United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT October 5, 2004
_______________________ Charles R. Fulbruge III
Clerk
NO. 03-30531
_______________________
LEOLA CELESTINE, on behalf of Sylvia Green,
Joseph Broussard, Lameka Broussard,
Plaintiff-Appellee,
versus
NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PENNSYLVANIA, ET AL.,
Defendants.
NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PENNSYLVANIA, AMERICAN
INTERNATIONAL GROUP, INC.,
Defendants-Appellants.
Appeal from the United States District Court
for the Western District of Louisiana
Civil Action No. 02-CV-2611
Before JOLLY, DAVIS and JONES, Circuit Judges.
PER CURIAM:*
This case arises from the district court’s remand of a
declaratory judgment action in light of an underlying liability
case pending in Louisiana state court. Because the district court
abused its discretion in remanding, we vacate the order and remand
for further proceedings.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.
I. Background
In February 1998, Sylvia Green was injured while shopping
at a K-Mart store in New Iberia, Louisiana. Leola Celestine, as
curatrix of Green, filed suit against K-Mart. In October 2000, a
jury found K-Mart 95% liable and Grandella Hamilton, an assistant
manager, 5% liable for Green’s injuries. The jury awarded Green a
$1.4. million judgment. K-Mart appealed to the Louisiana Court of
Appeals and filed for bankruptcy.
As required by bankruptcy procedures, K-Mart disclosed to
its insurers, National Union Fire Insurance Company and American
International Group, Inc. (collectively “the insurers”). In
October 2002, Celestine filed an action in Louisiana state court
against the insurers seeking a declaratory judgment on their
liability for the underlying state court judgment against K-Mart.
In November 2002, the Louisiana Court of Appeals vacated the
judgment against Hamilton but increased the judgment against K-Mart
to $4.4 million. K-Mart appealed to the Louisiana Supreme Court,
which accepted certiorari in March 2004 and has yet to rule.
On December 20, 2002, the insurers removed the action to
district court pursuant to 28 U.S.C. § 1446 (removal statute),
asserting subject matter jurisdiction under 28 U.S.C. § 1332
(diversity jurisdiction) and 28 U.S.C. § 1334(b) (non-exclusive
Title 11 bankruptcy jurisdiction). Upon Celestine’s motion, the
district court remanded the action back to the state court pursuant
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to 28 U.S.C. § 2201 (Declaratory Judgment Act), while reserving
jurisdiction and timeliness issues. Finding that Celestine’s
request for declaratory judgment “centers around the previously
rendered state court judgment,” the district court determined that
the state court would be the most efficient forum to resolve the
insurance liability issue.
The issues before this court are our appellate juris-
diction to review the remand order, and whether the district court
abused its discretion in remanding the case. For the reasons
stated below, we resolve both issues affirmatively.
II. Discussion
First, this court’s jurisdiction to review a remand order
depends upon the district court’s stated grounds for remand.
Tillman v. CSX Transp., Inc., 929 F.2d 1023, 1026 (5th Cir. 1991).
Whereas appellate review of a remand order for lack of subject
matter jurisdiction is proscribed by 28 U.S.C. § 1447(d), an
appellate court may review a remand order issued as a matter of
discretion pursuant to the Declaratory Judgment Act, 28 U.S.C.
§ 2201. See Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 711-12
(1996) (holding that an “abstention-based” remand is reviewable
under 28 U.S.C. § 1291 as a discretionary “refusal to adjudicate”).
Here, the district court’s discretionary remand under the
Declaratory Judgment Act for reasons of judicial economy fits
within the narrow class of remand orders which this court may
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review. As such, this court has jurisdiction over the instant
appeal.
Second, we address whether the district court abused its
discretion by remanding the case back to the state court.
Generally, federal courts have a “strict duty to exercise the
jurisdiction that is conferred upon them by Congress.”
Quackenbush, 517 U.S. at 716. However, federal courts should
forego jurisdiction in declaratory judgment actions when
considerations of judicial economy overwhelm. Agora Syndicate,
Inc. v. Robinson Janitorial Specialists, Inc., 149 F.3d 371, 372
(5th Cir. 1998) (citing Wilton v. Seven Falls Co., 515 U.S. 277,
288, 115 S.Ct. 2137, 2143, 132 L.Ed.2d 214 (1995)). In cases where
judicial economy is not an issue, a district court’s decision to
forego the exercise of its jurisdiction is an abuse of discretion.
Agora Syndicate, 149 F.3d at 373.
Here, the district court’s sole rationale for remand —
the efficiency of litigating the personal injury judgment appeal
with the insurance liability action in the state court — is
inapposite. The request for declaratory judgment on the insurers’
liability inquires whether the insurers are liable if the judgment
against K-Mart is affirmed and is legally and factually distinct
from K-Mart’s liability in the underlying personal injury action.
Cf. Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494-94,
62 S. Ct. 1173, 1175-76, 86 L. Ed. 1620 (1942). Moreover, neither
insurance company is a party to the underlying personal injury
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suit, which is now closed to new claims, additional evidence, and
joinder. Id. While the instant case presents no basis for a
judicial economy-based remand to the state court, it does afford an
opportunity for the district court’s efficient litigation of the
insurers’ liabilities if the $4.4 million dollar judgment against
K-Mart is affirmed. Therefore, the district court’s remand was an
abuse of discretion.
III. CONCLUSION
The district court’s remand order is VACATED, and the
case is REMANDED for further proceedings consistent with this
opinion.
VACATED and REMANDED.
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