurance policy required State Farm to pay no-fault benefits to Matthew Polido and to provide bodily injury coverage to Solomon Polido. On June 19, 1995, State Farm filed a motion for a summary judgment in Celeste Polido's removed state declaratory relief action in which it requested the court to determine that the automobile insurance policy did not provide for coverage for Matthew Polido or Solomon Polido. State Farm filed an opposition to Celeste Polido's motion for a summary judgment on June 22, 1995. Meanwhile, on June 8, 1995, State Farm filed a motion for the entry of a default judgment in its federal declaratory judgment action against Solomon Polido, based on his failure to plead and defend within 20 days of the filing of the complaint.
On July 5, 1995, State Farm and Celeste Polido filed a stipulation to consolidate the removed declaratory relief action with the suit filed by State Farm against Solomon Polido pursuant to the Declaratory Judgment Act. On the same date, Celeste Polido filed an opposition to State Farm's motion for a summary judgment in the removed declaratory relief action. On July 7, 1995, Celeste Polido filed a memorandum opposing the entry of a default judgment against Solomon Polido in State Farm's federal declaratory judgment action.
On July 10, 1995, the district court entered an order consolidating the declaratory relief actions. A hearing on the cross-motions for a summary judgment was conducted on July 11, 1995. On July 24, 1995, the district court "granted in full" State Farm's motion for a summary judgment, and denied Celeste Polido's motion for a summary judgment on the question "whether Defendant has to provide coverage and benefits to Matthew."
Judgment was entered as to both actions in this consolidated matter on July 27, 1995. Celeste Polido has appealed from the judgment against her in Civil No. 94-00657-ACK. No appeal has been filed in Civil No. 95-00314 by either Celeste Polido or Solomon Polido.
Neither party advised the district court that its jurisdiction under the Declaratory Judgment Act was discretionary. The parties also failed to identify any special circumstances that weighed in favor of reaching the merits of the declaratory relief claims in the consolidated actions. The district court's written order does not refer to the discretionary nature of its jurisdiction. The court made no findings concerning the appropriateness of the exercise of its discretionary jurisdiction in this diversity action. No reference to this issue appears in the initial briefs filed by the parties before this court. On September 20, 1996, we directed the parties to file supplemental briefs "addressing the question whether the district court properly exercised jurisdiction over a request for a declaratory judgment that raises only questions of state law and was brought during the pendency of a related state court proceeding, and, if not, whether the court should remand with directions to dismiss the complaint."
In her response to our request, Celeste Polido urges us to vacate the judgment of the district court and remand with instructions to dismiss. She argues that this action presents only novel state law issues that should be resolved in the pending state court tort action against Solomon Polido.
State Farm urges us to affirm the district court's decision on the merits, because, in addition to her claim for declaratory relief Celeste Polido also alleged independent claims for monetary relief that were within the district court's nondiscretionary subject matter jurisdiction on the date they were removed. State Farm also points out that the removed state declaratory judgment action is not parallel to the pending state court tort action filed by Celeste Polido against Solomon Polido. State Farm asserts that the only issue in the pending state court tort action is whether Solomon Polido is liable for negligence in unloading his rifle, while the removed declaratory relief claim involves State Farm's contractual liability under Hawaii insurance law to pay no-fault benefits to Matthew Polido.
Celeste Polido filed her declaratory relief action in state court pursuant to Haw.Rev.Stat. § 632-1. 3 The question whether the district court properly exercised its discretion to issue a declaration in a removed diversity action for declaratory relief is controlled by federal law. Golden Eagle Ins. Co. v. Travelers Cos., 103 F.3d 750, 753 (9th Cir.1996). Accordingly, we must apply the principles announced in Brillhart v. Excess Ins. Co., 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942) and Wilton v. Seven Falls Co., 515 U.S. 277, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995) in reviewing the district court's exercise of its discretion in issuing a decision on the merits in the removed action for declaratory relief.
The district court had the "unflagging obligation" to exercise its jurisdiction over the monetary claims exceeding $50,000 in Celeste Polido's complaint against State Farm, in the absence of proof of exceptional circumstances. Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 1246, 47 L.Ed.2d 483 (1976). 4 If the monetary claims had not been dismissed, a proper concern for judicial economy would have weighed in favor of the district court's exercise of its discretionary jurisdiction over the state law claim for declaratory relief. See Maryland Cas. Co. v. Knight, 96 F.3d 1284, 1289 (9th Cir.1996) (...
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