In the

United States Court of Appeals

For the Seventh Circuit

Nos. 13-2339 & 13-2340

ERIC D. FREED,

Plaintiff-Appellant,

v.

J.P. MORGAN CHASE BANK, N.A.,

Defendant-Appellee.

ERIC D. FREED,

Plaintiff-Appellant,

v.

PAUL M. WEISS, RONALD WEISS,

and COMPLEX LITIGATION GROUP LLC,

Defendants-Appellees.

Appeals from the United States District Court for the 

Northern District of Illinois, Eastern Division.

Nos. 12 C 1477 and 12 C 6720 — Gary S. Feinerman, Judge.

ARGUED NOVEMBER 7, 2013 — DECIDED JUNE 24, 2014

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Before BAUER, MANION, and SYKES, Circuit Judges.

BAUER, Circuit Judge. This appeal arises from three separate

actions filed by plaintiff-appellant Eric D. Freed (“Freed”)

against numerous defendants: the first case was filed in state

court; the second filed in state court and promptly removed to

federal court; the third filed in federal court. The district court

found that abstention in the two federal court cases was proper

under Colorado River Water Conservation District v. United States,

424 U.S. 800 (1976), and stayed both cases pending the outcome

of the state court proceedings. Freed timely appealed the two

Stay Orders, consolidated in this appeal, and argued that the

federal cases should be remanded and proceed to trial on the

merits. We find that the district court did not abuse its discretion in granting the stays. 

I. BACKGROUND

Freed and Paul M. Weiss (“Weiss”) were the sole managing

members of a legal practice organization called Complex

Litigation Group LLC (“CLG”). Freed claims to have provided

“virtually all of [CLG’s] operating capital” through loans in

excess of $12 million. Pursuant to the partnership agreement

between Freed and Weiss, Freed was entitled to repayment of

the loans before CLG could make distributions to other

members.

According to Freed, shortly after he received a partial

repayment from CLG in March 2011, Weiss began taking steps

to terminate Freed’s control of CLG and to create a new limited

liability company without him. Freed argues that Weiss,

without Freed’s authorization, moved CLG funds held by

J.P. Morgan Chase Bank (“Chase”) into other accounts, which

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Freed lacked signature authority to access. When Freed became

aware of Weiss’s movement of the CLG funds, Freed demanded that Chase freeze all of the CLG accounts based on the

claim that Weiss was unauthorized to move the funds without

Freed’s approval. Freed contends that Chase employees

relayed the freeze request to Weiss, who then removed all

funds from Chase through checks payable to him. Freed asserts

that Weiss planned to transfer the funds, along with all other

CLG assets, to the new company. 

In December 2011, Freed, individually and derivatively on

behalf of CLG, filed a complaint in state court against Weiss

and his wife Jamie Saltzman Weiss (“Saltzman”) alleging

various business-related improprieties primarily regarding

access to CLG records and funds (the “state court proceeding”). In an amended complaint, Freed asserted claims against

Weiss for breach of fiduciary duties owed to Freed and the

breach of the partnership agreement between Freed and Weiss.

Freed also requested a declaratory judgment from the court

stating that Weiss’s actions constituted a voluntary termination

of CLG according to the terms of the CLG partnership agreement. Freed further claimed that Saltzman, an employee of

CLG, breached her fiduciary duty of loyalty to CLG and that

both Saltzman and Weiss improperly converted CLG assets.

Freed’s complaint sought temporary and permanent injunctive

relief against Weiss and Saltzman to prevent any additional

actions in furtherance of their scheme to push Freed out of

CLG and to obtain its assets. 

In response, Weiss filed a counterclaim in state court on

behalf of himself and CLG requesting: (1) a judicial determination to expel Freed from CLG; (2) a temporary and permanent

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injunction preventing Freed from continuing to act or hold

himself out as a member and manager of CLG; and (3) a decree

that Freed be dissociated from CLG before August 2012. Weiss

and CLG filed additional counterclaims arguing that Freed was

dissociated from CLG in March 2011, when he withdrew CLG

funds in violation of their partnership agreement. However, in

the event that the state court determined that Freed was not

dissociated at that time, Weiss and CLG asked the court to

dissolve CLG and to award costs, compensatory damages, and

punitive damages against Freed.1

In February 2012, Freed filed suit against Chase in state

court claiming that Chase facilitated Weiss’s unauthorized

transfer of CLG funds (the “Chase Lawsuit”). Freed asserted

two claims against Chase: tortious interference with contractual rights and aiding and abetting Weiss’s breaches of

fiduciary duties owed to Freed. Chase timely removed the

Chase Lawsuit to federal court based on diversity of citizenship. Once in federal court, Chase brought third-party claims

against CLG, Weiss, and Saltzman for indemnity or contribution in the event that Freed was able to recover from Chase. 

On August 21, 2012, Freed gave written notice to CLG

expressing his voluntarily dissociation and filed a motion to

dismiss the state court proceeding without prejudice. That

same day, Freed filed an action in federal court against Weiss,

his father Ronald Weiss, and CLG asking the court to: (1) force

CLG to purchase Freed’s distributional interest in CLG for

 To be clear, Weiss and CLG’s filings with the state court were titled 1

“Emergency Petitions.” Both the state court and federal court treated these

as counterclaims. This court will do the same. 

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fair value and set the terms for the purchase and (2) award

damages against Weiss and Ronald Weiss, a CLG accountant,

for breaches of fiduciary duties arising from the alleged

transfer and theft of CLG funds (the “Distributional Interest

Lawsuit”). In the event that Freed did not receive his distributional interest at the price and subject to the terms set by the

court, Freed asked the court to dissolve CLG, supervise its

winding-up phase, and distribute CLG’s assets. CLG refused

to purchase Freed’s distributional interest, arguing that either

Freed could not dissociate because CLG was a membermanaged limited liability company or because Freed already

voluntarily terminated his membership in CLG in March 2011. 

The defendants in the Distributional Interest Lawsuit,

joined by Chase, filed a motion to stay the two federal cases

pending the outcome of the state court proceeding pursuant to

the Colorado River doctrine. After the defendants filed their

abstention motions in federal court, the state court granted

Freed’s motion to dismiss his state court claims. However,

because Weiss and CLG had filed counterclaims against Freed,

the state court proceeding was not ended. The federal court

requested supplemental briefing from the parties as to whether

the remaining counterclaims in the state court proceeding

justified federal abstention in light of the state court granting

Freed’s motion to dismiss. 

Before the supplemental briefings were due in federal

court, Weiss and CLG filed a motion in the state court

proceeding requesting immediate trial for the resolution of

their counterclaims. The motion urged the court to declare

that either Freed dissociated from CLG in March 2011, or

that he dissociated prior to his formal, written dissociation

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from CLG on August 21, 2012, by behavior that would constitute “dissociative acts” under the partnership agreement.

Weiss and CLG renewed their alternative request that the state

court dissolve CLG in the event that Freed was found to still be

a member of CLG until his written dissociation. Freed responded and requested judgment on the pleadings; that since

he formally dissociated from CLG on August 21, 2012, the

counterclaims made by Weiss and CLG were moot.

 On June 13, 2013, the federal district court entered Stay

Orders for both the Chase Lawsuit and the Distributional

Interest Lawsuit pending the outcome of the state court

proceeding pursuant to the Colorado River doctrine. Notably,

the district court determined that nine of the ten Colorado River

factors favored abstention. Freed timely appealed the district

court Stay Orders, which have been consolidated for this

appeal.

II. DISCUSSION

Pursuant to Colorado River, a federal court may stay or

dismiss a suit in federal court when a concurrent state court

case is underway, but only under exceptional circumstances

and if it would promote “wise judicial administration.”

Colorado River, 424 U.S. at 817–18. The primary purpose of the

Colorado River doctrine is to conserve both state and federal

judicial resources and prevent inconsistent results. Day v.

Union Mines, 862 F.2d 652, 657 (7th Cir. 1988); Lumen Const.,

Inc. v. Brant Const. Co., Inc., 780 F.2d 691, 694 (7th Cir. 1985). A

district court’s decision to stay federal proceedings pending the

resolution of a state court action is reviewed under an abuse of

discretion standard. Id. at 655.

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To determine whether a stay is appropriate, the court is

required to conduct a two-part analysis. First, the court must

determine whether the state and federal court actions are

parallel. AAR Int’l Inc. v. Nimelias Enterprises S.A., 250 F.3d 510,

518 (7th Cir. 2001). If the actions are not parallel, the Colorado

River doctrine does not apply and the court need not address

the second part of the analysis. Interstate Material Corp. v. City

of Chicago, 847 F.2d 1285, 1287 (7th Cir. 1988). If, however, the

court determines that the proceedings are parallel, the court

must decide whether abstention is proper by carefully weighing ten non-exclusive factors. AAR Int’l Inc., 250 F.3d at 522.

The factors are:

(1) whether the state has assumed jurisdiction over

property;

(2) the inconvenience of the federal forum;

(3) the desirability of avoiding piecemeal litigation;

(4) the order in which jurisdiction was obtained by

the concurrent forums;

(5) the source of governing law, state or federal;

(6) the adequacy of state-court action to protect the

federal plaintiff’s rights; 

(7) the relative progress of state and federal proceedings; 

(8) the presence or absence of concurrent jurisdiction; 

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(9) the availability of removal; and 

(10) the vexatious or contrived nature of the federal

claim.

Tyrer v. City of South Beloit, Ill., 456 F.3d 744, 754 (7th Cir. 2006)

(citing Caminiti & Iatarola, Ltd., 962 F.2d 698, 701 (7th Cir.

1992)).

As the Supreme Court noted in Colorado River, “[n]o one

factor is necessarily determinative” and the careful weighing

of all factors is necessary to determine whether circumstances

exist warranting abstention. 424 U.S. at 818-19; AAR Int’l Inc.,

250 F.3d at 518. 

A. Parallelism of State and Federal Court Cases

For a state court case to be parallel to a federal court case

under the Colorado River doctrine, there must be “a substantial

likelihood that the state litigation will dispose of all claims

presented in the federal case.” Lumen, 780 F.2d at 695. The

cases need not be identical to fulfill the requirement of parallelism, but the court must examine whether “substantially the

same parties are contemporaneously litigating substantially the

same issues in another forum.” Interstate Material Corp., 847

F.2d at 1288 (quoting Calvert Fire Ins. Co. v. American Mutual

Reinsurance Co., 600 F.2d 1228, 1229 n.1 (7th Cir. 1979)). 

The court should also examine whether the cases raise the

same legal allegations or arise from the same set of facts. Tyrer,

456 F.3d at 752. “[A]ny doubt regarding the parallel nature of

the [state court] suit should be resolved in favor of exercising

jurisdiction.” AAR Int’l. Inc., 250 F.3d at 520. A district court

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determination that the state and federal court proceedings are

parallel is reviewed by this court de novo. Id. at 518.

1. The State Court Proceeding and the Distributional

Interest Lawsuit

Since Freed is the plaintiff in both cases, we will first

examine whether the other parties in the state court proceeding

and the Distributional Interest Lawsuit are the same or

“substantially the same.” One way that parties in separate

actions are considered substantially the same under the

Colorado River doctrine is when they have “nearly identical”

interests. Caminiti, 962 F.2d at 700.

In the state court proceeding, the defendants are Weiss and

Saltzman. After the filing of counterclaims, CLG became

aligned with Weiss. In other words, the defendants in the state

court proceeding at the time of the request for abstention were

Weiss, CLG, and Saltzman, a third party accomplice accused of

assisting Weiss in his actions against Freed. The same is true

for the Distributional Interest Lawsuit: the defendants are

Weiss, CLG, and Ronald Weiss, another individual Freed

claims to have assisted Weiss in breaching the partnership

agreement and his fiduciary duties. Moreover, while the

various defendants are not identical in the two cases, their

interests are nearly identical: to show that neither fiduciary

duties nor the partnership agreement were breached and to

have the court determine that Freed dissociated from CLG in

March 2011, or in the alternative, to dissolve CLG and distribute its assets accordingly. The parties’ interests are substantially the same.

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Next, we look to see whether the issues in the two cases are

substantially the same. As previously detailed, the state court

proceeding brought by Freed centers on a scheme concocted by

Weiss to exclude Freed from CLG and take CLG assets. In their

counterclaims, Weiss and CLG argue that Freed dissociated

from CLG in March 2011, and even if he had not dissociated at

that time, his actions after March 2011 should result in his

expulsion from CLG. The counterclaims further request in the

alternative that the court dissolve CLG and determine the

distribution of its assets. Both Freed’s Distributional Interest

Lawsuit and state court proceeding allege that Weiss breached

his fiduciary duties owed to Freed and the partnership

agreement. 

Freed’s Distributional Interest Lawsuit additionally asks the

court to assess the fair value and terms of purchase of his

distributional interest in CLG at the time of his dissociation. See

805 ILCS 180/35–60(a) (“A limited liability company shall

purchase a distributional interest of a member for its fair value

determined as of the date of the member’s dissociation.”).

Freed argues that the resolution of his distributional interest

claims will not be resolved in the state court. We disagree.

Essential to Freed’s request in the federal court is his claim

that he voluntarily dissociated from CLG on August 21, 2012,

not March 2011, as alleged by Weiss. Thus, the Distributional

Interest Lawsuit turns on the determination of when Freed

dissociated under the partnership agreement; the precise

subject of the counterclaims in the state court proceeding. The

federal court cannot determine the value of Freed’s distributional interest until the claims brought in state court are

resolved. Similarly, Freed asserts in both cases that Weiss

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breached the partnership agreement as well as fiduciary duties

owed to Freed. The factual allegations and legal analyses in the

cases largely overlap, and the issues will be resolved largely by

referencing the same facts and evidence. Therefore, the issues

in the two cases, while not identical, are substantially the same. 

Freed then claims that since Ronald Weiss was not a

defendant in the state court proceeding, the resolution of the

claims in state court will not dispose of his “separate” allegations in the Distributional Interest Lawsuit against Ronald

Weiss, a CLG accountant, who Freed contends breached

fiduciary duties when he prepared fraudulent financial records

to facilitate Weiss’s transfer of CLG funds from Chase accounts. We disagree. 

“[T]he parallel nature of the actions cannot be destroyed by

simply tacking on a few more defendants, neither can it be

dispelled by repackaging the same issue under different causes

of action.” Clark v. Lacy, 376 F.3d 682, 686–87 (7th Cir. 2004).

The decision to exclude Ronald Weiss from the original state

court proceeding was entirely Freed’s choice. As the district

court correctly determined, Freed’s action against Ronald

Weiss is derivative of his claim against Weiss. If the state court

were to determine that Weiss did not violate the partnership

agreement or breach fiduciary duties owed to Freed, then

Ronald Weiss could not be held responsible for assisting Weiss

in those offenses. If the state court rules in favor of Freed, he

will be free to file claims against Ronald Weiss in the future. 

Freed additionally argues that the counterclaims filed by

Weiss and CLG in the state court proceeding were mooted by

his dissociation. Freed states that the only basis for dissolution

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argued in the counterclaims is a “deadlock” due to the disagreement between Freed and Weiss, the only membermanagers of CLG. According to Freed, the alternative request

for dissolution based on deadlock is a legal impossibility

because he has already dissociated from CLG. However, as

already discussed, the question of whether and/or when Freed

dissociated is an issue that has yet to be determined by the

state court. We therefore find that the issues and parties in the

state court proceeding are substantially similar to the issues

and parties in the Distributional Interest Lawsuit, satisfying

parallelism under Colorado River.

2. The State Court Proceeding and the Chase Lawsuit

In the Chase Lawsuit, Freed brought claims against Chase

for interfering with contractual obligations and aiding and

abetting Weiss in his breaches of fiduciary duties owed to

Freed. Chase filed a third-party complaint against Weiss, CLG,

and Saltzman repeating Freed’s claims and seeking contribution and/or indemnity based upon their conduct. In both cases,

Weiss is again aligned with CLG and an accomplice accused by

Freed of assisting Weiss in his scheme. 

The absence of Chase from the state court proceeding does

not necessarily defeat parallelism between the cases for two

reasons. Clark, 376 F.3d at 686 (“To be sufficiently similar it is

not necessary that there be ‘formal symmetry between the two

actions’”) (quoting Lumen, 780 F.2d at 695). First, Freed actively

chose to exclude Chase as a defendant in the state court

proceeding when it could have been joined as a party and there

appears to be no legitimate reason for Freed to leave Chase out

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of the state court action. Second, the Chase Lawsuit claims

are derived from the exact scheme and conduct Freed alleges

in the state court proceeding: that Weiss was taking actions to

(1) eliminate Freed from his control of CLG and (2) take all of

CLG’s assets without authorization, including funds to which

Freed was specifically entitled.

In order for Freed to bring claims against Chase for

assisting Weiss, he must first prove that Weiss breached the

partnership agreement as well as fiduciary duties owed to

Freed. If the state court finds that Freed dissociated from CLG

in March 2011, as argued in Weiss’s counterclaims, then Weiss

did not violate the partnership agreement or breach any

fiduciary duties and Freed has no cause of action against

Chase. Only after the state court resolves whether Weiss

violated obligations to Freed can Freed try to hold Chase liable

for assisting in that wrongdoing.

In short, the claims in both federal cases are premised upon

the scheme that is now before the state court. A resolution in

state court of two issues—when Freed dissociated from CLG

and whether Weiss breached the partnership agreement or

fiduciary duties owed to Freed—is necessary before either of

the federal cases can be decided. For this reason, it was rational

for the district court to determine that the “state court litigation

will be an adequate vehicle for the complete and prompt

resolution” of the larger dispute between Weiss and Freed that

rests at the heart of this appeal. The cases rely on the same set

of facts, present substantially similar legal issues, and involve

substantially the same parties. We agree with the district

court’s finding that the federal actions are parallel to those at

issue in the state court proceeding.

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B. The Ten Factors of Colorado River Abstention

We now turn to the second part of the Colorado River

analysis, which requires the court to consider the ten nonexclusive factors listed above. The district court is given the

discretion to apply more significant weight and analysis to

those factors that are most relevant to the case at hand. Clark,

376 F.3d at 688. “Given the flexible nature of the ten-factor

balancing test, we are reluctant to tinker with the district

court’s assignment of weight to any particular factor.” Id. Here,

the district court found nine of the ten factors weighed in favor

of abstention. Freed argues that none of the ten factors weigh

in favor of abstention. We review the district court’s consideration of the ten Colorado River factors for an abuse of discretion.

Tyrer, 456 F.3d at 751.

1. Whether the State has Assumed Jurisdiction

Over Property

The information and arguments presented to the district

court demonstrate that the state court assumed jurisdiction

over the bank accounts in which Freed claims to have property

rights. Freed concedes that the state court precluded him from

putting holds on CLG accounts and restricted access to CLG

property. Those actions sufficiently demonstrate that the state

court assumed jurisdiction over property relevant to the claims

in this appeal. Therefore, the first factor weighs in favor of

abstention.

2. The Inconvenience of the Federal Forum

Since the federal and state cases in this appeal are both

pending in Chicago courts, the federal forum is not inconvenient and the second factor weighs against abstention.

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3. The Desirability of Avoiding Piecemeal

Litigation 

The district court determined that the third factor strongly

weighs in favor of abstention. We agree. This factor “does not

turn on formal identity of issues but on concerns about the

efficient use of judicial resources and the public’s perception of

the legitimacy of judicial authority.” Id. at 756. When two

courts are given the task to oversee similar proceedings such

as pre-trial motions, discovery matters, and the consideration

of similar issues, evidence, and witnesses, it is effectively

“duplicating the amount of judicial resources required to

reach a resolution.” Clark, 376 F.3d at 687. This redundancy

would cause wasteful litigation, hindering judicial economy.

Caminiti, 962 F.2d at 701. Moreover, as this court stated in

Interstate Material Corp., “if both state and federal proceedings

were allowed to proceed, inconsistent rulings could jeopardize

the appearance and actuality of justice.” 847 F.2d at 1290. Here,

the state and federal forums have substantially the same

parties before them and are litigating substantially the same

issues arising from the same set of facts. Staying the federal

cases would therefore conserve judicial resources and avoid

the potential for the two proceedings to reach inconsistent

results. Clark, 376 F.3d at 687.

4. The Order in which Jurisdiction was Obtained

by the Concurrent Forums

The district court correctly noted that Freed first chose to

file the state court proceeding in December 2011. The Chase

Lawsuit was filed in February 2012, and the Distributional

Interest Lawsuit was not filed in federal court until August

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2012. At best, this factor could be considered neutral, but

more likely favors abstention. See, e.g., Lumen, 780 F.2d at 697

(holding that this factor favored abstention when the state

action was filed five months before the federal action).

Relying on Huon v. Johnson & Bell, Ltd., 657 F.3d 641 (7th

Cir. 2011), Freed contends that the district court gave insufficient consideration to this factor. This argument misconstrues

our holding. In Huon, we remanded a district court’s stay of

an action in order to determine if abstention was warranted

under Colorado River. Id. at 649. Noting that this form of

abstention requires “rigorous standards,” this court found

inadequate explanation for abstention when the district court

cited only three of the ten Colorado River factors and overlooked the other seven. Id. at 646–48. This case is distinguishable because the district court carefully addressed each of the

ten factors and provided sufficient explanations for its findings.

5. The Source of Governing Law, State or Federal

As conceded by Freed, all claims at issue in this appeal are

governed by state law. This court has noted that “a state

court’s expertise in applying its own law favors a Colorado River

stay.” Day, 862 F.2d at 660. Thus, the fifth factor also weighs in

favor of abstention.

6. The Adequacy of State-Court Action to Protect

the Federal Plaintiff’s Rights

Freed argues that forcing him to litigate his claims in state

court would inconvenience him and raise the possibility of

prejudice against him because he is a Florida citizen. However,

Freed chose the forum when he filed both the state court

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proceeding and the Chase Lawsuit in the Circuit Court of Cook

County. We agree with the district court that Freed effectively

undermined his own argument of prejudice when he chose the

state court forum for both the state court proceeding and the

Chase Lawsuit. We therefore cannot share Freed’s concerns

that his claims will not be fairly adjudicated in state court.

It is also important to note that the district court did not

dismiss Freed’s federal claims, but rather stayed them pending

the resolution of the state court proceeding. “[T]he circumstances permitting the dismissal of a federal suit due to the

presence of a concurrent state proceeding ... are considerably

more limited than the circumstances appropriate for abstention.” Colorado River, 424 U.S. at 818. As this court explained in

Lumen:

A dismissal, even without prejudice, creates a risk that

the federal plaintiff will be time-barred from reinstating

his federal suit if the state proceeding does not result in

a final decision on the merits. A stay, by contrast,

permits the federal court to retain jurisdiction in case

the state court action does not meet its anticipated end. 

780 F.2d at 698 (internal citations omitted). Here, Freed’s

substantial rights are protected by granting a stay because it

allows him the possibility to revive his federal litigation

depending on the outcome in state court or in the unlikely

event that the state court action is inadequate. Therefore, the

sixth factor also favors abstention.

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7. The Relative Progress of State and Federal

Proceedings

Freed argues that the progression of the state and federal

proceedings are “about the same” because they are both

“stalled.” We disagree. In the federal court cases, little has

occurred aside from filing the complaints, Chase’s answer to

Freed’s Second Amended Complaint, and Chase filing a thirdparty complaint. By contrast, the state court case had been in

progress for almost two years: the judge already issued several

rulings and ordered discovery, numerous appeals have been

filed, and the counterclaims are set for trial. It is clear that the

state court has expended significantly more judicial resources

than the federal court at this point. The district court correctly

found that the seventh factor also favors abstention. 

8. The Presence or Absence of Concurrent

Jurisdiction

Freed claims that this factor weighs against abstention

because his distributional interest claim is solely governed by

the federal court. Freed’s argument is flawed for the same

reasons his argument against parallelism between the state

court proceeding and the Distributional Interest Lawsuit fails.

Freed relies on the assumption that he dissociated from CLG

in August 2012, and so the counterclaims for the dissolution of

CLG and a distribution of its assets filed by Weiss and CLG are

moot. As previously explained, however, the determination of

Freed’s date of dissociation is unresolved. The resolution of

that key fact in state court is necessary before any distribution

of CLG interests can occur. Thus, the eighth factor also favors

abstention.

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Nos. 13-2339 & 13-2340 19

9. The Availability of Removal

The ninth factor intends to prevent a federal court from

hearing claims that are closely related to state proceedings that 

cannot be removed. Day, 862 F.2d at 660. The district court

concluded that the state court proceeding was non-removable

under 28 U.S.C. § 1441(b)(2) because diversity would provide

the only basis for federal jurisdiction. Freed argues that the

court ignored his claims against Chase, which were removed

to federal court. As detailed above, Freed had every opportunity to join Chase as a defendant in the state court proceeding,

eliminating Chase’s ability to remove based on diversity. We

agree with the district court that the ninth factor also weighs in

favor of abstention.

10. The Vexatious or Contrived Nature of the

Federal Claim

The district court determined that the tenth factor weighed

in favor of abstention due to the “overwhelming evidence that

Freed behaved vexatiously by bringing [the Distributional

Interest Lawsuit] in federal court and [the Chase Lawsuit] as a

separate suit in state court.” The record demonstrates that

Judge Pantle in the state court proceeding has made a number

of rulings unfavorable to Freed, such as granting Weiss’s

motion to enjoin Freed from filing or pursuing other related

actions in state court. Judge Pantle stated that she was “very

concerned about an abuse of process here and a manipulation

of the system” and concluded that Freed was “seeking to

litigate matters at the heart of [the state court proceeding]

before other judges in an attempt to evade [Judge Pantle’s]

orders.” In fact, Judge Pantle even initiated contempt proceedCase: 13-2339 Document: 00712285925 Filed: 08/04/2014 Pages: 21

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20 Nos. 13-2339 & 13-2340

ings against Freed based on what she believed to be instances

of misconduct and unlawful litigation tactics. 

Indeed, Freed’s filing of various actions in federal court that

arise from the same dispute between Freed and Weiss concerning CLG is indicative of an attempt to evade the state court.

However, even setting aside these presumptions, this factor

can weigh in favor of abstention when the claims and parties

in the federal suit could have been included in the original

state court proceeding. See, e.g., Interstate Material Corp., 847

F.2d at 1289 (finding that the federal suit could be considered

contrived and vexatious when there was “no reason why all

claims and all parties could not have been, and still could not

be, part of one suit”). Thus, the tenth factor also weighs in

favor of abstention.

In sum, several factors strongly favor abstention while

numerous others weigh in its favor. Freed has not presented

persuasive arguments to establish why any of the factors

strongly weigh against abstention. Since the factors more

heavily weigh in favor of a stay, we respectfully suggest that

the state court should first resolve when Freed dissociated

from CLG and whether he has stated a claim for breaches of

contract or fiduciary duty against Weiss before any of the

derivative federal suits can go forward. Accordingly, we find

that the district court did not abuse its discretion in finding that

the nature and circumstances of the state and federal proceedings warranted a stay.

III. CONCLUSION

For the foregoing reasons, we find that the concurrent state

and federal proceedings at issue in this appeal are parallel and

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Nos. 13-2339 & 13-2340 21

that the ten Colorado River factors carefully considered by the

district court weigh in favor of abstention. The district court’s

orders to stay the federal cases pending the outcome of the

state court proceeding are AFFIRMED. 

 

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