Court Opinion

ID: 2830649
Source: CourtListenerOpinion
Date Created: 2015-08-26 00:01:21.743084+00
Date Added: 2024-06-11T13:40:17.384839
License: Public Domain

Case: 14-51164       Document: 00513168367         Page: 1     Date Filed: 08/25/2015

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                                United States Court of Appeals
                                                                                         Fifth Circuit

                                                                                       FILED
                                       No. 14-51164                              August 25, 2015
                                                                                  Lyle W. Cayce
IRONSHORE SPECIALTY INSURANCE COMPANY,                                                 Clerk

               Plaintiff–Appellant,

v.

TRACTOR SUPPLY COMPANY; TRACTOR SUPPLY COMPANY OF
TEXAS, L.P.; SAFETY NATIONAL CASUALTY CORPORATION,

               Defendants–Appellees.

                   Appeal from the United States District Court
                        for the Western District of Texas
                             USDC No. 6:13-CV-269

Before CLEMENT, PRADO, and ELROD, Circuit Judges.
PER CURIAM:*
       This case stems from injuries Kenneth McGowan sustained while
working at a distribution center owned by Tractor Supply Company of Texas,
L.P. (TSCLP). While McGowan’s Texas state-court tort suit against TSCLP
was pending, Ironshore Specialty Insurance Company, which provides an
umbrella policy for TSCLP, commenced an action under the Declaratory

       * Pursuant to 5th Cir. R. 47.5, the Court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5th Cir.
R. 47.5.4.
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Judgment Act (DJA) in federal district court against TSCLP and Safety
National, which insures TSCLP against bodily injury to Texas employees.
Ironshore sought a declaration that Safety National’s policy covered TSCLP’s
liability to McGowan, and that any indemnity owed by Ironshore was in excess
of that coverage. After a state court jury found that TSCLP was liable to
McGowan for over $8 million in damages, the federal district court dismissed
the declaratory judgment action pursuant to its discretion under the DJA.
Ironshore appeals that dismissal. We reverse and remand.
            I. FACTUAL AND PROCEDURAL BACKGROUND
      Kenneth McGowan, whose workplace injuries occasioned this lawsuit,
was hired by Job Link Personnel Services, Incorporated, a staffing company.
Job Link assigned McGowan to work at the TSCLP distribution center in Waco,
Texas. At the distribution center, a TSCLP employee, Dwight Bledsoe, dropped
a pallet onto McGowan, injuring him.
      The accident and ensuing litigation implicate numerous insurance
policies. Job Link maintained a Texas workers’ compensation policy with Texas
Mutual Insurance Company. After the accident, McGowan applied for and
received benefits under this plan. At the time of the accident, TSCLP had
elected not to subscribe to the Texas workers’ compensation system and
instead created an ERISA work-injury benefit plan. TSCLP also obtained a
Nonsubscriber Policy from Safety National containing two coverage provisions,
one of which is implicated here. 1
      Under the “Excess Employers’ Liability” provision, Safety National must
reimburse TSCLP “for all sums in excess of the Self-Insured Retention as
specified in . . . the Declarations, which [TSCLP] legally must pay as Bodily

      1  The second coverage provision, “Occupational Injury Benefits,” reimburses TSCLP
for benefits paid to its employees under the ERISA benefits plan.
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Injury Damages to your Employee(s).” (emphasis added). “Employee” is defined
as:
       (a) a person who is employed in the regular business of, is under
       the direction and control of, and receives pay by means of a salary,
       wage or commission directly from, an Employer named . . . as a
       Named Insured, and for whom an Employer files a Form W-2 with
       the Internal Revenue Service; or (b) a person determined to be a
       common law Employee of an Employer by a court of competent
       jurisdiction . . . . Provided, further, that under no circumstances
       shall the term Employee include a leased employee, an
       independent contractor, third-party agent or volunteer.

It is undisputed that Job Link paid McGowan and TSCLP did not file a W-2
with the IRS for him.
       TSCLP also held a $25 million Commercial Umbrella Liability Policy
from Ironshore. This policy lists, inter alia, the Safety National policy as
underlying insurance for the “Texas Employer’s Liability” policy, which applies
to bodily injury “arising out of or in the course of the injured employee’s
employment by the Insured . . . in the State of Texas.” Ironshore alleges that
its policy covers only costs in excess of the Safety National policy.
       McGowan sued Tractor Supply Company, TSCLP, and Bledsoe in Texas
state court, 2 alleging, inter alia, that TSCLP was negligent and grossly
negligent, and that it is vicariously liable for Bledsoe’s acts. The parties filed
cross-motions for summary judgment. Tractor Supply Company and TSCLP
argued that TSCLP was McGowan’s statutory employer under the Texas
Workers’ Compensation Act (TWCA) and that Tractor Supply Company and

       2 The parties to the federal action stipulated that McGowan’s fifth amended complaint
is the operative complaint in the state court action.
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TSCLP “are immune from suit due to the exclusive remedy provisions of the
[TWCA].” 3
       McGowan countered with motions for partial summary judgment on the
exclusive-remedy defense. He argued that because TSCLP does not maintain
workers’ compensation insurance, it is not entitled to the protection of the
exclusive-remedy provision. McGowan also argued that the exclusive-remedy
defense failed because TSCLP was not McGowan’s employer under the TWCA.
The Texas trial court granted McGowan’s motions for partial summary
judgment against Tractor Supply Company and TSCLP without explanation. 4
       The Texas case proceeded to trial. On July 14, 2014, a jury found that
TSCLP’s negligence caused McGowan’s injuries and the Texas trial court
entered judgment awarding McGowan $8,767,375.81. TSCLP’s appeal of this
award is currently pending before Texas’s Tenth Court of Appeals.
       In August 2013, Ironshore filed a federal declaratory judgment action in
the Western District of Texas against TSCLP and Safety National. 5 Ironshore
sought declarations that (1) McGowan was an “employee” under the Safety
National policy and Texas common law; (2) the state court suit is covered by
the Safety National policy; (3) any coverage owed by Ironshore is in excess of
coverage afforded by the Safety National policy and other primary insurance
policies; and (4) Ironshore has no obligation to pay any of the state court
judgment until the Safety National and other primary policies are fully

       3 See generally 75 Tex. Jur. 3d Workers’ Compensation § 139 (2015) (“Recovery of
workers’ compensation benefits is the exclusive remedy of an employee covered by workers’
compensation insurance . . . .”).
       4 The court granted leave for the defendants to file an interlocutory appeal. The Tenth

Court of Appeals in Waco denied their request for interlocutory appeal.
       5 Ironshore’s original and first amended complaints also named Tractor Supply

Company as a defendant, but the parties stipulated to Tractor Supply Company’s dismissal.
Ironshore then filed a second amended complaint that does not name Tractor Supply
Company as a party. Tractor Supply Company is a Delaware corporation that serves as the
general partner of TSCLP.
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exhausted. TSCLP brought a cross-claim against Safety National for a
declaratory judgment on Safety National’s coverage obligations with respect to
the McGowan judgment.
      Safety National filed a motion to dismiss, which the district court
construed as a motion for summary judgment. The parties proceeded to file
extensive summary judgment stipulations. Safety National filed a motion for
summary judgment subject to its motion to dismiss, arguing the Safety
National policy does not cover McGowan’s state court claim. Ironshore filed a
response and cross-motion for summary judgment.
      On September 17, 2014, after the state court entered final judgment for
McGowan, the federal district court, pursuant to its discretion under 28 U.S.C.
§ 2201(a), declined to exercise jurisdiction over the declaratory judgment action
and dismissed Ironshore’s claims against Safety National and TSCLP.
Ironshore filed a motion to reconsider or, in the alterative, amend the judgment
to make clear that the complaint was dismissed without prejudice. The district
court denied the motion to reconsider, but granted the motion to amend. The
court, pursuant to the parties’ stipulation, dismissed without prejudice
TSCLP’s cross-claim against Safety National.
                               II. DISCUSSION
      A district court considering a declaratory judgment action “must engage
in a three-step inquiry.” Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 895
(5th Cir. 2000). The “district court must determine: (1) whether the declaratory
judgment action is justiciable; (2) whether the court has the authority to grant
the declaratory relief; and (3) whether to exercise its discretion to decide or
dismiss the action.” Sherwin–Williams Co. v. Holmes Cnty., 343 F.3d 383, 387
(5th Cir. 2003). This Court reviews the dismissal of a declaratory judgment
action for abuse of discretion. Orix, 212 F.3d at 895.

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      At issue in this case are the first and third steps; the district court had
authority to decide the suit because “diversity jurisdiction [is] present and the
Anti-Injunction Act d[oes] not apply because there was no pending state court
action between [the plaintiff] and any of the declaratory judgment defendants,”
Sherwin–Williams, 343 F.3d at 387–88.
      Because we conclude that this case is justiciable, we have jurisdiction
under 28 U.S.C. § 1291.
A.    Justiciability (Ripeness)
      The first step of the Orix inquiry, justiciability, “[t]ypically . . . becomes
a question of whether an ‘actual controversy’ exists between the parties to the
action.” 212 F.3d at 895. Stated differently, “[a] declaratory judgment action is
ripe for adjudication only where an ‘actual controversy’ exists.” Id. at 896.
“[T]he case or controversy requirement of Article III of the United States
Constitution is identical to the actual controversy requirement under the
Declaratory Judgment Act.” Texas v. W. Publ’g Co., 882 F.2d 171, 175 (5th Cir.
1989), quoted in Orix, 212 F.3d at 896.
       This Court has held that “[t]he threat of litigation, if specific and
concrete, can indeed establish a controversy upon which declaratory judgment
can be based.” Orix, 212 F.3d at 897. Additionally, “[t]he fact that the filing of
the lawsuit is contingent upon certain factors does not defeat jurisdiction over
a declaratory judgment action.” Id. “However, in determining whether a
justiciable controversy exists, a district court must take into account the
likelihood that these contingencies will occur.” Id.
      The Supreme Court has held that an actual case or controversy existed
when an insurer brought a declaratory judgment action regarding its liability
to the insured for an underlying state court action while the underlying action
was still pending. See Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 271–
74 (1941) (“That the complaint in the instant case presents such a controversy
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is plain.”). We have similarly found an actual controversy under the DJA in an
insurer’s suit seeking a declaration that it was not liable for damages in a
pending underlying state court action. See AXA Re Prop. & Cas. Ins. Co. v. Day,
162 F. App’x 316, 318–19 (5th Cir. 2006) (per curiam) (finding an actual
controversy in a declaratory judgment action on commercial-automobile
liability insurance coverage when the underlying state wrongful-death action
was still pending).
      In light of these cases and the fact that McGowan has already obtained
a judgment in the Texas court, the instant case presents “a substantial
controversy, between parties having adverse legal interests, of sufficient
immediacy and reality to warrant the issuance of a declaratory judgment,” Md.
Cas. Co., 312 U.S. at 273.
      Safety National argues that this case is not justiciable because under
Texas law indemnity actions are not justiciable until “the underlying suit is
concluded.” See Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523,
529 (5th Cir. 2004) (“Generally, Texas law only considers the duty-to-
indemnify question justiciable after the underlying suit is concluded . . . .”
(citing Farmers Tex. Cnty. Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 84 (Tex.
1997))). The Texas Supreme Court had long held that under the Texas
Constitution, “there was no justiciable controversy regarding the insurer’s
duty to indemnify before a judgment has been rendered against an insured.”
Griffin, 955 S.W.2d at 83. After the Texas Constitution was amended, the
Texas Supreme Court recognized an exception to this rule “when the insurer
has no duty to defend and the same reasons that negate the duty to defend
likewise negate any possibility the insurer will ever have a duty to indemnify.”
Id. at 84.
      The plain language of Griffin forecloses Safety National’s argument.
Griffin emphasized that, generally, “there [is] no justiciable controversy
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regarding the insurer’s duty to indemnify before a judgment has been rendered
against an insured.” 955 S.W.2d at 83 (emphasis added); see also id. at 84 (“If
. . . coverage issues other than the duty to defend are always nonjusticiable, it
would be impossible for an insurer to make a good faith effort to fully resolve
coverage before a judgment has been rendered in the underlying claim.”
(emphasis added)); Collier v. Allstate Cnty. Mut. Ins. Co., 64 S.W.3d 54, 62 (Tex.
App.—Fort Worth 2001, no pet.) (“[T]he duty to indemnify only arises after an
insured has been adjudicated, whether by judgment or settlement, to be legally
responsible for damages in a lawsuit.” (emphasis added) (citing Griffin, 955
S.W.2d at 82–83)). “Judgment” plainly refers to a liability determination at the
trial-court level rather than the exhaustion of appellate remedies. Because we
conclude that this case is justiciable under Griffin, 6 we turn to the third step
of the Orix inquiry—the district court’s discretion. Sherwin–Williams Co., 343
F.3d at 387.
B.     Discretion
       In Wilton v. Seven Falls Co., the Supreme Court held that the
discretionary standard of Brillhart v. Excess Insurance Co. of America, 316
U.S. 491 (1942), rather than a more stringent test, governs a district court’s
decision to hear a declaratory judgment action. 515 U.S. 277, 289–90 (1995).
“Under Brillhart, a district court ‘should ascertain whether the questions in
controversy between the parties to the federal suit . . . can be better settled in
the proceeding pending in state court.’” Sherwin–Williams, 343 F.3d at 389
(alteration in original) (quoting Brillhart, 316 U.S. at 494). Although each
circuit applies a slightly different formulation of the Brillhart test, “each

       6 Because Safety National’s argument that we lack jurisdiction under Griffin fails, we
do not address Ironshore’s argument that Griffin does not affect justiciability under the DJA
because it is “merely an application of state prudential justiciability rules,” rather than an
Article III requirement.
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circuit’s formulation addresses the same three aspects of the analysis”: “the
proper allocation of decision-making between state and federal courts”;
fairness; and efficiency. Id. at 390–91.
      This Court uses the nonexclusive factors listed in St. Paul Insurance Co.
v. Trejo, 39 F.3d 585 (5th Cir. 1994), to “guide a district court’s exercise of
discretion to accept or decline jurisdiction over a declaratory judgment suit.”
Sherwin–Williams, 343 F.3d at 390. These factors are:
        “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 anticipation 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 declaratory
      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 court is being called on to construe a
      state judicial decree involving the same parties and entered by the
      court before whom the parallel state suit between the same parties
      is pending.

Trejo, 39 F.3d at 590–91 (citation omitted) (quoting Travelers Ins. Co. v. La.
Farm Bureau Fed’n, 996 F.2d 774, 778 (5th Cir. 1993)). A district court abuses
its discretion “unless the district court addresses and balances the purposes of
the [DJA] and the factors relevant to the abstention doctrine on the record.”
Vulcan Materials Co. v. City of Tehuacana, 238 F.3d 382, 390 (5th Cir. 2001)
(emphasis added) (quoting Trejo, 39 F.3d at 590).
      As an initial matter, we address Ironshore’s argument that the district
court abused its discretion solely because it “did not expressly consider all
seven Trejo factors on the record.” The district court did list all seven Trejo
factors. But in its rather brief application of the factors, the district court failed
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to mention the seventh factor—whether the district court was being called on
to construe a state judicial decree:
      Having reviewed the foregoing [Trejo factors] in light of the facts
      of this case, the Court is persuaded that the balance weighs
      against exercising jurisdiction in this case. There is a pending
      state court case which may resolve the issues raised in this case,
      even though the Plaintiff is not a party to the state court case. The
      Plaintiff filed this lawsuit in an attempt to foreclose a
      determination of the issues in the state court case, although the
      present suit was not filed in anticipation of that lawsuit. Any
      opinion reached by this Court could contradict a ruling in the state
      court case, which would create inequities by giving the Plaintiff
      precedence. Additionally, retaining this lawsuit would not serve
      judicial economy. In favor of the Plaintiff, there is no indication
      that Plaintiff was forum shopping or that this Court is an
      inconvenient forum.

      Although this Court has often held a district court abuses its discretion
by failing to address the Trejo factors, no case has so held when the district
court lists all of the factors and expressly applies most of them. Compare
Vulcan, 238 F.3d at 390 (“Here, as in Travelers and Trejo, the district court did
not attempt to provide even a cursory analysis of the pertinent facts and law.”
(internal quotation marks omitted)), with Gonzalez v. Manjarrez, 558 F. App’x
350, 355 (5th Cir. 2014) (per curiam) (affirming a district court’s dismissal
because “the district court considered the seven Trejo factors on the record and
concluded that the first, third, fourth, and sixth weighed heavily in favor of
declining to exercise jurisdiction, while the second, fifth, and seventh did not
particularly support the discretionary exercise of jurisdiction”). In an
unpublished opinion, we confronted a district court order dismissing a
declaratory judgment action “because: (1) ‘the pending related action brought
by [the defendant] appear[ed] . . . to be a nonremovable state court action
presenting solely state law issues’; and (2) ‘the claims of the parties [could]
satisfactorily be adjudicated in the pending relation action; both parties in this
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action are parties in the relation action.’” Am. Bankers Life Assurance Co. of
Fla. v. Overton, 128 F. App’x 399, 402 (5th Cir. 2005) (per curiam) (alteration
in original). We found that this “terse analysis considered only the first factor,”
contrary to precedent, and held the court abused its discretion. Id. at 402–03.
      Although the district court in this case only specifically discussed six of
the seven factors, we conclude that this case is a far cry from Overton. The
district court listed all seven factors and specifically weighed six of them, albeit
tersely. In its analysis, the district court did not mention the seventh factor—
“whether the federal court is being called on to construe a state judicial decree
involving the same parties and entered by the court before whom the parallel
state suit between the same parties is pending,” Trejo, 39 F.3d at 591. This is
most likely because the district court clearly was not being asked to construe
a state judicial decree in this case. Although this factor weighs in favor of
Ironshore, 7 it probably would not have changed the district court’s conclusion
because the court found four factors to weigh against exercising jurisdiction.
While the district court’s very limited analysis in this case leaves much to be
desired, we cannot say that the district court’s failure to explicitly discuss the
seventh factor constitutes an abuse of discretion. We turn now to the district
court’s application of each of the seven factors.
      1. Pending State Court Action
      The district court found that this factor weighed against exercising
jurisdiction because there was “a pending state court case which may resolve
the issues raised in this case.” This was apparently a reference to the fact that
if the Texas appeals court finds that TSCLP is entitled to the exclusive-remedy
defense, “McGowan would take nothing.” Citing Agora Syndicate, Inc. v.
Robinson Janitorial Specialists, Inc., 149 F.3d 371 (5th Cir. 1998), Ironshore

      7   See infra Part II(B)(7).
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contends that the district court misapplied this factor because “[w]hether
Safety National’s policy is responsible for the McGowan judgment has not been
raised by any party to the state lawsuit.”
      “The first Trejo factor, whether there is a pending state action in which
all the matters in the controversy may be litigated, requires the court to
examine comity and efficiency.” Sherwin–Williams, 343 F.3d at 391. It is clear
that “[a] district court may decline to decide ‘a declaratory judgment suit where
another suit is pending in state court presenting the same issues, not governed
by federal law, between the same parties.’” Id. at 392 (emphasis added)
(quoting Brillhart, 316 U.S. at 495). Although “the lack of a pending parallel
state court proceeding” does not per se require a district court to decide a
declaratory judgment action, “the presence or absence of a parallel state
proceeding is an important factor.” Id. at 394. In Agora, this Court recognized
that in the context of a district court’s DJA discretion, a “parallel state
proceeding[ ]” refers to a state court proceeding with “identity of parties or
issues.” 149 F.3d at 373; see also AXA, 162 F. App’x at 320 (“First, because AXA
is not a party to the Louisiana action, the court correctly concluded no pending
state action exists where all the matters in controversy could be fully
litigated.”).
      Here, the pending state court action does not involve the same parties—
Safety National and Ironshore are not parties in that case. Moreover, the state
suit does not involve the same legal issues—the scope of Safety National and
Ironshore’s insurance policies. Safety National argues that, “[c]ontrary to
Ironshore’s contention, the issue of whether McGowan was an employee of
Tractor Supply was . . . presented to and ruled upon by the [s]tate [t]rial
[c]ourt.” This misses the point. Whether McGowan was an employee as defined
by the TWCA is an issue before the state court. At issue in the DJA action is
the distinct question of whether McGowan was an employee under the Safety
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National policy. Moreover, the Texas trial court did not explain whether it
granted summary judgment for McGowan on the TWCA-employee issue or on
one of the other issues raised in McGowan’s summary judgment motion.
      The district court’s conclusion that because the Texas appeal might moot
the issue, there existed a “pending state action in which all the matters in the
controversy may be litigated,” Sherwin–Williams, 343 F.3d at 391, was
mistaken. Here, the state court action did not involve the same parties or the
same legal issues; thus, this factor weighs “strongly against dismissal,” see id.
at 394.
      2. Suit Filed in Anticipation of Lawsuit
      The district court found that “[t]he Plaintiff filed this lawsuit in an
attempt to foreclose determination of the issues in the state court case,
although the present suit was not filed in anticipation of that lawsuit.”
      One of the DJA’s purposes “is to allow potential defendants to resolve a
dispute without waiting to be sued or until the statute of limitations expires.
The mere fact that a declaratory judgment action is brought in anticipation of
other suits does not require dismissal . . . .” Sherwin–Williams, 343 F.3d at 397
(citation omitted). Sherwin–Williams emphasized the similarities between this
and the forum-selection factor. See id. at 398. Both speak to the fairness aspect
of the Brillhart/Trejo inquiry—“whether the plaintiff is using the declaratory
judgment process to gain access to a federal forum on improper or unfair
grounds.” Id. at 391. Often, courts find that anticipatory suits weigh in favor
of dismissal when the declaratory judgment plaintiff engaged in “procedural
fencing.” Id. at 397 & n.7. For example, this Court has found improper
procedural fencing where “the declaratory judgment plaintiff used the federal
declaratory judgment statute and the defendant’s inability to file an earlier
state court suit for the sole purpose of controlling the state law that would

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apply.” Id. at 397 (discussing Mission Ins. Co. v. Puritan Fashions Corp., 706
F.2d 599, 602 & n.3 (5th Cir. 1983)).
      Here there is no indication of procedural fencing. The district court’s
conclusion that the Plaintiff was attempting “to foreclose a determination of
the issues in the state court case” is not supported by the record. As previously
discussed, 8 the state-court issues were legally distinct from those raised in the
declaratory judgment suit. Ironshore fails to convey how any ruling by the
federal court could have foreclosed the Texas court’s determination of the
applicability of the TWCA exclusive-remedy provision.
      The federal suit was filed after the Texas action commenced. And to the
extent the federal suit was filed in anticipation of a separate state
determination of the scope of the insurance provisions, this is a permissible
purpose under the DJA. Cf. Sherwin–Williams, 343 F.3d at 398 (“Despite the
fact that plaintiff may have predicted that there would be a related suit filed
in state court (making the federal suit ‘anticipatory’), ‘without more we cannot
say that [the declaratory judgment plaintiff’s] action is an instance of forum-
shopping instead of a reasonable assertion of its rights under the declaratory
judgment statute and diversity jurisdiction.’” (alteration in original) (quoting
United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 494 (4th Cir. 1998))).
      3. Forum Shopping
      The district properly court found “no indication that Plaintiff was forum
shopping” in this case and concluded that this factor weighs against dismissal.
See Sherwin–Williams, 343 F.3d at 398 (“[W]e know of no authority for the
proposition that an insurer is barred from invoking diversity jurisdiction to
bring a declaratory judgment action against an insured on an issue of
coverage.” (internal quotation marks omitted)).

      8   See supra Part II(B)(1).
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      4. Possible Inequities
      The district court found that “[a]ny opinion reached by this Court could
contradict a ruling in the state court case, which would create inequities by
giving the Plaintiff precedence.” Like the two before it, this factor goes to
fairness. See id. at 391.
      Ironshore attacks the district court’s finding because “no state suit exists
in which the coverage question is at issue. Nor would a determination of the
coverage issues foreclose any determination of the liability issues in the state
court case.” Ironshore correctly observes that McGowan is not a party to the
declaratory judgment case, and, therefore could not be bound by any
determination made by the federal court. See, e.g., Kaspar Wire Works, Inc. v.
Leco Eng’g & Mach., Inc., 575 F.2d 530, 535–36 (5th Cir. 1978) (“[Res judicata]
treats a judgment, once rendered, as the full measure of relief to be accorded
between the same parties on the same ‘claim’ or ‘cause of action.’ . . . [I]ssue
preclusion bars the relitigation of issues actually adjudicated, and essential to
the judgment, in a prior litigation between the same parties.”). Safety National
points to no other possible inequities created by the exercise of jurisdiction.
      Because the only possible inequity identified by the district court or
Safety National is not supported by the record, this factor weighs against
dismissal.
      5. Convenience of Forum
      The district court found that there was “no indication” that the Waco
district court was an inconvenient forum. Safety National does not dispute this
finding, and a review of the record has not revealed any contrary evidence.
Thus, the district court properly concluded that this factor also weighs against
dismissal.

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    Case: 14-51164       Document: 00513168367          Page: 16     Date Filed: 08/25/2015

                                       No. 14-51164
       6. Judicial Economy
       The district court observed that in the event the Texas Court of Appeals
reverses and grants summary judgment to TSCLP on exclusive-remedy
grounds, “a declaratory judgment by this Court would serve no useful purpose,”
and therefore found that a declaratory judgment would not serve judicial
economy.
       This factor presents a closer question. The district court is correct in
concluding that a finding of no liability for TSCLP in the Texas appeal would
moot the declaratory-judgment issue. On the other hand, the parties have
already briefed the insurance coverage issues to the district court and entered
into extensive factual stipulations. In Agora, this Court held that judicial
economy weighed against dismissal in part 9 because “there [were] no factual
disputes between the parties and . . . they [had] fully briefed the merits of the
insurance issues.” 149 F.3d at 373. Because the same is true in this case, we
hold that this factor weighs against dismissal.
       7. State Judicial Decree
       The seventh and last factor—“whether the federal court is being called
on to construe a state judicial decree involving the same parties and entered
by the court before whom the parallel state suit between the same parties is
pending,” Trejo, 39 F.3d at 591—weighs against dismissal. 10 There is no need
to construe a state judicial decree to resolve the issues in this case. Cf. id. at
591 n.8 (“For example, here the district court should determine whether it
makes more sense for the state court that approved the First Settlement to
interpret it.”).

       9 In Agora we also considered the fact that the case “had been pending in federal court
for over a year when the district court dismissed it sua sponte.” 149 F.3d at 373.
       10 As noted previously, the district court did not explicitly address this issue.

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   Case: 14-51164     Document: 00513168367      Page: 17   Date Filed: 08/25/2015

                                  No. 14-51164
      Although this Court reviews a dismissal of a declaratory judgment action
for abuse of discretion, a deferential standard, Orix, 212 F.3d at 895, the
district court’s cursory analysis of the Trejo factors leaves much to be desired.
All seven of the Trejo factors weigh against dismissal. Thus, we hold that the
district court abused its discretion in applying the Trejo factors and dismissing
the action. See Sherwin–Williams, 343 F.3d at 401 (holding that a district court
abused its discretion in dismissing a declaratory judgment action because
federalism, fairness, and efficiency concerns weighed against dismissal).
                              III. CONCLUSION
      This case presents an actual controversy for the purposes of the DJA.
Moreover, the district court abused its discretion in its application of the Trejo
factors. For the foregoing reasons, we REVERSE the district court and
REMAND for further proceedings.

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