Opinion ID: 377137
Heading Depth: 2
Heading Rank: 2

Heading: The GSA Review

Text: 55 Solo also seeks a declaration that it is entitled to have Federal provide a defense with respect to the allegations of sex discrimination made by the GSA in its compliance review. It additionally seeks indemnity for the $3,750 in legal fees and costs already expended during the review, and further seeks a declaratory judgment that any sums it becomes obligated to pay as backpay to female employees in the facility which was the subject of the GSA review will be within the indemnity coverage of the policy. 56 Dealing with these contentions in order, our review of the record does not indicate that Federal's defense obligations have been triggered by the events to date surrounding the compliance review. Our determination rests upon the fact that the only claim which has so far been made against Solo is an administrative proposal 7 that Solo pay some $266,667 in allegedly due backpay as a basis for conciliation. Solo, has, however, refused to conciliate upon this basis. Moreover, this excerpt from a letter from Solo to Federal dated May 19, 1977, is itself illustrative of the remote and indeed speculative nature of any claims which might be made against Solo: 57 Solo Cup Company denies that it is guilty of any such (backpay) deficiency because there are a number of available defenses to the allegation and in any event believes that the amount claimed is greatly exaggerated. As a result of refusing to conciliate this matter, it is anticipated that some time in the future there will be a hearing with respect to Solo's right to continue as a government contractor and there might be an action filed to seek backpay. 58 (Emphasis supplied.) 59 Because we have held that Federal's broad duty of defense has not yet been triggered, we must examine the question of whether Solo might be entitled to reimbursement of the $3,750 of fees and costs expended to date in conjunction with the review under the indemnity provisions of the policy. Because there have been no formal proceedings against Solo, and therefore no liability imposed upon the Insured by law as required by Paragraph 4 of the indemnity coverage, we hold that it is not so entitled at this time. 60 Finally, we are in full agreement with the district court that the question of whether Solo would be entitled to indemnity for sums paid to female employees in any actions which might be brought either to debar Solo as a federal contractor or to seek backpay for alleged discriminatees is not ripe for adjudication. The Declaratory Judgment Act, 28 U.S.C. § 2201, provides for a remedy only in cases of actual controversy. The mere possibility that proceedings might be commenced against an insured regarding an act of the insured's as to which the insurer might contest coverage, is not sufficient to create a controversy within the meaning of either the Declaratory Judgment Act or Article III of the Constitution. 61 The district court erred, however, in granting the insurer's motion for summary judgment as to the GSA related allegations. The appropriate remedy where an action is found not to constitute a controversy is not judgment but dismissal. Fed.R.Civ.P. 12(h)(3). 62 Reversed and Remanded, for entry of a judgment on Count I and an order of dismissal on Count II consistent with this opinion. The judgment of this court shall include costs to the appellant.