                    UNITED STATES COURT OF APPEALS
                         For the Fifth Circuit



                             No. 96-30072


CANAL INDEMNITY COMPANY,

      Plaintiff - Counter Defendant - Appellee,


                                VERSUS


WILBURN CONTAINER X-PRESS INCORPORATED; ET AL.,

      Defendants,                                                  .

FLEXI-VAN LEASING, INC.

      Defendant - Counter Claimant - Appellant



           Appeal from the United States District Court
               For the Middle District of Louisiana

                      (D. Ct. No.94-CV-911)
                            July 26, 1996
Before SMITH, BENAVIDES and DENNIS, Circuit Judges.

PER CURIAM:*

      Appellant-defendant-counter claimant Flexi-Van Leasing, Inc.

appeals the district court’s ruling denying its motion for new

trial and/or for reconsideration and dismissing the counterclaim

without prejudice on December 19, 1995.       The district court had



  *
     Pursuant to Local Rule 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in Local Rule 47.5.4.
previously    issued    an    order    dismissing        without     prejudice     the

declaratory action of plaintiff-appellee, Canal Indemnity Company,

on July 24, 1995.

      District courts’ decisions about the propriety of hearing

declaratory judgment actions, which are necessarily bound up with

their decisions about the propriety of granting declaratory relief,

should be reviewed for abuse of discretion.                Wilton v. Seven Falls

Co., 115 S.Ct. 2137 (1995), affirming Wilton v. Seven Falls Co., 41

F.3d 934, 935 (5th Cir. 1994) (citing Torch, Inc. v. LeBlanc, 947

F.2d 193, 194 (5th Cir. 1991)). It is more consistent with the

Declaratory Judgment Act to vest district courts with discretion in

the first instance, because facts bearing on the declaratory

judgment     remedy’s   usefulness,          and   the     case’s      fitness     for

resolution, are particularly within their grasp. 115 S.Ct. at 2144.

Consequently,    district      courts’       decisions     to   stay    or    dismiss

counterclaims filed in response to a dismissed declaratory judgment

action are matters within the sound exercise of their discretion

and are also reviewable for abuse of that discretion.



      Under the circumstances, we conclude that the district court

acted within the bounds of its discretion in dismissing without

prejudice Flexi-Van’s state law counterclaim, which arises out of

the   same   occurrence      that     formed   the     subject       matter   of   the

declaratory    judgment      action,    and    which     may    be    presented    for

ventilation in parallel proceedings in state court. Thus, the

                                         2
district court’s order dismissing Flexi-Van’s counterclaim without

prejudice and denying its motion on December 19, 1995 is AFFIRMED.




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