EMCASCO Insurance Company; Employers Mutual Casualty Company v. Barry Walker

United States Court of Appeals
For the Eighth Circuit
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No. 23-2425
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EMCASCO Insurance Company; Employers Mutual Casualty Company
Plaintiffs - Appellants
v.
Barry Walker; All Pro Contracting, Inc.; Bear Lake Property Investments, LLC;
Lori Cogburn; Brandy Cox; Bryce G. Walker; Jaydin Cotter; Lissette Neomi
Ramos Cortez; Taylor Bowen Squires; Kenny Taylor, as Next Friend of C.T., a
Minor; Kaila Deatherage, as Next Friend of K.M.B., a Minor; Harold Cates, as
next of friend of R.C. and H.T., a minor; Allyson Coster; Kate Lynn Owens; Scott
Withers; Heather Graves, as next of friend of M.A., a minor; Jana Bradford; Joyce
Perser
Defendants - Appellees
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Appeal from United States District Court
for the Western District of Arkansas - Hot Springs
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Submitted: January 9, 2024
Filed: July 15, 2024
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Before BENTON, ERICKSON, and KOBES, Circuit Judges.
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KOBES, Circuit Judge.

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EMCASCO Insurance Company and Employers Mutual Casualty Company
(together, EMC) appeal from the district court’s1 dismissal of their declaratory
judgment action and denial of their motion for reconsideration. We affirm.
I.
After Barry Walker pleaded guilty to sex crimes against children, several of
his victims filed a tort action against him and others in Arkansas state court. EMC
insured Walker during periods of his depravity, so it sued the victims, Walker, and
the other state tort defendants in federal court, seeking a declaration that it does not
have a duty to defend or indemnify Walker. Less than three months later, the victims
filed their own declaratory judgment case against EMC, Walker, and the other tort
defendants in Arkansas state court, except that they sought a declaration that EMC
does have a duty to defend and indemnify Walker.
With a dueling action in hand, the victims moved to dismiss EMC’s first-filed
federal complaint. The district court noted that it had “broad discretion to decline to
exercise jurisdiction” given the parallel state court action and dismissed the case. It
also denied EMC’s motion for reconsideration, reasoning that there was no
“compelling reason to reverse its discretionary decision” despite EMC’s strident
claims that the state court judge was biased.
II.
Under the Declaratory Judgment Act, a district court “may declare the rights
and other legal relations of any interested party seeking” a declaration. 28 U.S.C.
§ 2201(a) (emphasis added). This “textual commitment to discretion” spares the
court from its otherwise “‘virtually unflagging obligation’ to exercise the jurisdiction
conferred on [it] by Congress.” Wilton v. Seven Falls Co., 515 U.S. 277, 284, 286
1 The Honorable Susan O. Hickey, Chief Judge, United States District Court
for the Western District of Arkansas.

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(1995) (quoting Colo. River Water Conservation Dist. v. United States, 424 U.S.
800, 817 (1976)); Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494 (1942)
(observing that a district court is “under no compulsion to exercise” jurisdiction
under the Declaratory Judgment Act).
The scope of a district court’s discretion to dismiss a declaratory judgment
action—known as Wilton/Brillhart abstention—depends on the particular facts of a
case. We start with the “threshold determination” of whether there are parallel state
and federal declaratory judgment actions. See Lexington Ins. Co. v. Integrity Land
Title Co., 721 F.3d 958, 968 (8th Cir. 2013). There is no dispute here that the same
parties are litigating the same issues in both forums, so the actions are parallel. See
Scottsdale Ins. Co. v. Detco Indus., Inc., 426 F.3d 994, 997 (8th Cir. 2005). This
means that the district court “has much broader discretion in determining whether to
exercise jurisdiction,” and we have much narrower reason to find abuse of that
discretion. See id. at 996 (citing Wilton, 515 U.S. at 282–90).
Of course, “we do not mean that the district court may do whatever pleases
it.” Verizon Commc’ns, Inc. v. Inverizon Int’l, Inc., 295 F.3d 870, 872–73 (8th Cir.
2002) (citation omitted). It instead “should determine if the question[s] in
controversy would be better settled in the proceedings in the state court.” Cincinnati
Indem. Co. v. A & K Constr. Co., 542 F.3d 623, 625 (8th Cir. 2008) (emphasis
added). Beyond whether the actions are parallel, this analysis includes whether the
“issues [are] governed by federal law,” “whether all claims can be decided in state
court, and whether all parties are joined and amenable to process there.” Id. The
court should also consider judicial economy and weigh what may be practical, all
while keeping “attention to avoiding gratuitous interference with state proceedings.”
See Lexington, 721 F.3d at 967 (cleaned up) (quoting Brillhart, 316 U.S. at 495).
The district court found that the state and federal actions are parallel and that
Arkansas law governs this case. It then weighed considerations of judicial economy
and practicality, observing that the same judge is overseeing both the state tort and
declaratory judgment actions and that the federal action “ha[d] only been pending

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for a few months and ha[d] not approached the dispositive stage.” It also reckoned
that abstention “avoid[ed] the potential of having the parallel proceedings continue
for an extended period before one proceeding reache[d] a resolution and functionally
nullifie[d] the time spent on the other through res judicata.” We have concluded
under less compelling circumstances that the questions in controversy “w[ould] be
better settled in” a state court action and accordingly abstained, see Cincinnati
Indem., 542 F.3d at 625 (concluding that the “district court erred by not abstaining”
where the actions were parallel, state law controlled, all parties were joined in state
court, and the proceedings there were adequate to resolve the issues), so we have no
issue with the district court doing so here.
EMC objects, arguing that district courts may abstain only after finding that
some legal issue is “better settled” in state court. See Capitol Indem. Corp. v.
Haverfield, 218 F.3d 872, 875 (8th Cir. 2000). But Haverfield simply cautioned
against exercising jurisdiction in cases where it may be “prudent to allow the state
courts to resolve their own split of authority rather than having a federal district court
issue a nonprecedential interpretation of the issue.” Lexington, 721 F.3d at 972–73
(citing Haverfield, 218 F.3d at 875); see also GEICO Cas. Co. v. Isaacson, 932 F.3d
721, 725 (8th Cir. 2019) (distinguishing Haverfield and affirming exercise of
jurisdiction). It did not disturb the “unique breadth of [a district court’s] discretion
to decline to enter a declaratory judgment.” Cf. Wilton, 515 U.S. at 283, 287
(cautioning that where parallel proceedings raising the same state law issues exist,
without more, “a district court might be indulging in ‘gratuitous interference’” if it
exercises jurisdiction (cleaned up) (citation omitted)).
This case is in the heartland of the Wilton/Brillhart abstention doctrine
because it involves a parallel state court proceeding and exclusively state law issues.
See Wilton, 515 U.S. at 280; Brillhart, 316 U.S. at 492–93. The district court did
not abuse its “unique and substantial discretion,” Wilton, 515 U.S. at 286, by
deciding that “it would be uneconomical as well as vexatious for [it] to proceed in
[EMC’s] declaratory judgment suit,” Brillhart, 316 U.S. at 495.

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III.
EMC also appeals from the district court’s denial of its Federal Rule of Civil
Procedure 60(b) motion for reconsideration, which we review for clear abuse of
discretion. Wagstaff & Cartmell, LLP v. Lewis, 40 F.4th 830, 842–43 (8th Cir.
2022). EMC argued that the state court judge was required to recuse under the
Arkansas Code of Judicial Conduct and that he had and would continue to issue
unfair rulings against EMC.
EMC continues to attack the state court judge and the Arkansas courts in
general and urges us to find that the district court had to reverse course and keep the
case. We have no reason to believe that these arguments have any merit, but at the
very least, we cannot say the district court clearly abused its discretion by denying
the motion for reconsideration. Noting that the “potential bias of the state court
judge was not a dispositive factor in [its] order of dismissal,” the district court
observed that EMC’s concerns could “be adequately handled by state court
processes.”2 We agree.
IV.
Invoking the words of Chief Justice John Marshall, EMC insists that our
decision today will undermine “the right of incorporated aliens, or citizens of a
different state from the defendant, to sue in the national courts.” Bank of U.S. v.
Deveaux, 9 U.S. (5 Cranch) 61, 88 (1809). We don’t think so; we simply follow the
2 And that’s exactly what happened. Before EMC filed its brief in this appeal,
the state court judge recused from both the tort and declaratory judgment cases, and
the Arkansas Supreme Court appointed a new judge. EMC insists that we must close
our eyes to these facts since they occurred after the district court entered judgment.
But see State Farm Mut. Auto Ins. Co. v. Griffin, 240 F. App’x 734, 735 (8th Cir.
2007) (per curiam) (observing how “subsequent events [] proved that” the party’s
arguments on appeal had “[no] merit”). Assuming without deciding that dubious
contention is true, we affirm the district court’s decision without relying on later
facts that proved it to be entirely correct.

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text of the Declaratory Judgment Act. Cf. Pub. Affs. Assocs., Inc. v. Rickover, 369
U.S. 111, 112 (1962) (per curiam) (“The Declaratory Judgment Act was an
authorization, not a command. It gave the federal courts competence to make a
declaration of rights; it did not impose a duty to do so.”).
We affirm the district court’s judgment.
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