Wilton v. Seven Falls Co. ( 1994 )

UNITED STATES COURT OF APPEALS
for the Fifth Circuit
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No. 93-2608
Summary Calendar
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LESLIE WILTON, ETC., ET AL.,
Plaintiffs-Appellants,
VERSUS
SEVEN FALLS COMPANY, ET AL.,
Defendants-Appellees.
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Appeal from the United States District Court
for the Southern District of Texas
(CA H 93 0531)
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(June 29, 1994)
Before DAVIS, JONES and DUHÉ, Circuit Judge.
DAVIS, Circuit Judge:1
The plaintiffs appeal the district court's order staying this
action for declaratory judgment pending resolution of a later-filed
state court suit. Because we find that the district court did not
abuse its discretion in staying this action, we affirm.
I.
1
Local Rule 47.5 provides: "The publication of opinions that
have no precedential value and merely decide particular cases on
the basis of well-settled principles of law imposes needless
expense on the public and burdens on the legal profession."
Pursuant to that Rule, the Court has determined that this opinion
should not be published.
In October 1992, a verdict in excess of $100 million was
rendered against the appellees and others in suits involving a
dispute over the ownership and operation of certain oil and gas
properties. Anticipating litigation based on this verdict, in
December 1992, the plaintiffs/appellants (collectively "London
Underwriters") filed a declaratory judgment action pursuant to 28
U.S.C. § 2201 in the United States District Court for the Southern
District of Texas. The appellants sought declaration of their
rights and liabilities under several policies of commercial general
liability insurance issued to appellees (collectively the "Hill
Group"). Counsel for the parties thereafter entered into an
agreement whereby London Underwriters agreed to voluntarily dismiss
their declaratory judgment action in exchange for the Hill Group's
agreement to provide London Underwriters two weeks advance notice
prior to commencing any litigation against London Underwriters.
In February 1993, the Hill Group notified London Underwriters
of their intention to file suit in state court. London
Underwriters immediately filed this declaratory judgment action in
the Southern District of Texas. In March 1993, the Hill Group
filed an action against London Underwriters in state court. At
approximately the same time, the Hill Group also filed a Rule 12(b)
motion to dismiss or stay the federal declaratory judgment action.
The district court granted the appellees's Rule 12 motion, staying
the declaratory judgment action pending resolution of the state
court action. London Underwriters appeal.
II.
2
The district court has broad discretion to grant (or decline
to grant) declaratory judgment. Torch, Inc. v. LeBlanc, 947 F.2d
193, 194 (5th Cir. 1991). This court reviews the dismissal of a
declaratory judgment action for an abuse of discretion. Rowan Cos.
v. Griffin, 876 F.2d 26, 29 (5th Cir. 1989).
The district court may consider a variety of factors in
considering whether to grant or deny declaratory relief, including
the existence of a pending state court proceeding in which the
issues might be fully litigated. Id.
Fundamentally, the district court should determine
whether the state action provides an adequate vehicle for
adjudicating the claims of the parties and whether the
federal action serves some purpose beyond mere
duplication of effort. The district court should
consider denying declaratory relief to avoid gratuitous
interference with the orderly and comprehensive
disposition of a state court litigation if the claims of
all parties can satisfactorily be adjudicated in the
state court proceeding.
Matter of Magnolia Marine Transp. Co., 964 F.2d 1571, 1581 (5th
Cir. 1992)(internal punctuation and citations omitted).
The pending state court action in this case encompasses the
coverage issues raised by London Underwriters in this declaratory
action. The appellants are parties to the pending state court
action and may assert coverage defenses in that suit. The district
court did not abuse its discretion in concluding that maintenance
of this declaratory judgment action would result in piecemeal
adjudication of the coverage dispute and would reward London
Underwriters's attempts to forum shop. Accordingly, the district
court's order declining to entertain this declaratory judgment
action is affirmed.
3
AFFIRMED.
4