Opinion ID: 6944938
Heading Depth: 2
Heading Rank: 1

Heading: Applicability of Wilton

Text: For the following reasons, we find unpersuasive National Union’s contention that Wilton’s holding is limited to actions exclusively brought under the DJA, and is not applicable to claims for declaratory relief raised in other contexts. First, the contention is grounded on a distinction lacking any substance. The DJA is procedural in nature, and merely offers an additional remedy to litigants. See Wilton, — U.S. at-, 115 S.Ct. at 2143 (“By the Declaratory Judgment Act, Congress sought to place a remedial arrow in the district court’s quiver; it created an opportunity, rather than a duty, to grant a new form of relief to qualifying litigants.”); Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S, 667, 671, 70 S.Ct. 876, 878-79, 94 L.Ed. 1194 (1950). That remedy remains available to litigants at the discretion of the court, in any “case of actual controversy” for which federal subject matter jurisdiction exists, see 28 U.S.C. § 2201(a), provided that the claim for declaratory relief is pleaded in accordance with Rules 8 and 10 of the Federal Rules of Civil Procedure. Consequently, as the district court correctly noted, the ultimate authority to grant declaratory relief in a ease rests with the DJA itself, whether or not the claim for declaratory relief is brought solely under the DJA or is added to claims for relief brought under other auspices. Thus, the rationale underlying Wilton’s holding, namely, that the district court is afforded broad discretion under the DJA, see Wilton, — U.S. at-, 115 S.Ct. at 2142 (“[T]he Declaratory Judgment Act has been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants[.]”), is equally applicable to a claim for a declaration of non-coverage under an insurance policy raised in the context of a statutory interpleader, as it is to a claim for declaratory relief raised in any other context. Second, National Union’s action is not a typical interpleader action. Ordinarily, in an interpleader action the insurer is subject to conflicting claims to a policy, such as when two or more persons are claiming to be policy beneficiaries. As the Supreme Court explained in the seminal case State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 87 S.Ct. 1199, 18 L.Ed.2d 270 (1967), the insurance problem underlying the enactment of the in-terpleader statute “was that of an insurer faced with conflicting but mutually exclusive claims to a policy, rather than an insurer confronted with the problem of allocating a fund among various claimants whose independent claims may exceed the amount of the fund.” Id. at 533 n. 15, 87 S.Ct. at 1205 n. 15. To the extent that National Union seeks to adjudicate the allocation of its $5 million policy limit among the several claimants whose claims amount to more than the policy limit, and to obtain a declaration of non-coverage against the pilot’s estate, its arguments against abstention based on the allegedly “pure” nature of its interpleader action are less tenable. Cf. Quackenbush v. Allstate Ins. Co., — U.S. -, -, 116 S.Ct. 1712, 1722, 135 L.Ed.2d 1 (1996) (“[W]e have recognized that the authority of a federal court to abstain from exercising its jurisdiction extends to all cases in which the court has discretion to grant or deny relief.”). Third, we have previously held that the availability of interpleader jurisdiction does not require its exercise, and the district court acts within its discretion to decline adjudicating issues raised in an interpleader action that can be “fairly adjudicated” in state court. See Truck-A-Tune, Inc. v. Re, 23 F.3d 60, 63 (2d Cir.1994); see also American Airlines, Inc. v. Block, 905 F.2d 12, 14 (2d Cir.1990) (per curiam) (a district court can abstain from “deciding an interpleader action if another action could adequately redress the threat that the [insurer] might be held doubly liable.”)- As explained immediately below, the direct action against National Union brought by the estate of Stephanie Freeman would adequately and fairly adjudicate, among other things, the issue of whether the pilot was excluded from coverage under the policy. Accordingly, the district court did not err as a matter of law in applying the discretionary standard enunciated in Wilton when determining whether to abstain from adjudicating the issue of the pilot’s coverage under National Union’s policy.