Travelers Property Casualty Company of America v. Associated Engineers, Inc.

Filing 20

MEMORANDUM OPINION & ORDER by Chief Judge Joseph H. McKinley, Jr on 12/2/13; The motion by Defendant, Associated Engineers, Inc., to dismiss the action pursuant to the Colorado River doctrine of abstention 12 is GRANTED. The Court will enter a Judgment consistent with this Opinion.cc:counsel (JBM)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
OWENSBORO DIVISION
CIVIL ACTION NO. 4:13CV-00092-JHM
TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA, as subrogee of
Board of Education of Hopkins County, Kentucky

PLAINTIFF

vs.
ASSOCIATED ENGINEERS, INC.

DEFENDANT

MEMORANDUM OPINION AND ORDER

This mater is before the Court on a motion by Defendant, Associated Engineers, Inc., to
permanently stay or, in the alternative, dismiss the action pursuant to the Colorado River doctrine
of abstention [DN 12]. Fully briefed, this matter is ripe for decision.
I. BACKGROUND
On July 24, 2013, Plaintiff, Travelers Property Casualty Company of America
(hereinafter “Travelers Property”) as subrogee of the Board of Education of Hopkins County
(hereinafter “Board”), filed suit against Defendant, Associated Engineers, Inc. (hereinafter
“Associated”), in this Court alleging negligence and breach of contract. Travelers Property
alleges that the Board contracted with JKS Architects & Engineers for the design of a new
Career and Technology Center (“Tech Center”). Prior to construction of the Tech Center, the
Board retained the services of Associated to perform a geotechnical study of the property in
question to determine whether it was suitable for construction. Associated concluded the site
was suitable for construction. Associated also served as the structural engineer and the civil
engineer on the project.

After construction of the Tech Center began, but before it was

completed, the foundation and concrete slabs began to settle due to the inability of the soil

condition under the building to support the building’s weight. Travelers Property alleges that
Associated breached a duty of care ordinarily exercised by members of the engineering
profession and breached a verbal contract with the Board. Travelers Property, the Board’s
insurer, states that it paid to, or on behalf of, the Board an amount in excess of $75,000 as a
direct result of the building settlement.
Prior to Travelers Property filing this action, the Board filed an action in Hopkins Circuit
Court on July 20, 2012, against Associated and Travelers Property. In the state action, the Board
filed claims against Associated for negligence in providing engineering services, for breach of
contract to perform geotechnical engineering services, and for breach of the contract between the
Associated and JKS Architects & Engineers of which the Board contends it is a third-party
beneficiary. The Board also asserted claims against Travelers for breach of contract for its
failure to pay the Board additional monies under the insurance policy and for bad faith.
II. DISCUSSION
Associated argues that the Court should stay, or in the alternative, dismiss the action
under the doctrine announced by the Supreme Court in Colorado River Water Conservation
District v. United States, 424 U.S. 800 (1976). Under the Colorado River abstention doctrine,
federal courts have a “narrow exception” to their “virtually unflagging obligation . . . to exercise
the jurisdiction given them” where there is (1) “parallel” litigation pending in state court, and (2)
the proposed litigation in federal court would be duplicative or unwise. Id. at 817–818; Bates v.
Van Buren Tp., 122 Fed. Appx. 803, 806 (6th Cir. 2004); Gottfried v. Medical Planning Servs.,
Inc., 142 F.3d 326, 329 (6th Cir. 1998).
A. Parallel Litigation
The threshold question in the Colorado River abstention analysis is whether there are
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parallel proceedings in state court. Crawley v. Hamilton County Comm’rs, 744 F.2d 28, 31 (6th
Cir. 1984). To be “parallel” the proceedings have to be “substantially similar.” Romine v.
Compuserve Corp., 160 F.3d 337, 340 (6th Cir. 1998). This does not mean that the parties or the
claims have to be identical. Heitmanis v. Austin, 899 F.2d 521, 528 (6th Cir. 1990). “However,
cases are not considered parallel if there is an issue that would not be resolved by the state court
upon the completion of the state court action.” Kopacz v. Hopkinsville Surface and Storm Water
Utility, 714 F. Supp. 2d 682, 686 (W.D. Ky. 2010)(citing E.ON U.S. Services, Inc. v. QSC
Painting, Inc., 2008 WL 3982499 (E.D. Ky. Aug. 26, 2008); PNC Bank, National Assoc. v.
Person, 2007 WL 1423744 (W.D. Ky. May 8, 2007)). See also Wright v. Linebarger Googan
Blair & Sampson, LLP, 782 F.Supp.2d 593, 603–604 (W.D. Tenn. 2011). “‘The issue is not . . .
whether the proceedings could be modified to make them parallel; the issue is whether the state
court proceeding, as it currently exists, is a parallel state-court proceeding.’” Kopacz, 714
F.Supp.2d at 686–687 (quoting PNC Bank, 2007 WL 1423744) (citing Baskin v. Bath Tp. Bd. of
Zoning Appeals, 15 F.3d 569, 572 (6th Cir. 1994)) (emphasis in original). If the Court
determines the two concurrent actions in state and federal court are parallel, it must then weigh
various factors that “rest on considerations of wise judicial administration, [and give] regard to
conservation of judicial resources and comprehensive disposition of litigation.” Romine, 160
F.3d at 339 (quotations omitted).
In the present case, Travelers Property acknowledges that the state and federal actions are
substantially similar and appears to concede that the actions are parallel. However, while
acknowledging the similarity of the actions, Travelers Property then attempts to distinguish the
instant action from the state action by arguing that the issues are not similar because it has not
asserted any tort or contract claims against Associated in the state action. Travelers Property
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maintains that it opted to file a separate federal action in an effort to avoid the comingling of the
Board’s claims for insurance coverage and bad faith against Travelers Property in the state action
with Travelers Property’s independent tort and contract claims against Associated. Travelers
Property insists that the commingling of these issues in the state action would likely cause
confusion and unavoidable prejudice to Travelers Property’s recovery rights. This argument is
unavailing.
The Plaintiffs in these two actions are essentially the same considering that Travelers
Property is the subrogee of the Board, at least with respect to the amount paid by Travelers
Property thus far. See Factory Mutual Ins. Co. v. The BOC Group, Inc., 2005 WL 2978721, *2
(N.D. Ill. Nov. 2, 2005). Travelers Property alleges negligence and breach of contract claims
against Associated in this action, which are the same claims brought by the Board against
Associated in the state action. In fact, the essential issues in the state action are generally
whether Associated was negligent in providing engineering services and whether it breached a
contract. Both claims involve the same construction, the same building, the same alleged acts of
negligence, the same contracts and services, the same witnesses, and the same damages. Thus,
Travelers Property’s claims here are substantially the same as those asserted by its subrogor in
the state action. Any perceived prejudice of adjudicating both the negligence and contract claims
against Associated and the contract and bad faith claims against Travelers Property can be
adequately addressed by the state court’s bifurcation of the proceedings. Traveler Property’s
claims here are substantially the same as those in the state court action. Accordingly, the Court
finds that the proceedings are parallel for purposes of Colorado River abstention.
B. Other Colorado River Factors
The second step of the Colorado River analysis requires the Court to consider the
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interests of judicial economy and federal-state comity as embodied in the following factors:
(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(citations omitted). According to the Sixth Circuit, these
factors necessitate “‘a careful balancing as they apply in a give[n] case’ depending on the
particular facts at hand.” Id. at 341 (quoting Moses H. Cone Mem. Hosp. v. Mercury Constr.
Group, 460 U.S. 1, 15-16 (1983)). The Court finds that balancing of the factors weigh in favor
of abstention in this case.
The first factor is neutral as it does not appear that the state has assumed jurisdiction over
any res or property claims. The second factor, the convenience of the federal forum, weighs
slightly in favor of abstention as the property and Associated are located in Hopkins County, the
location of the state court.
In considering the third factor, because both the federal action and the state action
involve resolution of the Board’s negligence and contract claims against Associated, proceeding
with the federal action while the state action is continuing will likely result in piecemeal
litigation. “Piecemeal litigation occurs when different courts adjudicate the identical issue,
thereby duplicating judicial effort and potentially rendering conflicting results.” Romine, 160
F.3d at 341. If Travelers Property is permitted to prosecute its complaint here, there will be
substantial duplication of effort by both the courts and the parties. See Healy v. Fifth Third
Mortgage Co., 2011 WL 577385, *4 (E.D. Ky. Feb. 9, 2011).
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Additionally, there could

potentially be double recovery against Associated given that both the Board and Travelers
Property assert the same cause of action against Associated. Therefore, abstention will avoid this
result.
The remaining factors also weigh in favor of abstention. The state action was filed over a
year prior to the federal action, and no significant substantive action has occurred in the federal
action. In contrast, written discovery has occurred in the state action. In fact, an agreed
amended scheduling order has been tendered to the Court by the parties with an expert disclosure
deadline of November 1, 2013, for the Plaintiff and January 1, 2014 for the Defendants; a
discovery deadline of May 1, 2014; and a pretrial conference scheduled for May 12, 2014.
Additionally, the Board noticed depositions in the state court action; however, the depositions
were subsequently cancelled on August 23, 2013, approximately a month after Travelers
Property filed the federal action. Further, while concurrent jurisdiction exists, jurisdiction in this
Court is based solely upon diversity and application of state law will ultimately determine the
controversy. Finally, the Court is satisfied that Travelers Property’s rights would be adequately
protected in the state court action. See Sharp v. Bannon, 258 S.W.2d 713, 715 (Ky. 1953)(A
subrogee stands in the shoes of its subrogor and has no greater cause of action than would the
subrogor.).
Balancing the Colorado River factors, the Court finds these factors heavily favor
abstention.
C. Stay or Dismiss the Action
While the Court recognizes that when abstention is appropriate under the Colorado River
doctrine, the general course of action is to stay the proceeding pending the conclusion of the state
action. Healy, 2011 WL 577385, *5. However, in the present case, the Court finds that
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dismissal is appropriate. Once the state action is complete, there will be no remaining issues in
the federal action. Thus, the Court will grant Associated’s motion to dismiss this case pursuant
to the Colorado River abstention doctrine.
III. CONCLUSION
Based on the foregoing, and this Court being otherwise fully and sufficiently advised, IT
IS HEREBY ORDERED that the motion by Defendant, Associated Engineers, Inc., to dismiss
the action pursuant to the Colorado River doctrine of abstention [DN 12] is GRANTED. The
Court will enter a Judgment consistent with this Opinion.

cc: counsel of record
December 2, 2013

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