Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-01-07129/USCOURTS-caDC-01-07129-0/pdf.json

Parties Involved:
Dorothy Handy
Appellant
Shaw, Bransford, Veilleux & Roth
Appellee

Document Text:

Notice: This opinion is subject to formal revision before publication in the

Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify

the Clerk of any formal errors in order that corrections may be made

before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 13, 2003 Decided April 18, 2003

No. 01-7129

DOROTHY HANDY,

APPELLANT

v.

SHAW, BRANSFORD, VEILLEUX & ROTH,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 00cv02336)

Dorothy Handy argued the cause pro se.

Aaron L. Handleman argued the cause for the appellee.

George S. Mahaffey, Jr. was on brief for the appellee.

Before: HENDERSON, RANDOLPH and GARLAND, Circuit

Judges.

Opinion for the court filed by Circuit Judge HENDERSON.

 Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

USCA Case #01-7129 Document #744606 Filed: 04/18/2003 Page 1 of 11
2

KAREN LECRAFT HENDERSON, Circuit Judge: Dorothy

Handy appeals pro se the dismissal of her malpractice lawsuit

against the law firm of Shaw, Bransford, Veilleux & Roth

(Shaw). She asserts that the district court erred in ruling

that Rule 13 of the Federal Rules of Civil Procedure required

her to file her malpractice claim against Shaw in a lawsuit

already pending in the District of Columbia Superior Court

(Superior Court) brought by Shaw against Handy to recover

legal fees allegedly owing. A district court’s authority to

dismiss a case within its jurisdiction in favor of parallel local

court proceedings is limited, however, and here the court

overlooked both United States Supreme Court and Circuit

precedent to that effect. See, e.g., Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 813–19 (1976);

Reiman v. Smith, 12 F.3d 222, 223–24 (D.C. Cir. 1993); Hoai

v. Sun Refining & Mktg. Co., Inc., 866 F.2d 1515, 1518, 1520

(D.C. Cir. 1989).

I.

Handy’s malpractice claim against Shaw arose as a result

of Shaw’s representation of Handy in another case—Handy

had hired Shaw to represent her in an employment discrimination suit against the United States Department of Transportation. The Department successfully defended against

that claim and, subsequently, Shaw attempted to recover

legal fees from Handy. Handy, in turn, alleged that Shaw’s

representation of her in that case constituted malpractice.

Shaw filed its original complaint on September 26, 2000 in

Superior Court, seeking the recovery of fees allegedly owed

by Handy. Shaw, however, failed to serve Handy before she

filed pro se her malpractice complaint against Shaw in district

court on September 29, 2000. Shaw’s failure to serve Handy

ultimately resulted in the Superior Court’s dismissal of

Shaw’s claim on December 7, 2000. Shaw, Bransford, Veilleux & Roth v. Handy, Civ. No. 00–7138 (D.C. Super. Ct. Dec.

7, 2000). Handy, on the other hand, did successfully serve

Shaw, which on November 21, 2000 moved to dismiss her

USCA Case #01-7129 Document #744606 Filed: 04/18/2003 Page 2 of 11
3

complaint for failure to state a claim upon which relief could

be granted, namely, her alleged malpractice claim was required under FED. R. CIV. P. 13(a) to be brought as a

compulsory counterclaim in the then-pending Superior Court

litigation.

More than six months later, the district court granted

Shaw’s still-pending dismissal motion, dismissing without

prejudice Handy’s suit. Handy v. Shaw, Bransford, Veilleux

& Roth, Civ. A. No. 00–2336 (D.D.C. June 5, 2001) (mem.)

[hereinafter Mem. Op.].1

 It reasoned that Rule 13(a)’s requirement that ‘‘[a] pleading shall state as a counterclaim any

claim which at the time of serving the pleading the pleader

has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing

party’s claim,’’ compels a litigant to bring all claims arising

out of the same transaction or occurrence in a single forum.

Mem. Op. at 3–5. It first determined that Handy’s malpractice claim ‘‘bears a clear, logical relationship’’ to Shaw’s claim

for unpaid legal fees, id. at 5, and, then, based on that

determination, treated Handy’s claim as a compulsory counterclaim under Rule 13(a). Because Shaw’s lawsuit was filed

three days before Handy’s, the court said, Handy must file

her claim there,2

 declaring that ‘‘to permit both claims to

1 There is no dispute that Handy’s case was within the district

court’s subject matter jurisdiction under 28 U.S.C. § 1332 (diversity).

2 The district court was apparently unaware that in the interim

between Shaw’s motion to dismiss and its ruling thereon, Shaw’s

Superior Court case had been dismissed. Shaw filed a second

action in Superior Court on March 1, 2001, making the same claim.

Complaint, Shaw, Bransford, Veilleux & Roth v. Handy, No.

01–1664 ¶ ¶ 1–2 (D.C. Super. Ct. Mar. 1, 2001). Shaw had argued in

support of its motion to dismiss that the first case filed ought to

determine the forum in which both suits are litigated. Motion to

Dismiss, Handy v. Shaw, Bransford, Veilleux & Roth, Civ. A. No.

00–2336 (D.D.C. Nov. 21, 2000). By the time the district court

ruled on Shaw’s motion to dismiss, however, its original Superior

Court case had been dismissed and Handy’s federal suit was then

USCA Case #01-7129 Document #744606 Filed: 04/18/2003 Page 3 of 11
4

proceed in separate forums would thwart the intent behind

Rule 13.’’ Id. at 7. The district court concluded that ‘‘ ‘the

fairest and most efficient course would be to permit the

parties to litigate all aspects of the dispute in the forum in

which the controversy was first raised.’ ’’ Id. at 6–8 (quoting

Pumpelly v. Cook, 106 F.R.D. 238, 240 (D.D.C. 1985)) (citing

Coates v. Ellis, 61 A.2d 28, 30 (D.C. 1948)).

II.

The district court based its Rule 12(b)(6) dismissal without

prejudice on the compulsory counterclaim provision of FED. R.

CIV. P. 13(a) and notions of judicial efficiency.3

 Generally, the

district court’s decision to decline jurisdiction in favor of an

ongoing proceeding is reviewed for abuse of discretion. Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S.

1, 19 (1983). Whether the lower court applied the proper

legal standard in exercising that discretion, however, is a

question of law reviewed de novo. Id.; Reiman, 12 F.3d at

223–24; Wash. Metro. Area Transit Auth. (WMATA) v.

Ragonese, 617 F.2d 828, 830 (D.C. Cir. 1980). As the district

court noted, parallel litigation of factually related cases in

separate fora is inefficient. Mem. Op. at 7 (use of Rule 13 to

consolidate factually related cases justified because it is the

resolution that ‘‘will best serve the interests of justice, as well

as judicial economy’’). Indeed, separate parallel proceedings

have long been recognized as a judicial inconvenience. Columbia Plaza Corp. v. Sec. Nat’l Bank, 525 F.2d 620, 626

(D.C. Cir. 1975) (‘‘Sound judicial administration counsels

against separate proceedings, and the wasteful expenditure of

the first filed, that is, it pre-dated Shaw’s second Superior Court

action.

3 The district court’s rationale would more correctly have been

based on the parallel compulsory counterclaim rule applicable in

Superior Court, D.C. SUPER. CT. CIV. R. 13(a), inasmuch as the

litigation began there. Assuming the district court meant to give

effect to Superior Court Civil Rule 13 (although it cited FED. R. CIV.

P. 13), that Rule is virtually identical in form and substance to the

federal rule and therefore would lead to the same result.

USCA Case #01-7129 Document #744606 Filed: 04/18/2003 Page 4 of 11
5

energy and money incidental to separate litigation of identical

issues should be avoided.’’) (footnotes omitted). For ‘‘reasons

of wise judicial administration,’’ Colo. River, 424 U.S. at 818,

the district court is given discretion to dismiss or stay a

pending suit in favor of a consolidated action in another forum

but it is a discretion both the Supreme Court and our court

have limited. Moses H. Cone, 460 U.S. at 19 (‘‘[T]o say that

the district court has discretion is not to say that its decision

is unreviewable; such discretion must be exercised under the

relevant standard prescribed by this Court [viz.] Colorado

River’s exceptional-circumstances testTTTT’’); Reiman, 12

F.3d at 224; Columbia Plaza, 525 F.2d at 627–28. In the

case of parallel litigation in two federal district courts, the

‘‘general principle is to avoid duplicative litigation.’’ Colo.

River, 424 U.S. at 817 (citing Kerotest Mfg. Co. v. C–O–Two

Fire Equip. Co., 342 U.S. 180, 183 (1952)). So long as the

parallel cases involve the same subject matter, the district

court should—for judicial economy—resolve both suits in a

single forum. If there is a question whether the two cases

involve the same subject matter, and hence, should be litigated in a single forum, we use Rule 13(a)4

 to answer the

question. Columbia Plaza, 525 F.2d at 626–27 (using Rule

13(a) to conclude that ongoing suit in another district to

recover on certain notes and suit filed in district court here

challenging entire transaction—of which notes were part—

were ‘‘of a single controversy’’). Where the issues arise out

4 FED. R. CIV. P. 13(a) states:

A pleading shall state as a counterclaim any claim which at the

time of serving the pleading the pleader has against any

opposing party, if it arises out of the transaction or occurrence

that is the subject matter of the opposing party’s claim and

does not require for its adjudication the presence of third

parties of whom the court cannot acquire jurisdiction. But the

pleader need not state the claim if (1) at the time the action

was commenced the claim was the subject of another pending

action, or (2) the opposing party brought suit upon the claim by

attachment or other process by which the court did not acquire

jurisdiction to render a personal judgment on that claim, and

the pleader is not stating any counterclaim under this Rule 13.

USCA Case #01-7129 Document #744606 Filed: 04/18/2003 Page 5 of 11
6

of the same ‘‘transaction,’’ as they do here, the district court

next decides which district court should adjudicate the case.

Id. at 626–28. Although some courts make this determination

by using the so-called ‘‘first-to-file’’ rule, e.g., Cadle Co. v.

Whataburger of Alice, Inc., 174 F.3d 599, 606 (5th Cir. 1999);

Alltrade, Inc. v. Uniweld Products, Inc., 946 F.2d 622, 625

(9th Cir. 1991), we have emphasized that the district court

must balance equitable considerations rather than using a ‘‘a

mechanical ‘rule of thumb.’ ’’ Columbia Plaza, 525 F.2d at

628 (quotations omitted); id. (‘‘It is not enough to undertake

merely the task of inquiring into the applicability of relevant

provisions of the Civil Rules and end the effort at that

point.’’); see also WMATA, 617 F.2d at 830.

The district court determined that the two suits involved

the same subject matter, relying on Pumpelly v. Cook, 106

F.R.D. 238, 239–40 (D.D.C. 1985), where the district court

considered two factually related cases (one brought in our

district court and the other in the Eastern District of Virginia) and, using its discretion, dismissed the case in favor of

the parallel Virginia litigation. Mem. Op. at 4. Here, however, the district court determined that Rule 13(a) mandated

the dismissal of Handy’s action. Id. at 4 (Rule 13(a) imposes

two-step inquiry to determine whether case should be dismissed in favor of alternative forum). While it is true that

the purpose of Rule 13(a) is to consolidate logically related

claims, it is usually applied in subsequent litigation on res

judicata or estoppel principles. Asset Allocation & Mgmt.

Co. v. W. Employers Ins. Co., 892 F.2d 566, 572–73 (7th Cir.

1989) (rejecting FED. R. CIV. P. 13 as basis for enjoining

federal district court from proceeding with parallel litigation)

(‘‘[T]he usual method by which [Rule 13] is enforced is simply

by the plaintiff’s pleading the judgment as res judicata in the

defendant’s suit.’’) (citing Baker v. Gold Seal Liquors, Inc.,

417 U.S. 467, 469 n.1 (1974); Fagnan v. Great Cent. Ins. Co.,

577 F.2d 418, 420 (7th Cir.), cert. denied, 439 U.S. 1004

(1978)); Kane v. Magna Mixer Co., 71 F.3d 555, 562–63 (6th

Cir. 1995) (adopting waiver or estoppel theory for enforcing

Rule 13(a) compulsory counterclaim requirement in subseUSCA Case #01-7129 Document #744606 Filed: 04/18/2003 Page 6 of 11
7

quent litigation), cert. denied, 517 U.S. 1220 (1996); see

generally 6 CHARLES ALAN WRIGHT & ARTHUR R. MILLER,

FEDERAL PRACTICE AND PROCEDURE § 1417 (2d ed. 1990 & Supp.

2002) (explaining that failure to plead compulsory counterclaim under Rule 13(a) bars later claim on res judicata or

estoppel principles).

The parallel proceedings, as already noted, took place in

district court and in the Superior Court of the District of

Columbia. Although the Superior Court is a congressionally

created court and, thus, ‘‘federal’’ in its creation,5

 we have

heretofore reviewed the district court’s discretionary dismissal in favor of parallel proceedings in Superior Court under

the standard applicable to a parallel state court proceeding.

See, e.g., Reiman, 12 F.3d at 223–25; Hoai, 866 F.2d at 1517–

18, 1520–21; see also Mahaffey v. Bechtel Assocs. Prof’l

Corp., 699 F.2d 545, 546 (D.C. Cir. 1983) (per curiam) (reversing district court dismissal in favor of Superior Court because

case was not within ‘‘narrowly circumscribed category in

which, despite a statutory basis for federal jurisdiction, extraordinary factors warrant confining adjudication to a nonfederal forum,’’ endorsing stay of local litigation) (citing Colo.

River, 424 U.S. at 817–19). Thus, it is Colorado River

(followed by us in Reiman and Hoai), and not Columbia

5 District of Columbia Court Reorganization Act of 1970

(DCCRA), Pub. L. No. 91–358, tit. 1, sec. 111, 84 Stat. 473, 475–521

(codified at D.C. CODE § 11–101 et seq.) (creating District of Columbia court system). Nevertheless, both our case law and other

federal statutes treat the D.C. courts like state courts. See, e.g.,

United States v. Dist. of Columbia, 669 F.2d 738, 741 n.4 (D.C. Cir.

1981) (‘‘The [DCCRA] was intended to create a local court system

similar in major respects to court systems in the several states.’’)

(citations omitted); Steorts v. Am. Airlines, Inc., 647 F.2d 194, 196

(D.C. Cir. 1981) (‘‘From [the passage of the DCCRA] onward, the

relationship of the federal to the local judiciary was to be akin to

that historically existent in the states.’’). See also, e.g., 28 U.S.C.

§§ 1257(b) (treating D.C. Court of Appeals as state court for

certiorari), 1451 (treating Superior Court as state court for removal); 2113 (treating D.C. Court of Appeals as state court).

USCA Case #01-7129 Document #744606 Filed: 04/18/2003 Page 7 of 11
8

Plaza, Pumpelly or any compulsory counterclaim rule as the

district court believed, that applies here.

Because the Supreme Court has consistently reinforced

‘‘the virtually unflagging obligation of the federal courts to

exercise the jurisdiction given them,’’ Colo. River, 424 U.S. at

817, it has sanctioned the ‘‘ ‘[a]bdication of the obligation to

decide cases [as] justified TTT only in the exceptional circumstances where the order to the parties to repair to the State

court would clearly serve an important countervailing interest.’ ’’ Moses H. Cone, 460 U.S. at 14 (quoting Colo. River,

424 U.S. at 813); see Quackenbush v. Allstate Ins. Co., 517

U.S. 706, 716 (1996). Countervailing interests identified by

the Supreme Court in abstention doctrines that predate Colorado River include federalism and comity.6

 Our court has

questioned whether abstention should apply vis-a-vis ` the

Superior Court to the same extent it does in the federal-state

context.7

 Nevertheless, Colorado River recognizes as a coun6 The three abstention rules that preceded Colorado River include

the Younger/Pennzoil abstention, see Pennzoil Co. v. Texaco Inc.,

481 U.S. 1, 10–12 (1987) (abstention where there is federal/state

conflict and considerations of comity and federalism dictate federal

court should defer to state proceedings); see also Younger v.

Harris, 401 U.S. 37, 43–45 (1971), the Pullman abstention, Harris

County Comm’rs Ct. v. Moore, 420 U.S. 77, 83 (1975) (abstention to

avoid premature constitutional adjudication where there exists unsettled question of state law); see also R.R. Comm. of Texas v.

Pullman Co., 312 U.S. 496 (1941); and the Burford abstention,

Colo. River, 424 U.S. at 814–15 (abstention where there exist

‘‘difficult questions of state law bearing on policy problems of

substantial public import whose importance transcends the result in

the case then at bar’’); see also Burford v. Sun Oil Co., 319 U.S.

315 (1943).

7 Silverman v. Barry, 727 F.2d 1121, 1123 n.4 (D.C. Cir. 1984)

(noting ‘‘threshold question of whether the abstention rules, doctrinally based on concerns of federalism and comity, apply at all in the

District of Columbia, a creature of Congress’’), cert. denied, 488

U.S. 956 (1988). As we noted in an earlier case,

It may well be that the abstention doctrine is rooted in

federalism interests which—with all their historic underpinnings, the tension between federal powers and state sovereignUSCA Case #01-7129 Document #744606 Filed: 04/18/2003 Page 8 of 11
9

tervailing interest ‘‘wise judicial administration,’’ Colo. River,

424 U.S. at 817 (internal quotations omitted), an interest as

relevant as between the district court and the Superior Court

as it is between the district court and a state court. Moreover, when the issues raised in the parallel proceedings are

ones of local law, Superior Court judges presumably have as

much expertise as would a state court judge in deciding

questions of state law. This is one reason that we defer to

the local courts’ interpretations of the D.C. Code in the same

manner that other federal courts defer to state court interpretations of state law. See United States v. Edmond, 924

F.2d 261, 264 (D.C. Cir.), cert. denied, 502 U.S. 838 (1991).

The Congress’s treatment of D.C. courts as state courts for

certain purposes, see supra note 5, also counsels in favor of

our making the same analogy.

ty, and the concern for local political autonomy—make the

abstention doctrine inapposite in the unique District. It may

be that, in defining the relationship between the local and

Federal courts within the District, cases articulating the doctrine of abstention in the context of a Federal-state relationship

are instructive, but not necessarily controlling. On the other

hand it may be that, in enacting the District of Columbia Court

Reorganization Act of 1970, Congress intended a relationship

between the Federal courts and the local statutory courts to be

patterned in full measure on the relationship between Federal

and state tribunals in other parts of the country.

Sullivan v. Murphy, 478 F.2d 938, 962 n.35 (D.C. Cir.), cert. denied,

414 U.S. 880 (1973); see also Spivey v. Barry, 665 F.2d 1222, 1229

n.16 (D.C. Cir. 1981) (quoting Sullivan, 478 F.2d at 962 n.35). In

fact, we have previously applied only the Pullman doctrine to the

District of Columbia. Justice v. Super. Ct. of D.C., 732 F.2d 949,

950 (D.C. Cir. 1984) (application of Pullman abstention); but see id.

at 953 & n.20 (Robinson, C.J., dissenting). See LaShawn A. v.

Kelly, 990 F.2d 1319, 1322 (D.C. Cir. 1993) (‘‘This Court has never

decided whether the District of Columbia is a state for Younger

abstention purposes.’’), cert. denied, 510 U.S. 1044 (1994); Dist.

Props. Assocs. v. Dist. of Columbia, 743 F.2d 21, 28 n.5 (D.C. Cir.

1984) (Burford abstention ‘‘never applied to’’ District of Columbia).

USCA Case #01-7129 Document #744606 Filed: 04/18/2003 Page 9 of 11
10

We emphasize, as has the Supreme Court, that the district

court may exercise its discretion to decline jurisdiction for the

purpose of judicial economy only in truly ‘‘exceptional circumstances.’’ Moses H. Cone, 460 U.S. at 14; see Colo. River,

424 U.S. at 815, 817–19; Hoai, 866 F.2d at 1518. It may do

so only after weighing a number of factors, including the

inconvenience of the federal forum, the order in which the

courts assumed jurisdiction, the desirability of avoiding piecemeal litigation, whether federal or state law controls and

whether the state forum will adequately protect the interests

of the parties. Colo. River, 424 U.S. at 817–18; Moses H.

Cone, 460 U.S. at 25–26; Reiman, 12 F.3d at 223; see also

Burns v. Watler, 931 F.2d 140, 146 (1st Cir. 1991) (listing

principal factors courts consider under Colorado River and

Moses H. Cone). In the district court’s analysis, ‘‘[n]o one

factor is necessarily determinative; [but] a carefully considered judgment taking into account both the obligation to

exercise jurisdiction and the combination of factors counselling against that exercise is required.’’ Colo. River, 424 U.S.

at 818–19. ‘‘[O]nly truly ‘exceptional circumstances’ will allow

a federal court to stay or dismiss a federal action in favor of a

concurrent action before a state court.’’ Hoai, 866 F.2d at

1518. Indeed, the balance is ‘‘heavily weighted in favor of the

exercise of jurisdiction.’’ Moses H. Cone, 460 U.S. at 16;

Reiman, 12 F.3d at 223–24.

It does not appear that the district court engaged in the

deliberative balancing required by Colorado River and Moses

H. Cone and applied in Reiman, 12 F.3d at 223–24, and Hoai,

866 F.2d at 1518, 1520–21. In fact, the district court did not

discuss Colorado River or related precedent. While its objective, that is, pursuing the ‘‘ ‘most efficient course,’ ’’ Mem. Op.

at 7 (quoting Pumpelly, 106 F.R.D. at 240), is a relevant

consideration under Colorado River, the district court failed

to weigh the efficiency goal against its primary obligation to

exercise its jurisdiction. Here at least three factors should

be weighed: First, Shaw’s Superior Court suit had been

dismissed by the time the district court acted; second, no

substantial proceedings had occurred in Superior Court, see

Moses H. Cone, 460 U.S. at 21–22 (‘‘priority should not be

USCA Case #01-7129 Document #744606 Filed: 04/18/2003 Page 10 of 11
11

measured exclusively by which complaint was filed first, but

rather in terms of how much progress has been made in the

two actions’’; fact that ‘‘[i]t was the state-court suit in which

no substantial proceedings TTT had taken place’’ weighed

against stay of federal action); and third, the effect of the

applicable statute of limitations. LaDuke v. Burlington N.

R.R. Co., 879 F.2d 1556, 1561–62 (7th Cir. 1989) (district court

should stay rather than dismiss case if state statute of

limitations is bar); see also Hoai, 866 F.2d at 1517 (‘‘[I]t

might be appropriate to stay rather than dismiss a case if

dismissal is otherwise justifiedTTTT’’) (citations omitted).

III.

For the foregoing reasons, we conclude that the district

court’s dismissal of Handy’s claim constitutes legal error.

Accordingly, the judgment of the district court is reversed

and the case is remanded for further consideration consistent

with this opinion.

So ordered.

USCA Case #01-7129 Document #744606 Filed: 04/18/2003 Page 11 of 11