Brillhart v. Excess Ins. Co

In Brillhart v. Excess Ins. Co., 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942), the Supreme Court addressed the discretion granted the district courts by the Declaratory Judgment Act to decline to exercise their jurisdiction over cases otherwise properly within their subject matter jurisdiction. The district court in Brillhart dismissed an action filed by an insurance company under the Declaratory Judgment Act because related proceedings were pending in state court. The district court did not indicate in its order whether the issue presented in the declaratory relief action could have been raised by the plaintiff insurance company in the pending state court proceeding. The Tenth Circuit reversed with directions that the trial court proceed to a trial on the merits. Id. at 493-94, 62 S.Ct. at 1174-75. The Supreme Court began its analysis by pointing out that, "although the district court had jurisdiction of the suit under the Federal Declaratory Judgment Act, it was under no compulsion to exercise that jurisdiction." Id. at 494, 62 S.Ct. at 1175. The Court next observed that ordinarily 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. Gratuitous interference with the orderly and comprehensive disposition of a state court litigation should be avoided. Id. at 495, 62 S.Ct. at 1175-76. The Court reversed the judgment of the Tenth Circuit and directed it to remand the matter to the district court with directions that the trial judge determine "whether, under applicable local law, the claims sought to be adjudicated by the respondent in this suit for a declaratory judgment had either been foreclosed by Missouri law or could adequately be tested in the garnishment proceeding pending in the Missouri state court." Id. at 495-96, 62 S.Ct. at 1176. In Brillhart, the Supreme Court held that where it is claimed that "another proceeding [is] pending in a state court in which all matters in controversy between the parties could be fully adjudicated," Brillhart, 316 U.S. at 495, 62 S.Ct. at 1175, the district court should inquire into the scope of the state court action, to determine whether "the claims of all parties in interest can satisfactorily be adjudicated in that proceeding, whether necessary parties have been joined, whether such parties are amenable to process in that proceeding, etc." Id. The Court did not "attempt a comprehensive enumeration of what in other cases may be revealed as relevant factors governing the exercise of a District Court's discretion." Id. The Court did not set forth other procedural vehicles that may enable a party to obtain state court review of the federal plaintiff's claims such as intervention, or the filing of a separate action for declaratory relief if such remedy is available under state law. In Brillhart v. Excess Ins. Co., 316 U.S. 491, 495, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942), the Court warned district courts against "gratuitous interference with the orderly and comprehensive disposition of a state court litigation" and directed them to exercise discretion in deciding whether or not to proceed. The Supreme Court, however, did not articulate all of the considerations which should guide a district court's decision in this regard; it did provide, however, that the court should "ascertain whether the questions in controversy between the parties to the federal suit ... can better be settled in the proceeding pending in the state court ", assess "the scope of the pending state proceeding and the nature of the defenses open there ", and evaluate "whether the claims of all parties in interest can satisfactorily be adjudicated in that proceeding, whether necessary parties have been joined, and whether such parties are amenable to process in that proceeding, etc." Id.