Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_05-cv-00651/USCOURTS-caed-1_05-cv-00651-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1332 Diversity-Injunctive &amp; Declaratory Relief

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

ROBERT E. ALLEN, )

)

)

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Plaintiff, )

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vs. )

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ATALANTA CORPORATION, et al., )

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Defendant. )

)

)

No. CV-F-05-651 REC/SMS

ORDER DENYING DEFENDANTS'

MOTION TO DISMISS

On August 15, 2005, the court heard the motion to dismiss

filed by defendants Atalanta Corporation and Anatom Investment

Corporation.

Upon due consideration of the record and the arguments of

the parties, the court issues its ruling as set forth herein.

On May 17, 2005, Robert E. Allen filed a Complaint for

Declaratory Relief against defendants Atalanta Corporation and

Anatom Investment Corporation. Jurisdiction is alleged to be

based on diversity of citizenship.

Defendants move to dismiss this Complaint pursuant to the

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abstention doctrine set forth in Brillhart v. Excess Insurance

Co. of America, 316 U.S. 491 (1942), contending that an action

pending in the Butte County Superior Court involves the same

parties, the same underlying contracts, the same real property

collateral, and similar state law issues.

 The Complaint alleges that Allen was a kiwi farmer in Butte,

Yuba and Madera Counties; that his business included the

operation of packing and cold storage facilities in Chico and

Porterville; and that Allen owned most of the real property in

his individual capacity and conducted his farming operations

through a corporation, Alkop Farms, Inc., in which Allen held a

32% interest. Alkop owned 100% of Regent Cold Storage. Regent

owned the cold storage facility in Porterville and Alkop leased

the cold storage facility in Chico from Allen. Beginning in

1993, Alkop and Atalanta entered into various financial

agreements whereby Atalanta financed Alkop’s crops, operations

and marketing. Allen guaranteed the obligation of Alkop to

Atalanta by execution of a note to Atalanta. Prior to 1993,

Alkop became indebted to Calpine Containers, Inc. Alkop’s

obligation to Calpine Containers was secured by a lien on Alkop

property and on real property owned by Allen. Anatom purchased

the position of Calpine Containers on November 25, 1997 and was a

fully secured creditor of Allen holding liens of the Alkop

property and Allen’s property. On February 8, 1998, Allen filed

a Chapter 11 bankruptcy petition in the United States Bankruptcy

Court for the Eastern Division of California in Fresno. Atalanta

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was a fully secured creditor holding a lien junior to that of

Anatom on the Alkop property and on some of Allen’s properties

and by a lien on property owned by Regent. Allen proposed a plan

of reorganization, which was confirmed over the objections of

Anatom and Atalanta on April 26, 1999. Anatom and Atalanta

appealed the confirmed plan to the Eastern District Court and

Judge Wanger affirmed the plan with a direction to the Bankruptcy

Court to make appropriate findings of fact and conclusions of law

regarding the interest rates to accrue on the secured debt of

Anatom and Atalanta. Anatom and Atalanta appealed to the Ninth

Circuit and on September 13, 2002, the Ninth Circuit affirmed the

Bankruptcy Court and Judge Wanger’s ruling. Thereafter, by

stipulated order, the interest rate of 8.2% fixed in the

confirmation order was determined to be the appropriate rate

without the findings of fact and conclusions of law by the

Bankruptcy Court required by Judge Wanger. The Complaint further

alleges:

16. The amount of the allowed claim of both

Anatom and Atalanta at the time of

confirmation was disputed. Allen filed

motions to fix the claim at confirmation of

both Anatom and Atalanta in November 2000 in

anticipation of the ruling of Judge Wanger on

the appeal of the confirmation order. 

Oppositions were filed by both Defendants. 

The motions were dropped from calendar

following Defendants’ appeal to the Ninth

Circuit on February 2, 2001.

17. Following Defendants’ two appeals, Allen

reset both motions to fix the claim at

confirmation for hearing on August 26, 2004. 

The Bankruptcy Court required a re-filing of

the motions which took place on September 8,

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2004. The motions were again opposed by

Anatom and Atalanta and following

negotiations, the fully secured claim of each

entity was fixed at the time of confirmation

on April 26, 1999, by Stipulated Order. ....

The amount of Anatom’s secured claim was fixed as of April 26,

1999 was $446,934.47 and that of Atalanta was fixed at

$930,000.00. The Complaint further alleges:

18. Allen has now arranged for the sale of a

portion of his real property that serves as

collateral for both the Anatom and Atalanta

obligations. At present, the sale price

exceeds the total debt on the property. 

Allen has requested a demand for payoff from

both Anatom and Atalanta and received a reply

from both by letter dated April, 14, 2005. 

Attached to the Complaint is Anatom’s letter which states in

pertinent part:

Anatom’s payoff demand as of April 1, 2005 is

$733,198.58. A complete itemization of the

demand is enclosed. The claimed postconfirmation legal expenses are recoverable

under the express provisions of the debt

instruments. Specifically, the subject trust

deeds each provide that any sums disbursed by

Anatom for the reasonable fees of counsel to

protect or enforce the security of its trust

deeds in any action or proceeding (including

any bankruptcy, reorganization or other

debtor relief proceeding) will be additional

secured indebtedness of your client, payable

upon demand.

Atalanta’s letter is also attached to the Complaint and states in

pertinent part:

Atalanta’s payoff demand as of April 1, 2005

is $953,854.13. A complete itemization of

the demand is enclosed. The claimed postconfirmation legal expenses and interest are

recoverable under the express provisions of

the debt instruments. Specifically, the

subject trust deeds each provide that any

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sums disbursed by Atalanta for the reasonable

fees of counsel to protect or enforce the

security of its trust deeds in any action or

proceeding (including any bankruptcy,

reorganization, or other debtor relief

proceeding) will be additional secured

indebtedness of your client, will bear

interest at the applicable rate, and will be

payable by your client upon demand.

The Complaint alleges that a dispute has arisen between Allen and

Anatom and Atalanta concerning the content, accuracy and basis of

the payoff demand in light of existing law as it relates to this

situation and that Allen believes that defendants’ excessive

demands are made in bad faith, with a conscious effort to

disrupt, hinder, and/or prevent Allen from selling his real

property in connection with the execution of the court approved

plan of reorganization, and are consistent with defendants’ past

patter of bad faith conduct toward Allen in an effort to hinder

and disrupt the Chapter 11 bankruptcy process. The First Claim

for Relief seeks a declaratory judgment that the attorneys’ fees

and expenses incurred in determining the amounts of the secured

claims at confirmation were included in te stipulated orders

setting the amounts and that no attorneys’ fees relating to the

determination of the amount of the claim after the hearing on

confirmation on April 26, 1999 can be included in the claim as a

matter of law because no additional fees were requested by either

Anatom or Atalanta in resolving the motions. The Second Claim

for Relief seeks a declaratory judgment that Anatom and Atalanta

cannot include attorneys’ fees incurred on the appeals in their

payoff demands because no attorneys’ fees were awarded on either

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appeal, because Allen was the prevailing party on both appeals,

because the attorneys’ fees and expenses incurred in determining

the amounts of the secured claims at confirmation were included

in the stipulated orders setting the amounts and that no

attorneys’ fees relating to the determination of the amount of

the claim after the hearing on confirmation on April 26, 1999 can

be included in the claim as a matter of law because no additional

fees were requested by either Anatom or Atalanta in resolving the

motions, and because the attorneys’ fees sought by Anatom and

Atalanta are grossly excessive and unreasonable. The Third Claim

for Relief seeks a declaration that any attorneys’ fees and

expenses incurred by Anatom or Atalanta in connection with the

Alkop bankruptcy up to April 26, 1999 were included in the

allowed secured claims and that following confirmation of the

plan of reorganization, Anatom foreclosed on a 21.43 acre parcel

owned by Alkop, bidding $53,575.00, which was applied against the

Allen claim; that on June 18, 2002, after this foreclosure,

Alkop, Allen and Kay Martinelli filed an action against Anatom in

the Butte County Superior Court, Case No. 127703, alleging

wrongful foreclosure and various tort causes of action involving

the subsequent sale of the property to a third party, which case

is pending in the Butte County Superior Court; and that Anatom

has improperly included that attorneys’ fees incurred in

connection with its defense of the Butte County Superior Court

case in its payoff demand of the Allen claim. The Fourth Claim

for Relief seeks a declaration that Regent Cold Storage, Inc.

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filed a Chapter 11 bankruptcy on March 16, 1999, which was

converted to a Chapter 7 bankruptcy in March, 2000; that the

Chapter 7 trustee sold the real property and cold storage

facility owned by Regent; that Atalanta received $54,988.45 which

was applied to the Allen claim; that any attorneys’ fees and

expenses incurred by Atalanta prior to the confirmation of the

Allen plan of reorganization on April 26, 1999 were included in

Atalanta’s secured claim; and that Atalanta has improperly

included in its payoff demand attorneys’ fees and costs incurred

by Atalanta after the confirmation of the Allen plan in

connection with the Regent Chapter 11 case. The Fifth and Sixth 

Claims for Relief seeks a declaration concerning the proper

payoff amount plus interest of the Atalanta and Anatom secured

claims. 

B. Defendants’ Motion to Dismiss.

Atalanta and Anatom move the court to dismiss this Complaint

pursuant to the abstention doctrine set forth in Brillhart v.

Excess Insurance Co. of America, 316 U.S. 491 (1942). In so

moving, defendants assert that the action pending in the Butte

County Superior Court involves the same parties, the same

underlying contracts, the same real property collateral, and

similar state law issues.

1. Butte County Superior Court Case.

As alleged in the Complaint before this court, Alkop

Agriservices, Inc., Robert E. Allen, and Kathleen Martinelli have

filed an action in the Butte County Superior Court, Case No.

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127703, against Anatom Investment Corporation, Atalanta

Corporation, Lawyers Title Company, Commonwealth Land Title

Company, Peter G. Gaimpaoli, and Peter G. Giampaoli IRA

(hereinafter referred to as the Butte Action). The Butte Action

is now proceeding pursuant to the Third Amended Complaint (TAC). 

The TAC alleges that the real property involved in the Butte

County Action is 21.43 acres located in Butte County. The TAC

alleges the secured positions of Anatom and Atalanta and further

alleges that on April 23, 1997, Allen granted a deed of trust to

secure the payment of a $150,000 promissory note to Martinelli

(then Kathleen Allen, Allen’s ex-wife), which deed of trust was

senior to that held on the property by Atalanta. Paragraph 12

alleges in pertinent part:

12. On ... October 15, 1999, the defendants

... conducted a Trustee’s Sale without giving

notice to the plaintiffs, or any of them. 

While the property had a fair market value of

as much as $1,285,800.00, defendant Anatom

bid only $53,575.00 for the property. There

were no other bidders and the $53,575.00 bid

was declared the winning bid. That amount

was insufficient to cover the demands on the

First Deed of Trust and nothing was paid to

Martinelli on her Second Deed of Trust and

nothing was paid on the Third Deed of Trust;

both security interests were extinguished by

the Trustee’s Sale of the subject property

for only $53,575.00.

The First Cause of Action alleges interference with prospective

business advantage against defendants Peter G. Gaimpaoli, and

Peter G. Giampaoli IRA only and does not appear to be relevant to

the instant motion to dismiss. The Second Cause of Action is for

specific performance and promissory estoppel against all

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defendants and alleges in pertinent part:

27. In the summer of 2001, plaintiffs and

... Anatom and ... Atalanta began preliminary

negotiations regarding the reconveyance of

the ... 21.43 acres and settlement of all

disputes between the plaintiffs on the one

hand and ... Anatom and Atalanta on the other

hand.

28. On September 24, 2001, ... Anatom and

Atalanta made a written offer to ... Allen

promising to reconvey to plaintiffs the ...

21.43 acres and to otherwise resolve all

disputes with the plaintiffs ... Anatom and

Atalanta ... if the plaintiffs paid the sum

of $1.25 million to [Anatom and Atalanta] on

or before May 30, 2002 ... In early-mid

October, 2001, ... Allen made a Counter-Offer

of $900,000.00. On October 21, 2001, ...

Anatom and Atalanta rejected ... Allen’s

Counter-Offer ... in a writing that again

offered to convey title to the 21.43 acres

and otherwise settle all disputes on the

terms set forth in the September 24, 2001,

letter.

29. ... Anatom and Atalanta knew or should

have known that plaintiffs would reasonably

rely on ... defendants’ promise to reconvey

the ... 21.43 acres and otherwise resolve all

disputes if plaintiffs paid the sum of $1.25

million to [Anatom and Atalanta] on or before

May 30, 2002. Plaintiffs relied on the

aforementioned promise ... by, among other

things, foregoing legal action to void the

September, 1999, trustee’s sale and by taking

action to raise the $1.25 million.

30. Plaintiffs, and each of them, have made

demand that the defendants ... honor their

promise to reconvey the 21.43 acres and

accept the sum of $1.25 million to resolve

all disputes between the plaintiffs ... and

Anatom and Atalanta ... The defendants ...

have failed and refused to do so.

31. An injustice an be avoided only by

enforcing, completely, ... Anatom and

Atalanta’s promise to reconvey the ... 21.43

acres to plaintiffs and otherwise resolve all

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disputes in exchange for the sum of $1.25

million from plaintiffs.

32. On ... May 2, 2002, while plaintiffs

were in the process of raising the $1.25

million, said defendants sold the ... 21.43

acres to defendants Giampaoli. Defendants

Giampaoli knew of the promise to reconvey the

21.43 acres and resolve all other disputes

with ... Atalanta and Anatom. Defendants

Giampaoli were also aware that, by buying the

... 21.43 acres from ... Anatom and Atalanta,

defendants Giampaoli were making it

impossible for the plaintiffs to reacquire

the ... 21.43 acres and otherwise resolve all

disputes between plaintiffs ... and Anatom

and Atalanta ... for ... $1.25 million. As

of May 14, 2004, ... Anatom and Atalanta

demand more than $1.6 million to resolve all

disputes with the plaintiffs, and said

defendants are offering no real property to

plaintiffs in consideration of the payment of

that $1.6 million.

33. Plaintiffs have performed each, any and

every obligation required of them by the

terms of the ... written offers, excepting

those that they were excused from doing

because of the breaches by the defendants

....

The Third Cause of Action, which has been dismissed by the Butte

County Superior Court as against Anatom and Atalanta without

further leave to amend, alleged interference with prospective

economic advantage against all defendants. The Third Cause of

Action alleged in pertinent part:

36. Plaintiff Allen filed a Chapter 11

Petition in Federal Bankruptcy Court on ...

February 4, 1998. Plaintiff Allen proposed a

plan for the satisfaction of creditors, which

plan was approved in March, 1999. This

Confirmed Plan then became a written contract

between plaintiff Allen and his creditors,

including ... Anatom and Atalanta. The terms

of the Confirmed Plan required that plaintiff

Allen pay approximately $130,000.00 in April

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and May of each year. Upon failure to make

any part of the such annual payments any

creditor, including ... Anatom and Atalanta,

had the legal right to petition the

bankruptcy court to convert plaintiff Allen’s

Chapter 11 to a Chapter 7 and liquidate all

of said plaintiff’s assets. In fact ...

Anatom and Atalanta had on prior occasions

attempted to cause the bankruptcy court to

convert plaintiff Allen’s Chapter 11

bankruptcy to a Chapter 7, liquidating,

bankruptcy.

37. Plaintiff Allen confided in defendants

Giampaoli that he had to make payments of

$100,000.00 during the month of May, 2002, to

comply with the terms of said plaintiff’s

Chapter 11 Plan. Plaintiff Allen also

confided in defendants Giampaoli that [Allen]

desired to obtain the $1.25 million to

satisfy all claim of ... Anatom and Atalanta

on or before the May 30, 2002 Chapter 11 Plan

payments were due so as to eliminate the need

to make the $100,000.00 Chapter 11 Plan

payment which would otherwise be due then.

38. On ... March 18, 2004, plaintiff Robert

E. Allen caused written discovery in the form

of Special Interrogatories, and Requests for

Admission to be served on defendant Peter G.

Giampaoli ... On ... May 5, 2004, plaintiff

Robert E. Allen received said defendants’

[sic] responses to plaintiffs’ [sic] Special

Interrogatories set No. One. Plaintiffs’

counsel reviewed these Special Interrogatory

responses and learned the following: On ...

June 12, 2002, defendant Giampaoli sent a

letter to Thomas Gellert, an officer and/or

representative of ... Anatom and Atalanta,

stating that he, Giampaoli, wanted to

purchase additional real property consisting

of approximately 88 acres owned by plaintiff

Allen and located adjacent to the 21.43 acres

which are the subject of this action. 

Furthermore, defendant Giampaoli stated that

defendants Anatom and Atalanta expected to

obtain this additional real property by

foreclosure when plaintiff Allen was not able

to make his Chapter 11 payment due in May,

2002.

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39. Based upon the new facts revealed by

defendant Giampaoli’s discovery responses,

plaintiffs realized that all of the

defendants were actually conspiring together

to interfere with plaintiff Allen’s May,

2002, Chapter 11 plan payment in the amount

of $100,000.00 by causing him to rely falsely

on the promises of defendant Giampaoli to

loan him funds to settle with ... Anatom and

Atalanta. The goal of this ‘conspiracy’ was

that upon the anticipated failure of

plaintiff Allen to make the May 2002 Chapter

11 plan payment, defendants Anatom and

Atalanta would petition the bankruptcy court

to convert plaintiff Allen’s bankruptcy to a

Chapter 7, liquidating bankruptcy so that

defendants Anatom and Atalanta could

foreclose on the approximately 88 acres owned

by plaintiff Allen and then later sell that

real property to defendant Giampaoli at a

discount for residential sub-division

purposes. 

...

42. When plaintiff Allen learned that

defendants Giampaoli were not going to lend

said plaintiff the money necessary to settle

all disputes with defendants Anatom and

Atalanta, and not even lend him the amounts

necessary to pay the May, 2002, Chapter 11

Plan payment, it caused said plaintiff severe

emotional upset, anxiety, nausea, insomnia,

until said plaintiff was able to secure a

loan of money from other sources to prevent

the defendants ... from forcing him into

Chapter 7, liquidating bankruptcy, and the

loss of real property worth millions of

dollars. Plaintiff Allen suffered damages in

an amount to be proved at trial.

The Fourth and Fifth Causes of Action, alleging intentional and

negligent infliction of emotional distress caused by defendants’

conspiracy to mislead Allen for the purpose of causing him to

default on his Chapter 11 Plan payment due in May, 2002, were

also dismissed as against Anatom and Atalanta without leave to

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amend by the Butte County Superior Court.

On August 4, 2005, the Butte County Superior Court granted

summary judgment for the defendants on the remaining causes of

action.

2. Standards Governing Resolution of Motion to

Dismiss.

The Federal Declaratory Judgment Act, 28 U.S.C. § 2201(a),

provides in pertinent part that “any court of the United States,

upon the filing of any appropriate pleading, may declare the

rights and other legal relations of any interested party seeking

such declaration.” Although a suit otherwise satisfies subject

matter jurisdiction prerequisites, a district court possesses

discretion in determining whether and when to entertain an action

under the Declaratory Judgment Act. Wilton v. Seven Falls Co.,

515 U.S. 277, 282 (1985); Brillhart, supra, 316 U.S. at 494. In

Brillhart, the Supreme Court held:

Ordinarily it would be uneconomical as well

as vexatious for a federal court to proceed

in a declaratory judgment suit when another

suit is pending in a state court presenting

the same issues, not governed by federal law,

between the same parties. Gratuitous

interference with the orderly and

comprehensive disposition of a state court

litigation should be avoided. 

316 U.S. at 495. The question for a district court presented

with a suit under the Declaratory Judgment Act is to 

ascertain whether the questions in

controversy between the parties to the

federal suit, and which are not foreclosed

under the applicable substantive law, can

better be settled in the proceeding pending

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in the state court. This may entail inquiry

into the scope of the pending state court

proceeding and the nature of defenses open

there. The federal court may have to

consider whether the claims of all parties in

interest can satisfactorily be adjudicated in

that proceeding, whether necessary parties

have been joined, whether such parties are

amenable to process in that proceeding, etc.

We do not attempt a comprehensive enumeration

of what in other cases may be revealed as

relevant factors governing the exercise of a

district court’s discretion. ....

Id. In Polido v. State Farm Mut. Auto. Ins. Co., 110 F.3d 1418

(9 Cir. 1997), overruled on other grounds, Government Employees th

Ins. Co. v. Dizol, 133 F.3d 1220 (9 Cir. 1998), the Ninth th

Circuit explained:

... Exercise of the district court’s

discretionary jurisdiction under Brillhart

furthers the policy against needlessly

deciding unsettled state law issues, prevents

duplicitous litigation, and discourages forum

shopping. ....

...

... [I]n determining whether to exercise its

discretionary jurisdiction to reach the

merits in an action for declaratory relief,

the dispositive question is not whether the

pending state proceeding is ‘parallel,’ but

rather, whether there was a procedural

vehicle available to the insurance company in

state court to resolve the issues filed in

federal court. If a state court remedy is

available to the insurer, the district court

must consider whether circumstances exist

that overcome the ‘presumption that the

entire suit should be heard in state court,’

... to prevent forum shopping and piecemeal

litigation of complex state law issues. ....

110 F.3d at 1422-1423.

3. Merits of Motion to Dismiss.

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Defendants argue that the court should exercise its

discretion under the Brillhart factors and abstain from hearing

this declaratory judgment action.

Defendants, while conceding that the claims in the two

actions are not identical, contend that the claims are parallel:

The central issue in both cases is the

correct amount required to satisfy the

secured obligations owing from Plaintiff to

Defendants. In the Butte Action, Plaintiff

seeks specific performance of an alleged

settlement agreement wherein, he claims,

Defendants promised to accept $1.25 million

from Plaintiff in satisfaction of their

combined secured claims ... The adjudication

of the Butte Action in favor of Plaintiff

would moot the instant declaratory relief

action completely. This is because the

declaratory relief action addresses, albeit

separately, claims which necessarily would be

merged into the alleged settlement agreement. 

Plaintiff’s claims therefore should be left

for resolution by the state court in the

Butte Action.

Defendants further argue that California’s declaratory relief

statute provides a remedy to plaintiff in the Butte Action to

resolve the issues raised in the instant complaint.

California Code of Civil Procedure § 1060 provides in

pertinent part:

Any person interested under a written

instrument, excluding a will or trust, or

under a contract, or who desires a

declaration of his or her rights or duties

with respect to another, or in respect to,

in, over or upon property, ... may, in cases

of actual controversy relating to the legal

rights and duties of the respective parties,

bring an original action or cross-complaint

in the superior court for a declaration of

his or her rights and duties in the premises,

including a determination of any question of

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construction or validity arising under the

instrument or contract. He or she may ask

for a declaration of rights or duties, either

alone or with other relief; and the court may

make a binding declaration of these rights or

duties, whether or not further relief is or

could be claimed at the time. The

declaration may be either affirmative or

negative in form and effect, and the

declaration shall have the force of a final

judgment. The declaration may be had before

there has been any breach of the obligation

in respect to which said declaration is

sought. 

Defendants contend that, because the Complaint filed in this

court raises only state law claims, plaintiff has a remedy to

resolve these state law claims in the Butte Action. 

Finally, defendants argue, the Complaint filed in this court

is duplicative of the Butte Action:

Plaintiff has filed a federal action in an

attempt to achieve the same result sought in

the Butte Action: fixing the amounts of

Defendants’ respective claims. In order to

do so, both courts will necessarily examine

the same evidence, question the same

witnesses and entertain the same arguments

....

The District Court also should exercise its

discretion to decline jurisdiction in order

to avoid inconsistent state and federal

judgments. While Defendants acknowledge that

the settlement agreement alleged in the Butte

Action is different from the underlying notes

and security instruments, the two actions

address the same fundamental issue: the

amount of Plaintiff’s debt to Defendants. 

That issue should be resolved by the state

court in the pending Butte Action and not by

a duplicative lawsuit before the District

Court.

However, the court concurs with plaintiff that the Brillhart

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In so ruling, the court notes that plaintiff conceded at oral 1

argument that the issues raised in the Complaint before this court

involve issues of state law, not federal law as contended in

plaintiff’s opposition brief. The court further notes that the

Bankruptcy Court retained jurisdiction in its Order confirming the

Second Amended Plan of Reorganization for the purposes set forth in

the Bankruptcy Court’s Order. However, because plaintiff filed the

instant Complaint in the District Court, the Bankruptcy Court’s

retention of jurisdiction has no relevance to the resolution of

this motion to dismiss. 

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factors weigh against discretionary abstention. The court 1

concludes that the Complaint in this action is not parallel to

the Butte Action because this Complaint does not involve the same

or similar issues or all of the same parties. The Butte Action

does not, as contended by defendants, involve the amounts Allen

owes under the respective notes and security instruments, but,

rather, involves whether Allen and the defendants entered into a

settlement agreement concerning Allen’s obligations to Anatom and

Atalanta and, if so, whether that settlement agreement can be

specifically enforced. Furthermore, the Butte County Superior

Court has granted summary judgment for defendants. Although

defendants contend that, until that judgment is final there is

still a possibility that the action before this court will

duplicate the issues in the Butte County Action, the court does

not consider the two actions to be parallel. 

ACCORDINGLY:

1. Defendants’ Motion to Dismiss is denied. 

///

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IT IS SO ORDERED.

Dated: August 29, 2005 /s/ Robert E. Coyle 

668554 UNITED STATES DISTRICT JUDGE

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