Count Three of the Nassau County complaint requests that the court impose a constructive
trust on Levin for the benefit of Group 12, Group 12 Advertising and/or Native Woodland, on any
funds and property held by any Defendant or any entity owned or controlled by any Defendant.
Count Four of the Nassau County complaint requests an alternative, but similar, constructive trust as
Count Three.

The action in Nassau County, Florida has progressed to discovery but, as of July 10, 2002,
was delayed due to withdrawal by Levin's counsel. Pla. Brief Ex. A. The action is set to resume
discovery as soon as Levin finds replacement counsel.

ANALYSIS

A district court may stay an action when there is a concurrent, parallel state or federal
proceeding, Colorado River Water Conservation Dist. v. United States, 424 U.S, 800, 817 (1976).
However, the surrender of jurisdiction is only warranted in “exceptional circumstances” where the
decision to stay an action subject to the pendency of a cancurrent action is a matter of “wise judicial
administration, giving regard to the conservation of judicial resources and comprehensive disposition
of litigation.” Jd. Thus, a district court must determine whether exceptional circumstances exist to
justify a surrender of federal jurisdiction. Moses H. Cone Mem’t Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 25-6 (1983).

A two-part test exists for determining whether a federal district court should abstain from
adjudicating a claim when there is a related state court procceding. Admin. Comm. v. Gauf, 188 F.3d
767, 772 (7 Cir, 1999). First, the suits must be parallel in that “substantially the same parties are
contemporaneously litigating substantially the same issues in another forum.” Caminiti & latarola,
Ltd. v. Behnke Warehousing, Inc., 962 F.2d 698, 700 (7" Cir. 1992), This docs not mean that the

pattics and issues must be identical. AAR Int'l Inc. v. Nimelias Enter. S.A., 250 F.3d 510, 518 (7"


The final relevant factor is the relative progress of the state and federal proceedings. The
Nassau County action has proceeded to discovery, while the instant federal action has not yet
progress to the answer stage. Starr argues that the discovery phases in the state actions are being
delayed by Levin. However, we have no reason to believe that the state courts cannot adequately
deal with any delay tactics used by Levin. The progress of the state court in ils action weighs in
favor of a stay.

Upon balancing the Colorado River factors, we are convinced that abstention is the
appropriate course of action and that exceptional circumstances have been demonstrated. This case
will recommence upon the written motion of any party at the conclusion of the Nassau County
proceedings.

CONCLUSION

For the reasons above, we hereby stay these procccdings pursuant to the Colorado River
abstention doctrine pending the completion of the Nassau County proceeding. Defendant's motion to
transfer is taken under advisement and its ruting is also stayed. A status hearing is set for June 12,
2003, at 10:30 am, for the parties to inform the court as to the status of the Nassau County

proceeding.

It is so ordered. C y
aN

MARIN E. ASPEN
United States District Judge

Dated | elafo =



merely a “nominal plaintiff.” See, eg, Kaplus v, First Contin’! Corp., 711 So. 2d 108 (Fla. App. 3d
Dist. 1998). However, in this case, since Starr owns and operates the corporations in conjunction
with Levin, and brings both of these actions for the restoration of his financial dealings and business
reputation, any damages or equitable remedies given will be within his control.

Again, the heart of Starr’s allegations, whether brought by him, or on behalf of his
companies, contain a challenge to Levin’s behavior in his business dealings with Starr, The
important partics in both cases are Starr and Levin, Bringing suit on behalf of corporations owned by
Starr and Levin, or suing corporations solely owned by Levin cannot disguise the fact that Starr and
Levin remain, ultimately, the primary adverse parties.

Since we find that the suits are parallel, we turn to the second part of the Colorado River test
which requires us to balance ten factors to determine whether or not exceptional circumstances exist
to justify a surrender of jurisdiction. LaDuke v, Burlington N.R.R., 879 F.2d 1556, 1559 (7" Cir.
1989). These factors are: (1) whethcr the state has assumed jurisdiction over property; (2) the
inconvenience of the federal forum; (3) the desirability of avoiding piccemeal litigation; (4) the order
in which jurisdiction was obtained by the concurrent forums; (5) the source of governing law, statc or
federal; (6) the adequacy of the statc 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; (9) the availability of removal; and (10) the vexatious or contrived nature of the federal
claim. /d, No single factor is determinative and they arc “to be applied in a pragmatic, flexible
manner with a view to the realities of the case al hand.” Jd.

In the instant case, the partics do not dispute factors nine and ten: removal is not available
and the federal claim does not appear to be vexatious or contrived. Accordingly, we address only the

relevant remaining factors.



Cir. 2001). Indeed, the mere presence of additional issucs or partics docs not preclude a finding that

the suits are parallel. Jd.

Here, Starr argues that the suits are not parallel because they do not seek the same relief, and
because the Nassau County case involves breach of fiduciary duty to Starr through AeroSpace, Inc.
(AcroSpace) and through transfers of property to Mrs. Levin and Ms. Hankins, which arc not
remedies sought in the instant case. Mis argument, however, is without merit, First, the suits are
parallel in that they both seek damages to be awarded to Stary, even if, as in the Nassau County case,
those damages are on behalf of the corporations he wholly owns (or owns in conjunction with Levin).
The Nassau County case also seeks various equitable remedies in the form of accounting and
constructive trust, However, Starr’s request for additional remedies in the other forum, by itself, does
not convince us that the suits are not parallel. The dispositive issuc is whether substantially the
same parties are litigating substantially the same issucs. Caminit & latarola, 968 F.2d at 762. Levin
is named Defendant in this case and the Florida case, Def. Brief, Ex, A-C. The complaints contain
essentially the same factual allegations, as evidenced by the above recitation of the facts. Common
to both complaints are a breach of fiduciary duty and allegations of {raud on the part of Levin. At the
heart of the complaints is a challenge to the behavior and activities of Levin in his business dealings
with Starr revolving around Oyster Bay and the Group !2 companics, These cases involve
substantially the same parties litigating subslantially the same issues; the mere involvement of
additional parties or additional (ultimately related) claims, does not cause this case to veer from its
parallel nature,

Starr also argues that the suits are not parallel because he brought the Florida casc in his
capacity as a shareholder, not as an individual plaintiff. Starr argues that the corporation is the real
party in interest and the shareholder is only a nominal plaintiff. This fact is not enough to convince

us that this suit is not parallel. It is trac that normally the plaintiff in a sharcholder derivative suit is



The next relevant factor is the order in which jurisdiction was obtained. The Nassau County
court obtained jurisdiction first. Michigan obtained jurisdiction shortly after this court. Iowever,
the Supreme Court maintains that “priority should not be measured exclusively by which complaint
was filed first but rather in terms of how much progress has been made” in cach case, Moses H.
Cone Mem’'t Losp., 460 U.S. 1, 21 (1983). In the instant analysis, the Florida case has already
proceeded to discovery while the instant case is still in a relatively inchoate stage. Even though the
Nassau County case is presently delayed by the withdrawal of Levin’s counsel, it has still proceeded
to discovery and an order has been issued. Thus, the Nassau County court has proceeded further, and
as such, this factor weighs in favor of a stay.

The parties agree that the source of governing law for all claims of fraud, breach of contract,
and breach of fiduciary duty under both complaints is stale, as opposed to federal, law. As such, this
factor weighs in favor of a stay.

The question of the adequacy of the state court action to protect the federal plaintiff's tights
is the only factor that weighs against a stay. Starr argues that the state court actions cannot provide
him with the remedy of damages he seeks in this casc because the Michigan case was not filed
against Mr. Levin and the Florida case was filed on behalf of Starr’s corporations. As evidenced by
the recitation of the facts above, these cases all include Starr as Plaintiff and Levin as Defendant.
While Starr seeks damages in both cascs, however, he seeks additional remedies in the instant case
that are not sought in the Nassau County case. Thus, this factor weighs against a stay. Yet, Star's
rights are not permanently prejudiced, If, after the Nassau County case is resolved, Starr remains
convinced he has not been restored to financial well-being, he may continue to pursuc this case at
that time (subject, of course, to applicable principles of res judicata and collateral estoppel). Thus,
while this factor tends to weigh against granting a stay, we do not think it sufficient to outweigh all

the other relevant considerations.



“Minute Order Form (0697)

United States District Court, Northern District of IHinois

Name of Assigned Judi i! Sitting Judge If Other
ar Maglstrave Judge Marvin Aspen than Assigned Judge
CASE NUMBER 02 C 2258 DATE 8/19/2002
CASE Max Starr vs. Martin Levin
TITLE

[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.

MOTION:

DOCKET ENTRY:

(1) oO Filed motion of [ use listing in “Motion” box above.}

(2) Oo Brief in support of motion due

(3) a Answer briefto motion due__. Reply to answer briefdue___.

(4) oO Ruling/Hearingon_ssetfor_ ats

(3) a Status hearing set for 6/12/2003 at 10:30 A.M..

(6) Oo Pretrial conference[held/continued to] [set for/re-set for]on___eset fort.

(7) oO Trial[set for/re-sct for] on ___att

(8) Oo [Bench/Jury trial] [Hearing] held/continued to at

(9) Oo This case is dismissed [with/without] prejudice and without costs{by/agreement/pursuant to}
QO FRCP4(m) OLocal Rule 41.1 COFRCP41(aX1) OO) FRCP41(a)(2).

ao [Other docket entry] Enter Memorandum Opinion and Order: Levin’s motion to stay these

proceedings pending resolution of parallel proceedings in the Florida state court (5-1) is granted. We
hereby stay these proceedings pursuant to the Colorado River abstention doctrine pending the completion
of the Nassau County proceeding. Defendant’s motion to transfer is taken under advisement and its ruling
is also stayed. At the 6/12/03 status hearing, parties to inform the court as to the status of the Nassau
County proceeding.

(11) MH [Por further detail see order attached to the original minute order.

No notices required, advised in open court.

No notices required.

| Notices mailed by judge’s staff
Notified counsel by telephone. A\ !

Docketing to mail notices.

Mail AO 450 form.

Copy to judge/magistrate judge.

19/2002
dave maid notice
courtragm
GL deputy’s a
initials

MDate/time received in
central Clerk's Office mailing depury initials



The first factor is whether the state has assumed jurisdiction over property. The parties agree
that the Florida suit involves an interest in real property. However, Starr maintains that Levin owns
none of the property and, therefore, that no state has assumed jurisdiction over the property of Levin.
Notwithstanding Starr’s contentions, the fact remains that Florida has assumed jurisdiction over the

property at issue in Nassau County and that Levin is a named defendant in the suit. Thus, since

Florida has assumed jurisdiction over the property at issue, this factor weighs in favor of granting a
stay.

The next factor is the inconvenience of the federal forum. Starr is an Illinois resident while
Levin is a Michigan resident. Starr filed the action in Nassau County, Florida because “a key
defendant” is a Florida corporation with no known business outside the state of Florida. Plaintiff's
Resp. at 6. Levin is already subject to the jurisdiction of state courts in Michigan and Florida.
Because Starr is actively pursuing his case in Florida, we see minor inconvenience for Starr to
continue to prosecute that case while this court abstains. See LaDuke, 879 F.2d at 1561. By contrast,
Levin, already defending actions in two states, will be forced to defend in three states if the instant
stay is not granted. Thus, we find the inconvenience of the federal forum factor to be a burden on
Levin, and thus a factor in favor of granting a stay.

Of all the Colorado River factors, the desirability of avoiding picccmeal litigation weighs
most heavily in favor of a stay in the present case. Concern with this factor should focus on avoiding
“duplicative and wasteful litigation with the potential of inconsistent resolutions of the issue,”
Caminiti & Lrarola, 962 F.2d at 701. Levin and Starr are involved in at least three cases having
substantially the samc partics and involving substantially the same issucs. We will not take the
chance that our rulings will be inconsistent with that of the Nassau County court. The integrity and
authority of the judicial proccss must be preserved against inconsistent decisions and obligations on

the partics. Thus, the likelihood of piecemeal litigation weighs in favor of a stay.

7



Starr filed a derivative suit on behalf of Group 12 and Native Woodland in Nassau County, Florida,
naming, as defendants, Levin, Maralyn Levin, Ronnie Hankins, Autospace, Inc., Aerospace Corp.,
Inc., Nantomics Science Corp, Inc., System Site Homes, Inc., Timberlore A.G., Timberlore, Lid.,
Ontos, LLC, Group 12 Forest Products, Inc., and Group 12 Trading & Devclopment Corporation.
All of the corporate defendants are owned solely by Levin, or owned in conjunction with Starr.

The Nassau County complaint has three counts: breach of fiduciary duty, accounting, and
constructive trust. The breach of fiduciary duty count includes allegations against Levin including:
transfer of assets for no consideration; diversion of funds of Group 12, Group 12 Advertising, and
Native Woodlands to Aerospace Corp., Mrs. Levin, and Ms, Hankins; refusal to divulge the
performance of an investment made by Group 12 into a limited partnership that owns a brokerage
firm in New York; failure to communicate with counscl; failure to produce documents and
information with regard to actions brought against Levin and Starr in their capacity as owners and
sharcholders of Native Woodland; refusal to account for the activities, assets, and funds of Nantomic
Science, Nantomics Science, Timberlore A.G. and Timbcrlore, Ltd.; refusal to divulge the location of
securities purchased with Group 12 funds; inappropriately purchasing a boat and two cars for
personal use with Group 12 or Group 12 Advertising funds; instructing the accountants of Group 12
and Group 12 Advertising to not divulge financial information to Starr and to improperly classify
receipts and expenditures; hiding original accounting documents; and misrepresenting the amount of
encumbrance due on Oyster Bay Property.

Count Two of the Nassau County complaint is onc for accounting, alleges the actions
described above, and asks for Levin to account for all funds and property of Group 12, Group 12

Advertising and Native Woodlands and affiliates, in whatever form they may be found.

decision to stay is based solcly upon the pending action in Nassau County, however, we need not
further examine the pending Michigan action.



Count One alleges fraudulent conduct by Levin and corresponding injury to Starr. From

December 1998, Levin allegedly made sevcral fraudulent statements to Starr to induce Starr's further
investment in Group 12. ‘These statements include !.evin’s unfulfilled promise to contribute equally
to Group 12’s business ventures, Levin’s false representations that he had contributed the assets of a
Russian lumber mill and Swiss bank account to Group 12, Levin’s false representation that
mortgages cncumbering Oyster Bay totaled less than one million dollars when they actually totaled in
excess of six million dollars, and Levin’s false representation that the Oyster Bay mortgages had
been “taken care of” and paid, thereafter causing Starr to suffer a foreclosure action for an amount in
excess of seven million dollars.

Count Two of the instant complaint alleges Levin's breach of fiduciary duty. It alleges
Levin's making of the fraudulent statements recited above, Levin’s failure to deliver (and destruction
of) original accounting documents to Starr, Levin’s refusal or failure to cause numerous corporations
to issue stock to Starr where Starr was supposed to own 50% of those corporations, Levin's
inappropriate moving of asscts between various other corporate entities in order to hide those assets
from Starr, Levin’s repeated issuance of bad checks on behalf of Group 12, and Levin’s gross
mismanagement of Group 12 and Native Woodland.

Count Three of the instant complaint alleges breach of contract — specifically, that Levin and
Starr cach promised to provide equal amounts of capital to Group 12, but Levin contributed far less
than the required amount.

As the basis for his motion (o stay, Defendant Levin cites to the existence of a concurrent

action pending in the Florida state court.! On March 8, 2002 (three weeks prior to the instant action),

'Two days after filing the instant complaint, Starr filed another complaint in the state court in
Charlevoix County, Michigan. The Charlevoix County complaint is agamst Aerospace, Inc. (onc
of the corporations to which Levin has allegedly transferred funds), and alleges many of the same
allegations (with large swaths actually written word for word) as the instant complaint. Because our

2



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

MAX STARR, )
Plaintiff, }

v. } No. 02 C 2258
MARTIN LEVIN, }
Defendant. }

AUG 2 1 2002

MEMORANDUM OPINION AND ORDER
MARVIN E. ASPEN, Senior Judge:

Plaintiff Max Starr has filed a three count complaint against Defendant Martin Levin alleging
fraud, breach of fiduciary duty, and breach of contract in relation to a real property investment in
Nassau County, Florida. Starr has also filed a related suit in Nassau County. Given the existence of
the Florida suit, Levin has filed a motion to dismiss or stay pursuant to the Colorado River abstention
doctrine or, in the alternative, to transfer venue to the Middle District of Florida. For the following
reasons, we grant Levin's motion to stay these procecdings pending resolution of parallel proceedings
in the Florida state court.

BACKGROUND

The following facts arc taken from Plaintiffs complaint and are assumed to be true for
purposes of this motion. Starr and Levin own and operate Group 12, L.L.C. (“Group 12”), a
Delaware limited liability company, and, in its name, purchased all of the outstanding capital stock of
Native Woodland Propertics, Inc. (“Native Woodland”), a Florida corporation. Native Woodland
owns 950 acres of land in Nassau County, Florida, known as Oyster Bay Property (“Oyster Bay”),

which Starr and Levin intended to develop, improve and sell for their mutual benefit.

A