Transocean Offshore USA, Inc. v. Catrette

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS January 12, 2007
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
)))))))))))))))))))))))))) Clerk
No. 06-30474
Summary Calendar
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TRANSOCEAN OFFSHORE USA, INC.
Plaintiff–Appellant
v.
DAVID CATRETTE
Defendant–Appellee
Appeal from the United States District Court
for the Eastern District of Louisiana
No. 2:05-CV-6328
Before DEMOSS, STEWART, and PRADO, Circuit Judges.
PER CURIAM:*
This is an appeal from a district court’s order staying this
litigation in favor of similar state court litigation. Because
the district court abused its discretion in staying this case, we
REVERSE the district court’s order and REMAND the case for
further proceedings consistent with this opinion.
I. FACTUAL AND PROCEDURAL BACKGROUND
*
Pursuant to 5TH CIRCUIT RULE 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIRCUIT
RULE 47.5.4.
Defendant-Appellee David Catrette (“Catrette”) was employed
as a mechanic by Plaintiff-Appellant Transocean Offshore USA,
Inc. (“Transocean”), for approximately ten years. On April 9,
2003, Catrette reported to a Transocean medic that he was
experiencing discomfort in his right shoulder as a result of an
accident on the M/V DISCOVERER SPIRIT.1 After an examination,
the medic gave Catrette an anti-inflammatory and released him to
resume work.
Catrette made no further complaints about his shoulder until
February 12, 2004, when he advised Transocean that he had
sustained a rotator cuff injury as a result of his accident in
2003. Catrette requested further treatment as well as
compensation for his expenses arising out of the injury.
Transocean’s claims handler, Shuman Consulting Services, L.P.,
(“Shuman Consulting”) arranged for Catrette to see Dr. Jay
Binder, an orthopedic specialist. Dr. Binder concluded that
Catrette did not have a torn rotator cuff, but did recommend a
course of physical therapy. Catrette claims that Dr. Binder
informed Shuman Consulting of his diagnosis and recommendation,
but that no one ever told Catrette of the results.
Transocean and Catrette then entered into a settlement
agreement (the “Release”). In exchange for $4000, Catrette
1
The date of the alleged accident is disputed, but the
court need not resolve that issue in order to reach its decision
in this case.
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agreed to release and indemnify Transocean from any and all
claims Catrette might have arising out of the alleged accident.
The agreement was memorialized before a court reporter in a
transcript of the settlement proceedings. Catrette did not have
his own attorney during these proceedings.
Catrette later claimed that he was subsequently diagnosed
with a rotator cuff tear. Therefore, on June 27, 2005, Catrette
commenced litigation under the Jones Act against Transocean in
the United States District Court for the Eastern District of
Louisiana. Catrette voluntarily dismissed his complaint three
days later and refiled his suit in a Louisiana state court on
July 14, 2005. Catrette filed a motion for partial summary
judgment in state court, asking the state court to invalidate the
Release as a result of lack of consent and inadequate
consideration, based on the fact that Catrette was not aware of
Dr. Binder’s conclusions when he agreed to the Release. The
state court denied Catrette’s motion, finding there were genuine
issues of material fact regarding the validity of the Release.
Transocean filed the instant lawsuit on December 2, 2005,
seeking damages from Catrette as a result of Catrette’s breach of
the Release. Transocean filed a motion for partial summary
judgment, to which Catrette responded by filing a motion to
dismiss and, alternatively, a motion to stay the suit in favor of
his state court lawsuit. The district court granted the stay,
and Transocean now appeals.
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II. JURISDICTION AND STANDARD OF REVIEW
Transocean premises federal subject matter jurisdiction on
diversity of citizenship, see 28 U.S.C. § 1332, and admiralty
jurisdiction, see 28 U.S.C. § 1333, and made an admiralty
designation under Rule 9(h) of the Federal Rules of Civil
Procedure. We have jurisdiction over the district court’s order
granting the stay under 28 U.S.C. § 1291. See Moses H. Cone
Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 8-13 (1983);
see also Am. Guar. & Liab. Ins. Co. v. Anco Insulations, Inc.,
408 F.3d 248, 250 (5th Cir. 2005). We review a district court’s
decision to stay a federal suit pending the outcome of state
court litigation for an abuse of discretion; however, we consider
any legal interpretations underpinning the decision de novo.
Black Sea Inv., Ltd. v. United Heritage Corp., 204 F.3d 647, 649-
50 (5th Cir. 2000); see also Stewart v. W. Heritage Ins. Co., 438
F.3d 488, 491 (5th Cir. 2006).
III. DISCUSSION
It is well established that federal courts have a “virtually
unflagging” obligation to exercise the jurisdiction given to
them. Colo. River Water Conservation Dist. v. United States, 424
U.S. 800, 817 (1976). As a result, the pendency of an action in
state court is typically no bar to proceedings concerning the
same matter in federal court. Id. There are, however, several
exceptions to this general rule.
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One such exception is found in Brillhart v. Excess Insurance
Co. of America, 316 U.S. 491 (1942), which is applicable when the
federal suit seeks only declaratory relief. Under Brillhart, a
federal court may stay a declaratory judgment suit in favor of
state court litigation if, after consideration of several
factors, the court determines that the suit would be better
handled by the state court. Sherwin-Williams Co. v. Holmes
County, 343 F.3d 383, 389 (5th Cir. 2003) (listing six factors a
court should consider). However, when the federal suit seeks
monetary or other relief, even if declaratory relief is also
requested, the standard found in Colorado River is used to
determine whether a stay of the federal proceedings is warranted.
Am. Guar., 408 F.3d at 250-51. Under Colorado River, the
district court’s discretion to stay is “narrowly circumscribed”
and requires the existence of “exceptional circumstances” before
a stay is permissible. See id.; Southwind Aviation, Inc. v.
Bergen Aviation, Inc., 23 F.3d 948, 951 (5th Cir. 1994) (per
curiam).
Here, Transocean’s federal suit seeks monetary relief by way
of a breach of contract claim. The district court did not apply
either Brillhart or Colorado River in its analysis, but did
characterize Transocean’s federal suit as “virtually tantamount
to a declaratory judgment action . . . .” (4/19/06 Order &
Reasons at 10.) There was no finding, however, that Transocean’s
breach of contract claim was frivolous or that it was included
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solely to prevent application of the more lenient Brillhart
standard. See Kelly Inv., Inc. v. Cont’l Common Corp., 315 F.3d
494, 497 n.4 (5th Cir. 2002) (applying Colorado River when claims
for coercive relief were not frivolous and there was no evidence
they were added solely to avoid Brillhart). Thus, under this
court’s precedent, stay of the federal proceedings must be
analyzed under Colorado River. See Southwind Aviation, 23 F.3d
at 951 (holding that, because suit requested damages for breach
of contract, Colorado River applied, even though district court
characterized suit as declaratory judgment action).
A. Colorado River Analysis
We turn now to whether this case meets the exceptional
circumstances test outlined in Colorado River. As an initial
matter, a stay under Colorado River is permissible only when the
federal and state cases are “parallel.” Am. Guar., 408 F.3d at
251; Diamond Offshore Co. v. A&B Builders, Inc., 302 F.3d 531,
540 (5th Cir. 2002). This means that the suits must involve the
same parties and the same issues. Am. Guar., 408 F.3d at 251;
Diamond Offshore, 302 F.3d at 540.
If the federal and state cases are parallel, the court then
engages in a multi-factored analysis to determine whether there
are exceptional circumstances warranting a stay of the federal
litigation. Stewart, 438 F.3d at 491. The relevant factors
identified by the Supreme Court are: (1) the assumption by either
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court over a res; (2) the relative inconvenience of the forums;
(3) avoidance of piecemeal litigation; (4) the order in which
jurisdiction was obtained; (5) the extent to which federal law
provides the rules of decision on the merits; and (6) the
adequacy of the state proceedings to protect the rights of the
party invoking federal jurisdiction. Id.; see also Colo. River,
424 U.S. at 818. We do not apply these factors mechanically, but
carefully balance them “‘with the balance heavily weighted in
favor of the exercise of jurisdiction.’” Brown v. Pac. Life Ins.
Co., 462 F.3d 384, 395 (5th Cir. 2006) (quoting Moses H. Cone,
460 U.S. at 16).
We first note that it is questionable whether the federal
and state proceedings in this case are in fact parallel. While
the parties are the same in each case, the claims and issues are
not. Catrette’s state court suit includes a claim of negligence
against Transocean that is not present in the federal suit, and
Transocean’s federal suit contains a claim for breach of contract
that the state court suit does not. The Colorado River doctrine
cannot be invoked if the suits are not parallel; however, this
court has not always required a precise identity of parties and
issues. Brown, 462 F.3d at 395 n.7. In this case, because we
ultimately conclude that abstention is not proper, we need not
determine whether these proceedings are truly parallel. See id.Turning next to the consideration of the factors used in the
Colorado River analysis, we observe that the first two factors--
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assumption by the court over a res and relative inconvenience of
the forums--do not weigh in favor of abstention. Neither court
has assumed jurisdiction over a res, and the cases are both in
Louisiana and convenient for the parties.
The third factor, avoidance of piecemeal litigation, weighs
only slightly in favor of abstention. As explained by this court
in Stewart v. Western Heritage Insurance Co., the Colorado River
doctrine does not prohibit duplicative litigation, but only
piecemeal litigation. 438 F.3d at 492. The assertion of res
judicata following a decision by either the federal or state
court in this case would eliminate any problem of inconsistent
judgments. See id. As the litigation stands, though, with the
negligence claim in state court and the breach of contract claim
in federal court, this factor does militate toward abstention.
The order in which jurisdiction was obtained does not weigh
heavily in favor of abstention. Although Catrette’s state court
suit was first filed, Transocean could not have filed first, as
it was Catrette’s filing of the state court suit that created
Transocean’s breach of contract claim. As to the final two
factors, general maritime law provides the rules of decision in
both cases, and the state court is capable of protecting
Transocean’s rights. Both of these factors are neutral and do
not persuade this court that exceptional circumstances exist.
In sum, the avoidance of piecemeal litigation is the only
factor in the Colorado River analysis that leans toward
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permitting a stay of the federal litigation in this case. This
one factor, however, is insufficient to create the exceptional
circumstances necessary to warrant a stay of the federal
proceedings. See Stewart, 438 F.3d at 493 (finding district
court abused its discretion in staying federal litigation when
avoidance of piecemeal litigation was only factor weighing in
favor of abstention). Accordingly, granting a stay under the
Colorado River doctrine would be an abuse of discretion in this
case.
B. The District Court’s Analysis
As noted above, the district court did not rely on either
Brillhart or Colorado River in making its decision to stay the
case. Instead, the district court determined that a stay was
appropriate because (1) Catrette has a right to a jury trial in
state court on his Jones Act claim, but would not have a right to
a jury trial in federal court; and (2) proceeding with the
federal action would amount to a “constructive removal” of
Catrette’s Jones Act claim, which is not removable as a matter of
law.
We make no comment on whether the district court’s analysis
of Catrette’s right to a jury trial in federal court is correct.
We do, however, note that neither the Supreme Court nor this
court has ever held that a stay is appropriate solely because a
jury trial is available in one forum, but not another. Indeed,
the availability of a jury trial is not one of the factors the
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Supreme Court has authorized lower courts to consider in
determining whether a stay is warranted under Brillhart or
Colorado River.
As for the district court’s concern about a constructive
removal, this court has found no Supreme Court or court of
appeals opinion that even recognizes constructive removal. The
closest Catrette has come to case law on constructive removal is
Great Lakes Dredge & Dock Co. v. Ebanks, 870 F. Supp. 1112 (S.D.
Ga. 1994). In that case, the district court granted a motion to
dismiss a declaratory judgment claim in federal court when the
injured seaman had filed a Jones Act claim in state court. Id.
at 1119. The court noted that the declaratory judgment claim
amounted to a “backdoor” removal. Id. at 1118. This statement,
however, came in a discussion of the Brillhart factors, since the
court specifically refused to apply the strict standard found in
Colorado River, and, thus, this case is distinguishable from the
case at hand. Id. Further, because the federal suit in Great
Lakes was only a declaratory judgment, it resembled a
“constructive removal” much more closely than does this case,
where damages for a breach of contract are also sought.
The district court cites numerous cases for the proposition
that it is permissible to stay or dismiss a federal declaratory
judgment action in favor of a state court Jones Act claim. See,
e.g., Torch, Inc. v. Leblanc, 947 F.2d 193 (5th Cir. 1991); Rowan
Cos. v. Griffin, 876 F.2d 26 (5th Cir. 1989); Taira Lynn Marine,
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Inc. v. Blanchard, No. 00-CV-2161, 2000 WL 1520959 (E.D. La. Oct.
12, 2000); Belle Pass Towing Corp v. Cheramie, 763 F. Supp. 1348(E.D. La. 1991). None of these cases, however, applied the
Colorado River exceptional circumstances standard, because all of
the cases dealt only with federal declaratory judgments. Our
precedent demands that we apply Colorado River in this case
because Transocean has sought monetary damages for breach of
contract. Therefore, those cases, which were analyzed under a
more lenient standard, do not persuade this court that a stay is
appropriate under Colorado River.
Consequently, the district court abused its discretion when
it did not apply Colorado River to its analysis of Catrette’s
motion to stay and, instead, stayed the case on grounds not
recognized by this court or the Supreme Court. As a result, we
reverse the district court’s order staying this litigation and
remand for further proceedings.
IV. CONCLUSION
For the reasons above, we REVERSE the district court’s order
staying this litigation and REMAND for further proceedings
consistent with this opinion.
REVERSED and REMANDED.
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