Woody's Restaurant, LLC et al v. Travelers Casualty Insurance Company of America
Filing
23
MEMORANDUM OPINION AND ORDER: It is ordered that Pla's 13 Motion to Remand to State Court is DENIED. Signed by Judge Joseph M. Hood on 10/1/2013. (SCD)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
WOODY’S RESTAURANT, LLC,
et al.,
Plaintiffs,
v.
TRAVELERS CASUALTY INSURANCE
COMPANY OF AMERICA,
Defendant.
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Civil Case No.
5:12-cv-92-JMH
MEMORANDUM OPINION
AND ORDER
***
This matter is before the Court upon Plaintiffs’ Motion to
Remand.
[D.E. 13].
Defendant has filed a Response [D.E. 20]
and Plaintiffs filed a Reply.
fully
briefed,
and
the
Court
[D.E. 22].
being
This matter being
otherwise
sufficiently
advised, Plaintiffs’ Motion is ripe for review.
I. Procedural Background
Plaintiffs originally filed this suit in the Boyle County
Circuit Court, seeking monetary damages.
removed the action to this Court.
[D.E. 1-1].
[D.E. 1].
Defendant
Plaintiff now asks
the Court to remand this matter back to the Boyle County Circuit
Court based on the Colorado River abstention doctrine.
[D.E.
13].
Plaintiffs claim Colorado River abstention is appropriate
in this matter because of a parallel proceeding ongoing in Boyle
County Circuit Court.
The alleged parallel proceeding was filed
by
Coast
United
Advertising
Co.,
Inc.
(hereinafter
United”) against Plaintiffs and Defendant.
this
action
is
parallel
because
“Coast
Plaintiffs aver that
Coast
United
has
asserted
identical claims against Defendant as Plaintiffs have asserted
against
Defendant
in
this
Court.
[D.E.
13-1
at
2].
Furthermore, the claims arise out of the lack of payment on an
insurance
policy
property.
for
the
[D.E. 13].
same
damage
to
the
same
piece
of
In other words, Plaintiffs and Coast
United are both seeking to recover from Travelers for damage
sustained to the same building. The only difference is that
Plaintiffs’ claims are before this Court and Coast United’s are
before the Boyle County Circuit Court.
The
Court
construes
Plaintiffs’
Motion
as
a
motion
abstain, requesting remand as the form of relief.
to
However,
“federal courts have the power to dismiss or remand cases based
on abstention principles only where the relief being sought is
equitable or otherwise discretionary.”
Quackenbush v. Allstate
Ins. Co., 517 U.S. 706, 731 (1996). Plaintiffs have requested
monetary damages; therefore, this Court may not remand based on
abstention
whether
it
principles.
should
stay
Nonetheless,
the
action
abstention doctrine.
2
the
under
Court
the
will
analyze
Colorado
River
II. Standard of Review
“Abstention from the exercise of federal jurisdiction is
the exception, not the rule.”
Colorado River Water Conservation
Dist. v. United States, 424 U.S. 800, 813 (1976).
‘virtually
exercise
unflagging
the
obligation
jurisdiction
of
given
the
“Despite the
federal
to
considerations
them,’
courts
of
judicial economy and federal-state comity may justify abstention
in
situations
involving
the
contemporaneous
jurisdiction by state and federal courts.”
Corp.,
160
F.3d
337,
339
(6th
Cir.
exercise
of
Romine v. Compuserve
1998)
(quoting
Colorado
River, 424 U.S. at 817).
For Colorado River abstention to apply, there must first be
a parallel state proceeding.
Crawley v. Hamilton Cnty. Comm’rs,
744
1984).
F.2d
28,
31
(6th
Cir.
If
there
is
a
parallel
proceeding, there are eight factors that must be considered: (1)
whether the state court has assumed jurisdiction over any res or
property; (2) whether the federal forum is less convenient to
the
parties;
(3)
avoidance
of
piecemeal
litigation;
(4)
the
order in which jurisdiction was obtained; (5) whether the source
of governing law is state or federal; (6) the adequacy of the
state court action to protect the federal plaintiff’s rights;
(7) the relative progress of the state and federal proceedings;
and
(8)
the
presence
or
absence
of
concurrent
jurisdiction.
Romine, 160 F.3d at 340-41 (citing Colorado River, 424 U.S. at
3
818-19; Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 21-28 (1983); Will v. Calvert Fire Ins. Co., 437 U.S.
655
(1978)).
“These
mechanical checklist.
of
the
important
factors,
however,
do
not
comprise
a
Rather, they require a ‘careful balancing
factors
as
they
apply
depending on the particular facts at hand.”
in
a
given
case’
Id. at 341 (quoting
Moses H. Cone, 460 U.S. at 15-16).
The balancing of the factors
should
favor
be
“heavily
jurisdiction.”
weighted
in
of
the
exercise
of
Moses H. Cone, 460 U.S. at 16.
III. Analysis
The
first
step
in
analyzing
whether
Colorado
River
abstention is appropriate is to determine if the action before
this Court and the state action are parallel proceedings.
Crawley
v.
Hamilton
Cnty.
Comm’rs,
744
F.2d
at
31.
See
“Exact
parallelism is not required; it is enough if the two proceedings
are substantially similar.”
omitted)
(internal
Romine, 160 F.3d at 340 (citations
quotation
marks
omitted);
see
also
Total
Renal Care, Inc. v. Childers Oil Co., 743 F. Supp. 2d 609, 613
(E.D.
Ky.
2010)
(quoting
New
Beckley
Mining
Corp.
v.
Int’l
Union, United Mine Workers of Am., 946 F.2d 1072, 1073 (4th Cir.
1991)) (“Suits are parallel if substantially the same parties
litigate substantially the same issues.”).
The action before
this Court and the state court action involve the withholding of
payment on an insurance policy for the same damage to the same
4
piece
of
property
in
Danville,
Kentucky.
Plaintiffs
and
Defendant in this action are named as defendants in the state
court
action.
identical
The
claims
plaintiff
against
in
the
Defendant
state
court
Travelers
assert in the action before this Court.
as
asserts
Plaintiffs
See [D.E. 1-1; 13-2].
The plaintiff in the state court action, Coast United, is not
present before this Court, but that is not determinative of
whether the proceedings are parallel.
Total Renal Care, Inc.,
743 F. Supp. 2d at 614 (citations omitted) (“[T]he presence of
additional
parties
necessarily
in
destroy
one
suit
but
parallelism.”).
not
As
the
other
both
will
not
actions
may
determine what, if any, Travelers owes, and to whom, as well as
if Travelers violated several Kentucky statutes, the Court finds
that
the
proceedings
before
this
Court
and
the
proceedings
before the state court have enough similarities to be considered
parallel.
Having found the actions to be parallel, the Court will
balance the factors enumerated above to determine if abstention
is appropriate.
The first factor to be balanced is “whether the
state court has assumed jurisdiction over any res or property.”
Romine, 160 F.3d at 340.
This is an action to determine if
insurance proceeds should be paid.
There is no real property
over which to assert jurisdiction and neither party has asserted
that the state court has exercised jurisdiction over specific
5
monies.
The
Colorado
River
decision
was
concerned
with
jurisdiction over a specific piece of property, namely, water
rights,
not
an
interpretation
of
an
insurance
policy.
See
Crawley v. Hamilton Cnty. Comm’rs, 744 F.2d at 31 (citations
omitted) (“[T]he cases relied upon by the Court in
Colorado
River for the res exception all dealt with the disposition of
property.”).
This
factor
weighs
in
favor
of
exercising
jurisdiction.
The second factor is “whether the federal forum is less
convenient to the parties.”
Romine, 160 F.3d at 340-41.
This
factor “relates to geographical considerations,” not whether the
state court “can resolve every issue in a single proceeding.”
PaineWebber, Inc. v. Cohen, 276 F.3d 197, 207 (6th Cir. 2001).
Plaintiffs have conceded that the federal forum is not less
convenient because all of the parties can easily travel to the
federal forum [D.E. 13-1 at 5], and Defendant agreed.
at
5].
Thus,
this
factor
weighs
in
favor
[D.E. 20
of
exercising
of
piecemeal
jurisdiction.
The
third
litigation.”
factor
Romine,
is
160
the
F.3d
“avoidance
at
341.
This
consideration that was paramount in Colorado River.”
Cone,
460
different
duplicating
U.S.
courts
at
19.
“Piecemeal
adjudicate
judicial
the
effort
identical
and
6
litigation
“the
Moses H.
occurs
issue,
potentially
is
when
thereby
rendering
conflicting
results.”
Romine,
160
F.3d
at
341
(citations
omitted).
If both suits go forth in this matter there is only a
possibility,
addressed
by
not
a
both
certainty,
courts.
that
the
Plaintiff
same
issue
Woody’s,
would
the
be
Travelers
insurance policy holder, has not asserted a cross-claim against
Defendant Travelers in the state court action.
Rather, Coast
United, the plaintiff in the state court action, is claiming
that
it
is
an
intended
beneficiary
of
the
insurance
policy
issued by Travelers to Woody’s, and the proceeds should be paid
to it as an intended beneficiary.
before
addressing
Travelers
violated
breached
Kentucky
[D.E. 13-2 at 9].
the
issues
the
insurance
statutes,
the
before
this
contract
state
Therefore,
Court,
with
court
whether
Woody’s
will
have
or
to
determine if Coast United has a right to sue on the insurance
policy.
If the state court determines Coast United was not an
intended beneficiary of the insurance policy, the state court
will never address the issues presented to this Court.
Thus,
this case may or may not present the possibility of inconsistent
determinations,
duplicative
and,
issues
even
concerned
if
it
does,
in
Colorado
the
River
significant
will
not
present.
It is true, as the defendants suggest, that the
defendants could face inconsistent verdicts. They
could be found liable in state court and not liable in
7
be
federal court, or vice versa. But that is not really
the danger that Colorado River was concerned about. In
Colorado River, the state and federal litigation both
concerned rights to the same water. If the state court
held that the plaintiffs were entitled to the water
but the federal court held that the defendants were
entitled to the same water, there would be a serious
problem. Avoiding that intractable situation was the
primary impetus behind the federal court’s abstention
in Colorado River. The possible danger from piecemeal
litigation here is much less concerning.
Total
Renal
Care,
Inc.,
743
F.
Supp.
2d
at
616;
see
also
Colorado River, 424 U.S. at 816 (citations omitted) (“[T]he mere
potential for conflict in the results of adjudications, does
not,
without
more,
jurisdiction.”).
warrant
staying
exercise
of
federal
Because this matter does not present the same
“intractable situation” as Colorado River, and this Court and
the
state
court
may
not
even
be
forced
to
decide
the
same
issues, the avoidance of piecemeal litigation factor does not
support the extraordinary remedy of abstention.
The fourth factor is “the order in which jurisdiction was
obtained.”
Romine, 160 F.3d at 341.
The federal action was
removed to this Court on March 29, 2012 [D.E. 1], and the state
court action was not filed until July 9, 2012.
1].
This
militates
in
favor
of
exercising
[D.E. 13-2 at
jurisdiction.
However, this factor should be analyzed in conjunction with the
seventh
factor,
proceedings.
the
progress
of
the
state
and
federal
See Moses H. Cone, 60 U.S. at 21 (“[P]riority
should not be measured exclusively by which complaint was filed
8
first, but rather in terms of how much progress has been made in
the
two
actions.”).
While
there
may
have
been
more
motion
practice in the state court proceeding, due to more parties
being involved, [D.E. 13-1 at 7], a bankruptcy stay has just
been lifted in both actions.
See [D.E. 14].
Therefore, both
cases are still in the early stages of litigation.
Thus, the
order of jurisdiction, and more importantly, the progress of the
state
and
federal
jurisdiction.
seventh
proceedings
weigh
in
favor
of
exercising
See PaineWebber, Inc., 276 F.3d at 208 (“The
factor,
however,
once
again
points
toward
exercising
federal jurisdiction, because the state court action has not
progressed to any significant degree.”).
The fifth factor is “whether the source of governing law is
state or federal.”
Romine, 160 F.3d at 341.
The causes of
action are for breach of contract and various alleged violations
of Kentucky statutes [D.E. 1-1], thus, state law governs the
action.
when
However, “the source-of-law factor is less significant
the
states
jurisdiction.”
and
federal
courts
have
concurrent
Bates v. Van Buren Twp., 122 F. App’x 803, 807
(6th Cir. 2004) (citing Moses H. Cone, 460 U.S. at 25).
There
is concurrent jurisdiction; therefore, this factor, if anything,
militates in favor of abstention.
The sixth factor analyzes “the adequacy of the state action
to protect the federal plaintiff’s rights.”
9
Romine, 160 F.3d at
341.
There is no suggestion that Plaintiffs’ rights would not
be protected in state court.
abstaining.
This factor weighs in favor of
See PaineWebber, Inc., 276 F.3d at 208 (“[T[he
sixth factor . . . presents the strongest basis for abstaining,
because
the
state
PaineWebber’s
court
action
interests.”).
is
However,
adequate
the
Court
to
is
protect
cognizant
that, while the issues before this Court and the state court are
the
same,
the
Plaintiffs’
before this Court.
claims
against
Travelers
are
only
Thus, as to Plaintiffs’ claims, there is
nothing for the state court to protect.
The final factor asks whether the state and federal court
have concurrent jurisdiction.
Romine, 160 F.3d at 341.
This
factor favors abstention because this Court and the state court
have concurrent jurisdiction over the matter.
See
Blake v.
Wells Fargo Bank, N.A., 917 F. Supp. 2d 732, 738 (S.D. Ohio
2013) (“[T]he fact that there is concurrent jurisdiction between
the
state
and
federal
courts
evinces
a
policy
favoring
abstention.”).
The balancing of the factors weighs in favor of the Court
exercising
adequacy
presence
its
of
of
abstaining.
jurisdiction.
the
state
concurrent
court
Only
to
the
protect
jurisdiction
governing
Plaintiff,
weigh
in
law,
the
and
the
favor
of
However, the Court must remember that the fact that
state law governs is tempered because this Court and the state
10
court have concurrent jurisdiction, and that Plaintiffs’ claims
are
not
before
the
state
court.
The
most
important
consideration, the avoidance of piecemeal litigation, may not
even be an issue in this case, and, even if there are identical
issues presented, this case does not present the same situation
as Colorado River because neither court has taken jurisdiction
over
res.
The
Court
also
notes
that
the
party
potentially
subject to inconsistent determinations of liability, Travelers,
has
asked
this
Court
to
retain
jurisdiction.
Given
that
abstention “is the exception,” Colorado River, 424 U.S. at 813,
this
Court
finds
extraordinary
appropriate
that
this
circumstances
and
will
case
where
adhere
to
does
abstention
its
obligation” to exercise jurisdiction.
not
present
has
“virtually
been
the
found
unflagging
Id. at 817 (citations
omitted).
IV. Conclusion
Accordingly,
IT
IS
ORDERED
that
Plaintiff’s
Remand [D.E. 13] be, and the same hereby is, DENIED.
This the 1st day of October, 2013.
11
Motion
to
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