Opinion ID: 613119
Heading Depth: 3
Heading Rank: 1

Heading: Wilton/Brillhart

Text: The Declaratory Judgment Act uses permissive language. See 28 U.S.C. § 2201(a) (stating that federal courts  may declare the rights and other legal relations of any interested party in a declaratory judgment action (emphasis added)). Based on the permissive nature of the Declaratory Judgment Act, in Brillhart v. Excess Insurance Co. of America, 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942), the Supreme Court held that a district court has discretion to dismiss a federal declaratory judgment action when the questions in controversy ... can better be settled in a pending state court proceeding. Id. at 495, 62 S.Ct. 1173. The Court reaffirmed this principle in Wilton, holding that a district court may decline to entertain a federal declaratory judgment action when state court proceedings present[] opportunity for ventilation of the same state law issues. 515 U.S. at 290, 115 S.Ct. 2137. The Court has not yet delineated the outer boundaries of the so-called Wilton/Brillhart doctrine, id., but we have allowed district courts broad discretion as long as it furthers the Declaratory Judgment Act's purpose of enhancing judicial economy and cooperative federalism, Dizol, 133 F.3d at 1224. In Brillhart, the Court articulated three factors that courts should consider when examining the propriety of entertaining a declaratory judgment action: avoiding needless determination of state law issues; discouraging forum shopping; and avoiding duplicative litigation. See Dizol, 133 F.3d at 1225. Although courts may also consider a number of other factors, the three  Brillhart factors remain the philosophic touchstone for the Wilton/Brillhart analysis, id., and they served as the basis for the district court's decision in this case. The district court found that the claims in the Removed Action involved state law issues that had been or could be considered in the Vulcan Action; that Street had engaged in forum shopping by filing the Federal Action and removing the Removed Action; and, most significantly, that the Removed Action was duplicative of the Vulcan Action.
There is no question that retaining jurisdiction over the Removed Action would have required the district court to decide basic issues of state law. In prior cases, we have recognized that needless determination of state law issues alone may support remand. See Huth v. Hartford Ins. Co. of the Midwest, 298 F.3d 800, 802-04 (9th Cir.2002) (affirming remand of a declaratory judgment action to avoid needless determination of state law issues even in the absence of a similar state court proceeding). We do not end our analysis here, however, because the presence of the Federal Action raises other considerations in this case.
Street/National Union argue that the district court abused its discretion by remanding the Removed Action instead of staying or consolidating it with the Federal Action because Transport's Removed Action was reactive. We have instructed that federal courts should generally decline to entertain reactive declaratory actions. Dizol, 133 F.3d at 1225. For example, we held that when an insurer filed a declaratory judgment action in federal court during the pendency of a non-removable state court action presenting the same issues of state law, and the insurer did so merely to obtain a tactical advantage from litigating in a federal forum, the defensive or reactive nature of the insurer's action warranted dismissal. Continental Cas. Co. v. Robsac Indus., 947 F.2d 1367, 1371-72 (9th Cir.1991), overruled in part on other grounds by Dizol, 133 F.3d at 1220. The declaratory judgment action in Robsac was an archetype of `reactive' litigation, id. at 1372, but this case is distinguishable from Robsac. In Robsac, it was clear that the insurance company was forum-shopping merely for strategic purposes, and all of the Brillhart factors pointed in the same direction. See id. at 1371-73. Here, Transport concedes that it filed the Removed Action in response to the Federal Action, but it did so not merely to seek a favorable forum but also to seek a forum that could resolve all issues related to the 1981 Policy in one comprehensive proceeding. Additionally, in contrast to Robsac, both parties appear to have engaged in some defensive maneuvering or procedural fencing. [5] The mere fact that the district court's decision preserved the later-filed Removed Action instead of the earlier-filed Federal Action is of no consequence. Although courts generally give preference to the first-filed case among concurrent federal court proceedings, this is not a rigid or inflexible rule to be mechanically applied, but rather one that yields to the dictates of sound judicial administration. Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th Cir.1982). Timing is only one consideration when deciding whether to entertain a declaratory judgment action, and the Wilton/Brillhart factors sometimes compel a court to decline to entertain an earlier-filed action in favor of a later-filed action. See Wilton, 515 U.S. at 280-82, 115 S.Ct. 2137 (affirming dismissal of a federal action in light of a later-filed state action); Huth, 298 F.3d at 802-04 (affirming dismissal of an earlier-filed declaratory action but remanding a later-filed one).
If the Removed Action had been the only case pending before the district court, there would be no question that the court properly remanded the case. Retaining jurisdiction over the Removed Action would have required the district court to address the same issues of state law and policy interpretation that the state court had been grappling with for several years in the Vulcan Action, leading to duplicative litigation. In this case, however, the district court had to consider not only the Removed Action, which requests only declaratory relief, but also the Federal Action, which includes claims for damages. We have held that if the same action contains claims for both monetary and declaratory relief, the district court should not, as a general rule, remand or decline to entertain the claim for declaratory relief. Snodgrass v. Provident Life & Accident Ins. Co., 147 F.3d 1163, 1167 (9th Cir.1998) (internal quotation marks omitted). Snodgrass raises two considerations significant to this case. First, the discretionary Wilton/Brillhart standard does not apply to actions for damages, and the court may not rely solely on this standard to dispose of claims for damages. In Snodgrass, the district court on its own motion used its broad discretion under the Declaratory Judgment Act to remand the entire case even though the essence of the case was a suit for damages. Id. We reversed because [c]laims that exist independent of the request for a declaration are not subject to the Declaratory Judgment Act's discretionary jurisdictional rule but instead invoke the `virtually unflagging' obligation of the district court to hear jurisdictionally sufficient claims. Id. (quoting Colorado River, 424 U.S. at 817, 96 S.Ct. 1236). [6] Second, if the district court must exercise jurisdiction over claims for damages, the court should also retain similar claims for declaratory relief to avoid piecemeal litigation. Given the usual obligation to exercise jurisdiction over claims for damages, [r]emanding only the declaratory component of ... an action will frequently produce piecemeal litigation, a result which the Declaratory Judgment Act was intended to avoid, rather than promote. Id. (citations omitted); see also Dizol, 133 F.3d at 1225-26 (If a federal court is required to determine major issues of state law because of the existence of non-discretionary claims, the declaratory action should be retained to avoid piecemeal litigation.). Although this case involves two separate actions, while Snodgrass involved a single action with claims for both monetary and declaratory relief, the same basic principles apply. If the district court must exercise jurisdiction over the Federal Action, then the court should also retain jurisdiction over the Removed Action. The two actions involve identical issues, so remanding the Removed Action while maintaining the Federal Action would not serve the Wilton/Brillhart goals of avoiding duplicative litigation and needless determination of state law issues. Cf. id.; Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1367-68 (9th Cir.1991) (noting that refusing to issue a declaratory judgment may result in piecemeal litigation if the court retains jurisdiction over other claims). [7] In short, we conclude the district court did not abuse its discretion by remanding the Removed Action as long as Colorado River authorized dismissal of the Federal Action. We now turn to Colorado River.