<i>Wilton /Brillhart</i> Abstention Update

In Reifer v. Westport Ins. Corp., 2014 U.S. App. LEXIS 8014 (3d Cir. Pa. Apr. 29, 2014), the U.S. Court of Appeals for the Third Circuit affirmed a district court's decision to abstain from deciding, and remanded back to state court, an insurance coverage declaratory judgment action. While it is not unusual for federal courts to apply the Wilton/Brillhart abstention doctrine in response to a party motion, this case is remarkable because not only did the district court dismiss the case on its own motion, it did so fully a year after removal, with no parallel state court action pending and after the magistrate judge had issued a 39-page report recommending that the coverage question be answered in the insurer's favor. Reifer represents both a reaffirmance and an extension of the Third Circuit's decision in State Auto Ins. Cos. v. Summy, 234 F.3d 131 (3d Cir. 2000). In Summy, the court reversed, as an abuse of discretion, a district court's decision to exercise its discretionary jurisdiction to issue a declaratory judgment on an insurance coverage issue where a parallel state court proceeding was pending. The Summy court emphasized that district courts should generally defer to state courts to decide unsettled issues of state insurance coverage law by abstaining from exercising their jurisdiction under the Declaratory Judgment Act. Reifer extended the broad discretion of district courts to dismiss declaratory judgment actions to include cases where no parallel state court action is pending. Notwithstanding some token comments by the court in Reifer rejecting abstention on a routine basis, taken together, Reifer and Summy demonstrate the Third Circuit's strong preference for district courts to avoid deciding pure declaratory judgment actions involving unsettled questions of state insurance coverage law ' even where no party has asked that the federal courts abstain.