Chaz Aircraft, LLC v. Lantis et al

Filing 12

ORDER denying motion to dismiss and granting motion to stay. Signed by U.S. District Judge Karen E. Schreier on 12/5/2014. (KC)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
WESTERN DIVISION
CHAZ AIRCRAFT, LLC,

CIV. 14-5054-KES

Plaintiff,
vs.
TRAVIS LANTIS, Individually, and
MAVERICK AVIATION, LLC,

ORDER DENYING MOTION TO
DISMISS AND GRANTING MOTION
TO STAY

Defendants.
Defendants, Travis Lantis and Maverick Aviation, LLC, move the court to
dismiss or stay this action based on a pending state-court action in Florida.
Plaintiff, Chaz Aircraft, LLC, has not responded. For the following reasons, the
court denies the motion to dismiss but grants the motion to stay.
FACTUAL BACKGROUND
Chaz Aircraft is a Florida limited liability company. Lantis is a South
Dakota citizen. Maverick Aviation is a South Dakota limited liability company.
In 2007, Lantis was president of Maverick Aviation. On December 18, 2007,
Maverick Aviation and Chaz Aircraft entered into an aircraft purchase
agreement in Florida, in which Maverick Aviation agreed to sell, and Chaz
Aircraft agreed to purchase, a 1981 Conquest II airplane for $2,075,000.1 The
airplane was located in Florida at all relevant times. The purchase closed on
August 26, 2008.

1

The purchase price was subsequently reduced by $70,000.

Prior to closing, Maverick Aviation was to complete certain installations,
inspections, and repairs. Mechanic Don Beaty and his business, Royal Atlantic
Aviation, Inc., located in Melbourne, Florida, and Tony Fremo of Tri-State
Avionics, LLC, located in Rapid City, South Dakota, both performed work on
the airplane. Chaz Aircraft alleges that numerous misrepresentations were
made, including inaccurate or fraudulent logbook entries and inaccurate or
fraudulent Federal Aviation Administration forms and status reports.
Based on those alleged misrepresentations, Chaz Aircraft filed suit
against Lantis, Maverick Aviation, Royal Atlantic, Beaty, Tri-State Avionics, and
Fremo in Florida state court on August 21, 2009. That suit made the following
claims: Count One: rescission, cancellation, and damages based on material
misrepresentations of latent defects against Maverick Aviation and Lantis;
Count Two: fraudulent misrepresentation against all defendants; Count Three:
fraudulent inducement against all defendants; Count Four: negligent
misrepresentation against Maverick Aviation and Lantis; Count Five:
conspiracy against Lantis, Beaty, and Fremo; Count Six: violation of the Florida
Deceptive and Unfair Trade Practices Act against all defendants; and an
alternative count alleging breach of contract against Maverick Aviation.
Discovery was conducted from July 2010 through August 2014. On
August 28, 2014, the Florida court held an evidentiary hearing on
jurisdictional issues. On September 15, 2014, the Florida trial court judge
dismissed Lantis based on a lack of personal jurisdiction. Docket 7-2 at 2-3
(“There was no evidence presented that Travis Lantis, individually, committed a

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tort in Florida, nor was there evidence sufficient to pierce the corporate veil of
Defendant Maverick Aviation, LLC for jurisdictional purposes.”). The Florida
court found that it did have jurisdiction over Maverick Aviation. Docket 7-3 at
2. This court has no other information regarding the progress of the Florida
action.
On August 22, 2014, Chaz Aircraft filed this action against Lantis and
Maverick Aviation. The complaint alleges claims against Maverick Aviation and
Lantis for fraudulent misrepresentation, fraudulent inducement, negligent
misrepresentation, conspiracy, violation of the Florida Deceptive and Unfair
Trade Practices Act, and breach of contract. The complaint also recites the
same underlying facts set forth in the Florida state-court complaint.
Following service of the complaint in this action, Lantis and Maverick
Aviation filed a motion to dismiss, or alternatively a motion to stay, this
proceeding based on the pending state-court proceeding in Florida. Docket 7.
Over two months have passed without a response from Chaz Aircraft.
DISCUSSION
In Colorado River Water Conservation District v. United States, 424 U.S.
800 (1976), the Supreme Court addressed “principles . . . which govern in
situations involving the contemporaneous exercise of concurrent jurisdictions,
either by federal courts or by state and federal courts.” Id. at 817. “These
principles rest on consideration of ‘[w]ise judicial administration, giving regard
to conservation of judicial resources and comprehensive disposition of
litigation.’ ” Id. (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S.

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180, 183 (1952)). Although federal courts have a “virtually unflagging
obligation . . . to exercise the jurisdiction given them,” exceptional
circumstances permit a federal court to abstain from exercising jurisdiction
when a concurrent state-court action is also pending. Id. at 817-18.
To determine whether exceptional circumstances exist, a court should
evaluate the following factors:
(1) whether there is a res over which one court has established
jurisdiction, (2) the inconvenience of the federal forum, (3) whether
maintaining separate actions may result in piecemeal litigation,
unless the relevant law would require piecemeal litigation and the
federal court issue is easily severed, (4) which case has priority—
not necessarily which case was filed first but a greater emphasis
on the relative progress made in the cases, (5) whether state or
federal law controls, especially favoring the exercise of jurisdiction
where federal law controls, and (6) the adequacy of the state forum
to protect the federal plaintiff’s rights.
Mountain Pure, LLC v. Turner Holdings, LLC, 439 F.3d 920, 926 (8th Cir. 2006)
(quotation marks omitted). “These factors are not intended to be exhaustive,
nor are they mechanically applied.” Id. When applying the Colorado River
factors, “ ‘the balance [is] heavily weighted in favor of the exercise of
jurisdiction.’ ” Id. (alteration in original) (quoting Moses H. Cone Mem. Hosp. v.
Mercury Constr., 460 U.S. 1, 16 (1983)). Ultimately, a court’s task “is not to find
some substantial reason for the exercise of federal jurisdiction . . . rather, the
task is to ascertain whether there exist ‘exceptional’ circumstances, the
‘clearest of justifications,’ that can suffice under Colorado River to justify the
surrender of that jurisdiction.” Moses H. Cone, 460 U.S. at 25-26 (italics in
original).

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A state action must be parallel to the federal case before a federal court
may decline to exercise its jurisdiction under Colorado River based on the
pendency of the state-court action. See Cottrell v. Duke, 737 F.3d 1238, 1245
(8th Cir. 2013) (“The threshold question is whether the state and federal
proceedings are parallel.”). “Jurisdiction must be exercised if there is any doubt
as to the parallel nature of the state and federal proceedings.” Fru-Con Constr.
Corp. v. Controlled Air, Inc., 574 F.3d 527, 535 (8th Cir. 2009). In the Eighth
Circuit, to be parallel, ‘a substantial similarity must exist between the state
and federal proceedings, which similarity occurs when there is a substantial
likelihood that the state proceeding will fully dispose of the claims presented in
the federal court.’ ” Cottrell, 737 F.3d at 1245 (quoting Fru-Con Constr. Corp.,
574 F.3d at 535). Courts look to “ ‘sources of law, required evidentiary
showings, measures of damages, and treatment upon appeal’ for each claim.”
Id. (quoting Fru-Con Constr. Corp., 574 F.3d at 536).
The Florida proceeding initially named Royal Aviation, Beaty, Fremo, and
Tri-State Avionics as defendants in addition to Lantis and Maverick Aviation.
But courts must consider proceedings as they presently exist, not as they
existed when they were originally filed. See Fru-Con Constr. Corp., 574 F.3d at
540-45 (Bye, J., concurring in the result and joining the dissent in part and
Shephard, J., dissenting). Judge Dugan’s letter refers to the proceeding as
“Chaz Aircraft, LLC vs. Travis Lantis, Individually; Maverick Aviation, LLC;
Royal Atlantic Aviation, Inc.; Donnie D. Beaty, Individually.” Docket 7-3 at 2.
The letter also indicates that Florida has “jurisdiction to proceed in this matter

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with regard to Maverick Aviation, LLC, but not as to Travis Lantis,
individually,” but does not discuss jurisdiction over Fremo or Tri-State
Avionics, both from South Dakota. Id. Based on those factors, it appears that
Fremo and Tri-State Avionics are no longer parties to the Florida proceeding.
Royal Atlantic and Beaty are likely not named as defendants here because that
addition would destroy this court’s diversity jurisdiction, although the
conspiracy claim in this proceeding alleges that Lantis conspired with both
Beaty and Fremo. The parties need not be identical for actions to be parallel.
See Fru-Con Constr. Corp., 574 F.3d at 535 (requiring only “substantially
similar parties”). Although the named defendants in both proceedings are not
identical based on jurisdictional reasons, the underlying transaction and
alleged actions by the parties are identical.
The claims alleged in the Florida proceeding are identical to the claims
alleged in this proceeding. The sources of law are identical, as this court would
likely apply Florida law. Thus, the evidentiary showings and measures of
damages will also be identical. Furthermore, the complaint in this proceeding is
based on facts identical to the facts alleged in the Florida proceeding. Due to
the similarity of the claims, and the fact that both proceedings relate to the
same transaction and alleged misrepresentations, it is likely that the Florida
proceeding will fully dispose of the claims present in this proceeding.
Because the proceedings are parallel, the court turns to the factors laid
out in Colorado River to determine if abstention is appropriate. Defendants here
recognize that the first factor is neutral because there is no property involved.

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The second factor, whether the federal forum is inconvenient, weighs slightly in
favor of abstention because while the federal forum is convenient for the
defendants and inconvenient for Chaz Aircraft, it is also inconvenient for
potential witnesses from Florida and key evidence.
The third factor, avoidance of piecemeal litigation, is the most significant
factor. See Mountain Pure, 439 F.3d at 926-27 (stating that the third factor “is
the predominant factor”). “Piecemeal litigation occurs when different tribunals
consider the same issue, thereby duplicating efforts and possibly reaching
different results.” LaDuke v. Burlington Northern R.R. Co., 879 F.2d 1556, 1560
(7th Cir. 1989).
If this court were to proceed with this action, it would need to determine
whether Chaz Aircraft would be successful under any of its claims alleged
against Lantis or Maverick Aviation. These are the same claims that are alleged
against Maverick Aviation in the Florida action. This may result in an
inconsistent judgment and such an inconsistent judgment would impair the
“legitimacy of the court system in the eyes of the public.” See Lumen Constr.,
Inc. v. Brant Constr. Co., 780 F.2d 691, 694 (7th Cir. 1985).
Additionally, the Eighth Circuit has stated that courts should favor “the
most complete action.” See Federated Rural Elec. Ins. Corp. v. Ark. Elec. Coops.,
Inc., 48 F.3d 294, 298 (8th Cir. 1995). This proceeding does not include Royal
Atlantic or Beaty, likely for jurisdictional reasons. Thus, although this court
has personal jurisdiction over Lantis in addition to Maverick Aviation, this
proceeding does not include either Royal Atlantic or Beaty. Without those

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defendants, this court cannot provide a “comprehensive disposition” of the
litigation. Colorado River, 424 U.S. at 817.
Because the issues in both proceedings are the same, adjudication by
this court of the issues before the Florida court presents a risk of inconsistent
judgment. Additionally, relitigation of the same issues in this court does not
promote judicial efficiency or a comprehensive resolution of the litigation.
Therefore, the third factor weighs heavily in favor of abstention.
The fourth factor also weighs in favor of abstention. The Florida
proceeding began in 2009, whereas this proceeding began in 2014. More
importantly, the parties have been engaged in discovery for over four years in
the Florida proceeding, but in this proceeding no answer has been filed.
Although the court does not have definitive information on the progress of the
Florida proceeding, it is clear that the Florida proceeding has advanced further
than this proceeding.
The fifth factor does not carry much weight under the facts presented
here. Florida law likely applies, but “[t]he presence of state law issues . . . only
weighs in favor of abstention in rare circumstances.” Mountain Pure, 439 F.3d
at 927. This case does not appear to present such rare circumstances. This
case does not present issues of federal law, however, so this factor does not
weigh in favor of exercising jurisdiction.
The sixth factor, whether the state forum can adequately protect the
plaintiff’s rights, weighs slightly in favor of abstention as well. The only
advantage of the federal forum in this instance is that this court has personal

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jurisdiction over Lantis. The Florida court has jurisdiction over Maverick
Aviation, and presumably could order any necessary relief against Maverick
Aviation, even if that relief would not be granted against Lantis personally.2
Because Chaz Aircraft has failed to respond, this court does not have the
benefit of knowing Chaz Aircraft’s position on whether relief that is available in
this court is not available in Florida.
As part of the sixth factor, the Eighth Circuit has considered “whether
the federal or state suit is filed . . . for a vexatious, reactive or tactical reason.”
Federated Rural Elec. Ins. Corp., 48 F.3d at 299 (citing Moses H. Cone, 460 U.S.
at 17). The timing of this filing, over five years after the case was brought in
Florida, and on the eve of an evidentiary hearing on jurisdictional issues,
suggests that this case was brought in anticipation of the Florida court’s
decision regarding personal jurisdiction over Lantis. That fact suggests that
Chaz Aircraft filed this suit to secure a remedy that was not available in the
Florida state court forum or to ensure its rights were adequately protected.
From the analysis of the Colorado River factors, the first and fifth factors
do not weigh in either direction. The sixth factor weighs slightly against
abstention. The second factor weighs slightly in favor of abstention. The fourth

Additionally, because this court is granting the motion to stay rather
than the motion to dismiss, this court will retain jurisdiction in the event that
an order from this court is necessary to give effect to a judgment from the
Florida court, or if the state forum later proves to be inadequate. See Moses H.
Cone, 460 U.S. at 28 (“It is true that Mercury could seek to return to federal
court if it proved necessary; but that would be equally true if the District Court
had dismissed the case. It is highly questionable whether this Court would
have approved a dismissal of a federal suit in Colorado River . . . if the federal
courts did not remain open to a dismissed plaintiff who later demonstrated the
inadequacy of the state forum.”).
2

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factor also weighs in favor of abstention, but because the court does not know
the progress of the Florida litigation, it is unclear exactly how much weight this
factor carries. The third factor, however, weighs decisively in favor of
abstention. Given the importance of the third factor, the absence of any factor
weighing strongly in favor of an exercise of jurisdiction, and the principles
underlying the Colorado River doctrine, the court finds that this case
constitutes the type of exceptional circumstances in which abstention is
appropriate.
Having decided that abstention is appropriate in this case, the court
must decide whether to dismiss the case or stay it. In ordering either dismissal
or a stay, a federal court deciding to abstain will “have nothing further to do in
resolving any substantive part of the case.” Moses H. Cone, 460 U.S. at 28.
Nonetheless, the Eighth Circuit has expressed a preference for a stay so that a
federal forum will remain available if the state-court litigation does not provide
a complete and prompt resolution of the issues. See Royal Indem. Co. v. Apex
Oil Co., 511 F.3d 788, 797-98 (8th Cir. 2008) (“ ‘[W]here the basis for declining
to proceed is the pendency of a state proceeding, a stay will often be the
preferable course, because it assures that the federal action can proceed
without risk of a time bar if the state case . . . fails to resolve the matter in
controversy.’ ” (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 288 n.2 (1995));
see also 17A Charles Alan Wright et al. Federal Practice and Procedure § 4247
(3d ed.).

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This suit was filed five years and one day after the state court proceeding
was filed and almost six years after the purchase of the airplane closed. Based
on the timing of this suit, it is possible that a statute of limitations could
become an issue should Chaz Aircraft need to return to this court.
Furthermore, the Florida court will not reach the merits of the claim against
Lantis. For those reasons, and based on the general preference for a stay over
dismissal, defendants’ motion to dismiss is denied but the alternative motion to
stay is granted.
CONCLUSION
This proceeding is parallel to the Florida state-court proceeding, and
abstention is warranted under Colorado River. Although the court is
abstaining, a stay rather than dismissal is the appropriate mechanism in this
case. Accordingly, it is
ORDERED that the motion to dismiss or stay by defendants Maverick
Aviation, LLC, and Travis Lantis (Docket 7), is granted in part and denied in
part consistent with the order, and this case is stayed pending resolution of the
Florida state-court proceeding.
Dated December 5, 2014.
BY THE COURT:

/s/Karen E. Schreier
KAREN E. SCHREIER
UNITED STATES DISTRICT JUDGE

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