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Good v. Southern Steel & Construction, LLC

United States District Court, M.D. Tennessee, Nashville Division

June 14, 2018

RODNEY GOOD and IRON WORKERS TENNESSEE VALLEY AND VICINITY WELFARE FUND; IRON WORKERS TENNESSEE VALLEY AND VICINITY PENSION FUND, and IRON WORKERS TENNESSEE VALLEY AND VICINITY ANNUITY FUND Plaintiffs,
v.
SOUTHERN STEEL AND CONSTRUCTION, LLC; J. WARREN “SKIP” BROCK; DEBBIE BROCK; DENNY M. RUTLEDGE, JR.; and SHARON RUTLEDGE Defendants and SOUTHERN STEEL AND CONSTRUCTION, LLC; Third Party Plaintiff,
v.
QUALITY IRON FABRICATORS, INC. Third Party Defendant.

          HOLMES, MAGISTRATE JUDGE

          ORDER AND MEMORANDUM OPINION

          WILLIAM L. CAMPBELL, JR. UNITED STATES DISTRICT JUDGE

         Pending before the Court is Third-Party Defendant, Quality Iron Fabricators, Inc.'s (“Quality”) Motion to Dismiss or stay the Third-Party Complaint of Southern Steel and Construction, LLC, (“SSC”) or in the Alternative to Compel Arbitration. (Doc. No. 21). Third- Party Plaintiff SSC has responded in opposition. (Doc. No. 26). For the reasons discussed below, Quality's Motion for Abstention is GRANTED. Quality's Motion to Dismiss for lack of subject matter jurisdiction and to compel arbitration of all claims is DENIED.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Plaintiffs filed their Complaint on August 11, 2017, against SSC alleging causes of action pursuant to the Employment Retirement Income Security Act of 1974 (“ERISA”). (Doc. No. 1). On November 2, 2017, SSC filed an Answer to the Complaint and a Third-Party Complaint against Quality, asserting state law claims for breach of contract, indemnity[1], and violations of the Tennessee Prompt Pay Act. (Doc. No. 16, 17). With the exception of the indemnity claim, the state law claims asserted by SSC against Quality were previously asserted in a suit in the Shelby County, Tennessee Chancery Court (“State Court Action”), which remains open and active. (Doc. No. 22-1, 22-2).

         On December 8, 2017, Quality filed a Motion to Dismiss SSC's Third-Party Complaint for lack of subject matter jurisdiction. (Doc. No. 21). In the alternative, Quality asserts the Court should exercise abstention and dismiss or stay SSC's Third-Party Complaint given that the claims asserted by SSC against Quality in this case are pending in the State Court Action. (Id.). As a final suggestion, Quality requests this Court for an Order compelling arbitration of all of SSC's claims and staying all third-party claims until SSC and Quality complete arbitration. (Id.). SSC responded in opposition to the Motion to Dismiss on January 5, 2018. (Doc. No. 26).

         II. APPLICABLE LAW

         Quality asserts this Court should abstain from deciding SSC's state law claims and dismiss the third-party complaint, or stay the third-party complaint pending resolution of the state court action. (Doc. No. 22 at 6). The principles underlying the doctrine of abstention “rest on considerations of ‘wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.'” Romine v. Compuserve Corp., 160 F.3d 337, 339 (6th Cir. 1998) (citing Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976). While abstention from exercising federal jurisdiction is the exception and not the rule, in exceptional circumstances, “a federal district court may abstain. . . due to the existence of a concurrent state court proceeding…” PaineWebber, Inc. v. Cohen, 276 F.3d 197, 206 (6th Cir. 2001) (citing Colorado River, 424 U.S. at 817).

         Before determining whether abstention is appropriate the Court must first determine whether the proceedings in the state and federal actions are parallel. Crawley v. Hamilton County Comm'rs, 744 F.2d 28, 31 (6th Cir. 1984). The state court proceedings need not be identical, merely “substantially similar.” Romine v. Compuserve Corp., 160 F.3d 337, 340 (6th Cir. 1998). There is also no requirement that the parties in the state court proceedings be identical to those in the federal case. Heitmanis v. Austin, 899 F.2d 521, 528 (6th Cir. 1990). After establishing the actions are parallel, the Court must examine whether the judicial economy warrants abstention. Bates v. Van Buren Tp., 2004 WL 2792483, *3 (6th Cir. 2004). The Supreme Court has identified eight factors a district court must consider when deciding whether to abstain from exercising its jurisdiction due to the concurrent jurisdiction of a state court. Romine, 160 F.3d at 340-41 (collecting cases and factors).

(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 plaintiff's rights; (7) the relative progress of the state and federal proceedings; and (8) the presence or absence of concurrent jurisdiction.

Id.

         When considering these factors, the Court “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.” PaineWebber, Inc., 276 F.3d at 207 (citing Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16 (1983)).

         III. ...


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