UNITED STATES COURT OF APPEALS for the Fifth Circuit

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No. 93-2608 Summary Calendar _____________________________________

LESLIE WILTON, ETC., ET AL.,

Plaintiffs-Appellants,

VERSUS

SEVEN FALLS COMPANY, ET AL.,

Defendants-Appellees.

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Appeal from the United States District Court for the Southern District of Texas

______________________________________________________ (June 29, 1994)

Before DAVIS, JONES and DUHÉ, Circuit Judge.

DAVIS, Circuit Judge:

The plaintiffs appeal the district court's order staying this

action for declaratory judgment pending resolution of a later-filed

state court suit. Because we find that the district court did not

abuse its discretion in staying this action, we affirm.

I.

In October 1992, a verdict in excess of $100 million was

rendered against the appellees and others in suits involving a

dispute over the ownership and operation of certain oil and gas

properties. Anticipating litigation based on this verdict, in

December 1992, the plaintiffs/appellants (collectively "London Underwriters") filed a declaratory judgment action pursuant to

in the United States District Court for the Southern

District of Texas. The appellants sought declaration of their

rights and liabilities under several policies of commercial general

liability insurance issued to appellees (collectively the "Hill

Group"). Counsel for the parties thereafter entered into an

agreement whereby London Underwriters agreed to voluntarily dismiss

their declaratory judgment action in exchange for the Hill Group's

agreement to provide London Underwriters two weeks advance notice

prior to commencing any litigation against London Underwriters.

In February 1993, the Hill Group notified London Underwriters

of their intention to file suit in state court. London

Underwriters immediately filed this declaratory judgment action in

the Southern District of Texas. In March 1993, the Hill Group

filed an action against London Underwriters in state court. At

approximately the same time, the Hill Group also filed a Rule 12(b)

motion to dismiss or stay the federal declaratory judgment action.

The district court granted the appellees's Rule 12 motion, staying

the declaratory judgment action pending resolution of the state

court action. London Underwriters appeal.

II.

The district court has broad discretion to grant (or decline

to grant) declaratory judgment. Torch, Inc. v. LeBlanc,

(5th Cir. 1991). This court reviews the dismissal of a

declaratory judgment action for an abuse of discretion. Rowan Cos.

v. Griffin,

(5th Cir. 1989).

2 The district court may consider a variety of factors in

considering whether to grant or deny declaratory relief, including

the existence of a pending state court proceeding in which the

issues might be fully litigated.

Fundamentally, the district court should determine whether the state action provides an adequate vehicle for adjudicating the claims of the parties and whether the federal action serves some purpose beyond mere duplication of effort. The district court should consider denying declaratory relief to avoid gratuitous interference with the orderly and comprehensive disposition of a state court litigation if the claims of all parties can satisfactorily be adjudicated in the state court proceeding.

Matter of Magnolia Marine Transp. Co.,

(5th

Cir. 1992)(internal punctuation and citations omitted).

The pending state court action in this case encompasses the

coverage issues raised by London Underwriters in this declaratory

action. The appellants are parties to the pending state court

action and may assert coverage defenses in that suit. The district

court did not abuse its discretion in concluding that maintenance

of this declaratory judgment action would result in piecemeal

adjudication of the coverage dispute and would reward London

Underwriters's attempts to forum shop. Accordingly, the district

court's order declining to entertain this declaratory judgment

action is affirmed.

AFFIRMED.

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