State Farm Mut. Auto. Ins. Co. v. Scholes

• Decision Date: 24 July 1979
• Docket Number: No. 78-2005,78-2005
• Citation: 601 F.2d 1151
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Appellant, v. A. L. SCHOLES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1151

601 F.2d 1151

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Appellant, v. A. L. SCHOLES, Defendant-Appellee.

No. 78-2005.

United States Court of Appeals Tenth Circuit.

Submitted on Briefs May 17, 1979.

Decided July 24, 1979.

Glenn C. Hanni and Robert A. Burton of Strong & Hanni, Salt Lake City, Utah, for plaintiff-appellant.

Matias A. Zamora, Santa Fe, N.M., C. R. Henriksen, Salt Lake City, Utah, and Lynn W. Mitton, Roosevelt, Utah, for defendant-appellee.

Before McWILLIAMS, BARRETT and LOGAN, Circuit Judges.

BARRETT, Circuit Judge.

State Farm Mutual Automobile Insurance Company (State Farm) appeals from an order of the district court dismissing its declaratory relief action against A. L. Scholes (Scholes) Without prejudice.

On January 10, 1971, Marita Watchman (Watchman) was injured in an accident which occurred when Scholes backed up his pickup truck while Watchman, in the company of her grandmother, was attempting to board the pickup truck from the rear. ¹ At the time of the accident Scholes was insured by State Farm for bodily injury and property damage liability.

Following the accident, Watchman brought suit against Scholes in a New Mexico state court. That suit ultimately resulted in a judgment for Watchman, and against Scholes, in the amount of $273,783.00.

On October 20, 1977, Watchman filed an action against Scholes in the District Court of Duchesne County, Utah, seeking enforcement of the New Mexico judgment. Scholes answered and filed a third-party complaint against State Farm alleging, in essence, that State Farm breached its duties of good faith and fair dealing by failing to: advise Scholes of settlement offers made within the policy limits; provide him adequate post-judgment legal representation; and pay the $50,000.00 policy limits following rendition of judgment.

In response, State Farm filed this action in federal district court seeking a declaratory judgment relieving it of "any further obligation to provide a defense to Scholes . . ., and relieving State Farm of any obligation to pay any claim of Marita Watchman for personal injuries arising out of said automobile accident . . . ." (R., Vol. I, p. 3.) The declaratory relief was sought on the grounds that Scholes, as the insured of State Farm, breached the insuring agreement, particularly the cooperation clause, by failing to notify State Farm that an action had been commenced against him in the District Court of Duchesne County, Utah; by refusing State Farm its right to employ attorneys to represent Scholes in the Utah litigation; and by filing an answer admitting all of the material allegations thereof.

In response to the complaint for declaratory judgment, Scholes filed a motion to dismiss "on the ground that there is pending in the District Court . . ., State of Utah, an action involving the same parties, facts, transactions and subject matter as the instant action; that the claim of Plaintiff State Farm Mutual Automobile Insurance Company in the instant action is an affirmative defense required to be pleaded in that action; that the said State court action will be Res judicata of all facts and claims presented in the instant action, and that the State court action has advanced further than the instant one." (R., Vol. I, p. 88.)

On October 12, 1978, the federal district court granted Scholes' motion and ordered that the action be dismissed Without prejudice. (R., Vol. I, p. 107.) State Farm filed a timely notice of appeal. (R., Vol. I, p. 112.)

The sole issue on appeal is whether the district court abused its discretion in dismissing the complaint Without prejudice, which action effectively stayed the proceedings pending the outcome of the concurrent state litigation.

I. Federal Appellate Jurisdiction

At the outset, we must determine whether this court has jurisdiction to conduct the review requested by State Farm, despite the willingness and consent of the parties. Mountain Fuel Supply Co. v. Johnson, 586 F.2d 1375 (10th Cir. 1978), Cert. denied, --- U.S. ----, 99 S.Ct. 2182, 60 L.Ed.2d 1058 (1979); Golden Villa Spa, Inc. v. Health Industries, Inc., 549 F.2d 1363 (10th Cir. 1977). Generally, courts of appeal review only final orders of the district courts. See : 28 U.S.C. § 1291.

In Cohen v. Beneficial Industrial Loan Corporation, 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed.2d 1528 (1949), the Supreme Court addressed the "final order" requirement of § 1291, Supra :

(Section 1291) disallow(s) appeal from any decision which is tentative, informal or incomplete. Appeal gives the upper court a power of review, not one of intervention. So long as the matter remains open, unfinished or inconclusive, there may be no intrusion by appeal. . . .

Nor does a statute permit appeals, even from fully consummated decisions, where they are but steps towards final judgment in which they will merge. The purpose is to combine in one review all stages of the proceeding that effectively may be reviewed and corrected if and when final judgment results. . . .

337 U.S., at p. 546, 69 S.Ct., at p. 1225.

Although some courts have held that a lower court's abstention order is "final" for purposes of appeal, ² this court has held that "mandamus is available to review a trial court's grant or refusal of a stay of proceedings." Pet Milk Company v. Ritter, 323 F.2d 586, 588 (10th Cir. 1963). We believe that our views expressed in Pet Milk Company were recently affirmed by the Supreme Court in Will v. Calvert Fire Insurance Company, 437 U.S. 655, 98 S.Ct. 2552, 57 L.Ed.2d 504 (1978).

In Calvert Fire Insurance Company, supra, the court "granted certiorari to consider the propriety of the use of mandamus to review a District Court's decision to defer to concurrent state proceedings . . . ." Will v. Calvert Fire Insurance Company, supra, at 657-658, 98 S.Ct. at 2555.

In affirming the district court's stay of its proceedings pending the outcome of concurrent state litigation, the court extensively discussed the mandamus remedy and reaffirmed the "rule that a district court's decision to defer proceedings because of concurrent state litigation is generally committed to the discretion of that court." Will v. Calvert Fire Insurance Company, supra, at 665, 98 S.Ct. at 2559.

Thus, in our view, State Farm could have attempted to invoke the jurisdiction of this court only by means of a petition for writ of mandamus, rather than by appeal. Nonetheless, we are in agreement that we may treat the "appeal" as an application for leave to file a petition for writ of mandamus pursuant to the All Writs Act, 28 U.S.C. § 1651(a). See : Hartland v. Alaska Airlines, 544 F.2d 992 (9th Cir. 1976); Flora Construction Co. v. Fireman's Fund Ins. Co., 307 F.2d 413 (10th Cir. 1962), Cert. denied, 371 U.S. 950, 83 S.Ct. 505, 9 L.Ed.2d 499 (1963).

II.

Mandamus is an extraordinary writ, and the requirements for its issuance are strict. Prop-Jets, Inc. v. Chandler, 575 F.2d 1322 (10th Cir. 1978). The "traditional use of the writ in aid of appellate jurisdiction . . . has been to confine an inferior court to a lawful exercise of its prescribed jurisdiction or to compel it to exercise its authority when it is its duty to do so." Roche v. Evaporated Milk Association, 319 U.S. 21, 26, 63 S.Ct. 938, 941, 87 L.Ed. 1185 (1943). Mandamus is proper only when a party has no other adequate means to obtain relief. The right to relief must be clear and indisputable. Kerr v. United States District Court, 426 U.S. 394, 402, 96 S.Ct. 2119, 48 L.Ed.2d 725 (1976). Where a "district court persistently and without reason refuses to adjudicate a case properly before it, the Court of Appeals may issue the writ 'in order that (it) may exercise the jurisdiction of review given by law.' " Will v. Calvert Fire Insurance Company, supra, 437 U.S. at 662, 98 S.Ct. at 2557 (quoting from Insurance Company v. Comstock, 16 Wall 258, 270, 21 L.Ed. 493 (1873)). Courts proceed with extreme caution in granting writs of mandamus the petitioning party having "the burden of showing that its right to issuance of the writ is 'clear and indisputable.' " Bankers Life and Casualty Company v. Holland, 346 U.S. 379, 384, 74 S.Ct. 145, 148, 98 L.Ed. 106 (1953) (quoting from United States v. Duell, 172 U.S. 576, 582, 19 S.Ct. 286, 43 L.Ed. 559 (1899)).

Speaking to the issue before us here, the Supreme Court in Will v. Calvert Fire Insurance Company, supra, said:

It is well established that 'the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction.' McClellan v. Carland, 217 U.S. 268, 282, 30 S.Ct. 501, 505, 54 L.Ed. 762 (1910). It is equally well settled that a district court is 'under no compulsion to exercise that jurisdiction,' Brillhart v. Excess Ins. Co., 316 U.S. 491, 494, 62 S.Ct. 1173, 1175, 86 L.Ed. 1620 (1942), where the controversy may be settled more expeditiously in the state court. Although most of our decisions discussing the propriety of stays or dismissals of duplicative actions have concerned conflicts of jurisdiction between two federal district courts. e.g., Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 72 S.Ct. 219, 96 L.Ed. 200 (1952); Landis v. North American Co., 299 U.S. 248, 57 S.Ct. 163, 81 L.Ed. 153 (1936), we have recognized the relevance of those cases in the analogous circumstances presented here. See Colorado River (Colorado River Conservation Dist. v. United States ) 424 U.S. (800), at 817-819, 96 S.Ct. 1246-1247, (47 L.Ed.2d 483.) In both situations, the decision is largely committed to the 'carefully considered judgment," Id., at 818, 96 S.Ct. 1246, of the District Court.

There are sound reasons for our reiteration of the rule that a district court's decision to defer proceedings because of concurrent state litigation is generally committed to the discretion of that court. No one can seriously contend that a busy federal trial judge, confronted both with competing demands...