Court Opinion

ID: 160275
Source: CourtListenerOpinion
Date Created: 2010-08-14 06:41:42+00
Date Added: 2024-06-11T09:44:00.130616
License: Public Domain

F I L E D
                                                                 United States Court of Appeals
                                                                         Tenth Circuit
                   UNITED STATES COURT OF APPEALS
                                                                          OCT 17 2000
                         FOR THE TENTH CIRCUIT
                                                                    PATRICK FISHER
                                                                             Clerk

    VERNON JACKSON HARPIN,

             Plaintiff-Appellant,

    v.                                                 No. 99-1553
                                                   (D.C. No. 98-N-2448)
    OAKLEY CUSTOM HOMES, INC.                            (D. Colo.)
    and COASTAL HOLDINGS, INC.,

             Defendants-Appellees.

    ROBERT A. KELLEY,

             Plaintiff-Appellant,

    v.                                                  No. 99-1596
                                                    (D.C. No. 99-N-944)
    OAKLEY CUSTOM HOMES, INC.;                           (D. Colo.)
    COASTAL HOLDINGS, INC.,

             Defendants-Appellees.

                          ORDER AND JUDGMENT            *

Before BALDOCK , KELLY , and HENRY , Circuit Judges.

*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
      Vernon Harpin and Robert Kelley each appeals the district court’s dismissal

of his declaratory judgment action. Harpin filed his action in November 1998

seeking to have a March 1994 bankruptcy judgment in favor of Oakley Custom

Homes declared void on the grounds that the bankruptcy court had no personal

jurisdiction over him and that it failed to give him adequate notice and an

opportunity to respond before entering judgment against him. Harpin also sought

a return of all money he had paid on the judgment. In May 1999, Kelley filed his

declaratory judgment action seeking to invalidate the same bankruptcy judgment

on similar jurisdictional and due process grounds. Kelley also sought a return of

all money he had paid on the judgment, as well as a restoration of all rights,

property, and claims he had relinquished in two global settlement agreements that

included the bankruptcy judgment. The district court consolidated the two actions

and, after reviewing summary judgment materials and other pleadings of record,

determined that exercising jurisdiction over the consolidated action would not

further the purposes of the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202.

The court, therefore, dismissed the action and these appeals followed. We

exercise jurisdiction pursuant to 28 U.S.C. § 1292, and we affirm.   1

1
      After examining the briefs and appellate record, this panel has determined
                                                                      (continued...)

                                           -2-
       The Declaratory Judgment Act provides, in pertinent part, that “[i]n a case

of actual controversy within its jurisdiction, . . . any court of the United States,

upon the filing of an appropriate pleading, may declare the rights and other legal

relations of any interested party seeking such declaration, whether or not further

relief is or could be sought.” 28 U.S.C. § 2201. The Supreme Court has

“repeatedly characterized the Declaratory Judgment Act as an enabling Act, which

confers a discretion on the courts rather than an absolute right upon the litigant.”

Wilton v. Seven Falls Co. , 515 U.S. 277, 287 (1995) (quotation omitted). “Since

its inception, the Declaratory Judgment Act has been understood to confer on

federal courts unique and substantial discretion in deciding whether to declare the

rights of litigants.”   Id. at 286. “[D]istrict courts possess discretion in

determining whether and when to entertain an action under the Declaratory

Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional

prerequisites.”    Id. at 282. “In the declaratory judgment context, the normal

principle that federal courts should adjudicate claims within their jurisdiction

yields to considerations of practicality and wise judicial administration.”    Id. at

288.

1
 (...continued)
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The cases are
therefore ordered submitted without oral argument.

                                             -3-
       To guide district courts within this circuit in exercising their discretion

whether to hear declaratory judgment actions, this court has set forth a variety of

factors the district courts should consider.         See State Farm Fire & Cas. Co. v.

Mhoon , 31 F.3d 979, 983 (10th Cir. 1994) (setting forth five factors originally

articulated by the Sixth Circuit in   Allstate Ins. Co. v. Green , 825 F.2d 1061, 1063

(6th Cir. 1987)). Although we require a district court to consider these factors

when deciding whether to exercise its discretion to hear a declaratory judgment

action, “on appeal [we] will not engage in a         de novo review of all the various

fact-intensive and highly discretionary factors involved. Instead, [we] will only

ask whether the trial court’s assessment of them was so unsatisfactory as to

amount to an abuse of discretion.”      Id.

       The district court here explicitly considered each of the       Mhoon factors in

exercising its discretion not to hear the action. At the time the district court made

its decision, Kelley had filed an amended complaint, to which Oakley Custom

Homes and Coastal Holdings (referred to jointly as “Oakley”) had filed an answer

and counterclaim, and Harpin and Oakley had filed and fully briefed

cross-motions for summary judgment. The district court evaluated all the

information contained in the parties’ pleadings and made its own assessment of

the Mhoon factors without soliciting further input from the parties. Harpin and

Kelley contend that the district court abused its discretion by not giving the

                                               -4-
parties notice and an opportunity to address the       Mhoon factors before dismissing

the action. They also contend that the district court abused its discretion in

evaluating the Mhoon factors.

       Oakley argues that we should not even reach the question whether the

district court abused its discretion in dismissing the declaratory judgment actions,

because the district court lacked jurisdiction under the      Rooker-Feldman doctrine    2

to provide any of the relief requested. The         Rooker-Feldman doctrine bars “a

party losing in state court . . . from seeking what in substance would be appellate

review of the state judgment in a United States district court.”      Johnson v.

De Grandy , 512 U.S. 997, 1005-06 (1994). “Generally, a federal district court

cannot review matters actually decided by a state court, nor can it issue any

declaratory relief that is inextricably intertwined with the state court judgment.”

Kiowa Indian Tribe of Okla. v. Hoover      , 150 F.3d 1163, 1169 (10th Cir. 1998)

(quotations and citation omitted).

       Oakley contends that the validity of the bankruptcy judgment is inextricably

intertwined with a state court judgment because the state court approved two

global settlement agreements by Kelley, Harpin, and Oakley, each of which stated

that the bankruptcy judgment was currently enforceable in federal court and

2
        See Rooker v. Fidelity Trust Co. , 263 U.S. 413 (1923);     District of Columbia
Ct. of Appeals v. Feldman , 460 U.S. 462 (1983).

                                              -5-
provided that the money paid by Harpin and Kelley under the settlement

agreement would be treated as payment on the bankruptcy judgment. Oakley

argues that because the state court approved the first settlement agreement and

made its terms an order of the court enforceable as such, and because it approved

a stipulated dismissal of the state court action based on the second settlement

agreement, then any federal court declaration about the validity of the bankruptcy

judgment would be inextricably intertwined with the state court’s orders.

       “A claim is inextricably intertwined if the federal claim succeeds only to

the extent that the state court wrongly decided the issues before it.”   Charchenko

v. City of Stillwater , 47 F.3d 981, 983 (8th Cir. 1995). Assuming that the

state-court-approved settlement agreement constituted a state court judgment for

purposes of the Rooker-Feldman doctrine, see 4901 Corp. v. Town of Cicero      , 220
F.3d 522, 528 n.5 (7th Cir. 2000), the    Rooker-Feldman doctrine would not

preclude the district court from declaring the bankruptcy court judgment invalid,

because that simple declaration would not require the district court to determine

the validity and/or correctness of the state-court-approved settlement agreements.

The Rooker-Feldman doctrine may, however, preclude the district court from

granting some of the other relief sought by Harpin and Kelley to the extent it

directly implicates the validity and/or correctness of the state-court-approved

settlement agreements. Because the       Rooker-Feldman doctrine would not deprive

                                             -6-
the district court of jurisdiction over the entire declaratory judgment action, we

must proceed to consider whether the district court abused its discretion in

dismissing the action.

       Although Harpin and Kelley contend that the district court abused its

discretion by not giving them notice before it decided not to proceed with the

action, neither of them cites any authority for this contention in his appellate

brief, nor sheds much light on what additional evidence or argument he would

have presented if given the opportunity. “It is appropriate . . . for a district court

to examine whether hearing the declaratory judgment action would serve the

objectives for which the Declaratory Judgment Act was created.”       EMC Corp. v.

Norand Corp. , 89 F.3d 807, 814 (Fed. Cir. 1996). The district court may make

this determination at various stages of the proceedings. If a district court

determines after the complaint is filed that issuing a declaratory judgment would

not serve the purposes of the Act, it has no obligation to adjudicate the merits

before staying or dismissing the action.   See Wilton , 515 U.S. at 288. “Consistent

with the nonobligatory nature of the remedy, a district court is authorized, in the

sound exercise of its discretion, to stay or to dismiss an action seeking a

declaratory judgment before trial or after all arguments have drawn to a close.”

Id. The district court here did not abuse its discretion in pausing before reaching

the merits of the summary judgment motions to assess whether proceeding with

                                           -7-
the declaratory judgment action would be appropriate. Nor did the court abuse its

discretion in relying on undisputed facts advanced by the parties in connection

with the Harpin-Oakley summary judgment motions to evaluate the propriety of

proceeding with either appellant’s declaratory judgment action.

      As Harpin and Kelley concede, the district court explicitly considered all

the Mhoon factors in deciding whether to proceed further with the consolidated

declaratory judgment action. Harpin and Kelley each take issue with the court’s

assessment of those factors, but their arguments are ultimately unpersuasive.

Keeping in mind the district court’s “unique breadth of . . . discretion to decline

to enter a declaratory judgment,”   id. at 287, we cannot say the court’s assessment

of the pertinent factors “was so unsatisfactory as to amount to an abuse of

discretion,” Mhoon , 31 F.3d at 983.

      The judgment of the United States District Court for the District of

Colorado is AFFIRMED.

                                                     Entered for the Court

                                                     Paul J. Kelly, Jr.
                                                     Circuit Judge

                                          -8-