Wilton/Brillhart Abstention Is Not Appropriate When Claims For Non-Declaratory Relief Are Independent Of The Claims For Declaratory Relief
R. R. STREET & CO. v. VULCAN MATERIALS CO. (June 25, 2009)
R. R. Street has been the exclusive distributor for a dry cleaning solvent manufactured by Vulcan since 1961. Street alleges that Vulcan promised, in 1992, to and indemnify and defend Street for claims brought with respect to the solvent. Several lawsuits of that type are now pending against both Street and Vulcan. Several of Vulcan's insurers, including National Union, brought suit in California for a declaration that they are not required to defend Vulcan. National Union is also Street's insurer and has been defending Street in those lawsuits because Vulcan has refused to do so. Street and National Union sued Vulcan for breach of contract, promissory estoppel and indemnity. In addition, they asserted a claim for a declaration that Vulcan must defend and indemnify Street. Vulcan moved to either dismiss or stay the case pending resolution of the California case. The district court dismissed the case pursuant to theWilton/Brillhart doctrine. Vulcan appeals.
In their opinion, Judges Manion, Rovner and Tinder reversed and remanded. The Court noted that the relief provided in the Declaratory Judgment Act is discretionary. In Wilton and Brillhart, the Supreme Court held that district courts had much discretion in deciding whether to even entertain a declaratory judgment action. It is undisputed, the Court continued, that a district court can dismiss a complaint where only declaratory relief is requested. Here, however, plaintiffs seek both declaratory and non-declaratory relief. The Court noted that it had never ruled on that issue -- although several other courts of appeal had. The Fifth Circuit holds that Wilton/Brillhart is inapplicable when a non-frivolous claim for non-declaratory relief is present. The Second, Tenth and Fourth Circuits endorse similar results. The Ninth Circuit, on the other hand, rejects a bright line rule. It first asks whether non-declaratory claims exist that are independent of the declaratory relief requested. Independent claims are those that have a separate basis for jurisdiction and that can be resolved without the declaratory relief. If these independent claims exist, at least in the Ninth Circuit, the district court has almost no discretion to refuse to entertain them. The Court, upon reflection, thought the Ninth Circuit's approach was preferable and adopted a test whereby a district court should first determine whether the non-declaratory claims are independent of the declaratory claims. The Court defined "independent claim" as one which has its own jurisdictional basis and is viable without regard to the declaratory claim. If the non-declaratory claims are independent, Wilton/Brillhart doctrine should not be applied and the court should hear the claims. A court should also retain the declaratory claims for the sake of efficiency. Here, the non-declaratory claims are independent -- the district court would have diversity jurisdiction over the claims and declaratory relief is not a prerequisite for the resolution of the claims. The district court should have retained both the non-declaratory and declaratory claims.
