Legacy Odenville LLC v. Wiggins Childs Pantazis Fisher & Goldfarb LLC et al

Filing 28

MEMORANDUM OPINION Signed by Chief Judge Karon O Bowdre on 3/8/17. (SAC )

FILED
2017 Mar-08 AM 10:41
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
LEGACY ODENVILLE LLC,
Plaintiff,
v.
WIGGINS CHILDS PANTAZIS FISHER
& GOLDFARB LLC, et al.,
Defendants.

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Civil Action No.:
2:16-cv-1207-KOB

MEMORANDUM OPINION
Plaintiff Legacy Odenville, LLC filed this suit for a declaratory judgment, seeking a
determination that it had no obligation to Defendants Wiggins Childs Pantazis Fisher & Goldfarb,
LLC or The Robinson Law Firm under an attorneys’ fee agreement related to a contract for the sale
of land parcels. The Defendants have moved to dismiss the complaint. (Doc. 10). Because the
court finds that it should abstain from hearing this matter, it GRANTS the motion and will
DISMISS this case WITHOUT PREJUDICE.
I.

BACKGROUND
The center of this dispute is an attorneys’ fee agreement entered into by Four Star Land

Ventures, LLC and Four Star Properties, LLC with the Defendant Attorneys (“Attorneys”). At the
start of 2008, the Four Star entities were engaged in a dispute with D.R. Horton, Inc. over the sale
of lots in the Legacy Springs subdivision located in St. Clair County, Alabama. 1 Attorneys
represented Four Star throughout this dispute.
In April 2010, Four Star and D.R. Horton settled their dispute. Four Star and the Attorneys

1 The case in St. Clair County Circuit Court was Four Star v. Horton, Case No. CV-2008-90000023.00.

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then entered into a fee agreement. The agreement provided that Four Star would pay the Attorneys
$5,000 per lot sold from the proceeds due Four Star under the sale. If the purchase agreement was
amended or a subsequent agreement between Four Star and D.R. Horton was executed, Attorneys
would receive nine percent of the sales price of those lots.
However, Four Star no longer owns the lots in question. On April 27, 2015, Four Star
executed two deeds both entitled “Deed in Lieu of Foreclosure” in favor of the Plaintiff, Legacy
Odenville, LLC. Attorneys state that the deeds were the result of an agreement reached in
mediation in an action filed in St. Clair County Circuit Court to enforce the fee agreement and stop
a foreclosure action that had been initiated against the property by an entity named Legacy Springs
Bond.
The case is currently still pending. 2 After Legacy Odenville commenced this action,
Attorneys added Legacy Odenville to the state court action. On December 15, 2016, the state court
granted the Attorneys’ motion for partial summary judgment and declared the April 27, 2015,
deeds void. Legacy Odenville has filed a motion for the Circuit Court to reconsider its decision and
has also filed a petition for a writ of mandamus with the Alabama Supreme Court.
II.

LEGAL STANDARD
Generally, federal courts have a “duty to exercise the jurisdiction that is conferred upon

them by Congress.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996). However,
“district courts possess discretion in determining whether and when to entertain an action under
the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional
prerequisites.” Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995); see also Brillhart v. Excess
Ins. Co. of Am., 316 U.S. 491, 495 (1942).
2 Wiggins, Childs, et al. v. Four Star, Case No. CV-2015-9000040.

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The Eleventh Circuit has provided nine factors for a district court to consider in
determining whether to abstain from hearing an action for declaratory relief:
(1) the strength of the state's interest in having the issues raised in the
federal declaratory action decided in the state courts;
(2) whether the judgment in the federal declaratory action would settle the
controversy;
(3) whether the federal declaratory action would serve a useful purpose in
clarifying the legal relations at issue;
(4) whether the declaratory remedy is being used merely for the purpose of
“procedural fencing”—that is, to provide an arena for a race for res judicata
or to achieve a federal hearing in a case otherwise not removable;
(5) whether the use of a declaratory action would increase the friction
between our federal and state courts and improperly encroach on state
jurisdiction;
(6) whether there is an alternative remedy that is better or more effective;
(7) whether the underlying factual issues are important to an informed
resolution of the case;
(8) whether the state trial court is in a better position to evaluate those
factual issues than is the federal court; and
(9) whether there is a close nexus between the underlying factual and legal
issues and state law and/or public policy, or whether federal common or
statutory law dictates a resolution of the declaratory judgment action.
Ameritas Variable Life Ins. Co. v. Roach, 411 F.3d 1328, 1331 (11th Cir. 2005). The “list is neither
absolute nor is any one factor controlling” as the factors “are merely guideposts in furtherance of
the Supreme Court's admonitions in Brillhart and Wilton.” Id. The district court considering
abstention should weigh “the same considerations of federalism, efficiency, and comity that
traditionally inform a federal court's discretionary decision whether to abstain from exercising
jurisdiction over state-law claims in the face of parallel litigation in the state courts.” Id. (quoting
Centennial Life Ins. v. Poston, 88 F.3d 255, 257 (4th Cir.1996)).
III.

DISCUSSION
The court ordered Legacy Odenville to show cause why it should not dismiss this case on

the basis of Brillhart/Wilton abstention. See (Doc. 26). In response, Legacy Odenville argues that

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eight of the Ameritas factors are neutral and one, whether the declaratory remedy is being used to
obtain a race for res judicata, weighs strongly against abstention. However, the factor cited by
Legacy Odenville as weighing in favor of abstention is at best neutral. As discussed below, the
court believes that proceeding with this action would create friction between federal and state
courts, and that the state court is better positioned to resolve this dispute.
1.

Alabama’s Interest

First, the court considers “the strength of the state's interest in having the issues raised in
the federal declaratory action decided in the state courts.” Ameritas, 411 F.3d at 1331. Legacy
Odenville acknowledges that this case will be resolved under Alabama law but states “there does
not appear to be any other Alabama ‘interest’ that would be served or protected by having the issue
decided” in state court. (Doc. 27 at 3). Granted, federal courts are constantly called upon to apply
state law, and so the fact that this case involves only Alabama law claims cannot weigh heavily in
favor of abstention.
However, Alabama does have an additional interest. The validity of Legacy Odenville’s
deeds is a threshold question that the court would have to consider in this case, and courts have
recognized that property law concerns are frequently important state interests. See, e.g., Harper v.
Pub. Serv. Comm'n of W. Va., 396 F.3d 348, 352 (4th Cir. 2005). Given that, the court finds that the
first factor weighs in favor of abstention.
2.

Whether Judgment Would Settle Controversy

The second consideration is “whether the judgment in the federal declaratory action would
settle the controversy.” Ameritas, 411 F.3d at 1331. Legacy Odenville states that “a judgment in
this action would settle the entire controversy between Legacy Odenville and Defendants.” (Doc.
27 at 3). However, the state court action has additional parties who are relevant to resolving the
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broader controversy of whether foreclosure on the land should be enjoined. In determining
whether a judgment in the declaratory judgment action would settle the controversy, the court
should not limit itself to inquiring whether judgment would settle the dispute between the parties in
the federal court action. See Ameritas, 411 F.3d 1331 (abstention proper where federal court action
contained incomplete set of parties and claims); Centennial Life, 88 F.3d at 255 (abstention proper
where state litigation could resolve all matters but federal action would only resolve part).
Therefore, the court finds the second factor also weighs in favor of abstention.
3.

Whether Federal Action Would Serve Useful Purpose

The third factor is “whether the federal declaratory action would serve a useful purpose in
clarifying the legal relations at issue.” Ameritas, 411 F.3d at 1331. The court agrees with Legacy
Odenville that the third factor is neutral. A judgment by either this court or the St. Clair County
Circuit Court would clarify the issues. This factor does not weigh in favor or against abstention.
4.

Procedural Fencing and the Race for Res Judicata

The fourth factor is “whether the declaratory remedy is being used merely for the purpose
of ‘procedural fencing’—that is, to provide an arena for a race for res judicata or to achieve a
federal hearing in a case otherwise not removable.” Ameritas, 411 F.3d at 1331.This factor is the
sole factor Legacy Odenville argues weighs against abstention.
Legacy Odenville claims that Attorneys are the party who initiated a race for res judicata,
and therefore should not be rewarded by having this court abstain from deciding this case. See
(Doc. 27 at 4–5). Legacy Odenville notes that two weeks after it filed this action, the Attorneys
added it as a party to the state court action and moved for summary judgment on the validity of its
deeds, requesting and receiving expedited adjudication of its motion. Such a procedure, Legacy
Odenville feels, was designed to undercut this already-filed action. After all, if Legacy Odenville
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did not have title to the property, it would lack standing to assert its claim in this case.
Undoubtedly, the state court moved at a brisk pace in resolving the Attorneys’ motion.
However, the “procedural fencing” factor is limited to consideration of the plaintiff’s motives, and
Ameritas “did not hint that the court should closely examine or be skeptical of the motives of a
defendant in the declaratory judgment action who later files a parallel action . . . in state court.”
Metro. Prop. & Cas. Ins. Co. v. Butler, No. 4:15-CV-01244-JEO, 2016 WL 2939633, at *4 (N.D.
Ala. May 20, 2016). In Ameritas, the state action was filed after the federal declaratory judgment
action. Ameritas, 411 F.3d at 1331. Ameritas simply does not permit the court to take into account
what Legacy Odenville asks the court to weigh.
Further, the Eleventh Circuit has been even more explicit in later cases. In Triple S Refining
Corp. v. Mount Canaan Full Gospel Church, the district court weighed the Ameritas factors and
abstained from hearing a declaratory judgment action. The defendants had filed a state court action
after the plaintiffs commenced their federal suit for declaratory relief. On appeal, the plaintiffs
argued that the district court improperly weighed the Ameritas factors because it failed to consider
that the defendants had engaged in forum gamesmanship. The Eleventh Circuit roundly rejected
the argument, explaining “[t]hat the action in state court was filed after the federal complaint, in
anticipation of the motion to dismiss, is of no moment” and that the argument was
“indistinguishable from the arguments rejected by this Court in Ameritas.” Triple S Ref. Corp. v.
Mount Canaan Full Gospel Church, 254 F. App'x 762, 763 (11th Cir. 2007). Accordingly, the
court cannot consider the fact that the Attorneys added Legacy Odenville to the state court action
after commencement of this suit as a factor that weighs in favor of this court exercising jurisdiction
over this action.
However, the court cannot conclude that Legacy Odenville engaged this action as an
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anticipatory filing when faced with the prospect of state court litigation. Legacy Odenville was not
an original party to the St. Clair County action, and no indication exists that it filed this action
because it believed it was about to be brought into that case. Accordingly, the court finds that this
factor does not weigh in favor or against abstention.
5.

Increased Friction Between State and Federal Courts

The fifth factor is “whether the use of a declaratory action would increase the friction
between our federal and state courts and improperly encroach on state jurisdiction.” Ameritas, 411
F.3d at 1331. Friction with the state court is inevitable if this court proceeds with this action.
Legacy Odenville acknowledges that “tension” could exist if both suits proceed but argues
that Alabama’s abatement statute requires the state court to dismiss its action. However, the state
court has already determined that the abatement statute does not apply and that it has exclusive
jurisdiction over the property. Legacy Odenville vehemently disagrees with the state court, and in
effect, asks this court to second guess the state court’s determination about state law. Undoubtedly,
Legacy Odenville believes it will be vindicated in its mandamus petition. But this court declines to
consider the petition’s merits, as doing so would inherently create friction with the St. Clair
County Circuit Court. The court is empowered to use its discretion to avoid this “[g]ratuitous
interference” with a state court. Wilton, 515 U.S. at 282.
And that is just the start of the potential friction in this case. If this court elected to hear the
case, it would be immediately confronted with another conflict with the state court. The state court
determined that Legacy Odenville did not have title to the property. Accordingly, Legacy
Odenville would not have standing to sue in this action without title. But Legacy Odenville argues
that because that determination is not final, it should not be given preclusive effect in this case, and
that an earlier judgment from the previous case is the one to which this court should attach
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preclusive effect. See (Doc. 23 at 3–6).
Legacy Odenville might be correct on the preclusive effects of the judgment, but that does
not reduce the friction. If this court decided that the deeds were valid and Legacy Odenville was
the owner of the lots, the court’s opinion and order would directly contradict the state court’s
judgment. Legacy Odenville’s strong objections to the state court’s reasoning do not make that fact
any less true. All of this friction would occur before this court had even considered the merits.
If the court found this case to be justiciable, it would proceed to determine whether Legacy
Odenville owed any obligation to the Attorneys under the Fee Agreement. That precise issue is
currently being litigated in the state court action. If both cases proceeded, a significant risk exists
of either inconsistent judgments or that one case would reach a preclusive determination affecting
the other. Such a procedural posture is precisely the sort of “vexatious” and “uneconomical”
litigation Brillhart/Wilton abstention is meant to forestall. Brillhart, 316 U.S. at 495 (1942). From
jurisdiction to the merits, this case would be wrought with friction with the state court. For that
reason, the court finds that the fifth factor weighs strongly in favor of abstention.
6.

Existence of a Better or More Effective Alternative Remedy

The sixth factor is “whether there is an alternative remedy that is better or more effective.”
Ameritas, 411 F.3d at 1331. This court and the state court could both offer effective remedies, but
because the state court action encompasses all parties and issues, it could offer a better remedy that
could avoid subsequent litigation resulting from inconsistent determinations between this court
and the state court. Therefore, the court finds that the sixth factor weighs for abstention.
7.

Whether Underlying Factual Issues are Important to Informed Resolution and
Whether the State Court is Better Situated to Adjudicate those Facts

The seventh and eighth factors are best addressed together. The seventh factor is “whether

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the underlying factual issues are important to an informed resolution of the case” and the eighth
factor is “whether the state trial court is in a better position to evaluate those factual issues than is
the federal court.”Ameritas, 411 F.3d at 1331.
Legacy Odenville acknowledges that factual issues may be important to determining
whether it has an obligation to Attorneys under the Fee Agreement, but argues that the state court
is in no better position than this court to evaluate those issues. (Doc. 27 at 8). However, the court
notes that the state court would possess an advantage—it would have “all the parties and all of the
evidence before it,” which would enable “the state court . . . to see the whole board, rather than just
the sliver of it presented in federal court.” Lexington Ins. Co. v. Rolison, 434 F. Supp.2d 1228,
1242 (S.D. Ala. 2006). Given the state court’s vantage on the landscape of this litigation, including
the property itself, the court finds that these factors weigh slightly in favor of abstention.
8.

Whether a Close Nexus Exists between Issues and State Public Policy and Whether
Federal Law is Dispositive

The final factor is “whether there is a close nexus between the underlying factual and legal
issues and state law and/or public policy, or whether federal common or statutory law dictates a
resolution of the declaratory judgment action.” Ameritas, 411 F.3d at 1331.
Here, all of the issues will be decided under Alabama law. Federal courts routinely apply
state law, but if a “declaratory judgment action raises only issues of state law and a state case
involving the same state law issues is pending, generally the state court should decide the case and
the federal court should exercise its discretion to dismiss the federal suit.” Williams Co. v. Holmes
County, 343 F.3d 383, 390–91 (5th Cir. 2003). Given that general principle of comity, the court
finds this factor to weigh in favor of abstention.
IV.

CONCLUSION
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The heart of the Brillhart/Wilton inquiry is “whether the questions in controversy between
the parties to the federal suit, and which are not foreclosed under the applicable substantive law,
can better be settled in the proceeding pending in the state court.” Brillhart, 316 U.S. at 495. Given
the state’s interest and the inevitable friction with the state court proceeding, the court believes
abstention to be warranted. None of the Ameritas factors caution against abstention, and several
weigh in favor of it. Ultimately, the question presented in Legacy Odenville’s complaint for
declaratory relief is best answered in state court.
Having found abstention appropriate, the court must also consider whether it should stay or
dismiss this action. In Wilton the Supreme Court stated that “a stay will often be the preferable
course, because it assures that the federal action can proceed without risk of a time bar if the state
case, for any reason, fails to resolve the matter in controversy.” 515 U.S. at 288 n.2. However, no
risk of a time bar has been mentioned by the parties. When that concern is not present, a district
court may dismiss a case without prejudice rather than staying the action. See Ameritas, 411 F.3d
at 1332 (affirming a district court’s decision to dismiss action without prejudice).
Therefore, the court GRANTS the Defendants’ motion and DISMISSES this case
WITHOUT PREJUDICE. The court will enter a separate order accompanying this opinion.

DONE this 8th day of March, 2017.

___________________________________
KARON OWEN BOWDRE
CHIEF UNITED STATES DISTRICT JUDGE

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