Continental Casualty Co. v. Fuscardo

NIEMEYER, Circuit Judge,

dissenting:

Michael Fuscardo, a police officer, was seriously injured when he stepped from his patrol car and walked some 15 feet toward a parked van to investigate a littering complaint. As he approached the van to talk to Samuel Lorello, who was in the van, Lorello threw a mixture of caustic liquids in Officer Fuscardo’s face, blinding him. Lorello fled the scene, but was later apprehended and, several months later, a state court found him incompetent to stand trial for criminal charges.

Officer Fuscardo notified Continental Casualty Company of a potential claim for personal injury because Continental Casualty had issued an insurance policy providing coverage for Officer Fuscardo’s patrol car, which included uninsured motorist coverage. Lo-rello was uninsured at the time he caused personal injury to Fuscardo. In December 1992, when Officer Fuscardo sued Lorello in state court for personal injuries, he also provided Continental Casualty with a copy of the complaint.

Promptly after receiving notice of the suit, Continental Casualty instituted this declaratory judgment action in federal court under 28 U.S.C. § 2201 for a declaration that its insurance policy did not cover Fuscardo’s injuries because they did not arise out of the “normal use” of an automobile. Jurisdiction of the district court was based on diversity of citizenship under 28 U.S.C. § 1332. The district court, however, declined to exercise jurisdiction and dismissed the case, relying on our decision in Mitcheson v. Harris, 955 F.2d 235 (4th Cir.1992). In doing so, the district court misconstrued the holding of Mitcheson and, in my judgment, improperly refused to exercise diversity jurisdiction which had been properly invoked.

Section 2201 of Title 28 authorizes federal courts to afford the remedy of a declaratory judgment. The statute provides, in relevant part:

Any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.

While recognizing that the remedy has an aspect of discretion about it and need not automatically be afforded whenever prayed, “a federal district court should normally entertain a declaratory judgment action within its jurisdiction when it finds that the declaratory relief sought (i) ‘will serve a useful purpose in clarifying and settling the legal relations in issue,’ and (ii) “will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.’ ” Nautilus Ins. Co. v. Winchester Homes, Inc., 15 F.3d 371, 375 (4th Cir.1994) (internal citations omitted). When a district court decides not to provide the declaratory *970judgment remedy, it must do so for good reason, id., and we review that decision “essentially de novo.” Id.

This case presents the classical archetype for the appropriate use of a declaratory judgment action. An insurance company, which is called upon to provide coverage in circumstances which do not readily appear to fall within the scope of coverage, seeks a judicial determination that its policy affords no coverage. The decision on the coverage issue will not put at risk, by issue preclusion or claim preclusion, the ability of any state court to adjudicate fairly the underlying liability. The underlying state suit against Lo-rello in this case is a straightforward tort action for personal injury caused by his throwing caustic liquid at Officer Fuseardo. The declaratory judgment action in federal court raises the sole issue of whether Officer Fuscardo’s injury resulted from the operation, maintenance or use of an automobile, and the resolution of this issue would not draw upon any element that is necessary to establish or defend against the personal injury claim in the state court.

The simple fact that the state court action was pending when the federal declaratory action was filed is not determinative of the question. Indeed, it is common practice for insurance companies to file declaratory judgment actions in response to coverage questions raised by underlying state lawsuits. See Nautilus, 15 F.3d at 376 n. 4.

In addition to not interfering with the state court’s ability to adjudicate the personal injury action, the federal declaratory judgment action would not resolve any difficult question of state law. On the contrary, it would appear that the coverage issue is dictated by the decision in Baber v. Fortner, 186 W.Va. 413, 412 S.E.2d 814, 819 (1991), where the court held that as a matter of law, an intentional shooting from the cab of a stationary truck was not an act arising out of the ownership, maintenance or use of the vehicle. See also Watkins v. Continental Casualty Co., No. 92-1626, 1993 WL 127950 (4th Cir. Apr. 19, 1993). Indeed, the majority opinion in this case acknowledges this fact: “Here, the questions of state law involve the application of relatively settled principles of law to particular disputed facts.” Op. at 967.

I can perceive no reason, whether grounded in federalism, comity, or efficiency, why the federal declaratory action in this ease should not proceed, and the simple fact that the plaintiff in this case invoked federal jurisdiction provides a reason why it should. Federal courts have an obligation to decide cases within their jurisdiction, and the fact that the jurisdiction arises under diversity of citizenship, 28 U.S.C. § 1332, does not lessen this obligation. Indeed, diversity jurisdiction fulfills a constitutionally established obligation. See U.S. Const., art. Ill, § 2. Similarly, the fact that a federal court is called upon to apply state law ordinarily does not excuse the obligation. While it is recognized that in certain limited circumstances federal courts will abstain when complex questions of state law which have not been resolved are involved, we are not presented in this case with anything close to that situation. To abstain from exercising diversity jurisdiction in this ease amounts, in my judgment, to an abdication of judicial responsibility.

The district court in this case relied on our decision in Mitcheson v. 'Harris. But that case is significantly different and provides no precedential justification for its decision in this case. In Mitcheson, the insurance company provided a one-year insurance policy to cover a landlord’s liability risk in connection with his ownership of a rental house. When the landlord was later sued for lead paint poisoning suffered by tenants in the house, he sought coverage from the insurance company. A difficult question of coverage was presented, relating to when the “occurrence,” as defined by the policy, took place and whether it preceded the effective date of the insurance policy. This, in turn, depended on whether the occurrence took place when the lead paint was discovered or when the injury from it was first diagnosed. We observed in Mitcheson that the issues in the underlying ease and in the coverage case overlapped and that resolution of the coverage issue could significantly impact on issues in the underlying case, and vice versa: “The insured may well be collaterally estopped from relitigating the overlapping issues decided in the federal action.” 955 F.2d at 239. Recognizing that the state law was not well established, we also stated, “The federal court here should not elbow its way into this controversy to *971render what may be an ‘uncertain and ephemeral’ interpretation of state law.” Id. at 238. The holding in Mitcheson thus is an exception justified by the particular circumstances presented there. It does not control this garden-variety declaratory judgment action.

The decision that the majority makes today will, I am afraid, introduce confusion into the long and well-established declaratory judgment practice of which insurance companies and others have availed themselves routinely over the years. Arguably, the holding of this case could be cited in virtually every circumstance in which a federal declaratory judgment action follows the filing of a state court action as authority for a routine dismissal of the federal action. This result was clearly not intended by the Declaratory Judgment Act nor by the policy of diversity jurisdiction.

For the foregoing reasons I would reverse the order of the district court dismissing this ease and enter judgment for Continental Casualty, based on the Baber decision. Alternatively, I would agree to remand this case to the district court for it to receive arguments why Baber should not be applied to control the coverage issue.

Accordingly, I dissent.