M.L.R. Painting and Wallcovering, Inc. v. Hartford Fire Insurance Company

Filing 25

MEMORANDUM OPINION AND ORDER denying the 20 Motion to Stay. Signed by Honorable William Keith Watkins on 4/15/2010. (Attachments: # 1 Civil Appeals Checklist)(br, )

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IN THE UNITED STATES DISTRICT COURT F O R THE MIDDLE DISTRICT OF ALABAMA E A S T E R N DIVISION M .L .R . PAINTING AND WALLCOVERING, INC., P la in tif f , v. H A R T F O R D FIRE INSURANCE CO., D e f e n d a n t. ) ) ) ) ) ) ) ) ) N O . 3:09-CV-979-WKW [WO] M E M O R A N D U M OPINION AND ORDER B e f o re the court is Defendant Hartford Fire Insurance's motion to stay this litigation p e n d in g the resolution of a state court suit. (Doc. # 20.) As described in the court's opinion d e n yin g the motion to dismiss (Doc. # 13), this is a suit between a subcontractor and the is su e r of the payment bond on a construction contract. In the state court suit, filed March 22, 2 0 1 0 , in the Circuit Court of Mobile County, Alabama, the general contractor, WhiteS p u n n e r Construction, Inc., is suing Plaintiff in this case, M.L.R. (Doc. # 20, Ex. 1.) The s u it apparently concerns the same project and underlying facts at issue here. I. DISCUSSION M .L .R . opposes the motion to stay (Doc. # 22), arguing that staying the case would b e inconsistent with the law governing the conduct of parallel state and federal proceedings c o n c e rn in g the same matter. See Colo. River Water Conservation Dist. v. United States, 424 U .S . 800, 817 (1976); Moorer v. Demopolis Waterworks & Sewer Bd., 374 F.3d 994, 997 (1 1 th Cir. 2004). The Colorado River doctrine permits a federal court to abstain from hearing a case based on the pendency of a related state court case only in "exceptional c irc u m s ta n c e s , " given that "federal courts have a `virtually unflagging obligation . . . to e x e rc ise the jurisdiction given them.'" Moorer, 374 F.3d at 997 (quoting Colorado River, 424 U .S . at 817-18). There are six factors to be considered in determining whether "exceptional c irc u m s ta n c e s " favoring abstention exist. They are: (1 ) the order in which the courts assumed jurisdiction over property; (2) the re la tiv e inconvenience of the fora; (3) the order in which jurisdiction was o b ta in e d and the relative progress of the two actions; (4) the desire to avoid p ie c e m e a l litigation; (5) whether federal law provides the rule of decision; and (6 ) whether the state court will adequately protect the rights of all parties S e e id. (citing TransSouth Fin. Corp. v. Bell, 149 F.3d 1292, 1294-95 (11th Cir. 1 9 9 8 )). T h e first factor is not relevant to this case. The second does not weigh in favor of a f in d in g of extraordinary circumstances, given that the underlying events occurred in Auburn, A la b a m a , which is within the Middle District of Alabama, and that both parties in this case a re incorporated and headquartered outside Alabama. If anything, Mobile, Alabama, which h a s no apparent connection to the parties or facts of this case,1 would appear to be a less c o n v e n ie n t venue than Opelika, Alabama, which is only a few miles from Auburn, and is the lo c a tio n of the federal courthouse for the Eastern Division of the Middle District of Alabama. Finally, the court notes that it already resolved the issue of whether a forum selection clause Mobile is, apparently, the location of White-Spunner Construction, Inc.'s, headquarters. (Doc. # 7, Ex. 1.) 1 2 mandated venue in Mobile County Circuit Court in its prior opinion (Doc. # 13), finding that it did not and that venue was appropriate in this court. The third factor clearly weighs against abstention, because this case was filed on O c to b e r 20, 2009, over five months before the filing of the state court case. A scheduling o rd e r has been entered in this case and discovery is ongoing, while the state court case is p re s u m a b ly only in its preliminary stages. The fourth factor might seem to be implicated by th e shared subject matter of the two cases, but the Eleventh Circuit has rejected arguments th a t abstention based on a fear of "piecemeal litigation" should be triggered simply because b o th cases deal with, for example, the validity of the same agreement. To justify abstention, th e piecemeal litigation must be "abnormally excessive or deleterious." Ambrosia Coal & C o n s tr . Co. v. Pages Morales, 368 F.3d 1320, 1333 (11th Cir. 2004). The court notes that h e re , the two suits involve two different agreements the payment bond and the underlying s u b c o n tra c t. In any event, there has been no showing that refusing to abstain would result in piecemeal litigation outside the mainstream. F if th , this case does solely concern questions of state law. As with the previous f a c to r, though, precedent is clear that this factor only weighs in favor of abstention in "rare c irc um stances," Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 , 25-26 (1983), such as when a case involves "complex questions of state law that a state c o u rt might be best suited to resolve." Pages Morales, 368 F.3d at 1334. Here, only o rd in a ry state contract law is at issue, and federal courts determine such issues of state law 3 on a regular basis. The sixth factor, the adequacy of the state forum, is only relevant when o n e forum is "inadequate to protect a party's rights." Id. F u rth e r, the court must agree in part with M.L.R.'s contention that the initiation of the s ta te litigation and subsequent motion to stay were, if not "vexatious," at least "reactive" to th e court's earlier ruling on the motion to dismiss. See id. at 1331, 1334. After the denial o f the motion to dismiss, which had been premised on a forum selection clause in the s u b c o n tra c t between White-Spunner and M.L.R., White-Spunner filed the state court suit, f o llo w e d almost immediately by Hartford's seeking of the motion to stay in this court.2 E ss e n tia lly, then, Hartford again seeks to avoid litigating this case in federal court, on the b a s is that after the motion to dismiss was denied, its insured initiated a new case in the state c o u rt where it wanted this case to be from the start. If a defendant could avoid the result of lo s in g a motion to dismiss for improper venue by refiling the case as plaintiff (or having an e n tity with which it is in privity file as plaintiff) in the court where it would like to be, then m o v in g to stay the original suit, the result would be to encourage gamesmanship and waste ju d ic ia l resources in deciding the original motion. I I . CONCLUSION F o r the foregoing reasons, it is ORDERED that the motion to stay (Doc. # 20) is D E N IE D . The motion to compel the setting of deposition dates (Doc. # 23) remains pending 2 White-Spunner and Hartford are represented, in their respective suits, by the same counsel. 4 before the Magistrate Judge, with the understanding that there is not now any reason why d is c o v e ry should not proceed as scheduled. D O N E this 15th day of April, 2010. /s/ W. Keith Watkins UNITED STATES DISTRICT JUDGE 5

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