Homestead Insurance v. Sherman Way Biltmore Apartments

MEMORANDUM *

The district court improperly abstained from exercising jurisdiction over Sherman Way’s damages action against Homestead and Homestead’s declaratory judgment action against Sherman Way. We decline to reach the merits of Homestead’s constitutional claims because there are factual questions that remain unresolved. Accordingly, we REVERSE the district court’s orders of abstention in these actions and REMAND for further proceedings.

A federal court may not dismiss a damages action or remand it to state court *207 based on abstention. Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 711, 116 S.Ct. 1712 , 135 L.Ed.2d 1 (1996). The district court therefore had no discretion to remand Sherman Way’s damages action on grounds of abstention.

The district court also improperly dismissed Homestead’s declaratory judgment action without stating its reasons for abstaining. Gov’t Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1225-26 (9th Cir. 1998) (en banc) (so holding and identifying considerations relevant to abstention). We reverse the dismissal and remand to the district court so that it may reconsider its decision, including taking into account its resolution of the issue of…