Pontchartrain v. Tierra de Los Lagos

Case: 22-30286 Document: 00516473186 Page: 1 Date Filed: 09/15/2022
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
September 15, 2022
No. 22-30286
Lyle W. Cayce
Clerk
Pontchartrain Partners, L.L.C.,
Plaintiff—Appellant,
versus
Tierra de Los Lagos, L.L.C., doing business as Bee Sand
Company,
Defendant—Appellee.
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:21-CV-1765
Before Stewart, Duncan, and Wilson, Circuit Judges.
Per Curiam:
Plaintiff-Appellant Pontchartrain Partners, L.L.C., appeals the
district court’s grant of Defendant-Appellee’s Motion to Dismiss
Anticipatory Lawsuit and Motion to Transfer Venue to the Southern District
of Texas, Galveston Division, in the Alternative. We AFFIRM.
I.
Pontchartrain Partners, L.L.C. (“Pontchartrain”) and Tierra De Los
Lagos, L.L.C. d/b/a Bee Sand Company (“Bee Sand”) are construction
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No. 22-30286
companies involved in a breach-of-contract dispute. In June 2021, Bee Sand
sued Pontchartrain in Texas state court. Pontchartrain removed the case to
federal court in July. Later that month, Bee Sand voluntarily dismissed the
case, and explained to Pontchartrain that it intended to refile in September—
after a new Texas law governing attorney’s fees went into effect. Bee Sand
also offered to refile in federal court to spare Pontchartrain the expense of a
second removal, and Pontchartrain said that it would consider the matter.
Instead of responding to this offer, Pontchartrain sought to preempt
Bee Sand by suing in Louisiana state court on August 26, 2021. Pontchartrain
requested a declaratory judgment in its favor. Bee Sand removed this case to
federal court and refiled its previous suit in Texas state court on September
3, 2021—a case that has also since been removed to federal court. In response
to Pontchartrain’s declaratory judgment action, Bee Sand argued that it was
anticipatory in nature, meaning that the Southern District of Texas is the
proper forum for this dispute. The district court agreed and dismissed the
case, admonishing Pontchartrain’s counsel “to stop the childish fighting in
the sandbox and return to the very able federal court in the Southern District
of Texas to address this serious matter.” Pontchartrain appealed, hoping to
continue its playground squabble in this forum.
II.
We review a district court’s dismissal of a declaratory judgment action
for abuse of discretion. Sherwin-Williams Co. v. Holmes Cnty., 343 F.3d 383,
389 (5th Cir. 2003).
III.
Pontchartrain filed suit in Louisiana before Bee Sand refiled its lawsuit
in Texas. Given this, Pontchartrain argues that the district court should have
applied the “first-to-file” rule and refrained from dismissing its declaratory
judgment action. Pontchartrain is mistaken.
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In deciding whether to dismiss a declaratory judgment action, district
courts must consider at least six factors:
(1) whether there is a pending action in which all of the matters in
controversy may be fully litigated;
(2) whether the plaintiff’s suit is anticipatory;
(3) whether the plaintiff engaged in forum shopping;
(4) whether possible inequities in allowing the declaratory plaintiff to
gain precedent in time or to change forums exist;
(5) whether the federal court is a convenient forum for the parties and
witnesses; and
(6) whether retaining the lawsuit in federal court would serve the
purpose of judicial economy.
Travelers Ins. Co. v. La. Farm Bureau Fed’n, Inc., 996 F.2d 774, 778 (5th Cir.
1993). In performing this analysis, the district court should “balance[] the
purposes of the Declaratory Judgment Act” with the reasons for abstaining
from deciding a case on the merits. Ibid.Alongside these considerations, in situations where, as here, there
exist two separately filed lawsuits pending in different courts, “[t]his circuit
has recognized and applied . . . the first-filed rule.” W. Gulf Mar. Assoc. v.
ILA Deep Sea Lo. 24, 751 F.2d 721, 730 (5th Cir. 1985) (citing Mann Mfg.,
Inc v. Hortex, Inc., 439 F.2d 403 (5th Cir. 1971)). This “‘first-to-file’ rule is
grounded in principles of comity and sound judicial administration.” Save
Power Ltd. v. Syntek Fin. Corp., 121 F.3d 947, 950 (5th Cir. 1997). To
effectuate these principles, the rule provides that “[i]n the absence of
‘compelling circumstances,’ the district court who gets the suit first should
be the one to decide the case.” Excel Music, Inc. v. Simone, No. CIV. A. 95-
3626, 1996 WL 5708, at *6 (E.D. La. Jan. 5, 1996) (quoting Mann, 439 F.2d
at 407). But where such “compelling circumstances” exist, dismissal of a
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first-filed declaratory judgment action may be appropriate. See Missions Ins.
Co. v. Puritan Fashions Corp., 706 F.2d 599, 602 n.3 (5th Cir. 1983) (affirming
dismissal of first-filed declaratory judgment action after finding “indications
that forum-shopping was an element in this case”); see also Abbott Lab’ys v.
Gardner, 387 U.S. 136, 155 (1967) (“A court may even in its discretion
dismiss a declaratory judgment or injunctive suit if the same issue is pending
in litigation elsewhere.”).
Pontchartrain argues that there was “no litigation pending between
the parties” after Bee Sand’s voluntary dismissal, meaning that it “was well
within its rights to file suit.” Because its suit was technically the first to be
filed, Pontchartrain suggests that the “first-to-file” rule served as an
independent limitation on the district court’s ability to dismiss the case. We
disagree. The district court fully understood that Pontchartrain’s suit was
technically the first to be filed. But it nevertheless found that compelling
reasons warranted dismissal. Pontchartrain’s arguments fail to sufficiently
engage with these reasons.
First, guided by the aforementioned six factors, the district court
concluded that this action and Bee Sand’s Texas lawsuit were duplicative. It
then found that Pontchartrain’s Louisiana lawsuit was anticipatory in light of
the fact that Bee Sand had informed Pontchartrain of its intent to refile.
Because Pontchartrain nevertheless filed this suit, the district court found
that Pontchartrain was motivated by a “race to the courthouse.” This “race
to the courthouse” represented a misuse of the Declaratory Judgment Act
that attempted to preempt the proper plaintiff’s forum choice. These
reasons, combined with the district court’s consideration of the remaining
abstention factors, provided adequate justification for granting Bee Sand’s
motion. Moreover, these same reasons more than satisfy the “compelling
circumstances” needed to obviate the “first-to-file” rule’s application, so
the district court was not obligated to hear this case under that rule.
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Accordingly, the district did not abuse its discretion. Because we find that the
district court did not abuse its discretion in dismissing Pontchartrain’s
anticipatory lawsuit, Pontchartrain’s jurisdictional and venue arguments
need not be considered.
* * *
The district court’s judgment is AFFIRMED.
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