Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-92-05186/USCOURTS-ca10-92-05186-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

---

PUBLISH 

UNITED STATES COURT OF APPEALS fEB 1 0 1994 

TENTH CIRCUIT 

ODELL FOX, and SHARON FOX, 

Plaintiffs-Appellants, 

v. 

DWIGHT M. MAULDING; WALTER E. BROWN; 

JOHN B. CLARK; MIKE BEZANSON; MARK A. 

GISH; WILEY W. SMITH; C.F. BARTLETT; 

H.I. BARTLETT; B.B. BINGMAN; 

J.M. BINGMAN; E.D. HAMILTON; 

L.T. JACKSON, JR.; J.L. ROBERTSON; 

J.M. DAVIS; EDWARD A. CARSON; 

J.W. SHERWOOD; SECURITY NATIONAL BANK 

OF SAPULPA, a national banking 

association; SECURITY NATIONAL 

BANKSHARES OF SAPULPA, INC., 

Defendants-Appellees. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

11.0BElt'r L. HOEC:CER 

CI,c· .. l.- ·~· ... .i,. 

No. 92-5186 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF OKLAHOMA 

(D.C. No. 91-C-341-E) 

Submitted on the briefs: 

Joseph L. Hull, III, and Sandra Lefler Cole, Tulsa, Oklahoma, for 

Plaintiffs-Appellants. 

Jack B. Sellers and Jessie M. Huff of Jack B. Sellers Law 

Associates, Inc., Sapulpa, Oklahoma, for Defendant-Appellee Dwight 

M. Maulding; Sam T. Allen, III of Loeffler, Allen & Ham, Sapulpa, 

Oklahoma, for Defendant-Appellee Walter E. Brown; Gregory L. 

Mahaffey, J. Jayne Jarnigan, and Ted A. Ross of Mahaffey & Gore, 

P.C., Oklahoma City, Oklahoma, for all other Defendants-Appellees. 

Appellate Case: 92-5186 Document: 01019287316 Date Filed: 02/10/1994 Page: 1 
Before SETH, BARRETT, and McKAY, Circuit Judges. 

McKAY, Senior Circuit Judge. 

Plaintiffs appeal the district court's order of 

August 18, 1992, dismissing their action with prejudice after 

declining to exercise jurisdiction over the case pursuant to 

Colorado River Water Conservation District v. United States, 424 

u.s. 800 (1976) .

1 Plaintiffs challenge the district court's 

decision on procedural grounds, as well as on the merits. We 

reverse and remand for further consideration. 

The Colorado River doctrine applies to "situations involving 

the contemporaneous exercise of concurrent jurisdictions . . . by 

state and federal courts." Id. at 817. Although not a true form 

of abstention, see id.; Attwood v. Mendocino Coast Dist. Hasp., 

886 F.2d 241, 243 (9th Cir. 1989), the doctrine is often treated 

as a variety of abstention and is governed by the general 

principle that "[a]bstention from the exercise of federal 

jurisdiction is the exception, not the rule," Colorado River, 424 

U.S. at 813. The doctrine permits a federal court to dismiss or 

stay a federal action in deference to pending parallel state court 

proceedings, based on "considerations of ' [w] ise judicial 

administration, giving regard to conservation of judicial 

resources and comprehensive disposition of litigation.'" Id. at 

1 After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); lOth Cir. R. 34.1.9. The case is therefore ordered 

submitted without oral argument. 

2 

Appellate Case: 92-5186 Document: 01019287316 Date Filed: 02/10/1994 Page: 2 
817 (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 

u.s. 180, 183 (1952)). 

The present lawsuit arises out of plaintiff Odell Fox's 

participation in various business ventures with Scott Wilmott and 

Dwight Maulding. The three formed a partnership called Glendale 

Acres and subsequently formed a corporation by the same name 

without first dissolving the partnership. Both entities engaged 

in real estate investment. Most of the business ventures were 

financed by Security National Bank of Sapulpa (SNB) , of which 

Maulding was an officer and director. 

In 1986, Maulding brought an action in state court 

(# C-86-414) for a dissolution, winding up, and accounting of both 

the partnership and the corporation. He named Odell Fox and Scott 

Wilmott, as well as their respective wives, as defendants. Odell 

answered that he had no interest in either the partnership or the 

corporation, having conveyed everything to his wife, Sharon Fox. 

Sharon filed counterclaims against Maulding to collect on two 

promissory notes he had executed and filed a cross-claim against 

Wilmott challenging any interest he might assert in one of the 

notes. 

In 1988, SNB filed suit against Odell and Sharon Fox in state 

court (# C-88-51-D) to recover on a note secured by the Foxes' 

residence and to foreclose on the mortgage. Maulding signed the 

documents on behalf of SNB. When the Foxes failed to respond to 

SNB's motion for summary judgment, SNB obtained both a default 

judgment against the Foxes and an order for foreclosure. 

3 

Appellate Case: 92-5186 Document: 01019287316 Date Filed: 02/10/1994 Page: 3 
In October 1989, Odell filed a pro se action against Maulding 

and SNB (# C-89-609) in which he alleged that the two had 

converted $18,888.39 of his money. Odell also alleged that the 

defendants had extorted a kickback from him in exchange for giving 

him a loan, in violation of the Racketeer Influenced and Corrupt 

Organizations Act (RICO), 18 U.S.C. §§ 1961-68. Odell sought a 

writ of replevin on the conversion claim and sought damages on the 

RICO claim. The defendants entered special appearances in the 

case and moved to dismiss for lack of personal jurisdiction, as 

well as for failure to state a claim. 

In December 1989, Odell filed a second pro se action against 

Maulding and SNB (# C-89-743) in which he alleged the defendants 

had engaged in various fraudulent acts relating to their business 

dealings with him. Odell sought compensatory and punitive damages 

for the defendants' wrongdoing. 

By 1990, all four cases were pending before Judge Woodson and 

an independent CPA was proceeding with the accounting for the 

partnership and corporation. On May 23, 1991, Odell and Sharon 

filed the present action in federal court against Maulding, SNB, 

and others, alleging claims for RICO violations, fraud, 

constructive fraud, and intentional infliction of mental anguish. 

On May 31, 1991, counsel entered an appearance in state court on 

behalf of Odell and moved to dismiss the two cases Odell had 

instituted pro se (# C-89-609 and # C-89-743). By the time the 

federal district court considered Maulding's motion to dismiss the 

federal action pursuant to the Colorado River doctrine, the only 

state proceedings still ongoing were those involving the 

4 

Appellate Case: 92-5186 Document: 01019287316 Date Filed: 02/10/1994 Page: 4 
dissolution and winding up of Glendale Acres and the foreclosure 

of the mortgage on the Foxes' residence. 

"[T]he decision whether to defer to the state courts is 

necessarily left to the discretion of the district court in the 

first instance." Moses H. Cone Memorial Hosp. v. Mercury Constr. 

Co:r:p., 460 U.S. 1, 19 (1983). Such discretion, however, "must be 

exercised under the relevant standard prescribed by [the Supreme] 

Court." Id. In Colorado River, the Court held that, in light of 

the virtually unflagging obligation of the federal 

courts to exercise the jurisdiction given them . . . and 

the absence of weightier considerations of 

constitutional adjudication and state-federal relations, 

the circumstances permitting the dismissal of a federal 

suit due to the presence of a concurrent state 

proceeding for reasons of wise judicial administration 

are considerably more limited than the circumstances 

appropriate for abstention. 

424 u.s. at 817-18 (citations omitted). Thus, declining to 

exercise jurisdiction based on the Colorado River doctrine is 

appropriate only in "exceptional" circumstances. Id. at 818; 

Moses H. Cone, 460 U.S. at 19. 

The Supreme Court has set forth a number of factors for a 

court consider . in .. determining whether "exceptional 

circumstances" exist. Before examining these factors, however, a 

federal court must first determine whether the state and federal 

proceedings are parallel. See Caminiti & Iatarola, Ltd. v. Behnke 

Warehousing, Inc., 962 F.2d 698, 700 (7th Cir. 1992); New Beckley 

Mining Co:r:p. v. International Union, UMWA, 946 F.2d 1072, 1073 

(4th Cir. 1991), cert. denied, 112 S. Ct. 1587 (1992). "Suits are 

parallel if substantially the same parties.litigate substantially 

5 

Appellate Case: 92-5186 Document: 01019287316 Date Filed: 02/10/1994 Page: 5 
the same issues in different forums. 11 New Beckley Mining Corp., 

946 F.2d at 1073. 

Some courts, in determining whether state and federal 

proceedings are parallel, seem to consider how the state 

proceedings could have been brought in theory, i.e., what claims 

and parties could have been included had the federal plaintiff 

made a . timely application to do so, and compare the theoretical 

state proceedings to the federal proceedings. ~, Rosser v. 

Chrysler CokJ;?., 864 F.2d 1299, 1308 (7th Cir. 1988); Telesco v. 

Telesco Fuel & Masons' Materials, Inc., 765 F.2d 356, 359 (2d Cir. 

1985). We, however, believe that the better approach is to 

examine the state proceedings as they actually exist to determine 

whether they are parallel to the federal proceedings. McLaughlin 

v. United Va. Bank, 955 F.2d 930, 935-36 (4th Cir. 1992); Crawley 

v. Hamilton County Comm'rs, 744 F.2d 28, 31 (6th Cir. 1984). 

The latter approach heeds the Supreme Court's admonition in 

Moses H. Cone that to grant a stay or dismissal under the Colorado 

River doctrine would be 11 a serious abuse of discretion 11 unless 

11 the parallel state-court litigation will be an adequate vehicle 

for the complete and prompt resolution of the issue between the 

parties. . . . [T]he decision to invoke Colorado River 

necessarily contemplates that the federal court will have nothing 

further to do in resolving any substantive part of the case, 

whether it stays or dismisses. 11 460 U.S. at 28 (citations 

omitted) . 

11 [T]he existence of proceedings in state court does not by 

itself preclude parallel proceedings in federal court, 11 however. 

6 

Appellate Case: 92-5186 Document: 01019287316 Date Filed: 02/10/1994 Page: 6 
New Beckley Mining CokP., 946 F.2d at 1073. Thus, if a federal 

court determines the state and federal proceedings are parallel, 

it must then determine whether deference to state court 

proceedings is appropriate under the particular circumstances. 

In Colorado River, the Supreme Court set forth a nonexclusive 

list of factors for courts to consider in deciding whether 

11 exceptional circumstances 11 exist to warrant deference to parallel 

state proceedings: (1) whether either court has assumed 

jurisdiction over property; (2) the inconvenience of the federal 

forum; (3) the desirability of avoiding piecemeal litigation; and 

(4) the order in which the courts obtained jurisdiction. 424 U.S. 

at 818. The Court discussed several other factors in Moses H. 

Cone, such as the vexatious or reactive nature of either the 

federal or the state action, 460 U.S. at 18 n.20; whether federal 

law provides the rule of decision, id. at 23; and the adequacy of 

the state court action to protect the federal plaintiff's rights, 

id. at 28. Other courts also have considered whether the party 

opposing abstention has engaged in impermissible forum-shopping. 

See, e.g., Travelers Indem. Co. v. Madonna, 914 F.2d 1364, 1370-71 

(9th Cir. 1990). 

No single factor is dispositive; 11 [t]he weight to be given to 

any one factor may vary greatly from case to case, depending on 

the particular setting of the case. 11 Moses H. Cone, 460 U.S. at 

16. Rather than use the factors as a 11mechanical checklist, 11 a 

court should engage in 11 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. 11 Id. Indeed, 

7 

Appellate Case: 92-5186 Document: 01019287316 Date Filed: 02/10/1994 Page: 7 
since "[o]nly the clearest of justifications will warrant 

dismissal," Colorado River, 424 U.S. at 81.9, any doubt should be 

resolved in favor of exercising federal jurisdiction, see 

Travelers Indem. Co., 91.4 F.2d at 1.369. 

Needless to say, if we are to conduct any meaningful review 

of a district court's exercise of discretion under the Colorado 

River doctrine, the court must make its findings about the 

parallel nature of the state and federal proceedings and the 

balance of the factors on the record. The district court here, 

however, simply announced that "this matter should be dismissed 

pursuant to the Colorado River Doctrine. " Appellants' App. , Vol . 

IV, at 780. The court did not indicate why the state and federal 

proceedings were parallel, which factors it considered, if any, or 

what weight it. gave to any factor. 

Absent findings by the district court, "we are left with no 

means by which to judge the exercise of the court's discretion." 

Griffen v. City of Oklahoma City, 3 F.3d 336, 340 {10th Cir. 

1.993) . We decline to determine in the first instance whether 

deference to the state court proceedings is warranted, for to do 

so would overstep the bounds of our review for abuse of discretion 

and enter the realm of de novo review. Therefore, we must remand 

the action to the district court for further consideration. See 

Villa Marina Yacht Sales, Inc. v. Hatteras Yachts, 91.5 F.2d 7, 1.3 

{l.st Cir. 1.990) {Villa Marina I). 

On remand, the district court must first determine whether 

the state and federal proceedings are parallel and, if they are, 

whether extraordinary circumstances warrant withholding the 

8 

Appellate Case: 92-5186 Document: 01019287316 Date Filed: 02/10/1994 Page: 8 
exercise of federal jurisdiction. If the court determines 

exceptional circumstances do exist, it must then consider the 

appropriate remedy. The Supreme Court has declined to address 

whether deference to state court proceedings under the Colorado 

River doctrine should result in a stay or a dismissal of the 

federal action. Arizona v. San Carlos Apache Tribe, 463 U.S. 545, 

570 n.21 (1983); Moses H. Cone, 460 U.S. at 28. 

The district court here dismissed the federal action with 

prejudice. Some courts have approved dismissals, though whether 

with or without prejudice is not clear. Villa Marina Yacht Sales. 

Inc. v. Hatteras Yachts, 947 F.2d 529, 531 (1st Cir. 1991), cert. 

denied, 112 S. Ct. 1674 (1992) (Villa Marina II); American Disposal 

Servs .. Inc. v. O'Brien, 839 F.2d 84, 85 (2d Cir. 1988). 

We think the better practice is to stay the federal action 

pending the outcome of the state proceedings. Attwood, 886 F.2d 

at 243; Rosser, 864 F.2d at 1308-09; Mahaffey v. Bechtel Assocs. 

Professional CokP., 699 F.2d 545, 546-47 (D.C. Cir. 1983); Allen 

v. Louisiana State Bd. of DentisthY, 835 F.2d 100, 105 (5th Cir. 

1988), cert. denied, 112· s. Ct. 1764 (1992). In the event the 

state court proceedings do not resolve all the federal claims, a 

stay preserves an available federal forum in which to litigate the 

remaining claims, without the plaintiff having to file a new 

federal action. 

The judgment of the United 

Northern District of Oklahoma is 

States District Court for the 

REVERSED, and the case is 

REMANDED for further proceedings in accordance with this opinion. 

9 

Appellate Case: 92-5186 Document: 01019287316 Date Filed: 02/10/1994 Page: 9