Continental Casualty Company, Plaintiff-Counter-Defendant-Appellee v. Robsac Industries, Defendant-Counter-Claimant-Appellant

Defendant Robsac Industries (“Robsac”) appeals the district court’s entry of summary judgment for Continental Casualty Company (“Continental”) on Continental’s action for declaratory relief and its summary denial of Robsac’s motion to stay the declaratory relief action pending the outcome of a parallel state court proceeding on the merits. This case raises the oft recurring problem of the proper role of the federal courts in the resolution of disputes relating to obligations under insurance policies, an area primarily within the jurisdiction of the state courts. We hold that in light of the pending state action the district court should not have exercised its jurisdiction to grant declaratory relief. Accordingly, we reverse and remand to the district court with instructions to dismiss the action.

FACTS AND PROCEEDINGS BELOW

Robsac is a California corporation. Prior to January, 1987, when it filed a bankruptcy petition, Robsac was in the business of selling artist and drafting supplies through its stores in several cities throughout the United States. In December, 1984, Continental, an Illinois corporation, issued an insurance policy to Robsac along with five other named…

Judge, dissenting.

The effect of today’s decision is to forever disable the district courts of this circuit from exercising their discretion to entertain declaratory judgment actions brought by insurers in cases already pending in state courts. That result is particularly unfortunate because it could have been avoided had the majority not been so anxious to take the initial determination of jurisdiction out of the hands of the district court where, in my view, it belongs. I would have remanded the case to the district court with instructions to reconsider the matter in light of Chamberlain v. Allstate Co., 931 F.2d 1361 (9th Cir.1991). But the majority prefers to conduct that review itself. Because I disagree with that action, as well as with the analysis that is its product, I dissent.

This court reviews de novo a district court’s decision to exercise its jurisdiction under the Declaratory Judgments Act, 28 U.S.C. § 2201 (1988) (“the Act”). Chamberlain, 931 F.2d at 1366 . It follows, the majority concludes, that we have the option to review the district court’s jurisdictional decision now or “remand and delay doing so until after another appeal is taken.” Majority at 1370.…

947 F.2d 1367 CONTINENTAL CASUALTY COMPANY, Plaintiff-Counter-Defendant-Appellee, v. ROBSAC INDUSTRIES, Defendant-Counter-Claimant-Appellant. No. 89-55621. United States Court of Appeals, Ninth Circuit. Argued and Submitted July 13, 1990. Decided Oct. 25, 1991. Jonathan B. Cole, Brian H. Krikorian, Nemecek & Cole, Sherman Oaks, Cal., for defendant-counter-claimant-appellant. Richard R. Winter, Clausen, Miller, Gorman, Caffrey & Witous, Chicago, Ill., Robert F. Keehn, Booth, Mitchel & Strange, Los Angeles, Cal., for plaintiff-counter-defendant-appellee. Appeal from the United States District Court for the Central District of California. Before REINHARDT, HALL and LEAVY, * Circuit Judges. REINHARDT, Circuit Judge: 1 Defendant Robsac Industries ("Robsac") appeals the district court's entry of summary judgment for Continental Casualty Company ("Continental") on Continental's action for declaratory relief and its summary denial of Robsac's motion to stay the declaratory relief action pending the outcome of a parallel state court proceeding on the merits. This case raises the oft recurring problem of the proper role of the federal courts in the resolution of disputes…