Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-00470/USCOURTS-casd-3_13-cv-00470-0/pdf.json

Nature of Suit Code: 130
Nature of Suit: Miller Act
Cause of Action: 40:270 Miller Act

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

THE UNITED STATES OF

AMERICA FOR THE USE AND

BENEFIT OF PLAINTIFF WALDEN

STRUCTURES, INC.,

Plaintiff,

CASE NO: 13-CV-0470 W (JMA)

ORDER GRANTING IN PART

DEFENDANTS’ MOTION TO

DISMISS OR STAY [DOC. 5]

v.

T.B. PENICK & SONS, INC., et al.,

Defendants.

Pending before the Court is Defendants motion to dismiss or stay. [Doc. 5.] 

Having read the papers, and good cause appearing, the Court GRANTS IN PART

Defendants’ motion. 

I. BACKGROUND

In March 2011, Defendants T.B. Penick & Sons, Inc. (“Penick”) and Plaintiff

WaldenStructures,Inc.(“Walden”) entered into an agreement(“Agreement”)whereby

Walden agreed to manufacture and place module buildings on San Clemente Island,

Naval Base Coronado, California, forthe Department of Navy (“Project”). (Defs.’ NOL

[Doc 5-2] Ex. A Penick’s State Court Complaint 11:¶12.) On October 15, 2012,

- 1 - 13cv470w

Case 3:13-cv-00470-W-JMA Document 10 Filed 07/23/13 Page 1 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Penick filed an action in state court to resolve various disputes regarding the

Agreement and the Project (“state action”). (Declaration of Katherine Knudsen [Doc.

5-1] ¶ 3, 4.)

On December 3, 2012, Walden and the other named defendants filed an answer

as well as a cross-complaint against Walden (“state cross-complaint”). (Knudsen Decl.

¶ 5); (Defs.’ NOL [Doc. 5-2] Ex. B.) On January 7, 2013, Penick filed its answer to

the cross-complaint. (Knudsen Decl. ¶ 5.) Since then, the parties have conducted

various forms of written discovery “and are currently working on discovery disputes.” 

(MTD 3-4); (Knudsen Decl. ¶ 7.) In addition, the parties had a mediation scheduled for

June 11, 2013 and have a April 11, 2014 trial date. (Knudsen Decl. ¶ 7.)

On February 27, 2013, Walden filed a complaint in this Court, alleging five

separate causes of action (“federal Complaint”). (Federal Complaint[Doc. 1] ¶¶17-41.) 

Four of the five causes of action in the federal Complaint are identical to the causes of

action Walden alleges in its state cross-complaint. (Knudsen Decl. ¶ 9); (Federal

Complaint ¶¶ 17-22; 32-41); (State Cross-Complaint ¶¶16-31);(Opp’n 5 n. 4). The only

additional claim contained in the federal Complaint is for enforcement of a bond issued

pursuant to the federal Miller Act. (Knudsen Decl. ¶10); (Federal Complaint ¶¶ 23-31.) 

At the time of this order, no answer has been filed and no other motions have been filed

in the federal case.

 

II. LEGAL STANDARD

The Colorado River abstention doctrine authorizes a district court, for reasons

of wise judicial administration and in extraordinary and exceptional circumstances, to

stay or dismiss a case where a duplicate or parallel state case is pending. Colorado River

Water Conservation District v. United States, 424 U.S. 800, 818 (1976). A court

deciding whether abstention in favor of parallel state proceedings is appropriate may

consider the following nonexclusive factors: (1) whether the state or federal court has

assumed jurisdiction over a res (real property); (2) the relative convenience of the

- 2 - 13cv470w

Case 3:13-cv-00470-W-JMA Document 10 Filed 07/23/13 Page 2 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

forums; (3) the desirability of avoiding piecemeal litigation; (4) the order in which the

forums obtained jurisdiction; (5) whether state or federal law controls the decision on

the merits; (6) whether the state proceeding is adequate to protect the federal plaintiff’s

rights; and (7) whether the parties have engaged in forum shopping. Id. at 818–19;

Travelers Indem. Co. V. Madonna, 914 F.2d 1364, 1371 (9th Cir. 1990). 

III. ANALYSIS

A. Substantial Similarity

The threshold inquiry under Colorado River is whether a parallel state court

action is pending. “Exact parallelism” is not required; it is enough if the two

proceedings are “substantially similar.” Nakash v. Marciano, 882 F.2d 1411, 1417 (9th

Cir. 1989). 

Defendants claim that the instant case “is nearly identical to and therefore

sufficiently ‘parallel’” to the state action because “the two proceedings involve the exact

same set of facts, arise out of the same Project, and aside from Walden’s Miller Act

claim in the Federal Complaint action, involve identical causes of action.” (MTD 6-7.) 

Plaintiffs do not dispute this contention, and the Court agrees. (Opp’n 5 n. 4 (“For the

purposes of this analysis, Plaintiff agrees with Defendants that the Federal Action and

State Court Action are “substantially similar.”)); See Interstate Material Corp. v. City

of Chicago, 847 F. 2d 1285, 1288 (7th Cir 1988)(“A suit is ‘parallel” when substantially

the same parties are contemporaneously litigating substantially the same issues in

another forum.”)

 

B. Colorado River Abstention

As an initial matter, the Court finds, and the parties agree, that factors one, two,

and seven do not apply to this case. Moses H. Cone Mem’l Hosp. V. Mercury Constr.

Corp., 460 U.S. 1 , 23-24 (1983)(explaining that “federal courts are not to use the

various identified factors as a ‘checklist’”); (MTD 7 n. 2); (Opp’n 6.)

- 3 - 13cv470w

Case 3:13-cv-00470-W-JMA Document 10 Filed 07/23/13 Page 3 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Both parties agree thatthe state complaint and federalComplaint overlap except

for the Miller Act cause of action. (MTD 8); (Opp’n 5 n. 4.) Therefore, if litigation

continues in both state and federal court, then two separate courts will be deciding

identical claims. In light of this unnecessary and potential contradictory redundancy,

this Court finds that proceeding on to the preliminary stages of the federal case while

state litigation approaches trial would waste both the parties’ time and expenditures and

the resources of the respective fora. Thus, factor three, avoiding piecemeal litigation,

weighs heavily in favor of abstention. American International Underwriters, Inc. v.

Continental Ins. Co., 843 F.2d 1253, 1258 (9th Cir. 1988)(“Piecemeal litigation occurs

when differenttribunals considerthe same issue, thereby duplicating efforts and possibly

reaching different results.”). 

Factor four, concerning priority, is particularly relevant given that (1) the state

court action was initiated in October 2012, (2) litigation in that case has been on going

and substantial, and (3) the matter has been set for trial in April 2014. (Knudsen Decl.

¶¶ 3-5, 7). In contrast, Walden filed this federal action in February 2013 and no

deadlines leading to trial have been set. Therefore, this factor weighs in favor of staying

the proceedings. See Moses H. Cone, 460 U.S. at 21 (stating “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”).

The fifth factor also weighs in favor of abstention because four of the five causes

of action in the federal Complaint are governed by state law. Moreover, liability for the

sole federal claim, under the Miller Act, is completely derivative of liability under state

law claims. U.S. ex rel. Aurora Painting, Inc. V. Fireman’s Fund Ins. Co., 832 F.2d

1150, 1156 (9th Cir. 1987). Therefore, state law, not federal, “provides the rule of

decision on the merits” in this case. Moses H. Cone, 460 U.S. at 23.

Finally, the sixth factor favors abstention as well, since Walden’s right to recover

under its Miller Act claim will not be impinged upon by a state court decision on the

merits of his state law claims. See Aurora Painting, 832 F.2d at 1152-53. 

- 4 - 13cv470w

Case 3:13-cv-00470-W-JMA Document 10 Filed 07/23/13 Page 4 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Given this analysis, and in light of Penick’s concession that dismissal of this case

is inappropriate (Reply 2:17-24), stay of the instant case pending resolution of the state

court action is the best at this stage of litigation. The Court is aware of the limited

application of the Colorado River doctrine. Moses H. Cone, 460 U.S. at 23–24 (stating

“federal courts may not abstain when there is identical, concurrent state litigation,

except in truly exceptional cases”). However, the Court holds the exceptional

circumstances presented here warrant invocation of Colorado River abstention.

IV. CONCLUSION

In light of the foregoing, the Court GRANTS IN PART the motion and orders

this civil action STAYED pending resolution of the related civil action pending in state

court. The Court FURTHER ORDERS the parties to report to the Court on the

status of that litigation by October 1, 2013.

IT IS SO ORDERED.

DATED: July 23, 2013

Hon. Thomas J. Whelan

United States District Judge

- 5 - 13cv470w

Case 3:13-cv-00470-W-JMA Document 10 Filed 07/23/13 Page 5 of 5