Court Opinion

ID: 36535
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:41:51+00
Date Added: 2024-06-11T17:15:05.286753
License: Public Domain

United States Court of Appeals
                                                                      Fifth Circuit
                                                                   F I L E D
                    UNITED STATES COURT OF APPEALS
                         FOR THE FIFTH CIRCUIT                     October 5, 2004

                        _______________________                Charles R. Fulbruge III
                                                                       Clerk
                              NO. 03-30531
                        _______________________

             LEOLA CELESTINE, on behalf of Sylvia Green,
                 Joseph Broussard, Lameka Broussard,

                                                      Plaintiff-Appellee,

                                  versus

               NATIONAL UNION FIRE INSURANCE COMPANY OF
                   PITTSBURGH, PENNSYLVANIA, ET AL.,

                                                               Defendants.

               NATIONAL UNION FIRE INSURANCE COMPANY OF
                  PITTSBURGH, PENNSYLVANIA, AMERICAN
                      INTERNATIONAL GROUP, INC.,

                                                  Defendants-Appellants.

            Appeal from the United States District Court
                for the Western District of Louisiana
                     Civil Action No. 02-CV-2611

Before JOLLY, DAVIS and JONES, Circuit Judges.

PER CURIAM:*

           This case arises from the district court’s remand of a

declaratory judgment action in light of an underlying liability

case pending in Louisiana state court.        Because the district court

abused its discretion in remanding, we vacate the order and remand

for further proceedings.

     *
            Pursuant to 5TH CIR. R. 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.
                            I.    Background

          In February 1998, Sylvia Green was injured while shopping

at a K-Mart store in New Iberia, Louisiana.          Leola Celestine, as

curatrix of Green, filed suit against K-Mart.            In October 2000, a

jury found K-Mart 95% liable and Grandella Hamilton, an assistant

manager, 5% liable for Green’s injuries.         The jury awarded Green a

$1.4. million judgment.    K-Mart appealed to the Louisiana Court of

Appeals and filed for bankruptcy.

          As required by bankruptcy procedures, K-Mart disclosed to

its insurers, National Union Fire Insurance Company and American

International   Group,   Inc.    (collectively    “the    insurers”).   In

October 2002, Celestine filed an action in Louisiana state court

against the insurers seeking a declaratory judgment on their

liability for the underlying state court judgment against K-Mart.

In November 2002, the Louisiana Court of Appeals vacated the

judgment against Hamilton but increased the judgment against K-Mart

to $4.4 million.   K-Mart appealed to the Louisiana Supreme Court,

which accepted certiorari in March 2004 and has yet to rule.

          On December 20, 2002, the insurers removed the action to

district court pursuant to 28 U.S.C. § 1446 (removal statute),

asserting subject matter jurisdiction under 28 U.S.C. § 1332

(diversity jurisdiction) and 28 U.S.C. § 1334(b) (non-exclusive

Title 11 bankruptcy jurisdiction).       Upon Celestine’s motion, the

district court remanded the action back to the state court pursuant

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to 28 U.S.C. § 2201 (Declaratory Judgment Act), while reserving

jurisdiction and timeliness issues.         Finding that Celestine’s

request for declaratory judgment “centers around the previously

rendered state court judgment,” the district court determined that

the state court would be the most efficient forum to resolve the

insurance liability issue.

          The issues before this court are our appellate juris-

diction to review the remand order, and whether the district court

abused its discretion in remanding the case.          For the reasons

stated below, we resolve both issues affirmatively.

                           II.     Discussion

          First, this court’s jurisdiction to review a remand order

depends upon the district court’s stated grounds for remand.

Tillman v. CSX Transp., Inc., 929 F.2d 1023, 1026 (5th Cir. 1991).

Whereas appellate review of a remand order for lack of subject

matter jurisdiction is proscribed by 28 U.S.C. § 1447(d), an

appellate court may review a remand order issued as a matter of

discretion pursuant to the Declaratory Judgment Act, 28 U.S.C.

§ 2201. See Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 711-12

(1996) (holding that an “abstention-based” remand is reviewable

under 28 U.S.C. § 1291 as a discretionary “refusal to adjudicate”).

Here,   the   district   court’s    discretionary   remand   under   the

Declaratory Judgment Act for reasons of judicial economy fits

within the narrow class of remand orders which this court may

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review.    As such, this court has jurisdiction over the instant

appeal.

           Second, we address whether the district court abused its

discretion    by    remanding   the   case   back   to   the    state     court.

Generally, federal courts have a “strict duty to exercise the

jurisdiction       that   is    conferred    upon   them       by   Congress.”

Quackenbush, 517 U.S. at 716.             However, federal courts should

forego    jurisdiction     in    declaratory     judgment       actions     when

considerations of judicial economy overwhelm.              Agora Syndicate,

Inc. v. Robinson Janitorial Specialists, Inc., 149 F.3d 371, 372

(5th Cir. 1998) (citing Wilton v. Seven Falls Co., 515 U.S. 277,

288, 115 S.Ct. 2137, 2143, 132 L.Ed.2d 214 (1995)).            In cases where

judicial economy is not an issue, a district court’s decision to

forego the exercise of its jurisdiction is an abuse of discretion.

Agora Syndicate, 149 F.3d at 373.

           Here, the district court’s sole rationale for remand —

the efficiency of litigating the personal injury judgment appeal

with the insurance liability action in the state court — is

inapposite.    The request for declaratory judgment on the insurers’

liability inquires whether the insurers are liable if the judgment

against K-Mart is affirmed and is legally and factually distinct

from K-Mart’s liability in the underlying personal injury action.

Cf. Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494-94,

62 S. Ct. 1173, 1175-76, 86 L. Ed. 1620 (1942).            Moreover, neither

insurance company is a party to the underlying personal injury

                                      4
suit, which is now closed to new claims, additional evidence, and

joinder.   Id.   While the instant case presents no basis for a

judicial economy-based remand to the state court, it does afford an

opportunity for the district court’s efficient litigation of the

insurers’ liabilities if the $4.4 million dollar judgment against

K-Mart is affirmed.    Therefore, the district court’s remand was an

abuse of discretion.

                          III.   CONCLUSION

           The district court’s remand order is VACATED, and the

case is REMANDED for further proceedings consistent with this

opinion.

           VACATED and REMANDED.

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