In the

United States Court of Appeals

For the Seventh Circuit

No. 09-2019

ENVISION HEALTHCARE, INC.,

Plaintiff-Appellant,

v.

PREFERREDONE INSURANCE COMPANY,

Defendant-Appellee.

Appeal from the United States District Court 

for the Northern District of Illinois, Eastern Division.

No. 09 CV 00078—John F. Grady, Judge.

ARGUED JANUARY 13, 2010—DECIDED MAY 12, 2010

Before BAUER, MANION, and TINDER, Circuit Judges.

MANION, Circuit Judge. After being denied coverage

for substantial medical expenses, Bradley Romer sued

PreferredOne Insurance Company in Minnesota state

court claiming it improperly rescinded his insurance

policy. The dispute drew in other parties and bred

further suits: PreferredOne filed a third-party complaint

for indemnification against Envision Healthcare, Inc., in

the Minnesota case and days later Envision sued
2 No. 09-2019

PreferredOne in an Illinois federal court, seeking a declaration that it has no duty to indemnify PreferredOne.

The district court exercised its discretion under the Wilton/

Brillhart abstention doctrine and dismissed the federal

case. Envision appeals. Because the third-party proceedings in Minnesota are parallel to the federal case

and it was not an abuse of discretion for the district court

to abstain from hearing the declaratory action, we affirm.

I.

Envision Healthcare, Inc. (“Envision”) is a wholesale

insurance broker; it works with health insurance companies to market their products. In that capacity, it also

recruits, trains, and oversees retail agents who solicit

customers. In 2006, Envision entered into a General

Agent Agreement (“GAA”) with PreferredOne, a

Minnesota-based insurance company, to market and sell

its policies. One of Envision’s agents, Edward Thomas,

sold a PreferredOne health insurance policy to Bradley

Romer. Some time later, Romer had two knee operations. The first in May 2007, was completed without

incident. But after the second in September 2007,

Romer contracted a staph infection and was hospitalized

for over a week. The cost of the second operation and

the subsequent stay exceeded one hundred thousand

dollars. The bulk of this expense was attributed to treatment of the staph infection.

After receiving the hospital bill, PreferredOne began

looking a little deeper into Romer’s policy application

and discovered that he had failed to disclose a pre-
No. 09-2019 3

existing condition. And on that basis, PreferredOne

rescinded the policy and refused to pay for Romer’s

second operation and subsequent stay. Romer then sued

PreferredOne in Minnesota state court for breach of

contract. In the complaint, he claims that in the application interview with Thomas he truthfully answered all

of the application questions and relied on Thomas to

accurately complete the form.

Citing the GAA, PreferredOne filed a third-party complaint in the Minnesota action against Envision and

Thomas for indemnification from any resulting judgment it suffers. Two days later, Envision filed a

declaratory action against PreferredOne in the United

States District Court for the Northern District of Illinois,

seeking a declaration that it has no duty to indemnify

PreferredOne under the GAA. The crux of Envision’s

argument is that the GAA was executed in 2006 between PreferredOne and what it calls “old” Envision. In

May 2007, another company, J.K. Acquisitions, acquired

many of the assets of “old” Envision, including the name

“Envision Healthcare” and the right to collect commissions owed by PreferredOne. The Envision Healthcare

that entered into the 2006 GAA, “old” Envision, was

dissolved and “new” Envision began collecting commissions from PreferredOne without the burden of the

indemnification clause. Naturally, PreferredOne

disputes these claims.

After Envision filed suit in federal court, it filed a

motion to dismiss the third-party complaint in the Minnesota case. Among other things, it argued that the Minne-
4 No. 09-2019

sota case was duplicative of the federal case. In its words,

they “involve[] the exact same legal issue” and in the

interest of judicial economy the third-party suit should

be stayed pending the outcome of the federal case. That

motion was denied, and the Minnesota case moved

forward.

PreferredOne then moved to dismiss the declaratory

action in federal court for lack of personal jurisdiction.

The district court recognized that the two cases are

parallel actions because they involve the same parties

and present the same legal issue: whether Envision

owes PreferredOne a duty to indemnify. Therefore, the

court exercised its discretion and dismissed the case

under the Wilton/Brillhart abstention doctrine. Wilton v.

Seven Falls Co., 515 U.S. 277 (1995); Brillhart v. Excess Ins. Co.

of Am., 316 U.S. 491 (1942). On appeal, Envision argues

that the district court erred in its decision, and in

support it claims that the two proceedings are not parallel.

II.

Before addressing the merits of this appeal, we

consider the appropriate standard of review. The parties

argue that our review of the district court’s application

of the Wilton/Brillhart abstention doctrine is de novo.

They are correct, in part. Our cases are clear that we

review the underlying legal questions de novo. R.R. Street

& Co., Inc. v. Vulcan Materials Co., 569 F.3d 711, 714 (7th

Cir. 2009). Indeed, our review of legal questions is always

plenary. But the district court’s decision of whether to

abstain under Wilton/Brillhart is a different matter.
No. 09-2019 5

Some of our post-Wilton cases have reviewed both the 1

applicability of the doctrine and the district court’s decision de

novo. See, e.g., Newell Operating Co. v. Int’l Union of United Auto.,

Aerospace & Agric. Implement Workers of Am., 532 F.3d 583, 591

(7th Cir. 2008); N. Shore Gas Co. v. Salomon Inc., 152 F.3d 642, 647

(7th Cir. 1998); Matter of VMS Sec. Litig., 103 F.3d 1317, 1327

(7th Cir. 1996). However, as these cases conflict with the

Supreme Court’s holding in Wilton, they are in error and are

hereby overruled. Because our decision overrules these cases,

we have circulated it to the full court as required by our

Circuit Rule 40(e). No judge in regular active service voted

to hear the case en banc.

As the Supreme Court noted in Wilton “a district court

is authorized, in the sound exercise of its discretion, to

stay or to dismiss an action seeking a declaratory judgment.” 515 U.S. at 288. And we review that decision

“for abuse of discretion.” Id. at 289-90. 1

III. 

“Under what is known as the Wilton/Brillhart abstention doctrine, district courts possess significant discretion

to dismiss or stay claims seeking declaratory relief, even

though they have subject matter jurisdiction over such

claims.” R.R. Street & Co., 569 F.3d at 713. This discretion

arises from the Declaratory Judgment Act, 28 U.S.C.

§§ 2201-2202 itself, which provides that district courts

“may declare the rights and other legal relations of any

interested party seeking such declaration.” 28 U.S.C.

§ 2201(a). The discretionary nature of the Act led the
6 No. 09-2019

Supreme Court to hold in Brillhart and Wilton that

district courts have substantial discretion in deciding

whether to declare the rights of litigants and may, in the

sound exercise of their discretion, stay or dismiss an

action seeking a declaratory judgment in favor of an

ongoing state court case. See Brillhart v. Excess Ins. Co. of

Am., 316 U.S. 491, 494-95 (1942); Wilton, 515 U.S. at 288

(noting “a district court is authorized, in the sound exercise of its discretion, to stay or to dismiss an action

seeking a declaratory judgment”).

As the Supreme Court explained in Brillhart, there is

no set criteria for when a court should exercise its discretion to abstain. 316 U.S. at 495 (“We do not now

attempt a comprehensive enumeration of what in other

cases may be revealed as relevant factors governing the

exercise of a District Court’s discretion.”). But the classic

example of when abstention is proper occurs where, as

it is here, solely declaratory relief is sought and parallel

state proceedings are ongoing. Vulcan Materials, 569 F.3d

at 715. That does not mean that abstention is limited to

parallel proceedings. Nationwide Ins. v. Zavalis, 52 F.3d

689, 692 (7th Cir. 1995). But as the Supreme Court has

made clear, the Wilton/Brillhart abstention doctrine appropriately applies in a diversity case where a declaratory judgment is sought and a parallel state proceeding

also exists. Wilton, 515 U.S. at 283; Provident Tradesmens

Bk. & Tr. Co. v. Patterson, 390 U.S. 102, 126 (1968) (noting

“we reaffirm our prior holding that a federal district court

should, in the exercise of discretion, decline to exercise

jurisdiction over a diversity action raising issues of

state law when those same issues are being presented

contemporaneously to state courts”).
No. 09-2019 7

The question then becomes whether the Minnesota

case is parallel to the federal case. Two actions are

parallel when substantially the same parties are contemporaneously litigating substantially the same issues

in two fora. Sta-Rite Indus., Inc. v. Allstate Ins. Co., 96 F.3d

281, 287 (7th Cir. 1996); see also Interstate Material Corp. v.

City of Chicago, 847 F.2d 1285, 1288 (7th Cir. 1988) (noting

“[a] suit is ‘parallel’ when substantially the same

parties are contemporaneously litigating substantially

the same issues in another forum” (quotation omitted)).

Here, the third-party suit in Minnesota involves

the same parties as the federal case: Envision and

PreferredOne. And the same precise legal question will

be answered in both suits: whether Envision owes

PreferredOne a duty to indemnify it for any loss incurred in the Romer suit. Thus, the two suits are parallel. The fact that the parties are part of a thirdparty suit, rather than an original action in Minnesota,

does not affect the analysis of whether they are parallel.

See TruServ Corp. v. Flegles, Inc., 419 F.3d 584, 592 (7th Cir.

2005) (noting the inquiry is focused on “whether there

is a substantial likelihood that the [state court] litigation will dispose of all claims presented in the federal

case” (quotation omitted)).

Thus, the district court properly concluded that this

case is one that the Wilton/Brillhart abstention may be

applied to. And we find that the district court did not

abuse its discretion in abstaining from reaching the

merits of Envision’s suit and needlessly interfering with

the ongoing Minnesota state court proceedings. Brillhart,

316 U.S. at 495 (“Gratuitous interference with the orderly
8 No. 09-2019

and comprehensive disposition of a state court litigation

should be avoided.”). Accordingly, we AFFIRM the judgment of the district court.

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