[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT
U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
June 13, 2005
No. 05-10307 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D.C. Docket No. 04-02637 CV-P-S
AMERITAS VARIABLE LIFE
INSURANCE COMPANY,
Plaintiff-Appellant,
versus
SUSAN L. ROACH,
Defendant-Appellee.
__________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(June 13, 2005)
Before CARNES, MARCUS and FAY, Circuit Judges.
PER CURIAM:
This is an appeal of a district court’s dismissal of a declaratory judgment action
in favor of a parallel state court action. It also marks our first opportunity to discuss
the circumstances under which a federal district court should decline to exercise its
discretion to accept jurisdiction of such a controversy. The district court below found
that the declaratory judgment action amounted to unnecessary and inappropriate
interference with the parallel state court action, which will resolve the entire
controversy, and granted a dismissal. We agree, finding that the district court did not
abuse its discretion, and affirm the decision below.
I.
In March 2002, Brooke Roach (“Mr. Roach”) met with David Guttery
(“Guttery”), an agent of Acacia National Life Insurance (“Acacia”), which is
affiliated with Ameritas Variable Life Insurance Company (“Ameritas”). On that
date, he applied for a life insurance policy to replace an existing life insurance policy
he had with another insurance carrier. Mr. Roach also assigned to Acacia all of his
benefits, interests, and rights under his existing insurance policy. Acacia
subsequently issued to Mr. Roach a new life insurance policy (the “Policy”) that
included a suicide provision. The suicide provision provided that if the insured
committed suicide within two years after the Policy date, the insurance company
would only pay “the premiums received, less any partial surrenders and
2
indebtedness.” In November 2002, Ameritas assumed all rights, obligations, and
liabilities under the Policy.
Mr. Roach died (of an apparent suicide) on March 23, 2004. On April 13,
2004, Defendant-Appellee Susan Roach (“Mrs. Roach”), the beneficiary of the
Policy, filed a claim with Ameritas to recover death benefits under the Policy.
Thereafter, on September 1, 2004, Ameritas brought a diversity action under the
Federal Declaratory Judgment Act, 28 U.S.C. § 2201, et seq. (the “Declaratory
Judgment Act”), in the district court, seeking a declaration of the rights and
obligations of the parties under the Policy (the “declaratory action”).1
Subsequently, on October 12, 2004, Mrs. Roach filed a state court action
against Ameritas, Guttery, and Nowlin & Associates, Inc. (“NAI”), the agency that
employed Guttery (the “state court action”). The state court action asserts claims for
breach of the insurance contract and negligent supervision and hiring against
Ameritas; and claims for negligence against Guttery and NAI. Also, that same day,
Mrs. Roach filed with the district court a motion to dismiss the declaratory action in
favor of the parallel state court action. The district court ultimately determined that
the state court action was the more appropriate forum in which to hear the complete
controversy and granted Mrs. Roach’s motion to dismiss. This appeal followed.
1
In dispute is the effective date of the Policy.
3
II.
We review the district court’s dismissal of the declaratory judgment action for
abuse of discretion. Wilton v. Seven Falls Co., 515 U.S. 277, 289-90, 115 S.Ct. 2137
(1995). “[W]hen we say that a decision is discretionary, or that a district court has
discretion to grant or deny a motion, we do not mean that the district court may do
whatever pleases it. The phrase means instead that the court has a range of choice,
and that its decision will not be disturbed as long as it stays within that range and is
not influenced by any mistake of law.” Kern v. TXO Prod. Corp., 738 F.2d 968, 970
(8th Cir. 1984).2 Specifically, an abuse of discretion “can occur in three principal
ways: [1]when a relevant factor that should have been given significant weight is not
considered; [2]when an irrelevant or improper factor is considered and given
significant weight; and [3]when all proper factors, and no improper ones, are
considered, but the court, in weighing those factors, commits a clear error of
judgment.” Id. Thus, when employing an abuse of discretion standard, we will leave
undisturbed a district court’s ruling unless we find that the district court has made a
clear error of judgment, or has applied the wrong legal standard.
2
This Circuit has repeatedly cited Kern for its elaboration of the abuse of discretion
standard. See United States v. Drury, 396 F.3d 1303, 1315 (11th Cir. 2005); Cooper v. Southern
Co., 390 F.3d 695, 712 (11th Cir. 2004); United States v. Frazier, 387 F.3d 1244, 1259 (11th Cir.
2004) (en banc); Macklin v. Singletary, 24 F.3d 1307, 1311 (11th Cir. 1994); In re Rasbury, 24
F.3d 159 (11th Cir. 1994).
4
The Declaratory Judgment Act is “an enabling Act, which confers a discretion
on courts rather than an absolute right upon the litigant.” Wilton, 515 U.S. at 287
(citations omitted). It only gives the federal courts competence to make a declaration
of rights; it does not impose a duty to do so. Brillhart v. Excess Ins. Co. of America,
316 U.S. 491, 494, 62 S.Ct. 1173 (1942). In fact, in cases such as this, the Supreme
Court has expressed that “it would be uneconomical as well as vexatious for a federal
court to proceed in a declaratory judgment suit where another suit is pending in a
state court presenting the same issues, not governed by federal law, between the same
parties.” Id. at 495. The Supreme Court has warned that “[g]ratuitous interference
with the orderly and comprehensive disposition of a state court litigation should be
avoided.” Id. This warning should be heeded.
Guided by these general principles expressed by the Supreme Court, as well as
“the same considerations of federalism, efficiency, and comity that traditionally
inform a federal court’s discretionary decision whether to abstain from exercising
jurisdiction over state-law claims in the face of parallel litigation in the state courts,”3
we provide the following factors for consideration to aid district courts in balancing
state and federal interests.4
3
Centennial Life Ins. v Poston, 88 F.3d 255, 257 (4th Cir. 1996) (citation omitted).
4
This Circuit has not previously espoused a specific set of criteria to be applied in cases
such as this one – where a district court is faced with a declaratory action brought in federal court
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(1) the strength of the state’s interest in having the issues raised in the
federal declaratory action decided in the state courts;
(2) whether the judgment in the federal declaratory action would settle
the controversy;
(3) whether the federal declaratory action would serve a useful purpose
in clarifying the legal relations at issue;
(4) whether the declaratory remedy is being used merely for the purpose
of “procedural fencing” – that is, to provide an arena for a race for res
judicata or to achieve a federal hearing in a case otherwise not
removable;
(5) whether the use of a declaratory action would increase the friction
between our federal and state courts and improperly encroach on state
jurisdiction;
(6) whether there is an alternative remedy that is better or more
effective;
(7) whether the underlying factual issues are important to an informed
resolution of the case;
(8) whether the state trial court is in a better position to evaluate those
factual issues than is the federal court; and
(9) whether there is a close nexus between the underlying factual and
legal issues and state law and/or public policy, or whether federal
common or statutory law dictates a resolution of the declaratory
judgment action.
Our list is neither absolute nor is any one factor controlling; these are merely
guideposts in furtherance of the Supreme Court’s admonitions in Brillhart and
Wilton.
Here, the district court weighed several different factors before abstaining from
on the basis of diversity and a subsequent parallel lawsuit on the merits is instituted in state court.
Other circuits, most notably the Fourth and Sixth Circuits, have already explored this question in
detail, and have set forth certain factors, which we adopt as guideposts for the district courts.
These factors arise from a variety of sources. See Scottsdale Ins. Co. v. Roumph, 211 F.3d 964,
968 (6th Cir. 2000); Centennial Life Ins., 88 F.3d at 257; 12 Moore’s Federal Practice, § 57.42
(3d ed. 2005).
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the declaratory action in favor of the state court action. First, the district court found
that while it had before it only an incomplete set of parties and claims, the state court
action encompassed the complete controversy. Neither Ameritas, as plaintiff, nor the
district court, could compel Mrs. Roach to litigate her third-party claims in the
declaratory action, which would be the only way in which the district court could
mirror the state court action.
Second, the district court expressed concern about its ability to appropriately
exercise supplemental jurisdiction over the non-diverse third-party litigants if Mrs.
Roach were to seek to join them. The district court noted that the question is an open
one in the Eleventh Circuit and the Supreme Court, and that although it would be
inclined to rule that such a joinder would not destroy diversity jurisdiction, the issue
was moot because Mrs. Roach had not attempted such a joinder.5
Finally, the district court concluded that to allow the declaratory action to
proceed would amount to the unnecessary and inappropriate “[g]ratuitous
interference” with the more encompassing and currently pending state court action
that was contemplated by the Supreme Court in Brillhart and Wilton. We agree.
5
Ameritas places great emphasis on the issue of the district court’s ability to appropriately
exercise supplemental jurisdiction over the non-diverse third-party litigants. It argues that the
determination whether the court abused its discretion hinges on the outcome of this issue. We
disagree. The state court action includes all the parties to the dispute, which is controlled by state
law. There is no need for a federal district court to reach out for expanded jurisdiction even were
it permissible.
7
Ameritas contends that the district court abused its discretion by not
considering the various factors enumerated by our sister circuits in similar situations.
To the contrary, it appears to us that the district court gave appropriate consideration
to the primary factors existing here, including the traditional concepts of federalism,
efficiency, and comity.
Under an abuse of discretion standard, we will leave undisturbed a district
court’s ruling unless we find that the district court has made a clear error of judgment,
or has applied the wrong legal standard, and we find no such errors here. Moreover,
district courts have “substantial latitude in deciding whether to stay or dismiss a
declaratory judgment suit in light of pending state proceedings.” Wilton, 515 U.S.
at 286. “In the declaratory judgment context, the normal principle that federal courts
should adjudicate claims within their jurisdiction yields to considerations of
practicality and wise judgment.” Id. We, as the reviewing court, “must be mindful
that the district courts are closer to the facts and the parties, and that not everything
that is important about a lawsuit comes through on the printed page.” Kern, 738 F.2d
at 970. Here, the district court adequately considered “whether the claims of all the
parties in interest [could] satisfactorily be adjudicated in [the declaratory action],
whether necessary parties have been joined, [and] whether such parties are amenable
to process in [the declaratory action].” Brillhart, 316 U.S. at 495.
8
In our view, the district court acted well-within the range of its discretion by
heeding the Supreme Court’s admonitions in Brillhart and rightly abstaining from the
declaratory action in favor of the parallel state court action. Therefore, we find no
abuse of discretion and affirm the district court’s dismissal.
AFFIRMED.
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