Other rulings suggest. Unlike arbitration, a declaratory judgment cannot award any damages or regulate the parties in any way.An insured files a declaratory judgment action against their insurer and names an injured third party who shares citizenship with the insured. A Declaratory Judgment action asks the court to interpret the policy and decide whether there is coverage or there is no coverage. Combined would only need to file a counterclaim if Underwriters were to lose its declaratory action and then refuse to pay out on its policy. Memorandum of Law in Support of a Motion for Summary Judgment in a Declaratory Judgment Action: may be on behalf of insurer or insured (10-15 pages). The insurer may attempt to have its duty to defend resolved in a declaratory judgment action. Civil Procedure, § 2-701 (Supp. Motor Werks was a party in the declaratory judgment action, but not in the. Vehicle Identification Number and Odometer Verification.