United States Court of Appeals,

Eleventh Circuit.

No. 97-6966

Non-Argument Calendar.

FIRST FRANKLIN FINANCIAL CORP., Plaintiff-Appellant,

v.

Gary MCCOLLUM, Defendant-Appellee.

June 8, 1998

Appeal from the United States District Court for the Northern District of Alabama. (No. CV 97-AR2567-M), William M. Acker, Jr., Judge.

Before COX, BIRCH and MARCUS, Circuit Judges.

PER CURIAM:

 1st Franklin Financial Corporation appeals from the dismissal of its petition to compel Gary

McCollum to participate in arbitration, pursuant to the Federal Arbitration Act (FAA), 9 U.S.C. §§

3-4. McCollum sued 1st Franklin and one of its former employees, Kevin Dingle, in the circuit

court of Etowah County, Alabama, alleging several fraud-related claims arising from a loan

transaction. Eighteen days after McCollum sued, 1st Franklin filed concurrent petitions in the

Etowah County circuit court and in federal district court to force McCollum to arbitrate his claims

pursuant to an arbitration clause in the loan agreement and a separate arbitration agreement. The

district court dismissed the petition without prejudice, abstaining "[u]nder principles of comity and

federalism." (R.-9, at 2.) 1st Franklin represents that (as of the date of its opening brief) the state

court has not ruled on the motion to compel arbitration. 1st Franklin now appeals the dismissal.

Abstentions such as this are reviewed for abuse of discretion. See Moses H. Cone Mem. Hosp. v.
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Mercury Constr. Corp., 460 U.S. 1, 19, 103 S.Ct. 927, 938, 74 L.Ed.2d 765 (1983). We vacate and

remand.

 A threshold issue McCollum raises is whether the district court had subject matter

jurisdiction. As McCollum correctly points out, the FAA alone does not supply jurisdiction, see id.

at 25 n. 32, 103 S.Ct. at 942 n. 32, and no federal question appears in this action. It appears that

diversity jurisdiction exists, however, because the petition here (without contradiction) describes the

petitioner as a corporation organized under Georgia law with its principal place of business in

Georgia, names the respondent as a citizen of Alabama, and claims an amount in controversy

exceeding $75,000. That plainly satisfies 28 U.S.C. § 1332's demands. See 28 U.S.C. § 1332(a)(1),

(b), (c)(1).

McCollum asserts to the contrary first that diversity jurisdiction is lacking because the

state-court action is not removable due to Dingle's Alabama citizenship. We disagree. As a matter

of both § 1332's language and common sense, whether another action is removable or not does not

affect jurisdiction in this, an independent action. Furthermore, McCollum's sole authority for this

proposition is both weak and distinguishable. McCollum relies on a footnote in Ultracashmere

House, Ltd. v. Meyer, 664 F.2d 1176, 1181 n. 6 (11th Cir.1981), which observes that "[t]he

[underlying] action was removable under 28 U.S.C. § 1441 on the basis of diversity of citizenship;

were it not, this court would clearly be without jurisdiction to entertain the present proceeding."

First, this language does not state a rule that an action must be removable in order for a district court

to have jurisdiction to compel parties to the action to arbitrate. Rather, it seems more like an

observation in support of the court's conclusion in that case that abstention was appropriate, it

appearing that the arbitration petition was an eleventh-hour end-run around legitimate state-court
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rulings. See id. at 1181. And the observation was perfectly true in that case, because there were the

same two parties in both the underlying action and the action seeking to compel arbitration. Thus,

if diversity was lacking in the state-court action, it would be lacking in the federal-court action as

well. Here, of course, the observation is not true. The state-court action has three parties, but only

two are parties to this action seeking an order compelling arbitration. It is perfectly consistent,

therefore, for removal jurisdiction to lack in one, but subject matter jurisdiction to be present in the

other.

 McCollum makes a second, related contention based on a phrase taken out of context from

Moses H. Cone. There, the Court mentioned that for a federal court to have jurisdiction over a

petition to compel arbitration, it must have jurisdiction over the "underlying dispute." 460 U.S. at

25 n. 32, 103 S.Ct. at 942 n. 32. Again, this statement, while controlling, does not imply a lack of

federal subject matter jurisdiction here. The "underlying dispute" that 1st Franklin seeks to arbitrate

is not McCollum's quarrel with 1st Franklin's codefendant Dingle, but McCollum's quarrel with 1st

Franklin. Although 1st Franklin accuses McCollum of suing Dingle just to defeat removal, for

present purposes we assume that McCollum honestly believes that Dingle is for some reason

independently liable to McCollum. So there are two "underlying disputes," McCollum v. Dingle

and McCollum v. 1st Franklin, even though both may arise from the same transaction. 1st Franklin

seeks to arbitrate only McCollum v. 1st Franklin, and there is undoubtedly diversity in that

underlying dispute. There is, therefore, federal subject matter jurisdiction over the petition.

 Once such jurisdiction exists, federal courts have a "virtually unflagging obligation" to

exercise it. Moses H. Cone, 460 U.S. at 15, 103 S.Ct. at 936 (quoting Colorado River Water

Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 1246, 47 L.Ed.2d 483 (1976),
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in turn quoting Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 183, 72 S.Ct. 219, 221,

96 L.Ed. 200 (1952)). That means that dismissal is warranted in light of a concurrent state court

action only when a balancing of relevant factors, "heavily weighted in favor of the exercise of

jurisdiction," shows the case to be exceptional. See id. at 16, 103 S.Ct. at 937; see American

Bankers Ins. Co. v. First State Ins. Co., 891 F.2d 882, 884 (11th Cir.1990). In this case, the factors

weigh almost identically as they did in Moses H. Cone. That case, therefore, requires us to conclude

that the district court abused its discretion.

Colorado River and Moses H. Cone identify six factors relevant to whether a federal court

should exercise concurrent jurisdiction when a parallel state action is pending. See American

Bankers Ins. Co., 891 F.2d at 884. The parties agree that two (relative convenience of the fora and

whether one court has established jurisdiction over property) are irrelevant here. That leaves four

factors, and as in Moses H. Cone they point to exercising jurisdiction. The first is the potential for

piecemeal litigation. Moses H. Cone, 460 U.S. at 19-20, 103 S.Ct. at 939. McCollum makes much

of this, but here as in Moses H. Cone the factor has "no force." Id. The federal proceeding has only

two possible outcomes: an order compelling arbitration, or an order refusing to compel arbitration

and dismissing the petition. See 9 U.S.C. § 4. No piecemeal litigation of the merits can occur either

way, see Snap-On Tools Corp. v. Mason, 18 F.3d 1261, 1267 (5th Cir.1994), and even if arbitration

results, that is piecemeal litigation that the parties and federal policy have together made mandatory.

See Moses H. Cone, 460 U.S. at 20, 103 S.Ct. at 939.

 The second factor, the order in which the tribunals obtained and exercised jurisdiction, also

weighs against discretionary dismissal. Although McCollum filed the state court action about three

weeks before 1st Federal filed its federal-court petition, there is no suggestion in the record that 1st
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Federal could have done so much earlier than that, cf. id. at 21, 103 S.Ct. at 939-40, or that 1st

Federal could have known before McCollum sued in state court that he would not honor the

arbitration agreement. Furthermore, no activity had occurred in state court before the filing of the

federal petition or even before the district court ruled. As in Moses H. Cone, "[i]n realistic terms,

the federal suit was running well ahead of the state suit at the very time the District Court decided

to refuse to adjudicate the case." Id. at 22, 103 S.Ct. at 940. Indeed, because the state court had not

acted, 1st Federal's filing of a similar petition in state court simultaneously with this petition—a fact

that arguably might distinguish this case from Moses H. Cone—is of little moment.

 The third factor, the law to be applied, also points to exercising jurisdiction. The petition

was brought pursuant to the Federal Arbitration Act, 9 U.S.C. § 3-4, and thus any legal interpretation

will be of federal law. As in Moses H. Cone, the law to be interpreted does not supply the

extraordinary circumstance required for a federal court to refuse to exercise jurisdiction. See id. at

26-27, 103 S.Ct. at 942.

 The fourth factor, the adequacy of the state court to protect 1st Federal's rights, brings up

what may be the only material difference between this case and Moses H. Cone. The Moses H. Cone

Court noted that state-court procedures there were not adequate to protect the rights of the party

seeking arbitration. In particular, the Court worried that the language of 9 U.S.C. § 4, which

requires a "United States district court" to compel arbitration in certain circumstances, would on its

face seem not to apply in state court. See id. at 27, 103 S.Ct. at 942. The U.S. Supreme Court did

not answer the question of § 4's applicability, but the Alabama Supreme Court has accepted that an

Alabama court may compel arbitration under § 4, as long as the underlying transaction involves

interstate commerce. See, e.g., Old Republic Ins. Co. v. Lanier, 644 So.2d 1258, 1260 (Ala.1994).
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Thus, state court remedies may be adequate here. But there are counterconsiderations. First, the

state court has apparently not ruled on 1st Federal's motion, effectively undermining the federal

policy embodied in the FAA in favor of swift enforcement of arbitration agreements. See Moses H.

Cone, 460 U.S. at 22, 103 S.Ct. at 940. Second, the Moses H. Cone test permits abstention only

when some factor weighs heavily in favor of relinquishing jurisdiction. See American Bankers Ins.

Co., 891 F.2d at 884. The mere fact that 1st Federal may possibly get relief at some point from the

state court does not provide the "clearest of justifications," Moses H. Cone, 460 U.S. at 25, 103 S.Ct.

at 942, needed to warrant refusing to exercise jurisdiction.

In short, this case is so close to Moses H. Cone, and the factors here weigh sufficiently

against abstention, that the district court abused its discretion in abstaining.

For the foregoing reasons, the dismissal is vacated and the action is remanded for further

proceedings.

VACATED AND REMANDED.