Canal Indemnity Co v. Flexi-Van Leasing

• Court: Court of Appeals for the Fifth Circuit
• Decided: August 9, 1996
• Docket: 96-30072
• Status: Unpublished

Opinion

UNITED STATES COURT OF APPEALS For the Fifth Circuit

No. 96-30072

CANAL INDEMNITY COMPANY,

Plaintiff - Counter Defendant - Appellee,

VERSUS

WILBURN CONTAINER X-PRESS INCORPORATED; ET AL.,

Defendants, .

FLEXI-VAN LEASING, INC.

Defendant - Counter Claimant - Appellant

Appeal from the United States District Court For the Middle District of Louisiana

(D. Ct. No.94-CV-911) July 26, 1996 Before SMITH, BENAVIDES and DENNIS, Circuit Judges.

PER CURIAM:*

Appellant-defendant-counter claimant Flexi-Van Leasing, Inc.

appeals the district court’s ruling denying its motion for new

trial and/or for reconsideration and dismissing the counterclaim

without prejudice on December 19, 1995. The district court had

* Pursuant to Local Rule 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in Local Rule 47.5.4. previously issued an order dismissing without prejudice the

declaratory action of plaintiff-appellee, Canal Indemnity Company,

on July 24, 1995.

District courts’ decisions about the propriety of hearing

declaratory judgment actions, which are necessarily bound up with

their decisions about the propriety of granting declaratory relief,

should be reviewed for abuse of discretion. Wilton v. Seven Falls

Co., 115 S.Ct. 2137 (1995), affirming Wilton v. Seven Falls Co., 41

F.3d 934, 935 (5th Cir. 1994) (citing Torch, Inc. v. LeBlanc, 947

F.2d 193, 194 (5th Cir. 1991)). It is more consistent with the

Declaratory Judgment Act to vest district courts with discretion in

the first instance, because facts bearing on the declaratory

judgment remedy’s usefulness, and the case’s fitness for

resolution, are particularly within their grasp. 115 S.Ct. at 2144.

Consequently, district courts’ decisions to stay or dismiss

counterclaims filed in response to a dismissed declaratory judgment

action are matters within the sound exercise of their discretion

and are also reviewable for abuse of that discretion.

Under the circumstances, we conclude that the district court

acted within the bounds of its discretion in dismissing without

prejudice Flexi-Van’s state law counterclaim, which arises out of

the same occurrence that formed the subject matter of the

declaratory judgment action, and which may be presented for

ventilation in parallel proceedings in state court. Thus, the

2 district court’s order dismissing Flexi-Van’s counterclaim without

prejudice and denying its motion on December 19, 1995 is AFFIRMED.