Court Opinion

ID: 8206804
Source: CourtListenerOpinion
Date Created: 2022-09-16 00:00:28.17394+00
Date Added: 2024-06-11T16:41:19.696536
License: Public Domain

Case: 22-30286    Document: 00516473186         Page: 1    Date Filed: 09/15/2022

           United States Court of Appeals
                for the Fifth Circuit                               United States Court of Appeals
                                                                             Fifth Circuit

                                                                           FILED
                                                                   September 15, 2022
                                 No. 22-30286
                                                                      Lyle W. Cayce
                                                                           Clerk

   Pontchartrain Partners, L.L.C.,

                                                          Plaintiff—Appellant,

                                     versus

   Tierra de Los Lagos, L.L.C., doing business as Bee Sand
   Company,

                                                          Defendant—Appellee.

                 Appeal from the United States District Court
                    for the Eastern District of Louisiana
                          USDC No. 2:21-CV-1765

   Before Stewart, Duncan, and Wilson, Circuit Judges.
   Per Curiam:
         Plaintiff-Appellant Pontchartrain Partners, L.L.C., appeals the
   district court’s grant of Defendant-Appellee’s Motion to Dismiss
   Anticipatory Lawsuit and Motion to Transfer Venue to the Southern District
   of Texas, Galveston Division, in the Alternative. We AFFIRM.
                                       I.
         Pontchartrain Partners, L.L.C. (“Pontchartrain”) and Tierra De Los
   Lagos, L.L.C. d/b/a Bee Sand Company (“Bee Sand”) are construction
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                                    No. 22-30286

   companies involved in a breach-of-contract dispute. In June 2021, Bee Sand
   sued Pontchartrain in Texas state court. Pontchartrain removed the case to
   federal court in July. Later that month, Bee Sand voluntarily dismissed the
   case, and explained to Pontchartrain that it intended to refile in September—
   after a new Texas law governing attorney’s fees went into effect. Bee Sand
   also offered to refile in federal court to spare Pontchartrain the expense of a
   second removal, and Pontchartrain said that it would consider the matter.
          Instead of responding to this offer, Pontchartrain sought to preempt
   Bee Sand by suing in Louisiana state court on August 26, 2021. Pontchartrain
   requested a declaratory judgment in its favor. Bee Sand removed this case to
   federal court and refiled its previous suit in Texas state court on September
   3, 2021—a case that has also since been removed to federal court. In response
   to Pontchartrain’s declaratory judgment action, Bee Sand argued that it was
   anticipatory in nature, meaning that the Southern District of Texas is the
   proper forum for this dispute. The district court agreed and dismissed the
   case, admonishing Pontchartrain’s counsel “to stop the childish fighting in
   the sandbox and return to the very able federal court in the Southern District
   of Texas to address this serious matter.” Pontchartrain appealed, hoping to
   continue its playground squabble in this forum.
                                         II.
          We review a district court’s dismissal of a declaratory judgment action
   for abuse of discretion. Sherwin-Williams Co. v. Holmes Cnty., 343 F.3d 383,
   389 (5th Cir. 2003).
                                        III.
          Pontchartrain filed suit in Louisiana before Bee Sand refiled its lawsuit
   in Texas. Given this, Pontchartrain argues that the district court should have
   applied the “first-to-file” rule and refrained from dismissing its declaratory
   judgment action. Pontchartrain is mistaken.

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                                     No. 22-30286

          In deciding whether to dismiss a declaratory judgment action, district
   courts must consider at least six factors:
      (1) whether there is a pending action in which all of the matters in
           controversy may be fully litigated;
      (2) whether the plaintiff’s suit is anticipatory;
      (3) whether the plaintiff engaged in forum shopping;
      (4) whether possible inequities in allowing the declaratory plaintiff to
           gain precedent in time or to change forums exist;
      (5) whether the federal court is a convenient forum for the parties and
           witnesses; and
      (6) whether retaining the lawsuit in federal court would serve the
           purpose of judicial economy.
   Travelers Ins. Co. v. La. Farm Bureau Fed’n, Inc., 996 F.2d 774, 778 (5th Cir.
   1993). In performing this analysis, the district court should “balance[] the
   purposes of the Declaratory Judgment Act” with the reasons for abstaining
   from deciding a case on the merits. Ibid.
          Alongside these considerations, in situations where, as here, there
   exist two separately filed lawsuits pending in different courts, “[t]his circuit
   has recognized and applied . . . the first-filed rule.” W. Gulf Mar. Assoc. v.
   ILA Deep Sea Lo. 24, 751 F.2d 721, 730 (5th Cir. 1985) (citing Mann Mfg.,
   Inc v. Hortex, Inc., 439 F.2d 403 (5th Cir. 1971)). This “‘first-to-file’ rule is
   grounded in principles of comity and sound judicial administration.” Save
   Power Ltd. v. Syntek Fin. Corp., 121 F.3d 947, 950 (5th Cir. 1997). To
   effectuate these principles, the rule provides that “[i]n the absence of
   ‘compelling circumstances,’ the district court who gets the suit first should
   be the one to decide the case.” Excel Music, Inc. v. Simone, No. CIV. A. 95-
   3626, 1996 WL 5708, at *6 (E.D. La. Jan. 5, 1996) (quoting Mann, 439 F.2d
   at 407). But where such “compelling circumstances” exist, dismissal of a

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                                     No. 22-30286

   first-filed declaratory judgment action may be appropriate. See Missions Ins.
   Co. v. Puritan Fashions Corp., 706 F.2d 599, 602 n.3 (5th Cir. 1983) (affirming
   dismissal of first-filed declaratory judgment action after finding “indications
   that forum-shopping was an element in this case”); see also Abbott Lab’ys v.
   Gardner, 387 U.S. 136, 155 (1967) (“A court may even in its discretion
   dismiss a declaratory judgment or injunctive suit if the same issue is pending
   in litigation elsewhere.”).
          Pontchartrain argues that there was “no litigation pending between
   the parties” after Bee Sand’s voluntary dismissal, meaning that it “was well
   within its rights to file suit.” Because its suit was technically the first to be
   filed, Pontchartrain suggests that the “first-to-file” rule served as an
   independent limitation on the district court’s ability to dismiss the case. We
   disagree. The district court fully understood that Pontchartrain’s suit was
   technically the first to be filed. But it nevertheless found that compelling
   reasons warranted dismissal. Pontchartrain’s arguments fail to sufficiently
   engage with these reasons.
          First, guided by the aforementioned six factors, the district court
   concluded that this action and Bee Sand’s Texas lawsuit were duplicative. It
   then found that Pontchartrain’s Louisiana lawsuit was anticipatory in light of
   the fact that Bee Sand had informed Pontchartrain of its intent to refile.
   Because Pontchartrain nevertheless filed this suit, the district court found
   that Pontchartrain was motivated by a “race to the courthouse.” This “race
   to the courthouse” represented a misuse of the Declaratory Judgment Act
   that attempted to preempt the proper plaintiff’s forum choice. These
   reasons, combined with the district court’s consideration of the remaining
   abstention factors, provided adequate justification for granting Bee Sand’s
   motion. Moreover, these same reasons more than satisfy the “compelling
   circumstances” needed to obviate the “first-to-file” rule’s application, so
   the district court was not obligated to hear this case under that rule.

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   Accordingly, the district did not abuse its discretion. Because we find that the
   district court did not abuse its discretion in dismissing Pontchartrain’s
   anticipatory lawsuit, Pontchartrain’s jurisdictional and venue arguments
   need not be considered.
                                   *        *         *
          The district court’s judgment is AFFIRMED.

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