* Pursuant to 5 T H C IR

. R. 47.5, the Court has determined that

this opinion should not be published and is not precedent except

under the limited circumstances set forth in 5 TH C IR . R. 47.5.4. United States Court of Appeals

Fifth Circuit



## FILED

May 20, 2005

Charles R. Fulbruge III

Clerk UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 04-20450

RLI INSURANCE CO.,

as Successor-in-Interest to Underwriters Indemnity Co.,

Plaintiff-Appellant,

versus

WAINOCO OIL & GAS CO. and FRONTIER OIL CORP.,

Defendants-Appellees.

Appeal from the United States District Court

For the Southern District of Texas

(04-CV-553)

Before DAVIS, SMITH, and DeMOSS, Circuit Judges.

PER CURIAM * :

Plaintiff-Appellant RLI Insurance Co. (“RLI”) appeals from the

district court’s decision to stay the federal declaratory judgment

action RLI brought against Defendants-Appellees Wainoco Oil & Gas

Co. (“Wainoco”) and Fro ntier Oil Corp. (“Frontier”) (together,

“Appe llees”) pending the outcome of a related California state

court action. We AFFIRM.2 BACKGROUND

RLI is the successor-in-interest to Underwriters Indemnity Co.

(“UIC”). In the 1980s, UIC sold four insurance policies to Wainoco

Oil Corp., the parent company of Wainoco and now known as Frontier.

These policies covered the period from October 1987 to October

1989. Frontier is a Wyoming corporation with its principal place

of business in Texas. UIC was both incorporated and located in

Texas, while RLI is both incorporated and located in Illinois.

Between 1 985 and 1995, Appellees operated oil and gas

facilities on the campus of Beverly Hills High School. In June

2003 Appellees and other unrelated parties were named as defendants

in numerous California state court tort s uits for allegedly

releasing toxic chemicals at Beverly Hills High School and causing

injuries to those exposed.

During this time frame, Appellees had over 45 policies in

effect issued by at least 15 insurance groups. Shortly after being

named as defendants, Appellees contacted their insurers and

requested they provide defense and indemnity, if necessary. Having

n ot received any definitive response, on January 29, 2004,

Appellees’ counsel wrote to all of its clients’ insurers, asking

each to state its coverage position. RLI did not respond, but

instead on February 12, 2004, filed the instant declaratory action

in federal court in Texas, seeking a declaration that RLI did not

owe Appelle es a duty to defend or to indemnify in the California3

tort actions. The next day, RLI informed Appellees by letter that

it was denying coverage.

In response, on February 25, 2004, Appellees initiate d an

action in California state co urt against all their primary

insurers, including RLI, requesting a declaratory judgment that all

of their primary insurers owe a duty to defend the California tort

suits, and alleging breach of contract against RLI and another

insurer which also expressly denied coverage.

Appel lees moved the federal district court to dismiss the

Texas case or, in the alternative, stay it pending the resolution

of the California state court coverage action. Based on the

discr etion afforded to district courts under the Declaratory

Judgment Act, 28 U.S.C. § 2201 (“DJA”), and the Brillhart v. Excess

Insurance Co. of America

, 316 U.S. 491, 495 (1942), abstention

doctrine, the d istrict court determined that abstention was

appropriate and stayed the action. RLI timely appealed.

DISCUSSION

We review a district court’s decision whether to exercise its

jurisdiction under the DJA and Brillhart for abuse of discretion.

Wilton v. Seven Falls Co.

, 515 U.S. 277, 289-90 (1995). “[U]nless

the district court addresses and balances the purpos es of the

Declaratory Judgment Act and the factors relevant to the abstention

doctrine on the record, it abuses its discretion.” St. Paul Ins.

Co. v. Trejo

, 39 F.3d 585, 590 (5th Cir. 1994) (citation omitted).4

The DJA provides that “ [i]n a case of actual controversy

within its jurisdiction

. . . any court of the United States, upon

the filing of an appropriate pleading, may declare the rights and

other legal relations of any interested party seeking such

declaration, whether or not further relief is or could be sought.”

28 U.S.C. § 2201(a). The DJA “has been understood to confer on

federal courts unique and substantial discretion in deciding

whether to declare the rights of litigants.” Wilton , 515 U.S. at

286. In Brillhart , the Supreme Court explained:

Ordinarily it would be uneconomical as well as vexatious

for a federal court to proceed in a declaratory judgment

sui t where another suit is pending in state court

presenting the same issues, not governed by federal law,

between the same parties. Gratuitous interference with

the orderly and comprehensive disposition of a state

court litigation should be avoided.

316 U.S. at 495. B rillhart abstention is applicable when a

district court considers abstaining from exercising jurisdiction

over a declarato ry judgment action. S outhwind Aviation, Inc. v.

Bergen Aviation, Inc.

, 23 F.3d 948, 950 (5th Cir. 1994) (per

curiam).

This Court in Trejo identified seven nonexclusive factors for

a district court to consider in deciding whether to abstain from

adjudicating a declaratory judgment action:

1) whether there is a pending state action in which all

of the matters in controversy may be fully litigated, 2)

whether the plaintiff filed suit in antici pation of a

lawsuit filed by the defendant, 3) whether the plaintiff

engaged in forum shopping in bringing the suit, 4)

whether possible inequities in allowing the declaratory5

plaintiff to gain precedence in time or to change forums

exist, 5) whether the federal court is a convenient forum

for the parties and witnesses,

. . . 6) whether retaining

the lawsuit in federal court would serve the purposes of

judicial economy, and

. . . [7)] whether the federal

c ourt is being called on to construe a state ju dicial

decree involvin g the same parties and entered by the

court before whom the parallel state suit betwe en the

same parties is pending.

39 F.3d at 590-91 (internal citation omitted). The district court

operated under this exact Trejo framework when deciding to abstain

here. RLI argues that the court misconstrued these factors in

numerous ways and thus abused its discretion. Appellees contend

the district court properly exercised its discretion.

As to the first Trejo factor, the district court found it to

weigh in favor of dismissal or stay because the California coverage

suit presented a parallel state proceeding in which all matters in

controversy here may be fully litigated. As to the second and

third Trejo factors, the district court found them to be neutral

because both sides had engaged in “procedural fencing” in filing

their respective suits. As to the fourth T rejo factor, the

district court f ound it to weigh in favor of dismissal or stay.

The court determined that little inequity to RLI would result from

requiring all the coverage determinations to occur in California

where the subject of the insurance is located. Moreover, the court

noted that RLI is not a Texas company, the insureds prefer

California as the litigation situs, and the vast majority of the

insurers involved in the underlying California tort suits are6

likewise defendants in the California coverage action. As to the

fifth Trejo factor, the court found it to be neutral because of the

relative convenience of both forums, depending on whether just the

duty to defend or also the duty to indemnify was at issue. As to

the sixth T

rejo factor, the district court found it to weigh in

favor of dismissal or stay because deference to a pending state

action in which all of the primary insurers are joined would allow

one court to decide the issues in this case. The district court

properly noted that the seventh Trejo factor is not implicated in

this case. Because all the Trejo factors either weighed in favor

of yielding to the California coverage action, or were neutral, the

district court concluded it was appropriate to exercise its

discretion under the DJA a nd B rillhart and refrain from deciding

this case . In an effort to assure the availability of a federal

forum should the Cali fornia coverage action fail to resolve the

matter in controversy, the district court stayed, rather than

dismissed, the case. See Wilton , 515 U.S. at 288 n.2.

Here, the record reflects a reasoned memorandum and order by

the district court, which addressed and balanced the purposes of

the DJA and the factors relevant to the B rillhart abstention

doctrine. S ee Trejo

, 39 F.3d at 590. Therefore, we find that the

district court did not abuse its discretion in choosing to stay the

federal action pending the outcome of the related California state

court action. See id.7 CONCLUSION

Having carefully reviewed the record of this case and the

parties’ respective briefing and argum ents, for the reasons set

forth above, we AFFIRM the district court’s order.

AFFIRMED.