D.A. Osguthorpe Family Partnership v. ASC Utah, Inc.

FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS January 15, 2013
Elisabeth A. Shumaker
TENTH CIRCUIT Clerk of Court
D.A. OSGUTHORPE FAMILY
PARTNERSHIP, a Utah limited
partnership,
Nos. 11-4062, 11-4113, and 11-4159
Plaintiff-Appellant,
v.
ASC UTAH, INC., a Maine corporation;
WOLF MOUNTAIN RESORTS, L.C., a
Utah limited liability company; the
THIRD JUDICIAL DISTRICT COURT,
an agency of the Judicial Branch of
government of the State of Utah; and THE
HONORABLE ROBERT K. HILDER, in
his capacity as a Judge of the Third
Judicial District Court in and for the State
of Utah,
Defendants-Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH – SALT LAKE CITY
(D.C. No. 2:11-CV-00147-DS)
David Scofield, Peters/Scofield, Salt Lake City, Utah, for Plaintiff-Appellant.
Brent M. Johnson, Utah State Administrative Office of Courts, for Defendants-Appellees
Third Judicial District Court and Judge Robert K. Hilder, Salt Lake City, Utah, and John
R. Lund, Snow, Christensen & Martineau, Salt Lake City, Utah, for Defendant-Appellee
ASC Utah (Kara L. Pettit, Snow, Christensen & Martineau, Salt Lake City, Utah,
Attorney for Defendants-Appellees ASC Utah, with them on the brief).
Before LUCERO, HOLLOWAY, and HARTZ, Circuit Judges.
HOLLOWAY, Circuit Judge.
INTRODUCTORY STATEMENT
Some time ago, this lawsuit began in Utah state court. Since then, the litigation
has not so much developed as it has metastasized: parties have proliferated, claims have
collided, and issues have become intimately entangled. Eventually, one of the frustrated
suitors looked to the federal courts for relief, asking for a stay of all state-court
proceedings and an order compelling arbitration of the state-court claims. The federal
district court declined to do so, dismissed the case, and awarded attorney’s fees to the
prevailing party.
This appeal asks whether the federal district court correctly determined that,
simply put, the federal court should stay out of the still-unfolding state-court
controversy.1 We conclude that the Supreme Court’s Colorado River doctrine, see
Colorado River Water Conservation District v. United States, 424 U.S. 800, 817-21
(1976), is the persuasive and controlling law in this case. We think that in this case the
Colorado River doctrine wisely counsels our abstention from duplicative interference
1
There are three separate appeals at issue in this case. These appeals—Nos. 11-
4062, 11-4113, and 11-4159—were consolidated for purposes of briefing and oral
argument. No. 11-4062 came to us on interlocutory appeal from the district court’s order
denying the appellant’s “Motion for Order Compelling Arbitration and to Stay, for a
Temporary Restraining Order and Preliminary Injunction and for Expedited Resolution.”
No. 11-4113 is a direct appeal from the district court’s dismissal of the case. Finally, No.
11-4159 pertains to the district court’s award of attorney’s fees. All issues raised in these
separate appeals will be comprehensively resolved by us in our decision today.
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with the exceptionally protracted state proceedings present here. We AFFIRM the
district court’s dismissal and DISMISS AS MOOT the interlocutory appeal of the district
court’s order denying the motion to compel arbitration and for a stay of the state-court
proceedings. In addition, we must VACATE the district court’s award of attorney’s fees
and REMAND the matter to the district court for detailed findings of fact sufficient to
afford meaningful appellate review of its award.
BACKGROUND
A. Factual Setting
Summit County, Utah is a place of rugged, mountainous beauty. As such, it is ripe
for development for tourism and recreational pursuits. This is not without its problems.
In the early 1990s, Wolf Mountain Resorts, L.C. began acquiring land around Park City,
Utah with the aim of creating an all-season, “world class” resort destination.2 App. at
196. In 1996, Wolf Mountain leased about 560 acres of Summit County property from
the D.A. Osguthorpe Family Partnership, which owns ranchlands in Summit County.3
The parties contemplated that the Osguthorpe parcel would be used as part of the ski
resort. The planned use would involve “the installation, maintenance and operation of
two ski lifts, snow making, and clearing of ski trails and such other related facilities,
2
Although a named party on appeal, Wolf Mountain did not participate in the
briefing or oral argument of this case.
3
We note that the nature of the property interest granted by Osguthorpe has been
the subject of some dispute in the Utah state courts, both in this litigation and elsewhere.
See, e.g., Smith ex rel. Estate of Smith v. Osguthorpe, 58 P.3d 854 (Utah Ct. App. 2002).
The exact classification of that interest is not relevant to the case now before us.
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structures and roads as may be required.” Id. at 245.
Wolf Mountain also enlisted ASC Utah, Inc. to help in realizing its vision. In
1997, Wolf Mountain leased its property interest in the resort to ASC Utah under a 200-
year “Ground Lease.” In effect, ASC Utah would undertake the development and
operation of the planned resort, which was to include a ski area, golf course,
condominiums, and assorted tourist accommodations. In 1998, the lease agreement
between Wolf Mountain and Osguthorpe was also amended to allow ASC Utah to
conduct ski-resort operations on the Osguthorpe lands.
The following year, ASC Utah, Wolf Mountain, Osguthorpe, and Summit County
(along with numerous other parties not involved in this case) memorialized their
development plans in a document entitled “Amended and Restated Development
Agreement for the Canyons Specially Planned Area, Snyderville Basin, Summit County,
Utah.” The Development Agreement called for the construction of an eighteen-hole golf
course, for which Summit County property owners—including Osguthorpe—agreed to
grant the tracts of land necessary for the golf course’s completion. The parties further
agreed to give high priority to the golf course’s development. The Development
Agreement contained an arbitration provision, and it also permitted Summit County to
declare the parties to be in default if certain conditions were not timely met.
B. The State-Court Litigation
Soon enough, things began to sour between ASC Utah and Wolf Mountain. The
proposed golf-course development stalled, and in May of 2006 Summit County declared
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Wolf Mountain to have defaulted under the Development Agreement. Litigation rapidly
ensued. In June of 2006, ASC Utah sued Wolf Mountain for various alleged breaches of
the Ground Lease and Development Agreement. The lawsuit was brought in Summit
County, Utah, district court, which sits in Utah’s Third Judicial District. Wolf Mountain
promptly countersued, and the state district court consolidated the ASC Utah and Wolf
Mountain suits. At around the same time—in August of 2006—Osguthorpe brought a
state-court action against Wolf Mountain, alleging breaches of their 1996 lease
agreement. Osguthorpe initially filed its suit in Salt Lake County, but the Salt Lake
County district court transferred the case to the neighboring Summit County court, where
Osguthorpe also brought a separate action against ASC Utah in 2007. Over Osguthorpe’s
protests, the Summit County district court consolidated Osguthorpe’s suits into the extant
ASC Utah–Wolf Mountain litigation in August of 2008.
The next year saw two significant new developments in the ongoing litigation.
First, Wolf Mountain sought the court’s leave to add new parties to the suit. Upon the
denial of its request, Wolf Mountain filed a demand for arbitration under the
Development Agreement, along with a motion to compel arbitration. Although the
litigation had proceeded in Summit County district court for the previous three years, this
marked the first time that any party had invoked a purported right to arbitrate the dispute
under the Development Agreement.
The Summit County district court denied Wolf Mountain’s motion to compel
arbitration, and Wolf Mountain appealed. In a published opinion, the Utah Supreme
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Court upheld the state trial court’s decision, holding that Wolf Mountain had waived its
right to arbitrate by actively and substantially participating in the litigation for years
before ever asserting a contractual right of arbitration. See ASC Utah, Inc. v. Wolf
Mountain Resorts, L.C., 245 P.3d 184, 194 (Utah 2010) (“Wolf Mountain clearly had the
intent to pursue matters through litigation rather than to seek arbitration.”). While
acknowledging the importance of the contractual right of arbitration, the Utah Supreme
Court explained that
Utah public policy favors arbitration agreements only insofar as they
provide a speedy and inexpensive means of adjudicating disputes, and
reduce strain on judicial resources. In this case, enforcing the arbitration
agreement would undercut both policy rationales: arbitration at this point
would be neither a speedy and inexpensive way to adjudicate this dispute,
nor a means of reducing strain on judicial resources. Public policy is better
served by finding waiver where a party has participated in litigation to a
point inconsistent with an intent to arbitrate, when such participation causes
prejudice to the other party.
Id. at 197.
Also in 2009, Summit County declared that Osguthorpe had defaulted under the
Development Agreement by failing to set aside the portion of its property needed for
building the golf course. Because the issuance of the default notice gave rise to
additional claims and defenses under the Development Agreement that had not
previously been available to Osguthorpe, the Summit County district court reopened the
pleadings to allow Osguthorpe to assert supplemental claims. On July 19, 2010,
Osguthorpe brought new claims against both ASC Utah and Wolf Mountain under the
Development Agreement. On September 20, 2010—during the pendency of Wolf
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Mountain’s appeal of the Summit County district court’s denial of its motion to compel
arbitration—Osguthorpe filed a “Motion to Compel Arbitration and to Stay All Claims in
This Action Bearing on or Relating in Any Way to Any Alleged Default Under the
[Development] Agreement” in state court. Osguthorpe argued that the arbitration clause
in the Development Agreement required the arbitration of all claims and issues arising
under the Development Agreement—not only those between Osguthorpe, ASC Utah, and
Wolf Mountain, but also those that had been litigated solely between ASC Utah and Wolf
Mountain.
The Utah Supreme Court issued its mandate in ASC Utah, Inc. v. Wolf Mountain
Resorts, L.C. on November 19, 2010. The Honorable Robert K. Hilder, a Utah state-
court judge and a defendant–appellee in this case, denied Osguthorpe’s motion to compel
arbitration, inter alia, the next day. In denying the motion, Judge Hilder noted that
Osguthorpe was “situated differently from Wolf [Mountain] for several reasons, but not
so differently that [it] can compel arbitration of any claims or defenses in this
consolidated action.” App. at 136 (emphasis omitted). This was because “the policies
underlying arbitration have been so violated in this case that arbitration is not an option
open to any party.” Id. That said, Judge Hilder also recognized that Osguthorpe’s
supplemental claims arising under the Development Agreement were of much more
recent vintage than the Development Agreement claims that had been litigated between
ASC Utah and Wolf Mountain since 2006. In light of this fact, Judge Hilder gave
Osguthorpe leave to dismiss any or all of its Development Agreement claims “without
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prejudice to re-filing within a reasonable time after this case is adjudicated through a final
and appealable judgment.” Id. at 137. In other words, Osguthorpe could either (1)
continue to litigate its Development Agreement claims in the consolidated action, or (2)
voluntarily dismiss those claims and then submit them to arbitration after the conclusion
of the ASC Utah–Wolf Mountain litigation in the consolidated action.
Finding neither course acceptable, Osguthorpe promptly appealed Judge Hilder’s
ruling to the Utah Supreme Court, where the interlocutory appeal remains pending.4
Osguthorpe also asked Judge Hilder to recuse himself from hearing the case, to vacate his
ruling on arbitration, and to stay the proceedings in Summit County pending the outcome
of Osguthorpe’s interlocutory appeal. After Judge Hilder denied these requests,
Osguthorpe petitioned the Utah Supreme Court for emergency relief and for an
immediate stay of all trial-court proceedings pending the resolution of its appeal. The
Utah Supreme Court summarily denied Osguthorpe’s petition on January 20, 2011.
C. Proceedings in Federal District Court
Facing the prospect of imminent trial in Summit County district court, Osguthorpe
turned to the federal courts for relief, filing this case in the United States District Court
for the District of Utah on February 8, 2011. Osguthorpe asked the federal district court
for several things. First, Osguthorpe requested a declaratory judgment that it had a right
to arbitration, as guaranteed to it under the Federal Arbitration Act, 9 U.S.C. §§ 1-16.
4
Osguthorpe’s interlocutory appeal before the Utah Supreme Court raises
substantially the same issues under the Federal Arbitation Act, 9 U.S.C. §§ 1-16, that are
presented in this case.
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Osguthorpe also sought an order staying the state-court proceedings under 9 U.S.C. § 35
and an order compelling arbitration under 9 U.S.C. § 4.6 In addition, Osguthorpe alleged
under 42 U.S.C. § 1983 that Judge Hilder and Utah’s Third Judicial District Court, as
state actors operating under color of law, had violated Osguthorpe’s due-process rights by
conspiring with ASC Utah and Wolf Mountain to press forward with the state-court
litigation and deprive Osguthorpe of its right to arbitration. In advancing its § 1983
claim, Osguthorpe asserted it had a property interest in its contractual right to arbitration
under the Development Agreement that was protected under the Fourteenth Amendment
to the United States Constitution. To this end, Osguthorpe requested a declaratory
judgment from the federal district court that the state district court had violated
Osguthorpe’s due-process rights, and it sought an immediate injunction against ASC
5
The terms of 9 U.S.C. § 3 provide:
If any suit or proceeding be brought in any of the courts of the United
States upon any issue referable to arbitration under an agreement in writing
for such arbitration, the court in which such suit is pending, upon being
satisfied that the issue involved in such suit or proceeding is referable to
arbitration under such an agreement, shall on application of one of the
parties stay the trial of the action until such arbitration has been had in
accordance with the terms of the agreement, providing the applicant for the
stay is not in default in proceeding with such arbitration.
6
The terms of 9 U.S.C. § 4 state in pertinent part:
A party aggrieved by the alleged failure, neglect, or refusal of another to
arbitrate under a written agreement for arbitration may petition any United
States district court which, save for such agreement, would have
jurisdiction . . . of the subject matter of a suit arising out of the controversy
between the parties, for an order directing that such arbitration proceed in
the manner provided for in such agreement.
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Utah, Wolf Mountain, Judge Hilder, and the Third Judicial District Court “preventing
each one and all of them from proceeding further with any proceedings in the
consolidated state court case pending the issuance of a final arbitration award.” App. at
29.
After filing its complaint, Osguthorpe presented the federal district court with a
“Motion for Order Compelling Arbitration and to Stay, for a Temporary Restraining
Order and Preliminary Injunction and for Expedited Resolution.” Relying in the main on
the Rooker–Feldman doctrine, the district court denied Osguthorpe’s motion for lack of
subject-matter jurisdiction.7 Apart from its initial jurisdictional determination, the district
court also found that “jurisdiction is improper under the Younger doctrine and the general
principles of abstention.”8 App. at 1121. Osguthorpe immediately brought an
7
The Rooker–Feldman doctrine takes its name from the two Supreme Court cases
in which its rule has been applied: Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923), and
District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983). The doctrine
bars federal courts from reviewing the judgments and decisions of state courts once they
have become final.
8
The Younger abstention doctrine derives from Younger v. Harris, 401 U.S. 37
(1971). Younger instructs “that federal courts not interfere with state court proceedings
by granting equitable relief—such as injunctions of important state proceedings or
declaratory judgments regarding constitutional issues in those proceedings—when such
relief could adequately be sought before the state court.” Rienhardt v. Kelly, 164 F.3d
1296, 1302 (10th Cir. 1999). The Court in Younger gave two overarching reasons for the
“long-standing public policy against federal court interference with state court
proceedings.” Younger, 401 U.S. at 43. The first reason is founded on “the basic
doctrine of equity jurisprudence that courts of equity should not act . . . when the moving
party has an adequate remedy at law and will not suffer irreparable injury if denied
equitable relief.” Id. at 43-44. The second—and “more vital”—ground is “the notion of
‘comity,’ that is, a proper respect for state functions.” Id. at 44.
In denying Osguthorpe’s motion, the federal district court suggested that the
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interlocutory appeal of the district court’s order in this court. Meanwhile, the federal-
court defendants moved the federal district court to dismiss Osguthorpe’s complaint.
Agreeing with the defendants, the federal district court dismissed the action.9 Arguing
that Osguthorpe’s federal-court suit was brought for a vexatious and frivolous purpose,
ASC Utah moved for attorney’s fees under 42 U.S.C. § 1988. After considering
arguments on the issue, the federal district court awarded attorney’s fees to ASC Utah in
the amount of $42,923.00. Osguthorpe appeals these rulings.
II. DISCUSSION
The federal district court primarily dismissed Osguthorpe’s suit for lack of
subject-matter jurisdiction under the Rooker–Feldman doctrine, but the court gave as
alternate bases for dismissal the Younger abstention doctrine and “general principles of
abstention.” App. at 1121. On appeal,10 the parties have devoted considerable briefing
Younger doctrine is jurisdictional. App. at 1121. This is not precisely correct. Younger
is a doctrine of abstention. An abstention doctrine is one “under which a District Court
may decline to exercise or postpone the exercise of its jurisdiction.” Cnty. of Allegheny v.
Frank Mashuda Co., 360 U.S. 185, 188 (1959). This differs from a case in which the
district court is barred at the outset from exercising its jurisdiction. That said, we also
acknowledge that once a court has properly determined that Younger abstention applies,
“there is no discretion to grant injunctive relief.” Colorado River, 424 U.S. at 816 n.22.
9
The defendants–appellees argue in their Response Brief that Osguthorpe has
waived review of the federal district court’s dismissal order by failing adequately to
oppose dismissal. See Appellees’ Br. at 2-4. We do not agree. After carefully reviewing
the record of proceedings below, we are satisfied that Osguthorpe did not abandon its
claim of error.
10
In this case we consider three separate appeals. See note 1, supra. The first of
these is an interlocutory appeal, No. 11-4062, that came to us following the federal
district court’s denial of Osguthorpe’s motion for an order compelling arbitration and for
a stay of the state-court proceedings. Later on, the federal district court dismissed the
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and argument to the respective applicability of the doctrines of Rooker–Feldman,
Younger, and, finally, Colorado River, the principles of which we believe are embraced
by the phrase “general principles of abstention.” For the reasons that follow, we hold the
Colorado River doctrine controls the disposition of this case and mandates the dismissal
of Osguthorpe’s suit.
A. The Threshold Matter of Jurisdiction and the Scope of Our Review
We review de novo the dismissal of a complaint for lack of subject-matter
jurisdiction. Chapman v. Oklahoma, 472 F.3d 747, 749 (10th Cir. 2006). At the outset,
we must conclude that the federal district court erred in dismissing the case under the
Rooker–Feldman doctrine. This fact alone, of course, does not end our inquiry into the
appropriateness of the federal district court’s dismissal. It is well-established that “we are
free to affirm a district court decision on any grounds for which there is a record
sufficient to permit conclusions of law, even grounds not relied upon by the district
court.” Wells v. City and Cnty. of Denver, 257 F.3d 1132, 1149-50 (10th Cir. 2001)
(quotations and citations omitted).
As stated above, the federal district court alternatively relied on the Younger
abstention doctrine and “general principles of abstention” as grounds for the suit’s
dismissal, and the parties have focused much of their arguments on the Colorado River
case, a ruling from which Osguthorpe also appeals. Our affirmance of the federal district
court’s dismissal renders Osguthorpe’s first, interlocutory appeal moot. See Sac & Fox
Nation of Okla. v. Cuomo, 193 F.3d 1162, 1168 (10th Cir. 1999).
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doctrine.11 Even had they not done so, a court may raise the issue of abstention sua
sponte. Bellotti v. Baird, 428 U.S. 132, 143 n.10 (1976); Morrow v. Winslow, 94 F.3d
1386, 1390-92 (10th Cir. 1996). In Quackenbush v. Allstate Insurance Co. the Supreme
Court observed that “it has long been established that a federal court has the authority to
decline to exercise its jurisdiction when it ‘is asked to employ its historic powers as a
court of equity.’” 517 U.S. 706, 717 (1996) (quoting Fair Assessment in Real Estate
Ass’n, Inc. v. McNary, 454 U.S. 100, 120 (1981) (Brennan, J., concurring in judgment)).
Further describing the roots of our abstention doctrines, the Court said:
Though we have thus located the power to abstain in the historic discretion
exercised by federal courts sitting in equity, we have not treated abstention
as a technical rule of equity procedure. Rather, we have recognized that the
authority of a federal court to abstain from exercising its jurisdiction
extends to all cases in which the court has discretion to grant or deny relief.
Id. at 718 (internal quotation marks and citation omitted). Abstention is thus fairly raised
as a basis for affirming the federal district court’s decision.
B. The Rooker–Feldman Doctrine Is Not Applicable
Because a question of subject-matter jurisdiction is implicated here, we pause
briefly to explain why the Rooker–Feldman doctrine did not provide a sound foundation
for dismissal in this case. The Rooker–Feldman doctrine “has a narrow scope.”
Chapman, 472 F.3d at 749. In the past, courts have on occasion been too eager to apply
Rooker–Feldman, thereby overextending its reach. The Supreme Court has recently
11
“We review district court decisions regarding deferral under the Colorado River
Doctrine for abuse of discretion.” Rienhardt, 164 F.3d at 1302 (citing Moses H. Cone
Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 19 (1983)).
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made clear that the Rooker–Feldman doctrine “is confined to cases of the kind from
which the doctrine acquired its name: cases brought by state-court losers complaining of
injuries caused by state-court judgments rendered before the district court proceedings
commenced and inviting district court review and rejection of those judgments.” Exxon
Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). In other words,
“Rooker–Feldman applies only to suits filed after state proceedings are final.” Guttman
v. Khalsa, 446 F.3d 1027, 1032 (10th Cir. 2006).
Having considered the record before us, we cannot say that the proceedings in
Utah state court are “final” within the meaning dictated by Exxon Mobil. 12 Exxon Mobil
clarifies that the Rooker–Feldman doctrine is triggered only “after the state proceedings
have ended.” 544 U.S. at 291. After Judge Hilder denied Osguthorpe’s motion to compel
arbitration in the Summit County case, Osguthorpe appealed that ruling to the Utah
Supreme Court. That state-court appeal remains unresolved, and on that basis alone we
may conclude that the Utah state-court proceedings have not yet ended.
Osguthorpe filed its federal suit while its appeal of Judge Hilder’s order was still
pending before the Utah Supreme Court. Because the state-court proceedings are not
12
We have cited with approval the First Circuit’s formulation of when a state-court
judgment becomes final under the Rooker–Feldman doctrine, as set forth post-Exxon
Mobil: “(1) ‘when the highest state court in which review is available has affirmed the
judgment below and nothing is left to be resolved’; (2) ‘if the state action has reached a
point where neither party seeks further action’; or (3) ‘if the state court proceedings have
finally resolved all the federal questions in the litigation, but state law or purely factual
questions (whether great or small) remain to be litigated.’” Guttman, 446 F.3d at 1032
(quoting Federación de Maestros de Puerto Rico v. Junta de Relaciones del Trabajo de
Puerto Rico, 410 F.3d 17, 24-25 (1st Cir. 2005)).
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final, the Rooker–Feldman doctrine cannot by itself bar the federal district court from
hearing Osguthorpe’s suit. The federal district court had subject-matter jurisdiction to
hear the case. But jurisdiction, even though properly obtained, may—and sometimes
must—be declined under the principles of abstention. See Quackenbush, 517 U.S. at 716
(“[W]e have held that federal courts may decline to exercise their jurisdiction, in
otherwise ‘exceptional circumstances,’ where denying a federal forum would clearly
serve an important countervailing interest . . . .”) (quoting Colorado River, 424 U.S. at
813) (internal quotation marks omitted)). Having previously concluded that the Colorado
River doctrine governs our decision in this case, we need not decide whether abstention
would also have been proper under the Younger doctrine.
C. The Colorado River Doctrine Is Applicable
As a general rule, “‘the pendency of an action in the state court is no bar to
proceedings concerning the same matter in the Federal court having jurisdiction . . . .’”
Colorado River, 424 U.S. at 817 (quoting McClellan v. Carland, 217 U.S. 268, 282
(1910)). But, at times, “reasons of wise judicial administration” must weigh in favor of
“permitting the dismissal of a federal suit due to the presence of a concurrent state
proceeding.” Id. at 818. Granted, these occasions are not ordinarily encountered. Yet
such “circumstances, though exceptional, do nevertheless exist.” Id. We find the case
before us to be exceptional enough to warrant dismissal under the Colorado River
doctrine.
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This case is about the tension that results when one lawsuit suddenly becomes two,
each proceeding along tracks that, although parallel, are far from identical. Colorado
River doctrine applies where, as here, we must decide whether such a state of affairs
should continue—in other words, “whether a district court should have stayed or
dismissed a federal suit pending the resolution of a parallel state court proceeding.”
Rienhardt, 164 F.3d at 1302. And, to be sure, a federal court will not and should not shy
away from contemporaneously exercising concurrent jurisdiction with a state court in the
ordinary course of things. But this is no ordinary case.
We recognize, as we must, the “virtually unflagging obligation of the federal
courts to exercise the jurisdiction given them.” Colorado River, 424 U.S. at 817; see also
England v. Louisiana State Bd. of Med. Exam’rs, 375 U.S. 411, 415 (1964) (“‘When a
Federal court is properly appealed to in a case over which it has by law jurisdiction, it is
its duty to take such jurisdiction . . . .’”) (quoting Willcox v. Consol. Gas Co. of N.Y., 212
U.S. 19, 40 (1909)); Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 404 (1821) (“We have
no more right to decline the exercise of jurisdiction which is given, than to usurp that
which is not given.”). But this obligation, although great, is not absolute. “[T]he
proposition that a court having jurisdiction must exercise it, is not universally true . . . .”
Canada Malting Co. v. Paterson S.S., Ltd., 285 U.S. 413, 422 (1932). It is well-
established that “federal courts have the power to refrain from hearing,” among other
things, “cases which are duplicative of a pending state proceeding.” Quackenbush, 517
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U.S. at 716-17. This latter principle—the avoidance of duplicative litigation—is at the
core of the Colorado River doctrine.
Colorado River concerns itself with efficiency and economy. Its goal is “to
preserve judicial resources.”13 Rienhardt, 164 F.3d at 1302. In announcing its reasons
for adopting the doctrine, the Court in Colorado River explained:
Although this case falls within none of the abstention categories, there are
principles unrelated to considerations of proper constitutional adjudication
and regard for federal-state relations which govern in situations involving
the contemporaneous exercise of concurrent jurisdictions, either by federal
courts or by state and federal courts. These principles rest on considerations
of “(w)ise judicial administration, giving regard to conservation of judicial
resources and comprehensive disposition of litigation.”
424 U.S. at 817 (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180,
183 (1952)). The Court provided four factors to aid in determining whether dismissal
was warranted. These four factors are: (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.” Id. at 818. The Court also advised that “[n]o one
factor is necessarily determinative; a carefully considered judgment taking into account
both the obligation to exercise jurisdiction and the combination of factors counselling
against that exercise is required.” Id. at 818-19; see also Moses H. Cone Mem’l Hosp. v.
13
This sets it apart from the abstention doctrines that preceded it. In the strictest
sense, the Colorado River doctrine is not an abstention doctrine at all. Rather, it is a
judicially crafted doctrine of efficiency that arose to fill a gap in the federal courts’
existing inventory of abstention principles. See Colorado River, 424 U.S. at 817-18
(distinguishing between dismissal under abstention doctrines and dismissal “for reasons
of wise judicial administration”).
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Mercury Constr. Corp., 460 U.S. 1, 16 (1983) (stating that the Colorado River factors are
not a “mechanical checklist,” “careful balancing” is required, and “[t]he weight to be
given to any one factor may vary greatly from case to case”).
Bearing in mind these considerations, we now turn to whether the federal district
court properly dismissed Osguthorpe’s suit. As an initial matter, we find that the first of
the Colorado River factors does not apply to this case. Neither the state nor district court
has acquired jurisdiction over property in the course of this litigation. That is to say, this
is not an action in rem or quasi in rem. We also afford scant weight to the second factor,
the relative inconvenience of the federal forum. The state-court action began in Summit
County, Utah, which borders Salt Lake County, Utah, the site of the federal district court.
The state and federal courthouses involved in this case 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.
But the latter two factors weigh heavily on our analysis. The “paramount”
consideration in Colorado River was the third factor: “the danger of piecemeal
litigation.” See Moses H. Cone, 460 U.S. at 19. And so it is with us in this case. This
lawsuit was initiated in Utah state court on June 14, 2006, when ASC filed its complaint
against Wolf Mountain. Osguthorpe began its participation in state-court litigation in
August of that same year, when it brought its own suit, later consolidated, against Wolf
Mountain. From that time until February of 2011, when Osguthorpe filed its suit in
federal court, the parties aggressively litigated this sprawling case in state court. This
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fact is amply illustrated by the mammoth size of the Summit County district court’s
docket for this case. It contains thousands of entries and spans nearly two hundred pages
in the record. See App. at 555-728. The scope of the state-court litigation—and the
accompanying strain on the judicial resources of the state court—was pointedly described
by Judge Hilder in refusing to compel arbitration of the Development Agreement claims:
[T]his case (or more correctly, these cases) have proven to be one of the
greatest consumers of the resources of the Third District Court in many
years. The litigation has consumed years of intensive court involvement,
voluminous motion practice, extensive discovery, and even substantial
physical resources as basic as paper, copy toner, and storage space. This
consolidated case comprises more file volumes than any presently pending
case in this District that serves more than one million citizens of this state.
It is also now on its third judge and fourth or fifth law clerk. . . . [T]he point
is that court resources have already been consumed almost to exhaustion.
Id. at 134-35.
At the time Judge Hilder wrote those words, the case had been litigated in Utah
state court for more than four years. During that time, the litigation had become
profoundly intertwined with the machinery of the Utah judicial system. Parallel
proceedings had not yet begun in federal court and would not for several more months—a
consideration that ties into the fourth Colorado River factor. Under this factor, we look
to the order in which the state and federal courts obtained jurisdiction over the matter. In
applying this 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. Here, the Utah state court had already
overseen years of intensive litigation before the federal court’s jurisdiction was invoked.
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All progress in this case, in other words, has been made in the state court. The Court in
Colorado River emphasized that “[o]nly the clearest of justifications will warrant
dismissal.” 424 U.S. at 819. We find the clearest of justifications to be present here.
Our holding is bulwarked by the Supreme Court’s later decision in Moses H.
Cone. In that case, the Court supplemented its original Colorado River framework with
additional factors for courts to weigh when deciding the appropriateness of abstention.
Following Moses H. Cone, we may also look to whether “federal law provides the rule of
decision on the merits,” 460 U.S. at 23, and whether the state-court proceedings
adequately protect the litigants’ rights, id. at 26-27. In dictum, the Court also strongly
suggested that a court may take into account the possibly “vexatious or reactive nature of
either the federal or the state litigation.” Id. at 17 n.20.
Although it is true that the Federal Arbitration Act will govern the merits of
Osguthorpe’s arbitration claims, this factor does not automatically compel the conclusion
that the resolution of a claim arising under the Act is a task better suited for the federal
courts. Indeed, “[s]tate courts rather than federal courts are most frequently called upon
to apply the Federal Arbitration Act.” Nitro-Lift Techs., L.L.C. v. Howard, 133 S. Ct.
500, 501 (2012) (per curiam). Further, the bare fact that Osguthorpe has thus far failed to
obtain its desired outcome in Utah state-court litigation does not give us sufficient reason
to think that Osguthorpe’s rights are somehow less protected in the Utah state-court
proceedings. And it has also not escaped our attention that Osguthorpe came to the
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federal courts for relief only after receiving an unfavorable state-court ruling on
arbitrability several years after litigation had begun in Utah’s state-court system.
In Moses H. Cone, the Court found that the federal district court had improperly
stayed the state-court proceedings under Colorado River. But the parallel state- and
federal-court proceedings in Moses H. Cone were initiated within weeks—not years—of
each other. This case has been interwoven with a state-court system—on both the trial
and appellate levels—on a scale simply not seen in Moses H. Cone. Moses H. Cone did
not present the exceptional case warranting Colorado River abstention; this case does.
Above all, the Colorado River factors must “be applied in a pragmatic, flexible manner
with a view to the realities of the case at hand.” Moses H. Cone, 460 U.S. at 21. Guided
by this bedrock principle of judicial administration, we now hold that this case should
live out the rest of its days in the place where it began: the Utah state courts. Having
concluded that dismissal was proper in this case under Colorado River doctrine, we do
not think it necessary to discuss the merits of Osguthorpe’s other arguments on the
arbitrability of the Development Agreement claims.
D. The Award of Attorney’s Fees
After the federal district court dismissed this suit, ASC Utah asked for attorney’s
fees under 42 U.S.C. § 1988(b).14 Section 1988(b) provides that, in an action brought to
vindicate a party’s civil rights under 42 U.S.C. § 1983, inter alia, “the court, in its
discretion, may allow the prevailing party . . . a reasonable attorney's fee as part of the
14
Only ASC Utah sought attorney’s fees in the federal-court action.
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costs.” In a § 1983 action, “[a] prevailing defendant may recover an attorney's fee only
where the suit was vexatious, frivolous, or brought to harass or embarrass the defendant.”
Hensley v. Eckerhart, 461 U.S. 424, 429 n.2 (1983). Arguing that Osguthorpe’s federal
suit was both vexatious and frivolous, ASC Utah asked the federal district court to award
it the costs incurred in defending against the suit—an amount ASC Utah alleged to be
$42,923.00. The federal district court agreed with ASC Utah, finding that Osguthorpe’s
lawsuit was both vexatious and frivolous and awarding ASC Utah the full amount of its
requested attorney’s fees.
We review a district court’s award of attorney’s fees for an abuse of discretion, but
we review de novo “the district court’s application of the legal principles underlying that
decision.” United States ex rel. Grynberg v. Praxair, Inc., 389 F.3d 1038, 1055 (10th
Cir. 2004). In Grynberg, we acknowledged that a district court may still award attorney’s
fees after dismissing the underlying action for lack of subject-matter jurisdiction.15 Id. at
1055-58. This is because a claim for attorney’s fees gives rise to issues separate and
distinct from the merits of the original cause of action. See Cooter & Gell v. Hartmarx
Corp., 496 U.S. 384, 395 (1990) (“It is well established that a federal court may consider
collateral issues after an action is no longer pending.”). In this case, the federal district
court principally relied on the Rooker–Feldman doctrine in dismissing Osguthorpe’s suit
for want of subject-matter jurisdiction. As stated above in section II.B, the federal district
15
Although our decision in Grynberg did not deal with an award of fees under §
1988, we thoroughly considered similar language in other fee-shifting statutes. We think
Gyrnberg’s rule also extends to § 1988 fee awards.
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court’s reliance on Rooker–Feldman was misplaced because the state-court proceedings
are not yet “final” in the sense required by that doctrine. Abstention under Colorado
River, not dismissal for lack of subject-matter jurisdiction, was the proper course.
Having said that, we believe Grynberg’s reasoning applies with equal force to cases
dismissed under doctrines of abstention. In other words, a district court may abstain from
hearing a case and still retain the power to consider a prevailing defendant’s request for
attorney’s fees.
We are satisfied that the federal district court had jurisdiction to consider ASC
Utah’s motion for attorney’s fees. Our more immediate concern in this case is the lack of
specific factual findings by the federal district court in support of its decision to award
those fees. “In order to provide meaningful appellate review, we require an articulation
of the district court's rationale.” Grynberg, 389 F.3d at 1059. Although the federal
district court held a short hearing on ASC Utah’s motion for fees, it appears from our
study of the record that the court mainly used this abbreviated hearing to announce its
decision and to ask ASC Utah to prepare an application for fees. See App. at 1872-73.
More specifically, the district court stated, “I have read your briefing on this matter. This
is the Court’s disposition to find that the suit here in federal court is both frivolous and
vexatious, and the only question I am here to consider is the amount of the fee.” Id. at
1872. Without a more detailed explanation of why the federal district court reached its
conclusions, we simply are unable to determine whether the district court “made a clear
error of judgment or exceeded the bounds of permissible choice in the circumstances.”
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Grynberg, 389 F.3d at 1058 (citation and internal quotation marks omitted). We must
vacate the award of attorney’s fees to ASC Utah and remand to the federal district court,
instructing it to make specific and detailed findings of fact to support its award.
III. CONCLUSION
For the reasons stated, we AFFIRM the district court’s dismissal and DISMISS
AS MOOT the interlocutory appeal of the district court’s order denying the motion to
compel arbitration and for a stay of the state-court proceedings. Finally, we VACATE
the district court’s award of attorney’s fees and REMAND the matter to the district court
for detailed findings of fact sufficient to afford meaningful appellate review of its award.
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11-4062 - D.A. Osguthorpe Family Partnership v. ASC Utah, Inc.
HARTZ, Circuit Judge, concurring:
I join Judge Holloway’s opinion but add a few words to express skepticism that
the district court will be able to state a proper ground for the attorney-fee award.
The Appellees sought attorney fees on the ground that the suit was frivolous and
vexatious. As I understand their brief, however, the “vexatious” ground is dependent on
the complaint having been frivolous. I will therefore address only whether the complaint
was frivolous.
Perhaps the district court determined that the complaint was frivolous because
there was obviously no federal jurisdiction. But it was incorrect in ruling that it lacked
jurisdiction under the Rooker-Feldman doctrine; and even though we hold that it was
proper for the district court to abstain under the Colorado River doctrine, I do not think
that the contrary view is a frivolous one.
The other alternative is that the district court determined that the complaint was
frivolous on the merits. But such a justification for the attorney-fee award would be
inconsistent with Colorado River abstention. If the claims are frivolous, then they can be
decided readily, the inconvenience of any possible piecemeal litigation is minimal, and
there would be scant reason for abstention.