Insurance Litigation: Counterclaims and Cross-Claims under the Federal Declaratory Judgment Act
![handle is hein.journals/ilr52 and id is 699 raw text is: NOTES
INSURANCE LITIGATION: COUNTERCLAIMS AND
CROSS-CLAIMS UNDER THE FEDERAL
DECLARATORY JUDGMENT ACT
I. INMODUCTION
After an accident, if a liability insurance company is uncertain of its
obligations under an insurance contract, it may bring a declaratory
judgment action against the insured and any injured party. The in-
surance company generally asks the court to declare that the company
is not liable to defend the insured, or to pay any damages arising from
the accident. When the insurer seeks declaratory relief, the injured
party may attempt to recover damages in the same action by a counter-
claim against the insurance company and a cross-claim against the in-
sured. This Note will determine when these claims should be per-
mitted in actions brought under the Federal Declaratory Judgment
Act.
II. USE OF THm FEDERAL DECLARATORY JUDGMENT AcT
A. The Nature of a Federal Declaratory Judgment Action
The Federal Declaratory Judgment Act provides that any federal
court may declare the rights and other legal relations of any interested
party seeking such declaration.. . .I The act requires that an actual
controversy exist before a court is allowed to declare the rights and
other legal relations of the interested party bringing the action.2 Con-
sequently, a federal court is not allowed to decide hypothetical, ab-
stract, or moot questions.3 Instead, the question presented must be of
such a nature that the court, in deciding the case, can remove the un-
certainty of the existing circumstances.4 Even if the actual controversy
128 U.S.C. § 2201 (1964).
2 !bid.
3 See 1 ANDERSON, AcTIoNs FOR DEC LARATORY JUnosTs § 9, at 47-52 (1951); 3
BAR oN & HOLTzOFF, FEDERAL PRAcTIcE & PRocEDuRE § 1263, at 276-80 (1960)
[hereinafter cited as BARRoN & HoLTzoFF].
4 See Fraser, A Survey of Declaratory Judgment Actions in the United States,
39 IOWA L. Rv. 639, 640-41 (1954). In Aetna Life Ins. Co. v. Haworth, 300 U.S.
227, 240-41 (1937), the Supreme Court of the United States stated that a con-
troversy ' must be definite and concrete, touching the legal relations of the parties
having adverse legal interest. The Court then added that a controversy must
be real, substantial, and admit of specific relief through a judicial decree of a
conclusive nature, as distinguished from an advisory opinion upon a hypothetical
state of facts. Id. at 241. A later case, Public Service Comm'n v. Wycoff Co.,
344 U.S. 237 (1952), further defined the actual controversy requirement.
The disagreement must not be nebulous or contingent but must have](ViewImageLocal?handle=hein.journals/ilr52&div=39&collection=&method=preview&ext=.png&size=3)
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Insurance Litigation: Counterclaims and Cross-Claims under the Federal Declaratory Judgment Act
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