Bituminous Casualty Corporation v. J & Llumber Company, Inc.

*The Honorable David M. Lawson, United States District Judge for
the Eastern D istrict of M ichigan, sitting by designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0199P (6th Cir.)
File Name: 04a0199p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
BITUMINOUS CASUALTY
CORPORATION,
Plaintiff-Appellee,
v.
J & L LUMBER COMPANY,
INC.,
Defendant-Appellant.
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No. 03-5217
Appeal from the United States District Court
for the Western District of Kentucky at Owensboro.
No. 01-00106—Joseph H. McKinley, Jr., District Judge.
Argued: April 20, 2004
Decided and Filed: June 29, 2004
Before: SUHRHEINRICH and GIBBONS, Circuit Judges;
LAWSON, District Judge.*
2 Bituminous Casualty Corp.
v. J & L Lumber Co.
No. 03-5217
_________________
COUNSEL
ARGUED: Jeffrey L. Freeman, JEFFREY L. FREEMAN
ATTORNEY AT LAW, Louisville, Kentucky, for Appellant.
Robert E. Maclin III, McBRAYER, McGINNIS, LESLIE &
KIRKLAND, Lexington, Kentucky, for Appellee.
ON BRIEF: Jeffrey L. Freeman, JEFFREY L. FREEMAN
ATTORNEY AT LAW, Louisville, Kentucky, for Appellant.
Robert E. Maclin III, Pamela A. Chesnut, McBRAYER,
McGINNIS, LESLIE & KIRKLAND, Lexington, Kentucky,
for Appellee.
_________________
OPINION
_________________
SUHRHEINRICH, Circuit Judge. Defendant-Appellant
J & L Lumber Company, Inc. (J & L) appeals from the order
of the district court granting summary judgment in favor of
Bituminous Casualty Corp. (Bituminous) and denying
summary judgment in favor of J & L in this declaratory
judgment action. Bituminous brought this action against
J & L in federal district court, seeking a declaration that it was
not required to defend or indemnify J & L in a personal injury
action in state court relating to a logging accident that
occurred on November 13, 1998, while Phillip Shields,
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

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No. 03-5217 Bituminous Casualty Corp. v.
J & L Lumber Co.
3
REMAND the case to the district court with instructions to
dismiss the complaint.
I. Background
A. Facts
J & L is a small, family owned and operated sawmill in
eastern Kentucky. Besides family members, the mill employs
approximately ten to fifteen additional workers in either the
sawmill or the woods. In November 1998, J & L also owned
three tractor-trailer trucks and two tandems for hauling
lumber and employed drivers for these vehicles.
Phillip Shields, the plaintiff in the underlying personal
injury action against J & L, is a fifty-eight-year-old man who
has worked in or around the logging industry most of his
adult life. At different times, Shields has worked as a trucker,
sawmill foreman, independent logger, and timber buyer. In
the past, he worked for J & L both as the sawmill foreman
and as a truck driver.
Sometime after quitting the sawmill foreman position at
J & L, Shields formed a trucking company with the name
Phillip Shields or Shields Trucking. He purchased two
eighteen-wheeler trucks, which were garaged at his house and
were maintained primarily by him. Shields also employed his
own driver and incurred other expenses in connection with his
trucking business, including fuel, contract labor, tolls,
business telephone, and subcontractors. In 1998, Shields’s
trucking business yielded a gross income of $91,159.
After Shields started his trucking company, he and J & L
formed a business relationship. J & L hired Shields’s trucks
and drivers when it needed loads hauled and did not have any
available trucks or drivers of its own. Although there was no
formal contract between them, J & L used Shields’s trucks on
a regular basis, but not exclusively. In fact, weather
4 Bituminous Casualty Corp.
v. J & L Lumber Co.
No. 03-5217
permitting, Shields hauled for J & L at least once a week and
usually more. On occasion, he even drove a J & L truck.
The payment arrangement between Shields and J & L was
somewhat complicated. Primarily, Shields was paid by the
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
manner as J & L’s own drivers. In addition, from March
1998 through December 9, 1998, Shields was listed as an
employee on the J & L payroll registers. He received a
weekly payroll check of $250 from which taxes and health
insurance premiums were withheld. He also received a check
from the general account from which no withholdings were
taken.
J & L described this unusual payment arrangement as an
accounting device that permitted Shields to obtain health
insurance coverage. The deposition testimony indicated that
in March or April 1998, Wilma Myers (Myers), J & L’s
secretary and general office manager, and Joel Smith, an
owner’s son who had been insured with Blue Cross and Blue
Shield, decided to change insurance providers due to an
increase in premiums. To get insurance under a plan with
MedQuest insurance company, however, they needed a group
of at least three. Shields, who also needed insurance, became
the third member of the group. Myers placed Shields on the
payroll and began issuing him a weekly check from which the
insurance premium was deducted. The amount of the payroll
check was then deducted from the total amount due Shields
for his independent hauling. Although Joel was not an
employee, his insurance premium was paid directly by J & L
because of his filial relationship to Jerry Smith, one of J &
L’s owners.
Outside of their business relationship, Shields and the
owners of J & L were good friends. They had known each
other for approximately thirty years. In fact, Shields
characterized his relationship with Jerry and Lester Smith as

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No. 03-5217 Bituminous Casualty Corp. v.
J & L Lumber Co.
5
the “best of friends.” He lived approximately one mile from
J & L’s office and would go to the J & L property usually
once a day and sometimes two or three times a day to check
for work or just to socialize. Shields was also good friends
with Myers and the two had a social, dating relationship in the
past. In addition, Shields employed Myers’s son, Greg, as a
driver for one of his tractor-trailers.
On the evening of November 12, 1998, Shields and Myers
were in the J & L office drinking coffee when they received
word that the woods crew was “blocked out” and could not
continue working unless the cut timber was hauled away from
the logging site. Myers and Shields arranged for Shields to
take a truck and haul the timber the next morning. On the
morning of November 13, 1998, Shields arrived at the J & L
lumber yard and picked up a J & L truck, which was loaded
with pulp wood. He delivered the load and proceeded to the
site that was “blocked out.” After hauling a couple of loads,
Shields was injured during loading when a log dislodged from
the truck and landed on him. As noted, at the time of the
injury, Shields was operating a J & L truck and was picking
up his third load of the day.
Both Shields and Myers stated that Shields was doing a
favor for J & L at the time of the accident and was not going
to be compensated for his work. Shields testified at
deposition that his work on the morning of November 13 was
strictly voluntary. Moreover, Shields, Myers and J & L’s
owners, Jerry and Lester Smith, all insisted at deposition that
Shields was not an employee of J & L at the time of his
injury.
Procedural History
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
November 13, 1998. As one of its affirmative defenses, J & L
6 Bituminous Casualty Corp.
v. J & L Lumber Co.
No. 03-5217
1This fact was certified by the Commissioner of the Kentucky
Departm ent of W orkers’ Claim s on N ovembe r 13, 200 0.
asserted that Shields’s action was barred by the exclusive
remedy provision of the Kentucky Workers’ Compensation
Act.
J & L did not carry workers’ compensation insurance at the
time of the injury.1 J & L did, however, carry accident
coverage for its employees under an Employers’ Underwriters
policy. It also carried two commercial insurance policies with
Bituminous Casualty Corp., a general liability policy and a
commercial auto policy. At the time of injury, Shields was
not covered under the Employers’ Underwriters policy.
Therefore, J & L requested a defense from Bituminous in the
state tort action, which Bituminous provided under
reservation of rights.
On or about October 23, 2000, a few weeks before the
expiration of the two-year statute of limitation under the
Kentucky Workers’ Compensation Act, Shields filed a claim,
presumably a protective filing, with the Kentucky Department
of Workers’ Claims, alleging that he was injured on
November 13, 1998, while in the course of employment. See
Ky. Rev. Stat. § 342.185. This claim was dismissed on
January 24, 2003, after an Administrative Law Judge for the
Kentucky Department of Workers’ Claims determined that
Shields was an independent contractor and not an employee.
The Administrative Law Judge stated that, although it was a
close question based upon the facts and Kentucky case law,
he found the intent of the parties to be paramount in
determining that Shields was not an employee.
In the underlying state personal injury action, on or about
March 18, 2002, Shields filed a motion for partial summary
judgment seeking to strike the affirmative defense raised by
J & L that the Workers’ Compensation Act was his exclusive

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No. 03-5217 Bituminous Casualty Corp. v.
J & L Lumber Co.
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remedy on the grounds that he was not an employee of J & L.
J & L did not respond to this motion. On March 28, 2002, the
Ohio County Circuit Court of Kentucky found that Shields
was not an employee of J & L at the time of injury and struck
the Workers’ Compensation Act defense. Specifically, the
Kentucky court found that J & L had little, if any, control
over Shields, since Shields was volunteering on the day of
injury and that the true intent of the parties was that Shields
was not an employee.
In the meantime, on July 2, 2001, Bituminous filed the
instant action in the United States District Court for the
Western District of Kentucky seeking a declaratory judgment
that it had no duty to defend or indemnify J & L under its
policies based on exclusions contained in each policy for
employees. Bituminous argued that Shields was an employee
of J & L at the time of his injury and was, therefore, not
covered by the policies. J & L maintained that Shields was
not an employee of J & L at the time of injury. The parties
filed cross motions for summary judgment.
On October 16, 2002, the district court granted summary
judgment in favor of Bituminous, finding that Shields was an
employee as a matter of law. The district court found, among
other things, that J & L had the ultimate right to control
Shields’s work, that the method of payment indicated
employment, and that the actions of J & L and Shields were
inconsistent with their assertion that Shields was not an
employee. The district court did not make a finding regarding
the testimony that Shields had been working as a volunteer on
the day of injury. In addition, the district court found that the
October 28, 2002, Kentucky state court judgment in the
negligence action did not have preclusive effect because it
determined that the state court decision was not the result of
an adversarial proceeding, since a finding that Shields was not
an employee benefitted both Shields and J & L. J & L
benefitted by the finding that Shields was not an employee
because the finding entitled it to indemnity from Bituminous.
8 Bituminous Casualty Corp.
v. J & L Lumber Co.
No. 03-5217
Likewise, the finding benefitted Shields because it enabled
him to collect any judgment awarded in the negligence action
from J & L’s insurer, rather than J & L and his close friends.
J & L filed a motion to alter, amend or vacate judgment,
which was denied on January 6, 2003. J & L then filed this
appeal, raising four issues: whether the district court
misapplied Kentucky law when it used a workers’
compensation analysis rather than a common law analysis to
determine whether Shields was an employee pursuant to the
insurance contract; whether the district court erred in holding
that Shields was an employee of J & L as a matter of law;
whether the district court erred in failing to consider the
explicit policy definitions; and whether the district court erred
in applying federal preclusion law rather than state preclusion
law to determine the effect of a prior state court judgment in
a diversity action.
II. Standards of Review
A. Summary Judgment
This Court reviews a district court’s grant of summary
judgment de novo. Hartsel v. Keys, 87 F.3d 795, 799 (6th
Cir. 1996). Summary judgment is appropriate “if the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.”
Fed. R. Civ. P. 56(c).
B. Declaratory Judgment Actions
Exercise of jurisdiction under the Declaratory Judgment
Act, 28 U.S.C. § 2201(a) is not mandatory. Brillhart v.
Excess Ins. Co., 316 U.S. 491, 494 (1942). Therefore, we
review the district court’s decision to exercise jurisdiction for
abuse of discretion. Wilton v. Seven Falls Co., 515 U.S. 277,

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No. 03-5217 Bituminous Casualty Corp. v.
J & L Lumber Co.
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289-90 (1995); Scottsdale Ins. Co. v. Roumph, 211 F.3d 964,
967 (6th Cir. 2000).
III. Analysis
As noted, J & L raises four issues on appeal. We do not
reach these issues, however, because we conclude that the
district court should have declined to exercise jurisdiction
over this declaratory judgment action and should have
dismissed the complaint.
A. Declaratory Judgment Actions
We have repeatedly held in insurance coverage diversity
cases that “declaratory judgment actions seeking an advance
opinion on indemnity issues are seldom helpful in resolving
an ongoing action in another court.” Manley, Bennett,
McDonald & Co. v. St. Paul Fire & Marine Ins. Co., 791
F.2d 460, 463 (6th Cir. 1986). Further, “[s]uch actions . . .
should normally be filed, if at all, in the court that has
jurisdiction over the litigation which gives rise to the
indemnity problem. Otherwise confusing problems of
scheduling, orderly presentation of fact issues and res
judicata are created.” Id.; see also Scottsdale Ins. Co., 211
F.3d 964; Omaha Property and Cas. Ins. Co. v. Johnson, 923
F.2d 446, 448 (6th Cir. 1991); Allstate Ins. Co. v. Mercier,
913 F.2d 273, 278-79 (6th Cir. 1990); Grand Trunk W.R. Co.
v. Consolid. Rail Corp., 746 F.2d 323, 326 (6th Cir. 1984).
That is not to say that there is a per se rule against exercising
jurisdiction in actions involving insurance coverage
questions. See Allstate Ins. Co. v. Green, 825 F.2d 1061,
1066 (6th Cir. 1987); State Farm Fire and Cas. Co. v. Odom,
799 F.2d 247, 250 (6th Cir. 1986). Nevertheless, the factual
and procedural postures of this case make exercise of
jurisdiction particularly inappropriate.
10 Bituminous Casualty Corp.
v. J & L Lumber Co.
No. 03-5217
B. Propriety of Declaratory Judgment Relief in this
Case
This Court generally considers five factors to determine
whether a case is appropriate for declaratory judgment:
(1) whether the judgment would settle the controversy;
(2) whether the declaratory judgment action would serve
a useful purpose in clarifying the legal relations at issue;
(3) whether the declaratory remedy is being used merely
for the purpose of “procedural fencing” or “to provide an
arena for a race for res judicata”;
(4) whether the use of a declaratory action would
increase the friction between our federal and state courts
and improperly encroach on state jurisdiction; and
(5) whether there is an alternative remedy that is better or
more effective.
Scottsdale 211 F.3d at 968 (citations omitted). The district
court did not consider these criteria; therefore, we review
them for the first time on appeal.
1. Whether the judgment would settle the controversy.
The controversy in this case is one of insurance coverage.
Bituminous seeks a declaration that it has no duty to defend
or indemnify J & L based on exclusions in its insurance
policies for employees. If Shields was an employee of J & L
at the time of his injury, Bituminous would have no duty to
defend or indemnify J & L in the state court personal injury
action. If Shields was not an employee, on the other hand,
Bituminous would be obligated under its contracts to defend
and indemnify J & L. Thus, resolution of the controversy
hinges solely on whether Shields was an employee of J & L
at the time of his injury, a fact-based, and in this case very
close, question of state law.

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No. 03-5217 Bituminous Casualty Corp. v.
J & L Lumber Co.
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When this declaratory judgment action was filed, however,
Shields’s employment status was already being considered in
two independent state court proceedings: the state tort action
between Shields and J & L, and Shields’s action before the
Kentucky Department of Workers’ Claims. In the state tort
action, which Shields had filed against J & L on negligence
grounds, J & L defended, in part, on the grounds that
Shields’s action was barred by the exclusive remedy
provision of the Kentucky Workers’ Compensation Act. This
defense was only viable if Shields was an employee of J & L
at the time of the injury. Furthermore, although J & L did not
have workers’ compensation insurance and the exclusive
remedy defense might have been dismissed on this ground
alone, a determination of Shields’s employment status was
still necessary in the tort action because, under Kentucky law,
if Shields was an employee, J & L would not be allowed to
plead the defenses of assumption of the risk or contributory
negligence in the state court. See Ky. Rev. St. § 342.690(2).
In the action before the Kentucky Department of Workers’
Claims, Shields’s employment status was a crucial issue
because, had Shields not been an employee of J & L, he
would not be eligible to collect compensation under the Act.
Thus, to rule on the issues presented, all three courts had to
address the identical issue of whether Shields was an
employee of J & L. The declaratory judgment action in
federal court could serve no useful purpose. The federal court
could either reach the same conclusion as the state court, in
which case the declaration would have been unnecessary and
the federal litigation a waste of judicial resources, or the
federal court could disagree with the state court, resulting in
inconsistent judgments. Ultimately, inconsistent rulings on
Shields’s employment status did issue from the state and
federal courts. Both state courts determined that Shields was
not an employee of J & L, and the federal court determined
that he was.
12 Bituminous Casualty Corp.
v. J & L Lumber Co.
No. 03-5217
Moreover, a declaration of insurance coverage would not
resolve the controversy. Although a declaratory judgment
would settle the controversy between Bituminous and J & L,
Shields was not made a party to the declaratory judgment
action. Therefore, any judgment in the federal court would
not be binding as to him and could not be res judicata in the
tort action. Regardless of the judgment rendered in the
declaratory judgment action, Shields would be entitled to
pursue third-party recovery from Bituminous in Kentucky
state court if he were successful in his tort action.
A declaratory judgment would not resolve the insurance
coverage controversy here. On the contrary, as we have seen,
the judgment in federal court declaring that Shields was an
employee was contrary to two state court findings that Shields
was not an employee, complicating the underlying issues of
liability. The state negligence action is still proceeding and
the effect that will be given to the inconsistent judgments in
a collection suit by Shields against Bituminous, if any, is
unclear. Therefore, this factor weighs against exercising
jurisdiction.
2. Whether the declaratory judgment action would serve a
useful purpose in clarifying the legal relations at issue.
Like the first factor, although a declaratory judgment would
clarify the legal relationship between Bituminous and J & L
pursuant to the insurance contracts, the judgment would not
clarify the legal relationship between Shields and J & L in the
underlying state action. The question of Shields’s
employment status would not be resolved by the declaratory
judgment. Furthermore, an adverse judgment against J & L
in the state court action could still leave Bituminous subject
to liability in a subsequent collection suit by Shields against
Bituminous.

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3. Whether the declaratory remedy is being used merely for
the purpose of “procedural fencing” or “to provide an arena
for a race for res judicata.”
This case does not present the appearance of a race for res
judicata. Bituminous filed its action in federal court two
years after Shields filed his initial negligence action against
J & L in state court and nine months after Shields filed his
claim for workers’ compensation benefits. We give
Bituminous the benefit of the doubt that no improper motive
fueled the filing of this action.
4. Whether the use of a declaratory action would increase
friction between our federal and state courts and improperly
encroach upon state jurisdiction.
To determine whether the exercise of jurisdiction would
increase friction between federal and state courts we have
considered three additional factors:
(1) whether the underlying factual issues are important to
an informed resolution of the case;
(2) whether the state trial court is in a better position to
evaluate those factual issues than is the federal court; and
(3) whether there is a close nexus between the underlying
factual and legal issues and state law and/or public
policy, or whether federal common or statutory law
dictates a resolution of the declaratory judgment action.
Scottsdale, 211 F.3d at 968.
First, in this case, two state actions, involving the same
factual issue that is presented in this declaratory judgment
action, were pending when this action was filed. The issue of
whether Shields was an employee, the key issue in the
declaratory judgment action, was a necessary component of
both Shields’s negligence action against J & L and his claim
for workers’ compensation benefits. Thus, the underlying
14 Bituminous Casualty Corp.
v. J & L Lumber Co.
No. 03-5217
factual issues are important to an informed resolution of this
case.
Second, both the issue of Shields’s employment status and
the issue of the insurance contract interpretation are questions
of state law with which the Kentucky state courts are more
familiar and, therefore, better able to resolve. “[S]tates
regulate insurance companies for the protection of their
residents, and state courts are best situated to identify and
enforce the public policies that form the foundation of such
regulation.” Mercier, 913 F.2d at 279.
Furthermore, resolution of the insurance controversy in this
case requires a ruling on previously undetermined questions
of state law. The insurance contract at issue here includes
exclusions for obligations arising under workers’
compensation laws. Yet, J & L did not carry workers’
compensation insurance at the time of the injury. Although
recently a number of courts have held that such exclusions
remain applicable despite an employer’s lack of insurance,
there is precedent from at least two courts supporting an
alternate position. See Johnson v. Marciniak, 231 F. Supp.2d
958, 960 (D.N.D. 2002); Weger v. United Fire and Cas. Co.,
796 P.2d 72, 74 (Colo. Ct. App. 1990); Tri-State Constr., Inc.
v Columbia Cas. Co./CNA, 692 P.2d 899, 903 (Wash. Ct.
App. 1984). But see Hunt v. Hosp. Serv. Plan of New Jersey,
162 A.2d 561 (N.J. 1960); and Rose v. Franklin Sur. Co., 183
N.E. 918, 919 (Mass. 1933). Kentucky has not decided the
issue.
Similarly, the parties dispute whether, if Shields is an
employee, he falls within the insurance contracts’ definitions
of temporary worker, a category of worker that would not be
excluded from coverage. The contracts define a temporary
worker as “a person who is furnished to you to substitute for
a permanent ‘employee’ on leave or to meet seasonal or short-
term workload conditions.” Contract definitions of
“temporary worker”, identical to the definitions in the

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2It appears from a non-final Kentucky Court of Appeals opinion that
Kentucky would hold the workers’ compensation exclusion app licable
and would follow the interpretation of “temporary worker” found in
Tickle. See Indiana Ins. Co. v. Brown, _ S.W.3d _, 2003 WL 23008788
(Ky. Ct. Ap p. 2003). Nevertheless, under Kentucky rules a non-final
opinion shall not be cited as authority in any of the courts of the
Comm onwealth.
Bituminous policies, have been interpreted in two
jurisdictions, each giving different meaning to the phrase
“furnished to” in the definition. Depending on the
interpretation chosen, Shields could be classified as a
temporary worker. See Ayers v. C & D Gen. Contractors, 237
F. Supp.2d 764, 768-69 (W.D. Ky. 2002), and Am. Family
Mut. Ins. Co. v. Tickle, 99 S.W.3d 25 (Mo. Ct. App. 2003).
Kentucky courts have not yet interpreted the controversial
language.2
While a district court should not necessarily refuse to
exercise jurisdiction because a case involves undetermined
questions of state law, it is an appropriate consideration when
determining the suitability of a case for declaratory judgment.
See Scottsdale, 211 F.3d at 969. Where as here, there are two
potential unresolved questions of state law concerning state
regulated insurance contracts, this consideration weighs
against exercising jurisdiction.
Finally, this case was brought pursuant to the federal
courts’ diversity jurisdiction and neither federal common law
nor federal statutory law apply to the substantive issues of the
case. The declaratory judgment action involved the same
underlying factual issues that were pending in two state court
actions. The state courts were in a better position to evaluate
the factual issues because they rested solely on state law with
which the state courts are better acquainted. Furthermore,
resolution of the declaratory judgment action required
consideration of two undetermined questions of state law and
did not involve the application of any federal law. All three
16 Bituminous Casualty Corp.
v. J & L Lumber Co.
No. 03-5217
of the Scottsdale factors indicate that exercise of jurisdiction
in this case could create friction between the state and federal
courts.
A friction between the courts was an actuality, not a mere
possibility. Indeed, the district court’s decision is contrary to
two decisions rendered by the state courts on the same facts.
The district court’s finding that Shields was an employee was
made on summary judgment, indicating the district court’s
belief that Shields was an employee as a matter of law. See
Fed. R. Civ. P. 56(c) (Summary judgment is appropriate “if
the pleadings, depositions, answers to interrogatories, and
admissions on file . . . show that there is no genuine issue as
to any material fact and that the moving party is entitled to a
judgment as a matter of law.”). Prior to the district court’s
ruling, however, the state court found, on the same facts, that
Shields was not an employee. Thus, the district court’s
contrary opinion leads to the ultimate conclusion that the
district court believed the state court erroneously decided a
question of state law.
Although the district court did not, indeed could not, know
what the state court would ultimately hold regarding Shields’s
employment status, it did know that two actions were pending
in the state courts both revolving around the issue of Shields’s
employment status. Therefore, the district court should have
recognized the possibility that it would render a judgment
inconsistent with the state court on that issue. We conclude
that considerations of comity weigh against exercising
jurisdiction.
5. Whether there is an alternative remedy which is better or
more effective.
Kentucky does provide a procedure for a declaration of
rights. Ky. Rev. St. § 418.040 (“In any action in a court of
record of this commonwealth having general jurisdiction
wherein it is made to appear that an actual controversy exists,

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No. 03-5217 Bituminous Casualty Corp. v.
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the plaintiff may ask for a declaration of rights . . . and the
court may make a binding declaration of rights . . . .”). Thus,
Bituminous could have presented its case to the same court
that will decide the underlying tort action. Given that the
issues presented involve questions of state law only, the state
court is also in a superior position to resolve the case. See
Mercier, 913 F.2d at 278-79. In addition, a superior
alternative remedy exists in the form of an indemnity action
filed at the conclusion of the underlying state action. See
Manley, Bennett, 791 F.2d at 462-63.
There is no reason to suppose that the alternate remedies
available in state court would not adequately protect
Bituminous’s interests. We “question the need for . . .
declaratory judgments in federal courts when the only
question is one of state law and when there is no suggestion
that the state court is not in a position to define its own law in
a fair and impartial manner.” Am. Home Assur. Co. v. Evans,
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.
18 Bituminous Casualty Corp.
v. J & L Lumber Co.
No. 03-5217
We are cognizant of the fact that it is easier in hindsight to
conclude that jurisdiction in declaratory judgment actions was
improvidently granted, especially when faced with the tangle
of inconsistent judgments that is presented here. Nonetheless,
although the district court cannot be expected to foresee the
unforeseeable, the district court must be attentive to the
potential problems that can arise when there are dual, let
alone triple, actions in state and federal court and should
dispose of declaratory judgment actions accordingly.
Because we find that declaratory judgment relief was
inappropriately granted, we do not reach the issues regarding
the district court’s order granting summary judgment.
For the foregoing reasons, we VACATE the district court’s
order granting declaratory judgment relief and REMAND the
case to the district court with instructions to dismiss the
complaint.

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