U.S. Bank National Association v. Ribeiro

Filing 27

ORDER Denying 10 Motion to Dismiss, or alternatively, to remand to state court. Signed by Judge James C. Mahan on 2/14/2012. (Copies have been distributed pursuant to the NEF - SLR)

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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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U.S. BANK NATIONAL
ASSOCIATION,

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2:11-CV-1534 JCM (PAL)

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Plaintiff,

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v.

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JOHNNY A. RIBEIRO, JR.,

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Defendants.

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ORDER

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Presently before the court is defendant Johnny A. Ribeiro’s motion to dismiss or,

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alternatively, to remand to state court. (Doc. #10). Plaintiff U.S. National Bank Association,

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successor in interest to Bank of America, N.A., in its capacity as a trustee (“USBNA”), filed an

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opposition to this motion. (Doc. #13).

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I.

Background

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This case arises out of the alleged failure of the guarantors of a promissory note to honor the

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guaranty after the borrower’s default. On or about December 21, 2004 Tenaya Quail, LLC,

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(“borrower”) borrowed $7,300,000 from Countrywide Commercial Real Estate Finance, Inc. See

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Compl. ¶ 9. On the same day, defendant Johnny A. Ribeiro, Jr. (“defendant” or “guarantor”)

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executed an “Exceptions to Non-Recourse Guaranty” (the “guaranty”), guarantying the note. See

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Compl. ¶ 13. USBNA currently holds the note, the guaranty, and other loan documents. See Compl.

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¶ 17. Borrower defaulted on April 11, 2011, and USBNA accelerated the note, notifying the

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James C. Mahan
U.S. District Judge

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borrower and guarantors of the default and acceleration. See Compl. ¶ 18.

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On or about August 2, 2011, USBNA filed a complaint in the Eighth Judicial District Court

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for the State of Nevada against the borrower, seeking entry of an order appointing a receiver to

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assume control over the property. Mot. Dismiss 3:13-17. That action resulted in an order placing

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the subject property in receivership. Mot. Dismiss 3:17-18. On September 23, 2011, USBNA

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demanded in writing that the guarantor immediately pay the full amount due on the note, $4,178,866,

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but he has refused. See Compl. ¶ 25. USBNA then initiated this diversity action, alleging breach

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of contract and breach of the implied covenant of good faith and fair dealing.

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Defendant moves to dismiss, contending that this court lacks jurisdiction under the prior

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exclusive jurisdiction doctrine. Alternatively, defendant argues abstention is appropriate pursuant

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to Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976).

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II.

Discussion

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A.

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Under the prior exclusive jurisdiction doctrine, a federal court will dismiss property claims

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for lack of jurisdiction where a state court has first exercised jurisdiction over the property at issue.

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See, e.g., Wolf v. Dist. Court, 235 F. 69, 73 (9th Cir. 1916) (dismissing a later-filed federal complaint

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regarding possession where a prior state complaint regarding ownership was pending). In the present

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case USBNA has sued the borrower in state court, and the state court has put the subject property

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into receivership. However, the case before this court is an in personam contract dispute, not a

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dispute over property. The present suit seeks monetary relief, not control or possession of property.

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This case, therefore, does not conflict with the state court’s control over the property at issue. The

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court, therefore, has jurisdiction.

Prior Exclusive Jurisdiction Doctrine

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B.

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In the alternative, the defendant asks the court to abstain under Colorado River. In that case,

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the Supreme Court ruled that even when jurisdiction is not lacking, abstention may be appropriate

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to promote “(w)ise judicial administration, giving regard to conservation of judicial resources and

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comprehensive disposition of litigation.” Colorado River Water Conservation Dist. v. United States.

Colorado River Abstention

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James C. Mahan
U.S. District Judge

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at 817. The Colorado River doctrine is designed to increase the overall efficiency of related

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litigation in federal and state courts. Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460

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U.S. 1, 14-15 (1983). The decision is “highly weighted in favor of the exercise of jurisdiction.” Id.

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at 16.

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This court, however, finds that the Colorado River doctrine is inapplicable to this case

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because there is no state court action that involves the same parties. Rather, the state court action

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is a limited action that sought (and succeeded) in having the state court appoint a receiver over the

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security. The defendants here, the guarantors, are being sued on the guaranty, which is separate and

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distinct from the promissory note and property which secures the note. Because guarantors do not

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benefit from the “one action rule,” a separate suit may be brought against them. See Coombs v.

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Heers, 366 F. Supp. 851 (D. Nev. 1973).

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Where the state court action is limited solely to having a receiver appointed over the property

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and the federal action seeks to collect from the guarantors, this court does not find that the “two

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proceedings are ‘substantially similar.’” Nakash v. Marciano, 882 F.2d 1411, 1416 (1989) (holding

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that substantial similarity is sufficient basis for abstaining pursuant to Colorado River).

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that defendant Johnny A.

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Ribeiro, Jr.’s motion to dismiss, or alternatively, to remand to state court (doc. #10) be, and the same

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hereby is, DENIED.

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DATED February 14, 2012.

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UNITED STATES DISTRICT JUDGE
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James C. Mahan
U.S. District Judge

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