August 01, 2012 Articles

Insurance 101: Considerations for Declaratory Judgment Actions

Declaratory judgment actions are commonplace in insurance coverage litigation, but a number of threshold issues and strategy concerns should be considered

by Shanda K. Pearson

Declaratory judgment actions are one of the most common procedural mechanisms by which policyholders and insurers can proactively seek a determination regarding their respective rights and obligations under an insurance policy. In the words of the Georgia Court of Appeals, a declaratory judgment action "permit[s] one who is walking in the dark to ascertain where he is and where he is going, to turn on the light before he steps rather than after he has stepped in a hole."[1]

Although declaratory judgment actions are commonplace in insurance coverage litigation, there are a number of threshold issues and strategy concerns that should be considered before commencing such an action.

History, Applicable Statutes, and Rules

Declaratory judgments were recognized as remedies in the United States in the early 1900s. In 1922, the Commissioners on Uniform State Laws first adopted the Uniform Declaratory Judgments Act (UDJA). The UDJA states:

Courts of record within their respective jurisdictions shall have power to declare rights, status, and other legal relations whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for. The declaration may be either affirmative or negative in form and effect; and such declarations shall have the force and effect of a final judgment or decree.[2]

The majority of states have adopted some version of the UDJA, providing for some level of national standardization of the declaratory judgment process. Most, but not all, states that have declined to adopt the UDJA have statutes that provide for declaratory judgments.[3] In states in which some form of the UDJA has been adopted, state rules of civil procedure generally govern declaratory judgment actions brought under state statute.[4]

In 1934, Congress enacted a federal statute, similar to the UDJA, which authorized federal courts to grant declaratory judgment relief,[5] although the Federal Declaratory Judgments Act does not provide an independent basis for federal jurisdiction.[6] The Federal Rules of Civil Procedure generally govern the procedure for obtaining a declaratory judgment in federal court.[7]

The Purpose of a Declaratory Judgment Action

Declaratory judgments are actions designed to resolve disputes "before the commission of wrongs"[8] and to "settle uncertainties prior to full-blown development."[9] Black's Law Dictionary defines "declaratory judgment" as follows:

[A] [s]tatutory remedy for the determination of a justiciable controversy where [a party] is in doubt as to his legal rights. A binding adjudication of the rights and status of litigants even though no consequential relief is awarded.[10]

In short, the purpose of a declaratory judgment action is to "settle important questions of law before the controversy has reached a more critical stage."[11] One commentator has observed that the declaratory judgment action recognizes that "[c]ourts should operate as preventive clinics as well as hospitals for the injured."[12]

Relevant to insurance coverage actions, the UDJA expressly provides that declaratory judgment actions are an appropriate mechanism for construing and interpreting contracts:

Any person interested under a . . . written contract or other writings constituting a contract, or whose rights, status, or other legal relations are affected by a . . . contract . . . may have determined any question of construction or validity arising under the . . . contract . . . and obtain a declaration of rights, status, or other legal relations thereunder.[13]

The UDJA further provides that "[a] contract may be construed either before or after there has been a breach thereof."[14]

Thus, declaratory judgment actions can be used to resolve a variety of insurance coverage issues. Among such issues are whether an insurer has a duty to defend,[15] the existence of coverage for a particular claim,[16] whether a policy exclusion is applicable,[17] or the priority of coverage between two or more insurers.[18] In some jurisdictions, however, a declaratory judgment action is not an acceptable mechanism for seeking reformation of a policy.[19] In addition, some jurisdictions—despite the above provision in the UDJA—have held that a declaratory judgment action is not appropriately brought by an insurer where the insurer has already denied coverage under an insurance policy.[20]

Declaratory Relief

A threshold issue that must be addressed prior to the commencement of a declaratory judgment action is whether a justiciable controversy exists.[21] While states may differ on what facts are required to determine that a justiciable controversy exists, all states require that a "justiciable controversy" exist before a party is entitled to commence a declaratory judgment action. To establish a justiciable controversy, a litigant must generally establish there is a present, substantial controversy between adverse parties with "legal interests susceptible to immediate resolution and capable of present judicial enforcement."[22] The UDJA "does not give a court the power to render advisory opinions or determine questions not essential to the decision of an actual controversy."[23]

When the policyholder has been sued and has tendered the claim to its insurer for a defense, the presence of a justiciable controversy is usually apparent. A more difficult issue arises, for example, when an insurer is aware of an accident that will likely give rise to a claim and wants to resolve the coverage question early, even before a claim is formally brought.

Alternatively, consider a situation in which a policyholder who is being provided a defense by one carrier indicates an intent to claim coverage against a second carrier. Under such circumstances, whether a justiciable controversy exists with respect to the second carrier is a close question. With respect to a declaratory judgment action brought by a policyholder against its excess insurer, the court's decision will likely turn on whether it is reasonably likely that the claims against the excess carrier will mature. For example, in In re Pettibone Corp.,[24] the court held there was no justiciable controversy with respect to a duty to defend where it was improbable, based on the facts of the case, that the excess insurer would be called upon to undertake the defense.[25] Where the declaratory judgment action is between two insurers, courts have reached different conclusions.[26]

Commencing a Declaratory Judgment Action

Assuming there is a justiciable controversy, a party commencing a declaratory judgment action should consider the forum in which the action should be commenced and what state's law will apply. If, for example, a Minnesota resident is involved in an accident in Wisconsin potentially governed by a policy issued in Arizona, forum and choice of law become critical concerns, particularly where state law differs on an outcome-determinative issue.

Choice of Law
Assuming the insurance contract itself does not designate what state's substantive law will be applied in the event of a dispute between the parties, the first step in any choice of law analysis is to determine whether a conflict exists between the potentially applicable insurance coverage laws of different states. A choice of law analysis is necessary only when the "choice of one state's law over another's creates an actual conflict"[27] or when the law of one state is uncertain and there is a potential for conflict. In addition, a choice of law analysis is necessary only if the law of both states is capable of being constitutionally applied.[28]

The choice of forum, further discussed below, may have a major impact on what state's law will be applied to a controversy because of the possibility that a court may be inclined to apply the law of its own forum. In addition, different states use different tests to determine what state's law will govern where there is a conflict of law. Among these tests are the lex loci contractus doctrine, the "choice influencing" test, and the test from the Restatement (Second) of Conflict of Laws.

Under the lex loci contractus doctrine, the court would apply the law of the state where the insurance contract had been entered into. While the doctrine has been criticized as being outdated and inflexible,[29] at least 10 states still apply it—Alabama, Arkansas, Florida, Georgia, Kansas, Maryland, New Mexico, South Carolina, Tennessee, and Virginia.[30]

Since 1973, a few courts, including Minnesota, have adopted Professor Robert Leflar's five-factor choice-of-law test in contract cases. This test, sometimes referred to as the "choice influencing consideration" test or the "better-law" approach, requires a court to consider five factors to determine which state's law to apply: (1) predictability of results, (2) maintenance of interstate and international order, (3) simplification of the judicial task, (4) advancement of the forum's governmental interests, and (5) application of the better rule of law.[31]

The first two factors are generally the most significant. The first factor, predictability of results, is intended to fulfill the parties' "justified expectations" about what law they believed would be applied to a controversy.[32] Under this factor the residency of the insured and the place where the insurance policy was entered into are seen as factors that would have affected the parties' expectations about what law would be applied. This first factor often weighs heavily toward applying the law of the insured's domicile in a coverage declaratory judgment action.[33] As to the second factor, courts frequently look to what state has the most significant contacts with the facts of the case and analyze the issue of forum shopping.[34]

The majority of jurisdictions, however, have adopted the Restatement (Second) of Conflict of Laws test in contract actions.[35] Some of the states that have adopted at least some portion of the Second Restatement test are Arizona, Connecticut, Iowa, Michigan, Ohio, Utah, and Washington. Although the framework for a choice of law analysis is set forth in section 6 of the Restatement (Second) of Conflict of Laws,[36] when applied to insurance contracts, the principles from section 6 are of secondary importance to Restatement (Second) of Conflict of Laws sections 188 and 193.[37] Section 193 provides that the validity of rights created under a fire, surety, or casualty insurance policy

are determined by the local law of the state which the parties understood was to be the principal location of the insured risk during the term of the policy, unless with respect to the particular issue, some other state has a more significant relationship . . . to the transaction and the parties. . . .

In the absence of a principal location of the insured risk, section 188 sets forth the following factors to consider: the place of contracting; the place of negotiation of the contract; the place of performance; the location of the subject matter of the contract; and the domicile, residence, nationality, place of incorporation, and place of business of the parties. In some situations, the section 188 factors may even outweigh the principal location of the insured risk.[38] Of note, under the Second Restatement test, a choice of law provision in an insurance contract may not necessarily govern.[39]

States not adopting one of the aforementioned tests generally use combinations and variations of the lex loci and choice-influencing rules or rely on a "significant contacts" test similar to the minimum contacts analysis used in determining personal jurisdiction.[40]

Regardless of the test actually used, however, courts' decisions on choice of law issues are sometimes hard to predict. Frequently, the substantive law of the policyholder's domicile, which is normally where the insurance contract was entered into, will apply to an insurance coverage declaratory judgment action. It is also important to remember that procedural matters, such as the applicable statute of limitations, will be governed by the law of the forum state irrespective of the outcome of any choice of law questions.

Choice of Forum
After determining which state is most likely to apply the law that is favorable to a party's position, it is also necessary to consider whether that forum state has the requisite personal jurisdiction over the parties. Personal jurisdiction and choice of law inquiries are not the same.[41] Personal jurisdiction is the power of the tribunal to subject and bind a particular entity to its decisions.[42] If the party against whom the action is brought is domiciled within the state, the court will have jurisdiction. When the party is a nonresident, courts will look to the state's long-arm statute to determine whether personal jurisdiction exists.

In addition to whether the forum has personal jurisdiction over the parties, consideration should be given to whether the opposing party will be able to successfully move for dismissal or a change of venue on forum non conveniens grounds. A party moving to dismiss on forum non conveniens grounds must show two things: (1) the existence of an adequate alternative forum and (2) that the balance of private and public interest factors favor dismissal.[43] Whether or not there is an alternative forum will depend on whether the defendant is "amenable to process in the other jurisdiction."[44] When balancing the private and public interest factors, the private factors that may be considered include the residence of the witnesses and parties; costs of bringing witnesses and parties to the place of trial; access to sources of proof; and "other practical issues that make trial of a case, easy, expeditious and inexpensive."[45] The public interest factors include local interest in resolving the controversy, administrative difficulties for local courts, and preference for having a forum apply law with which it is familiar.[46]

Under 28 U.S.C. § 1406, a federal case may be transferred to a more convenient forum, rather than dismissed, if the transfer is in the interest of justice. Transfer is limited to districts in which the case could have originally been brought.

Naming Parties in a Declaratory Judgment Action

Most declaratory judgment statutes provide that all persons having an interest in the outcome of a declaratory action should be included in the action. What constitutes "having an interest" in the outcome, and whether a party is a necessary party or just a proper party, is often unclear.

Section 11 of the UDJA provides, in pertinent part:

When declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding.

The UDJA does not distinguish between persons who are necessary parties and persons who are merely proper parties. The cases applying section 11 to varying factual situations, however, do make that distinction and have raised some confusion as to whether section 11 is mandatory in jurisdictions that have adopted it.[47] Regardless, some courts in jurisdictions that have adopted section 11 view a failure to name as parties all persons whose interests would be affected as a non-waivable jurisdictional flaw.[48] Others have held that that a court may not enter judgment in a declaratory judgment action until all persons who have an interest in the controversy are named as parties.[49]

In the typical case, the policyholder who would be affected by the relief sought would have to be named as a defendant in a declaratory judgment action. More difficult is determining whether to name other parties—including but not limited to the plaintiff or other defendants in the underlying lawsuit, and other primary or excess insurers—in the declaratory judgment action.

Whether the plaintiff in the underlying action is a necessary party in an insurance coverage declaratory judgment action is the subject of much debate. Some argue that because the plaintiff's ability to recover from the defendant insured may be dependent on whether there is insurance available, the plaintiff has an "interest" in the outcome and so is a necessary party in an insurance coverage declaratory judgment action.[50] Pennsylvania courts, and many other jurisdictions, routinely dismiss declaratory judgment actions if the plaintiff in the underlying action is not a named party in the declaratory action.[51]

There are arguments in support of the opposite conclusion. Most declaratory judgment statutes require the joinder of all persons with "any interest that would be affected by the declaration," but because the declaratory judgment action is a contract action and because the plaintiff in the underlying action is not a party to the contract, one could argue that the plaintiff has no interest in the declaratory judgment action. In addition, because the plaintiff's interest in finding coverage is adequately protected by the presence of the policyholder, who is equally interested in establishing coverage, it could be argued that naming the plaintiff is unnecessary.

Failure to name the plaintiff, however, could result in two separate declaratory judgment actions or otherwise relitigating identical coverage issues. In Krohn v. Gardner,[52] the Nebraska court held that the claimant was not bound by a previous finding of no coverage in a declaratory action between the insurance company and the policyholder. The court reasoned that although the policyholder and the claimant had similar goals (establishing coverage), this did not make them "privies" and so the claimant was not bound.[53]

In addition to satisfying concerns stemming from section 11 of the UDJA, there are other factors that should be considered when deciding whether to name additional parties in a declaratory judgment action. The preferred forum for the declaratory judgment action may lack jurisdiction over the plaintiff or defendants in the underlying action. But if the preferred forum is federal court, a greater number of parties increases the possibility of destroying diversity jurisdiction. Finally, litigating a case with fewer parties can be easier and less costly.

In short, the decision of what parties to name in a declaratory judgment action should involve a careful legal and costs-benefit analysis.

Timing and Coordination of Actions

Additional issues that may need to be considered when deciding whether to bring a declaratory judgment action involve the timing of and coordination between the declaratory judgment action and the underlying liability action. One question that frequently arises is whether issues raised in the underlying action may be resolved first in the declaratory judgment action. Consider a situation in which an insurer has accepted defense under a reservation of rights in a claim that alleges both negligence and intentional conduct against the insured. The insurer may want to initiate a declaratory judgment action and proceed quickly to a determination that the conduct of the insured was intentional and thus not covered under the policy, thereby ending its defense obligation. May the issue of intent be resolved in the declaratory judgment action before the underlying action is concluded?

The majority of jurisdictions hold that where the question to be resolved in the declaratory judgment action between the insurer and the insured will be decided in the main, underlying action, the trial court may not resolve that issue in the declaratory judgment action; it must be left for resolution in the underlying action.[54] Thus, a declaratory judgment action can proceed before the insured's liability is determined in the underlying action when the issues in the two actions are independent and separable.[55] For example, if an individual is sued for injuring someone, and a coverage dispute arises over whether the defendant is a resident of the named insured's household and so qualifies as an insured, the residency issue could be resolved in the declaratory action before the underlying case is complete because the issue of residency is unrelated to the issue of liability in the underlying lawsuit.[56] If the issues in the two cases are not exactly the same, though closely related, the parties are entitled to a declaratory judgment establishing coverage or the lack thereof.

Courts cite several reasons for the rule that the declaratory judgment action may not resolve issues that will be decided in the main action. The majority rule "prevents duplicative proceedings, may allow the insured his choice of forum, and avoids the danger of inconsistent judgments."[57]

Additional reasons for the majority rule arise from fundamental notions of fairness. First, courts have prohibited the insurer from proceeding in a declaratory judgment action while the underlying action is unresolved because, by proceeding, the insurer defeats its insured's expectation of protection for which it paid a premium.[58]

Second, courts are concerned about the possible collateral estoppel or prejudicial effect that a judgment or finding in the declaratory judgment action might have on the underlying action. In effect, if the insurer was permitted to establish the insured's liability in the declaratory action, the insurer would be providing the plaintiff in the underlying action the tools to seek a directed verdict against the insured in the underlying action.[59] General notions of fairness are of particular concern when the insurer is representing an insured in the underlying matter at the same time it is attempting to establish facts that may lead to the insured's liability. This frequently comes into play in situations in which an insurer argues that an intentional acts exclusion bars coverage for a claim. One commentator explains this concern as follows:

In a nutshell, the problem is that if the insurer is permitted to pursue the declaratory action prior to the disposition of the underlying claim, then the insurer will be seeking to prove in the declaratory action that the insured committed an intentional tort, which is contrary to the insured's interests in the tort action.[60]

In fact, in some jurisdictions, an insurer that raises coverage defenses in a declaratory judgment action may lose its right to control the defense and any settlement of the underlying claim.[61] This is because of an apparent conflict between the policyholder and the insurer.

Third, courts are concerned about the possible prejudice to the insured by being placed in the position having to fight a two-front war—one against the plaintiff in the underlying action and one against the insurer in the declaratory judgment action.[62]

There is, however, contrary authority. In some jurisdictions, courts will allow a declaratory judgment action to proceed first even though it involves resolution of the same issues involved in the underlying action.[63] In Metro Property & Liability Insurance v. Kirkwood, an insurer brought a declaratory judgment action against an insured's widow and estate seeking a determination that the insured acted intentionally, not negligently, in shooting his stepson and wife. The First Circuit allowed the declaratory judgment action to proceed, despite a pending tort suit brought by the insured's wife against his estate, because resolving the coverage matter first would avoid any conflict of interest between the insurer and the insured at the underlying trial.[64]

In sum, it is important to determine how a potentially applicable jurisdiction resolves this issue to avoid a potential stay or dismissal of, and incurring unnecessary costs related to, a declaratory judgment action.


Declaratory judgment actions are a commonly used vehicle for policyholders and insurers to seek important legal determinations regarding their rights and obligations under insurance policies. Rather than falling into routine practices in commencing such actions, however, insurance coverage litigants must remember to give significant consideration to the above issues, prior to commencing suit, to improve their chances of success and decrease the possibility of—or at least be able to anticipate—motion practice seeking dismissal of the action or other remedies with respect to the action.

Keywords: insurance coverage, litigation, Declaratory judgment actions, declaratory judgment relief, Uniform Declaratory Judgments Act, choice of forum

Shanda Pearson is a shareholder with the Minneapolis litigation firm of Bassford Remele.

* Shanda Pearson is a shareholder with the Minneapolis litigation firm of Bassford Remele, concentrating a substantial portion of her practice in insurance coverage. Ms. Pearson graduated magna cum laude from William Mitchell College of Law. She has been selected to the Minnesota Rising Stars list and was named an Up & Coming Attorney by Minnesota Lawyer.

[1] Farm & Home Life Ins. Co. v. Skelton, 510 S.E.2d 76, 77 (Ga. Ct. App. 1998) (citation and quotation omitted).

[2] UDJA § 1.

[3] But see, e.g., Sumrall v. Preferred Risk Mut. Ins. Co., 339 So. 2d 568 (Miss. 1976) (dismissing claim because jurisdiction did not specifically authorize declaratory judgment).

[4] See, e.g., Minn. R. Civ. P. 57.

[5] 28 U.S.C. §§ 2201, 2202.

[6] See Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995) ("By the [Federal] Declaratory Judgments 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."); Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494 (1942) ("Although the District Court had jurisdiction of the suit under the Federal Declaratory Judgments Act, . . . it was under no compulsion to exercise that jurisdiction.").

[7] See Fed. R. Civ. P. 57.

[8] Midwest Motor Express, Inc. v. Int'l Bhd. of Teamsters, 512 N.W.2d 881, 884 (Minn. 1994).

[9] Holiday Acres No. 3 v. Midwest Fed. Sav. & Loan Ass'n of Minneapolis, 271 N.W.2d 445, 447 (Minn. 1978).

[10] Black's Law Dictionary 846 (7th ed. 1999); see also Colonial Pipeline Co. v. Morgan, 263 S.W.3d 827, 836 (Tenn. 2008) (citing 26 C.J.S. Declaratory Judgments § 1 (2001)) ( "'Declaratory judgments' are so named because they proclaim the rights of the litigants without ordering execution or performance.").

[11] Colonial Pipeline, 263 S.W.3d at 836 (citing 26 C.J.S. Declaratory Judgments § 3 (2001)).

[12] Colonial Pipeline, 263 S.W.3d at 836 (quoting Henry R. Gibson, Gibson's Suits in Chancery § 545 (6th ed. 1982)).

[13] UDJA § 2.

[14] UDJA § 3.

[15] St. Paul Fire & Marine Ins. Co. v. Seagate Tech., Inc., 570 N.W.2d 503 (Minn. Ct. App. 1997).

[16] Nationwide Mut. Ins. Co., 691 S.E.2d 487 (S.C. Ct. App. 2010).

[17] Am. Family Mut. Ins. Co. v. Moore, 912 S.W.2d 531 (Mo. Ct. App. 1995).

[18] West Bend Mut. Ins. Co. v. Allstate Ins. Co., 776 N.W.2d 693 (Minn. 2009).

[19] Compare U.S. Guarantee Co. v. Harrison & Owen Produce Co., 198 So. 240 (Ala. 1940) (holding action for reformation of policy on basis of mutual mistake presents justiciable controversy under UDJA), with Danson v. George Washington Life Ins. Co., 237 So. 2d 774 (Fla. Ct. App. 1970) (holding claim for reformation of policy not within purview of the declaratory judgment statute).

[20] Builders Ins. Group, Inc. v. Ker–Wil Enters., Inc., 618 S.E.2d 160 (Ga. Ct. App. 2005) (upholding dismissal of declaratory judgment action when insurance company had already denied coverage).

[21] Lavely v. Heafner, 976 S.W.2d 896 (Tex. Ct. App. 1998); Winter v. Gnaizda, 152 Cal. Rptr. 700 (Cal. Ct. App. 1979); Watson v. Aetna Cas. & Sur. Co., 675 N.Y.S.2d 367 (N.Y. App. Div. 1998); see also Rice Lake Contracting Corp. v. Rust Env't & Infrastructure, Inc., 549 N.W.2d 96, 99 (Minn. Ct. App. 1996) ("The only prerequisite for a court's exercise of jurisdiction in declaratory judgment actions is the presence of a 'justiciable controversy.'").

[22] Prof'l Firefighters Ass'n of Omaha v. City of Omaha, 803 N.W.2d 17, 26 (Neb. 2011).

[23] Brandvold v. Lewis & Clark Pub. Sch. Dist. No. 161, 803 N.W.2d 827, 830 (N.D. 2011).

[24] 121 B.R. 801, 805806 (Bankr. N.D. Ill. 1990).

[25] See also, e.g., Bankers Trust Co. v. Old Republic Ins. Co., 959 F.2d 677 (7th Cir. 1992); E.R. Squibb & Sons, Inc. v. Accident & Cas. Ins. Co., 853 F. Supp. 98 (S.D.N.Y. 1994) (considering whether excess coverage would likely be implicated).

[26] See, e.g., Provident Life & Acc. Ins. Co. v. Transamerica-Occidental Life Ins. Co., 850 F.2d 1489 (11th Cir. 1988) (determining no case or controversy existed for action between consecutive insurers in which insured was not named as a party); Fremont Indem. Co. v. Cal. Nat'l Physician's Ins. Co., 954 F. Supp. 1399 (C.D. Cal. 1997) (holding declaratory relief appropriate in declaratory judgment action between consecutive insurers).

[27] Jepson v. Gen. Cas. Co. of Wis., 513 N.W.2d 467, 469 (Minn. 1994).

[28] Allstate Ins. Co. v. Hague, 449 U.S. 302, 312–13 (1981) (requiring sufficient contact with the parties and the occurrence or transaction such that the choice of law is neither arbitrary nor capricious).

[29] Randy Maniloff & Jeffrey Stempel, General Liability Insurance Coverage, Key Issues in Every State 19 (Oxford  Univ. Press 2011).

[30] Maniloff & Stempel, supra note 29, at 19.

[31] Milkovich v. Saari, 203 N.W.2d 408, 412 (Minn. 1973).

[32] Lommen v. City of E. Grand Forks, 522 N.W.2d 148, 150 (Minn. Ct. App. 1994).

[33] See Jepson v. Gen. Cas. Co. of Wis., 513 N.W.2d 467, 470–71 (Minn. 1994).

[34] Jepson, 513 N.W.2d at 470–71.

[35] Maniloff & Stempel, supra note 29, at 19.

[36] Maniloff & Stempel, supra note 29, at 19–20.

[37] Maniloff & Stempel, supra note 29, at 20 (citations omitted).

[38] Maniloff & Stempel, supra note 29, at 20 (citations omitted).

[39] Maniloff & Stempel, supra note 29, at 21 (citing Restatement (Second) of Conflicts of Law § 193 cmt. e ("Effect will frequently not be given to a choice-of-law provision in a contract of fire, surety, or casualty insurance which designates a state whose local law gives the insured less protection than he would receive under the otherwise applicable law."); Industrial Indem. Ins. Co. v. United States, 757 F.3d 982 (9th Cir. 1985) (declining to apply Illinois choice-of-law clause to policy having no relationship to Illinois).

[40] See Sec. Ins. Co. of Hartford v. Kevin Tucker & Assocs., 64 F.3d 1001, 1005 (6th Cir. 1995).

[41] Allstate Ins. Co. v. Hague, 449 U.S. 302, 320 n.3 (1981) ("The two questions presented by the choice-of-law issue arise only after it is assumed or established that the defendant's contacts with the forum State are sufficient to support personal jurisdiction.").

[42] Concordia Teachers Coll. v. Neb. Dep't of Labor, 563 N.W.2d 345, 348 (Neb. 1997).

[43] Lockman Found. v. Evangelical Alliance Mission, 930 F.2d 764, 767 (9th Cir. 1991).

[44] Lockman Foundation, 930 F.2d at 768.

[45] Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947), superseded by statute on other grounds.

[46] Lockman, 930 F.2d at 771.

[47] See H. H. Henry, Annotation, "Construction, Application, and Effect of § 11 of the Uniform Declaratory Judgments Act That All Persons Who Have or Claim Any Interest Which Would Be Affected By the Declaration Shall Be Made Parties," 71 A.L.R.2d 723 § 2 (1960 & Supp.).

[48] Henry, supra note 47.

[49] Henry, supra note 47.

[50] See Fire Ins. Exch. v. Basten, 549 N.W.2d 690, 698–99 (Wis. 1996) (requiring the plaintiff and anyone else with a claim against the insured in the underlying action to be named as a party in the declaratory judgment action); see also Soc'y of Mt. Carmel v. Nat'l Ben Franklin Ins. Co., 643 N.E.2d 1280, 1284–85 (Ill. Ct. App. 1994) (the tort claimant in an underlying action is a necessary party to a declaratory judgment action brought to determine insurance coverage for that claim); Royal Indem. Co. v Hartford Accident & Indem. Co., 155 A.2d 270, 272 (N.J. 1959) (holding judgment in a declaratory judgment action involving two potential insurers should not have been entered without the joinder as parties of persons who had been riding in the vehicle and were injured in the accident).

[51] See Vale Chem. Co. v. Hartford Accident & Indem. Co., 516 A.2d 684 (Pa. 1986) (dismissing lawsuit for lack of subject matter jurisdiction because the injured party was not joined); see also Davis J. Howard, "Declaratory Judgment Coverage Actions: A Multistate Survey and Analysis and State Versus Federal Law Comparison," 21 Ohio N.U. L. Rev. 13 (1994).

[52] 471 N.W.2d 391 (Neb. 1991), appeal after remand, 533 N.W.2d 95 (Neb. 1995).

[53] Krohn, 471 N.W.2d 391; see also Howard, supra note 51, at 33 (discussing Krohn).

[54] See State Farm Fire & Cas. Co. v. Finney, 770 P.2d 460, 464 (Kan. 1989); Fid. & Cas. Co. of N.Y. v. Envirodyne Eng'rs, Inc., 461 N.E.2d 471 (Ill. App. Ct. 1983); Hartford Ins. Grp. v. District Court, 625 P.2d 1013 (Colo. 1981); Thornton v. Paul, 384 N.E.2d 335 (Ill. 1978), overruled on other grounds, Am. Family Mut. Ins. Co. v. Savickas, 739 N.E.2d 445 (Ill. 2000); Brohawn v. Transamerica Ins. Co., 347 A.2d 842 (Md. 1975).

[55] See, e.g., State Farm Mut. Auto. Ins. Co. v. Pfiel, 710 N.E.2d 100, 103–104 (Ill. Ct. App. 1999) (declaratory action could proceed before underlying claim resolved where issue in declaratory action required determination of whether insured's use of automobile to confine and kill an occupant involved the "ownership, maintenance or use" of an automobile, an issue not crucial in the determination of liability in the underlying case).

[56] See Haskel, Inc. v. Superior Court, 39 Cal. Rptr. 2d 520, 529 (Cal. Ct. App. 1995). ("It is only where there is no potential conflict between the trial of the coverage dispute and the underlying action that an insurer can obtain an early trial date on resolution of its claim that coverage does not exist.").

[57] Metro. Prop. & Liab. Ins. Co. v. Kirkwood, 729 F.2d 61, 63–64 (1st Cir. 1984).

[58] See, e.g., Hartford, 625 P.2d at 1016 ; Terra Nova Ins. Co. v. 900 Bar, Inc., 887 F.2d 1213, 1225 (3d Cir. 1989) ("The insured could not possibly have anticipated that the very resources for which he bargained would be turned against him and used to establish his liability whenever [an] intentional tort was alleged.").

[59] See, e.g., Thornton, 384 N.E.2d at 346.

[60] 16 Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 227:37 (3d ed. 2005) (citing A.M. Posner, "Prematurity of Declaratory Judgment Actions; Does State or Federal Law Apply?," 25 Brief 15 (Fall 1995)).

[61] See Burd v. Sussex Mut. Ins. Co., 267 A.2d 7 (N.J. 1970).

[62] See Haskel, Inc. v. Superior Court, 39 Cal. Rptr. 2d 520 (Cal. Ct. App. 1995).

[63] See Metro. Prop. & Liab. Ins. Co. v. Kirkwood, 729 F.2d 61 (1st Cir. 1984); Stout v. Grain Dealers Mut. Ins. Co., 307 F.2d 521 (4th Cir. 1962); Alan Posner, "Prematurity of Declaratory Judgment Actions, Does State or Federal Law Apply?," 25 Brief 15 (Fall 1995).

[64] Kirkwood, 729 F.2d at 63–64 (citing Stout v. Grain Dealers Mut. Ins. Co., 307 F.2d 521 (4th Cir. 1962) (upholding district court's decision not to dismiss a declaratory judgment action when a conflict of interest existed that would have prevented the insurance company from managing the insured's defense in an underlying tort suit)).

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