Opinion ID: 2830649
Heading Depth: 2
Heading Rank: 1

Heading: Justiciability (Ripeness)

Text: The first step of the Orix inquiry, justiciability, “[t]ypically . . . becomes a question of whether an ‘actual controversy’ exists between the parties to the action.” 212 F.3d at 895. Stated differently, “[a] declaratory judgment action is ripe for adjudication only where an ‘actual controversy’ exists.” Id. at 896. “[T]he case or controversy requirement of Article III of the United States Constitution is identical to the actual controversy requirement under the Declaratory Judgment Act.” Texas v. W. Publ’g Co., 882 F.2d 171, 175 (5th Cir. 1989), quoted in Orix, 212 F.3d at 896. This Court has held that “[t]he threat of litigation, if specific and concrete, can indeed establish a controversy upon which declaratory judgment can be based.” Orix, 212 F.3d at 897. Additionally, “[t]he fact that the filing of the lawsuit is contingent upon certain factors does not defeat jurisdiction over a declaratory judgment action.” Id. “However, in determining whether a justiciable controversy exists, a district court must take into account the likelihood that these contingencies will occur.” Id. The Supreme Court has held that an actual case or controversy existed when an insurer brought a declaratory judgment action regarding its liability to the insured for an underlying state court action while the underlying action was still pending. See Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 271– 74 (1941) (“That the complaint in the instant case presents such a controversy 6 Case: 14-51164 Document: 00513168367 Page: 7 Date Filed: 08/25/2015 No. 14-51164 is plain.”). We have similarly found an actual controversy under the DJA in an insurer’s suit seeking a declaration that it was not liable for damages in a pending underlying state court action. See AXA Re Prop. & Cas. Ins. Co. v. Day, 162 F. App’x 316, 318–19 (5th Cir. 2006) (per curiam) (finding an actual controversy in a declaratory judgment action on commercial-automobile liability insurance coverage when the underlying state wrongful-death action was still pending). In light of these cases and the fact that McGowan has already obtained a judgment in the Texas court, the instant case presents “a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment,” Md. Cas. Co., 312 U.S. at 273. Safety National argues that this case is not justiciable because under Texas law indemnity actions are not justiciable until “the underlying suit is concluded.” See Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523, 529 (5th Cir. 2004) (“Generally, Texas law only considers the duty-toindemnify question justiciable after the underlying suit is concluded . . . .” (citing Farmers Tex. Cnty. Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 84 (Tex. 1997))). The Texas Supreme Court had long held that under the Texas Constitution, “there was no justiciable controversy regarding the insurer’s duty to indemnify before a judgment has been rendered against an insured.” Griffin, 955 S.W.2d at 83. After the Texas Constitution was amended, the Texas Supreme Court recognized an exception to this rule “when the insurer has no duty to defend and the same reasons that negate the duty to defend likewise negate any possibility the insurer will ever have a duty to indemnify.” Id. at 84. The plain language of Griffin forecloses Safety National’s argument. Griffin emphasized that, generally, “there [is] no justiciable controversy 7 Case: 14-51164 Document: 00513168367 Page: 8 Date Filed: 08/25/2015 No. 14-51164 regarding the insurer’s duty to indemnify before a judgment has been rendered against an insured.” 955 S.W.2d at 83 (emphasis added); see also id. at 84 (“If . . . coverage issues other than the duty to defend are always nonjusticiable, it would be impossible for an insurer to make a good faith effort to fully resolve coverage before a judgment has been rendered in the underlying claim.” (emphasis added)); Collier v. Allstate Cnty. Mut. Ins. Co., 64 S.W.3d 54, 62 (Tex. App.—Fort Worth 2001, no pet.) (“[T]he duty to indemnify only arises after an insured has been adjudicated, whether by judgment or settlement, to be legally responsible for damages in a lawsuit.” (emphasis added) (citing Griffin, 955 S.W.2d at 82–83)). “Judgment” plainly refers to a liability determination at the trial-court level rather than the exhaustion of appellate remedies. Because we conclude that this case is justiciable under Griffin, 6 we turn to the third step of the Orix inquiry—the district court’s discretion. Sherwin–Williams Co., 343 F.3d at 387.