LTF Real Estate, Inc. v. Premier Site Development, LLC
Filing
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OPINION AND ORDER by Judge James H Payne ; dismissing/terminating case (terminates case) ; finding as moot 4 Motion for Summary Judgment (Documents Terminated: 14 MOTION for Hearing ) (pll, Dpty Clk)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
LTF REAL ESTATE COMPANY, INC.,
a Minnesota corporation
)
)
)
Plaintiff,
)
)
v.
)
)
PREMIER SITE DEVELOPMENT, L.L.C., )
an Oklahoma limited liability company
)
)
Defendants.
)
)
Case No. 12-CV-132-JHP-FHM
OPINION AND ORDER
Before the Court are Plaintiff LTF Real Estate Company, Inc.’s (LTF) Motion for Summary
Judgment (Motion),1 Defendant’s [sic] Premier Site Development, L.L.C. (Premier) Objection to
Plaintiff’s Motion for Summary Judgment (Response),2 and Plaintiff’s Reply to Defendants’ [sic]
Response to Plaintiff’s Motion for Summary Judgment(Reply).3 For the reasons detailed below, the
Court declines to exercise its jurisdiction pursuant to 28 U.S.C. §2201. Plaintiff’s Motion for
Summary Judgment is MOOT. Plaintiff’s Complaint is DISMISSED WITHOUT PREJUDICE.
BACKGROUND
The instant case arises from a payment dispute between a Summit Civil Contractors, L.L.C.
(Summit), a subcontractor for the construction arm of LTF, and Defendant Premier, another
subcontractor working for Summit, for work on a project involving real property owned by Plaintiff
1
Docket No. 4.
2
Docket No. 11.
3
Docket No.13.
1
LTF.4 Upon not being paid by Summit, Defendant forwarded a pre-lien notice to Plaintiff LTF and
to the general contractor as required by Oklahoma State title 42, §142.6.5 This pre-lien notice was
subsequently amended twice, and with each amended notice, an amended mechanic’s and
materialmen’s lien was filed with the Tulsa County Clerk.6 The last lien was filed on March 23,
2012.7
On March 3, 2012, approximately one month after the initial lien was filed, Plaintiff’s filed
this declaratory action in this Court pursuant to 28 U.S.C.§2201.8 Plaintiff’s filed the instant Motion
for Summary Judgment simultaneously with its Complaint, asking this Court to find that
Defendant’s pre-lien notices were inadequate under Oklahoma Law, and therefore the liens against
Plaintiff’s property are void as a matter of law.9 In support of its Motion, Plaintiff further offers that
the Defendant’s liens are unnecessary because Defendant’s have a remedy available based on their
current suit against Summit in Osage County District Court.10
DISCUSSION
The Declaratory Judgment Act provides, in pertinent part, that “[i]n a case of actual
controversy within its jurisdiction, . . . any court of the United States, upon the filing of an
4
Motion at 1, Docket No. 2, Response at 1, Docket No. 11.
5
Response at 1, Docket No. 11.
6
Id. at 1-2.
7
Id. at 2.
8
See Complaint at 2, Docket No. 2.
9
See Motion at 5, Docket No. 4.
10
Reply at 4, Docket No. 13.
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appropriate pleading, may declare the rights and other legal relations of any interested party seeking
such declaration, whether or not further relief is or could be sought.”11 Both the Supreme Court and
the Tenth Circuit have made clear that, although the Declaratory Judgment Act gives federal courts
competence to make a declaration of party rights, it does not impose any duty to do so.12
The Supreme Court has “repeatedly characterized the Declaratory Judgment Act as an
enabling Act, which confers a discretion on the courts rather than an absolute right upon the
litigant.”13 District Courts have the discretion whether and when to hear declaratory actions “even
when the suit otherwise satisfies subject matter jurisdictional prerequisites.”14 “In the declaratory
judgment context, the normal principle that federal courts should adjudicate claims within their
jurisdiction yields to considerations of practicality and wise judicial administration.”15
Consistent with the nonobligatory nature the Act, the Court may make the determination as
to whether or not a declaratory action furthers the purposes of the Declaratory Judgment Act at any
stage of the proceeding.16 Further, the Court need not provide the parties with notice or an
11
28 U.S.C. §2201.
12
State Farm Fire & Cas. Co., v. Mhoon, 31 F.3d 979, 982 (citing Public Affairs Assoc.
Inc v. Rickover, 369 U.S. 111, 112, 82 S.Ct. 580, 581, 7 L.Ed.2d 604 (1962)).
13
Wilton v. Seven Falls Co., 515 U.S. 277, 287, 115 S.Ct. 2137, 2143, 132 L.Ed.2d 214
14
Id. at 282.
15
Id. at 288.
(1995).
16
See Harpin v. Oakley Custom Homes, Inc., 232 F.3d 901(Table), 2000 WL 1531819, *3
(10th Cir.2000)(“The district court may make this determination at various stages of the
proceedings. If a district court determines after the complaint is filed that issuing a declaratory
judgment would not serve the purposes of the Act, it has no obligation to adjudicate the merits
before staying or dismissing the action”) (citing Wilton, 515 U.S. at 288).
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opportunity for argument before deciding to dispose of a declaratory action.17
In State Farm Fire & Casualty Company v. Mhoon, the Tenth Circuit adopted an expanded
list of factors the district court must weigh when deciding whether or not to hear a declaratory
action.18 These include:
[1] whether a declaratory action would settle the controversy; [2] whether it would
serve a useful purpose in clarifying the legal relations at issue; [3] whether the
declaratory remedy is being used merely for the purpose of “procedural fencing” or
“to provide an arena for a race to res judicata ”; [4] whether use of a declaratory
action would increase friction between our federal and state courts and improperly
encroach upon state jurisdiction; and [5] whether there is an alternative remedy
which is better or more effective.19
Looking to these factors and applying them to the instant case, Plaintiff’s proposed
declaratory action would do little to settle the instant controversy. Whether or not the pre-lien notice
materially complied with Oklahoma statutes is a mere piece of the greater state court breach of
contract action, of which Plaintiff is at least tangentially a part.20 Although a finding for the Plaintiff
could settle the controversy as to the validity of the lien, such a finding is far from clear, and the
underlying breach of contract action would remain. Further, if the Court finds for the Defendant,
the instant declaratory action will have effectively accomplished nothing.
As to Mhoon’s second factor, the case could potentially clarify some of the legal relations
17
Id.
18
Mhoon, 31 F.3d 979, 983 (10th Cir.1994).
19
Id.
20
The Court recognizes the two actions are not necessarily “parallel proceedings.”
However, the facts underlying both cases do offer a degree of similarity that should necessarily
be considered in this Court’s Mhoon analysis. See U.S. v. City of Las Cruces, 289 F.3d 1170,
1182(10th Cir.2002) (“We now hold the degree of similarity should be considered in the
evaluation of the Brillhart/Mhoon factors, rather than considered as a threshold condition”).
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at issue, but not all. The lien at issue is part of a greater controversy involving the general contractor,
allegedly owned and/or operated by Plaintiff, and between the two subcontractors. The lien itself
represents what is often the sole bargaining chip in such disputes, and a decision for Plaintiff would
allow them to exit the litigation unscathed having already received the fruits of the allegedly
breached contract. Under this possible result, legal relations between Plaintiff and Defendant are
clarified as to the lien, but Defendant would retain other avenues of legal recourse against the
Plaintiff. As a result, the possible clarification of rights and duties provided by a resolution of
Plaintiff’s claims is minimal at best.
This Court considers closely the third factor of the Mhoon analysis: whether the declaratory
remedy is being used merely for the purpose of "procedural fencing" or "to provide an arena for a
race to res judicata." This case, if filed by Defendant as a direct action, would clearly satisfy the
diversity jurisdiction requirements of 28 U.S.C. §1332, and would be removable to this Court.
Consequently, the Court does not believe this suit is an attempt at improper “procedural fencing.”
However, Plaintiff’s action on the lien issue does present the trappings of a “race to res
judicata.” The instant action roughly parallels the state court contract action, and at present, the lien
comprises Plaintiff’s only tie to that action. As noted above, it is apparent to the Court that the
impetus of Plaintiff’s declaratory action is to hopefully remove its own skin from the game by
getting a judgment from this Court as to the lien. In doing so, Plaintiff likely hopes to preempt any
action against it in state court by Defendant. Consequently, this suit suggests a proverbial “race to
the courthouse” for which the declaratory judgment door is often closed.21
21
See, e.g., Great American Insurance Co. v. Houston General Insurance Co., 735
F.Supp. 581, 586 (S.D.N.Y.1990).
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The fourth Mhoon factor also weighs heavily in this Court’s analysis. The validity of the
disputed lien presents complex, and as of yet unanswered, questions of Oklahoma state law with
regard to pre-lien notice requirements. Specifically, questions arise as to whether Defendant’s notice
was sufficient under the statute and whether, under principles of equity, Defendant’s second
amended notice, presented after the statutory deadline, can be related back to the time of the first
notice. Because of this, the instant action presents a situation where there is not only a possibility
of friction between the state and federal courts, but also of encroachment by the federal court based
on conflicting interpretations of Oklahoma law.
The Court recognizes that, absent exceptional circumstances, the presence of questions of
state law alone does not justify a refusal of a federal court to entertain a declaratory action.22
However, Plaintiff’s declaratory action presents unsettled questions of state law that may ultimately
require certification of those questions to the Oklahoma Supreme Court. Because of this, Plaintiff’s
action also implicates the fifth factor of Mhoon: whether there is an alternative remedy which is
better or more effective.
Ruling on Plaintiff’s declaratory action in this Court will require the Court to (1) examine
Plaintiff’s arguments, (2) certify any appropriate questions to the Oklahoma Supreme Court for
resolution, and (3) wait on that court’s resolution in order to effect final adjudication. All this
occurring while the state court contract action between the contractors proceeds through the
Oklahoma trial court. Consequently, final adjudication of Plaintiff’s declaratory action will require
a doubly duplicitous expenditure of the judicial resources, where the ultimate resolution requires
22
Guardian Life Ins. Co. of America v. Kortz, 151 F.2d 582, 586 (10thCir.1945).
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proceedings in this Court and parallel proceedings in two state courts.
Multiple remedies exist that are far superior to this jurisdictional quagmire. For example,
Plaintiff could join the state Court litigation and ask for a declaration of its rights under state law
in that forum. Plaintiff could further wait out the underlying state court litigation, which may
ultimately obviate Plaintiff’s need for relief. In this Court’s view, Plaintiff’s declaratory action is
the least efficient of its remedial options.
Plaintiff’s action fails each of the Mhoon factors, and therefore fails to demonstrate that
hearing Plaintiff’s action in this forum would further the aims of the Declaratory Judgment Act. The
court reiterates that “[i]n the declaratory judgment context, the normal principle that federal courts
should adjudicate claims within their jurisdiction yields to considerations of practicality and wise
judicial administration.”23 In terms of practical or efficient judicial administration, resolution of
Plaintiff’s claim by this Court at this time appears both impractical and unwise.
CONCLUSION
For all of the foregoing reasons, this Court declines to exercise jurisdiction over Plaintiff’s
declaratory action pursuant to 28 U.S.C. §2201. Plaintiff’s Complaint is DISMISSED WITHOUT
PREJUDICE.24 Plaintiff’s Motion for Summary Judgment is MOOT.25
23
Wilton, 515 U.S. at 288.
24
Docket No. 2.
25
Docket No. 4.
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