The opinion of the court was delivered by: JAMES MUNLEY, District Judge
Presently before the Court is Plaintiff American States
Insurance Co.'s ("American") declaratory judgment action seeking
clarification of its duties to defend and indemnify insured
Defendants Component Technologies, Inc. and Granart Surfacing,
Inc. for potential liabilities stemming from a suit brought in
state court by Defendant Moses Taylor Hospital. Plaintiff does
not contest its duty to defend and is indeed defending the
underlying action. Liability has not been established in the
underlying case. Therefore, on August 31, 2005, we ordered the
parties to file a brief on the issue of the ripeness of the
present action for adjudication. On September 9, 2005, American
filed a brief in support of the ripeness of this case. No other
party has filed a brief and the time for such filing has passed.
For the following reasons, we will dismiss this case as unripe.
"The existence of a case and controversy is a prerequisite to
all federal actions, including those for declaratory or
injunctive relief." Peachlum v. City of York, 333 F.3d 429, 433 (3d Cir. 2003) (quoting Presbytery of New Jersey of Orthodox
Presbyterian Church v. Florio, 40 F.3d 1454 (3d Cir. 1994)).
Ripeness is a question of timing and "its basic rationale is to
prevent the courts, through avoidance of premature adjudication,
from entangling themselves in abstract disagreements." Taylor v.
Upper Darby, 983 F.2d 1285, 1290 (3d Cir. 1993) (quoting Abbott
Lab. v. Gardner, 387 U.S.136, 148 (1967)).
"As a general rule, a court entertaining a declaratory judgment
action in an insurance coverage case should refrain from
determining the insurer's duty to indemnify until the insured is
found liable for damages in the underlying action." Cincinnati
Ins. Companies v. Pestco, Inc., 374 F. Supp. 2d 451, 465 (W.D.
Pa. 2004) (citing Home Ins. Co. v. Law Offices of Jonathan
DeYoung, 107 F. Supp. 2d 647, 650 (E.D. Pa. 2000), Home Ins.
Co. v. Perlberger, 900 F. Supp. 768, 773 (E.D. Pa. 1995). The
Third Circuit "has recognized that considerations of ripeness are
sufficiently important that the court is required to raise the
issue sua sponte even though the parties do not." Peachlum,
333 F.3d at 433.
The following three factors determine whether the matter is
ripe for declaratory relief: 1) whether the parties' interests
are sufficiently adverse; 2) whether the court can issue a
conclusive ruling in light of potentially evolving factual
developments; and 3) whether the decision will render practical
help to the parties. Step-Saver Data Systems, Inc. v. Wyse
Technology, 912 F.2d 643, 647 (3d Cir. 1990).
Plaintiff argues that this case is ripe for adjudication
because our resolution of the issues presented would provide
guidance for the parties in the underlying action and possibly
facilitate a settlement. We find that this case is not ripe. The first Step Saver factor, the adversity of the interests
of the parties, dictates that this case is not ripe. At present,
the parties interests are not adverse. Plaintiffs have assumed a
duty to defend Defendants in the underlying lawsuit. Rather than
having divergent interests, they share the interest of proving
that Defendants are not liable in the underlying suit. If we
declare that Plaintiff has a duty to indemnify the insured for
some damages but not others, we provide a disincentive for
Plaintiff to properly defend the entire suit. Defendant has a
duty to defend the entire suit, not just those claims that it
will have a duty to indemnify. Biborosch v. Transamerica Ins.
Co., 603 A.2d 1050, 1093-94 (Pa. Super. Ct. 1992) (providing
that even if some claims in an underlying complaint fall outside
the terms of insurance coverage, the insurer is obligated to
defend the entire action against the insured if the policy would
potentially cover some claim). Our resolution of this matter
would create a conflict between Plaintiff's duty to defend and
its interest in avoiding coverage. Thus, we find that at present,
the parties' interests are not sufficiently adverse.
The second Step-Saver factor also weighs in favor of
dismissing this case because we cannot provide a conclusive
ruling. Here, any declaratory ruling in this action regarding
Plantiff's duty to indemnify would be contingent upon the
insureds subsequently being held liable in the underlying suit.
Plaintiff's suit requires that we discern the extent of its duty
under an insurance contract to indemnify Defendants for
liabilities. The extent of its duty to indemnify, however,
depends on the extent of the liabilities that at present are
merely hypothetical. Thus, our ruling would not be conclusive.
See Step-Saver, 912 F.2d at 648 (finding an action for
declaratory judgment unripe where the declaration would outline
which of two parties would be responsible for a liability that had yet
to be established).
Finally, we find that the third factor, the usefulness of the
judgment, also weighs in favor of dismissal. Plaintiff argues
that our judgment will be useful to help it settle the underlying
case. Under this argument, every advisory opinion would be
helpful in the sense that it allows a party or potential litigant
to seek legal advice from an Article III judge. Settlement, of
course, is no foregone conclusion, and our opinion in this case
may be of no utility at all in the event that the underlying suit
proceeds to trial and Defendants are absolved of liability. On
the other hand, in the event of a settlement, we are confident
that able counsel could structure a settlement to preserve the
issues raised before this Court while at the same time presenting
a more concrete basis for adjudication. See Cay Divers, Inc.
v. Raven, 812 F.2d 866, 870 (3d Cir. 1987).
Additionally, we find Plaintiff's reliance on ACandS, Inc., v.
Aetna Cas. & Sur. Co., 666 F. 2d 819 (1981) misplaced. ACandS
holds that an insurer's declaratory action to determine its duty
to defend an underlying suit prior to a finding of liability is
justiciable. Id. at 823. It says nothing regarding the ripeness
of an insurer's declaratory action to determine its duty to
indemnify an insured for damages that have yet to be
established. The duty to defend is significantly broader than the
duty to defend, it is based solely on a reading of the complaint,
and is not contingent on the imposition of liability. Gene's
Restaurant, Inc. v. Nationwide Ins. Co., 548 A.2d 246 (1988).
Thus, the duty to defend is an entirely distinct determination.
Furthermore, this duty is not at issue because Plaintiff is
defending the underlying suit. "[W]here there is a duty to
defend, the duty to indemnify must await resolution of the underlying suits." United Nat. Ins. Co. v. Dunbar & Sullivan
Dredging, 953 F.2d 334, 338 (7th Cir. 1992).
Accordingly, we find that the present controversy is not
sufficiently definite or concrete to be justiciable.*fn1 At
present, Plaintiff seeks a declaration of its duty to indemnify
Defendants for liabilities they may never incur.*fn2
Plaintiff has assumed a duty to defend Defendants for all claims
in the underlying action. Thus, their interests are the same:
they both seek to prevent Defendants' liability in the underlying
suits altogether. Our judgment would merely provide advice and
guidance to Plaintiff as to how to proceed through settlement
negotiations. This is precisely the type of abstract disagreement
that the ripeness doctrine is designed to avoid. Therefore, we
will dismiss the instant case without prejudice to Plaintiff's
ability to file suit following the imposition of liability in the
underlying suit by settlement or otherwise. ORDER
AND NOW, to wit, this 15th day of September 2005, Plaintiff's
action for declaratory judgment of its duty to indemnify the
insured defendants (Doc. 1) is hereby DISMISSED without
prejudice because it is not ripe for adjudication. The portion of
Plaintiff's complaint seeking declaratory judgment on its duty to
defend is hereby DISMISSED as moot without prejudice because
Plaintiff has willingly supplied a defense in the underlying
action. The Clerk of Courts is directed to close this case in
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