AARON ENTERPRISES, INC. v. FEDERAL INSURANCE COMPANY, 2:19-cv-04854

Aaron Enterprises (subcontractor) performed work for Welded Construction under a prime contract with Transcontinental; Federal Insurance issued a payment bond listing Welded as principal and Transcontinental as obligee.
Welded paid Aaron approximately $1,428,897 across nine disbursements, all within 90 days before Welded filed for bankruptcy.
After Welded’s bankruptcy filing, Aaron made a contingent bond claim (January 16, 2019) seeking coverage if it is later ordered to return those pre-petition payments as preferential transfers.
Federal moved to dismiss on Rule 12(b)(1) and 12(b)(6) grounds, arguing no live bond claim (statute of limitations) and no justiciable case or controversy for declaratory relief.
The court concluded Federal had fulfilled its obligations to Aaron and that Aaron’s requested declaration is speculative and contingent on a future avoidance action that may never occur.
The court dismissed the complaint for lack of subject-matter jurisdiction (no ripe Article III case or controversy) and did not reach the statute-of-limitations merits.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Ripeness / Article III case or controversy for declaratory relief	Aaron seeks a declaration that Federal must reimburse Aaron if Aaron is later ordered to disgorge preferential payments	Federal says there is no live controversy: no trustee action has been filed, the dispute is contingent, and Federal has satisfied its obligations	Dismissed for lack of subject-matter jurisdiction — claim not ripe because it rests on contingent future events
Statute of limitations on bond claim	Aaron contends it must preserve its bond claim and avoid a future SOL defense to a breach action	Federal argues any bond claim has expired and Aaron cannot use declaratory relief to alter statutes of limitation	Court declined to decide on the merits; SOL arguments must be litigated in an actual breach action if and when it arises

MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007) (ripeness inquiry for declaratory judgments: substantial controversy of sufficient immediacy and reality)
Wilton v. Seven Falls Co., 515 U.S. 277 (1995) (Declaratory Judgment Act affords federal courts discretion to decline relief)
Public Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237 (1952) (declaratory judgments require concrete, not advisory, disputes)
Step‑Saver Data Sys., Inc. v. Wyse Tech., 912 F.2d 643 (3d Cir. 1990) (three‑part ripeness test for declaratory actions)
Surrick v. Killion, 449 F.3d 520 (3d Cir. 2006) (applies adversity/concreteness/utility test to ripeness)
Wyatt v. Virgin Islands, 385 F.3d 801 (3d Cir. 2004) (disputes contingent on future events are not ripe)
Wayne Land & Mineral Grp. LLC v. Delaware River Basin Comm'n, 894 F.3d 509 (3d Cir. 2018) (ripeness and adversity analysis under Third Circuit precedent)
Armstrong World Indus. v. Adams, 961 F.2d 405 (3d Cir. 1992) (advisory declaratory judgments are contingencies and thus futile)
Calderon v. Ashmus, 523 U.S. 740 (1998) (federal courts cannot issue advisory opinions on hypothetical future disputes)
Fed. Kemper Ins. Co. v. Rauscher, 807 F.2d 345 (3d Cir. 1986) (justiciability in diversity cases is governed by federal law)