Kearns

American States Insurance Company (American States) appeals from the district court’s judgment dismissing its declaratory relief action for lack of jurisdiction. American States sought to establish that under the insurance policy at issue, it has no duty to indemnify or defend Kearns, doing business as Tahoe Boat Company (Tahoe Boat) in a suit brought against Tahoe Boat in state court. The district court’s jurisdiction over this diversity suit would be premised on 28 U.S.C. § 2201 (a) and 28 U.S.C. § 1332 . We have jurisdiction over this timely appeal pursuant to 28 U.S.C. § 1291 . We reverse and remand.

I

Tahoe Boat was sued in state court under several theories of liability arising out of the sale of a boat. American States undertook Tahoe Boat’s defense with a full reservation of rights, while bringing a diversity suit in federal court under the Declaratory Judgments Act, 28 U.S.C. § 2201 , to establish whether it had a duty to defend or indemnify Tahoe Boat. Arguing that it would be prejudiced by revealing possible bases of liability if a summary judgment motion were entertained in the district court, Tahoe Boat moved to stay the declaratory relief action until the state…

concurring:

I am in complete agreement with the result reached by the majority. My only reason for writing separately is to suggest that, in exercising its discretion, the district court should consider and weigh at the least the following factors:

First, and foremost in my opinion, the district court should determine whether the federal and state cases are parallel. See, e.g., Provident Tradesmens Bank v. Patterson, 390 U.S. 102, 125-28 , 88 S.Ct. 733, 746-47 , 19 L.Ed.2d 936 (1968); Continental Casualty Co. v. Coastal Sav. Bank, 977 F.2d 734 , 737 (2nd Cir.1992); Sears, Roebuck and Co. v. Zurich Ins. Co., 422 F.2d 587, 590 (7th Cir.1970).

Other factors that I suggest should be considered by the district court in exercising its discretion are: whether the declaratory action will settle all aspects of the controversy; whether the declaratory action will serve a useful purpose in clarifying the legal relations in issue; whether the declaratory action is being sought merely for the purposes of procedural fencing or to obtain a “res judica-ta” advantage; or whether the use of a declaratory action will result in entanglement between the federal and state court systems. In addition,…