Bituminous Casualty v. J & L Lumber Co Inc

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206 2 Bituminous Casualty Corp. No. 03-5217
ELECTRONIC CITATION: 2004 FED App. 0199P (6th Cir.) v. J & L Lumber Co.
File Name: 04a0199p.06
_________________
UNITED STATES COURT OF APPEALS COUNSEL
FOR THE SIXTH CIRCUIT ARGUED: Jeffrey L. Freeman, JEFFREY L. FREEMAN
_________________ ATTORNEY AT LAW, Louisville, Kentucky, for Appellant.
Robert E. Maclin III, McBRAYER, McGINNIS, LESLIE &
BITUMINOUS CASUALTY X KIRKLAND, Lexington, Kentucky, for Appellee.
CORPORATION , - ON BRIEF: Jeffrey L. Freeman, JEFFREY L. FREEMAN
Plaintiff-Appellee, - ATTORNEY AT LAW, Louisville, Kentucky, for Appellant.
- No. 03-5217 Robert E. Maclin III, Pamela A. Chesnut, McBRAYER,
- McGINNIS, LESLIE & KIRKLAND, Lexington, Kentucky,
v. > for Appellee.
,
-
J & L LUMBER COMPANY , _________________
-
INC., - OPINION
Defendant-Appellant. - _________________
-
N SUHRHEINRICH, Circuit Judge. Defendant-Appellant
Appeal from the United States District Court J & L Lumber Company, Inc. (J & L) appeals from the order
for the Western District of Kentucky at Owensboro. of the district court granting summary judgment in favor of
No. 01-00106—Joseph H. McKinley, Jr., District Judge. Bituminous Casualty Corp. (Bituminous) and denying
summary judgment in favor of J & L in this declaratory
Argued: April 20, 2004 judgment action. Bituminous brought this action against
J & L in federal district court, seeking a declaration that it was
Decided and Filed: June 29, 2004 not required to defend or indemnify J & L in a personal injury
action in state court relating to a logging accident that
Before: SUHRHEINRICH and GIBBONS, Circuit Judges; occurred on November 13, 1998, while Phillip Shields,
LAWSON, District Judge.* plaintiff in the state action, was preparing to haul a load of
timber from a J & L logging site. The central issue in the
federal aJune 29, 2004ction was whether Shields was an
employee of J & L at the time of his injury and, therefore,
excluded from coverage under the terms of J & L’s
commercial insurance policies with Bituminous. For the
reasons that follow, we VACATE the district court’s order
* granting declaratory judgment relief to Bituminous and
The Honorable David M. Lawson, United States District Judge for
the Eastern D istrict of M ichigan, sitting by de signation.
1
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J & L Lumber Co. v. J & L Lumber Co.
REMAND the case to the district court with instructions to permitting, Shields hauled for J & L at least once a week and
dismiss the complaint. usually more. On occasion, he even drove a J & L truck.
I. Background The payment arrangement between Shields and J & L was
somewhat complicated. Primarily, Shields was paid by the
A. Facts load for his work hauling for J & L. When he drove a J & L
truck, though, Shields received only driver’s pay in the same
J & L is a small, family owned and operated sawmill in manner as J & L’s own drivers. In addition, from March
eastern Kentucky. Besides family members, the mill employs 1998 through December 9, 1998, Shields was listed as an
approximately ten to fifteen additional workers in either the employee on the J & L payroll registers. He received a
sawmill or the woods. In November 1998, J & L also owned weekly payroll check of $250 from which taxes and health
three tractor-trailer trucks and two tandems for hauling insurance premiums were withheld. He also received a check
lumber and employed drivers for these vehicles. from the general account from which no withholdings were
taken.
Phillip Shields, the plaintiff in the underlying personal
injury action against J & L, is a fifty-eight-year-old man who J & L described this unusual payment arrangement as an
has worked in or around the logging industry most of his accounting device that permitted Shields to obtain health
adult life. At different times, Shields has worked as a trucker, insurance coverage. The deposition testimony indicated that
sawmill foreman, independent logger, and timber buyer. In in March or April 1998, Wilma Myers (Myers), J & L’s
the past, he worked for J & L both as the sawmill foreman secretary and general office manager, and Joel Smith, an
and as a truck driver. owner’s son who had been insured with Blue Cross and Blue
Shield, decided to change insurance providers due to an
Sometime after quitting the sawmill foreman position at increase in premiums. To get insurance under a plan with
J & L, Shields formed a trucking company with the name MedQuest insurance company, however, they needed a group
Phillip Shields or Shields Trucking. He purchased two of at least three. Shields, who also needed insurance, became
eighteen-wheeler trucks, which were garaged at his house and the third member of the group. Myers placed Shields on the
were maintained primarily by him. Shields also employed his payroll and began issuing him a weekly check from which the
own driver and incurred other expenses in connection with his insurance premium was deducted. The amount of the payroll
trucking business, including fuel, contract labor, tolls, check was then deducted from the total amount due Shields
business telephone, and subcontractors. In 1998, Shields’s for his independent hauling. Although Joel was not an
trucking business yielded a gross income of $91,159. employee, his insurance premium was paid directly by J & L
because of his filial relationship to Jerry Smith, one of J &
After Shields started his trucking company, he and J & L L’s owners.
formed a business relationship. J & L hired Shields’s trucks
and drivers when it needed loads hauled and did not have any Outside of their business relationship, Shields and the
available trucks or drivers of its own. Although there was no owners of J & L were good friends. They had known each
formal contract between them, J & L used Shields’s trucks on other for approximately thirty years. In fact, Shields
a regular basis, but not exclusively. In fact, weather characterized his relationship with Jerry and Lester Smith as
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J & L Lumber Co. v. J & L Lumber Co.
the “best of friends.” He lived approximately one mile from asserted that Shields’s action was barred by the exclusive
J & L’s office and would go to the J & L property usually remedy provision of the Kentucky Workers’ Compensation
once a day and sometimes two or three times a day to check Act.
for work or just to socialize. Shields was also good friends
with Myers and the two had a social, dating relationship in the J & L did not carry workers’ compensation insurance at the
past. In addition, Shields employed Myers’s son, Greg, as a time of the injury.1 J & L did, however, carry accident
driver for one of his tractor-trailers. coverage for its employees under an Employers’ Underwriters
policy. It also carried two commercial insurance policies with
On the evening of November 12, 1998, Shields and Myers Bituminous Casualty Corp., a general liability policy and a
were in the J & L office drinking coffee when they received commercial auto policy. At the time of injury, Shields was
word that the woods crew was “blocked out” and could not not covered under the Employers’ Underwriters policy.
continue working unless the cut timber was hauled away from Therefore, J & L requested a defense from Bituminous in the
the logging site. Myers and Shields arranged for Shields to state tort action, which Bituminous provided under
take a truck and haul the timber the next morning. On the reservation of rights.
morning of November 13, 1998, Shields arrived at the J & L
lumber yard and picked up a J & L truck, which was loaded On or about October 23, 2000, a few weeks before the
with pulp wood. He delivered the load and proceeded to the expiration of the two-year statute of limitation under the
site that was “blocked out.” After hauling a couple of loads, Kentucky Workers’ Compensation Act, Shields filed a claim,
Shields was injured during loading when a log dislodged from presumably a protective filing, with the Kentucky Department
the truck and landed on him. As noted, at the time of the of Workers’ Claims, alleging that he was injured on
injury, Shields was operating a J & L truck and was picking November 13, 1998, while in the course of employment. See
up his third load of the day. Ky. Rev. Stat. § 342.185. This claim was dismissed on
January 24, 2003, after an Administrative Law Judge for the
Both Shields and Myers stated that Shields was doing a Kentucky Department of Workers’ Claims determined that
favor for J & L at the time of the accident and was not going Shields was an independent contractor and not an employee.
to be compensated for his work. Shields testified at The Administrative Law Judge stated that, although it was a
deposition that his work on the morning of November 13 was close question based upon the facts and Kentucky case law,
strictly voluntary. Moreover, Shields, Myers and J & L’s he found the intent of the parties to be paramount in
owners, Jerry and Lester Smith, all insisted at deposition that determining that Shields was not an employee.
Shields was not an employee of J & L at the time of his
injury. In the underlying state personal injury action, on or about
March 18, 2002, Shields filed a motion for partial summary
Procedural History judgment seeking to strike the affirmative defense raised by
J & L that the Workers’ Compensation Act was his exclusive
In July 1999, Shields filed a personal injury action in the
Ohio County Circuit Court of Kentucky alleging negligence
on the part of J & L or its employees related to his injuries on 1
November 13, 1998. As one of its affirmative defenses, J & L This fact was certified by the Commissioner of the Kentucky
Departm ent of W orkers’ Claim s on N ovembe r 13, 200 0.
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J & L Lumber Co. v. J & L Lumber Co.
remedy on the grounds that he was not an employee of J & L. Likewise, the finding benefitted Shields because it enabled
J & L did not respond to this motion. On March 28, 2002, the him to collect any judgment awarded in the negligence action
Ohio County Circuit Court of Kentucky found that Shields from J & L’s insurer, rather than J & L and his close friends.
was not an employee of J & L at the time of injury and struck
the Workers’ Compensation Act defense. Specifically, the J & L filed a motion to alter, amend or vacate judgment,
Kentucky court found that J & L had little, if any, control which was denied on January 6, 2003. J & L then filed this
over Shields, since Shields was volunteering on the day of appeal, raising four issues: whether the district court
injury and that the true intent of the parties was that Shields misapplied Kentucky law when it used a workers’
was not an employee. compensation analysis rather than a common law analysis to
determine whether Shields was an employee pursuant to the
In the meantime, on July 2, 2001, Bituminous filed the insurance contract; whether the district court erred in holding
instant action in the United States District Court for the that Shields was an employee of J & L as a matter of law;
Western District of Kentucky seeking a declaratory judgment whether the district court erred in failing to consider the
that it had no duty to defend or indemnify J & L under its explicit policy definitions; and whether the district court erred
policies based on exclusions contained in each policy for in applying federal preclusion law rather than state preclusion
employees. Bituminous argued that Shields was an employee law to determine the effect of a prior state court judgment in
of J & L at the time of his injury and was, therefore, not a diversity action.
covered by the policies. J & L maintained that Shields was
not an employee of J & L at the time of injury. The parties II. Standards of Review
filed cross motions for summary judgment.
A. Summary Judgment
On October 16, 2002, the district court granted summary
judgment in favor of Bituminous, finding that Shields was an This Court reviews a district court’s grant of summary
employee as a matter of law. The district court found, among judgment de novo. Hartsel v. Keys, 87 F.3d 795, 799 (6th
other things, that J & L had the ultimate right to control Cir. 1996). Summary judgment is appropriate “if the
Shields’s work, that the method of payment indicated pleadings, depositions, answers to interrogatories, and
employment, and that the actions of J & L and Shields were admissions on file, together with the affidavits, if any, show
inconsistent with their assertion that Shields was not an that there is no genuine issue as to any material fact and that
employee. The district court did not make a finding regarding the moving party is entitled to a judgment as a matter of law.”
the testimony that Shields had been working as a volunteer on Fed. R. Civ. P. 56(c).
the day of injury. In addition, the district court found that the
October 28, 2002, Kentucky state court judgment in the B. Declaratory Judgment Actions
negligence action did not have preclusive effect because it
determined that the state court decision was not the result of Exercise of jurisdiction under the Declaratory Judgment
an adversarial proceeding, since a finding that Shields was not Act, 28 U.S.C. § 2201(a) is not mandatory. Brillhart v.
an employee benefitted both Shields and J & L. J & L Excess Ins. Co., 316 U.S. 491, 494 (1942). Therefore, we
benefitted by the finding that Shields was not an employee review the district court’s decision to exercise jurisdiction for
because the finding entitled it to indemnity from Bituminous. abuse of discretion. Wilton v. Seven Falls Co., 515 U.S. 277,
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J & L Lumber Co. v. J & L Lumber Co.
289-90 (1995); Scottsdale Ins. Co. v. Roumph, 211 F.3d 964, B. Propriety of Declaratory Judgment Relief in this
967 (6th Cir. 2000). Case
III. Analysis This Court generally considers five factors to determine
whether a case is appropriate for declaratory judgment:
As noted, J & L raises four issues on appeal. We do not
reach these issues, however, because we conclude that the (1) whether the judgment would settle the controversy;
district court should have declined to exercise jurisdiction (2) whether the declaratory judgment action would serve
over this declaratory judgment action and should have a useful purpose in clarifying the legal relations at issue;
dismissed the complaint. (3) whether the declaratory remedy is being used merely
for the purpose of “procedural fencing” or “to provide an
A. Declaratory Judgment Actions arena for a race for res judicata”;
(4) whether the use of a declaratory action would
We have repeatedly held in insurance coverage diversity increase the friction between our federal and state courts
cases that “declaratory judgment actions seeking an advance and improperly encroach on state jurisdiction; and
opinion on indemnity issues are seldom helpful in resolving (5) whether there is an alternative remedy that is better or
an ongoing action in another court.” Manley, Bennett, more effective.
McDonald & Co. v. St. Paul Fire & Marine Ins. Co., 791
F.2d 460, 463 (6th Cir. 1986). Further, “[s]uch actions . . . Scottsdale 211 F.3d at 968 (citations omitted). The district
should normally be filed, if at all, in the court that has court did not consider these criteria; therefore, we review
jurisdiction over the litigation which gives rise to the them for the first time on appeal.
indemnity problem. Otherwise confusing problems of
scheduling, orderly presentation of fact issues and res 1. Whether the judgment would settle the controversy.
judicata are created.” Id.; see also Scottsdale Ins. Co., 211
F.3d 964; Omaha Property and Cas. Ins. Co. v. Johnson, 923 The controversy in this case is one of insurance coverage.
F.2d 446, 448 (6th Cir. 1991); Allstate Ins. Co. v. Mercier, Bituminous seeks a declaration that it has no duty to defend
913 F.2d 273, 278-79 (6th Cir. 1990); Grand Trunk W.R. Co. or indemnify J & L based on exclusions in its insurance
v. Consolid. Rail Corp., 746 F.2d 323, 326 (6th Cir. 1984). policies for employees. If Shields was an employee of J & L
That is not to say that there is a per se rule against exercising at the time of his injury, Bituminous would have no duty to
jurisdiction in actions involving insurance coverage defend or indemnify J & L in the state court personal injury
questions. See Allstate Ins. Co. v. Green, 825 F.2d 1061, action. If Shields was not an employee, on the other hand,
1066 (6th Cir. 1987); State Farm Fire and Cas. Co. v. Odom, Bituminous would be obligated under its contracts to defend
799 F.2d 247, 250 (6th Cir. 1986). Nevertheless, the factual and indemnify J & L. Thus, resolution of the controversy
and procedural postures of this case make exercise of hinges solely on whether Shields was an employee of J & L
jurisdiction particularly inappropriate. at the time of his injury, a fact-based, and in this case very
close, question of state law.
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When this declaratory judgment action was filed, however, Moreover, a declaration of insurance coverage would not
Shields’s employment status was already being considered in resolve the controversy. Although a declaratory judgment
two independent state court proceedings: the state tort action would settle the controversy between Bituminous and J & L,
between Shields and J & L, and Shields’s action before the Shields was not made a party to the declaratory judgment
Kentucky Department of Workers’ Claims. In the state tort action. Therefore, any judgment in the federal court would
action, which Shields had filed against J & L on negligence not be binding as to him and could not be res judicata in the
grounds, J & L defended, in part, on the grounds that tort action. Regardless of the judgment rendered in the
Shields’s action was barred by the exclusive remedy declaratory judgment action, Shields would be entitled to
provision of the Kentucky Workers’ Compensation Act. This pursue third-party recovery from Bituminous in Kentucky
defense was only viable if Shields was an employee of J & L state court if he were successful in his tort action.
at the time of the injury. Furthermore, although J & L did not
have workers’ compensation insurance and the exclusive A declaratory judgment would not resolve the insurance
remedy defense might have been dismissed on this ground coverage controversy here. On the contrary, as we have seen,
alone, a determination of Shields’s employment status was the judgment in federal court declaring that Shields was an
still necessary in the tort action because, under Kentucky law, employee was contrary to two state court findings that Shields
if Shields was an employee, J & L would not be allowed to was not an employee, complicating the underlying issues of
plead the defenses of assumption of the risk or contributory liability. The state negligence action is still proceeding and
negligence in the state court. See Ky. Rev. St. § 342.690(2). the effect that will be given to the inconsistent judgments in
a collection suit by Shields against Bituminous, if any, is
In the action before the Kentucky Department of Workers’ unclear. Therefore, this factor weighs against exercising
Claims, Shields’s employment status was a crucial issue jurisdiction.
because, had Shields not been an employee of J & L, he
would not be eligible to collect compensation under the Act. 2. Whether the declaratory judgment action would serve a
Thus, to rule on the issues presented, all three courts had to useful purpose in clarifying the legal relations at issue.
address the identical issue of whether Shields was an
employee of J & L. The declaratory judgment action in Like the first factor, although a declaratory judgment would
federal court could serve no useful purpose. The federal court clarify the legal relationship between Bituminous and J & L
could either reach the same conclusion as the state court, in pursuant to the insurance contracts, the judgment would not
which case the declaration would have been unnecessary and clarify the legal relationship between Shields and J & L in the
the federal litigation a waste of judicial resources, or the underlying state action. The question of Shields’s
federal court could disagree with the state court, resulting in employment status would not be resolved by the declaratory
inconsistent judgments. Ultimately, inconsistent rulings on judgment. Furthermore, an adverse judgment against J & L
Shields’s employment status did issue from the state and in the state court action could still leave Bituminous subject
federal courts. Both state courts determined that Shields was to liability in a subsequent collection suit by Shields against
not an employee of J & L, and the federal court determined Bituminous.
that he was.
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3. Whether the declaratory remedy is being used merely for factual issues are important to an informed resolution of this
the purpose of “procedural fencing” or “to provide an arena case.
for a race for res judicata.”
Second, both the issue of Shields’s employment status and
This case does not present the appearance of a race for res the issue of the insurance contract interpretation are questions
judicata. Bituminous filed its action in federal court two of state law with which the Kentucky state courts are more
years after Shields filed his initial negligence action against familiar and, therefore, better able to resolve. “[S]tates
J & L in state court and nine months after Shields filed his regulate insurance companies for the protection of their
claim for workers’ compensation benefits. We give residents, and state courts are best situated to identify and
Bituminous the benefit of the doubt that no improper motive enforce the public policies that form the foundation of such
fueled the filing of this action. regulation.” Mercier, 913 F.2d at 279.
4. Whether the use of a declaratory action would increase Furthermore, resolution of the insurance controversy in this
friction between our federal and state courts and improperly case requires a ruling on previously undetermined questions
encroach upon state jurisdiction. of state law. The insurance contract at issue here includes
exclusions for obligations arising under workers’
To determine whether the exercise of jurisdiction would compensation laws. Yet, J & L did not carry workers’
increase friction between federal and state courts we have compensation insurance at the time of the injury. Although
considered three additional factors: recently a number of courts have held that such exclusions
remain applicable despite an employer’s lack of insurance,
(1) whether the underlying factual issues are important to there is precedent from at least two courts supporting an
an informed resolution of the case; alternate position. See Johnson v. Marciniak, 231 F. Supp.2d
(2) whether the state trial court is in a better position to 958, 960 (D.N.D. 2002); Weger v. United Fire and Cas. Co.,
evaluate those factual issues than is the federal court; and 796 P.2d 72, 74 (Colo. Ct. App. 1990); Tri-State Constr., Inc.
(3) whether there is a close nexus between the underlying v Columbia Cas. Co./CNA, 692 P.2d 899, 903 (Wash. Ct.
factual and legal issues and state law and/or public App. 1984). But see Hunt v. Hosp. Serv. Plan of New Jersey,
policy, or whether federal common or statutory law 162 A.2d 561 (N.J. 1960); and Rose v. Franklin Sur. Co., 183
dictates a resolution of the declaratory judgment action. N.E. 918, 919 (Mass. 1933). Kentucky has not decided the
issue.
Scottsdale, 211 F.3d at 968.
Similarly, the parties dispute whether, if Shields is an
First, in this case, two state actions, involving the same employee, he falls within the insurance contracts’ definitions
factual issue that is presented in this declaratory judgment of temporary worker, a category of worker that would not be
action, were pending when this action was filed. The issue of excluded from coverage. The contracts define a temporary
whether Shields was an employee, the key issue in the worker as “a person who is furnished to you to substitute for
declaratory judgment action, was a necessary component of a permanent ‘employee’ on leave or to meet seasonal or short-
both Shields’s negligence action against J & L and his claim term workload conditions.” Contract definitions of
for workers’ compensation benefits. Thus, the underlying “temporary worker”, identical to the definitions in the
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J & L Lumber Co. v. J & L Lumber Co.
Bituminous policies, have been interpreted in two of the Scottsdale factors indicate that exercise of jurisdiction
jurisdictions, each giving different meaning to the phrase in this case could create friction between the state and federal
“furnished to” in the definition. Depending on the courts.
interpretation chosen, Shields could be classified as a
temporary worker. See Ayers v. C & D Gen. Contractors, 237 A friction between the courts was an actuality, not a mere
F. Supp.2d 764, 768-69 (W.D. Ky. 2002), and Am. Family possibility. Indeed, the district court’s decision is contrary to
Mut. Ins. Co. v. Tickle, 99 S.W.3d 25 (Mo. Ct. App. 2003). two decisions rendered by the state courts on the same facts.
Kentucky courts have not yet interpreted the controversial The district court’s finding that Shields was an employee was
language.2 made on summary judgment, indicating the district court’s
belief that Shields was an employee as a matter of law. See
While a district court should not necessarily refuse to Fed. R. Civ. P. 56(c) (Summary judgment is appropriate “if
exercise jurisdiction because a case involves undetermined the pleadings, depositions, answers to interrogatories, and
questions of state law, it is an appropriate consideration when admissions on file . . . show that there is no genuine issue as
determining the suitability of a case for declaratory judgment. to any material fact and that the moving party is entitled to a
See Scottsdale, 211 F.3d at 969. Where as here, there are two judgment as a matter of law.”). Prior to the district court’s
potential unresolved questions of state law concerning state ruling, however, the state court found, on the same facts, that
regulated insurance contracts, this consideration weighs Shields was not an employee. Thus, the district court’s
against exercising jurisdiction. contrary opinion leads to the ultimate conclusion that the
district court believed the state court erroneously decided a
Finally, this case was brought pursuant to the federal question of state law.
courts’ diversity jurisdiction and neither federal common law
nor federal statutory law apply to the substantive issues of the Although the district court did not, indeed could not, know
case. The declaratory judgment action involved the same what the state court would ultimately hold regarding Shields’s
underlying factual issues that were pending in two state court employment status, it did know that two actions were pending
actions. The state courts were in a better position to evaluate in the state courts both revolving around the issue of Shields’s
the factual issues because they rested solely on state law with employment status. Therefore, the district court should have
which the state courts are better acquainted. Furthermore, recognized the possibility that it would render a judgment
resolution of the declaratory judgment action required inconsistent with the state court on that issue. We conclude
consideration of two undetermined questions of state law and that considerations of comity weigh against exercising
did not involve the application of any federal law. All three jurisdiction.
5. Whether there is an alternative remedy which is better or
2
It appears from a non-final Kentucky Court of Appeals opinion that more effective.
Kentucky would hold the workers’ compensation exclusion app licable
and would follow the interpretation of “temporary worker” found in Kentucky does provide a procedure for a declaration of
Tickle. See Indiana Ins. Co. v. Brown, _ S.W.3d _, 2003 WL 23008788 rights. Ky. Rev. St. § 418.040 (“In any action in a court of
(Ky. Ct. Ap p. 2003). Nevertheless, under Kentucky rules a non-final record of this commonwealth having general jurisdiction
opinion shall not be cited as authority in any of the courts of the wherein it is made to appear that an actual controversy exists,
Comm onwealth.
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J & L Lumber Co. v. J & L Lumber Co.
the plaintiff may ask for a declaration of rights . . . and the We are cognizant of the fact that it is easier in hindsight to
court may make a binding declaration of rights . . . .”). Thus, conclude that jurisdiction in declaratory judgment actions was
Bituminous could have presented its case to the same court improvidently granted, especially when faced with the tangle
that will decide the underlying tort action. Given that the of inconsistent judgments that is presented here. Nonetheless,
issues presented involve questions of state law only, the state although the district court cannot be expected to foresee the
court is also in a superior position to resolve the case. See unforeseeable, the district court must be attentive to the
Mercier, 913 F.2d at 278-79. In addition, a superior potential problems that can arise when there are dual, let
alternative remedy exists in the form of an indemnity action alone triple, actions in state and federal court and should
filed at the conclusion of the underlying state action. See dispose of declaratory judgment actions accordingly.
Manley, Bennett, 791 F.2d at 462-63.
Because we find that declaratory judgment relief was
There is no reason to suppose that the alternate remedies inappropriately granted, we do not reach the issues regarding
available in state court would not adequately protect the district court’s order granting summary judgment.
Bituminous’s interests. We “question the need for . . .
declaratory judgments in federal courts when the only For the foregoing reasons, we VACATE the district court’s
question is one of state law and when there is no suggestion order granting declaratory judgment relief and REMAND the
that the state court is not in a position to define its own law in case to the district court with instructions to dismiss the
a fair and impartial manner.” Am. Home Assur. Co. v. Evans, complaint.
791 F.2d 61, 63 (6th Cir. 1986). This factor, as well, weighs
against exercising jurisdiction.
IV. Conclusion
We find that at least four of the above five factors indicate
that a federal declaratory judgment was inappropriate in this
case. Although it does not appear that Bituminous filed this
action for the purpose of procedural fencing or to win a race
for res judicata, the lack of improper motive in filing alone
cannot justify the exercise of jurisdiction when all the other
factors weigh on the side of declining. See Mercier, 913 F.2d
at 279. A declaratory judgment in this case would not settle
the controversy or resolve all the underlying legal relations.
Any resolution that could be achieved by the declaratory
judgment would come at the cost of increasing the friction
between state and federal courts. Finally, a superior remedy
exists in state court.