1 UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________________

No. 96-50431

Summary Calendar

_______________________

UTICA LLOYD’S OF TEXAS,

Plaintiff-Appellee,

versus

ERIC MITCHELL, d/b/a THE MITCHELL COMPANY; ET AL.,

Defendants,

ERIC MITCHELL, Individually and d/b/a THE MITCHELL COMPANY, ANDERSON,

WORMLEY MITCHELL & HUNT, INC., and MITCHELL & ASSOCIATES, INC.,

Defendants-Appellants.

_________________________________________________________________

Appeal from the United States District Court

For the Western District of Texas

_________________________________________________________________ April 15, 1998

Before JONES, DeMOSS and PARKER, Circuit Judges.

EDITH H. JONES, Circuit Judge:

Ut ica Lloyd’s of Texas (“Utica”) brought this diversity suit under the Declarat o ry

Judgment Act (the “Federal DJA”), 28 U.S.C. §§ 2201-02, against Eric Mitchell, The Mitchell

Company, Anderson, Wormley, Mitchell & Hunt , Inc. and Wormley, Mitchell & Associates, Inc.

(collectively, the “Mit chell Defendants”) seeking construction of a policy issued by Utica, and a

determination whether it had the duty to defend and indemnify the Mitchell Defendants in an

underlying state court suit. Following an order by the federal district court determining that Utica

had a du t y to defend the Mitchell Defendants, the Mitchell Defendants sought attorney’s fees1 Chapter 37 of the Texas Civil Practice and Remedies Code contains the Texas version of the

Uniform Declaratory Judgment Act. Section 37.009 provides that “[i]n any proceeding under this

chapter, the court may award cos t s and reasonable and necessary attorney’s fees as are equitable

and just.” T EX

. C IV

. P RAC & R EM

. C ODE § 37.009.

2 The five statutory provisions listed are:

(1) Article 3.62, Insurance Code;

(2) Section 1, Chapter 387, Acts of the 55th Legislature, Regular Session, 1957 (Article 3.62-1,

Vernon’s Texas Insurance Code);

(3) Chapter 9, Insurance Code;

(4) Article 21.21, Insurance Code; or

(5) the Unfair Claim Settlement Practices Act (Article 21.21-2, Insurance Code).

T EX

. C IV

. P RAC

. & R EM

. C ODE § 38.006.

The parties do not dispute that Utica is an insurer subject to Article 21.21 of the Insurance Code and included

within § 36.006(4). Thus, even if the Mitchell Defendants had sought attorney ’s fees pursuant to § 38.001, § 38.006

expressly excludes them from an award of attorney’s fees under Chapter 38.

2 pursuant to the Texas ve rsio n o f the Uniform Declaratory Judgments Act (the “Texas DJA”),

T EX

. C IV

. P RAC

. & R EM

. C ODE § 37.00 1, e t seq. 1 The district court denied the request for

attorney’s fees, perceiving itself bound by our decision in Bituminous Casualty C orp. v. Vacuum

Tanks, Inc.

, 975 F.2d 1130, 1133 (5th Cir. 1992), which found that attorney ’ s fee awards against

certain insurers should be denied in Texas declaratory judgment actions. We affirm, but for a

different reason. The district court in the instant case relied on a statement in Bituminous

that T EX

. C IV

. P RAC

. & R EM

. C ODE § 38.006 “exempts certain insurers from payment of

attorney’s fees in declaratory judgment actions.” B ituminous

, 975 F.3d at 1133. The court

apparently interpreted Bituminous as a broad holding applying to any declaratory judgment arising

under Texas law. Bituminous

, however, invo lved an award of attorney’s fees under § 38.001(8),

which provides for such fees for claims on “an oral or written contract,” and never add r essed the

provision for attorney’s fees under § 37.009 of the Texas Declaratory Judgment Act, while the

Mitchell Defendants in the instant case base their clai m fo r fees solely on § 37.009. Furthermore,

§ 38.006 simply provides that Chapter 38 “does not apply to a contract issued by an insurer that is

subject to” one of five provisions. 2 Accordingly, B ituminous limit s only the availabilit y of

atto r ney’s fees sought under Chapter 38, and is not relevant to the issue before this court--3

whether t he Mit chell Defendants are entitled to attorney’s fees under § 37.009 in a federal

declaratory judgment action arising under diversity.

Federal courts follow the American Rule in the absence of fee-shifting congressional

legislation. See A lyeska Pipeline Serv. Co v. Wilderness Soc’y

, 421 U.S. 240, 247, 95 S. Ct.

1612, 1616 (1975). Section 2202 of the Federal DJA provides that “[f]urther necessary or proper

r e lief based on a declaratory judgment or decree may be granted

. . . against any adverse party

whose rights have been determined by such judgment.” As this court has noted, however, § 2202

o f the Federal DJA “does not by itself provide statutory authority to award attorney's fees t hat

would not otherwise be available under state law in a diversity ac tion.” M ercantile Nat'l Bank v.

Bradford Trust Co.

, 850 F.2d 215, 218 (5th Cir.1988) . Furthermore, the “otherwi se . . .

av ailable” state law in a diversity case must be substantive, for M ercantile explicitly stated that an

a ward of attorney’s fees in a federal declaratory judgment action “is confined to two situ ations:

(i) where, under the rest rict ive American rule, attorney’s fees are allowed; and (ii) where

controlling substantive law permits recovery.” Id. at 216 (emphasis added).

The Mitchell defendants rely on the § 37.009 of the Texas DJA to authori ze recovery

of attorney’s fees. Although the Texas DJA expressly provides for attorney’s fees, it functions

solely as a procedural mechanism for resolving substantive “c ont roversies which are already

within the jurisdiction of the courts.” H ousing Authority v. Valdez

, 841 S.W.2d 860, 864 (Tex.

App.--Corpus Christi 1992, writ denied). Unlike substantive law, however, Texas procedure does

not govern this diversity action. S ee Gasperini v. Center for Humanities, Inc.

, --- U.S.

----, ----,

116 S. Ct. 2211, 2219 (1996) (observing that “[u]nder the E rie doctrine, federal courts si tting in

diversity apply state substantive law and federal procedural law”).

This court specifically noted in Self-Insurance Institute of America, Inc. v. Korioth

, 53

F.3d 694 ( 5t h Cir. 1995) that although “a party may recover fees in a federal declaratory

j udgment action where ‘controlling substantive law’ permits such recovery,” “[t]he Texas DJA is4

neither substantive no r cont rolling.” I d. at 697 (internal citation omitted). Though jurisdiction in

Korioth arose through a federal question claim rather than diversity, the decision’s languag e

clearly indicates, and we now hold, t hat a party may not rely on the Texas DJA to authorize

attorney’s fees in a diversity case because the statute is not substantive law.

The Mitchell Defen dant s have failed to show they are entitled to attorney’s fees under

an applicable fee-shifting statute. Accordingly, the judgment of the district court denying the

Mitchell Defendants an award of attorney’s fees is AFFIRMED.