Wilton v. Seven Falls Co. - 515 U.S. 277, 115 S. Ct. 2137 (1995)

Rule:

Distinct features of the Declaratory Judgment Act, 28 U.S.C.S. § 2201(a), justify a standard vesting district courts with greater discretion in declaratory judgment actions than that permitted under the "exceptional circumstances" test.

Facts:

Petitioner underwriters refused to defend or indemnify respondents under several commercial liability insurance policies in litigation between respondents and other parties over the ownership and operation of certain Texas oil and gas properties. After a verdict was entered against respondents and they notified petitioners that they intended to file a state court suit on the policies, petitioners sought a declaratory judgment in federal court that their policies did not cover respondents' liability. Respondents filed their state court suit and moved to dismiss or, in the alternative, to stay petitioners' action. The District Court entered a stay on the ground that the state suit encompassed the same coverage issues raised in the federal action, and the Court of Appeals affirmed. Noting that a district court has broad discretion to grant or decline to grant declaratory judgment, the court did not require application of the test articulated in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 47 L. Ed. 2d 483, 96 S. Ct. 1236, and Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 74 L. Ed. 2d 765, 103 S. Ct. 927, under which district courts must point to "exceptional circumstances" to justify staying or dismissing federal proceedings. A writ of certiorari was granted. 

Issue:

Should the district court point to “exceptional circumstances” to justify staying or dismissing proceedings? 

Answer:

No.

Conclusion:

The Court held that distinct features of the Declaratory Judgment Act, 28 U.S.C.S. § 2201(a) justified a standard vesting district courts with greater discretion in declaratory judgment actions than that permitted under the "exceptional circumstances" test. The Court held that district court's decisions about the propriety of hearing declaratory judgment actions should be reviewed only for abuse of discretion. In this case, the Court held that the district court did not abuse its discretion, where parallel proceedings, presenting opportunity for ventilation of the same state law issues involved in the federal action, were underway in state court.