Opinion
CASE NO. 00-CV-71886-DT
August 2, 2000
OPINION AND ORDER I. INTRODUCTION
This matter is before the Court on defendant's Motion to Abstain and Stay Proceedings. Plaintiff has responded and defendant has replied. The Court has determined that the facts and the legal arguments are adequately presented in the materials currently before the Court, and believes that the decision-making process would not be significantly aided by oral argument. Consequently, the motion will be decided on the materials submitted. See E.D. Mich. Local R.7.1(e)(2). For the reasons that follow defendant's Motion to Abstain and Stay Proceedings is DENIED.
II. BACKGROUND
In 1988, Cadillac Tower Associates ("CTA") procured a loan from General Electric Capital Corporation ("GECC"). GECC secured repayment of the loan by a mortgage on the Cadillac Towers, which was owned by CTA. On January 21, 1988, John W. Lambrecht, a partner in CTA, executed a guaranty in favor of GECC, ensuring repayment of the loan. On December 13, 1989, Lambrecht died and his will was admitted to probate in the Wayne County Probate Court. In November 1994, the Probate Court ordered that all assets and liabilities be transferred from Lambrecht's estate to the John W. Lambrecht Trust ("Trust"), and approved the execution of a First Amendment to Guaranty and Ratification Agreement. Under this agreement, the Trust assumed all obligations from the original guaranty, however, the Trust's liability was capped at $725,489.60.
The mortgage and First Amendment to Guaranty and Ratification Agreement were subsequently assigned to plaintiff. CTA eventually defaulted on the mortgage, so plaintiff foreclosed, and the Cadillac Towers was sold. However there was a deficiency of over seven million dollars. Plaintiff has filed suit in this Court, demanding the Trust pay $725,489.60, as established by the First Amendment to Guaranty and Ratification Agreement. Soon after this suit was commenced, defendant, as trustee over the Trust, filed a Petition for Determination of Liabilities with Respect to Guaranty in the Wayne County Probate Court, and a Motion to Abstain and Stay Proceedings with this Court.
III. LEGAL STANDARDS
The threshold question when a court considers invoking the abstention doctrine is whether "the concurrent state and federal actions are actually parallel." Romine v. Compuserve Corp., 160 F.3d 337, 339 (6th Cir. 1998). If answered in the affirmative, the Court must then examine several factors to determine whether abstention is appropriate:
(1) whether the state court has assumed jurisdiction over any res or property; (2) whether the federal forum is less convenient to the parties; (3) avoidance of piecemeal litigation; (4) the order in which jurisdiction was obtained. . . . (5) whether the source of governing law is state or federal; (6) the adequacy of the state court action to protect the federal plaintiffs rights; (7) the relative progress of the state and federal proceedings; and (8) the presence or absence of concurrent jurisdiction,Romaine, 160 F.3d at 340-41 (citing Colorado River Conservation District v. United States, 424 U.S. 800, 8 17 (1976) (internal citations omitted)). In considering these factors, the Court is mindful that it has a "virtually unflagging obligation. . . to exercise... jurisdiction." Colorado River, 424 U.S. at 817. Further, "as between state and federal courts, the rule is that "the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction . . . ."" Id.
IV. ANALYSIS
After reviewing the materials submitted, the Court finds that defendant's Motion to Abstain and Stay Proceedings should be denied. The Court finds that defendant has failed to meet its burden under the abstention doctrine established in Romaine and Colorado River.
As an initial matter, the Court finds that the proceedings before this Court and the proceedings before the Wayne County Probate Court are parallel. In making this determination, the Court is guided by the Sixth Circuit's statement that "`exact parallelism' is not required; `it is enough if the two proceedings are substantially similar.'" Romaine, 160 F.3d at 340. The Court has reviewed the Petition for Determination of Liabilities with Respect to Guaranty submitted to the Wayne County Probate Court, and although the matter is not identical to the matter before the Court, it is substantially similar to the present case.
Turning to the factors set forth in Colorado River and Romaine, the first factor to consider is whether the Wayne County Probate Court has assumed jurisdiction over any property or res. Defendant points to the fact that the Trust is currently under the "subject and control" of the Wayne County Probate Court. The Court finds that this factor weighs in favor of granting a stay.
The second factor is whether this Court is less convenient for the parties. Defendant correctly points out that both the Wayne County Probate Court and this Court are located within the boundaries of the Eastern District of Michigan. Therefore, this factor does not weigh in favor of abstention.
Third, the Court should consider whether piecemeal litigation will result if the abstention doctrine is not invoked. "A correct evaluation of this factor involves considering whether exceptional circumstances exist which justify the special concern for piecemeal litigation." Focus Radio, Inc. v. Summit Radio, Inc., 853 F. Supp. 252, 256 (E.D. Mich. 1994). In the present case, no exceptional circumstances" exist which would justify a concern for piecemeal litigation. Unlike Colorado River, where the nature of the suit manifested a dramatic risk of piecemeal litigation, there is simply no reason to believe that maintaining jurisdiction in this case would result in an increase in piecemeal litigation. See Focus Radio, 853 F. Supp. at 256. Accordingly, this factor weighs against abstention.
The fourth factor to consider is which court obtained jurisdiction first. Although the Court agrees with defendant's statement that the Wayne County Probate Court has been dealing with this matter for years, this factor "is to be applied in a pragmatic, flexible manner with a view to the realities of the case at hand. Thus, 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 Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1, 21 (1983).
Although the Wayne County Probate Court has been dealing with issues related to the subject matter in the present case for years, the fact is that this Court has been dealing with the specific issues relating to the mortgage and First Amendment to Guaranty and Ratification Agreement for a longer period of time. The complaint in this case was filed on April 24, 2000, and defendant's answer was filed approximately six weeks later. The Court has held a scheduling conference and defendant informs the Court that it has been served with discovery requests. On the other hand, defendant only recently petitioned the Wayne County Probate Court to make a determination as to the issues in the present case on June 7, 2000.
Examining the realities of this case, the Court finds that this factor weighs in favor of denying the request for abstention. As to the issues actually presented in the suit before the Court, substantial progress has been made. Although the Wayne County Probate Court has been dealing with issues surrounding the Trust for many years, it has only recently been asked to decide the Trust's liability as to plaintiff. Consequently, the Court finds that it has made more progress than the Wayne County Probate Court on this matter.
The fifth factor to consider is whether Michigan or federal law will apply. Defendant summarily concludes that "[t]he governing law will be the substantive law of law of [sic] the State of Michigan. This factor weighs in favor of a stay." However, the Court has previously held that routine matters of state law, such as the ones presented in this case, do not "constitute a `rare' or exceptional circumstance where a district court should decline jurisdiction." Focus Radio, 853 F. Supp. at 255. Therefore, the Court finds that since Michigan law will be applied, and because the issues presented are routine, this factor weighs in favor of denying the request for abstention.
The sixth factor to consider is whether plaintiffs rights will be adequately protected in the Wayne County Probate action. Plaintiff raises no concerns as to the adequacy of the proceedings in probate court. Therefore, this factor weighs in favor of granting defendant's request for abstention.
The seventh factor to consider is the progress of the two actions, as compared to one another. As pointed out during the discussion of the fourth factor, the complaint in this case was filed on April 24, 2000, and defendant's answer was filed approximately six weeks later. The Court has held a scheduling conference and defendant informs the Court that it has been served with discovery requests. On the other hand, defendant petitioned the Wayne County Probate Court to make a determination as to the issues in the present case on June 7, 2000. Comparing the relative progress of the two actions, the Court finds that the action before it has progressed further than the action in Wayne County Probate Court. Consequently, this factor weighs in favor of denying the abstention request.
The eight and final factor is the presence or absence of concurrent jurisdiction. Defendant directs the Court's attention to M.C.L. § 700.1 303(2)-(3), which states that when state probate courts and state circuit courts have concurrent jurisdiction over a matter, the matters should be consolidated in the probate court. However, as plaintiff correctly notes, "[t]he mere duplicativeness of a parallel state and federal proceeding, and the inefficiency inherent in parallel litigation, is insufficient to justify abstention. . . ." Karakas v. McKeown, 783 F. Supp. 1028, 1032 (E.D. Mich. 1992)
After carefully considering each of the eight factors, the Court finds that defendant's request for abstention should be denied. In making this determination, the Court is heavily persuaded by the fact that it has a "virtually unflagging obligation. . . to exercise. . . jurisdiction." Colorado River, 424 U.S. at 817. Further, the Court finds that only two of the above-listed factors weigh in favor of granting defendant's request for abstention, whereas the rest of the factors weigh against granting defendant's request. Given that the majority of the factors weigh against granting defendant's request, the Court finds that defendant has not overcome the Court's "virtually unflagging obligation to exercise.., jurisdiction" over this matter.
Defendant's second argument, that abstention is justified under Burford v. Sun Oil Co., 319 U.S. 315 (1943), is simply of no avail. In discussing this case, the Supreme Court discussed the unique problems presented in Burford:
We noted, for instance, the difficulty of the regulatory issues presented, stating that the "order under consideration is part of the general regulatory system devised for the conservation of oil and gas in Texas, an aspect of "as thorny a problem as has challenged the ingenuity and wisdom of legislatures.Quackenbush v. Allstate lns. Co., 517 U.S. 706, 725 (1996).
The issues in the case presently before the Court are a far cry from ones that challenge the "ingenuity and wisdom of legislatures." Whereas Burford dealt with complex issues of land use, oil and gas law, and conservation of natural resources, the case currently before the Court is a relatively simple contract matter. Consequently', the Court will not invoke the abstention doctrine under Burford.
V. CONCLUSION
IT IS HEREBY ORDERED, for the reasons stated above, the defendant's Motion to Abstain and Stay Proceedings is DENIED.
IT IS SO ORDERED.