Opinion ID: 73119
Heading Depth: 2
Heading Rank: 1

Heading: did the district court abuse its discretion by

Text: DISMISSING TRANSOUTH’S PETITION TO COMPEL ARBITRATION? The district court dismissed the appellants’ complaint pursuant to the abstention doctrine that the Supreme Court announced in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 96 S. Ct. 1236 (1976), which allows a federal court to dismiss a case when a concurrent state proceeding provides a more appropriate forum. As modified by the Supreme Court in Moses H. Cone Memorial Hospital v. Mercury Constr. Co., 460 U.S. 1, 103 S. Ct. 927 (1983), the Colorado River doctrine 5 requires federal courts to consider six factors in determining whether abstention in favor of a concurrent state proceeding is appropriate: (1) the order in which the courts assumed jurisdiction over property; (2) the relative inconvenience of the fora; (3) the order in which jurisdiction was obtained and the relative progress of the two actions; (4) the desire to avoid piecemeal litigation; (5) whether federal law provides the rule of decision; and (6) whether the state court will adequately protect the rights of all parties. See id. at 16-26, 103 S. Ct. at 937-42. The Supreme Court indicated that these criteria could not be applied according to a rigid formula; no one factor is dispositive. See id. However, a federal court considering abstention must weigh these factors with a heavy bias in favor of exercising jurisdiction, see id. at 16, 103 S. Ct. at 937, since federal courts have a “virtually unflagging obligation” to exercise jurisdiction where it exists. Colorado River, 424 U.S. at 817, 96 S. Ct. at 1246. In a recent Colorado River abstention decision, we applied the Moses H. Cone factors to a scenario materially indistinguishable from this case. In First Franklin Fin. Corp. v. McCollum, 144 F.3d 1362 (11th Cir. 1998), 6 the federal court defendant, Gary McCollum, filed a state court action against First Franklin and one of its employees, alleging several fraudrelated claims. Shortly thereafter, First Franklin filed concurrent state and federal court petitions seeking to compel McCollum to arbitrate his claims. The district court relied on Colorado River abstention to dismiss the federal court petition, reasoning that concerns of comity and federalism warranted deferral to the previous state court action brought by McCollum. See First Franklin, 144 F.3d at 1363. We vacated and remanded, holding that several of the Moses H. Cone factors weighed in favor of exercising federal jurisdiction. First, we noted that the “piecemeal litigation” factor did not weigh against exercising jurisdiction because no piecemeal litigation would ensue with regard to the arbitrability of the dispute, the only question before the federal court. In addition, we pointed out that any piecemeal litigation that might result from a decision on arbitrability would be the result of the parties’ voluntary actions and the strong federal policy favoring arbitration. See id. at 1364. Second, we noted in First Franklin that priority of jurisdiction and the 7 timing and progress of the concurrent suits weighed against abstention. As discussed in Moses H. Cone, this factor requires the court to consider not only the chronological order in which the parties initiated the concurrent proceedings, but the progress of the proceedings and whether the party availing itself of the federal forum should have acted earlier. See Moses H. Cone, 430 U.S. at 21-22, 103 S. Ct. at 939-40. First Franklin had filed its suit at nearly the earliest opportunity, shortly after McCollum indicated his refusal to arbitrate by filing his state court lawsuit. Furthermore, the state court had not ruled on First Franklin’s motion to compel arbitration at the time the district court decided to abstain from exercising jurisdiction. As a result, there had been no progress in the state court to weigh in favor of federal court deferral. See id. at 1364-65. Therefore, we concluded that the relative timing and progress of the concurrent proceedings in First Franklin did not weigh in favor of abstention. Third, we noted in First Franklin that the law of decision weighed against abstention, since the Federal Arbitration Act, 9 U.S.C. §§ 3-4 governs motions to compel arbitration. We reasoned that resolution of the 8 underlying dispute being governed by federal law is a factor that strongly suggests a federal court should exercise its jurisdiction. See id. at 1365. The final factor that we deemed to be relevant was the availability of complete relief in the state forum. We recognized that the state court’s ability to eventually grant complete relief weighed slightly in favor of abstention. See id. However, that one factor was insufficient to counterbalance the other considerations. In sum, we concluded in First Franklin that the factors not favoring abstention -- avoiding piecemeal litigation, progress of the concurrent proceedings, and the federal nature of the relevant law -- coupled with the absence of any factor weighing strongly in favor of abstention required us to conclude that the district court abused its discretion by abstaining. See id. This case is not materially different from First Franklin. Both cases involve parallel state and federal proceedings. In both cases, the state court plaintiff filed his complaint first, alleging several fraud-related claims, and soon thereafter one or more of the defendants in the state court action filed motions to compel arbitration in both state and federal court. In both cases, 9 the district court decided to abstain from exercising its jurisdiction, even though the state court had not issued a ruling on the arbitrability issue. Given these similarities, the same Moses H. Cone factors that this Court applied in First Franklin weigh against abstention here as well. As we said in First Franklin, “this case is so close to Moses H. Cone, and the factors weigh sufficiently against abstention, that the district court abused its discretion in abstaining.” Id. The district court in this case did not have the benefit of the First Franklin decision when it ruled. We are confident that if it had, the court would not have abstained. In light of First Franklin, we must vacate the district court’s order of dismissal on abstention grounds, and remand this case to the district court for a decision on the appellants’ motion to compel Bell to arbitrate his claims against them.1 1 Our decision in Old Republic Union Ins. Co. v. Tillis Trucking Co., 124 F.3d 1258 (11th Cir. 1997), does not conflict with our analysis here. In Old Republic, we affirmed a district court’s refusal on Younger abstention grounds to entertain a declaratory judgment action where there was a concurrent state action. The federal plaintiff sought to have the federal court pass on the constitutionality of Alabama’s wrongful death statute. See id. at 1261. We found that Younger abstention was appropriate because “important state interests [were] involved,” and those interests favored allowing the Alabama state courts to pass on the validity of state law. Id. We also found that abstention in that case was supported by the fact that the federal action was brought under the Declaratory Judgment Act, which “confer[s] on federal courts unique and substantial discretion in 10