UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Ryan Hardy and
Matthew O’Connor,
Plaintiffs
v. Case No. 20-cv-216-SM
Opinion No. 2020 DNH 090
Granite State Insurance Company,
Defendant
O R D E R
This is a declaratory judgment action in which plaintiffs
seek a judicial determination of the limits of coverage provided
under an insurance policy issued by defendant, Granite State
Insurance Company. Plaintiffs originally filed their petition
in the Hillsborough County Superior Court, seeking a declaratory
judgment under state law. See N.H. Rev. Stat. Ann. (“RSA”)
491:22. Granite State removed the action, invoking this court’s
diversity subject matter jurisdiction. Plaintiffs then amended
their petition to include a count under the federal Declaratory
Judgment Act. See 28 U.S.C. § 2201.
Pending before the court is Granite State’s motion to
dismiss the Amended Complaint. Granite State asserts that plaintiffs are neither parties to, nor insureds under, the
insurance contract and, therefore, lack standing to sue.
Granite State also says plaintiffs’ claims are not ripe for
adjudication. Plaintiffs object. For the reasons discussed,
Granite State’s motion to dismiss (document no. 11) is denied.
This matter is, however, remanded to the Hillsborough County
Superior Court.
Standard of Review
When ruling on a motion to dismiss under Rules 12(b)(1) and
12(b)(6), the court must “accept as true all well-pleaded facts
set out in the complaint and indulge all reasonable inferences
in favor of the pleader.” SEC v. Tambone, 597 F.3d 436, 441
(1st Cir. 2010). See also Lyman v. Baker, 954 F.3d 351, 359–60
(1st Cir. 2020) (noting the same basic standard of review
applies to motions under 12(b)(1) (lack of subject matter
jurisdiction) and 12(b)(6) (failure to state a claim)).
Although the complaint need only contain “a short and plain
statement of the claim showing that the pleader is entitled to
relief,” Fed. R. Civ. P. 8(a)(2), it must allege each of the
essential elements of a viable cause of action and “contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face,” Ashcroft v. Iqbal, 556
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U.S. 662, 678 (2009) (citation and internal punctuation
omitted).
Background
In April of 2016, Ian MacPherson purchased a firearm from
Chester Arms, a federally licensed firearms dealer in Derry, New
Hampshire. About six weeks later, Manchester Police Officer
Ryan Hardy saw MacPherson walking in Manchester and noticed that
he met the description of a man suspected of having recently
robbed a gas station. Officer Hardy approached MacPherson and,
at some point during their encounter, MacPherson shot Hardy
several times in the face and torso. Hardy radioed in his
status, location, and the direction in which MacPherson fled.
Approximately thirty minutes later, Manchester Police
Officer Matthew O’Connor and members of the State Police saw a
man fitting MacPherson’s description. During the officers’
efforts to apprehend him, MacPherson shot Officer O’Connor in
the leg. MacPherson again escaped, but was arrested a few hours
later. The weapon MacPherson used to shoot both officers was
the one he had purchased from Chester Arms.
In July of 2018, Officer Hardy and Officer O’Connor brought
separate lawsuits in state court asserting, among other things,
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that MacPherson was a “prohibited person” (that is, someone
barred from lawfully purchasing, owning, or possessing a
firearm) and that Chester Arms had been negligent in selling the
firearm to him. That negligent sale, say plaintiffs,
proximately caused their injuries when MacPherson subsequently
shot them.
Chester Arms is insured by the defendant in this
proceeding, Granite State Insurance Company. Under the terms of
its policy, Granite State provides Chester Arms with liability
coverage of up to One Million Dollars ($1,000,000) for each
insured “occurrence,” with an aggregate limit of Two Million
Dollars ($2,000,000). Granite State has acknowledged coverage
under the policy and is providing Chester Arms with a defense in
state court.
At issue in this case is the proper interpretation of that
insurance policy. Officers Hardy and O’Connor say they were
shot and injured in separate “occurrences” and, therefore,
Granite State’s policy provides Chester Arms with One Million
Dollars of coverage in each of their separate lawsuits. Granite
State disagrees and says the officers’ injuries were the product
of a single insured “occurrence” (presumably Chester Arms’
negligent sale of the firearm to MacPherson). So, says Granite
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State, because there is only a single covered “occurrence,”
Chester Arms’ insurance coverage is limited to a total of One
Million Dollars (for both claims).
As the defendant in the state negligence actions, and the
insured under Granite State’s policy, Chester Arms presumably
shares the officers’ interest in maximizing insurance coverage
under the policy. After all, its potential liability in the
state negligence actions is substantial. Yet, Chester Arms is
not a party to this declaratory judgment action.
Discussion
In their Amended Complaint, plaintiffs advance two
virtually identical claims for declaratory relief: first, under
the federal Declaratory Judgment Act, and second, under New
Hampshire’s state analog. In each count, plaintiffs seek a
judicial declaration:
A. That Granite State Insurance Company is obligated
to provide Chester Arms with liability insurance
coverage in the amount of One Million Dollars
($1,000,000) per occurrence, subject to an
aggregate of Two Million Dollars ($2,000,000);
B. That the two separate and distinct incidents in
which Ryan Hardy and Matthew O’Connor were shot
and injured constitute two separate “occurrences”
with respect to the Granite State insurance
policy;
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C. That Granite State Insurance Company is obligated
to satisfy any judgment rendered against Chester
Arms in favor of Ryan Hardy in the action
presently pending in the Rockingham County
Superior Court up to an amount of One Million
Dollars ($1,000,000); and
D. That Granite State Insurance Company is obligated
to satisfy any judgment rendered against Chester
Arms in favor of Matthew O’Connor in the action
presently pending in the Rockingham County
Superior Court up to an amount of One Million
Dollars ($1,000,000).
Amended Complaint at 7-8.
Granite State’s pending motion does not address the merits
of plaintiffs’ interpretation of the underlying insurance
policy. Rather, Granite State asserts that neither officer has
standing to bring this action because neither is an insured
under the policy. The contract of insurance is between Granite
State and Chester Arms. So, says Granite State, only Chester
Arms has standing (at least at this juncture) to question
Granite State’s interpretation of the policy language. And, as
noted earlier, Chester Arms is not a party to this action. 1
1 The parties have not addressed whether Chester Arms is a necessary party to this litigation that should be joined under Fed. R. Civ. P. 19(a). Nor have they discussed whether adding Chester Arms (a limited liability company) would defeat this court’s diversity subject matter jurisdiction. See,e.g., Carden v. Arkoma Assocs., 494 U.S. 185, 195-96 (1990) (providing that diversity jurisdiction in a suit by or against an artificial entity depends on the citizenship of all its members). See also Pramco, LLC ex rel. CFSC Consortium, LLC v. San Juan Bay Marina,
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Moreover, Granite State asserts that the police officers’
claims are not ripe for judicial resolution because Chester
Arms’ liability (if any) to the officers has not been resolved,
and no fixed monetary claim for indemnification has been made
against the insurance policy. Accordingly, says Granite State,
plaintiffs’ amended complaint should be dismissed.
I. Plaintiffs’ Standing.
Many federal courts have concluded (sometimes in slightly
different procedural postures) that tort victims can have
standing in declaratory judgment actions seeking a determination
of the scope of insurance coverage provided by a tortfeasor’s
insurer. See, e.g., Maryland Casualty Co. v. Pacific Coal & Oil
Co., 312 U.S. 270 (1941). See also Ricchio v. Bijal, Inc., 424
F. Supp. 3d 182, 186–87 (D. Mass. 2019) (collecting cases). See
generally Bankers Tr. Co. v. Old Republic Ins. Co., 959 F.2d
677, 681–82 (7th Cir. 1992); Eureka Fed. Sav. & Loan Ass’n v.
Am. Cas. Co. of Reading, Pa., 873 F.2d 229, 232 (9th Cir. 1989);
Federal Kemper Insurance Co. v. Rauscher, 807 F.2d 345 (3d Cir.
Inc., 435 F.3d 51, 54 (1st Cir. 2006)(noting that this rule applies to partnerships and limited liability companies). See generally Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Tr. for S. California, 463 U.S. 1, 15–19 (1983) (observing that the federal Declaratory Judgment Act does not independently vest federal courts with subject matter jurisdiction. Rather, the court’s jurisdiction turns on whether the requirements of either 28 U.S.C. § 1331 or § 1332 are met).
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1986); Penn Am. Ins. Co. v. Valade, 28 F. App’x 253, 256–57 (4th
Cir. 2002).
Similarly, the New Hampshire Supreme Court (and,
necessarily, the New Hampshire Superior Courts) have, on many
occasions, permitted victims to pursue declaratory judgment
actions against their tortfeasor’s insurance provider (without
directly addressing the question of standing). See, e.g.,
Cogswell Farm Condo. Ass’n v. Tower Grp., Inc., 167 N.H. 245
(2015); St. Pierre v. State Farm Mut. Auto. Ins. Co., No. 2014-0225, 2014 WL 11485835 (N.H. Nov. 21, 2014); White v. Vermont
Mut. Ins. Co., 167 N.H. 153 (2014); Brown v. Concord Grp. Ins.
Co., 163 N.H. 522 (2012); Warner v. Clarendon Ins. Co., 154 N.H.
331 (2006); Guilfoy v. United Servs. Auto. Ass’n, 153 N.H. 461
(2006); Banfield v. Allstate Ins. Co., 152 N.H. 491 (2005); High
Country Assocs. v. New Hampshire Ins. Co., 139 N.H. 39 (1994);
Brown v. City of Laconia, 118 N.H. 376 (1978). 2
2 The only apparent opinion from a New Hampshire court standing in opposition is one from the Strafford County Superior Court, in which the court declared, without elaboration, that a tort victim lacked standing to bring a declaratory judgment against his tortfeasor’s insurer. Yet, despite that finding, the court went on to rule on the merits of the plaintiff’s claims. See O’Connor v Certain Underwriters at Lloyd’s of London, No. 03-E-0064, 2005 WL 6310216 (N.H. Super. Jan. 25, 2005).
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Granite State argues that the decisions cited above are
distinguishable because, in each, the court “inadvertently”
failed to recognize the standing issue. Defendant’s Reply
Memorandum (document no. 14) at 10. But, a plaintiff’s standing
(or lack thereof) implicates the very core of the court’s
authority to preside over a matter: subject matter jurisdiction.
See, e.g., Duncan v. State, 166 N.H. 630, 640 (2014) (explaining
that “standing is a question of subject matter jurisdiction”).
In every case before them, courts must first assess their
subject matter jurisdiction – sua sponte, if necessary. See,
e.g., Arbaugh v. Y&H Corp., 546 U.S. 500, 514, (2006) (“Courts,
including [the Supreme Court], have an independent obligation to
determine whether subject-matter jurisdiction exists, even in
the absence of a challenge from any party.”). See also
Libertarian Party of New Hampshire v. Sec’y of State, 158 N.H.
194, 195–96 (2008) (same).
The New Hampshire Supreme Court undoubtedly considered its
jurisdiction to hear each of the cases cited above and likely
accepted that a victim’s standing to bring a declaratory
judgment action under RSA 491:22 against its tortfeasor’s
insurer is so obvious and well-understood that it required no
argument from counsel and no discussion from the court.
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II. Remand to State Court is Appropriate.
But, this court need not resolve the standing/ripeness
issue under the federal Declaratory Judgment Act. Nor is it
necessary to settle the analogous question under RSA 491:22 (or
certify the question to the New Hampshire Supreme Court). The
absence of Chester Arms from this litigation - whether
intentional or inadvertent – gives rise to prudential
considerations that weigh against this court’s exercise of its
discretion to consider the plaintiffs’ petition for declaratory
judgment.
It is a well-understood proposition that federal courts are
vested with discretion to determine whether it is appropriate to
entertain a petition for declaratory relief. As the Supreme
Court has observed:
There is nothing automatic or obligatory about the
assumption of jurisdiction by a federal court to hear
a declaratory judgment action. By the Declaratory
Judgment Act, Congress sought to place a remedial
arrow in the district court’s quiver; it created an
opportunity, rather than a duty, to grant a new form
of relief to qualifying litigants. Consistent with
the nonobligatory nature of the remedy, a district
court is authorized, in the sound exercise of its
discretion, to stay or to dismiss an action seeking a
declaratory judgment before trial or after all
arguments have drawn to a close. In the declaratory
judgment context, the normal principle that federal
courts should adjudicate claims within their
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jurisdiction yields to considerations of practicality
and wise judicial administration.
Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995) (citations,
footnote, and internal punctuation omitted). See also Diaz–
Fonseca v. Puerto Rico, 451 F.3d 13, 39 (1st Cir. 2006) (“The
[Declaratory Judgment] Act neither imposes an unflagging duty
upon the courts to decide declaratory judgment actions nor
grants an entitlement to litigants to demand declaratory
remedies. Consequently, federal courts retain substantial
discretion in deciding whether to grant declaratory relief.”)
(citations and internal punctuation omitted).
In this case, issues of comity, judicial restraint,
fundamental fairness, and the efficient use of judicial
resources all counsel in favor of declining to address
plaintiffs’ petition. This court (DiClerico, J.) previously
identified and discussed several of those issues in a case that
presented a substantially similar procedural posture to this one
– that is: (a) a declaratory judgment action, (b) filed by a
tort victim against the tortfeasor’s insurance carrier, and (c)
to which the insured tortfeasor was not a party. See Warner v.
Frontier Ins. Co., 288 F. Supp. 2d 127 (D.N.H. 2003).
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Judge DiClerico’s thoughtful reasoning in Warner need not
be rehearsed. It is enough to note that even if this court were
to resolve the present dispute between the officers and Granite
State over the limits of policy coverage, that determination
likely would not bind Chester Arms (since it is not a party to
this litigation). Nor, indeed, would it bind the state courts.
See generally Massachusetts Delivery Ass’n v. Coakley, 671 F.3d
33, 47–48 (1st Cir. 2012). That, in turn, leaves open the
possibility that the state court might subsequently reach a
conflicting interpretation of the policy language at issue (say,
in an action brought by Chester Arms against Granite State). As
Judge DiClerico noted in Warner, that kind of uncertainty and
potential conflict could prejudice the parties, inject needless
confusion into their dispute, and even adversely affect
settlement negotiations. See Id. at 131. See also Maryland
Casualty, 312 U.S. at 274 (discussing the potential problem of
conflicting state and federal interpretations of an insurance
policy when each interpretation is binding on fewer than all
affected parties).
Conflicting interpretations of the same insurance policy
language should be avoided – particularly when such potentially
conflicting interpretations involve the same or related parties,
or arise out of the same underlying factual circumstances. By
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declining to entertaining plaintiffs’ declaratory judgment
action in the absence of Chester Arms, this court can avoid
potential conflicts by deferring to the state court, which
plainly has both subject matter jurisdiction and personal
jurisdiction over all parties.
Conclusion
For the foregoing reasons, as well as those expressed by
the court in Warner v. Frontier Ins. Co., 288 F. Supp. 2d 127
(D.N.H. 2003), the court declines to exercise its discretion to
hear plaintiffs’ declaratory judgment claims.
Nevertheless, Granite State Insurance Company’s motion to
dismiss (document no. 11) is denied and the Clerk of Court shall
remand this matter to the Hillsborough County Superior Court -the state court from which it was removed. Defendant’s motion
to strike (document no. 15) is denied as moot.
SO ORDERED.
Steven J. McAuliffe
United States District Judge
May 28, 2020
cc: Gordon A. Rehnborg, Jr., Esq.
Mark D. Morrissette, Esq.
Tamara S. Holtslag, Esq.
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