Hungerford

This appeal arises, out of the district court’s entry of summary judgment in favor of the insured in a declaratory judgment action brought by the insurer. Because we conclude that the district court improperly exercised its discretionary jurisdiction, we vacate the judgment and remand with instructions to dismiss the case.

FACTS AND PRIOR PROCEEDINGS

Mark Hungerford (“Hungerford”) founded and served as Chairman of the Board and Chief Executive Officer of PLM Companies, Inc. (“PLMC”), a Delaware corporation with its principal place of business in California. Great American Insurance Company (“Great America”) issued a Directors and Officers Liability Insurance Policy (“Policy”) to PLMC that provided coverage to Hungerford in his capacity as an officer and director of PLMC. Pursuant to an endorsement to the Policy, American National Fire Insurance Company (“American National”) subsequently assumed the coverage for PLMC’s officers and directors.

PLMC was the sole owner of the outstanding stock of PLM Financial Services, Inc. (“FSI”); PLM Railcar Management Services, Inc. (“RMSI”); and PLM Transportation Equipment Management, Inc. (“TEMI”). FSI in turn was the sole owner of the…