Seneca Insurance Co. v. Strange Land, Inc., No. 15-16011 (9th Cir. 2017)
Annotate this CaseThe Ninth Circuit vacated the district court's order staying Seneca's action against Strange Land in a parallel state court proceeding. The panel held that the district court correctly chose to analyze the abstention motion under the Colorado River framework where Seneca sought remedies beyond declaratory judgment. Applying the factors in assessing the appropriateness of a Colorado River stay, the panel held that the district court abused its narrow discretion, essentially transforming the strong presumption against abstention into a presumption in favor of abstention where state law issues predominate. The panel explained that nothing about this case was "exceptional" so as to warrant disregarding the "virtually unflagging obligation" of a federal court to exercise its jurisdiction. Accordingly, the panel remanded.
Court Description: Colorado River Abstention The panel vacated the district court’s order staying an action, pursuant to Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 813 (1976), against Strange Land, Inc. pending the decision in a parallel state court proceeding; and remanded to the district court for further proceedings. In July 2014, Seneca Insurance Company, Inc. filed a complaint against Strange Land and U.S. Bank in the instant federal action seeking a declaration of insurance obligations. In October 2014, Belfor USA Group, Inc. filed an action in Nevada state court seeking compensation for its repair work from Strange Land as the property owner and Seneca as the policy issuer. The panel held that the district court correctly chose to analyze Strange Land’s request for abstention in the federal SENECA INS. CO. V. STRANGE LAND 3 action under the Colorado River framework because Seneca sought remedies beyond declaratory judgment. The panel rejected Strange Land’s argument that the more lenient abstention test from Wilton v. Seven Falls Co., 515 U.S. 277 (1995), and Brillhart v. Excess Ins. Co. of America, 316 U.S. 491 (1942), should apply. The panel evaluated the eight factors in assessing the appropriateness of a Colorado River stay or dismissal. The panel held that the district court’s application of Colorado River abstention was an abuse of its narrow discretion because the case was not “exceptional” so as to warrant disregarding the obligation of a federal court to exercise its jurisdiction.
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