Opinion ID: 3012374
Heading Depth: 2
Heading Rank: 3

Heading: Policy Limits

Text: The district court determined that the Lakens’ claims against Bayer triggered the policy’s $500,000 limit for aggregate claims rather than the $250,000 single claim limit. Westport contends that the issue of policy limits is beyond the scope of the declaratory judgment action, and urges us to vacate the district court’s determination on that issue. Westport further argues that, in any case, the applicable policy limit is $250,000. Westport’s declaratory judgment complaint requests a declaration of no coverage for the Lakens’ claimsalong _________________________________________________________________ 7. [C]overage clauses are interpreted broadly so as to afford the greatest possible protection to the insured. Exceptions to an insurer’s general liability are accordingly to be interpreted narrowly against the insurer. Eichelberger v. Warner, 434 A.2d 747, 750 (Pa. Super. Ct. 1981) (citations omitted). 13 with such other and further relief in its favor and against the defendants as is just and proper. Westport never requested a declaration of the applicable limits of coverage. Nor did the Lakens’ answer to the declaratory judgment request such a declaration. The Lakens made no counterclaim; they simply listed affirmative defenses and requested a dismissal of the declaratory judgment action. The parties did not put the question of limits before the district court. Westport argues that under these circumstances, the district court improperly went beyond the scope of the declaratory judgment action by deciding the applicable limit of coverage under the policy. The Lakens reply that the Declaratory Judgment Act provides the district court with authority to grant further relief based on a declaratory judgment: Further necessary or proper relief based on a declaratory judgment or decree may be granted, after reasonable notice and hearing, against any adverse party whose rights have been determined by such judgment. 28 U.S.C. S 2202. However, Westport correctly points out that in this case the district court offered no notice and held no hearing after the declaratory judgment before granting further relief to the Lakens by determining the applicable policy limits. Generally, the judgment in a suit for declaratory judgment must be responsive to the pleadings and issues presented. See St. Paul Fire & Marine Ins. Co. v. Lawson Bros. Iron Works, 428 F.2d 929, 931 (10th Cir. 1970). A judgment beyond the issues presented constitutes an advisory opinion. Id. Our own research has failed to uncover any United States Court of Appeals case affirming a district court’s grant of declaratory relief to a defendant beyond that requested in the pleadings, except where the defendant brought a counterclaim. See, e.g., Starter Corp. v. Converse, Inc., 170 F.3d 286, 298 (2d Cir. 1999) (noting that [c]ourts have also entered injunctions against unsuccessful [declaratory judgment] plaintiffs because either the prevailing party requested such relief, which was granted after notice and hearing, or the defendant had initially sought injunctive relief in its counterclaims) (emphasis added) (citations omitted); Penthouse Int’l, Ltd. v. Barnes, 792 F.2d 943, 950 (9th Cir. 1986) (holding that the 14 district court abused its discretion in awarding to declaratory judgment defendant relief beyond the scope of the issues presented in the action). Moreover, we note that even if we were to address the issue of the applicable limit of liability under the policy, we would need further findings of fact by the district court or greater development of the record before we could determine whether the Lakens present a single claim or multiple claims under the policy definitions. Under the heading Multiple Insureds, Claims and Claimants, the policy states: The inclusion of more than one insured in any claim or the making of claims by more than one person or organization shall not operate to increase the limits of liability and deductible. Two or more claims arising out of a single act, error, omission or personal injury or a series of related acts, errors, omissions or personal injuries shall be treated as a single claim. All such claims whenever made shall be considered first made on the date on which the earliest claim arising out of such act, error, omission or personal injury was first made and all such claims are subject to the same limits of liability and deductible. App. at A-2-12. The policy defines a claim to be a demand made upon any insured for damages.8 We observe that under the Declaratory Judgment Act the Lakens can request that the district court order further relief based on the declaratory judgment. See 28 U.S.C. S 2202. Assuming the Lakens undertake such action, the district court may resolve this issue after notice and hearing either on the present record or, at its option, by _________________________________________________________________ 8. For cases addressing similar issues regarding policies with similar language, see Gregory v. Home Ins. Co., 876 F.2d 602 (7th Cir. 1989); Continental Cas. Co. v. Brooks, 698 So.2d 763 (Ala. 1997); and Bay Cities Paving & Grading, Inc. v. Lawyers’ Mut. Ins. Co., 855 P.2d 1263 (Cal. 1993). 15 hearing additional evidence. See Edward B. Marks Music Corp. v. Charles K. Harris Music Publ’g Co., 255 F.2d 518, 522 (2d Cir. 1958). We determine that the district court erred by granting relief to the Lakens on an issue outside the scope of the relief requested by Westport and without the notice and hearing required by statute. We therefore vacate the district court’s determination that the applicable policy limit is $500,000.