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LaBarge Coating, LLC v. LaBarge C&R, LLC

United States District Court, E.D. Missouri, Eastern Division

July 12, 2019

LABARGE COATING, LLC, and SAND DEVELOPMENT, LLC, Plaintiffs,
v.
LABARGE C&R, LLC, LABARGE REALTY, LLC, and PIERRE L. LABARGE, III, Defendants.

          MEMORANDUM AND ORDER

          JEAN C. HAMILTON, UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Defendants' Motion to Dismiss or, in the Alternative, Stay pursuant to the Colorado River Abstention Doctrine, filed June 7, 2019. (ECF No. 29). The motion is fully briefed and ready for disposition.

         BACKGROUND

         This case arises out of a Purchase Agreement and related, contemporaneous transactions through which Plaintiff SanD Development, LLC (“SanD”) acquired Plaintiff LaBarge Coating, LLC (“Coating”) from Defendant LaBarge C&R, LLC (“C&R”). In September, 2018, SanD and Coating filed suit in state court in Harris County, Texas, alleging breach of the Purchase Agreement and related torts surrounding the sale of Coating from C&R to SanD. Defendants C&R and LaBarge Realty, LLC (“Realty”) (with the consent of Defendant Pierre L. LaBarge, III) removed the suit to the United States District Court for the Southern District of Texas on October 22, 2018, on the basis of diversity jurisdiction. In an Order entered December 17, 2018, the United States District Judge in Texas transferred the case to this Court, holding the forum selection clause in the Purchase Agreement mandated that any suit be filed in state or federal court located in St. Louis, Missouri.

         Meanwhile, in October, 2018, C&R and Realty filed a state court action in St. Louis County, Missouri, against SanD, Coating, Suzanne M. Pawlow (“Pawlow”) and David W. Kersting (“Kersting”).[1] In their suit C&R and Realty, among other things, ask that the Missouri State Court rescind the Purchase Agreement because of alleged fraud. Pawlow removed the case to federal court on November 8, 2018, but in an Order entered May 9, 2019, Judge John A. Ross of this Court remanded the case to the Circuit Court of St. Louis County, where it remains pending.

         As noted above, Defendants here filed the instant motion on June 7, 2019, asking that the Court dismiss or stay this case pursuant to the Colorado River abstention doctrine, in favor of the parallel proceeding pending in the Circuit Court of St. Louis County, Missouri.

         DISCUSSION

         Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976), “permits federal courts to decline to exercise jurisdiction over cases where parallel state court litigation is pending, meaning that there is a substantial likelihood that the state proceeding will fully dispose of the claims presented in the federal court.” Spectra Communications Group, LLC v. City of Cameron, Mo., 806 F.3d 1113, 1121 (8th Cir. 2015) (internal quotations and citations omitted).

This rule is based on considerations of wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation. Nevertheless, federal courts have a virtually unflagging obligation…to exercise the jurisdiction given them, which does not evaporate simply because there is a pending state court action involving the same subject matter. Rather, Colorado River abstention is appropriate only in exceptional circumstances where the surrender of federal jurisdiction is supported by the clearest of justifications.

Id. (internal quotations and 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.” Fru-Con Constr. Corp. v. Controlled Air, Inc., 574 F.3d 527, 534 (8th Cir. 2009) (citation omitted).[2]

         In determining whether exceptional circumstances warranting abstention exist, the Court considers the following non-exhaustive factors:

(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, and (6) the adequacy of the state forum to protect the federal plaintiff's rights.

Spectra Communications, 806 F.3d at 1121 (citation omitted). The parties agree that factors one, two, five and six are irrelevant to the Court's analysis.[3] The Court thus turns to consideration of the remaining two factors.

         “Piecemeal litigation occurs when different tribunals consider the same issue, thereby duplicating efforts and possibly reaching different results.” Liberty Mutual Ins. Co. v. Wright Constr. Servs., Inc., 2018 WL 4095186, at *4 (E.D. Mo. Aug. 28, 2018) (internal quotations and citations omitted). “Because the policies underlying the Colorado River abstention doctrine are considerations of wise judicial administration, courts have given ...


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