14 V.I. 266 | Supreme Court of The Virgin Islands | 1977
MEMORANDUM OPINION AND ORDER
Plaintiff, Arnold Petersen, seeks a declaratory judgment alleging that he recovered a money judgment from defendant, Elton Malone, in a prior action for damages and for which he contends the defendant insurance company is liable because of a motor vehicle liability insurance policy then in effect. Defendant insurance company (hereinafter Fireman’s Insurance) has filed a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, 5 V.I.C. App. I Rule 12. Although defendant’s motion is not clear, it appears to be based on the contention that the complaint does not present an actual controversy.
While it is clear, as the defendant points out, that the procedure for obtaining a declaratory judgment must be in accordance with the Federal Rules of Civil Procedure, 5 V.I.C. § 1269, the substantive power of the court to hear and decide matters and grant relief is derived from Chapter 89 of Title 5 of the Virgin Islands Code and not the federal declaratory judgment statute, 28 U.S.C. § 2201. However, to the extent that the two statutes are similar, decisions construing the federal statute are persuasive in interpreting the Virgin Islands law.
Defendant relies on Cross v. Occidental Fire and Casualty, 347 F.Supp. 342 (W.D. Okla. 1972), for the proposition that an injured third party may not maintain a declaratory judgment action against the tortfeasor’s in
(1) That an actual controversy exists between the parties.
(2) That the parties have adverse legal interests.
(3) That such interests are immediate and real and will support a determination based thereon.
Cross, supra at 343. The court found that no actual controversy existed between the parties because there was no judgment in plaintiff’s favor and, in fact, that there may never be one. In addition, the court said the parties lacked “present adverse legal interests” because plaintiff’s interest arose from the alleged tortious acts of the insured, not the insurer, while the legal interest of the insurer arose from the contract of insurance it had with the insured. Finally, plaintiff’s interest was neither real nor immediate, being contingent and unsupported by legal principle.
This line of analysis, when applied to the facts of the instant case, reveals several important factual distinctions. Crucial among these is the fact that plaintiff has alleged that he has reduced his claim against the insured
A judgment against the insured in an action by a third person is not of itself conclusive in favor of the plaintiif against the insurer. However, a person obtaining a judgment against the insured is entitled to recover from the insurer, if the insurer has a duty of exoneration or indemnity because of the judgment, on the ground that the right of the insured is an asset upon which the judgment creditor can realize.
Id. Comment b, accord Employees’ Liability Assur. Corp. v. Ryan, 109 F.2d 690 (6th Cir. 1940), cert. dismissed 311 U.S. 722, 60 S.Ct. 1107, 85 L.Ed. 470 (judgment in favor of injured third party “matured” the controversy making it an actual controversy). It is thus clear that the interests of Petersen and Fireman’s Insurance are sufficiently adverse and arise out of the same nexus of facts and law: the contract between insurer and insured, the liability and
With respect to the third test enunciated in Cross, supra, the insurer does not dispute that the judgment in plaintiff’s favor against the insured has created an immediate legal interest in the insurance contract. Moreover, it is an interest that is protected and founded in statute. Plaintiff is a person “interested under a written contract” within the meaning of 5 V.I.C. § 1262. Consequently, if he can prove the allegations of his complaint, he is entitled to declaratory relief. The court finds it significant that § 1262 speaks of “any person interested” rather than “the parties to” a deed, will or contract. This is in keeping with the generally expansive language of Chapter 89, and the mandate of § 1270 that the act is to be liberally construed.
The court is not unmindful of the district court’s admonition in Cross, supra, that the only way an injured third party can enforce an insurance contract between the tortfeasor and the insurer is indirectly by way of garnishment. That, however, was an unnecessary gratuity, clearly dicta for the purpose of the decision. While it might be one way for plaintiff to proceed, it is clearly not the only way. Nor is the availability of declaratory relief contingent on the absence of other available remedies. 5 V.I.C. §§ 1261, 1269; 5 V.I.C. App. I Rule 57. Once plaintiff has established his entitlement to use the declaratory relief procedure it is not for the defendant to tell him to proceed otherwise.
While there is a dearth of authority in support of the court’s present decision, there is no authority to the contrary. Apparently, in most cases, it is the insurer who initiates an action for declaratory relief naming the injured third party and the insured as defendants. It has been repeatedly held that the injured third party may not have the case dismissed as to him on the ground of no “actual controversy.” Maryland Casualty Co. v. Pacific
Appellee (insurer) voluntarily brought appellant (injured third party) into this litigation as a party defendant. Appellant, being a proper party to an actual controversy with appellee, should be heard to assert any proper defense raised by his answer to the complaint. The district court erred in dismissing appellant from this suit.
Id. at 177. In Automobile Underwriters Corp. v. Graves, supra, the Eighth Circuit, relying in turn on Hawkeye-Security, said:
The insurer . . . urges initially that Stanley Graves cannot bring an appeal since the district court dismissed him from the action. We reject this threshold argument. An injured person having a possible claim against an insurer who has been made a party defendant to an*273 action for declaratory judgment possesses the requisite interest to be heard on appeal notwithstanding that the court in entering a judgment on the merits dismisses the action against all parties other than the policyholder. Id. at 627-28.
It is apparent that Plaintiff Petersen’s position is much stronger in the present case than was that of either defendant in Hawkeye-Security or Underwriters Automobile Corp. Neither defendant in either of those cases had an adjudication of liability against the respective tortfeasors and both had been dismissed from the declaratory judgment action as nominal parties. The appellate court, however, still found the requisite controversy to allow them to prosecute an appeal. No reason appearing to the court why plaintiff should not be allowed to prosecute the instant action for a declaration of liability against the insurer it is hereby
ORDERED that defendant’s motion to dismiss be and the same hereby is denied.
The court assumes, without deciding, that its jurisdiction is predicated on the existence of an actual case or controversy:
“The Virgin Islands Declaratory Judgment Act . . . does not extend the jurisdiction of this court to the adjudication of rights other than those which are directly affected.” The Virgin Islands Territorial Board of Realtors v. Wheatley, 6 V.I. 185, 190 (D.V.I. 1960) (Circuit Judge Maris).