Opinion ID: 37110
Heading Depth: 3
Heading Rank: 1

Heading: District Court’s Order to Stay

Text: We review a district court’s decision to dismiss or stay a federal declaratory judgment action under an abuse of discretion standard. The Sherwin-Williams Co. v. Holmes County, 343 F.3d 383, 389 (5th Cir. 2003). Under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201(a), a district court “may declare the rights and other legal relations of any interested party seeking such declaration.” However, the district court is not compelled to exercise that jurisdiction. Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494 (1942); Wilton v. Seven Falls Co., 515 U.S. 277, 286-87 (1995). The basic question for the district court is “whether the questions in controversy between the parties to the federal suit ... can better be settled in the proceeding pending in state court.” Brillhart, 316 U.S. at 495. In St. Paul Insurance Co. v. Trejo, 39 F.3d 585 (5th Cir. 1994), we set forth seven factors for a court to apply to determine whether or not it should exercise jurisdiction. In Sherwin-Williams, we recognized that the Trejo factors address three broad considerations - federalism, fairness/improper forum shopping, and efficiency. Sherwin-Williams, 343 F.3d at 390-91. With respect to federalism considerations, we said in Sherwin-Williams: “[I]f the federal declaratory judgment action raises only issues of state law and a state case involving the same state law issues is pending, generally the state court should decide the case and the federal court should exercise its discretion to dismiss the federal suit.” Id. In the instant case, the dispute involves the interpretation of an insurance contract and interpretation of state insurance law as it relates to asbestos claims, both of which are state law matters. Furthermore, the parties are involved in numerous state court actions involving the same state law issues. Eagle has filed third-party demands in several state court lawsuits. In addition, Appellants have been named as defendants in several of the state court lawsuits. Thus, considerations of federalism support the district court’s decision to stay Appellants’ federal declaratory judgment action. With respect to fairness considerations, in Sherwin-Williams we recognized that the mere act of filing a federal declaratory action in anticipation of a state lawsuit is not, in and of itself, impermissible. Rather, we were concerned with whether there was a legitimate reason to be in federal court. Id. at 397-99. In Sherwin-Williams, we held that the selection of a federal forum was not impermissible for at least four reasons. First, a desire to avoid multiple lawsuits in multiple courts is a legitimate reason to want to be in federal court. Second, Sherwin-Williams’ desire to avoid plaintiff-friendly state court juries was not illegitimate, because Sherwin-Williams was an outof-state company. The traditional justification for diversity jurisdiction is to ensure fairness for out-of-state litigants. Third, the selection of a federal forum would not change the applicable law because state law would apply in either case. Fourth, there was no evidence that the defendant in the declaratory judgment action had been restricted from filing a state court action prior to the plaintiff filing the declaratory judgment action. Id. at 399. In the instant case there are many similarities with Sherwin-Williams. Appellants here did file in federal court in anticipation of involvement in a state court lawsuit, but they do not seem to have done so for improper purposes. As in Sherwin- Williams, Appellants in the instant case are seeking to avoid multiple lawsuits in multiple courts to determine the same issues. Also, as in Sherwin-Williams, Appellants here are outof-state corporations attempting to avail themselves of the traditional justification for diversity jurisdiction. Third, as in Sherwin-Williams, state law will apply in a state court action or in a federal declaratory action. And finally, there is no evidence that Appellee could not have filed a state court action. Thus, with respect to fairness considerations, Appellants did not engage in improper forum shopping, nor did they act unfairly with respect to Appellee by filing a federal declaratory judgment action. With respect to efficiency, the third Sherwin-Wiiliams consideration, Appellants claim that it would be more efficient for one federal court to determine all of the issues between the parties than for various state courts to decide the issues in a piecemeal fashion. However, this supposed efficiency gain would not actually be realized because a federal court cannot rule conclusively on the disputed issues at this time. Appellants have five issues for which they request declaratory judgment. Resolution of each of the five issues requires a determination of state law and/or resolution depends on the factual circumstances of the underlying asbestos claims. Thus, a federal court would not be able to conclusively resolve the dispute between the parties involving these issues, and it would not be more efficient for a federal court to initially hear the claims. In sum, the application of the considerations we identified in Sherwin-Williams supports the district court’s order to stay Appellants’ federal declaratory judgment action. Therefore, we find that the district court did not abuse its discretion by granting Eagle’s motion to stay Appellants’ declaratory judgment action. B. District Court’s Denial of Motion for Summary Judgment Appellants ask us to consider the merits of their motion for partial summary judgment despite the fact that the district court’s denial of that motion is not a final order. See Ardoin v. J. Ray McDermott & Co., 641 F.2d 277, 278 (5th Cir. 1981) (denial of summary judgment motion is an interlocutory order and unappealable). This Court generally does not have jurisdiction to review a district court’s denial of a motion for summary judgment because such a ruling is not a final one within the meaning of 28 U.S.C. § 1291. Lemoine v. New Horizons Ranch and Ctr., Inc., 174 F.3d 629, 633 (5th Cir. 1999). Appellants do not provide any compelling reason for us to make an exception to the general rule that only final orders are appealable. Accordingly, we find that the district court’s order denying Appellants’ motion for partial summary judgment is not an appealable order.