Opinion
No. 05-1002-T/An.
April 8, 2005
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
The plaintiff, Baker Energy, Inc. ("Baker"), filed the present complaint on January 5, 2005, against Girkin Development, L.L.C. ("Girkin"). On January 25, 2005, Girkin filed a motion to dismiss on the grounds that a prior action involving the same parties and common questions of law and fact is pending in another federal court. Pursuant to Local Rule 7.2(a)(2), Baker's response to the motion was due on or before February 28, 2005. See Fed.R.Civ.P. 6(a), (e). However, no response has been filed. The Court has become aware that Baker filed a voluntary Chapter 11 proceeding on February 15, 2005, in the United States Bankruptcy Court for the Western District of Tennessee.
Baker's complaint alleges that, pursuant to an order of the United States Bankruptcy Court for the Northern District of Illinois in case no. 02-40045 (JHS), dated April 19, 2003, Baker assumed certain lease obligations that the debtor, Clark Retail Enterprises, Inc., had to Girkin. These assumed obligations included personal property and equipment lease obligations for nine gasoline station/convenience stores, included under a Master Equipment and Personal Property Lease. Baker alleges that it was subsequently notified by Girkin on September 12, 2003, that the rent for the personal property and equipment at the nine stores was $60,500 per month. Baker paid that amount of monthly rent through December 2004.
The complaint further alleges that Baker discovered that the rent for the nine stores should have been only $14,473 per month. Therefore, Baker alleges that it has overpaid more than $750,000 in rent to Girkin. The complaint asserts causes of action for breach of the lease and misrepresentation and seeks recovery of the overpayment, as well as punitive damages. In the alternative, Baker seeks a declaratory judgment regarding the correct amount of the monthly rent for the nine stores, and the amount of any overpayment.
Exhibits submitted with the motion to dismiss show that a declaratory judgment action was filed by G.D. Deal Holdings, L.L.C. and Girkin against Baker in Kentucky Circuit Court on January 4, 2005, one day prior to the filing of this case. The Kentucky action involves some of the same issues that Baker raises in this case regarding the amount of monthly rent due and whether there has been an overpayment by Baker. On January 10, 2005, Baker removed Girkin's action from Kentucky state court to the United States District Court for the Western District of Kentucky.
G.D. Deal Holdings, L.L.C. and Girkin Dev., L.L.C. v. Baker Energy Inc., No. 1:05-CV-03-M (W.D. Ky. filed Jan. 4, 2005.).
Baker filed an answer and counterclaim in the Kentucky action on January 14, 2005, and an amended answer and counterclaim on January 20, 2005. The counterclaim is virtually identical to the complaint filed in this Court. On January 24, 2005, Girkin filed a motion to consolidate the Kentucky action with another case filed against Baker in that district and a motion to amend the complaint, both of which were granted. On March 7, 2005, Baker gave notice in the Kentucky actions of its Chapter 11 filing. On March 14, 2005, the Kentucky District Court entered an order closing the consolidated cases for statistical purposes but retaining jurisdiction. The order stated that the cases would be restored to the trial docket upon proper motion if circumstances changed.
Crown Oil and Petroleum Supplies, L.L.C. v. Baker Energy, Inc., No. 1:05-CV-08-R (filed Jan. 20, 2005). Crown Oil also filed a voluntary Chapter 11 proceeding on February 9, 2005, in the United States Bankruptcy Court for the Eastern District of Wisconsin.
Girkin contends that dismissal of this case is appropriate because the previously filed Kentucky action involves the same issues and the same parties, and has joined several other necessary and indispensable parties to the dispute. Therefore, Girkin argues that full relief can only be afforded in the Kentucky action.
The "first-to-file" rule is a well-established principle providing that when actions involving nearly identical parties and issues are filed in two different district courts, the first filed should generally proceed to judgment. Zide Sport Shop of Ohio, Inc. v. Ed Tobergte Associates, Inc., 16 Fed. Appx. 433, 437 (6th Cir. July 31, 2001). However, the rule is not strict, and "[d]istrict courts have the discretion to dispense with the first-to-file rule where equity so demands." Id. Often, the rule "gives way in the context of a coercive action filed subsequent to a declaratory action." AmSouth Bank v. Dale, 386 F.3d 763, 791 n. 8 (6th Cir. 2004). "Factors that weigh against enforcement of the first-to-file rule include extraordinary circumstances, inequitable conduct, bad faith, anticipatory suits, and forum shopping." Zide Sport Shop, 16 Fed. Appx. at 437.
Baker's complaint in this Court seeks both coercive relief and, in the alternative, a declaratory judgment. While Girkin's original Kentucky complaint sought only a declaratory judgment, the amended complaint incorporates the original claims but also seeks coercive relief, as does Baker's counterclaim filed in the Kentucky action. Thus, as to the type of relief sought, both actions are now in a similar posture.
The statistical closing of the consolidated cases in Kentucky does not automatically render the dismissal of this case under the first-to-file rule inappropriate. As noted, the Western District of Kentucky has retained jurisdiction and specifically stated that the consolidated actions may be restored to the trial docket if circumstances change. In addition, as Baker has failed to file any response to Girkin's motion to dismiss the action in this Court, it must be presumed that it has no objection to the motion.
It appears to the Court that all parties necessary for full resolution of the dispute involved in this case are present in the consolidated actions in the Western District of Kentucky. Given the pending Chapter 11 bankruptcy proceedings, Baker's failure to respond to Girkin's motion to dismiss and the resulting uncertainty as to whether Baker will prosecute this case, the Court concludes that this case should be dismissed in favor of allowing the Kentucky actions to proceed to judgment if the bankruptcy proceedings allow. However, in light of these unusual circumstances, the dismissal will be without prejudice.
Accordingly, the motion to dismiss is GRANTED, and this case is hereby DISMISSED without prejudice. The Clerk of Court is directed to prepare a judgment.
IT IS SO ORDERED.