Bituminous Casualty v. J & L Lumber Co Inc

RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 Bituminous Casualty Corp. No. 03-5217 ELECTRONIC CITATION: 2004 FED App. 0199P (6th Cir.) v. J & L Lumber Co. File Name: 04a0199p.06 _________________ UNITED STATES COURT OF APPEALS COUNSEL FOR THE SIXTH CIRCUIT ARGUED: Jeffrey L. Freeman, JEFFREY L. FREEMAN _________________ ATTORNEY AT LAW, Louisville, Kentucky, for Appellant. Robert E. Maclin III, McBRAYER, McGINNIS, LESLIE & BITUMINOUS CASUALTY X KIRKLAND, Lexington, Kentucky, for Appellee. CORPORATION , - ON BRIEF: Jeffrey L. Freeman, JEFFREY L. FREEMAN Plaintiff-Appellee, - ATTORNEY AT LAW, Louisville, Kentucky, for Appellant. - No. 03-5217 Robert E. Maclin III, Pamela A. Chesnut, McBRAYER, - McGINNIS, LESLIE & KIRKLAND, Lexington, Kentucky, v. > for Appellee. , - J & L LUMBER COMPANY , _________________ - INC., - OPINION Defendant-Appellant. - _________________ - N SUHRHEINRICH, Circuit Judge. Defendant-Appellant Appeal from the United States District Court J & L Lumber Company, Inc. (J & L) appeals from the order for the Western District of Kentucky at Owensboro. of the district court granting summary judgment in favor of No. 01-00106—Joseph H. McKinley, Jr., District Judge. Bituminous Casualty Corp. (Bituminous) and denying summary judgment in favor of J & L in this declaratory Argued: April 20, 2004 judgment action. Bituminous brought this action against J & L in federal district court, seeking a declaration that it was Decided and Filed: June 29, 2004 not required to defend or indemnify J & L in a personal injury action in state court relating to a logging accident that Before: SUHRHEINRICH and GIBBONS, Circuit Judges; occurred on November 13, 1998, while Phillip Shields, LAWSON, District Judge.* plaintiff in the state action, was preparing to haul a load of timber from a J & L logging site. The central issue in the federal aJune 29, 2004ction was whether Shields was an employee of J & L at the time of his injury and, therefore, excluded from coverage under the terms of J & L’s commercial insurance policies with Bituminous. For the reasons that follow, we VACATE the district court’s order * granting declaratory judgment relief to Bituminous and The Honorable David M. Lawson, United States District Judge for the Eastern D istrict of M ichigan, sitting by de signation.

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REMAND the case to the district court with instructions to permitting, Shields hauled for J & L at least once a week and dismiss the complaint. usually more. On occasion, he even drove a J & L truck. I. Background The payment arrangement between Shields and J & L was somewhat complicated. Primarily, Shields was paid by the A. Facts load for his work hauling for J & L. When he drove a J & L truck, though, Shields received only driver’s pay in the same J & L is a small, family owned and operated sawmill in manner as J & L’s own drivers. In addition, from March eastern Kentucky. Besides family members, the mill employs 1998 through December 9, 1998, Shields was listed as an approximately ten to fifteen additional workers in either the employee on the J & L payroll registers. He received a sawmill or the woods. In November 1998, J & L also owned weekly payroll check of $250 from which taxes and health three tractor-trailer trucks and two tandems for hauling insurance premiums were withheld. He also received a check lumber and employed drivers for these vehicles. from the general account from which no withholdings were taken. Phillip Shields, the plaintiff in the underlying personal injury action against J & L, is a fifty-eight-year-old man who J & L described this unusual payment arrangement as an has worked in or around the logging industry most of his accounting device that permitted Shields to obtain health adult life. At different times, Shields has worked as a trucker, insurance coverage. The deposition testimony indicated that sawmill foreman, independent logger, and timber buyer. In in March or April 1998, Wilma Myers (Myers), J & L’s the past, he worked for J & L both as the sawmill foreman secretary and general office manager, and Joel Smith, an and as a truck driver. owner’s son who had been insured with Blue Cross and Blue Shield, decided to change insurance providers due to an Sometime after quitting the sawmill foreman position at increase in premiums. To get insurance under a plan with J & L, Shields formed a trucking company with the name MedQuest insurance company, however, they needed a group Phillip Shields or Shields Trucking. He purchased two of at least three. Shields, who also needed insurance, became eighteen-wheeler trucks, which were garaged at his house and the third member of the group. Myers placed Shields on the were maintained primarily by him. Shields also employed his payroll and began issuing him a weekly check from which the own driver and incurred other expenses in connection with his insurance premium was deducted. The amount of the payroll trucking business, including fuel, contract labor, tolls, check was then deducted from the total amount due Shields business telephone, and subcontractors. In 1998, Shields’s for his independent hauling. Although Joel was not an trucking business yielded a gross income of $91,159. employee, his insurance premium was paid directly by J & L because of his filial relationship to Jerry Smith, one of J & After Shields started his trucking company, he and J & L L’s owners. formed a business relationship. J & L hired Shields’s trucks and drivers when it needed loads hauled and did not have any Outside of their business relationship, Shields and the available trucks or drivers of its own. Although there was no owners of J & L were good friends. They had known each formal contract between them, J & L used Shields’s trucks on other for approximately thirty years. In fact, Shields a regular basis, but not exclusively. In fact, weather characterized his relationship with Jerry and Lester Smith as

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the “best of friends.” He lived approximately one mile from asserted that Shields’s action was barred by the exclusive J & L’s office and would go to the J & L property usually remedy provision of the Kentucky Workers’ Compensation once a day and sometimes two or three times a day to check Act. for work or just to socialize. Shields was also good friends with Myers and the two had a social, dating relationship in the J & L did not carry workers’ compensation insurance at the past. In addition, Shields employed Myers’s son, Greg, as a time of the injury.1 J & L did, however, carry accident driver for one of his tractor-trailers. coverage for its employees under an Employers’ Underwriters policy. It also carried two commercial insurance policies with On the evening of November 12, 1998, Shields and Myers Bituminous Casualty Corp., a general liability policy and a were in the J & L office drinking coffee when they received commercial auto policy. At the time of injury, Shields was word that the woods crew was “blocked out” and could not not covered under the Employers’ Underwriters policy. continue working unless the cut timber was hauled away from Therefore, J & L requested a defense from Bituminous in the the logging site. Myers and Shields arranged for Shields to state tort action, which Bituminous provided under take a truck and haul the timber the next morning. On the reservation of rights. morning of November 13, 1998, Shields arrived at the J & L lumber yard and picked up a J & L truck, which was loaded On or about October 23, 2000, a few weeks before the with pulp wood. He delivered the load and proceeded to the expiration of the two-year statute of limitation under the site that was “blocked out.” After hauling a couple of loads, Kentucky Workers’ Compensation Act, Shields filed a claim, Shields was injured during loading when a log dislodged from presumably a protective filing, with the Kentucky Department the truck and landed on him. As noted, at the time of the of Workers’ Claims, alleging that he was injured on injury, Shields was operating a J & L truck and was picking November 13, 1998, while in the course of employment. See up his third load of the day. Ky. Rev. Stat. § 342.185. This claim was dismissed on January 24, 2003, after an Administrative Law Judge for the Both Shields and Myers stated that Shields was doing a Kentucky Department of Workers’ Claims determined that favor for J & L at the time of the accident and was not going Shields was an independent contractor and not an employee. to be compensated for his work. Shields testified at The Administrative Law Judge stated that, although it was a deposition that his work on the morning of November 13 was close question based upon the facts and Kentucky case law, strictly voluntary. Moreover, Shields, Myers and J & L’s he found the intent of the parties to be paramount in owners, Jerry and Lester Smith, all insisted at deposition that determining that Shields was not an employee. Shields was not an employee of J & L at the time of his injury. In the underlying state personal injury action, on or about March 18, 2002, Shields filed a motion for partial summary Procedural History judgment seeking to strike the affirmative defense raised by J & L that the Workers’ Compensation Act was his exclusive In July 1999, Shields filed a personal injury action in the Ohio County Circuit Court of Kentucky alleging negligence on the part of J & L or its employees related to his injuries on 1 November 13, 1998. As one of its affirmative defenses, J & L This fact was certified by the Commissioner of the Kentucky Departm ent of W orkers’ Claim s on N ovembe r 13, 200 0.

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remedy on the grounds that he was not an employee of J & L. Likewise, the finding benefitted Shields because it enabled J & L did not respond to this motion. On March 28, 2002, the him to collect any judgment awarded in the negligence action Ohio County Circuit Court of Kentucky found that Shields from J & L’s insurer, rather than J & L and his close friends. was not an employee of J & L at the time of injury and struck the Workers’ Compensation Act defense. Specifically, the J & L filed a motion to alter, amend or vacate judgment, Kentucky court found that J & L had little, if any, control which was denied on January 6, 2003. J & L then filed this over Shields, since Shields was volunteering on the day of appeal, raising four issues: whether the district court injury and that the true intent of the parties was that Shields misapplied Kentucky law when it used a workers’ was not an employee. compensation analysis rather than a common law analysis to determine whether Shields was an employee pursuant to the In the meantime, on July 2, 2001, Bituminous filed the insurance contract; whether the district court erred in holding instant action in the United States District Court for the that Shields was an employee of J & L as a matter of law; Western District of Kentucky seeking a declaratory judgment whether the district court erred in failing to consider the that it had no duty to defend or indemnify J & L under its explicit policy definitions; and whether the district court erred policies based on exclusions contained in each policy for in applying federal preclusion law rather than state preclusion employees. Bituminous argued that Shields was an employee law to determine the effect of a prior state court judgment in of J & L at the time of his injury and was, therefore, not a diversity action. covered by the policies. J & L maintained that Shields was not an employee of J & L at the time of injury. The parties II. Standards of Review filed cross motions for summary judgment. A. Summary Judgment On October 16, 2002, the district court granted summary judgment in favor of Bituminous, finding that Shields was an This Court reviews a district court’s grant of summary employee as a matter of law. The district court found, among judgment de novo. Hartsel v. Keys, 87 F.3d 795, 799 (6th other things, that J & L had the ultimate right to control Cir. 1996). Summary judgment is appropriate “if the Shields’s work, that the method of payment indicated pleadings, depositions, answers to interrogatories, and employment, and that the actions of J & L and Shields were admissions on file, together with the affidavits, if any, show inconsistent with their assertion that Shields was not an that there is no genuine issue as to any material fact and that employee. The district court did not make a finding regarding the moving party is entitled to a judgment as a matter of law.” the testimony that Shields had been working as a volunteer on Fed. R. Civ. P. 56(c). the day of injury. In addition, the district court found that the October 28, 2002, Kentucky state court judgment in the B. Declaratory Judgment Actions negligence action did not have preclusive effect because it determined that the state court decision was not the result of Exercise of jurisdiction under the Declaratory Judgment an adversarial proceeding, since a finding that Shields was not Act, 28 U.S.C. § 2201(a) is not mandatory. Brillhart v. an employee benefitted both Shields and J & L. J & L Excess Ins. Co., 316 U.S. 491, 494 (1942). Therefore, we benefitted by the finding that Shields was not an employee review the district court’s decision to exercise jurisdiction for because the finding entitled it to indemnity from Bituminous. abuse of discretion. Wilton v. Seven Falls Co., 515 U.S. 277,

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289-90 (1995); Scottsdale Ins. Co. v. Roumph, 211 F.3d 964, B. Propriety of Declaratory Judgment Relief in this 967 (6th Cir. 2000). Case III. Analysis This Court generally considers five factors to determine whether a case is appropriate for declaratory judgment: As noted, J & L raises four issues on appeal. We do not reach these issues, however, because we conclude that the (1) whether the judgment would settle the controversy; district court should have declined to exercise jurisdiction (2) whether the declaratory judgment action would serve over this declaratory judgment action and should have a useful purpose in clarifying the legal relations at issue; dismissed the complaint. (3) whether the declaratory remedy is being used merely for the purpose of “procedural fencing” or “to provide an A. Declaratory Judgment Actions arena for a race for res judicata”; (4) whether the use of a declaratory action would We have repeatedly held in insurance coverage diversity increase the friction between our federal and state courts cases that “declaratory judgment actions seeking an advance and improperly encroach on state jurisdiction; and opinion on indemnity issues are seldom helpful in resolving (5) whether there is an alternative remedy that is better or an ongoing action in another court.” Manley, Bennett, more effective. McDonald & Co. v. St. Paul Fire & Marine Ins. Co., 791 F.2d 460, 463 (6th Cir. 1986). Further, “[s]uch actions . . . Scottsdale 211 F.3d at 968 (citations omitted). The district should normally be filed, if at all, in the court that has court did not consider these criteria; therefore, we review jurisdiction over the litigation which gives rise to the them for the first time on appeal. indemnity problem. Otherwise confusing problems of scheduling, orderly presentation of fact issues and res 1. Whether the judgment would settle the controversy. judicata are created.” Id.; see also Scottsdale Ins. Co., 211 F.3d 964; Omaha Property and Cas. Ins. Co. v. Johnson, 923 The controversy in this case is one of insurance coverage. F.2d 446, 448 (6th Cir. 1991); Allstate Ins. Co. v. Mercier, Bituminous seeks a declaration that it has no duty to defend 913 F.2d 273, 278-79 (6th Cir. 1990); Grand Trunk W.R. Co. or indemnify J & L based on exclusions in its insurance v. Consolid. Rail Corp., 746 F.2d 323, 326 (6th Cir. 1984). policies for employees. If Shields was an employee of J & L That is not to say that there is a per se rule against exercising at the time of his injury, Bituminous would have no duty to jurisdiction in actions involving insurance coverage defend or indemnify J & L in the state court personal injury questions. See Allstate Ins. Co. v. Green, 825 F.2d 1061, action. If Shields was not an employee, on the other hand, 1066 (6th Cir. 1987); State Farm Fire and Cas. Co. v. Odom, Bituminous would be obligated under its contracts to defend 799 F.2d 247, 250 (6th Cir. 1986). Nevertheless, the factual and indemnify J & L. Thus, resolution of the controversy and procedural postures of this case make exercise of hinges solely on whether Shields was an employee of J & L jurisdiction particularly inappropriate. at the time of his injury, a fact-based, and in this case very close, question of state law.

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When this declaratory judgment action was filed, however, Moreover, a declaration of insurance coverage would not Shields’s employment status was already being considered in resolve the controversy. Although a declaratory judgment two independent state court proceedings: the state tort action would settle the controversy between Bituminous and J & L, between Shields and J & L, and Shields’s action before the Shields was not made a party to the declaratory judgment Kentucky Department of Workers’ Claims. In the state tort action. Therefore, any judgment in the federal court would action, which Shields had filed against J & L on negligence not be binding as to him and could not be res judicata in the grounds, J & L defended, in part, on the grounds that tort action. Regardless of the judgment rendered in the Shields’s action was barred by the exclusive remedy declaratory judgment action, Shields would be entitled to provision of the Kentucky Workers’ Compensation Act. This pursue third-party recovery from Bituminous in Kentucky defense was only viable if Shields was an employee of J & L state court if he were successful in his tort action. at the time of the injury. Furthermore, although J & L did not have workers’ compensation insurance and the exclusive A declaratory judgment would not resolve the insurance remedy defense might have been dismissed on this ground coverage controversy here. On the contrary, as we have seen, alone, a determination of Shields’s employment status was the judgment in federal court declaring that Shields was an still necessary in the tort action because, under Kentucky law, employee was contrary to two state court findings that Shields if Shields was an employee, J & L would not be allowed to was not an employee, complicating the underlying issues of plead the defenses of assumption of the risk or contributory liability. The state negligence action is still proceeding and negligence in the state court. See Ky. Rev. St. § 342.690(2). the effect that will be given to the inconsistent judgments in a collection suit by Shields against Bituminous, if any, is In the action before the Kentucky Department of Workers’ unclear. Therefore, this factor weighs against exercising Claims, Shields’s employment status was a crucial issue jurisdiction. because, had Shields not been an employee of J & L, he would not be eligible to collect compensation under the Act. 2. Whether the declaratory judgment action would serve a Thus, to rule on the issues presented, all three courts had to useful purpose in clarifying the legal relations at issue. address the identical issue of whether Shields was an employee of J & L. The declaratory judgment action in Like the first factor, although a declaratory judgment would federal court could serve no useful purpose. The federal court clarify the legal relationship between Bituminous and J & L could either reach the same conclusion as the state court, in pursuant to the insurance contracts, the judgment would not which case the declaration would have been unnecessary and clarify the legal relationship between Shields and J & L in the the federal litigation a waste of judicial resources, or the underlying state action. The question of Shields’s federal court could disagree with the state court, resulting in employment status would not be resolved by the declaratory inconsistent judgments. Ultimately, inconsistent rulings on judgment. Furthermore, an adverse judgment against J & L Shields’s employment status did issue from the state and in the state court action could still leave Bituminous subject federal courts. Both state courts determined that Shields was to liability in a subsequent collection suit by Shields against not an employee of J & L, and the federal court determined Bituminous. that he was.

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3. Whether the declaratory remedy is being used merely for factual issues are important to an informed resolution of this the purpose of “procedural fencing” or “to provide an arena case. for a race for res judicata.” Second, both the issue of Shields’s employment status and This case does not present the appearance of a race for res the issue of the insurance contract interpretation are questions judicata. Bituminous filed its action in federal court two of state law with which the Kentucky state courts are more years after Shields filed his initial negligence action against familiar and, therefore, better able to resolve. “[S]tates J & L in state court and nine months after Shields filed his regulate insurance companies for the protection of their claim for workers’ compensation benefits. We give residents, and state courts are best situated to identify and Bituminous the benefit of the doubt that no improper motive enforce the public policies that form the foundation of such fueled the filing of this action. regulation.” Mercier, 913 F.2d at 279. 4. Whether the use of a declaratory action would increase Furthermore, resolution of the insurance controversy in this friction between our federal and state courts and improperly case requires a ruling on previously undetermined questions encroach upon state jurisdiction. of state law. The insurance contract at issue here includes exclusions for obligations arising under workers’ To determine whether the exercise of jurisdiction would compensation laws. Yet, J & L did not carry workers’ increase friction between federal and state courts we have compensation insurance at the time of the injury. Although considered three additional factors: recently a number of courts have held that such exclusions remain applicable despite an employer’s lack of insurance, (1) whether the underlying factual issues are important to there is precedent from at least two courts supporting an an informed resolution of the case; alternate position. See Johnson v. Marciniak, 231 F. Supp.2d (2) whether the state trial court is in a better position to 958, 960 (D.N.D. 2002); Weger v. United Fire and Cas. Co., evaluate those factual issues than is the federal court; and 796 P.2d 72, 74 (Colo. Ct. App. 1990); Tri-State Constr., Inc. (3) whether there is a close nexus between the underlying v Columbia Cas. Co./CNA, 692 P.2d 899, 903 (Wash. Ct. factual and legal issues and state law and/or public App. 1984). But see Hunt v. Hosp. Serv. Plan of New Jersey, policy, or whether federal common or statutory law 162 A.2d 561 (N.J. 1960); and Rose v. Franklin Sur. Co., 183 dictates a resolution of the declaratory judgment action. N.E. 918, 919 (Mass. 1933). Kentucky has not decided the issue. Scottsdale, 211 F.3d at 968. Similarly, the parties dispute whether, if Shields is an First, in this case, two state actions, involving the same employee, he falls within the insurance contracts’ definitions factual issue that is presented in this declaratory judgment of temporary worker, a category of worker that would not be action, were pending when this action was filed. The issue of excluded from coverage. The contracts define a temporary whether Shields was an employee, the key issue in the worker as “a person who is furnished to you to substitute for declaratory judgment action, was a necessary component of a permanent ‘employee’ on leave or to meet seasonal or short- both Shields’s negligence action against J & L and his claim term workload conditions.” Contract definitions of for workers’ compensation benefits. Thus, the underlying “temporary worker”, identical to the definitions in the

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Bituminous policies, have been interpreted in two of the Scottsdale factors indicate that exercise of jurisdiction jurisdictions, each giving different meaning to the phrase in this case could create friction between the state and federal “furnished to” in the definition. Depending on the courts. interpretation chosen, Shields could be classified as a temporary worker. See Ayers v. C & D Gen. Contractors, 237 A friction between the courts was an actuality, not a mere F. Supp.2d 764, 768-69 (W.D. Ky. 2002), and Am. Family possibility. Indeed, the district court’s decision is contrary to Mut. Ins. Co. v. Tickle, 99 S.W.3d 25 (Mo. Ct. App. 2003). two decisions rendered by the state courts on the same facts. Kentucky courts have not yet interpreted the controversial The district court’s finding that Shields was an employee was language.2 made on summary judgment, indicating the district court’s belief that Shields was an employee as a matter of law. See While a district court should not necessarily refuse to Fed. R. Civ. P. 56(c) (Summary judgment is appropriate “if exercise jurisdiction because a case involves undetermined the pleadings, depositions, answers to interrogatories, and questions of state law, it is an appropriate consideration when admissions on file . . . show that there is no genuine issue as determining the suitability of a case for declaratory judgment. to any material fact and that the moving party is entitled to a See Scottsdale, 211 F.3d at 969. Where as here, there are two judgment as a matter of law.”). Prior to the district court’s potential unresolved questions of state law concerning state ruling, however, the state court found, on the same facts, that regulated insurance contracts, this consideration weighs Shields was not an employee. Thus, the district court’s against exercising jurisdiction. contrary opinion leads to the ultimate conclusion that the district court believed the state court erroneously decided a Finally, this case was brought pursuant to the federal question of state law. courts’ diversity jurisdiction and neither federal common law nor federal statutory law apply to the substantive issues of the Although the district court did not, indeed could not, know case. The declaratory judgment action involved the same what the state court would ultimately hold regarding Shields’s underlying factual issues that were pending in two state court employment status, it did know that two actions were pending actions. The state courts were in a better position to evaluate in the state courts both revolving around the issue of Shields’s the factual issues because they rested solely on state law with employment status. Therefore, the district court should have which the state courts are better acquainted. Furthermore, recognized the possibility that it would render a judgment resolution of the declaratory judgment action required inconsistent with the state court on that issue. We conclude consideration of two undetermined questions of state law and that considerations of comity weigh against exercising did not involve the application of any federal law. All three jurisdiction. 5. Whether there is an alternative remedy which is better or 2 It appears from a non-final Kentucky Court of Appeals opinion that more effective. Kentucky would hold the workers’ compensation exclusion app licable and would follow the interpretation of “temporary worker” found in Kentucky does provide a procedure for a declaration of Tickle. See Indiana Ins. Co. v. Brown, _ S.W.3d _, 2003 WL 23008788 rights. Ky. Rev. St. § 418.040 (“In any action in a court of (Ky. Ct. Ap p. 2003). Nevertheless, under Kentucky rules a non-final record of this commonwealth having general jurisdiction opinion shall not be cited as authority in any of the courts of the wherein it is made to appear that an actual controversy exists, Comm onwealth.

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the plaintiff may ask for a declaration of rights . . . and the We are cognizant of the fact that it is easier in hindsight to court may make a binding declaration of rights . . . .”). Thus, conclude that jurisdiction in declaratory judgment actions was Bituminous could have presented its case to the same court improvidently granted, especially when faced with the tangle that will decide the underlying tort action. Given that the of inconsistent judgments that is presented here. Nonetheless, issues presented involve questions of state law only, the state although the district court cannot be expected to foresee the court is also in a superior position to resolve the case. See unforeseeable, the district court must be attentive to the Mercier, 913 F.2d at 278-79. In addition, a superior potential problems that can arise when there are dual, let alternative remedy exists in the form of an indemnity action alone triple, actions in state and federal court and should filed at the conclusion of the underlying state action. See dispose of declaratory judgment actions accordingly. Manley, Bennett, 791 F.2d at 462-63. Because we find that declaratory judgment relief was There is no reason to suppose that the alternate remedies inappropriately granted, we do not reach the issues regarding available in state court would not adequately protect the district court’s order granting summary judgment. Bituminous’s interests. We “question the need for . . . declaratory judgments in federal courts when the only For the foregoing reasons, we VACATE the district court’s question is one of state law and when there is no suggestion order granting declaratory judgment relief and REMAND the that the state court is not in a position to define its own law in case to the district court with instructions to dismiss the a fair and impartial manner.” Am. Home Assur. Co. v. Evans, complaint. 791 F.2d 61, 63 (6th Cir. 1986). This factor, as well, weighs against exercising jurisdiction. IV. Conclusion We find that at least four of the above five factors indicate that a federal declaratory judgment was inappropriate in this case. Although it does not appear that Bituminous filed this action for the purpose of procedural fencing or to win a race for res judicata, the lack of improper motive in filing alone cannot justify the exercise of jurisdiction when all the other factors weigh on the side of declining. See Mercier, 913 F.2d at 279. A declaratory judgment in this case would not settle the controversy or resolve all the underlying legal relations. Any resolution that could be achieved by the declaratory judgment would come at the cost of increasing the friction between state and federal courts. Finally, a superior remedy exists in state court.