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United States Court of Appeals for the Third Circuit
November 2, 2016, Argued; March 28, 2017, Filed
[*225] OPINION OF THE COURT
HARDIMAN, Circuit Judge.
In Brillhart v. Excess Insurance Company of America, 316 U.S. 491, 62 S. Ct. 1173, 86 L. Ed. 1620 (1942), the Supreme Court held that federal courts have broad discretion to decline to hear actions arising under the Declaratory Judgment Act. Decades later the Court reminded federal courts that they have a "virtually unflagging obligation" to exercise jurisdiction over actions seeking legal relief. Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S. Ct. 1236, 47 L. Ed. 2d 483 (1976). But this "unflagging obligation" does not undermine the discretion inherent in the Declaratory Judgment Act as interpreted in Brillhart. See Wilton v. Seven Falls Co., 515 U.S. 277, 286-88, 115 S. Ct. 2137, 132 L. Ed. 2d 214 (1995).
What about complaints [**2] that seek both declaratory and legal relief? Our sister courts of appeals and district courts within the Third Circuit have disagreed over the legal standard applicable in such cases. The United States District Court for the Eastern District of Pennsylvania in the two appeals we consider here adopted a "heart of the matter" test and, after finding that the essence of each action was declaratory, declined to exercise jurisdiction. In our view, the heart of the matter test is problematic because it enables plaintiffs to avoid federal subject matter jurisdiction through artful pleading. Accordingly, we will vacate the orders of the District Court and remand the cases for further proceedings.
A resident of Pennsylvania, Brian Rarick worked for a company that insured its vehicles under a business automobile policy provided by Federated Service Insurance Company, a Minnesota corporation. Under that policy, Rarick's employer waived uninsured motorist coverage for most of its employees, including Rarick.
In his complaint, Rarick alleged that he suffered injuries after he crashed a company car insured by Federated Service when an unidentified vehicle forced him off the road. Rarick reported [**3] the accident and submitted a claim to Federated Service for uninsured motorist benefits, in accordance with the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa. Cons. Stat. §§ 1701, et seq. Federated Service denied the claim, citing its waiver of uninsured motorist coverage for employees like Rarick.
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852 F.3d 223 *; 2017 U.S. App. LEXIS 5374 **; 2017 WL 1149099
BRYAN RARICK, Individually and on behalf of a class of similarly situated persons v. FEDERATED SERVICE INSURANCE COMPANY, Appellant; TERRY EASTERDAY; LINDA EASTERDAY, h/w individually and on behalf of a class of similarly situated persons v. THE FEDERATED MUTUAL INSURANCE COMPANY, Appellant
Subsequent History: Partial summary judgment denied by, Summary judgment granted by, Judgment entered by Rarick v. Federated Serv. Ins. Co., 2018 U.S. Dist. LEXIS 114817 (E.D. Pa., July 10, 2018)
Prior History: [**1] On Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. No. 2-13-cv-03286). District Judge: Honorable Joseph F. Leeson, Jr. On Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. No. 5-14-cv-01415). District Judge: Honorable Lawrence F. Stengel.
Easterday v. Federated Mut. Ins. Co., 2016 U.S. Dist. LEXIS 15440 (E.D. Pa., Feb. 8, 2016)Rarick v. Federated Serv. Ins. Co., 2015 U.S. Dist. LEXIS 129860 (E.D. Pa., Sept. 28, 2015)
district court, declaratory, declaratory judgment, declaratory relief, legal claim, cases, heart of the matter, motorist coverage, federal court, legal relief, declaration, unflagging, uninsured, hear, declaratory judgment action, independent claim, underinsured, coercive, Appeals, courts
Civil Procedure, Appeals, Standards of Review, Abuse of Discretion, De Novo Review, Declaratory Judgments, Federal Declaratory Judgments, Appellate Review, Discretionary Jurisdiction, Preliminary Considerations, Jurisdiction, Judicial Officers, Judges, Discretionary Powers, Discretionary Jurisdiction, Factors