Seneca Ins. Co. v. Strange Land, Inc.

A district court may abstain under the Colorado River doctrine only in extraordinary circumstances, not in an ordinary diversity action seeking damages and rescission under settled principles of state law.  The district court erred in granting a motion for Colorado River abstention in this case which an insurer had filed in federal court seeking rescission of its insurance policy due to misrepresentations in the insurance application, a declaration of non-coverage, and damages or restitution of sums already paid the insured on an earlier claim under the policy.  The laxer Brillhart-Wilton standard for abstention in a suit seeking only declaratory relief since the insurer also sought rescission and damages.  Colorado River abstention is proper only in extraordinary circumstances.  There was nothing extraordinary about this suit.  It raised no difficult or novel issue of state law.  It did not involve water rights or other matters which the state had a strong interest in adjudicating.  None of the other Colorado River factors weighed heavily in favor of abstention.

Ninth Circuit Court of Appeals (Wardlaw, J.); July 5, 2017; 2017 WL 2855082

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