The Federal Ninth Circuit Court of Appeals has recently affirmed a District Court's rare and unique two-punch decision to abstain both from a determination of California Insurance Coverage and a related environmental tort action for Damages: Download R.R. Street & Co. v. Transport Insurance Co. (9th Cir. Case Nos. 10.55361, 10.55404 Opinion Filed September 2, 2011) PUBLIC ACCESS, also published as 2011 WL 3873804 *1 (9th Cir. September 2, 2011)(authorized password required to access Westlaw). These are the circumstances and these too are the issues identified by the Ninth Circuit before it pronounced its decision in this appeal:
This dispute emerges from a web of state and federal litigation over liability for damages and defense costs in certain environmental tort suits. The appeal before us concerns two cases that mirror each other: (1) an action for damages that the Appellants brought in federal court and (2) a declaratory judgment action that the Appellee brought in state court, which Appellants later removed to federal court. The district court declined to entertain these actions, by dismissing the former and remanding the latter, in light of a related third action that had been pending for several years in state court.
The District Court's decision to abstain from California Coverage was affirmed on the discretionary Declaratory Judgment abstention doctrine announced 70 years ago in Brillhart v. Excess Insurance Co. of America, 316 U.S. 491 (1942). In the case at bar, three factors articulated by the United States Supreme Court in Brillhart were considered, and each was found to be in play: (1) Avoiding "'needless determination of state law issues'"; (2) "discouraging 'forum shopping'"; and (3) "avoiding 'duplicative litigation.'" Federal Courts are allowed to consider other factors as well. R.R. Street & Co. v. Transport Insurance Co., 2011 WL 3873804 at *6. The three enunciated factors were enough to affirm abstention from deciding California Insurance Coverage issues in this case. See id. at *6-*8.
The District Court also appropriately abstained from deciding Damages in the related environmental tort action because the "concurrent state proceeding" to determine California Insurance Coverage was the kind of "rare case" described by the U.S. Supreme Court in the case of Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976). As applied by the Ninth Circuit panel in affirming the District Judge's abstention from considering the environmental tort action for Damages here, the circumstances of this case warrant abstention after considering such factors as (1) "piecemeal litigation"; (2) "order of jurisdiction"; (3) "source of law"; (4) "adequacy of state court" protections; (5) "forum shopping"; and (6) "parallel suits". Id. at *8-*14.
This is not all. The District Court also applied "the Rooker-Feldman doctrine," a doctrine examined on this Blog previously, under which Federal Courts refuse to function as courts of appellate review over State Court Judgments, in simple and basic terms. The Ninth Circuit did not agree with the District Court's application of that doctrine in this case. Here, there was no State Court Judgment, said the appellate panel. Even if there had been a Judgment, the State Court Order in question did not apply to two of the three named Defendants. Therefore, in the view of the Ninth Circuit panel on appeal, Rooker-Feldman is out of place here. Id. at *5.
Regardless of Rooker and irrespective of Feldman, though, in this case Federal Courts will not interpret California Insurance Coverage issues which apparently control all Jurisdiction over the environmental tort action for Damages as well.
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