OCTOBER TERM, 1994
certiorari to the united states court of appeals for the fifth circuit
No. 94-562. Argued March 27, 1995—Decided June 12, 1995
Petitioner underwriters refused to defend or indemnify respondents under several commercial liability insurance policies in litigation between respondents and other parties over the ownership and operation of certain Texas oil and gas properties. After a verdict was entered against respondents and they notified petitioners that they intended to file a state court suit on the policies, petitioners sought a declaratory judgment in federal court that their policies did not cover respondents' liability. Respondents filed their state court suit and moved to dismiss or, in the alternative, to stay petitioners' action. The District Court entered a stay on the ground that the state suit encompassed the same coverage issues raised in the federal action, and the Court of Appeals affirmed. Noting that a district court has broad discretion to grant or decline to grant declaratory judgment, the court did not require application of the test articulated in Colorado River Water Conservation Dist. v. United States, 424 U. S. 800, and Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U. S. 1, under which district courts must point to "exceptional circumstances" to justify staying or dismissing federal proceedings. The court reviewed the District Court's decision for abuse of discretion, and found none.
Held: 1. The discretionary standard of Brillhart v. Excess Ins. Co. of America, 316 U. S. 491, governs a district court's decision to stay a declaratory judgment action during the pendency of parallel state court proceedings. Pp. 282-288. (a) In addressing circumstances virtually identical to those present here, the Court in Brillhart made clear that district courts possess discretion in determining whether and when to entertain an action under the Declaratory Judgment Act (Act), even when the suit otherwise satisfies subject matter jurisdiction. While Brillhart did not set out an exclusive list of factors governing the exercise of this discretion, it did provide some guidance, indicating that, at least where another suit involving the same parties and presenting opportunity for ventilation of the same state law issues is pending in state court, a district court might be indulging in gratuitous interference if it permitted the federal declaratory action to proceed. Pp. 282-283.
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