State Farm Fire & Cas. Co. v. Mhoon, 93-2103

Decision Date01 August 1994
Docket NumberNo. 93-2103,93-2103
Citation31 F.3d 979
PartiesSTATE FARM FIRE & CASUALTY COMPANY, Plaintiff-Appellee, v. Robert Ray MHOON, Defendant-Appellant, Takura Fujiwara, and Melinda Isabel Fujiwara, Defendants.
CourtU.S. Court of Appeals — Tenth Circuit

James T. Roach, Albuquerque, NM, for defendant-appellant.

Cynthia Braun Greenwell (Randal W. Roberts with her on the brief), of Simone, Roberts & Weiss, P.A., Albuquerque, NM, for plaintiff-appellee.

Before WHITE, Associate Justice (Ret.); * TACHA, and BRORBY, Circuit Judges.

WHITE, Associate Justice (Ret.).

State Farm Fire & Casualty Company sought and received in federal district court a declaration that it had no obligation to insure or defend Robert Mhoon, one of its policyholders, in a state tort action. We are now called upon to review the district court's decision to exercise jurisdiction over State Farm's claim, and its ultimate disposition of that claim on the merits. We do so and affirm.


Robert Mhoon and Takuro Fujiwara were neighbors. On February 16, 1990, an afternoon conversation between the pair in Mhoon's garage erupted into an argument. The argument itself escalated into physical confrontation when Mhoon grabbed a metal bar and tried to strike Fujiwara with it. Fujiwara managed to wrestle the bar away, but Mhoon then ran into an adjoining garage, unlocked a car he had parked there, reached underneath a note pad and tissue box in the car's console, and retrieved a gun he had secreted in that spot. The gun was unloaded so Mhoon grabbed a magazine of bullets also stored in the console and inserted it into the gun. Mhoon then went looking for Fujiwara. Finding him walking outside, Mhoon pointed the gun at Fujiwara's head, "kicked the slide" to make a warning sound, shot twice in Fujiwara's direction, and hit him once.

The Fujiwara shooting gave rise to three separate legal actions, including the one now before us on appeal. First, Mhoon was criminally charged in New Mexico state court with aggravated battery. Though Mhoon contended he had shot Fujiwara only in self defense, the jury was unimpressed and returned a guilty verdict on February 25, 1991. 1 Secondly, while the criminal action was pending, Fujiwara and his wife, Melinda, filed a civil action in state court on November 2, 1990. Their complaint alleged primarily that Mhoon had committed a number of intentional torts against the couple. State Farm, Mhoon's insurer under a homeowner's policy, agreed to defend him against the Fujiwaras, but only under a reservation of rights which left State Farm free to seek a judicial determination of its contractual obligations to Mhoon.

On June 12, 1991, State Farm exercised its reserved rights and filed this, the third action to arise out of the Fujiwara shooting, in federal district court. The company named Mhoon and the Fujiwaras as joint defendants and asked the court to exercise jurisdiction under the Declaratory Judgment Act, 28 U.S.C. Sec. 2201, 2 and declare that, under its policy with Mhoon, it owed him neither a duty to defend the Fujiwaras' action nor to pay any adverse judgment entered against Mhoon in that action. Specifically, State Farm contended that Mhoon shot Fujiwara intentionally and that its homeowner's policy with Mhoon covered only accidental, not intentional harms that he might commit.

Though the state tort suit between Mhoon and Fuijiwara was still in progress at the time, the federal district judge agreed to hear State Farm's declaratory action. He also entertained arguments on the merits and, on March 4, 1993, entered summary judgment in State Farm's favor. The judge ruled as a matter of law that Mhoon had intentionally shot Fujiwara and that, under the terms of the homeowner policy, such behavior was not covered and gave rise to no duty to defend. Mhoon then filed this appeal. 3

After briefs were entered in this appeal, the state tort action came to a conclusion. On September 7, 1993 the jury awarded the Fujiwaras a substantial sum for harm done by Mhoon's "intentional" act; Mhoon has informed this court that he will not appeal that judgment. 4


On appeal before us now, Mhoon argues that the district court should not have accepted jurisdiction over State Farm's claim. More precisely, he does not suggest that the trial court lacked subject matter jurisdiction over this diversity action. Rather, he contends only that the Declaratory Judgment Act provides the district court with the discretion to refuse to hear an otherwise justiciable declaratory action and that, given the nature and setting of State Farm's claim, the district court ought to have employed that discretion to dismiss this matter.

Appellant is, of course, correct that the district court is not obliged to entertain every justiciable declaratory claim brought before it. The Supreme Court has long made clear that the Declaratory Judgment Act "gave the federal courts competence to make a declaration of rights; it did not impose a duty to do so." Public Affairs Associates, Inc. v. Rickover, 369 U.S. 111, 112, 82 S.Ct. 580, 581, 7 L.Ed.2d 604 (1962). See also Brillhart v. Excess Ins. Co., 316 U.S. 491, 494, 62 S.Ct. 1173, 1175, 86 L.Ed. 1620 (1942). This circuit has provided trial courts in its bailiwick with substantial guidance on this score, instructing them to weigh two questions originally supplied by Professor Borchard: Will a declaration of rights, under the circumstances, serve to clarify or settle legal relations in issue? Will it terminate or afford relief from the uncertainty giving rise to the proceeding? If an affirmative answer can be had to both questions, the trial court should hear the case; if not, it should decline to do so. See, e.g., Delaney v. Carter Oil Co., 174 F.2d 314, 317 (10th Cir.), cert. denied, 338 U.S. 824, 70 S.Ct. 71, 94 L.Ed. 501 (1949) (citing E. Borchard, Declaratory Judgments 299 (2d ed. 1941)); Kunkel v. Continental Cas. Co., 866 F.2d 1269 (10th Cir.1989) (same). 5 As noted approvingly by this court in Kunkel, 866 F.2d at 1275 n. 4, however, the Sixth Circuit has recently suggested that a trial judge should weigh an expanded list of factors when deciding whether or not to hear a declaratory action. According to that court, he should ask

whether a declaratory action would settle the controversy; whether it would serve a useful purpose in clarifying the legal relations at issue; whether the declaratory remedy is being used merely for the purpose of "procedural fencing" or "to provide an arena for a race to res judicata "; whether use of a declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction; and whether there is an alternative remedy which is better or more effective.

Allstate Ins. Co. v. Green, 825 F.2d 1061, 1063 (6th Cir.1987).

While imposing on the trial court the obligation to weigh these various factors when deciding whether to hear a declaratory judgment action, this circuit has repeatedly over the years held that on appeal it will not engage in a de novo review of all the various fact-intensive and highly discretionary factors involved. Instead, it will only ask whether the trial court's assessment of them was so unsatisfactory as to amount to an abuse of discretion. See, e.g., Duggins v. Hunt, 323 F.2d 746 (10th Cir.1963); Kunkel, 866 F.2d at 1273. 6

Appellant submits that the district court abused its discretion when it decided to hear this controversy. He insists that when the court took the case "[t]he State Court proceeding [had] not yet determined whether the act [was] intentional or not. Therefore, the U.S. District Court ... put [itself] in the position of dictating to the State Court that the act [was] intentional or making the statement that regardless of the factual determination in State Court, the federal court makes its own determination on the issue.... Mhoon contends those factual issues should be determined by State Court, not by Federal Court." Paraphrasing, appellant is concerned that the district court's intercession added to the uncertainty about the parties' positions and raised serious federal-state court comity problems. The critical question whether Mhoon acted intentionally was before both the state and federal courts simultaneously and the federal court's failure to await the state court's resolution of the issue opened the possibility that the state court would be foreclosed from deciding that Mhoon behaved only negligently and was, thus, entitled to be insured and defended.

We do not, however, see any abuse of discretion in the trial court's decision to hear this case. Leading us to our conclusion is the fact that a live need for a declaration of State Farm's rights and duties did, in fact, exist. Neither party before us has suggested that State Farm was, or could have been made, a party to the state tort action, thus obviating any need for an independent declaratory action and providing a simpler and more efficient resolution of State Farm's obligations toward Mhoon. Indeed, both concede that a suit like this one would have been required at some point in some case other than the state tort action. We note, moreover, that there is a substantial interest in deciding these issues without undue delay, particularly the question of the duty to defend. See generally Metro. Property & Liability Ins. Co. v. Kirkwood, 729 F.2d 61 (1st Cir.1984) (deciding the duty to defend question first would allow the state tort action to be tried without the potential of a conflict of interest arising between insurer and insured). The federal district court was an available forum to State Farm, and on the facts before us we see no reason why the declaratory judgment action should not have proceeded as it did.

Finally, we add that entertaining State Farm's summary judgment motion involved no undue interference with the state proceeding. In hearing and deciding the summary judgment motion, the trial judge inquired whether,...

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