Suncoast Projects, LLC v. 1031 Canal Development, LLC et al

Filing 51

ORDER AND REASONS granting 40 Motion to Stay. This matter is STAYED and ADMINISTRATIVELY CLOSED. Signed by Judge Carl Barbier on 7/15/21. (cg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
SUNCOAST PROJECTS, LLC
d/b/a HUB STEEL

CIVIL ACTION

VERSUS

20-2791

1031 CANAL DEVELOPMENT,
LLC, ET AL.

SECTION: “J” (1)

ORDER & REASONS
Before the Court is a Motion to Stay (Rec. Doc. 40) filed by Defendants Citadel
Builders, LLC and Travelers Casualty & Surety Company of America. The motion is
opposed by Plaintiff Suncoast Projects, LLC d/b/a/ Hub Steel (Rec. Docs. 43, 47) and
supported by Defendants 1031 Canal Development, LLC and 1031 Canal Owner, LLC
(Rec. Doc. 44). Citadel and Travelers also filed a reply (Rec. Doc. 50). Having
considered the motion and memoranda, the record, and the applicable law, the Court
finds that the motion should be GRANTED.
FACTS AND PROCEDURAL BACKGROUND
This litigation arises from the October 2019 collapse of the Hard Rock Hotel
construction project at 1031 Canal Street, New Orleans, Louisiana. Plaintiff Hub
Steel was a subcontractor on that project and filed this action seeking payment for
labor, materials, and equipment it allegedly furnished to the project. Defendants seek
a stay of these proceedings in light of the 100 lawsuits filed in state court arising out
of the collapse, 62 of which allege that Plaintiff shares responsibility for the collapse.
Defendants contend that resolving Plaintiff’s claims in this action requires first

determining liability for the collapse and therefore request that the Court stay these
proceedings until liability is determined in the state court litigation. Plaintiff
contends that a stay is improper under the Colorado River doctrine.
DISCUSSION
Defendants first contend that the requirements of the Colorado River doctrine
need not be met because the Court can stay these proceedings under its general
discretionary power to control proceedings as set forth in Landis v. North American
Co., 299 U.S. 248, 254 (1936). The Supreme Court specifically distinguished Landis
in Colorado River:
Generally, as between state and federal courts, the rule is that the
pendency of an action in the state court is no bar to proceedings
concerning the same matter in the Federal court having jurisdiction. As
between federal district courts, however, though no precise rule has
evolved, the general principle is to avoid duplicative litigation. This
difference in general approach between state-federal concurrent
jurisdiction and wholly federal concurrent jurisdiction stems from the
virtually unflagging obligation of the federal courts to exercise the
jurisdiction given them.
Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)
(cleaned up) (citing Landis after second sentence; other citations omitted).
A district court’s discretion to stay an action for monetary relief pending the
outcome of state proceedings “is ‘narrowly circumscribed’ by its obligation to hear
cases within its jurisdiction, . . . and the propriety of a stay is governed by the
‘exceptional circumstances’ standard of Colorado River.” Am. Guarantee & Liab. Ins.
Co. v. Anco Insulations, Inc., 408 F.3d 248, 251 (5th Cir. 2005) (citation omitted).
“Colorado River discretion to stay is available only where the state and federal

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proceedings are parallel—i.e., where the two suits involve the same parties and the
same issues.” Id. “If the suits are not parallel, the federal court must exercise
jurisdiction.” Stewart v. W. Heritage Ins. Co., 438 F.3d 488, 491 n.3 (5th Cir. 2006).
Here, there are parallel proceedings because, as Plaintiff admits, it filed an
identical suit in state court. (Rec. Doc. 43, at 3 n.7; see Petition, Suncoast Projects
LLC v. 1031 Canal Development, LLC, No. 2020-08683 (Orleans Par. Civ. Dist. Ct.
Oct. 12, 2020), Rec. Doc. 44-2).
Where parallel proceedings exist, courts consider six factors to determine
whether abstention is appropriate: “1) assumption by either court of jurisdiction over
a res, 2) relative inconvenience of the forums, 3) avoidance of piecemeal litigation, 4)
the order in which jurisdiction was obtained by the concurrent forums, 5) to what
extent federal law provides the rules of decision on the merits, and 6) the adequacy
of the state proceedings in protecting the rights of the party invoking federal
jurisdiction.” Stewart, 438 F.3d at 492.
The first two factors are absent here and therefore weigh in favor of exercising
jurisdiction. See id. The third factor seeks to prevent “piecemeal,” not duplicative,
litigation “and the concomitant danger of inconsistent rulings with respect to a piece
of property.” Id. (quoting Black Sea Invs. v. United Heritage Corp., 204 F.3d 647, 65051 (5th Cir. 2000)). While there is not a traditional res at issue here, there is the
danger of inconsistent rulings with respect to certain property: the insurance funds
available for the collapse. Due to the danger of depleting the available insurance
funds, the state court stayed discovery for approximately one year until a case

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management order was entered that provided for coordinated and efficient discovery.
(See Rec. Doc. 40-6, at 14). Thus, there is the possibility that the judgment in this
case makes satisfaction of a judgment in the state court litigation impossible due to
depletion of the funds. Additionally, given the constraints on discovery in the state
court litigation, there is the danger of conflicting discovery rulings. While Plaintiff
asserts that “there is no reason why the parties to this matter cannot agree on a
reasonable discovery plan to avoid duplication of costs,” it is not hard for the Court to
imagine any of the parties coming to this Court for relief should they receive an
unfavorable discovery ruling in the state court litigation. Finally, considering the
numerous additional parties in the state court litigation, it is not clear that a
judgment in this action would have preclusive effect there. See, e.g., Comer v. Murphy
Oil USA, Inc., 718 F.3d 460, 467 (5th Cir. 2013) (res judicata requires that “the
parties are identical or in privity”). The Court finds that the third factor weighs in
favor of abstention.
The fourth factor, the order in which jurisdiction was obtained, actually
concerns “how much progress has been made in the two actions.” Black Sea, 204 F.3d
at 651 (citation omitted). Thus, even though aspects of the state court litigation were
filed nearly a year before the instant action, essentially immediately after the
collapse, the Court must consider the progress made in each forum. While no progress
has been made in the identical state suit, that is because Plaintiff has voluntarily
withheld service. When considering the state litigation as a whole, considerable more
progress has been made there, as the state court has developed a comprehensive

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discovery plan and resolved matters related to preservation of evidence while
allowing the remains of the structure to be demolished, whereas here, only a standard
scheduling order has been entered and no dispositive motions have been filed. The
progress in the case before the Court is comparable to the progress that had been
made before the district court in Colorado River. See 424 U.S. at 820 (noting “the
apparent absence of any proceedings in the District Court, other than the filing of the
complaint, prior to the motion to dismiss”). The Court finds that the fourth factor
weighs in favor of abstention.
The fifth factor, whether federal law provides the rule of decision on the merits,
is absent here, as only state law claims are asserted. However, the Fifth Circuit has
held that this factor is “at most neutral” unless there are “rare circumstances.” Black
Sea, 204 F.3d at 651. Regarding the applicability of this factor in Colorado River, the
Supreme Court has explained that “although the water rights of the United States
and the Indian tribes were governed in part by federal law, the bulk of the litigation
would necessarily revolve around the state-law water rights of the thousand
nonfederal parties in the case—a factor on which we expressly relied in approving the
District Court’s stay.” Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S.
1, 23 n.29 (1983); see Colo. River, 424 U.S. at 820 (“[W]e also find significant . . . the
extensive involvement of state water rights occasioned by this suit naming 1,000
defendants.”). Here, there are no federal law issues involved, and the litigation
involves the state law rights of the 100-plus plaintiffs (including Plaintiff) claiming
damages from the Hard Rock collapse. The Court finds that the facts of this case

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presents rare circumstances and, therefore, that this factor weighs in favor of
abstention.
The sixth factor, whether Plaintiff’s rights would be adequately protected in
state court, “can only be a neutral factor or one that weighs against, not for,
abstention.” Black Sea, 204 F.3d at 651. The Court finds that Plaintiff’s interests
would be adequately protected in state court given that Plaintiff has already filed an
identical suit there. This factor is neutral.
With two factors favoring jurisdiction, three factors favoring abstention, and
one neutral, the Court finds that abstention is appropriate here.1
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that the Motion to Stay (Rec. Doc. 40) is
GRANTED, and this matter is STAYED and ADMINISTRATIVELY CLOSED.
New Orleans, Louisiana, this 15th day of July, 2021.

CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

The Court is also mindful of the fact that, if this case is not stayed, it may need to be dismissed under
Rule 19 for the inability to join necessary parties, as Defendants contend that many of the non-diverse
state parties, including the project’s engineer and architect, would be needed to be joined to resolve
Plaintiff’s claims.
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