Elliott Roofing LLC v. Jedson Engineering Inc

Filing 30

ORDER granting in part and denying in part 19 Motion to Dismiss or in the Alternative to Stay. The Clerk is directed to Administratively terminate this action without prejudice to the right of any party to file a motion to reopen within 30 days after the entry of a judgement in the Miller case. Signed by Honorable Timothy D. DeGiusti on 3/9/2017. (mb)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
ELLIOTT ROOFING, LLC,

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)
Plaintiff,
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v.
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JEDSON ENGINEERING, INC.,
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Defendant/Third-Party Plaintiff, )
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v.
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)
CP KELCO U.S. INC.,
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Third-Party Defendant.
)

Case No. CIV-16-980-D

ORDER
Before the Court is CP Kelco’s Motion to Dismiss or, in the Alternative, Stay
[Doc. No. 19]. Third-Party Defendant CP Kelco U.S., Inc. (“CPK”) seeks a dismissal or
stay of this action under the Colorado River 1 abstention doctrine due to a parallel state
court proceeding between the parties. Alternatively, CPK moves for a dismissal of the
Third-Party Complaint of Defendant Jedson Engineering, Inc. (“Jedson”) pursuant to
Fed. R. Civ. P. 12(b)(3) and (6). CPK contends Jedson does not state a third-party claim
that can properly be asserted under Fed. R. Civ. P. 14(a), and that a mandatory forum
selection clause in their contract renders venue improper in this judicial district.

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

Both Plaintiff Elliott Roofing, LLC (“Elliott”) and Jedson have responded in
opposition to the Motion. Elliott asserts that abstention is not warranted, but takes no
position regarding dismissal of the Third-Party Complaint. Jedson agrees that abstention
is not appropriate, and contends its third-party action against CPK can properly be
brought in this forum. CPK has filed a timely reply brief and, on January12, 2017, filed
an authorized supplemental brief. To date, no further briefing has been requested. Thus,
the Court finds that CPK’s Motion is fully briefed and ripe for decision.
Factual and Procedural Background
This case concerns a construction project at CPK’s manufacturing facility in
Okmulgee County, Oklahoma. Elliott provided roofing work on the project under a
contract with Jedson, which was CPK’s prime contractor. Elliott initiated this breach of
contract action against Jedson in the District Court of Oklahoma County, Oklahoma, on
July 21, 2016, alleging nonpayment for its work. Elliott also filed a lien against CPK’s
property in Okmulgee County. Another subcontractor seeking payment for its work on
the project initiated a breach of contract and lien foreclosure action in the District Court
of Okmulgee County on August 8, 2016. See Miller Valve & Controls, Inc. v. Jedson
Eng’g, Inc., Case No. CJ-2016-127 (Dist. Ct. Okmulgee Cty., Okla.). The defendants in
the Miller case are Jedson, CPK, and other subcontractors, including Elliott, all of which
have asserted claims against each other. All of the parties’ claims in this case (as well as
additional claims) are asserted in the Miller case.

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After Miller was filed, Jedson was served with process in this case, and promptly
removed the case to federal court on August 25, 2016. The Court initially found that the
Notice of Removal failed to establish subject matter jurisdiction based on diversity of
citizenship, and directed Jedson to file an amendment. Jedson cured the deficiency by the
Second Amended Notice of Removal filed September 12, 2016, and then promptly filed
its Third-Party Complaint against CPK on September 16, 2016.
The primary focus of CPK’s Motion is federal abstention. CPK contends this case
and the Miller case constitute parallel actions because every claim asserted in this case
has also been filed in Miller. CPK argues that all relevant factors identified in Colorado
River, and additional factors recognized in Moses H. Cone Memorial Hospital v. Mercury
Construction Corp., 460 U.S. 1 (1983), weigh in favor of abstention and the dismissal or
stay of this action. For reasons discussed infra, the Court is persuaded that abstention is
warranted and, therefore, does not reach the remainder of CPK’s asserted grounds for
dismissal.
Abstention
The Colorado River doctrine authorizes a federal court to abstain from hearing a
case within its jurisdiction due to the existence of a parallel state court proceeding. See
Rienhardt v. Kelly, 164 F.3d 1296, 1302 (10th Cir. 1999). The doctrine rests on a desire
for judicial economy, not constitutional concerns about federal-state comity, and requires
a determination that “there exist ‘exceptional circumstances, the clearest of justifications,
that can suffice under Colorado River to justify the surrender of jurisdiction.’” Id. at
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1303 (quoting Moses H. Cone, 460 U.S. at 25-26) (emphasis added in Rienhardt). Under
this doctrine, a district court has the power to stay or dismiss a case in deference to a
concurrent state court proceeding; “the avoidance of duplicative litigation . . . is at the
core of the Colorado River doctrine.” D.A. Osguthorpe Family P’ship v. ASC Utah, Inc.,
705 F.3d 1223, 1233 (10th Cir. 2013).
In deciding the application of the Colorado River doctrine, a threshold issue is
whether the federal and state actions are parallel. See United States v. City of Las Cruces,
289 F.3d 1170, 1182 (10th Cir 2002); Fox v. Maulding, 16 F.3d 1079, 1081 (10th Cir.
1994). In determining this issue, an “exact identity of parties and issues is not required.
Rather, state and federal proceedings are sufficiently parallel if ‘substantially the same
parties litigate substantially the same issues.’” Las Cruces, 289 F.3d at 1182 (quoting
Fox, 16 F.3d at 1081 (internal quotation omitted)).
This case clearly parallels the Miller case, given the undisputed fact that all of the
parties to this case are simultaneously asserting the same claims against each other in that
case. Although the Miller case involves additional parties and claims, 2 this difference
does not alter the fact that this case, as between the parties involved, is duplicative of a
state court proceeding involving identical claims.

2

Publicly available state court records regarding the Miller case show that additional parties have
been added and a substantial amount of motion practice has occurred in state court while CPK’s Motion
has been pending in this case, but the Miller case has not proceeded to trial.
See
http://www.oscn.net/dockets/GetCaseInformation.aspx?db=okmulgee&number=CJ-2016-127. The Court
can properly take judicial notice of such records. See Tal v. Hogan, 453 F.3d 1244, 1265 n.24 (10th Cir.
2006); see also Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).

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The Supreme Court has identified four factors to consider in determining whether
to invoke the Colorado River doctrine: “(1) whether the state or federal court first
assumed jurisdiction over the same res; (2) ‘the inconvenience of the federal forum’;
(3) ‘the desirability of avoiding piecemeal litigation’; and (4) ‘the order in which
jurisdiction was obtained by the concurrent forums.’” Osguthorpe, 705 F.3d at 1234
(quoting Colorado River, 424 U.S. at 818). Under the fourth factor, “priority should not
be measured exclusively by which complaint was filed first, but rather in terms of how
much progress has been made in the two actions.” Moses H. Cone, 460 U.S. at 21.
Further, the factors are not a “mechanical checklist;” instead, “[t]he weight to be given
any one factor may vary greatly from case to case, depending on the particular setting of
the case.” Id. at 16. In Moses H. Cone, the Supreme Court “supplemented its original
Colorado River framework with additional factors for courts to weigh when deciding the
appropriateness of abstention[:] . . . whether ‘federal law provides the rule of decision on
the merits,’ and whether ‘the state-court proceedings adequately protect the litigants’
rights.” Osguthorpe, 705 F.3d at 1235 (quoting Moses H. Cone, 460 U.S. at 23, 26-27)
(citations omitted).
Upon consideration of the pertinent factors in this case, the Court finds that
abstention is warranted under the circumstances. First, the Miller case involves claims to
foreclose and determine the priority of liens against real property, and to this extent, the
state court is exercising authority over a res that may be outside the jurisdiction of this
Court. The second factor is neutral; no party can persuasively contend either forum is
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more convenient than the other. “The state and federal courthouses involved . . . are at no
great geographical distance from each other, and no party has suggested any physical or
logistical inconvenience suffered as a result of litigating in dual forums.” Osguthorpe,
705 F.3d at 1234. Similarly, the fourth factor does not favor either forum; neither case
has consumed a substantial amount of judicial resources to date. Although discovery has
begun in the Miller case and the case has presumably advanced further than this one, no
showing has been made that the state court has yet decided any substantial issue. 3 There
is no contention that any federal law is involved that would weigh in favor of a federal
court decision, and no party contends its rights will not be adequately protected in the
state court proceeding.
“The ‘paramount’ consideration in Colorado River was the third factor: ‘the
danger of piecemeal litigation.’” Osguthorpe 705 F.3d at 1234 (quoting Moses H. Cone,
460 U.S. at 19).

The Court finds that this factor also weighs heavily in favor of

abstention in this case, to achieve judicial economy and avoid a duplication of resources.
This case and the Miller case involve overlapping and competing claims to proceeds of
the same prime contract. In both cases, Jedson and CPK blame each other for problems
encountered on the construction project, and determining their competing claims of fault
and damages will be critical to the resolution of both cases. Jedson asserts in the state
court action that some subcontractors may be a fault as well and that a full development
of the facts will be needed to resolve all the issues. Duplicative litigation in different
3

Pursuant to Rule 26, discovery cannot begin in this case until the parties have conferred and
developed a discovery plan. See Fed. R. Civ. P. 26(d)(1), (f).

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forums raises the danger of piecemeal litigation and inconsistent determination of the
same issues. This critical factor counsels strongly against letting the two cases proceed
simultaneously.
Further, as a practical matter, the Miller case provides a means of resolving the
entire dispute among the parties regarding the project. Elliott has not asserted, and
perhaps cannot assert, a lien claim in this case; it is pursuing that claim only in the Miller
case. However, if Jedson’s recovery under the prime contract is insufficient to pay all
subcontractors, as suggested by Jedson, then Elliott’s quest to be paid for its work on the
project may necessarily involve lien foreclosure. Elliott argues that the Miller case will
be complex and “likely take years to adjudicate,” while its “relatively straight forward
breach of contract claim” may be resolved “rather quickly.” See Pl.’s Resp. Br. [Doc.
No. 22] at 7. Elliott also argues that if its lien claim in the Miller case is subjected to a
proportionate reduction as required by Oklahoma law, it will be unable to recover the full
measure of its damages. Id. at 7-8. This argument suggests Elliott is engaged in forum
shopping aimed at placing itself above other subcontractors on the project. A court may
properly consider whether the party opposing abstention has engaged in forum shopping.
See Fox, 16 F.3d at 1082; see also Predator Int’l, Inc. v. Gamo Outdoor USA, Inc., 793
F.3d 1177, 1190 (10th Cir. 2015).
In summary, the applicable factors and the underlying principles of Colorado
River weigh heavily in favor of federal abstention to permit a concurrent state court

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proceeding to resolve the claims of all interested parties, including nonparties to this case
whose presence might destroy diversity of citizenship.
Regarding the issue of whether to dismiss or stay this action, the Tenth Circuit has
stated:
We think the better practice is to stay the federal action pending the
outcome of the state proceedings. In the event the state court proceedings
do not resolve all the federal claims, a stay preserves an available federal
forum in which to litigate the remaining claims, without the plaintiff having
to file a new federal action.
Fox, 16 F.3d at 1083 (citations omitted). Thus, while the Court can discern no claim that
might remain for decision after the disposition of the Miller case, and no party suggests
one, the Court will follow the court of appeals’ guidance and stay rather than dismiss this
case.
Conclusion
For these reasons, the Court concludes that this case should be stayed during the
pendency of state court litigation between the parties concerning the same issues. If any
issue raised by Plaintiff’s pleading or Jedson’s Third-Party Complaint remains
unresolved after the state court case is concluded, any party to this case may move for the
stay to be lifted in order to proceed to judgment on the claims asserted in this case.
IT IS THEREFORE ORDERED that CP Kelso’s Motion to Dismiss or, in the
Alternative, Stay [Doc. No. 19] is GRANTED in part and DENIED in part, as set forth
herein. The Court orders a stay of this case pending the final disposition of Miller Valve

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& Controls, Inc. v. Jedson Engineering, Inc., Case No. CJ-2016-127 (Dist. Ct. Okmulgee
Cty., Okla.).
IT IS FURTHER ORDERED that this case shall be administratively closed for the
duration of the stay. The Clerk of Court is directed to administratively terminate this
action in her records, without prejudice to the right of any party to file a motion to reopen
the case within 30 days after the entry of a final judgment in the Miller case.
IT IS SO ORDERED this 9th day of March, 2017.

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