§ 12.3 Federal Courts

• Library: Guide to South Carolina Liability and Property Insurance Law (SCBar) (2019 Ed.)

§ 12.3 Federal Courts

Federal Rule of Civil Procedure 57 provides:

These rules govern the procedure for obtaining a declaratory judgment under 28 U.S.C. § 2201. Rules 38 and 39 govern a demand for a jury trial. The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. The court may order a speedy hearing of a declaratory-judgment action.

Therefore, declaratory judgment actions are governed by 28 U.S.C. § 2201, the Declaratory Judgment Act, which provides in relevant part:

(a) In a case of actual controversy within its jurisdiction, except with respect to Federal taxes other than actions brought under section 7428 of the Internal Revenue Code of 1986 [26 U.S.C. § 7428], a proceeding under section 505 or 1146 of title 11, or in any civil action involving an antidumping or countervailing duty proceeding regarding a class or kind of merchandise of a free trade area country (as defined in section 516A(f)(10) of the Tariff Act of 1930 [19 U.S.C. § 1516a(f) (10)]), as determined by the administering authority, any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.⁷

The Supreme Court of the United States has explained that "[b]asically the question is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment."⁸ The Fourth Circuit has explained that "[t]he Supreme Court has 'repeatedly characterized the Declaratory Judgment Act as 'an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant.''"⁹ However, while "[a] federal court has the discretion to decline to entertain a declaratory judgment action, but, under the law of this Circuit, the court must do so only for 'good reason.'"¹⁰

The Fourth Circuit and the United States District Court of the District of South Carolina have both provided guidance for courts to consider in determining whether they will exercise jurisdiction over a declaratory judgment. The federal district court addressed these factors in Affirmative Insurance Company v. Williams.¹¹ The court...