1 The district court referred this case to a magistrate

judge, who made findings and recommendations regarding the jurisdiction and abstention issues. These findings and recommendations were eventually adopted by the district court; accordingly, we refer to those findings and recommendations as having been made by the district court. United States Court of Appeals,

Fifth Circuit.

No. 93-7640.

Summary Calendar.

SOUTHWIND AVIATION, INC., Plaintiff-Appellant,

v.

BERGEN AVIATION, INC., et al., Defendants.

Bergen Aviation, Inc., Defendant-Appellant.

June 27, 1994.

Appeal f rom the United States District Court For the Southern

District of Texas.

Before JOLLY, WIENER, and EMILIO M. GARZA, Circuit Judges.

PER CURIAM:

Plaintiff-Appellant Southwind Aviation, Inc. ("Southwind")

sued to collect on a contract and to seek a determination of its

rights as a lien-holder and as a possible beneficiary of an

insurance policy. Mistakenly characterizing this as a declaratory

judgment action, the district court 1 concluded that abstention was

warranted by the presence of ongoing state litigation involving the

sam e subject matter, issues, and essentially the same parties.

Accordingly, the distri ct court dismissed Southwind's suit after

applying the abstention standards for declaratory judgment actions.

As Southwind seeks various forms of coercive relief, however, the

cor rect inquiry is provided by C olorado River Water Conservation2 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976).

3 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).

4 The parties disagree over the entity or entities with which Southwind contracted and over the effect, if any, to give the separate legal status of BAI and BAC. Resolution of these issues is unnecessary to this appeal. For purposes of convenience only, we will refer to the entities collectively as the "Bergen Companies." District v. United States 2 and Moses H. Cone Mem orial Hospital v.

M ercury Construction Corp., 3 under which only the clearest of

justifications warrants abstention. As we conclude that the

district court thu s applied the wrong standard in deciding to

abstain, we reverse and remand.

I

FACTS AND PROCEEDINGS

Southwind entered into a contract with either Bergen

Acceptance Corporation ("BAC") or Defendant-Appellee Bergen

Aviation, Inc. ("BAI") (collectively, the "Bergen Companies"), or

both, to perform certain repairs on a Douglas DC-3 aircraft. 4 The

repairs took longer and cost more than originally anticipated. Not

surprisingly, disagreements developed between Southwind and the

Bergen Companies. Eventually, Southwind sent presuit notice to BAI

by certified mail. In this notice, Southwind threatened to take

legal action unless certain documents were received by March 5,

1993.

On March 4, 1993—the last day before the threatened suit

filing date—BAC (the other Bergen Company) filed suit preemptively

in Texas state court. Two months later, BAC's state complaint was

amended to add BAI as a plain tiff. In the intervening period,5 Southwind offers no explanation as to why it has sued only

one of the two companies that may be involved in the purported

breach of contract.

6 964 F.2d 1571 (5th Cir.1992). Southwind had filed suit in federal court against BAI only. 5 Thus,

in the state suit both BAC and BAI are plaintiffs and Southwind is

the defendant; while in the federal suit Southwind is the

plaintiff and BAI is the sole defendant.

Both the federal suit and the state suit in volve claims

arising out of purported breaches of the contract to repair the DC3. In the federal suit, Southwind predicated federal subject

matter jurisdiction on diversity of citizenship under 28 U.S.C. §

1332. Southwind sued to collect on the contract, to impose a

temporary injunction, and to seek a declaration of its rights as a

lien-holder and as a possible beneficiary of an insurance policy.

Southwind also requested attorney's fees under the applicable state

statute. After inquiring into the amount-in-controversy

requirement, the district court concluded that it had subject

matter jurisdiction over So uthwind's suit, and BAI does not

challenge this conclusion on appeal.

Despite having jurisdiction, however, the district court

decided to abstain. Construing Southwind's suit as a declaratory

judgment action, the district court applied the abstention

standards app licable to such cases. Specifically, the district

court observed that—under our opinion in Magnolia Marine Transport

Co. v. LaPlace Towing Corp. 6 —such abstention is appropriate when

the claims of all parties may be satisfactorily adjudicated in the

state court proceeding. As Southwind's and BAI's claims could be7 E.g., Granite State Ins. Co. v. Tandy Corp., 986 F.2d 94,

95-96 (5th Cir.), cert. granted, --- U.S. ----, 113 S.Ct. 51, 121
L.Ed.2d 21 (1992), cert. dismissed, --- U.S. ----, 113 S.Ct. 1836, 123 L.Ed.2d 463 (1993) (clarifying that Brillhart is the correct standard to apply to decisions to abstain in declaratory judgment actions); Rowan Cos. v. Griffin, 876 F.2d 26, 28-29 & n. 2 (5th Cir.1989) (same).

8 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942); see, e.g., Granite State Ins. Co., 986 F.2d at 95-96 (applying

Brillhart to abstention from a declaratory judgment action).

9 Brillhart, 316 U.S. at 495, 62 S.Ct. at 1175-1176. adequately re solved in the ongoing state court proceeding, the

district court concluded that abstention was approp riate here.

Consequently, the district court ordered dismissal of Southwind's

suit, and Southwind timely appealed.

II

DISCUSSION

We apply one of two different tests when reviewing a district

court's exerc ise of its discretion to abstain because of the

presence of ongoing parallel state litigation, depending on the

substantive nature of the litigation. 7 When a district court is

considering abstaining from exercising jurisdiction over a

declaratory judgment action, it must apply standards derived from

Brillhart v. Excess Insurance Co. of Amer ica. 8 In B rillhart the

Supreme Court stated:

Ordinarily, it would be uneconomical as well as vexatious for

a federal court to proceed in a declaratory judgment suit

where another suit is pending in state co urt 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. 9

Consistent with Brillhart, abstention from a declaratory judgment

action is ordinarily appropriate when the state offers an adequate10 E.g., Magnolia Marine Transport, 964 F.2d at 1581-82

(concluding that district court abused its discretion in declining to abstain when there was an ongoing state court proceeding that was capable of adequately resolving all issues);
Granite State, 986 F.2d at 95-96 (affirming abstention from declaratory judgment—abstention premised on presence of ongoing state proceeding capable of resolving all issues); Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 601-03 (5th Cir.1983) (same). Cf., Travelers Ins. Co. v. Louisiana Farm
Bureau Federation, 996 F.2d 774, 778-79 (5th Cir.1993) (abstention inappropriate when declaratory judgment action consolidated several disputes and only matter left in federal court was to resolve one legal question, whereas discovery had not yet started in state action); Rowan, 876 F.2d at 29-30 (remanding because district court did not explain the reasons for
its decision to abstain).

11 424 U.S. 800, 96 S.Ct. 1236.

12 460 U.S. 1, 103 S.Ct. 927.

13 Colorado River, 424 U.S. at 817, 96 S.Ct. at 1246.

14 Id. at 818, 96 S.Ct. at 1246.

15 Moses H. Cone, 460 U.S. at 16, 103 S.Ct. at 937 (emphasis in original) (quoting Colorado River at 424 U.S. at 818-19, 96 alternative forum in which to resolve the particular dispute. 10

In contrast, when actions involve coercive relief the trial

court must apply the standards enunciated by the Court in Colorado

River 11 and reaffirmed in Moses H. Cone. 12 Although district courts

likewise have "discretion" to abstain under these circumstances,

such discretion is narrowly circumscribed by—as the Court stated in

Colorado Rive r —their "virtually unflagging obligation

... to

exercise the jurisdiction given them." 13 Consequently, a district

court should abstain under these circumst ances only in the

"exceptional" case. 14 The Court reaffirmed C olorado River in Moses

H. Cone, making clear that Colora do River states an "exceptional

circumstance" test and reiterating that " " [o]nly the clearest of

circumstances will warrant dismissal. ' " 15S.Ct. at 1246-47); see also, Signad, Inc. v. Sugar Land, 753

F.2d 1338, 1339-40 (5th Cir.), cert. denied, 474 U.S. 822, 106 S.Ct. 75, 88 L.Ed.2d 61 (1985) (reversing district court's decision to abstain because of the lack of exceptional
circumstances).

16 E.g., Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 295, 63 S.Ct. 1070, 1071, 87 L.Ed. 1407 (1943) (classifying action as a declaratory judgment action because it involved only a declaration of rights); Ulstein Maritime, Ltd. v. United

States, 833 F.2d 1052, 1055 (1st Cir.1987) (stating "[a] declaratory judgment states the existing legal rights in controversy, but does not, in itself, coerce any party or enjoin any future action).

In the instant case, the district cour t characterized

Southwind's suit as a "declaratory judgment action." Accordingly,

it concluded that abstention by dismissal was appropriate as "all

pending issues could be effectively and satisfactorily adjudicated

in the state civil action." But the district court erred as a

matter of law in classifying Southwind's suit as a "declaratory

judgment action." Although some of the relief sought by Southwind

is declaratory in nature, Southwind also requests coercive remedies

for the breach of contract in the form of damages, attorney's fees,

and injunctive relief. Inclusion of these coercive remedies

indisputably removes this suit from the ambit of a declaratory

judgment action. 16

The district court's mistake in classifying the case as a

declaratory judgment action led it to apply the wrong standard.

The court has therefore never had an opportunity to exercise its

discretion regarding abstention under the appropriate standards.

Consequently, we must remand this cause to the district court so

that it may decide in the first instance whether abstention is

w arranted here in light of the appropriate standards of C olorado17 See Brillhart, 316 U.S. at 497-98, 62 S.Ct. at 1176-77

(remanding to district court so that it could exercise its discretion in deciding whether to abstain); see also Rowan, 876 F.2d at 29-30 (remanding to district court to explain the reasons
for its decision to abstain). River and Moses H. Cone. 17

REVERSED and REMANDED.