Winfield Solutions LLC v. Success Grain Inc et al
Filing
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OPINION AND ORDER denying 14 motion to abstain. Signed by Judge J. Leon Holmes on 2/28/2018. (ljb)
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
JONESBORO DIVISION
WINFIELD SOLUTIONS, LLC
v.
PLAINTIFF
No. 3:17CV00329 JLH
SUCCESS GRAIN, INC.;
J. TODD BERRY; GLENNA S. LANE;
and FARM CREDIT MIDSOUTH, PCA
DEFENDANTS
OPINION AND ORDER
Winfield Solutions, LLC, commenced this action in federal court after Farm Credit
Midsouth, PCA, commenced a similar action in Arkansas state court. These actions came about
after Success Grain, Inc., whose corporate officers include J. Todd Berry and Glenna S. Lane,
defaulted on debt obligations to United Suppliers, Inc., a company that has now merged with
Winfield, and Farm Credit. In the state court action, Farm Credit named as a defendant Winfield
US Holdings, LLC, which is related to but separate from Winfield Solutions, LLC. Farm Credit has
moved this Court to abstain from exercising jurisdiction, citing Colorado River Water Conservation
Dist. v. United States, 424 U.S. 800, 96 S. Ct. 1236, 47 L. Ed. 2d 483 (1976).
Federal courts have a “virtually unflagging obligation . . . to exercise the jurisdiction given
them,” id. at 817, 96 S. Ct. at 1246, which “does not evaporate simply because there is a pending
state court action involving the same subject matter.” Federated Rural Elec. Ins. Corp. v. Arkansas
Elec. Cooperatives, Inc., 48 F.3d 294, 297 (8th Cir. 1995). A federal court will not abstain from
exercising jurisdiction under Colorado River, unless there are “pending parallel state and federal
court proceedings.” United States v. Rice, 605 F.3d 473, 476 (8th Cir. 2010). If this threshold
requirement is met, a federal court should still not abstain absent “exceptional circumstances.” Id. at
476. Any doubt as to either step requires the federal court to exercise its jurisdiction. Colorado
River, 424 U.S. at 819, 96 S. Ct. at 1247; Cottrell v. Duke, 737 F.3d 1238, 1245 (8th Cir. 2013).
Winfield argues that Farm Credit can neither show that there are parallel proceedings nor that
there are exceptional circumstances warranting abstention. Proceedings are parallel where the
federal and state court actions bear a “substantial similarity,” which is the case “when there is a
substantial likelihood that the state proceeding will fully dispose of the claims presented in the
federal court.” Id. If a district court is unsure whether the concurrent state and federal proceedings
are parallel, it cannot refuse to exercise its jurisdiction under Colorado River. Id.
Winfield says that this action is not substantially similar to the one in state court because it
has asserted additional claims. In the state action, Farm Credit brought claims for foreclosure and
in replevin. Document #14-1. In this action, Winfield has raised breach-of-contract claims against
Berry and Lane based on guaranties that they executed in favor of Winfield. Document #1.
Although these claims likely arise out of the same “transaction or occurrence which is the subject
matter” of the state action, they would only be cross-claims in the state action and, thus, would not
be compulsory claims. See Ark. R. Civ. P. 13(f). Foreclosure claims are distinct from contract
claims, and judgment on the former will not necessarily dispose of the latter. Fru-Con Const. Corp.
v. Controlled Air, Inc., 574 F.3d 527, 536 (8th Cir. 2009).
It is, therefore, not certain that the proceedings are parallel because there is not a substantial
likelihood that a judgment on the state claims will fully dispose of Winfield’s contract claims raised
in this action. Being so, this Court cannot refuse to exercise its jurisdiction. Farm Credit’s motion
to abstain is DENIED. Document #14.
IT IS SO ORDERED this 28th day of February, 2018.
________________________________
J. LEON HOLMES
UNITED STATES DISTRICT JUDGE
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