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Click here for the full text of this decision FACTS:American Guarantee & Liability Insurance Co., Zurich American Insurance Co. and Royal Indemnity Company appeal the district court’s decision to stay their suit for declaratory relief and restitution against Anco Insulations Inc., pending the outcome of a state proceeding involving American, Zurich and Anco that encompasses some common issues. HOLDING:Vacated and remanded. The district court’s jurisdiction was premised on diversity. By granting the stay, the district court surrendered determination of issues common to the federal and state suits to the state court. The state court’s resolution of those issues will have a preclusive effect in the district court once the stay is lifted. The court concludes that the order is not, therefore, unappealable and may be appealed. One of two standards governs the propriety of a decision to stay based on considerations of wise judicial administration, depending on whether the federal suit is purely declaratory or seeks other relief. If the federal suit seeks only a declaration of rights, the district court’s discretion to stay or dismiss the suit is governed by a standard derived from Brillhart v. Excess Insurance Co. of America, 316 U.S. 491 (1942). If the suit involves a request for monetary or other relief, the district court’s discretion is much narrower, even if declaratory relief is also requested, and the propriety of a stay is governed by the “exceptional circumstances” standard of Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976). The court concludes that, regardless of which standard the district court applied, the district court abused its discretion. Here, American and Zurich a declaration of their rights and liabilities under insurance policies issued to Anco, as well as restitution for amounts it paid to defend or indemnify Anco that may have exceeded the policies’ limits. If the district court’s based its decision only on concerns of wise judicial administration, the Colorado River standard, the stay was inappropriate. So, too, would be the application of the Brillhart standard. While the two competing suits share some issues between American, Zurich and Anco, Royal is not a party to the state suit. In addition, the state action does not encompass Zurich’s claim for restitution. The court thus lacked discretion to stay in favor of the state suit. OPINION:Reavley, J.; Reavley, Jones and Garza, JJ.

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