Fru-Con Construction Corp. v. Controlled Air

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 08-1712
___________
Fru-Con Construction Corporation; *
Austin Maintenance & Construction, *
Inc., a Delaware Corporation, doing *
business as Fru-Con/Austin, JV, *
*
Appellants, *
* Appeal from the United States
v. * District Court for the
* Eastern District of Missouri.
Controlled Air, Inc., a Kansas *
Corporation, *
*
Appellee. *
___________
Submitted: September 26, 2008
Filed: July 24, 2009
___________
Before BYE, BEAM, and SHEPHERD, Circuit Judges.
___________
BEAM, Circuit Judge.
Fru-Con Construction Corporation and Austin Maintenance and Construction,
Inc. (the Joint Venture) appeal the district court's application of Colorado River1
abstention to dismiss the Joint Venture's breach of contract action against Controlled
Air, Inc. We reverse.
1
Colorado River Water Conservation Dist. v. United States, 424 U.S. 800(1976).
I. BACKGROUND
Nordic Biofuels of Ravenna, L.L.C., hired the Joint Venture through a real
estate improvement contract as defined by Nebraska Revised Statute § 52-130 to
construct an ethanol production facility in Ravenna, Nebraska. The Joint Venture
engaged Controlled Air to construct the grain receiving, storage, and milling system
for the facility. Their agreement contained law and forum selection clauses requiring
all disputes between the parties to be governed by Missouri law and brought in
Missouri state court or the federal district court for the Eastern District of Missouri.
Additionally, the contract allowed the Joint Venture to terminate Controlled Air for
specified reasons and to take over the work being performed after giving seventy-two
hours written notice.
A dispute between Controlled Air and the Joint Venture arose and work ceased
on the project. Controlled Air supplied labor and materials through January 14, 2007,
and the Joint Venture assumed responsibility for the work on January 17, 2007.
Pursuant to the Nebraska Construction Lien Act (NCLA), Controlled Air recorded a
construction lien on March 1, 2007, for purportedly unpaid labor and materials. The
recording alleged that the Joint Venture owed Controlled Air $1,496,636 for labor and
materials provided through January 14. Controlled Air filed suit to foreclose the
construction lien in the District Court of Buffalo County, Nebraska, on May 18, 2007.
The Joint Venture, however, had previously filed a breach of contract action against
Controlled Air in the United States District Court for the Eastern District of Missouri.
The complaint alleged that the Joint Venture incurred damages of $1,500,000 after
January 17, 2007, as a result of Controlled Air's breach of the agreement.
Believing that its Nebraska lien foreclosure action could serve to litigate the
entire dispute between the parties, Controlled Air filed a motion asking the federal
court to abstain from or dismiss the Joint Venture's breach of contract claim in the
Eastern District of Missouri. Believing that the federal court forum could serve the
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same purpose, the Joint Venture filed a lien relief bond in Buffalo County, Nebraska,
in accordance with the NCLA, releasing the construction lien and clearing the lien
from the title to the real estate in question. A motion to dismiss or stay Controlled
Air's lien foreclosure proceeding was then filed by the Joint Venture in the District
Court of Buffalo County. Thus, a federal-state forum fight came to life.
A. Nebraska Proceedings
The Joint Venture's motion to dismiss the lien foreclosure proceeding alleged
that by filing a surety bond issued by a company authorized to do business in
Nebraska, the action was no longer in rem and the forum selection clause applied,
mandating jurisdiction in Missouri. During the first hearing on this matter, the
Nebraska court held that the bond was ineffective because only a person having an
interest in the real estate may file a bond under Nebraska Revised Statute § 52-142,
and the Joint Venture did not have an interest in the lien property.2 After the Joint
Venture amended the bond, the Nebraska court again held the bond ineffective
because it failed to identify where and upon whom service should be made. Finally,
after the Joint Venture corrected all purported mistakes, the Nebraska court ruled on
the motion to dismiss.
The Nebraska court first noted that the bond discharged the real estate lien,3 but
then concluded that the foreclosure action was still in existence "in so much as the lien
is transferred to the submitted surety bond." On this basis, the court held that the
2
This was error. Pursuant to Nebraska Revised Statute § 52-131(1), any person
(including the Joint Venture, a prime contractor as defined in Nebraska Revised
Statute § 52-127(8)), "'who furnishes services or materials pursuant to a real estate
improvement contract has a construction lien[,]'" to secure the payment of his or her
contract price. Tilt-Up Concrete, Inc. v. Star City/Fed., Inc., 582 N.W.2d 604, 610
(Neb. 1998) (quoting Neb. Rev. Stat. § 52-131(1)).
3
This was a correct analysis.
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validity of the original construction lien and the amounts that might be owed on it
were still in question. Thus, the court decided that an appropriate remedy was not
available in the federal forum and denied the motion to dismiss.
Although the contract action had not been asserted in Nebraska, the state court,
in making its ruling, applied Nebraska Revised Statute § 25-415 to dispose of the
contract's forum selection clause. That section codifies Nebraska's recognition of
forum selection clauses, but provides five exceptions. While the court originally
viewed three of the exceptions as potentially applicable, it ultimately determined that
the Joint Venture's bond was ineffective in releasing the lien from the real estate,
creating an in rem action that had to be resolved at the situs of the dispute–Nebraska.
However, as earlier stated, the Nebraska court later recognized its error as to the
efficacy of the bond in releasing the real estate lien and thereafter, upon
reconsideration, made its dismissal decision based upon the purported "unique[ness
of the lien action] to the Nebraska jurisdiction"–making a remedy not available in the
federal forum. As mentioned below, the federal district court found this to be error,
a matter with which we agree and discuss in greater detail in Section IIA.
B. Federal Proceedings
The District Court for the Eastern District of Missouri recognized its subject
matter jurisdiction but granted Controlled Air's motion to abstain from and dismiss the
Joint Venture's breach of contract action, but only after the Nebraska court retained
jurisdiction over the lien foreclosure proceeding.4 The Joint Venture disputed
Controlled Air's motion to abstain in the federal case on grounds that the construction
lien property was no longer under the exclusive control of the Nebraska court and
4
Controlled Air's motion to dismiss for lack of personal jurisdiction and
improper venue was denied. As Controlled Air did not appeal that ruling it is not
before us today.
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because the forum selection clause mandated that jurisdiction over its contract action
was properly in the federal court.
Clearly believing that the federal contract action and the state lien foreclosure
proceeding were parallel matters5–unaware of the fact that the Joint Venture, under
protest and out of an abundance of caution, had later asserted its contract action
against Controlled Air in the Nebraska court, Controlled Air, Inc. v. Abengoa
Bioenergy of Neb., LLC, No. CI07319 (D. Ct. Buffalo County, Neb. Oct. 22, 2007)
(answer and counterclaim)–the federal district court first referenced the six abstention
factors created by Colorado River and then proceeded to discuss each in turn. The
court found that the following factors favored abstention: (1) while the Nebraska
action is not in rem and the state court does not have exclusive jurisdiction, the state
court has an interest in adjudicating the contract dispute; (2) allowing the federal
action to continue would result in piecemeal litigation; (3) the Nebraska court is a
more convenient forum; (4) state law controls; and (5) the state court can adequately
protect the Joint Venture's rights. The sixth and final factor regarding priority of filing
(of the federal contract action and the state lien foreclosure action) was held neutral.
Then, the district court abstained from and dismissed the federal case.
Turning to the forum selection clause, which it separately considered, the
district court concluded that "any questions of forum were validly decided by the
Nebraska court." The district court concluded that abstention was a question for it to
decide while enforcement of the forum selection clause was a question best left "to the
5
The federal district court in formulating its abstention and dismissal order
states, for instance, "both the contract dispute before this Court, and the collection
actions in the Nebraska court, involve work performed by the respective parties on the
ethanol plan located in Nebraska. This factor, although it does not mandate
abstention, weighs in favor of abstention." Appellants' App. at 125-26. "There is
currently pending before the Nebraska state court an action involving the same Parties
and the same property at issue in the suit before this Court." Id. at 128.
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sound judgment of the Nebraska state court." The Joint Venture filed a timely appeal
alleging that the district court improperly abstained and dismissed.
II. DISCUSSION
Because the availability of a federal forum for the lien foreclosure claim has
been an issue in both the Colorado River abstention ruling and the enforceability of
the forum selection clause, we discuss that matter at the outset.
A. Lien Foreclosure Jurisdiction
Nebraska jurisdiction over the lien dispute is "unique" only in the sense that the
Nebraska statute, here the NCLA, governs the nature and amount of damages the lien
claimant may recover in its construction lien dispute, nothing more. Of course,
federal courts routinely interpret and apply state law. Frequently, as in this appeal,
statutes from more than one state are in play in a single piece of litigation.
The NCLA does not specify the forum or procedure that must be used to
determine rights and remedies under the legislation. Neb. Rev. Stat. § 52-155. A
court may use any procedure applicable to a realization on judgments to satisfy a
NCLA-based claim. Tilt-Up Concrete, Inc. v. Star City/Fed., Inc., 621 N.W.2d 502,
509 (Neb. 2001). And, any action is grounded in equity. Tilt-Up Concrete, Inc. v.
Star City/Fed., Inc., 582 N.W.2d 604, 610 (Neb. 1998). It is reviewed on appeal de
novo on the record. Id. Nothing in the statute limits an NCLA action to Nebraska
courts and it has already been correctly determined by the federal judge that the
United States District Court for the Eastern District of Missouri would have subject
matter jurisdiction over the lien dispute as well as personal jurisdiction over the
parties and proper venue. See n.4.
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Under the NCLA, "[a]ny person having an interest in real estate may release the
real estate from liens . . . by [d]epositing in the office of the clerk of the [appropriate
Nebraska] district court . . . a surety bond." Neb. Rev. Stat. § 52-142(1)(a). Upon the
deposit of a bond, "the claimant's rights are transferred from the real estate to [that]
bond and the claimant may establish his or her claim under the [Act]."6 Id. § 52-
142(3). Upon determination of the validity and amount of a lien claim, the court shall
render judgment against the surety company. Id. Thus, whether Controlled Air files
a foreclosure suit in Nebraska or Missouri, only the amount of a claim against the
bonding company is dictated by the NCLA. Recovery under the bond first requires
proof that a "real estate improvement contract" has actually been entered into. Id. §
52-131(1). In this case, the question of whether such a contract exists between the
Joint Venture and Controlled Air is answered by Missouri law–the law selected under
their agreement. And even if the applicable law is governed by Nebraska statute, the
federal court can make that determination. So, once it is established that a valid real
6
Under the NCLA, a contract vendor such as Controlled Air "is entitled to the
unpaid part of his or her contract price [] when the [vendor] has substantially
performed the contract," which includes profits incorporated into the contract. Tilt-up
Concrete, 582 N.W.2d at 614. When a vendor has not substantially performed the
contract or has been prevented from completing work, however, it is only "entitled to
a lien for the reasonable value of the labor he or she has performed and the material
he or she has furnished, [] the [vendor] cannot have a lien for the damages sustained
from the breach of contract." Id. Yet, the Nebraska Supreme Court noted that "[a]
contractor is entitled to a reasonable profit on the work performed that is secured by
a construction lien, even though the profit is limited to the extent that it may be
considered compensation for services actually rendered, as distinguished from the
amount of the contractor's loss because of an owner's breach of contract." Id. at 615.
Thus, Controlled Air is limited in damages to the reasonable value of labor and
materials provided because Controlled Air claims it was prevented from completing
work on the project. And, to be sure, Controlled Air asked for only "[t]he amount
unpaid [] for the services and materials furnished." Controlled Air may, however, file
a separate action for breach of contract for the lost profits on the contract. See Tilt-Up
Concrete, 621 N.W.2d at 507-09. So far as the record shows, Controlled Air has not
done so in either Nebraska or Missouri courts.
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estate improvement contract exists and that the Joint Venture breached that contract
by receiving and failing to pay for labor and materials provided by Controlled Air,
recovery under the bond is had through a judgment against the surety company. Id.
§ 52-142(3).
In the event that such a judgment is rendered by the federal district court for the
Eastern District of Missouri, it may be transferred, if necessary, to the District Court
of Buffalo County, Nebraska, through the Uniform Enforcement of Foreign
Judgments Act long ago enacted in Nebraska. See id. §§ 25-1587.01 to 1587.09. It
is likely, however, that any bonding company authorized to do business in Nebraska
is also directly subject to service of process in the federal courts of Missouri.
B. Federal Court Jurisdiction
1. Abstention
We review a district court's decision to abstain from exercising jurisdiction over
the federal court contract action under Colorado River for an abuse of discretion.
Mountain Pure, LLC v. Turner Holdings, LLC, 439 F.3d 920, 926 (8th Cir. 2006).
Federal courts, however, have a "virtually unflagging obligation . . . to exercise the
jurisdiction given them, even when there is a pending state court action involving the
same subject matter." Id. (internal citations omitted). Thus, a federal court may divest
itself of jurisdiction by abstaining only when parallel state and federal actions exist
and exceptional circumstances warrant abstention. Colorado River Water
Conservation Dist. v. United States, 424 U.S. 800, 817-18 (1976).7
7
When a federal court moves beyond abstention to dismissal, as here,
considerably weightier reasons have to be in place. Colorado River, 424 U.S. at 818.
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Six non-exhaustive factors have been developed to determine whether, in the
case of parallel state and federal proceedings, exceptional circumstances warrant
abstention. These six factors are:
(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, 439 F.3d at 926. In this case, the district court abstained based on five
of the six factors and dismissed the case without further comment. On appeal, the
parties' focus on the district court's analysis of these six factors and, separately, the
viability of the forum selection clause. Because the federal district court compared
only the federal contract action and the state lien foreclosure action, clearly non-
parallel proceedings, the Colorado River doctrine did not provide a basis for its
judgment. Thus, we actually need not consider whether the district court properly
weighed the above factors. Nonetheless, for a reason we later note, we carefully
analyze the application of these components by the federal district court in Section
IIB2.
a. Parallel Proceedings
As a threshold matter, as above indicated, there must be pending parallel state
and federal court proceedings before Colorado River is implicated. In re Burns &
Wilcox, Ltd., 54 F.3d 475, 477 (8th Cir. 1995) (citing Baskin v. Bath Twp. Bd. of
Zoning Appeals, 15 F.3d 569, 571-72 (6th Cir. 1994)), limited on other grounds by
Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 710-11 (1996)). Precedent
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establishing a comprehensive definition of "parallel proceedings" for purposes of
Colorado River abstention is scarce in this circuit. Although the court has decided
several cases involving such proceedings, none has discussed the specific elements
of parallelism. Other circuits have, however, defined it for purposes of Colorado
River. Great Am. Ins. Co. v. Gross, 468 F.3d 199, 209 (4th Cir. 2006); Tyrer v. City
of South Beloit, 456 F.3d 744, 752 (7th Cir. 2006); Ambrosia Coal & Const. Co. v.
Pages Morales, 368 F.3d 1320, 1330 (11th Cir. 2004); United States v. City of Las
Cruces, 289 F.3d 1170, 1182 (10th Cir. 2002). The prevailing view is that state and
federal proceedings are parallel for purposes of Colorado River abstention when
substantially similar parties are litigating substantially similar issues in both state and
federal court. This circuit requires more precision.
The pendency of a state claim based on the same general facts or subject matter
as a federal claim and involving the same parties is not alone sufficient. Federated
Rural Elec. Ins. Corp. v. Ark. Elec. Coop., Inc., 48 F.3d 294, 297 (8th Cir. 1995).
Rather, 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. TruServ Corp. v.
Flegles, Inc., 419 F.3d 584, 592 (7th Cir. 2005). This analysis focuses on matters as
they currently exist, not as they could be modified. Baskin, 15 F.3d at 572.
Moreover, in keeping with the Supreme Court's charge to abstain in limited instances
only, jurisdiction must be exercised if there is any doubt as to the parallel nature of the
state and federal proceedings. AAR Int'l, Inc. v. Nimelias Enter. S.A., 250 F.3d 510,
520 (7th Cir. 2001).
With these principles in mind, we start with a specific finding that Controlled
Air's lien foreclosure proceeding is not parallel to the Joint Venture's breach of
contract action for purposes of Colorado River abstention. Controlled Air is seeking
to foreclose a Nebraska statutory lien for labor and materials furnished on and before
January 14, 2007. The Joint Venture, however, seeks common law contract damages
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for losses incurred after January 17, 2007, as a result of Controlled Air's breach of the
subcontract. While both actions stem from the same project and contractual
relationship, each is premised on a different wrong arising from different occurrences.
Upon completion of the lien foreclosure, the only issue decided will have been
whether labor and materials were provided for which the Joint Venture has failed to
pay. A decision on that claim, which has been asserted only in state court, will not
foreclose the issue of whether Controlled Air breached the subcontract and whether
the Joint Venture incurred damages as a result. Accordingly, the state lien foreclosure
action will not dispose of all issues in the federal contract action. See, e.g., George
Weis Co. v. Stratum Design-Build, Inc., 227 S.W.3d 486, 489-90 (Mo. 2007) (holding
a lien is a claim against property–here a surety bond–and breach of contract is a claim
against a person; thus, the lien proceeding did not dispose of the breach of contract
action). Neither will any judgment rendered in the lien foreclosure action be res
judicata in the contract dispute.
The sources of law, required evidentiary showings, measures of damages, and
treatment on appeal are also distinct for each claim. The lien amount is, at least in
part, based on Nebraska statute and is limited by the NCLA. The breach of contract
claim, on the other hand, is based on Missouri common law and entails the satisfaction
of five different elements. Berra v. Papin Builders, Inc., 706 S.W.2d 70, 73-74 (Mo.
Ct. App. 1986) (outlining the five breach of contract elements). The difference in
recoveries for these claims was highlighted in Preston Refrigeration Co. v. Omaha
Cold Storage Terminals, where the court said a lien is "the unpaid cost of materials
and labor actually expended," while a breach of contract action concerns the damages
incurred as a result of incomplete performance. 742 N.W.2d 782, 788 (Neb. Ct. App.
2007); see also Info. Sys. & Networks Corp. v. City of Kansas City, 147 F.3d 711,
713 (8th Cir. 1998) (addressing breach of contract damages). Finally, a lien
foreclosure is grounded in equity, tried to the court and on appeal is reviewed de novo
on the record, while the breach of contract claim is an action at law which may be
presented to a jury and is factually reviewed for clear error. Par 3, Inc. v. Livingston,
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686 N.W.2d 369, 372 (Neb. 2004); Lincoln Lumber Co. v. Lancaster, 618 N.W.2d
676, 679 (Neb. 2000); C.F.S. v. Mahan, 934 S.W.2d 615, 618 (Mo. Ct. App. 1996);
Old v. Heibel, 178 S.W.2d 351, 352 (Mo. 1944).
Almost identical facts were addressed by the Fourth Circuit in Gannett Co., Inc.
v. Clark Construction Group, Inc., 286 F.3d 737 (4th Cir. 2002). Gannett hired Clark
to build a new USA Today headquarters, a dispute arose, and work ceased. Id. at 740.
Gannett filed a federal action for breach of contract and Clark filed a lien foreclosure
action in Virginia state court. Id. Clark subsequently filed a motion to dismiss or stay
the federal proceedings pending the outcome of the state action, and Gannett filed a
motion to abate or stay the state proceedings. Id. The federal district court granted
Clark's motion to stay the proceedings pursuant to the Colorado River abstention
doctrine. Id. at 740-41.
The Fourth Circuit reversed, holding that the state lien proceeding and the
federal breach of contract action were not parallel. Id. at 741-43. The court found the
federal contract action and the state lien action involved different issues with different
requisites of proof. Id. at 742. Further, the remedies were different as the state lien
action sought foreclosure on property (here, the bond proceeds) and the federal
contract action sought compensatory damages. Id. at 743. Thus, the federal contract
action and the state lien action were not parallel proceedings and Colorado River
abstention did not apply. Id.; see also New Beckley Mining Corp. v. UMW, 946 F.2d
1072, 1074 (4th Cir. 1991) (holding state and federal actions not parallel for Colorado
River purposes because the remedies were different—one was equitable and the other
compensatory—and the sources of law came from different states).
In sum, the state lien foreclosure proceeding will not dispose of the federal
contract action and the sources of law, remedies sought, elements of proof, review on
appeal, and events giving rise to each cause of action are different. Additionally,
Controlled Air has never asserted the lien foreclosure claim in the federal district
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court. So, as to the lien foreclosure, there is neither similar claims nor similar parties
in both state and federal courts as required for parallelism. Thus, Colorado River was
not available to the federal court in adjudication of the correct locus of the contract
action.
b. Similar Claims
The foregoing analysis does not end our inquiry. When the Nebraska court
denied the Joint Venture's motion to dismiss the lien claim, the Joint Venture
answered Controlled Air's lien foreclosure action in the Nebraska court. At that same
time, to protect its contract interests in the face of Controlled Air's federal motion to
dismiss, the Joint Venture, while refusing to acknowledge the correctness of Nebraska
venue, asserted its breach of contract action in state court, but "only out of an
abundance of caution." Controlled Air, No. CI07319, answer and counterclaim at 2.
So, at that point in time, the contract action asserted by the Joint Venture against
Controlled Air was, ostensibly, pending in both the Nebraska court and the federal
district court for the Eastern District of Missouri.8
8
Unfortunately for Controlled Air, this turn of events is not advantageous to its
abstention and dismissal contentions. As already stated, there is nothing in the district
court record concerning the breach of contract counterclaim. Further, upon
questioning by this court, Controlled Air conceded that the counterclaim was "not
filed with the court." Neither was the counterclaim ever mentioned in the briefings
to this court. These facts alone foreclose any newly minted argument that the
Nebraska and federal contract actions are parallel for purposes of our consideration
of the issues in this appeal. See City of Jefferson City v. Cingular Wireless, LLC, 531
F.3d 595 (8th Cir.), cert. denied sub nom. Alltel Commc'ns, LLC v. City of
Springfield, 129 S. Ct. 739 (2008). In Jefferson City, the failure to notify the district
court of an alleged parallel proceeding, and, thus, limiting the court's ability to
exercise its discretion regarding the matter, was held to preclude this court from
considering the alleged parallel proceeding on appeal for abstention purposes. Id. at
604-05. In Jefferson City, the appellant appealed the denial of a motion to abstain
citing a state court case as a parallel proceeding. Id. We affirmed noting that
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This event, however, did not trigger parallelism between the proceedings
pending in the two courts. The principle cases in this circuit defining when actions
become parallel for abstention purposes are Scottsdale Insurance Co. v. Detco
Industries, Inc., 426 F.3d 994 (8th Cir. 2005), and Royal Indemnity Co. v. Apex Oil
Co. Inc., 511 F.3d 788 (8th Cir. 2008). As opposed to Colorado River abstention,
these cases concern the so-called Wilton/Brillhart abstention doctrine, Wilton v. Seven
Falls Co., 515 U.S. 277 (1995); Brillhart v. Excess Insurance Co. of America, 316
U.S. 491 (1942), a doctrine granting broader discretion to abstain but continuing to
require federal-state parallelism. Scottsdale counsels that the "threshold issue . . . is
whether parallel proceedings were pending in state court at the time [the federal
plaintiff] brought its [federal] action." 426 F.3d at 996. In this case, such rule defeats
a parallelistic outcome because the Joint Venture's federal action was filed well before
Controlled Air's Nebraska lien foreclosure claim and much longer before the Joint
Venture's Nebraska breach of contract assertion. While Royal Indemnity might be
read to provide a different result based strictly upon a filing time, it otherwise
demands that "the state court proceeding must present [to the federal court] 'the same
issues, not governed by federal law, between the same parties.'" 511 F.3d at 796
(emphasis added) (quoting Brillhart, 316 U.S. at 495). Such a circumstance did not
exist in this case at the time the federal court abstained from and dismissed the Joint
Venture's contract action. Notwithstanding the federal court's erroneous conclusion
that adjudication of the forum selection clause be best left "to the sound judgment of
the Nebraska state court," enforcement, or not, of the contractual forum selection
clause was a federal court procedural matter governed by federal law. Servewell
Plumbing, LLC v. Fed. Ins. Co., 439 F.3d 786, 789 (8th Cir. 2006); Rainforest Café,
Inc. v. EklecCo, L.L.C., 340 F.3d 544, 546 (8th Cir. 2003); Int'l Software Sys., Inc.
v. Amplicon, Inc., 77 F.3d 112, 114-15 (5th Cir. 1996); Jones v. Weibrecht, 901 F.2d
appellant "has not indicated where in the record it made the district court aware of this
case." Id. at 605. Thus, because the district court was unable to exercise its discretion,
and this court on appeal is not a court of first view, the alleged parallel proceeding was
ignored on appeal. Id.
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17, 19 (2d Cir. 1990); Manetti-Farrow, Inc. v. Gucci Amer., Inc., 858 F.2d 509, 513
(9th Cir. 1988); Stewart Org., Inc. v . Ricoh Corp., 810 F.2d 1066, 1068 (11th Cir.
1987) (en banc) (per curiam), aff'd on other grounds, 487 U.S. 22 (1988); Vessel
Systems, Inc. v. Sambucks, LLC, No. 05-DF-1028-LLR, 2007 WL 715773 (N.D.
Iowa Mar. 6, 2007). So, even as asserted in both jurisdictions, the Joint Venture's
contract claim presents a federal law forum selection issue, at least in the federal court.
This, of course, defeats parallelism under Royal Indemnity precedent.
2. Colorado River Abstention
Assuming, for discussion, that assertion of purportedly parallel common law
contract claims occurred in both forums, we must assess the federal district court's
findings for conformance with Colorado River. First, we reiterate, however, that for
Colorado River abstention purposes, any conclusion reached by the federal court
arising from comparisons of the common law contract action and the statutorily based
lien foreclosure claim were wholly irrelevant under both Supreme Court and Eighth
Circuit precedent. Because of use of this improper mismatch, there has been, to date,
no reference in the record to a comparative analysis under Colorado River of the
Nebraska forum and the federal forum by the federal district court with regard to these
contract actions as they may have purportedly lately pended in both jurisdictions.
With that in mind, we turn again to and analyze each of the federal court's findings as
set forth in its judgment of abstention and dismissal.
Finding One:
While the action was not in rem and the Nebraska court does not have exclusive
jurisdiction, the state court has an interest in adjudicating the contract dispute.
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Analysis:
The in rem and exclusive jurisdiction references obviously refer to the lien
foreclosure claim because the contract claim presents no such issues. While the
state court may have an interest in adjudicating the late blooming contract
claim, the Missouri courts have an equal or significantly greater interest in
adjudicating the contract claim because the forum selection clause agreed upon
by the parties specifies a Missouri court applying Missouri law. And, the
enforceability of the forum selection clause by the federal district court is one
of federal procedural law and not Nebraska substantive law as erroneously
indicated by the federal court. Also, the federal district court has little or no
discretion to ignore the Joint Venture's choice of the federal forum for the filing
of its contract claim, even in the absence of a forum selection clause.
Finding Two:
Allowing the federal action to continue would result in piecemeal litigation.
Analysis:
There will be no piecemeal litigation involving the contract claim. Litigating
the lien foreclosure claim, if that is the comparison being made by the federal
court in this finding, will require separate, and thus piecemeal, litigation in
either jurisdiction, although joinder of the separate claims may be possible
under Rule 18 of the Federal Rules of Civil Procedure. Likewise, there is no
certainty that the Nebraska court, even correctly applying Nebraska forum
selection precedent, could or would fail to enforce the contract's Missouri
forum selection clause when faced with the issue in the contract claim.
Finding Three:
The Nebraska court is a more convenient forum.
Analysis:
Given the contract agreement to apply Missouri law, the Nebraska forum is at
least incrementally less convenient than the Missouri forum. And, "mere
inconvenience to a party is an insufficient basis to defeat an otherwise
enforceable forum selection clause." Servewell Plumbing, 439 F.3d at 790.
Finding Four:
State law controls.
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Analysis:
It is likely correct that state law will apply, except, of course, to forum
enforcement. Forum clause enforcement in the federal court will require
application of federal law. Otherwise though, state law will apply in the federal
court and in the Nebraska forum and, as to the contract claim, it will be
Missouri law, not that of Nebraska. And "the presence of state law issues [in
federal court] will weigh in favor of abstention only in rare circumstances."
Federated Rural Elec. Ins. Corp. v. Arkansas Elec. Coop., Inc., 48 F.3d 294,
299 (8th Cir. 1995).
Finding Five:
The state court can adequately protect the Joint Venture's rights.
Analysis:
While it is true that the Nebraska court can adequately protect the Joint
Venture's rights, it can do so no more efficiently than the federal district court.
And, this factor counts for or against abstention and dismissal only where "one
of the forums is inadequate to protect a party's rights." Gov't Employees Ins.
Co. v. Simon, 917 F.2d 1144, 1149 (8th Cir. 1990) (emphasis in original)
(quoting Noonan S., Inc. v. County of Volusia, 841 F.2d 380, 383 (11th Cir.
1988)). Thus, this reason is no better than an even push for each forum and
certainly does not provide an "exceptional circumstance" as required by
Colorado River.
Finding Six:
Priority of filing the cases is neutral.
Analysis:
It may be true that "time of filing" of the contract claim and the lien foreclosure
claim could be fairly evaluated as neutral. But, when compared with the forced
filing time of the contract counterclaim in state court, it is a different matter.
Further, priority of filing includes a plaintiff's choice of forum. "'[T]he
plaintiff's choice of forum should rarely be disturbed.'" Reid-Walen v. Hansen,
933 F.2d 1390, 1395 (8th Cir. 1991) (quoting Gulf Oil Corp. v. Gilbert, 330
U.S. 501, 508 (1947)). "[F]ederal courts give considerable deference to a
plaintiff's choice of forum." Terra Int'l, Inc. v. Mississippi Chem. Corp., 119
F.3d 688, 695 (8th Cir. 1997). Accordingly, this factor clearly favors retention
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of the contract claim by the federal court, the chosen forum in which the Joint
Venture first filed its contract claim.
In summary, although there has been a purported Colorado River analysis of
non-parallel filings of the parties by the district court, the court has never undertaken
a review of the contract pleadings under that case's doctrine. So, at the very least,
there must be a remand to the district court for that purpose. A reading of the entire
record, however, dictates that such a course is unnecessary. Under the uncontested
circumstances of this case, abstention is unsupportable as a matter of law. None of the
reasons advanced or that could be advanced by the federal court provide the
extraordinary conditions required by Colorado River for a federal court to disregard
its "virtually unflagging obligation . . . to exercise the jurisdiction" it is given even
when there is also pending a state court action involving the same subject matter.
Mountain Pure, 439 F.3d at 926. In analyzing the Colorado River factors, the district
court's task was and is "to ascertain whether there exists exceptional circumstances,
the clearest of justifications, that can suffice . . . to justify the surrender of []
jurisdiction." Id. Indeed, even though we are a court of appellate review, "not of first
view," Cutter v. Wilkinson, 544 U.S. 709, 718 n.7 (2005), it is more than obvious that
no such circumstances or justifications exist under any acceptable analysis of any of
the causes of action. Thus, abstention from and dismissal of the Joint Venture's
federal contract claim was and would be an abuse of discretion and reversible error.
III. CONCLUSION
For the foregoing reasons, we reverse and remand to the district court for
proceedings consistent with this opinion.
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BYE, Circuit Judge, concurring in the result and joining the dissent in part.
I conclude the district court's decision to abstain from exercising jurisdiction
under Colorado River Water Conservation District v. United States, 424 U.S. 800(1976), was an abuse of discretion. Thus, I concur in the result of the court's decision
reversing the district court. I agree, however, with the dissent's view as to the
Colorado River abstention doctrine applying to this dispute and with its rejection of
the "originally filed" approach. I would hold that as a result of the Joint Venture's
breach-of-contract counterclaim, the Nebraska lien and federal contract suits are
parallel proceedings as they actually existed when the district court issued its
abstention order. I would apply the Colorado River abstention doctrine as articulated
by the dissent, but would hold the district court abused its discretion in declining to
exercise jurisdiction.
SHEPHERD, Circuit Judge, dissenting.
Because I believe we should affirm the judgment of the district court, I
respectfully dissent. This appeal presents two issues: (1) Are the Nebraska and
federal actions “parallel proceedings”? (2) If so, did the district court abuse its
discretion by abstaining under Colorado River? On the first issue, I disagree with
Judge Beam’s conclusion in Part II.B.1 of his opinion that the Nebraska and federal
suits are not parallel. See ante at 8-15. On the second issue, I disagree with the
majority’s conclusion that the district court abused its discretion by abstaining. See
id. at 15-18.
I.
The Nebraska and federal actions are “parallel proceedings.” Judge Beam
contends the cases are not parallel because Controlled Air’s lien foreclosure suit and
the Joint Venture’s action for breach of contract involve different “sources of law,
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remedies sought, elements of proof, review on appeal, and events giving rise to each
cause of action . . . .” Ante at 12. I agree that a construction lien foreclosure action
and a suit for breach of contract do not involve “substantially similar issues” and, thus,
are not “parallel proceedings” for purposes of Colorado River abstention. See Gannett
Co., Inc. v. Clark Constr. Group, Inc., 286 F.3d 737, 743 (4th Cir. 2002). However,
on October 22, 2007, four months before the district court abstained, the Joint Venture
filed a counterclaim in the Nebraska suit asserting the same cause of action for breach
of contract that it asserted in federal court.9 The Fourth Circuit recognized the
possibility of this scenario in Gannett. Id. at 742 n.4 (“We note that . . . the equity
court in the State Lien Action possesses the power to resolve the breach of contract
issues, in which case the State Lien Action arguably would be parallel to the Federal
Contract Action, but neither Clark nor Gannett has sought such relief in the State Lien
Action.”). As a result of the Joint Venture’s counterclaim, the state and federal
proceedings in this case involve substantially similar issues, and the state action will
9
Judge Beam contends that, because “there is nothing in the district court record
concerning the breach of contract counterclaim,” this fact “foreclose[s] any newly
minted argument that the Nebraska and federal contract actions are parallel for
purposes of our consideration of the issues in this appeal.” Ante at 13 n.8. However,
“we may take judicial notice of proceedings in other courts that relate to matters at
issue.” Great Plains Trust Co. v. Union Pacific R.R. Co., 492 F.3d 986, 996 (8th Cir.
2007). Further, the Joint Venture and Controlled Air have conceded, both in the
district court and on appeal, that the proceedings are parallel. See Fru-Con Constr.
Corp. v. Controlled Air, Inc., No. 4:07CV00495, slip op. at 11 n.5, 12 (E.D. Mo. Feb.
26, 2008) (“[t]here is no dispute that both cases involve the same contract” and “[b]oth
actions involve the same construction contract”); (Appellee’s Br. 12 (“The federal and
Nebraska cases clearly are parallel proceedings. [The Joint Venture] has
acknowledged the cases are parallel and has not raised this as an issue before the
District Court or this Court.”)); Audio Recording of Oral Argument at 2:28, 10:41,
16:30, Fru-Con Constr. Corp. v. Controlled Air, Inc., No. 08-1712 (8th Cir. Sept. 26,
2008) (the Joint Venture and Controlled Air conceded that the suits are parallel and
referenced the filing of the counterclaim). In light of the parties’ mutual and repeated
concessions, taking judicial notice of the Joint Venture’s counterclaim is appropriate
in this case. We should not fault the litigants for failing to introduce evidence
concerning a legal issue that they have never contested.
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undoubtedly dispose of the federal suit for breach of contract.10 Therefore, the actions
are parallel. See TruServ Corp. v. Flegles, Inc., 419 F.3d 584, 592 (7th Cir. 2005).
Judge Beam asserts that the filing of the counterclaim for breach of contract
“did not trigger parallelism between the proceedings pending in the two courts.” Ante
at 14. He asserts that we are bound by Scottsdale Insurance Co. v. Detco Industries,
Inc., 426 F.3d 994 (8th Cir. 2005). In Scottsdale, this court held that multiple state
tort suits and a federal declaratory judgment action11 were not parallel because they
10
To constitute “parallel proceedings,” state and federal actions need not be
mirror images. As Judge Beam acknowledges, “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.” Ante at 10 (citing TruServ Corp. v. Flegles, Inc., 419
F.3d 584, 592 (7th Cir. 2005)). In the present case, it is virtually certain that the
Nebraska action, which includes both Controlled Air’s lien foreclosure claim and the
Joint Venture’s counterclaim for breach of contract, will fully dispose of the Joint
Venture’s singular breach-of-contract claim in federal court.
11
The “exceptional circumstances” test from Colorado River does not apply to
actions for declaratory judgment. Prudential Ins. Co. of Am. v. Doe, 140 F.3d 785,
789 (8th Cir. 1998); see also Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995)
(“Distinct features of the Declaratory Judgment Act . . . justify a standard vesting
district courts with greater discretion in declaratory judgment actions than that
permitted under the ‘exceptional circumstances’ test of Colorado River and Moses H.
Cone.”). Despite this distinction, the threshold question of whether parallel
proceedings exist remains a necessary inquiry in declaratory judgment actions to
determine the extent of the district court’s discretion. If parallel proceedings exist, we
review the abstention decision under the lenient test expressed in Wilton. Prudential
Ins. Co., 140 F.3d at 788-89. If the proceedings are not parallel, the district court still
has some discretion to abstain; however, it does not have the broad discretion outlined
in Wilton. Scottsdale, 426 F.3d at 999. Instead, we review the court’s abstention
decision under a more stringent six-factor test. Id. at 998-99 (adopting the six-factor
test from Aetna Cas. & Sur. Co. v. Ind-Com Elec. Co., 139 F.3d 419 (4th Cir. 1998)
(per curiam)). However, we use the same test to determine whether cases are parallel
in declaratory judgment and non-declaratory judgment actions. See id. at 997 (“Suits
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did not involve “substantially the same issues” and because Scottsdale was not a party
to the state actions. Id. at 997. In so holding, the court characterized the issue as
“whether parallel proceedings were pending in state court at the time Scottsdale
brought its [federal] declaratory judgment action.” Id. at 996 (emphasis added).
Judge Beam refers to this language in arguing that we must view the proceedings in
this case as they existed when the Nebraska lien suit and federal contract action were
originally filed, not as they actually existed when the district court abstained.
Therefore, according to this view, we cannot consider the breach-of-contract
counterclaim the Joint Venture filed five months after the Nebraska suit commenced.
Contrary to this belief, Scottsdale does not mandate an “originally filed”
approach. At best, the language in Scottsdale is dicta and, therefore, does not bind this
panel’s decision. See Passmore v. Astrue, 533 F.3d 658, 661 (8th Cir. 2008) (“[w]e
need not follow dicta” (quotation omitted)); John Morrell & Co. v. Local Union 304A
of United Food & Commercial Workers, 913 F.2d 544, 550 (8th Cir. 1990) (“[w]e
need not follow dicta,” which is “language . . . in [an] earlier [] opinion [that] was not
essential to the judgment in that case”). Unlike in the present case, the parties in
Scottsdale never filed counterclaims or otherwise altered the parties or issues involved
in their state and federal actions. See Scottsdale, 426 F.3d at 996-97. Because the
suits were never altered, it was not essential to the Scottsdale court’s judgment to
determine that we must view the proceedings as they existed when originally filed, as
opposed to some other point in time.
Our recent decision in Royal Indemnity Co. v. Apex Oil Co., Inc., 511 F.3d 788(8th Cir. 2008), further proves that we do not follow an “originally filed” approach in
this circuit. In Royal Indemnity, Apex Oil filed suit in state court against multiple
are parallel if substantially the same parties litigate substantially the same issues in
different forums.” (quotation omitted)). Therefore, declaratory judgment abstention
cases are applicable to the present case insofar as they concern the threshold question
of whether parallel proceedings exist.
-22-
insurance companies (the “state insurers”) on August 5, 2005, seeking a declaration
of the parties’ rights and responsibilities under policies the state insurers had issued
Apex Oil. Id. at 791. On March 22, 2006, Royal Indemnity brought a declaratory
judgment action in federal court against Apex Oil that named several other insurance
companies (the “federal insurers”) and sought an adjudication of the parties’ rights
and obligations under policies that Royal Indemnity and the federal insurers had
issued Apex Oil. Id. Two months later, on May 19, 2006, Apex Oil amended its
state-court complaint to name Royal Indemnity and the federal insurers as defendants
in the state lawsuit. Id. at 791-92. The district court found that the state and federal
proceedings were parallel and, therefore, exercised its broad discretion to abstain in
a declaratory judgment action under Wilton. Id. at 792. We agreed that the state
action was parallel and affirmed the district court’s decision to abstain under the broad
Wilton standard. Id. at 797. Thus, in Royal Indemnity, the amended state-court
complaint, filed two months after the federal lawsuit commenced and nine months
after the state lawsuit commenced, made the proceedings parallel.
Under Judge Beam’s approach, the Eighth Circuit panel in Royal Indemnity
necessarily erred. As the state and federal suits existed when they were originally
filed, Apex Oil was the only party common to both actions, which involved different
insurers and different policies. Id. at 791. Because Apex Oil’s state lawsuit against
the state insurers would not have disposed of the federal action against Royal
Indemnity and the federal insurers, the proceedings were not parallel as they existed
when originally filed. See TruServ, 419 F.3d at 592. Only after Apex Oil added
Royal Indemnity and the federal insurers as defendants in the state action did the
proceedings become parallel because the state action would have disposed of the
entire federal case. See id. Under the “originally filed” approach, because the suits
were not parallel as originally filed, the district court could not have had broad
discretion to abstain under Wilton; it could only have had limited discretion to abstain
under Aetna. Contra Royal Indemnity, 511 F.3d at 797 (“[W]e affirm the district
court’s decision to apply the Wilton . . . abstention standard, and . . . we hold that the
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district court did not abuse its discretion in abstaining from this lawsuit to allow the
parallel state court action to proceed.” (emphasis added)).
The fact that we clearly did not view the state and federal proceedings as they
existed when originally filed was essential to our reasoning and judgment in Royal
Indemnity and is binding on this panel. See Passmore, 533 F.3d at 660 (we “cannot
overrule an earlier decision by another panel”). In both Royal Indemnity and the
present case, the proceedings were not parallel as they existed when originally filed,
but they became parallel before the district court issued its abstention order.
Therefore, Judge Beam’s approach in the present case impermissibly ignores our
recent decision in Royal Indemnity.12
12
Judge Beam states that “[w]hile Royal Indemnity might be read to provide a
different result based strictly upon a filing time, it otherwise demands that the state
court proceeding must present [to the federal court] the same issues, not governed by
federal law, between the same parties.” Ante at 14 (quotation omitted). He further
opines that “enforcement, or not, of the contractual forum selection clause was a
federal court procedural matter governed by federal law” . . . [and] [t]his, of course,
defeats parallelism under Royal Indemnity precedent.” Id. at 14-15. In my view, such
an interpretation of the cited language from Royal Indemnity would give those words
unwarranted meaning. If a difference between state and federal procedural law
governing the two actions necessarily defeats parallelism, then there will be few, if
any, situations in which Colorado River abstention is permissible because all
procedural matters in federal court are governed by federal law. See Erie R.R. Co. v.
Tompkins, 304 U.S. 64 (1938). Moreover, contrary to Judge Beam’s contention, see
ante at 14, Servewell Plumbing and Rainforest Café make clear that we have not yet
decided whether enforcement of a contract’s forum selection clause is governed by
state substantive or federal procedural law, see Servewell Plumbing, 439 F.3d at 789
(“Because the enforceability of a forum selection clause concerns both the substantive
law of contracts and the procedural law of venue, there is some disagreement among
the circuits over whether state or federal law applies, and we have yet to adopt a
definitive position on the issue. Nor must we do so here . . . .” (quotation and citations
omitted)); Rainforest Café, 340 F.3d at 546 (“we indulge their suggestion that we
interpret the forum selection clause under federal law” only “[b]ecause the parties
have not argued that state law would result in a materially different outcome”).
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Moving beyond issues of stare decisis, the principles underlying Colorado
River abstention also counsel against adopting an “originally filed” approach to
determine whether state and federal actions are parallel. Those principles “rest on
considerations of wise judicial administration, giving regard to conservation of
judicial resources and comprehensive disposition of litigation.” Colorado River
Conservation Dist. v. United States, 424 U.S. 800, 817 (1976) (quotation omitted).
Put another way, “[a]llowing the litigation to proceed simultaneously in federal and
state courts is wasteful because ultimately only one of the jurisdictions will actually
decide the case. Once one court renders a ruling, the other court will be obliged to
halt its proceedings and give res judicata effect to the decision.” Erwin Chemerinsky,
Federal Jurisdiction 867 (5th ed. 2007). Thus, Colorado River asks, if the district
court exercises its discretion to abstain now, will it conserve judicial resources and
promote comprehensive disposition of the litigation in the future?
The presence of parallel proceedings is a prerequisite for the application of
Colorado River abstention because, unless “a parallel state-court action exists, [] the
[federal] district court would have nothing in favor of which to abstain.” Baskin v.
Bath Twp. Bd. of Zoning Appeals, 15 F.3d 569, 571 (6th Cir. 1994). Thus, the
existence of parallel proceedings triggers the district court’s discretion to abstain
under Colorado River. Under the approach advanced by Judge Beam, to determine
whether its discretion to abstain is triggered, the district court must take a snapshot of
the state and federal suits as they existed when originally filed.
If, as in the present case, the parties or issues involved in the proceedings have
changed since the suits were originally filed, then taking a snapshot of the proceedings
as they existed in the past says nothing about whether abstention will conserve judicial
resources and promote comprehensive disposition of the litigation in the future. If,
as in Scottsdale, the parties and issues have never changed, then there is no difference
between taking a snapshot of the proceedings as they existed in the past and taking a
snapshot of the proceedings as they currently exist. The snapshots look the same, and
-25-
the answer to the parallel proceedings inquiry is the same. Therefore, in light of the
principles underlying Colorado River abstention, it only makes sense for the district
court to view the state and federal proceedings as they currently exist to determine
whether its discretion to abstain is triggered. See, e.g., Baskin, 15 F.3d at 572 (“The
issue is whether the state court proceeding, as it currently exists, is a parallel, state-
court proceeding.” (quotation and alteration omitted)).
Finally, and most importantly, if state and federal proceedings are parallel as
originally filed but become unparallel before the district court issues its abstention
order, an “originally filed” approach would still trigger the district court’s discretion
to abstain solely because the actions were parallel at some point in the past. Under
this approach, the district court would have discretion to abstain under Colorado River
even though there would no longer be a parallel action in favor of which to abstain.
Consequently, such an approach runs afoul of the Colorado River doctrine and should
be rejected. As a result of the Joint Venture’s counterclaim, the Nebraska and federal
actions are “parallel proceedings” as they actually existed when the district court
abstained. See TruServ, 419 F.3d at 592; Gannett, 286 F.3d at 742 n.4; Baskin, 15
F.3d at 572.
II.
Because the proceedings are parallel, we “must consider whether the district
court abused its discretion in finding that ‘exceptional circumstances’ warranted
abstention.” Gannett, 286 F.3d at 744. Determining whether exceptional
circumstances exist requires evaluating the factors outlined in Colorado River and
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983).13
13
The Colorado River and Moses H. Cone factors are: “(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
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Federated Rural Elec. Ins. Corp. v. Ark. Elec. Coops., Inc., 48 F.3d 294, 297 (8th Cir.
1995). I believe the first and third factors weigh in favor of abstention. All other
factors are neutral and, as such, are “irrelevant to the existence of exceptional
circumstances.” Federated Rural, 48 F.3d at 297. The district court did not abuse its
discretion when it decided that this case presents the type of exceptional
circumstances that warrant abstention “in order to advance the ‘clear federal policy’
of avoiding piecemeal adjudication.” Federated Rural, 48 F.3d at 297 (quoting Moses
H. Cone, 460 U.S. at 16). Therefore, the judgment of the district court should be
affirmed.
Even though the majority will not affirm, outright reversal is not appropriate in
this case. As Judge Beam acknowledges, “although there has been a purported
Colorado River analysis of non-parallel filings of the parties by the district court, the
court has never undertaken a review of the contract pleadings under that case’s
doctrine. So, at the very least, there must be a remand to the district court for that
purpose.” Ante at 18 (emphasis added). For example, when Judge Beam finds that
“there will be no piecemeal litigation,” ante at 16, his analysis—like the district
court’s—is potentially flawed because he fails to consider the breach-of-contract
counterclaim as part of the Nebraska action. Nonetheless, he finds that “[u]nder the
uncontested circumstances of this case, abstention is unsupportable as a matter of law”
and that “it is more than obvious that no such [exceptional] circumstances or
justifications exist under any acceptable analysis of any of the causes of action.” Id.
at 18. I believe that, “at the very least,” id., we should remand so the district court will
have an opportunity to consider the Joint Venture’s Nebraska counterclaim for breach
of contract in deciding whether abstention is appropriate.
______________________________
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.” Federated Rural, 48 F.3d at 297 (quotation omitted).
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