Woody's Restaurant, LLC et al v. Travelers Casualty Insurance Company of America, No. 5:2012cv00092 - Document 23 (E.D. Ky. 2013)
Court Description: MEMORANDUM OPINION AND ORDER: It is ordered that Pla's 13 Motion to Remand to State Court is DENIED. Signed by Judge Joseph M. Hood on 10/1/2013. (SCD)cc: COR
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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY CENTRAL DIVISION at LEXINGTON WOODY S RESTAURANT, LLC, et al., Plaintiffs, v. TRAVELERS CASUALTY INSURANCE COMPANY OF AMERICA, Defendant. ) ) ) ) ) ) ) ) ) ) ) Civil Case No. 5:12-cv-92-JMH MEMORANDUM OPINION AND ORDER *** This matter is before the Court upon Plaintiffs Motion to Remand. [D.E. 13]. Defendant has filed a Response [D.E. 20] and Plaintiffs filed a Reply. fully briefed, and the Court [D.E. 22]. being This matter being otherwise sufficiently advised, Plaintiffs Motion is ripe for review. I. Procedural Background Plaintiffs originally filed this suit in the Boyle County Circuit Court, seeking monetary damages. removed the action to this Court. [D.E. 1-1]. [D.E. 1]. Defendant Plaintiff now asks the Court to remand this matter back to the Boyle County Circuit Court based on the Colorado River abstention doctrine. [D.E. 13]. Plaintiffs claim Colorado River abstention is appropriate in this matter because of a parallel proceeding ongoing in Boyle County Circuit Court. The alleged parallel proceeding was filed by Coast United Advertising Co., Inc. (hereinafter United ) against Plaintiffs and Defendant. this action is parallel because Coast Plaintiffs aver that Coast United has asserted identical claims against Defendant as Plaintiffs have asserted against Defendant in this Court. [D.E. 13-1 at 2]. Furthermore, the claims arise out of the lack of payment on an insurance policy property. for the [D.E. 13]. same damage to the same piece of In other words, Plaintiffs and Coast United are both seeking to recover from Travelers for damage sustained to the same building. The only difference is that Plaintiffs claims are before this Court and Coast United s are before the Boyle County Circuit Court. The Court construes Plaintiffs Motion as a motion abstain, requesting remand as the form of relief. to However, federal courts have the power to dismiss or remand cases based on abstention principles only where the relief being sought is equitable or otherwise discretionary. Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 731 (1996). Plaintiffs have requested monetary damages; therefore, this Court may not remand based on abstention whether it principles. should stay Nonetheless, the action abstention doctrine. 2 the under Court the will analyze Colorado River II. Standard of Review Abstention from the exercise of federal jurisdiction is the exception, not the rule. Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 813 (1976). virtually exercise unflagging the obligation jurisdiction of given the Despite the federal to considerations them, courts of judicial economy and federal-state comity may justify abstention in situations involving the contemporaneous jurisdiction by state and federal courts. Corp., 160 F.3d 337, 339 (6th Cir. exercise of Romine v. Compuserve 1998) (quoting Colorado River, 424 U.S. at 817). For Colorado River abstention to apply, there must first be a parallel state proceeding. Crawley v. Hamilton Cnty. Comm rs, 744 1984). F.2d 28, 31 (6th Cir. If there is a parallel proceeding, there are eight factors that must be considered: (1) whether the state court has assumed jurisdiction over any res or property; (2) whether the federal forum is less convenient to the parties; (3) avoidance of piecemeal litigation; (4) the order in which jurisdiction was obtained; (5) whether the source of governing law is state or federal; (6) the adequacy of the state court action to protect the federal plaintiff s rights; (7) the relative progress of the state and federal proceedings; and (8) the presence or absence of concurrent jurisdiction. Romine, 160 F.3d at 340-41 (citing Colorado River, 424 U.S. at 3 818-19; Moses H. Cone Mem l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 21-28 (1983); Will v. Calvert Fire Ins. Co., 437 U.S. 655 (1978)). These mechanical checklist. of the important factors, however, do not comprise a Rather, they require a careful balancing factors as they apply depending on the particular facts at hand. in a given case Id. at 341 (quoting Moses H. Cone, 460 U.S. at 15-16). The balancing of the factors should favor be heavily jurisdiction. weighted in of the exercise of Moses H. Cone, 460 U.S. at 16. III. Analysis The first step in analyzing whether Colorado River abstention is appropriate is to determine if the action before this Court and the state action are parallel proceedings. Crawley v. Hamilton Cnty. Comm rs, 744 F.2d at 31. See Exact parallelism is not required; it is enough if the two proceedings are substantially similar. omitted) (internal Romine, 160 F.3d at 340 (citations quotation marks omitted); see also Total Renal Care, Inc. v. Childers Oil Co., 743 F. Supp. 2d 609, 613 (E.D. Ky. 2010) (quoting New Beckley Mining Corp. v. Int l Union, United Mine Workers of Am., 946 F.2d 1072, 1073 (4th Cir. 1991)) ( Suits are parallel if substantially the same parties litigate substantially the same issues. ). The action before this Court and the state court action involve the withholding of payment on an insurance policy for the same damage to the same 4 piece of property in Danville, Kentucky. Plaintiffs and Defendant in this action are named as defendants in the state court action. identical The claims plaintiff against in the Defendant state court Travelers assert in the action before this Court. as asserts Plaintiffs See [D.E. 1-1; 13-2]. The plaintiff in the state court action, Coast United, is not present before this Court, but that is not determinative of whether the proceedings are parallel. Total Renal Care, Inc., 743 F. Supp. 2d at 614 (citations omitted) ( [T]he presence of additional parties necessarily in destroy one suit but parallelism. ). not As the other both will not actions may determine what, if any, Travelers owes, and to whom, as well as if Travelers violated several Kentucky statutes, the Court finds that the proceedings before this Court and the proceedings before the state court have enough similarities to be considered parallel. Having found the actions to be parallel, the Court will balance the factors enumerated above to determine if abstention is appropriate. The first factor to be balanced is whether the state court has assumed jurisdiction over any res or property. Romine, 160 F.3d at 340. This is an action to determine if insurance proceeds should be paid. There is no real property over which to assert jurisdiction and neither party has asserted that the state court has exercised jurisdiction over specific 5 monies. The Colorado River decision was concerned with jurisdiction over a specific piece of property, namely, water rights, not an interpretation of an insurance policy. See Crawley v. Hamilton Cnty. Comm rs, 744 F.2d at 31 (citations omitted) ( [T]he cases relied upon by the Court in Colorado River for the res exception all dealt with the disposition of property. ). This factor weighs in favor of exercising jurisdiction. The second factor is whether the federal forum is less convenient to the parties. Romine, 160 F.3d at 340-41. This factor relates to geographical considerations, not whether the state court can resolve every issue in a single proceeding. PaineWebber, Inc. v. Cohen, 276 F.3d 197, 207 (6th Cir. 2001). Plaintiffs have conceded that the federal forum is not less convenient because all of the parties can easily travel to the federal forum [D.E. 13-1 at 5], and Defendant agreed. at 5]. Thus, this factor weighs in favor [D.E. 20 of exercising of piecemeal jurisdiction. The third litigation. factor Romine, is 160 the F.3d avoidance at 341. This consideration that was paramount in Colorado River. Cone, 460 different duplicating U.S. courts at 19. Piecemeal adjudicate judicial the effort identical and 6 litigation the Moses H. occurs issue, potentially is when thereby rendering conflicting results. Romine, 160 F.3d at 341 (citations omitted). If both suits go forth in this matter there is only a possibility, addressed by not a both certainty, courts. that the Plaintiff same issue Woody s, would the be Travelers insurance policy holder, has not asserted a cross-claim against Defendant Travelers in the state court action. Rather, Coast United, the plaintiff in the state court action, is claiming that it is an intended beneficiary of the insurance policy issued by Travelers to Woody s, and the proceeds should be paid to it as an intended beneficiary. before addressing Travelers violated breached Kentucky [D.E. 13-2 at 9]. the issues the insurance statutes, the before this contract state Therefore, Court, with court whether Woody s will have or to determine if Coast United has a right to sue on the insurance policy. If the state court determines Coast United was not an intended beneficiary of the insurance policy, the state court will never address the issues presented to this Court. Thus, this case may or may not present the possibility of inconsistent determinations, duplicative and, issues even concerned if it does, in Colorado the River significant will not present. It is true, as the defendants suggest, that the defendants could face inconsistent verdicts. They could be found liable in state court and not liable in 7 be federal court, or vice versa. But that is not really the danger that Colorado River was concerned about. In Colorado River, the state and federal litigation both concerned rights to the same water. If the state court held that the plaintiffs were entitled to the water but the federal court held that the defendants were entitled to the same water, there would be a serious problem. Avoiding that intractable situation was the primary impetus behind the federal court s abstention in Colorado River. The possible danger from piecemeal litigation here is much less concerning. Total Renal Care, Inc., 743 F. Supp. 2d at 616; see also Colorado River, 424 U.S. at 816 (citations omitted) ( [T]he mere potential for conflict in the results of adjudications, does not, without more, jurisdiction. ). warrant staying exercise of federal Because this matter does not present the same intractable situation as Colorado River, and this Court and the state court may not even be forced to decide the same issues, the avoidance of piecemeal litigation factor does not support the extraordinary remedy of abstention. The fourth factor is the order in which jurisdiction was obtained. Romine, 160 F.3d at 341. The federal action was removed to this Court on March 29, 2012 [D.E. 1], and the state court action was not filed until July 9, 2012. 1]. This militates in favor of exercising [D.E. 13-2 at jurisdiction. However, this factor should be analyzed in conjunction with the seventh factor, proceedings. the progress of the state and federal See Moses H. Cone, 60 U.S. at 21 ( [P]riority should not be measured exclusively by which complaint was filed 8 first, but rather in terms of how much progress has been made in the two actions. ). While there may have been more motion practice in the state court proceeding, due to more parties being involved, [D.E. 13-1 at 7], a bankruptcy stay has just been lifted in both actions. See [D.E. 14]. Therefore, both cases are still in the early stages of litigation. Thus, the order of jurisdiction, and more importantly, the progress of the state and federal jurisdiction. seventh proceedings weigh in favor of exercising See PaineWebber, Inc., 276 F.3d at 208 ( The factor, however, once again points toward exercising federal jurisdiction, because the state court action has not progressed to any significant degree. ). The fifth factor is whether the source of governing law is state or federal. Romine, 160 F.3d at 341. The causes of action are for breach of contract and various alleged violations of Kentucky statutes [D.E. 1-1], thus, state law governs the action. when However, the source-of-law factor is less significant the states jurisdiction. and federal courts have concurrent Bates v. Van Buren Twp., 122 F. App x 803, 807 (6th Cir. 2004) (citing Moses H. Cone, 460 U.S. at 25). There is concurrent jurisdiction; therefore, this factor, if anything, militates in favor of abstention. The sixth factor analyzes the adequacy of the state action to protect the federal plaintiff s rights. 9 Romine, 160 F.3d at 341. There is no suggestion that Plaintiffs rights would not be protected in state court. abstaining. This factor weighs in favor of See PaineWebber, Inc., 276 F.3d at 208 ( [T[he sixth factor . . . presents the strongest basis for abstaining, because the state PaineWebber s court action interests. ). is However, adequate the Court to is protect cognizant that, while the issues before this Court and the state court are the same, the Plaintiffs before this Court. claims against Travelers are only Thus, as to Plaintiffs claims, there is nothing for the state court to protect. The final factor asks whether the state and federal court have concurrent jurisdiction. Romine, 160 F.3d at 341. This factor favors abstention because this Court and the state court have concurrent jurisdiction over the matter. See Blake v. Wells Fargo Bank, N.A., 917 F. Supp. 2d 732, 738 (S.D. Ohio 2013) ( [T]he fact that there is concurrent jurisdiction between the state and federal courts evinces a policy favoring abstention. ). The balancing of the factors weighs in favor of the Court exercising adequacy presence its of of abstaining. jurisdiction. the state concurrent court Only to the protect jurisdiction governing Plaintiff, weigh in law, the and the favor of However, the Court must remember that the fact that state law governs is tempered because this Court and the state 10 court have concurrent jurisdiction, and that Plaintiffs claims are not before the state court. The most important consideration, the avoidance of piecemeal litigation, may not even be an issue in this case, and, even if there are identical issues presented, this case does not present the same situation as Colorado River because neither court has taken jurisdiction over res. The Court also notes that the party potentially subject to inconsistent determinations of liability, Travelers, has asked this Court to retain jurisdiction. Given that abstention is the exception, Colorado River, 424 U.S. at 813, this Court finds extraordinary appropriate that this circumstances and will case where adhere to does abstention its obligation to exercise jurisdiction. not present has virtually been the found unflagging Id. at 817 (citations omitted). IV. Conclusion Accordingly, IT IS ORDERED that Plaintiff s Remand [D.E. 13] be, and the same hereby is, DENIED. This the 1st day of October, 2013. 11 Motion to
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