Opinion
CIVIL ACTION NO. 3:21-CV-40-DPJ-FKB
2021-02-22
REGIONS BANK, Plaintiff v. Gwendolyn ANTOINE and Arielle M. Collins, Individually and on Behalf of Gwendolyn Antoine, Defendants
Benjamin McRae Watson, La'Toyia J. Slay, Butler Snow LLP, Ridgeland, MS, for Plaintiff. Abby Gale Robinson, Abby Robinson Law Firm, PLLC, Jackson, MS, for Defendants.
Benjamin McRae Watson, La'Toyia J. Slay, Butler Snow LLP, Ridgeland, MS, for Plaintiff.
Abby Gale Robinson, Abby Robinson Law Firm, PLLC, Jackson, MS, for Defendants.
ORDER
Daniel P. Jordan III, CHIEF UNITED STATES DISTRICT JUDGE
Plaintiff Regions Bank seeks an order compelling arbitration of its dispute with Defendants Gwendolyn Antoine and Arielle M. Collins. In response, Antoine and Collins urge the Court to abstain from deciding Regions’ motion and dismiss this case. Because Antoine and Collins have not shown exceptional circumstances for declining jurisdiction and have otherwise failed to address Regions’ demand for arbitration, Regions’ Motion to Compel Arbitration [4] is granted, and Defendants’ two motions seeking dismissal based on abstention [6, 9] are denied.
I. Background
Antoine opened an account with Regions in 1992; Collins co-signed. Defendants later signed signature cards acknowledging that the account was subject to the Regions Deposit Account Agreement and Disclosures, which included an arbitration agreement. According to Regions, Antoine subsequently signed two international-transfer requests and authorizations in March 2020 that also included arbitration agreements. See Pl.’s Mem. [5] at 4–6. These factual assertions have not been disputed.
After signing those agreements, Antoine and Collins (individually and on Antoine's behalf) sued Regions Bank and one of its employees in the Circuit Court of Hinds County, Mississippi. State-Court Compl. [1-1]. In their suit, Antoine and Collins allege that a Regions employee stole $132,000 from Antoine's retirement account. Id. at 3.
Rather than seek arbitration in the state-court case, Regions sued Antoine and Collins here, asserting its right to arbitration under the Federal Arbitration Act (FAA), 9 U.S.C. § 4. See Regions Compl. [1]. Regions then moved for an order compelling arbitration of all claims against it and its employees; an injunction preventing Antoine and Collins from prosecuting their state-court complaint until the Court rules on the enforceability of the arbitration agreements; and other relief. Pl.’s Mot. [4] at 8.
Antoine and Collins initially offered no response to Regions’ motion. They instead filed a "Motion to Dismiss Based on the True Parallel Jurisdiction of the Same Already State Court Parties and Issues Pending in Hinds County Circuit Court," which was in effect a motion to abstain. Defs.’ Mot. [6]. A few days later, they filed an identically titled motion again seeking abstention. See Defs.’ Mot. [9]. Although those motions—if granted—would defeat Regions’ motion, the Court desired a response to Regions’ legal arguments related to arbitration and therefore ordered Defendants to substantively respond. Order [12] at 1. They responded but rested on their abstention arguments without addressing the FAA. See Defs.’ Mem. 14. Regions filed a rebuttal to that response and a response to Defendants’ two motions seeking abstention. Antoine and Collins filed no rebuttal supporting their motions to dismiss, and the time to do so has passed.
II. Analysis
A. Jurisdiction
Before addressing the pending motions, the Court must briefly examine subject-matter jurisdiction. Regions filed this suit under the FAA, which is " ‘something of an anomaly in the field of federal-court jurisdiction’ in bestowing no federal jurisdiction but rather requiring an independent jurisdictional basis." Hall St. Assocs., L.L.C. v. Mattel, Inc. , 552 U.S. 576, 582, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 25 n.32, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) ). Here, complete diversity exists between Regions and Defendants, and the amount in controversy exceeds the jurisdictional minimum. Federal subject-matter jurisdiction therefore exists under 28 U.S.C. § 1332.
B. Defendants’ Motions for Abstention
Antoine and Collins say the Court must abstain and dismiss this case in favor of their state-court case. According to them, Regions "tried to trick and scam" the Court, by filing "the identical issues regarding the same parties that [are] already pending in state court." Defs.’ Mem. [10] at 3. Regions argues in response that the Court lacks discretion to abstain under the FAA or alternatively should decline to do so.
Antoine and Collins filed two motions seeking abstention with two supporting memoranda. It appears that the second memorandum corrects a grammatical mistake in the first but is otherwise identical. The Court will cite the second memorandum in its analysis.
While there are various abstention theories, Defendants focus on the Colorado River abstention doctrine. See Defs.’ Mem. [10] at 3 (citing Colo. River Water Conservation Dist. v. United States , 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) ); see also Safety Nat'l Cas. Corp. v. Bristol-Myers Squibb Co. , 214 F.3d 562, 564 (5th Cir. 2000) (applying Colorado River to motion for abstention of FAA claim).
" Colorado River applies when [federal-and state-court] suits are parallel, having the same parties and the same issues." Stewart v. W. Heritage Ins. Co. , 438 F.3d 488, 491 (5th Cir. 2006) (citing Diamond Offshore Co. v. A&B Builders, Inc. , 302 F.3d 531, 540 (5th Cir. 2002) ). Here, Defendants primarily argue that the Court must abstain because the two suits are parallel. Colorado River rejects that assertion, holding that "the pendency of an action in the state court is no bar to proceedings concerning the same subject matter in the Federal court having jurisdiction." Colo. River , 424 U.S. at 817, 96 S.Ct. 1236 (quoting McClellan v. Carland , 217 U.S. 268, 282, 30 S.Ct. 501, 54 L.Ed. 762 (1910) ).
Turning then to the applicable test, " Colorado River abstention analysis begins with a heavy thumb on the scale in favor of exercising federal jurisdiction," a presumption that "is overcome only by ‘exceptional circumstances.’ " Aptim Corp. v. McCall , 888 F.3d 129, 135 (5th Cir. 2018) (quoting Stewart , 438 F.3d at 491 ). The burden is high because "[f]ederal courts have a ‘virtually unflagging obligation ... to exercise the jurisdiction given them.’ " Id. (quoting Colo. River , 424 U.S. at 817, 96 S.Ct. 1236 ). When deciding whether exceptional circumstances exist, courts may consider six factors:
(1) assumption by either court of jurisdiction over a res; (2) the relative inconvenience of the forums; (3) the avoidance of piecemeal litigation; (4) the order in which jurisdiction was obtained by the concurrent forums; (5) whether and to what extent federal law provides the rules of decision on the merits; and (6) the adequacy of the state proceedings in protecting the rights of the party invoking federal jurisdiction.
Murphy v. Uncle Ben's, Inc. , 168 F.3d 734, 738 (5th Cir. 1999). "Only the clearest of justifications will warrant dismissal. " Moses H. Cone , 460 U.S. at 15–16, 103 S.Ct. 927 (emphasis in original).
Regions raises the threshold question whether the Court may weigh these factors in the FAA context. As it notes, the Fifth Circuit held in Munich American Reinsurance Co. v. Crawford that prayers for abstention in that FAA case were "neither equitable nor otherwise committed to [the district court's] discretion." 141 F.3d 585, 590 (5th Cir. 1998). There, the Fifth Circuit found that the district court erred by invoking Burford abstention because, "[b]y its terms, the [FAA] leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Id. (quoting Dean Witter Reynolds, Inc. v. Byrd , 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985) (citing 9 U.S.C. §§ 3, 4 )).
Perhaps there is a difference between Burford abstention and Colorado River abstention in this context. But as to the latter—which is the issue here—the United States Supreme Court applied the Colorado River factors in Moses H. Cone , finding that the district court abused its discretion by staying a federal FAA suit. 460 U.S. at 19, 103 S.Ct. 927. That ruling came before Munich American , and its approach has been consistently followed within the Fifth Circuit in cases like this. See, e.g., Safety Nat'l , 214 F.3d at 565 (reversing district court order staying federal FAA suit and weighing Colorado River factors). That said, the Fifth Circuit has generally noted that "Congress’[s] desire ‘to move parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possible’, as a matter of federal law, counsel[s] against abstention." Id. (quoting Moses H. Cone , 460 U.S. at 22–23, 103 S.Ct. 927 ).
Assuming the Court should weigh the Colorado River factors, they lead to that same result. First, neither this Court nor the state court has jurisdiction over a res. Therefore, "[t]he first factor weighs against abstention." Id. at 136 (noting that neither court had jurisdiction over a res ).
The second factor—relative inconvenience of the forums—"primarily involves the physical proximity of the federal forum to the evidence and witnesses." Evanston Ins. Co. v. Jimco, Inc. , 844 F.2d 1185, 1191 (5th Cir. 1988). More specifically, the factor would weigh in favor of abstention if there is "any contention that the federal forum was any less convenient to the parties than the state forum." Id. (quoting Moses H. Cone , 460 U.S. at 19, 103 S.Ct. 927 ). Conversely, "[w]hen courts are in the same geographic location, the inconvenience factor weighs against abstention." Stewart , 438 F.3d at 492 ; accord Bank One, N.A. v. Boyd , 288 F.3d 181, 185 (5th Cir. 2002) (finding that second factor "weigh[ed] in favor of the district court exercising jurisdiction"). Here, the two courthouses are within two city blocks of each other; this factor weighs against abstention.
The concern over piecemeal litigation likewise weighs against abstention. "Given the strong federal policy favoring arbitration, the concern about piecemeal litigation ‘is not applicable in the FAA context.’ " Aptim Corp. , 888 F.3d at 137 (quoting Safety Nat'l Cas. Corp. , 214 F.3d at 565 ); see also Nationstar Mortg. LLC v. Knox , 351 F. App'x 844, 851 (5th Cir. 2009) (finding that third factor counsels against abstention in FAA case); Brown v. Pac. Life Ins. Co. , 462 F.3d 384, 395 (5th Cir. 2006) (same); Bank One, N.A. , 288 F.3d at 185 (holding that district court erred in finding that this factor supported abstention because "[t]he FAA ... not only contemplates piecemeal litigation, but ‘requires piecemeal resolution when necessary to give effect to an arbitration agreement’ " (quoting Moses H. Cone , 460 U.S. at 20, 103 S.Ct. 927 )); Snap-on Tools Corp. v. Mason , 18 F.3d 1261, 1265 (5th Cir. 1994) (holding that "even if some piecemeal litigation does result, that sometimes is the inevitable result of a congressional policy strongly favoring arbitration").
The fourth factor addresses which court first obtained jurisdiction. "The inquiry centers more on the progress made in the relative forums, not on the date of initial filing." Aptim Corp. , 888 F.3d at 137 (citing Moses H. Cone , 460 U.S. at 21, 103 S.Ct. 927 ). "If the progress made is just ‘jurisdictional posturing’ with little progress on the merits, the factor ‘weighs against abstention.’ " Id. (quoting Black Sea Inv., Ltd. v. United Heritage Corp. , 204 F.3d 647, 651 (5th Cir. 2000) ). Here, Regions filed this suit the month after Defendants filed theirs. Compare Regions Compl. [1], with Defs.’ Compl. [1-1]. And Regions contends that its federal case is further along—especially as to arbitration—something Defendants have not addressed. See Pl.’s Mem. [16] at 7. Thus, if this factor does not favor retaining jurisdiction, it is at best neutral. See Bank One, N.A. , 288 F.3d at 186 ("Indeed, the state court action was filed first in time, but its progress relative to the federal suits calls into question the weight attributed to this factor.").
The fifth factor—the extent federal law provides the rules of decision on the merits—weighs against abstention. With respect to the issues before this Court, the FAA "is the underlying law and embodies ‘a liberal federal policy favoring arbitration agreements.’ " Aptim Corp. , 888 F.3d at 138 (quoting Moses H. Cone , 460 U.S. at 24, 103 S.Ct. 927 ). In other words, while the underlying claims "are based on state law, the FAA governs the merits of the federal action." Nationstar Mortg. LLC , 351 F. App'x at 852 ; see also Aptim Corp. , 888 F.3d at 138 (holding that this factor weighs against abstention); accord Bank One, N.A. , 288 F.3d at 186.
The final factor is the "adequacy of the state proceedings in protecting the rights of the party invoking federal jurisdiction." Murphy , 168 F.3d at 738. The Fifth Circuit has taken a case-by-case approach to this factor. For example, in Aptim , it noted that state courts are capable of addressing motions to compel arbitration under the FAA, "so this factor is neutral." 888 F.3d at 138. In Nationstar Mortgage , an unpublished opinion, the court found that this factor weighs in favor of abstention. 351 F. App'x at 852. And in Bank One , the Fifth Circuit was unsure whether the district court correctly found that this factor supported abstention, though it ultimately found the district court abused its discretion by declining jurisdiction. 288 F.3d at 186. Following the published opinion in Aptim , this factor is neutral, but even if it favored abstention, it would stand alone.
Weighing the facts and factors here, Antoine and Collins have shown no factors that favor abstention. Indeed, they filed no reply to Regions’ memorandum specifically addressing the six factors and explaining why they weigh against abstention. Defendants have not demonstrated exceptional circumstances.
Finally, while " Colorado River presents an inherently discretionary balancing inquiry that shifts with the particular facts," Aptim Corp. , 888 F.3d at 140, the facts here are much like those in other Fifth Circuit cases affirming the denial of abstention in FAA suits, see id. at 142 ; Brown , 462 F.3d at 396. In fact, Moses H. Cone and at least four Fifth Circuit cases have held that district courts abused their discretion when abstaining in FAA cases. Moses H. Cone , 460 U.S. at 19, 103 S.Ct. 927 (agreeing district court "abused its discretion in granting stay"); see also Bank One, N.A. , 288 F.3d at 187 ; Safety Nat'l Cas. Corp. , 214 F.3d at 566 ; Wells v. State Farm Mut. Auto. Ins. Co. , 144 F.3d 51 (5th Cir. 1998) ; Snap-on Tools Corp. , 18 F.3d at 1265 ; but see Nationstar Mortg. , 351 F. App'x at 852 (unpublished opinion affirming abstention in FAA case but noting "very close question" whether district court abused its discretion). Defendants’ two motions to abstain are denied.
C. Regions’ Motion
Regions seeks an order compelling arbitration and enjoining any state-court proceedings related to the parties’ dispute. Supported by record evidence and relevant legal authority, Regions argues that Antoine and Collins both signed valid and binding arbitration agreements that cover their dispute.
As noted, Defendants did not initially respond to Regions’ motion, so the Court gave them another opportunity to do so. In that Order, the Court acknowledged Defendants’ abstention arguments but instructed them to "specifically address [Regions’] legal arguments for compelling arbitration" in the event abstention was denied. Order [12] at 1. The Court further noted that "[f]ailure to substantively respond would be viewed as a concession that the motion to compel should be granted, if the Court ultimately declines to abstain." Id. Defendants responded to the show-cause order, but they again relied on their abstention arguments and failed to address Regions’ factual or legal arguments for compelling arbitration. See Defs.’ Mem. [14]. In this procedural light, the Court must assume Antoine and Collins have conceded that arbitration should be compelled now that the Court has retained jurisdiction. Regardless, arbitration should be compelled for the reasons stated in Regions’ briefs. The only remaining issue is whether Regions is entitled to the other relief it seeks in its motion, i.e. ,
an Order pursuant to 28 U.S.C. §§ 1651 & 2283 and other law, enjoining Defendants from proceeding with or attempting to judicially prosecute any claims against Regions and any other covered person, including but not limited to Caroline Kemp (f/k/a Caroline Elmore), in the Antoine Suit or otherwise, until this Court has ruled upon the enforceability of the arbitration provisions at issue and an arbitration(s) has been conducted, concluded and finally confirmed in accordance with the terms of the applicable arbitration provisions.
Pl.’s Mot. [4] at 8 (emphasis added). Antoine and Collins never responded to this portion of Regions’ motion, and it otherwise appears meritorious. See Aptim Corp. , 888 F.3d at 142–43 (affirming order compelling arbitration and enjoining state-court proceedings under relitigation exception to Anti-Injunction Act, 28 U.S.C.A. § 2283 ).
While Regions’ employee Caroline Kemp is a party to the state-court action but not to this suit, Regions submits that claims against its employees fall within the scope of the arbitration provisions and that the Court may enjoin the state-court action. Pl.’s Mem. [5] at 7. The relitigation exception to the Anti-Injunction Act applies when the parties are "at least in privity with) the parties in a prior action." Regions Bank of Louisiana v. Rivet , 224 F.3d 483, 488 (5th Cir. 2000). Under Mississippi law, an "employer-employee relationship satisfies privity when the action against the employer is based on vicarious liability or respondeat superior." Doss v. Dixon , 131 So. 3d 1265, 1270 (Miss. Ct. App. 2014) (quoting 21A Federal Procedure: Lawyers’ Edition § 51:241, at 562 (2008) ). The state-court complaint filed by Antoine and Collins alleges "vicarious liability." State-Court Compl. [1-1] at 13. In any event, Defendants never substantively disputed Regions’ position.
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III. Conclusion
The Court has considered all arguments; those not addressed in this Order would not have changed the results. For the stated reasons, the Court finds that Regions’ Motion to Compel Arbitration [4] is granted. Defendants’ two motions seeking abstention [6, 9] are denied.
The parties are ordered to submit to arbitration consistent with their arbitration agreement. The state-court proceedings are enjoined, and this matter will be administratively closed in this Court, subject to reopening by either party consistent with the FAA.
SO ORDERED AND ADJUDGED this the 22nd day of February, 2021.