ADMIRAL INSURANCE COMPANY, Plaintiff-Appellant, v. NIAGARA TRANSFORMER CORPORATION, Defendant-Appellee.
No. 21-2733
United States Court of Appeals For the Second Circuit
Decided: January 6, 2023
August Term 2021
Argued: May 3, 2022
Appeal from the United States District Court for the Southern District of New York No. 20-cv-4041, Andrew L. Carter, Jr., Judge.
Before: CALABRESI, CABRANES, and SULLIVAN, Circuit Judges.
While the district court properly concluded that it lacked jurisdiction to declare Admiral‘s duty to indemnify Niagara, it did not adequately distinguish between that duty (which is triggered by a determination of the insured‘s liability to the third party) and the insurer‘s separate duty to defend its insured (which is triggered by the third party‘s filing suit against the insured). Because a declaratory-judgment action concerning either duty becomes justiciable upon a “practical likelihood” that the duty will be triggered, see, e.g., Associated Indem. Corp. v. Fairchild Indus., Inc., 961 F.2d 32, 35 (2d Cir. 1992), the justiciаbility of Admiral‘s duty-to-defend claim turns on the practical likelihood that Monsanto will file suit against Niagara – not on whether Monsanto has already in fact done so or explicitly threatened to do so. As a result, we AFFIRM the district court‘s order dismissing Admiral‘s action to the extent that it sought a declaration of Admiral‘s duty to indemnify Niagara, and REMAND, pursuant to our practice under United States v. Jacobson, 15 F.3d 19 (2d Cir. 1994), for the district court to determine – as relevant to its jurisdiction to declare Admiral‘s duty to defend Niagara – whether there exists a practical likelihood that Monsanto will file suit against Niagara. Consistent with that practice, appellate jurisdiction will be restored to this panel after the district court has supplemented the record and reconsidered its prior decision on remand.
Should the district court determine on remand that it has jurisdiction to declare Admiral‘s duty to defend Niagara, it may nevertheless decline to exercise such jurisdiction. To that end, we clarify the standard governing a district court‘s discretion to decline jurisdiction under the DJA. We previously held in Continental Casualty Co. v. Coastal Savings Bank, 977 F.2d 734 (2d Cir. 1992), and Broadview Chemical Corp. v. Loctite Corp., 417 F.2d 998 (2d Cir. 1969) – that a district court must exercise jurisdiction if the issuance of a declaratory judgment would serve a useful purpose in settling the legal relations
AFFIRMED IN PART AND REMANDED IN PART.
JUSTIN N. KINNEY (Michael S. Chuven, on the brief), Kinney Lisovicz Reilly & Wolff PC, New York, NY, for Plaintiff-Appellant Admiral Insurance Company.
RODMAN E. HONECKER, Windels Marx Lane & Mittendorf, LLP, New York, NY, for Defendant-Appellee Niagara Transformer Corporation.
RICHARD J. SULLIVAN, Circuit Judge:
In this declaratory-judgment action, Admiral Insurance Co. (“Admiral“) sought a declaration that it need not defend or indemnify its historical insured, Niagara Transformer Corp. (“Niagara“), in potential litigation between Niagara and nonparties Monsanto Co., Pharmacia LLC, and Solutia Inc. (collectively, “Monsanto“) over harms caused by polychlorinаted biphenyls (“PCBs“) that Monsanto had sold to Niagara in the 1960s and 1970s. Admiral now appeals from the order of the district court (Carter, J.) dismissing its action for lack of a justiciable “case of actual controversy” within the meaning of the Declaratory Judgment Act (the “DJA“),
While the district court properly concluded that it lacked jurisdiction to declare Admiral‘s duty to indemnify Niagara, it did not adequately distinguish between that duty (which is triggered by a determination of the insured‘s liability to the third party) and the insurer‘s separate duty to defend its insured (which is triggered by the third party‘s filing suit against the insured). Because a declaratory-judgment action concerning either duty becomes justiciable upon a “practical likelihood” that the duty will be triggered, see, e.g., Associated Indem. Corp. v. Fairchild Indus., Inc., 961 F.2d 32, 35 (2d Cir. 1992), the justiciability of Admiral‘s duty-to-defend claim turns on the practical likelihood that Monsanto will file suit against Niagara – not on whether Monsanto has already in fact done so or explicitly threatened to do so. As a result, we AFFIRM the district court‘s order dismissing Admiral‘s action to the extent that it sought a declaration of Admiral‘s duty to indemnify Niagara, and REMAND, pursuant to our practice under United States v. Jacobson, 15 F.3d 19 (2d Cir. 1994), for the district court to determine – as relevant to its jurisdiction to declare Admiral‘s duty to defend Niagara – whether there exists a practical likelihood that Monsanto will file suit against Niagara. Consistent with that practice, appellate jurisdiction will be restored to this panel after the district court has supplemented the record and reconsidered its prior decision on remand.
Should the district court determine on remand that it has jurisdiction to declare Admiral‘s duty to defend Niagara, it may nevertheless decline to exercise such jurisdiction. To that end, we clarify the standard governing a district court‘s discretion to decline jurisdiction under the DJA. We previously held in Continental Casualty Co. v. Coastal Savings Bank, 977 F.2d 734 (2d Cir. 1992), and Broadview Chemical Corp. v. Loctite Corp., 417 F.2d 998 (2d Cir. 1969), that a district court must exercise jurisdiction if the issuance of a declaratory judgment would serve a useful purpose in settling the legal relations in issue or afford relief from the uncertainty giving rise to the proceeding. But our caselaw following Wilton v. Seven Falls Co., 515 U.S. 277 (1995), has treated the factors established by Broadview as only two among other factors that district courts should balance in determining whether to exercise jurisdiction under the DJA. Our caselaw suggests, and we now clarify, that district courts have discretion to decline jurisdiction upon the application of an open-ended, multi-factor balancing test in which no one factor necessarily mandates the exercise of jurisdiction.
I. BACKGROUND
Defendant-Appellee Niagara is a manufacturer of electrical transformers and the historical insured of Plaintiff-Appellant Admiral. Throughout the 1960s and 1970s, Niagara purchased PCBs from nonparty Monsanto for use in its transformers. PCBs are highly toxic and carcinogenic chemical comрounds, the manufacture, processing, and distribution of which are now largely banned under federal statute. See
Beginning in 2009, various individuals, businesses, municipalities, and states commenced actions against Monsanto in state and federal courts across the country, asserting claims for personal injuries, environmental clean-up costs, property damage, and other harms allegedly caused by exposure to or contamination by PCBs originally manufactured by Monsanto. In August 2016, after losing an eight-figure judgment in one such case (and while countless other such cases were in active litigation or settlement negotiations, with still more being filed anew), Monsanto sent Niagara a letter, through counsel, “demand[ing]” that Niagara “defend, indemnify[,] and hold harmless” Monsanto “in connection with all current and future PCB-related litigation wherein . . . Monsanto is, or will be, named as a defendаnt, and for the amount of any resulting judgments (if any) and settlements, to the full extent required by the Special Undertaking.” Id. at 22. Monsanto further stated that “Niagara . . . will be held liable for the amount of the resulting settlements or judgments (if any) [in the PCB-related actions against Monsanto,] as well as the incurred costs, expert witness fees, attorney‘s fees, and all other reasonable expense incurred in defending [such] actions.” Id. (emphasis added). Appended to this letter was a chart enumerating forty-six relevant cases pending against Monsanto. Niagara responded with a letter from its own counsel, denying any and all liability to Monsanto. To date, Monsanto has not commenced formal legal action against Niagara.
In early 2020, Niagara learned that Magnetek, Inc. – another industrial manufacturer thаt had sourced PCBs from Monsanto pursuant to a contract substantially identical to the Special Undertaking – had been sued by Monsanto but was able to obtain coverage from its historical insurance carrier. This prompted Niagara to further investigate and to ultimately identify
Shortly thereafter, in May 2020, Admiral filed its complaint in district court, seeking a declаration that it has no obligation to defend or indemnify Niagara in connection with the claims asserted in or arising out of Monsanto‘s 2016 demand
letter. On September 1, 2020, Niagara moved to dismiss the complaint for lack of subject-matter jurisdiction, arguing principally that Admiral‘s action did not present a justiciable “case of actual controversy” under the DJA.
Admiral timely appealed.
II. STANDARD OF REVIEW
On appeal from a dismissal for lack of subject-matter jurisdiction, we review the district court‘s legal conclusions de novo, Amidax Trading Grp. v. S.W.I.F.T. SCRL, 671 F.3d 140, 145 (2d Cir. 2011), and its factual findings for clear error, Zappia Middle E. Constr. Co. v. Emirate of Abu Dhabi, 215 F.3d 247, 249 (2d Cir. 2000). In so doing, “we draw all facts – which we assume to be true unless contradicted by more specific allegations or documentary evidence – from the complaint and from the exhibits attached thereto,” and “we construe all reasonable inferences . . . in [the non-movаnt‘s] favor.” Amidax Trading Grp., 671 F.3d at 145.
III. DISCUSSION
A. Justiciability
1. Applicable Law
Article III of the Constitution limits the “judicial Power of the United States” to “Cases” and “Controversies.”
The DJA provides that “[i]n a case of actual controversy within its jurisdiction, . . . any court of the United States . . . 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.”
“The difference between an abstract question and a ‘controversy’ contemplated by the [DJA] is necessarily one of degree, and it would be difficult, if it would be possible, to fashion a precise test for determining in every case whether there is such a controversy.” Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941); cf. Socialist Lab. Party, 406 U.S. at 586 (“It is axiomatic that the federal courts do not decide abstract questions . . . .“). “Basically,” however, the critical “question . . . is whether . . . there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” MedImmune, 549 U.S. at 127 (quoting Md. Cas. Co., 312 U.S. at 273) (emphasis added); see also Aetna Life Ins., 300 U.S. at 239, 241 (еxplaining that an “actual controversy” within the meaning of the DJA “must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character“). “That the liability may be contingent does not necessarily defeat jurisdiction of a declaratory[-]judgment action. Rather, courts should focus on the practical likelihood that the [relevant] contingencies will occur.” Emps. Ins. of Wausau v. Fox Ent. Grp., Inc., 522 F.3d 271, 278 (2d Cir. 2008) (quoting E.R. Squibb & Sons, Inc. v. Lloyd‘s & Cos., 241 F.3d 154, 177 (2d Cir. 2001)) (emphasis added; alteration omitted); see also Associated Indem. Corp. v. Fairchild Indus., Inc., 961 F.2d 32, 35 (2d Cir. 1992) (same). “Indeed, litigation over insurance coverage” – like the dispute before
When applying the practical-likelihood standard in insurance coverage disputes, we must account for the faсt that “an insurer‘s duty to defend is . . . distinct from [its] duty to indemnify,” Euchner-USA, Inc. v. Hartford Cas. Ins. Co., 754 F.3d 136, 140 (2d Cir. 2014), and that insurance law applies “very different presumptions to each,” CGS Indus., Inc. v. Charter Oak Fire Ins. Co., 720 F.3d 71, 77 (2d Cir. 2013) (internal quotation marks omitted).2 Thus, we agree with Judge Cote
that district courts must “distinguish between the duty to defend and the duty to indemnify in determining whether each issue posed in a declaratory[-]judgment action is ripe for adjudication.” Atl. Cas. Ins. Co. v. Value Waterproofing, Inc., 918 F. Supp. 2d 243, 261 (S.D.N.Y.), aff‘d sub nom. Atl. Cas. Ins. Co. v. Greenwich Ins. Co., 548 F. App‘x 716 (2d Cir. 2013); accord Columbia Cas. Co. v. Ga. & Fla. RailNet, Inc., 542 F.3d 106, 110–11 (5th Cir. 2008); Lear Corp. v. Johnson Elec. Holdings Ltd., 353 F.3d 580, 583 (7th Cir. 2003); Nationwide Ins. v. Zavalis, 52 F.3d 689, 693–94 (7th Cir. 1995). Because “the duty to defend is triggered by the filing of a lawsuit while the duty to indemnify is triggered by a determination of liability,” a district court‘s jurisdiction to declare an insurer‘s duty to defend and its duty to indemnify turn on different inquiries – each involving the practical likelihood that the triggering event will occur. Atl. Cas. Ins. Co., 918 F. Supp. 2d at 261 (citing Columbia Cas. Co., 542 F.3d at 110–11). With respect to the duty to defend, the district court must find a practical likelihood that a third party will commence litigation against the insured. With respect to the duty to indemnify, the court must find a practical likelihood that the third party will prevail in such litigation. Accordingly, a district court “may” well have jurisdiction to “issue a declaratory judgment on [an insurer‘s] duty to defend,” even “while holding that the duty to indemnify is not ripe for adjudication.” Id.
2. Application
Applying these principles here, we find that the district court correctly determined
In the decision below, the district court properly focused its analysis on the “practical likelihood” of Monsanto‘s taking actions that would resolve “contingencies” embedded in the coverage dispute between Admiral and Niagara. Sр. App‘x at 9 (explaining that the justiciability of Admiral‘s declaratory-judgment action “turns on whether there exists a practical likelihood that [certain] contingencies will occur“). However, the district court‘s framing of the relevant “contingencies” – and its assessment of what it would take for Admiral to establish the requisite “likelihood that th[ose] contingencies will occur,” id. at 10 – failed to sufficiently account for the “distinct[ion]” between “an insurer‘s duty to defend” and its “duty to indemnify,” Euchner-USA, 754 F.3d at 140.
Despite repeated references to multiple “contingencies,” the district court only articulated one: “[t]he contingency here is whether Niagara will incur liability for defense and indemnity to Monsanto in connection with the PCB-related litigation.” Sp. App‘x at 9 (emphasis added). Thе district court “conclude[d]” that, “[b]ecause it is unknown whether Monsanto will ever pursue future litigation against Niagara and the validity and scope of the Special Undertaking is also undetermined, future litigation that may require Admiral to indemnify Niagara is unlikely.” Id. at 14 (emphasis added; internal quotation marks and alterations omitted). Accordingly, the district court found that Admiral “has failed to show that there is a practical likelihood that” the relevant “contingencies will occur.” Id. at 10.3 Meanwhile, the district court appears not to have assessed the practical likelihood of whether Monsanto will sue Niagara – and instead, simply relied on
the fact that “[t]o date, Monsanto has not [already] filed suit against Niagara” or “explicitly threatened” to do so. Id. at 5 (emphasis added).
On the one hand, because “the duty to indemnify is triggered by a dеtermination of liability,” Atl. Cas. Ins, 918 F. Supp. 2d at 261, the district court‘s finding that it is practically “unlikely” that “Niagara will incur liability . . . to Monsanto,” Sp. App‘x at 9, 14, was sufficient to justify its conclusion that it lacked jurisdiction to declare Admiral‘s duty to indemnify. And we find no clear error in that underlying finding, see Zappia Middle E. Constr., 215 F.3d at 249, given the district court‘s careful analysis of the “undetermined” status of the “validity and scope of the Special Undertaking” upon which Monsanto‘s theory of Niagara‘s liability was premised, Sp. App‘x at 14. We therefore affirm the district court‘s jurisdictional ruling on the duty-to-indemnify component of Admiral‘s declaratory-judgment action.
On the other hand, because “the duty to defend is triggered by the filing of a lawsuit,” Atl. Cas. Ins., 918 F. Supp. 2d at 261, the district court‘s jurisdiction to declare Admiral‘s duty to defend Niagara properly turns on the question of whether there exists a “practical likelihood” that Monsanto will file suit against Niagara, Associated Indem., 961 F.2d at 35 (citation omitted). That question is distinct, of course, from the questions of whether Monsanto has already filed suit or explicitly threatened to file suit against Niagara.
Although it may be true that “[d]istrict courts in this Circuit generally” do “find [that] a practical likelihood exists in insurance declaratory[-]judgment actions where there is a separate, underlying third-party action against the insured” already pending, Sp. App‘x at 11, that is a sufficient – rather than necessary – condition for finding jurisdiction to declare an insurer‘s duty to defend an insured. Indeed, we have explicitly clarified that, in this context, the mere “threat of future litigation remains relevant in determining whether an actual controversy exists.” Nike, 663 F.3d at 96. And applying that principle, we have routinely exercised subject-matter jurisdiction over insurers’ declaratory-judgment actions that were filed – and decided by district courts – before the relevant third party had filed suit against the insured. See, e.g., Am. Ins. Co. v. Fairchild Indus., Inc., 56 F.3d 435, 438–39 (2d Cir. 1995).4
We therefore remand, pursuant to our practice under United States v. Jacobson, 15 F.3d 19 (2d Cir. 1994), for the district court to “reconsider its prior conclusion” regarding the justiciability of the duty-to-defend component of Admiral‘s declaratory-judgment action, Florez v. CIA, 829 F.3d 178, 189 (2d Cir. 2016). In particular, we instruct the district court on remand to assess the “practical likelihood,” Emps. Ins. of Wausau, 522 F.3d at 278 (citation omitted), that Monsanto will commence formal litigation against Niagara to vindicate the positions staked out in the 2016 Demand Letter.
“In the interests of judicial economy and orderly resolution of this matter, we find prudent a limited remand” under Jacobson to allow the district court to conduct this inquiry “in the first instance, and to conduct any further fact-finding that may be required” to that end. Florez, 829 F.3d at 189 (citation omitted). Once it has done so,
B. Discretion to Decline Jurisdiction Under the DJA
Of course, should the district court determine on remand that it has jurisdiction to declare Admiral‘s duty to defend Niagara, it may nevertheless decline to exercise such jurisdiction. That is because the DJA provides only that federal courts ”may declare the rights and other legal relations of an[] interested party seeking such declaration” in “a case of actual controversy” – not that they must so declare.
interpreted this permissive language as a broad grant of discretion to district courts to refuse to exercise jurisdiction over a declaratory action that they would otherwise be empowered to hear.” Dow Jones & Co. v. Harrods Ltd., 346 F.3d 357, 359 (2d Cir. 2003). Nevertheless, because there appears to be considerable confusion among the district courts of this Circuit regarding just how broad that discretion really is, we write to clarify the legal standard that governs district courts’ discretion to decline to issue declaratory judgments in “case[s] of actual controversy” that are otherwise “within [their] jurisdiction.”
In Broadview Chemical Corp. v. Loctite Corp., we held that “[t]he two principal criteria guiding the policy in favor of rendering declaratory judgments are (1) when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and (2) when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.” 417 F.2d 998, 1001 (2d Cir. 1969) (quoting Edwin Borchard, Declaratory Judgments 299 (2d ed. 1941)). We further held that “[i]t follows as a general corollary to this rule that if either of these objectives can be achieved[,] the action should be entertained and the failure to do is error.” Id.6 We rеaffirmed that holding in 1992, when we held that “a [district]
legal relations in issue” or “afford relief from the uncertainty . . . giving rise to the proceeding.” Cont‘l Cas., 977 F.2d at 737.
Shortly after we decided Continental Casualty, the Supreme Court handed down a decision casting significant doubt on our cribbed view of the discretion afforded to district courts under the DJA. In Wilton v. Seven Falls Co., the Court repeatedly emphasized “the unique breadth of [district courts‘] discretion to decline to enter a declaratory judgment.” 515 U.S. 277, 287 (1995); see also id. at 279, 282-83, 286-88 (using similar language). Along the way, the Court also rejected arguments that closely mirrored the holdings of Broadview and Continental Casualty, namely, that “[d]istrict courts must hear declaratory judgment cases absent exceptional circumstances,” and that “district courts may decline [to do so only] if no beneficial purpose is thereby served or if equity otherwise counsels.” Id. at 287 (emphasis in original; citation omitted).
Candidly, our post-Wilton caselaw has been less than a model of clarity in its treatment of the Broadview/Continental Casualty factors. In Dow Jones (decided six years after Wilton), we did not expressly address the mandatory character of the Broadview prongs. We did, however, cite Wilton for the general proposition that “distriсt courts” have “broad . . . discretion” under the DJA “to refuse toexercise jurisdiction over a declaratory action that they would otherwise be empowered to hear.” Id. (citing Wilton, 515 U.S. at 282-83). And we characterized the Broadview factors merely as “factors that this . . . [C]ircuit[] ha[s] developed to guide the exercise of discretion in [DJA] cases.” Dow Jones, 346 F.3d at 359 (emphasis added). Without much analysis, we also noted that the district court in Dow Jones had “balanced” the two Broadview factors alongside three additional “factors that . . . other circuits have developed to guide the exercise of discretion in [DJA] cases,” including: “whether the proposed remedy is being used merely for ‘procedural fencing’ or a ‘race to res judicata‘“; “whether the use of a declaratory judgment would increase friction between sovereign legal systems or improperly encroach on the domain of a state or foreign court“; and “whether there is a better or more effective remedy.” Id. at 359-60 (citing NUCOR Corp. v. Aceros Y Maquilas de Occidente, S.A. de C.V., 28 F.3d 572, 577 (7th Cir. 1994); Grand Trunk R.R. Co. v. Consol. Rail Corp., 746 F.2d 323, 326 (6th Cir. 1984)) (emphasis added). We did not specify, however, whether we were adopting the “other circuits[‘]” factors. In the end, we ultimately affirmed the district court‘s decision to “decline to exercise discretionary jurisdiction over the action,” based on its “detailed analysis” of “all” “five . . . factors.” Id. at 360.
In New York v. Solvent Chemical Co., 664 F.3d 22 (2d Cir. 2011), we added to the
And then, just a year later, we muddied the waters even further by reverting to Dow Jones‘s categorization of the five factors—stating that the first two factors (again, the Broadview factors) constitute “our test” while the next three are merely “additional factors” that “[o]ther circuits have added” into their tests. Niagаra Mohawk Power Corp. v. Hudson River-Black River Regul. Dist., 673 F.3d 84, 105 (2d Cir. 2012) (emphasis added). Thus, for all our tinkering, we have still not clearly stated whether the Broadview/Continental Casualty factors remain mandatory after Wilton.
Not surprisingly, this lack of clear guidance has resulted in a significant split of authority among the district courts of our Circuit. While most have continued to apply the Broadview/Continental Casualty mandatory standard in strict fashion,8 many others have treated our post-Wilton decisions as abandoning that standard and replacing it with an open-ended, multi-factor balancing test.9 See ICBC Standard Sec., Inc. v. Luzuriaga, 217 F. Supp. 3d 733, 738 n.1 (S.D.N.Y. 2016) (discussing other district courts’ confusion over whether ”Continental Casualty‘s mandatory standard“—that is, its “test mandating [the exercise of] jurisdiction when either of the two [Broadview] factors is met“—remains viable).
Despite their lack of clarity, our post-Wilton decisions are best read as having abandoned the mandatory standard we had previously announced in Broadview and Continental Casualty. None of those decisions has referred to, let alone endorsed, Broadview‘s or Continental Casualty‘s language mandating that a district court must entertain a declaratory-judgment action if either Broadview factor is satisfied. Indeed, while we have occasionally cited Broadview and Continental Casualty following Wilton fоr the two “factors” or “prongs” that they enumerated, it has been more than thirty years since any of our cases has invoked Continental Casualty‘s “must be entertained” language, 977 F.2d at 737, or even Broadview‘s “should be entertained” language, 417 F.2d at 1001. See Albradco, Inc. v. Bevona, 982 F.2d 82, 87 (2d Cir. 1992). Meanwhile, all have identified other factors that district courts either may, see Dow Jones, 346 F.3d at 359-60; Niagara Mohawk Power, 673 F.3d at 105, or must, see Solvent Chem., 664 F.3d at 26, consider alongside the two Broadview factors—which would hardly make sense unless they were implicitly holding that the Broadview factors are no longer dispositive in their own right. Through it all, our post-Wilton cases have consistently emphasized that district courts have “broad . . . discretion . . . to refuse to exercise jurisdiction over a declaratory action that they would otherwise be empowered to hear.” Dow Jones, 346 F.3d at 359; see also Niagara Mohawk Power, 673 F.3d at 105, 106 n.7 (similarly referring to district courts’ “broad discretion“). And it would hardly constitute meaningful discretion—much less broad discretion—to insist that district courts “must” exercise their jurisdiction to issue a dеclaratory judgment whenever one would “serve a useful purpose in clarifying . . . the legal relations in issue” or “afford relief from the uncertainty . . . giving rise to the proceeding.” Cont‘l Cas., 977 F.2d at 737.
Thus, consistent with our post-Wilton decisions, we now clarify that even in circumstances “when [a declaratory] judgment [would] serve a useful purpose in clarifying and settling the legal relations in issue” or “terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding,” Cont‘l Cas., 977 F.2d at 737 (citing Broadview, 417 F.2d at 1001), district courts retain “broad discretion” to decline jurisdiction under the DJA, Niagara Mohawk Power, 673 F.3d at 106 n.7. We further clarify that the following considerations, “to the extent they are relevant” in a particular case, Reifer v. Westport Ins. Corp., 751 F.3d 129, 146 (3d Cir. 2014), should inform a district court‘s exercise of such discretion: (1) “whether the [declaratory] judgment [sought] will serve a useful purpose in clarifying or settling the legal issues involved“;
Inherent in district courts’ “broad . . . discretion” to decline jurisdiction under the DJA, Dow Jones, 346 F.3d at 359, is a similarly broad discretion to weigh the factors we have enumerated here. Thus, no one factor is sufficient, by itself, tomandate that a district court exercise—or decline to exercise—its jurisdiction to issue a declaratory judgment. Likewise, “[t]hese factors are non-exhaustive,” Reifer, 751 F.3d at 146, with district courts retaining wide latitude to address other factors as relevant to the ultimate question of whether “the normal principle that federal courts should adjudicate claims [over which they have] jurisdiction” should “yield[] to considerations of practicality and wise judicial administration” in a particular case, Wilton, 515 U.S. at 288.
Nevertheless, district courts’ “broad discretion” to weigh these and other relevant factors is not altogether “unfettered.” Niagara Mohawk Power, 673 F.3d at 105. To the contrary, thеre are “three principal ways” in which “an abuse of discretion can occur” in this context: (1) “when a relevant factor that should have been given significant weight is not considered“; (2) “when an irrelevant or improper factor is considered and given significant weight“; and (3) “when all proper factors, and no improper ones, are considered, but the court, in weighing those factors, commits a clear error of judgment.” Ameritas Variable Life Ins. Co. v. Roach, 411 F.3d 1328, 1330 (11th Cir. 2005) (internal quotation marks omitted); see also Dow Jones, 346 F.3d at 359 (“The Supreme Court has . . . made it clear that thisbroad discretion is reviewed deferentially, for abuse of discretion.” (citing Wilton, 515 U.S. at 289; Brillhart v. Excess Ins. Co., 316 U.S. 491, 494-95 (1942)))).
This framework is faithful to the permissive language of the DJA, see
For the foregoing reasons, we AFFIRM the district court‘s ruling that it lacked jurisdiction to declare Admiral‘s duty to indemnify Niagara; and REMAND, pursuant to our practice under Jacobson, see 15 F.3d at 22, for the district court to determine (1) whether there is a justiciable “case of actual controversy,”