Jurisdiction; The Declaratory Judgment Act; 28 USC § 2201(a); “Mixed action” for both coercive relief (damages) & non-coercive (declaratory) relief; Meredith v City of Winter Haven; Adrian Energy Assocs v Michigan Pub Serv Comm’n; Applicability of a traditional abstention doctrine; Louisianna Power & Light Co v City of Thibodaux

In an issue of first impression in this circuit, the court held that in a “mixed action” for damages (coercive relief) and declaratory relief (non-coercive) “the normal rules of mandatory jurisdiction and abstention” are to be applied to “coercive claims and the discretionary standard to declaratory judgment claims. If no traditional abstention doctrine applies to the coercive claim, the district court must exercise jurisdiction over that claim.” It found the district court erred when it remanded plaintiff-Fire-Dex’s claim for declaratory relief and defendant-Admiral’s counterclaim for such relief back to state court and entered a stay of Fire-Dex’s damages claims pending resolution of the state court case. The case involved an insurance-coverage dispute. Admiral sought a declaratory judgment in the district court, which exercised its discretion and declined to hear the case. Fire-Dex sued Admiral in state court for damages. Admiral removed that case to federal court and again sought a declaratory judgment. The district court then entered the order at issue on appeal. The court noted “district courts have much more leeway in declining to exercise jurisdiction over a claim for declaratory relief than” one for damages or an injunction. Section 2201(a)’s “discretionary standard applies regardless of whether the declaratory claim is part of a mixed action. But” the court concluded that “when the coercive and declaratory claims in a mixed action are tightly linked, it would most likely be an abuse of discretion to abstain on the declaratory claim.” It found the conflicting approaches used by other circuits “unpersuasive.” Turning to this case, it noted that in “justifying abstention on the declaratory claims, the district court relied on Thibodaux abstention, but” that did not apply. “And it would have been an abuse of discretion to abstain on the declaratory claims under the normal discretionary standard. Why? Because no traditional abstention doctrine supported not exercising jurisdiction over the damages claims, and one of those damages claims turned on the exact same legal issues as the declaratory claims.” Also, the district court could not abstain “from the declaratory claims based on its normal, expansive discretion to not exercise jurisdiction over declaratory claims.” Answering the damages question here required “an answer to the declaratory relief question—and vice-versa.” In addition, “no traditional abstention doctrine stood in the way of the normal rule of mandatory jurisdiction over the breach of contract damages claim. Therefore, it would be an abuse of discretion not to exercise jurisdiction over Fire-Dex’s declaratory claim and Admiral’s mirror-image declaratory counterclaim.” Vacated and remanded.