Opinion
06 Civ. 6003 (WHP).
January 3, 2007
Y. David Scharf, Esq., Jay R. Speyer, Morrison Cohen LLP, New York, NY, Attorneys for Petitioners Charlotte Gardner and Danielle B. Gardner.
Robert I. Bodian, Esq., Seth Goldman, Mintz Levin Cohn Ferris Glovsky and Popeo PC, New York, NY, Attorneys for Respondent Peter Weisman.
MEMORANDUM AND ORDER
Charlotte Gardner ("Charlotte") and Danielle B. Gardner ("Danielle") (collectively, "Petitioners" or the "Gardners") bring this petition for injunction to prevent Peter Weisman ("Respondent" or "Weisman") from marketing or selling the property located at 100 Fifth Avenue in Manhattan. Presently before the Court is Petitioners' motion to remand this action to the Surrogate's Court of the State of New York, New York County (the "Surrogate's Court"). For the reasons set forth below, Petitioners' motion is denied.
BACKGROUND
In 1982, Weisman and Joseph Gardner formed a partnership called P J Realty Management ("P J") for the purpose of managing their real estate investments. (Petition for Injunction, dated July 21, 2006 ("Petition") ¶¶ 11-12.) Each property in P J's portfolio is owned by a separate limited partnership. (Affidavit of Robert I. Bodian, dated Sept. 20, 2006 ("Bodian Aff.") Ex. 3: Respondent's Reply to Statement of Claim ("Resp't Reply") ¶¶ 7-8.) In addition to 100 Fifth Avenue Associates L.P. ("100 Fifth Avenue"), the limited partnership at issue in this motion, P J's portfolio included West 56th Street Associates L.P., East 22nd Street Associates L.P., 160 Associates L.P., and 14-15 Street Associates L.P. (collectively, the "Limited Partnerships"). (Resp't Reply ¶ 7.) Under the agreements governing the Limited Partnerships (the "Partnership Agreements"), Weisman and Joseph Gardner were the exclusive general partners of each limited partnership. (Petition ¶ 12; Resp't Reply ¶¶ 7-8.)
Joseph Gardner passed away on March 1, 2006. (Petition ¶ 3.) Under Section 9.2 of the 100 Fifth Avenue Limited Partnership Agreement (the "100 Fifth Avenue Agreement"), Joseph was permitted to "designate" a person to succeed him as general partner of 100 Fifth Avenue. (Declaration of Jay R. Speyer, dated Sept. 6, 2006 ("Speyer Decl.") Ex. B.) Joseph left a Last Will and Testament dated December 1, 2004 (the "Will"). (Speyer Decl. Ex. A.) The Will does not specifically designate a successor to the general partnership of 100 Fifth Avenue, although it does contain a clause assigning Joseph's residuary estate to a trust for the benefit of the Gardners (the "Trust"). (Speyer Decl. Ex. A.) In a May 2006 letter to Danielle, Weisman asserted that Joseph had failed to designate a successor pursuant to Section 9.2, leaving Weisman as the sole general partner of 100 Fifth Avenue. (Speyer Decl. Ex. C.) Weisman then began preparations to sell the partnership properties.
The Gardners commenced a construction proceeding in the Surrogate's Court on or about July 13, 2006 to determine whether the Will's residuary clause is sufficient to satisfy Section 9.2's designation requirement. (Speyer Decl. Ex. F.) Several days later, the Gardners commenced an arbitration before the American Arbitration Association to prevent Weisman from unilaterally operating and selling the Partnership properties. (Petition ¶ 9; Bodian Aff. Ex. 2.)
On July 21, 2006, the Gardners filed Petitions for Injunction in the Surrogate's Court with respect to each of the Limited Partnerships. See Gardner v. Weisman, 06 Civ. 5998, 06 Civ. 5999, 06 Civ. 6001, 06 Civ. 6002, 06 Civ. 6003. The Petitions for Injunction seek to enjoin Weisman from selling the Limited Partnerships while the arbitration is pending. On July 28, 2006, the Surrogate's Court granted Petitioners' ex parte request for temporary restraining orders against Weisman in each of the five actions. On August 7, 2006, Weisman removed all five Petitions to this Court and moved to dissolve the temporary restraining orders. This Court granted Weisman's motion on August 21, 2006.See Gardner v. Weisman, No. 06 Civ. 5998 (WHP), 2006 WL 2423376 (S.D.N.Y. Aug. 21, 2006).
The Gardners now seek to remand the Petition for Injunction pertaining to 100 Fifth Avenue to the Surrogate's Court pursuant to the doctrine of abstention set forth in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976).
DISCUSSION
I. Legal Standard
In general, "the pendency of an action in . . . state court is no bar to proceedings concerning the same matter in [a] Federal court having jurisdiction." Woodford v. Cmty. Action Agency of Greene County, Inc., 239 F.3d 517, 522 (2d Cir. 2001) (quotingColorado River, 424 U.S. at 817 (1976)). The following are three traditional exceptions to this rule in which abstention by the federal court is appropriate: (1) "where there have been presented difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar;" (2) where "federal jurisdiction has been invoked for the purpose of restraining state criminal proceedings;" and (3) "in cases presenting a federal constitutional issue which might be mooted or presented in a different posture by a state court determination of pertinent state law." Colorado River, 424 U.S. at 814-16. Where, as here, the traditional exceptions are inapplicable, abstention is nevertheless permitted to avoid duplicative litigation based on considerations of "[w]ise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation."Colorado River, 424 U.S. at 817; see also Village of Westfield v. Welch's, 170 F.3d 116, 120 (2d Cir. 1999).
Abstention pursuant to "wise judicial administration" requires that the concurrent proceedings be "parallel." Abercrombie v. Andrew Coll., 438 F. Supp. 2d 243, 258 (S.D.N.Y. 2006) (quotingDittmer v. Cty. of Suffolk, 146 F.3d 113, 118 (2d Cir. 1998)). Proceedings are "parallel" when "substantially the same parties are litigating the same issues in a state forum." Carruthers v. Flaum, 388 F. Supp. 2d 360, 375 (S.D.N.Y. 2005) (internal quotation omitted); United Nat'l Ins. Co. v. Waterfront N.Y. Realty Corp., 948 F. Supp. 263, 271 (S.D.N.Y. 1996). If the litigations are parallel, the court must then consider the following factors in determining whether abstention is warranted: "(1) whether the controversy involves a res over which one of the courts has assumed jurisdiction, (2) whether the federal forum is less inconvenient than the other for the parties, (3) whether staying or dismissing the federal action will avoid piecemeal litigation, (4) the order in which the actions were filed, and whether proceedings have advanced more in one forum than in the other, (5) whether federal law provides the rule of decision, and (6) whether the state procedures are adequate to protect the plaintiff's federal rights." Woodford, 239 F.3d at 522; see also United States v. Pikna, 880 F.2d 1578, 1582 (2d Cir. 1989). "[T]he decision whether to dismiss a federal action because of parallel state-court litigation does not rest on a mechanical checklist, but on a careful balancing of the important factors as they apply in a given case, with the balance heavily weighted in favor of the exercise of jurisdiction." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16 (1983). No single factor is necessarily determinative, Village of Westfield, 170 F.3d at 121, and the facial neutrality of a factor is a basis for retaining jurisdiction, not yielding it, Woodford, 237 F.3d at 522.
II. Parallel Proceedings
As noted in this Court's August 21, 2006 order, the proceeding before this Court is not parallel to the Surrogate's Court action because different issues are involved. See Gardner, 2006 WL 2423376, at *2. Unlike the claims before the Surrogate's Court, the Petition here alleges breach of contract and breach of fiduciary duty (Petition ¶ 22). See Kshel Realty Corp. v. City of New York, No. 01 Civ. 9039 (LMM), 2003 WL 21146650, at *5-6 (S.D.N.Y. May 16, 2003) (finding proceedings non-parallel where the federal action involved certain claims that were absent from the state action). Petitioners maintain that "[b]oth actions turn on an interpretation of the Will." (Petitioners' Memorandum of Law, dated Sept. 7, 2006, at 10.) Yet this Court has already found that the federal action turns on the proper interpretation of the 100 Fifth Avenue Agreement. Gardner, 2006 WL 2423376, at *2 n. 1. Regardless of whether Joseph intended to pass the general partnership interest to the Trust through his residuary estate, the ultimate issue here is whether Section 9.2 of the 100 Fifth Avenue Partnership recognizes the validity of such a residual distribution. If it does not, then Joseph lacked the authority to ignore the intent of the parties to the partnership agreement and unilaterally change the criteria for succession of general partners. Thus, the action before this Court ultimately turns not on Joseph's intent in drafting the Will, but on the partners' intent in entering the 100 Fifth Avenue Agreement. Because Petitioners submit that the Surrogate's Court will not address the 100 Fifth Avenue Partnership Agreement, this proceeding and Surrogate's proceeding must be considered fundamentally different.
The Gardners' reliance on Congress Talcott Corp. v. Roslin, No. 95 Civ. 7698 (LAP), 1996 WL 499337 (S.D.N.Y. Sept. 4, 1996), is therefore unavailing. In Congress Talcott, the plaintiff brought suit against two guarantors for amounts allegedly owed under a contract. The plaintiff sued one guarantor in federal court and the other in state court. The state and federal court actions were "virtually identical," with "no substantive or significant procedural differences." Congress Talcott, 1996 WL 499337, at *3. The district court concluded that the proceedings were parallel.Congress Talcott, 1996 WL 499337, at *3. Here, the Surrogate's court action materially differs from this action and, therefore, the actions are not parallel.
III. Exceptional Circumstances
Even if the proceedings were deemed parallel, Petitioners fail to demonstrate the "exceptional circumstances" required for abstention under Colorado River. The six factors relevant to this determination are considered seriatim.
A. Assumption of Jurisdiction Over a Res
The parties agree that there is no res in this case. "[T]he absence of a res points toward exercise of federal jurisdiction."Woodford, 239 F.3d at 522 (quoting Village of Westfield, 170 F.3d at 122); De Cisneros v. Younger, 871 F.2d 305, 307 (2d Cir. 1989); Carruthers, 388 F. Supp. 2d at 376.
B. Convenience of Forum
The Surrogate's Court is in close geographic proximity to this Court. See Sun Life Assurance Co. of Canada v. Gruber, No. 05 Civ. 10194 (NRB), 2006 WL 1520524, at *3 (S.D.N.Y. June 1, 2006). "[W]here the federal court is `just as convenient' as the state court, that factor favors retention of the case in federal court." Village of Westfield, 170 F.3d at 122 (quoting Youell v. Exxon Corp., 48 F.3d 105, 113 (2d Cir. 1995)); accord Woodford, 239 F.3d at 523; Durst v. Siegler, No. 04 Civ. 6981 (RMB), 2005 WL 3358599, at *9 (S.D.N.Y. Dec. 7, 2005).
C. Avoidance of Piecemeal Litigation
As discussed above, the issues before the Surrogate's Court are not identical to Petitioner's claims here. See Sun Life, 2006 WL 1520524, at *4 (finding no risk of piecemeal litigation in an action requiring the court to determine the intent of an insured under a life insurance policy, despite concurrent will construction proceeding before the Surrogate's Court). A federal court is not required to abstain simply because some issues in the case are related to probate. See Giardina v. Fontana, 733 F.2d 1047, 1051 (2d Cir. 1984) (noting that "the Surrogates' Courts commonly handle such questions . . . but so do the federal courts") (quoting Beach v. Rome Trust Co., 269 F.2d 367, 374 (2d Cir. 1959)). Moreover, with five separate but closely related actions before this Court, piecemeal litigation will exist regardless of whether this Court abstains with respect to one of the actions. See Kshel Realty Corp., 2003 WL 21146650, at *5 ("With the existence of at least five pending state actions" in addition to a federal action, "piecemeal litigation already exists."). Consequently, this factor weighs against abstention.
D. Order of Filing and the Procedural Posture of the Two Actions
For 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. "[W]here there has been limited progress in a state court suit, `the fact that the state action was commenced before the federal suit carries little weight.'" Village of Westfield, 170 F.3d at 122 (quoting Andrea Theatres, Inc. v. Theatre Confections, Inc., 787 F.2d 59, 64 (2d Cir. 1986)). Although the Surrogate's proceeding was filed before this action, the Surrogate's Court has yet to issue a substantive ruling. By contrast, this Court's August 21, 2006 Order dissolved the temporary restraining orders that had precluded Respondent from marketing or selling 100 Fifth Avenue. The Petition in this action ultimately seeks a preliminary injunction to prevent Respondent from selling the property. Although this Court has not reached the merits of Petitioners' request for a preliminary injunction, "[t]he standards for granting a temporary restraining order and a preliminary injunction pursuant to Rule 65 of the Federal Rules of Procedure are identical." Spencer Trask Software and Info. Servs., LLC v. RPost Int'l Ltd., 190 F. Supp. 2d 577, 580 (S.D.N.Y. 2002); see also Echo Design Group, Inc. v. Zino Davidoff S.A., 283 F. Supp. 2d 963, 966 (S.D.N.Y. 2003). More progress has been made in this action than in the Surrogate's proceedings, which favors retention of the federal action. See Village of Westfield, 170 F.3d at 123.
E. Rule of Decision
"[A]lthough the presence of federal issues strongly advises exercising federal jurisdiction, the absence of federal issues does not strongly advise dismissal, unless the state law issues are novel or particularly complex." Village of Westfield, 170 F.3d at 124. "This factor has more influence when a federal rule of decision is involved; only in some rare circumstances may the presence of state-law issues weigh in favor of surrender of federal jurisdiction."Giardina, 733 F.2d at 1053 (internal quotation marks omitted);accord Sun Life, 2006 WL 1520524, at *4 (the federal court's familiarity with New York state law rendered rule of decision factor neutral). New York law is the only substantive law to be applied in this action, but the issues presented are neither novel nor particularly complex. Thus, this factor favors abstention only slightly.
F. Protection of Federal Rights in State Proceeding
This factor is inapplicable because none of Petitioner's federal rights are at issue in the instant proceeding. Under these circumstances, "[t]he final Colorado River factor . . . does not weigh either in favor of or against [abstention]." Sun Life, 2006 WL 1520524, at *5 (declining to abstain where no federal rights are implicated).
G. Balancing the Factors
Because only one of the six Colorado River favors abstention, this case does not present the "clearest of justifications" that warrant abstention under Colorado River. See Carruthers, 388 F. Supp. 2d at 377 (declining to abstain when only the final twoColorado River factors favored abstention).
CONCLUSION
For the foregoing reasons, Petitioners' motion to remand this action to the Surrogate's Court is denied.
SO ORDERED: