Court Opinion

ID: 9440655
Source: CourtListenerOpinion
Date Created: 2023-08-03 17:01:00.568836+00
Date Added: 2024-06-11T17:31:42.872716
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

ERNEST BOCK, LLC,                     No. 22-15466

             Plaintiff-Appellant,        D.C. No.
                                      2:19-cv-01065-
 v.                                      JAD-EJY

PAUL STEELMAN, individually and
as trustee of the Steelman Asset        OPINION
Protection Trust (“SAPT”), the Paul
C. Steelman and Maryann T. Steelman
Revocable Living Trust (“RLT”), and
the Paul Steelman Gaming Asset
Protection Trust; STEPHEN
STEELMAN; SUZANNE
STEELMAN-TAYLOR; MARYANN
STEELMAN, individually and as
trustee of the SAPT and RLT;
COMPETITION INTERACTIVE,
LLC; PAUL STEELMAN, LTD.;
STEELMAN PARTNERS, LLP;
PAUL STEELMAN DESIGN
GROUP, INC.; SAPT HOLDINGS,
LLC SERIES B; KEEPSAKE, INC.;
SMMR, LLC; SMMR, LLC SERIES
A-Z; SSSSS, LLC; SSSSS, LLC
SERIES B; CHRISTIANIA, LLC;
CHRISTIANIA, LLC SERIES A-Z;
2               ERNEST BOCK, LLC V. STEELMAN

JIM MAIN, as trustee of the SAPT;
AARON SQUIRES; MATTHEW
MAHANEY,

               Defendants-Appellees.

        Appeal from the United States District Court
                  for the District of Nevada
        Jennifer A. Dorsey, District Judge, Presiding

            Argued and Submitted March 6, 2023
                    Las Vegas, Nevada

                    Filed August 3, 2023

    Before: Richard R. Clifton, Jay S. Bybee, and Mark J.
                  Bennett, Circuit Judges.

                 Opinion by Judge Bennett
                  ERNEST BOCK, LLC V. STEELMAN                     3

                          SUMMARY *

                      Colorado River Stay

    The panel reversed the district court’s order staying,
pursuant to Colorado River Water Conservation District v.
United States (Colorado River), 424 U.S. 800 (1976),
plaintiff Ernest Bock, LLS’s action alleging that the
defendants improperly transferred their assets to insulate
them from an $11.8 million New Jersey state court
judgment.
    While Bock’s federal suit was pending, a New Jersey
appellate court vacated the underlying judgment and
remanded for further proceedings to determine whether the
defendants were liable to Bock. The district court then
stayed this case pursuant to Colorado River, in part because
it would be inefficient for the New Jersey litigation and the
federal suit to proceed simultaneously.
    The panel first concluded that Bock had standing to bring
the suit because Bock raised a question of fact as to whether
it was injured by the defendants’ asset transfers.
    Noting that a Colorado River stay is proper only in
exceptional circumstances, the panel held that a Colorado
River stay cannot issue when, as here, there was substantial
doubt as to whether the state proceedings would resolve the
federal action. Because Colorado River did not support a
stay, neither could the district court’s docket management
authority.

*
 This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
4                 ERNEST BOCK, LLC V. STEELMAN

                            COUNSEL

John F. Palladino (argued) and Evan M. Labov, Hankin
Sandman Palladino & Weintrob PC, Atlantic City, New
Jersey, for Plaintiff-Appellant.
Emily A. Ellis (argued), Frank M. Flansburg III, and Emily
L. Dyer, Brownstein Hyatt Farber Schreck LLP, Las Vegas,
Nevada; Jeffrey P. Luszeck and Roberto M. Campos,
Solomon Dwiggins Freer and Steadman LTD, Las Vegas,
Nevada; Joel E. Tasca, Ballard Spahr LLP, Las Vegas,
Nevada; Paul Ort, Ballard Spahr LLP, Philadelphia,
Pennsylvania; for Defendants-Appellees.

                             OPINION

BENNETT, Circuit Judge:

    Plaintiff-Appellant Ernest Bock, LLC (“Bock”) initially
obtained an $11.8 million judgment for breach of contract
against Defendants Paul and Maryann Steelman (“the
Steelmans”) in New Jersey state court. Bock then filed this
federal suit in the District of Nevada, alleging that the
Steelmans, assisted by other named Defendants, engaged in
an elaborate series of allegedly improper asset transfers to
insulate those assets from the New Jersey judgment. 1 But

1
  Under Nevada’s version of the Uniform Fraudulent Transfer Act, a
“transfer” is “every mode, direct or indirect, absolute or conditional,
voluntary or involuntary, of disposing of or parting with an asset or an
interest in an asset, and includes payment of money, release, lease and
creation of a lien or other encumbrance.” Nev. Rev. Stat. § 112.150(12).
                   ERNEST BOCK, LLC V. STEELMAN                           5

while the federal suit was pending, a New Jersey appellate
court vacated the underlying judgment and remanded for
further proceedings, including discovery, to determine
whether the Steelmans were liable to Bock.
     The district court then stayed this case pursuant to
Colorado River Water Conservation District v. United
States (Colorado River), 424 U.S. 800 (1976). 2 The court
first determined that both the state and federal lawsuits turn
on the same question of New Jersey law —whether the
Steelmans are liable for breach of contract. The court then
stayed the federal case, in part because it would be
inefficient for both suits to proceed simultaneously.
    We must decide whether a Colorado River stay was
proper. “Generally . . . the rule is that ‘the pendency of an
action in the state court is no bar to proceedings concerning
the same matter in the Federal court having jurisdiction.’”
Id. at 817 (quoting McClellan v. Carland, 217 U.S. 268, 282
(1910)). The Supreme Court has made clear that a Colorado
River stay is proper only in “exceptional circumstances.” Id.
at 813. Absent such circumstances, federal courts have a
“virtually unflagging obligation . . . to exercise the
jurisdiction given them.” Id. at 817. “Thus, the decision to
invoke Colorado River necessarily contemplates that the
federal court will have nothing further to do in resolving any
substantive part of the case.” Moses H. Cone Mem’l Hosp.

   As relevant to Bock’s claims, that Act prohibits a debtor from making
a transfer “[w]ith actual intent to hinder, delay or defraud any creditor of
the debtor.” Id. § 112.180(1)(a). One of the factors used to determine
“actual intent” is whether “[b]efore the transfer was made . . . the debtor
had been sued or threatened with suit.” Id. § 112.180(2)(d).
2
  This type of stay is often referred to as Colorado River abstention. See
infra Section IV.A.
6                    ERNEST BOCK, LLC V. STEELMAN

v. Mercury Constr. Corp. (Moses Cone), 460 U.S. 1, 28
(1983) (emphasis added).
    First, we conclude that Bock has standing to bring its
federal court claims because it raised a question of fact as to
whether it is injured by the Steelmans’ asset transfers. Next,
we hold that a Colorado River stay cannot issue when, as
here, federal litigation will be fully resolved only if parallel
state court proceedings end in one of several possible
outcomes, though we acknowledge conflicting authority on
the question. Finally, we reject Defendants’ alternative
argument that the district court’s inherent docket
management powers can justify a stay. Accordingly, we
reverse the district court’s order and remand for further
proceedings.
                             I. Background
    In 2011, members of the Catanoso family 3 approached
Bock, a Philadelphia-based construction company, seeking
a loan to finance the purchase and renovation of an
amusement pier in Atlantic City. Bock was initially
skeptical about the Catanosos’ liquidity and ability to post
collateral. To resolve those concerns, the Catanosos
engaged Paul Steelman, an acclaimed architect based in Las
Vegas, to join the project. Collectively, they formed Steel
Pier Associates, LLC (“SPA”). 4 Bock agreed to make two
loans to SPA in the form of commercial mortgage notes,

3
    The Catanosos are not parties in this case.
4
  It appears that Paul and the Catanosos also formed Cape Entertainment
Associates, LLC (“CEA”). Bock’s operative federal complaint alleges
that CEA and SPA were both named borrowers on the second loan,
which the Steelmans personally guaranteed in its entirety. For
simplicity, we refer only to SPA as the parties do in their briefing.
                   ERNEST BOCK, LLC V. STEELMAN                           7

each secured by a personal guarantee from Paul and his wife
Maryann. 5
    It is undisputed that SPA was in default on both loans at
least by March 2014. In October 2015, Bock filed suit
against the Steelmans in New Jersey Superior Court, seeking
to enforce their guarantee of SPA’s liability under the
commercial mortgage notes.         Bock alleged that the
Steelmans breached their contract by failing to honor the
terms of the guaranty agreements and committed fraud by
misrepresenting the net worth of their assets. The Steelmans
countered that Bock breached an implied covenant of good
faith and fair dealing inherent in every contract subject to
New Jersey law, by encouraging SPA to take on risky
financial obligations that made repayment of the original
loans by SPA impossible. 6 See Ernest Bock, LLC v.
Steelman (Ernest Bock), No. A-0469-19, 2021 WL 4771306,
at *6–7 (N.J. Super. Ct. App. Div. Oct. 13, 2021). The
Superior Court sided with Bock, entering summary

5
  The notes provided that Bock could sue to enforce SPA’s repayment
obligations in the event of default. The notes defined default in part as:
(1) SPA’s “nonpayment when due of any amount payable under this
Note”; (2) failure “to observe or perform any other existing or future
agreement” between the parties; (3) insolvency, corporate mergers, or
dissolutions; and (4) attempts to disclaim indebtedness.
  The Steelmans’ guarantees, in turn, constituted “guarantees as
unconditional surety the prompt payment and performance of all loans,
advances, debts, liabilities, obligations, covenants and duties owing by
[SPA] to [Bock].” The guarantees purport to be “absolute and
unconditional irrespective of: (1) any lack of validity or enforceability of
any of the Loan Documents.”
6
  The Steelmans also alleged that this behavior constituted “Tortious
Interference with Prospective Financial Gain,” and as a result, Bock’s
loans should be “recharacterized” as a purchase of an equity stake in
SPA.
8               ERNEST BOCK, LLC V. STEELMAN

judgment against the Steelmans for more than $11 million.
The Steelmans appealed.
    Bock alleges that the Steelmans then began dispersing
their assets through a complicated web of trusts and
corporate entities intending to shield their wealth from the
New Jersey judgment while also retaining ultimate control
over their assets. Accordingly, Bock filed this lawsuit in the
District of Nevada against the Steelmans, the trusts and
entities in question, and several individuals who allegedly
helped facilitate the contested transfers (collectively,
“Defendants”). The lawsuit alleges that Defendants violated
Nevada and federal laws by: (1) creating trusts with the
intent to defraud creditors; (2) transferring property, assets,
and interests with the intent to defraud creditors; (3)
impermissibly using corporate alter egos to shield personal
liability; and (4) violating and conspiring to violate the
Racketeer Influenced and Corrupt Organizations Act, 18
U.S.C. § 1961 et seq.
     But while the federal suit was pending, the Appellate
Division of the New Jersey Superior Court vacated the
underlying judgment. Ernest Bock, 2021 WL 4771306, at
*1. The court found that “summary judgment was
prematurely granted before . . . discovery [was] completed,”
id., because “if defendants prove that Bock . . . improperly
impeded the ability of [SPA] to pay the loan debt, that
improper conduct might excuse or justify defendants’ non-
payment of the guaranties,” id. at *5. For this reason, the
court “vacate[d] the trial court’s grant of summary judgment
and remand[ed] the matter for continued discovery under the
trial court’s supervision.” Id. at *9. The New Jersey
Supreme Court declined to review the Appellate Division’s
determination. Ernest Bock, LLC v. Steelman, 270 A.3d
1084 (N.J. 2022).
                   ERNEST BOCK, LLC V. STEELMAN                           9

    As there was no longer a judgment, Bock was no longer
a judgment creditor of the Steelmans. Accordingly, both the
New Jersey litigation and the federal suit were set to proceed
in parallel. And both cases turn on the same threshold
question of New Jersey state law: whether the Steelmans’
guarantees are enforceable. 7 For this reason, the Steelmans
sought to stay federal proceedings pending resolution of the
New Jersey litigation, arguing that allowing the suits to
proceed simultaneously would waste judicial resources and
risk inconsistent judgments. 8 Bock opposed the stay,
arguing that: (1) a stay could not be justified by either the
court’s docket management powers or the Colorado River
doctrine; and (2) pausing the federal litigation would afford
the Steelmans additional time to hide assets and thus shield
them from Bock. In the alternative, Bock asked that if the
district court were to issue a stay, it should also require
Defendants, as a condition, to post $35.5 million bond. The
district court issued a stay under Colorado River and
declined to require a bond.
    Bock timely appealed, arguing that this case does not
present the “exceptional circumstances” required for a
Colorado River stay. Defendants contend that: (1) a
Colorado River stay was proper; (2) even if not, the district

7
  In the New Jersey action, the Steelmans cannot have actionably
breached the guarantees if the guarantees are unenforceable. And in the
federal action, the Steelmans’ asset transfers can only be a fraudulent
attempt to evade “creditor” Bock, if the guarantees are enforceable by
Bock (because if not, Bock could not obtain a monetary judgment and
become a judgment creditor).
8
  Initially, the Steelmans requested a stay pursuant to the district court’s
inherent docket management powers. The district court found that
Colorado River authorized the stay. As discussed below, we find that
neither supports a stay here.
10                 ERNEST BOCK, LLC V. STEELMAN

court had the inherent docket management authority to issue
a stay; and (3) without a valid New Jersey judgment, Bock
lacks standing to bring its federal claims because it has not
suffered an injury in fact.
            II. Jurisdiction & Standards of Review
    We have jurisdiction under 28 U.S.C. § 1291. 9 Although
the district court did not make an Article III standing
determination, standing is a threshold jurisdictional
requirement and “may be raised at any time during the
proceedings, including on appeal.” Wash. Env’t Council v.
Bellon, 732 F.3d 1131, 1139 (9th Cir. 2013) (citation
omitted). Thus, we determine de novo whether Bock has
standing.
     Our Colorado River analysis proceeds in two steps.
First, “[w]hether the facts of a particular case conform to the
requirements for a Colorado River stay . . . is a question of
law which we review de novo.” Smith v. Cent. Ariz. Water
Conservation District, 418 F.3d 1028, 1032 (9th Cir. 2005).
Second, “[i]f we conclude that the Colorado River
requirements have been met, we then review for abuse of
discretion the district court’s decision to stay . . . the action.”
Seneca Ins. Co. v. Strange Land, Inc. (Seneca), 862 F.3d
835, 840 (9th Cir. 2017) .. “[H]owever, this standard is
stricter ‘than the flexible abuse of discretion standard used
in other areas of law’ because ‘discretion must be exercised
within the narrow and specific limits prescribed by the
Colorado River doctrine.’” R.R. Street & Co. Inc. v. Transp.
Ins. Co. (R.R. Street), 656 F.3d 966, 973 (9th Cir. 2011)

9
 Although a stay is generally not a final appealable order, a stay issued
under Colorado River is immediately appealable. United States v. State
Water Res. Control Bd., 988 F.3d 1194, 1201–02 (9th Cir. 2021).
                  ERNEST BOCK, LLC V. STEELMAN                      11

(cleaned up) (quoting Holder v. Holder, 305 F.3d 854, 863
(9th Cir. 2002)).
    Finally, we review for abuse of discretion whether a
district court properly stayed an action pursuant to its
inherent docket management powers, “but this standard is
‘somewhat less deferential’ than the abuse of discretion
standard used in other contexts.” Lockyer v. Mirant Corp.,
398 F.3d 1098, 1105 (9th Cir. 2005) (quoting Yong v. INS,
208 F.3d 1116, 1119 (9th Cir. 2000)).
                            III. Standing
     To establish standing, “a plaintiff must satisfy three
‘irreducible constitutional minimum’ requirements: (1) he or
she suffered an injury in fact that is concrete, particularized,
and actual or imminent; (2) the injury is fairly traceable to
the challenged conduct; and (3) the injury is likely to be
redressed by a favorable court decision.” Bellon, 732 F.3d
at 1139–40 (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555,
560–61 (1992)).
    Defendants claim that without a New Jersey judgment,
Bock cannot establish an injury in fact because the
Steelmans are not legally obligated to pay the guarantees.
But plaintiffs need only establish each element of standing
“with the manner and degree of evidence required at the
successive stages of the litigation.” Lujan, 504 U.S. at 561.
“At the pleading stage, general factual allegations of injury
resulting from the defendant’s conduct may suffice.” Id. 10

10
   “In response to a summary judgment motion, however, the plaintiff
can no longer rest on such ‘mere allegations,’ but must ‘set forth’ by
affidavit or other evidence ‘specific facts,’ which for purposes of the
summary judgment motion will be taken to be true.” Lujan, 504 U.S. at
561 (citation omitted) (quoting Fed. R. Civ. P. 56(e)).
12               ERNEST BOCK, LLC V. STEELMAN

Here, Bock has at least raised a question of fact as to the
enforceability of the guarantees. See Ernest Bock, 2021 WL
4771306, at *8 (recognizing “material factual disputes” as to
enforceability). If the guarantees are enforceable, Bock
would be injured by any fraudulent efforts to shield the
Steelmans’ assets from Bock, which would again become a
judgment creditor. Thus, Bock has sufficiently alleged an
injury in fact at this stage of the litigation.
                     IV. Colorado River
     A. Standard
     “Generally, as between state and federal courts, the rule
is that ‘the pendency of an action in the state court is no bar
to proceedings concerning the same matter in the Federal
court having jurisdiction.’” Colorado River, 424 U.S. at 817
(quoting McLellan, 217 U.S. at 282). However, the Supreme
Court has identified several instances in which it is
appropriate for a federal court to abstain from exercising its
jurisdiction. See, e.g., id. at 813–17 (discussing traditional
abstention doctrines). As relevant here, in Colorado River,
the Supreme Court recognized that in “exceptional
circumstances,” id. at 813, “considerations of ‘[w]ise
judicial administration, giving regard to conservation of
judicial resources and comprehensive disposition of
litigation’” can support a stay of federal litigation in favor of
parallel state proceedings, id. at 817 (alteration in original)
(quoting Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342
U.S. 180, 183 (1952)).
    The Court was careful to distinguish Colorado River
stays from traditional abstention doctrines. While traditional
forms of abstention rest on “considerations of proper
constitutional adjudication and regard for federal-state
relations,” Colorado River stays are based on administrative
                   ERNEST BOCK, LLC V. STEELMAN                        13

concerns and prioritize efficient “disposition of litigation”
through the wise deployment of “judicial resources,” id.
(quoting Kerotest Mfg., 342 U.S. at 183). 11 Following this
distinction, we have recognized that “Colorado River is not
an abstention doctrine, though it shares the qualities of one.”
United States v. State Water Res. Control Bd., 988 F.3d
1194, 1202 (9th Cir. 2021); see also Nakash v. Marciano,
882 F.2d 1411, 1415 & n.5 (9th Cir. 1989) (citation omitted)
(“Although [Colorado River is] commonly referred to as an
abstention doctrine, the Supreme Court has flatly rejected
this categorization.”).
    No matter how the Colorado River doctrine is formally
characterized, however, one principle is clear: a stay of
federal litigation in favor of state court proceedings “is the
exception, not the rule.” Colorado River, 424 U.S. at 813.
“Only the clearest of justifications will warrant” a stay, id. at
819, and the circumstances justifying a stay are “exceedingly
rare,” Smith, 418 F.3d at 1033.

11
    See also Moses Cone, 460 U.S. at 14–15 (distinguishing Colorado
River from traditional abstention doctrines, which rest on
“considerations of state-federal comity or on avoidance of constitutional
decisions”). We note that scholars are divided as to whether a distinction
between federalism and administration is a sensible basis for delineating
forms of federal abstention. Compare James C. Rehnquist, Taking
Comity Seriously: How to Neutralize the Abstention Doctrine, 46 Stan.
L. Rev. 1049, 1094 (1994) (the “dichotomy between administration and
federalism wholly overlooks the friction that inheres in duplication [of
state and federal proceedings] itself”), with Martin H. Redish,
Intersystemic Redundancy and Federal Court Power: Proposing a Zero
Tolerance Solution to the Duplicative Litigation Problem, 75 Notre
Dame L. Rev. 1347, 1374 (2000) (“[D]uplicative litigation is wasteful,
burdensome, inefficient, and often harassing . . . . No consideration of
litigant choice or judicial federalism should be allowed to outweigh this
overriding interest.”).
14              ERNEST BOCK, LLC V. STEELMAN

   This court weighs eight factors to determine whether a
Colorado River stay is justified:

       (1) which court first assumed jurisdiction
       over any property at stake; (2) the
       inconvenience of the federal forum; (3) the
       desire to avoid piecemeal litigation; (4) the
       order in which the forums obtained
       jurisdiction; (5) whether federal law or state
       law provides the rule of decision on the
       merits; (6) whether the state court
       proceedings can adequately protect the rights
       of the federal litigants; (7) the desire to avoid
       forum shopping; and (8) whether the state
       court proceedings will resolve all issues
       before the federal court.

R.R. Street, 656 F.3d at 978–79 (citing Holder, 305 F.3d at
870). “The factors are not a ‘mechanical checklist.’ We
apply the factors ‘in a pragmatic, flexible manner with a
view to the realities of the case at hand. The weight to be
given to any one factor may vary greatly from case to case.’”
State Water Res. Control Bd., 988 F.3d at 1203 (citations
omitted) (quoting Moses Cone, 460 U.S. at 16, 21). “Some
factors may not apply in some cases,” but in other cases, “a
single factor may decide whether a stay is permissible.” Id.
(cleaned up). “The underlying principle guiding this review
is a strong presumption against federal abstention.” Seneca,
862 F.3d at 842 (emphasis added). “Any doubt as to whether
a factor exists should be resolved against a stay, not in favor
of one.” Travelers Indem. Co. v. Madonna, 914 F.2d 1364,
1369 (9th Cir. 1990).
                   ERNEST BOCK, LLC V. STEELMAN                         15

     Our first task is to review de novo whether, in light of
the eight factors enumerated above, the facts here “conform
to the requirements for a Colorado River stay.” Seneca, 862
F.3d. at 840 (quoting Smith, 418 F.3d at 1032). Here, the
district court concluded that factors three (piecemeal
litigation), four (order of obtaining jurisdiction), and eight
(parallelism) “militate decisively in favor of abstention.”
The court weighed factor seven (forum-shopping) “slightly
in favor of retaining federal jurisdiction,” and concluded that
all other factors were “neutral.”
     B. Piecemeal Litigation            &     Order of Obtaining
        Jurisdiction
    We agree that the piecemeal litigation and order of
jurisdiction factors support a stay. 12 Allowing both the New
Jersey state action and Nevada federal suit to proceed
simultaneously will duplicate judicial efforts to resolve the
common question of whether the Steelmans’ personal
guarantees are enforceable. And there is a risk that the courts
will reach different results. 13        Accordingly, parallel

12
   We also agree that factors one, two, five, six, and seven are neutral or
inconsequential. Neither the federal nor the state court has exercised
jurisdiction over property, and there is no obvious forum shopping or
reason to suspect that either court is incapable of fairly adjudicating the
issues before it. There is also no indication that the federal forum is
inconvenient. And while “[t]he presence of federal-law issues must
always be a major consideration weighing against surrender’” of federal
jurisdiction, Moses Cone, 460 U.S. at 26 (emphasis added), the existence
of a common threshold issue of New Jersey state law in both the state
and federal proceedings renders factor five largely irrelevant.
13
  We acknowledge that the decision of the New Jersey court could have
preclusive effect in federal court. But if the New Jersey courts ultimately
determine that the Steelmans’ guarantees are enforceable, additional
federal litigation will be required to determine liability for fraudulent
16                  ERNEST BOCK, LLC V. STEELMAN

proceedings could waste judicial resources and cause
confusion in the continuing disputes between the parties.
See R.R. Street, 656 F.3d at 979–80 (identifying duplication
of efforts and possibility of differing results as the primary
concerns of the piecemeal litigation factor). 14
    Factor four requires us to consider “the order in which
the [state and federal] forums obtained jurisdiction.” Id. at
978. But under this factor, “courts are instructed not simply
to compare filing dates, but to analyze the progress made in
each case.” Seneca, 862 F.3d at 843. Here, New Jersey
courts have issued not one, but two (differing) reasoned
opinions on the common issue of the enforceability of the
Steelmans’ guarantees.       See Ernest Bock, 2021 WL
4771306, at *2. Most recently, the Appellate Division held
that material factual disputes precluded summary judgment
for Bock, at least without further discovery. Id. at *5–9. By
contrast, the federal district court has not yet even
entertained a summary judgment motion on the issue. Thus,
the New Jersey courts have made more progress on resolving
the common legal issue in this case.

transfer whether or not the state court’s decision is preclusive. See Intel
Corp. v. Advanced Micro Devices, Inc., 12 F.3d 908, 913 & n.5 (9th Cir.
1993). Accordingly, preclusion doctrines do not eliminate the risk of
continued litigation in federal court.
14
    Some of our cases have noted that the mere existence of piecemeal
litigation is not sufficient on its own to warrant a stay. See, e.g., Seneca,
862 F.3d at 842–43 (“A general preference for avoiding piecemeal
litigation is insufficient to warrant abstention . . . . Instead, there must
be exceptional circumstances present that demonstrate that piecemeal
litigation would be particularly problematic.”).
                ERNEST BOCK, LLC V. STEELMAN              17

   C. Parallelism
    We do not agree with the district court that the
parallelism factor supports a stay. To the contrary, we find
that because the federal and state proceedings are not
sufficiently parallel, a Colorado River stay may not issue.
   Parallelism is a threshold requirement for a Colorado
River stay:

       When a district court decides to dismiss or
       stay under Colorado River, it presumably
       concludes that the parallel state-court
       litigation will be an adequate vehicle for the
       complete and prompt resolution of the issues
       between the parties.        If there is any
       substantial doubt as to this, it would be a
       serious abuse of discretion to grant the stay or
       dismissal at all. Thus, the decision to invoke
       Colorado River necessarily contemplates that
       the federal court will have nothing further to
       do in resolving any substantive part of the
       case, whether it stays or dismisses.

Moses Cone, 460 U.S. at 28 (citations omitted). The Court
reiterated that “a district court normally would expect the
order granting the [Colorado River] stay to settle the matter
for all time.” Gulfstream Aerospace Corp. v. Mayacamas
Corp., 485 U.S. 271, 277 (1988). “[T]he granting of a
Colorado River [stay] necessarily implies an expectation
that the state court will resolve the dispute.” Id. at 278.
Applying these principles, we have recognized that
“[p]arallelism is necessary but not sufficient to counsel in
favor of abstention.” Seneca, 862 F.3d at 845. But “exact
parallelism . . . is not required. It is enough if the two
18                 ERNEST BOCK, LLC V. STEELMAN

proceedings are ‘substantially similar.’” Nakash, 882 F.2d
at 1416 (citations omitted).
    Here, the question we face is whether state and federal
proceedings are sufficiently parallel when the state court
proceedings will fully resolve the federal case only if the
state court rules in one of two ways. As discussed above, if
the Steelmans’ guarantees are not enforceable, then the
federal claims are completely barred, as there would be no
New Jersey judgment for Bock, and thus no fraudulent
transfer of assets to avoid that non-existent judgment. 15 But
if the guarantees are enforceable, the federal court must
proceed to determine whether Defendants fraudulently
transferred assets to avoid paying Bock on the valid
guarantees.
    We recognize that there is some tension in our decisions
under such circumstances. In Nakash, we affirmed a
Colorado River stay in a dispute between two competing
business families, the Nakashes and the Marcianos. 882
F.2d at 1412–13. The Marcianos sued the Nakashes in
California state court, bringing a litany of claims. Although
the Nakashes filed a cross-complaint in state court, they
ultimately dismissed it and brought an action in federal court
instead, seeking to enjoin further state proceedings. Id. 16
We affirmed a Colorado River stay of the federal case, even
after acknowledging that “[t]he state action focuses on the

15
   We recognize that the district court may have authority to grant
injunctive or other relief to prevent the fraudulent transfer of assets in
anticipation of a potential judgment. But if either the district court or
New Jersey courts determine that the guarantees are unenforceable, then
Bock’s federal court claims necessarily fail.
16
  The Nakashes withdrew their cross-complaint in state court on the
same day they filed their federal complaint. Nakash, 882 F.2d at 1413.
                ERNEST BOCK, LLC V. STEELMAN                19

Nakash[es’] wrongdoing while their [federal] complaint
alleges wrongdoing by the Marcianos.” Id. at 1416; see also
Montanore Mins. Corp. v. Bakie, 867 F.3d 1160, 1170 (9th
Cir. 2017) (citations omitted) (“In Nakash . . . the suits were
sufficiently parallel because they concerned the same
relevant conduct and named the same pertinent parties. The
parallelism requirement was met even though additional
parties were named in the state suit, the federal suit included
additional claims, and the suits arguably focused on different
aspects of the dispute.”). Thus, we affirmed a Colorado
River stay even after implicitly recognizing that the state
court proceedings might not fully resolve the federal case.
    Moreover, in Bakie, we reversed the district court’s
denial of a Colorado River stay when the parties contested
the validity of mining claims owned by the defendant. 867
F.3d at 1163. In a Montana state court lawsuit, a mining
company sought a declaratory judgment that the defendant’s
claims were invalid, which would have cleared the way for
the company to mine the land. Id. But after the state court
upheld the validity of the claims in a non-final interlocutory
order, id. at 1164, the company sued in federal court,
“seeking to condemn [the land] for public use easements and
rights of way,” allowing it to mine the land notwithstanding
defendant’s valid claims, id. at 1163. The district court
denied defendants’ motion to stay the action pending final
resolution of the Montana state court proceedings, finding
“that the state court proceedings were not sufficiently
parallel to the federal” condemnation action. Id. at 1165.
Instead, the district court condemned the land and awarded
the company a public easement. Id.
    We reversed, holding that the district court abused its
discretion by denying a Colorado River stay. Id. at 1163.
When addressing the parallelism requirement, we relied
20               ERNEST BOCK, LLC V. STEELMAN

heavily on Nakash’s instruction that “exact parallelism” is
not required. Id. at 1170 (quoting Nakash, 882 F.2d at 1416).
We explained that the federal condemnation and state
validity proceedings were sufficiently parallel “because they
both concern rights to the [same land], name the same
pertinent parties, and attempt to accomplish the same goal
(namely extinguishing the Defendants’ rights to the [land]).”
Id. Although we did not explicitly make this determination
in Bakie, it appears at least possible that if the Montana court
entered a final order affirming the validity of defendant’s
claim, the district court would still have had to make its
condemnation determination. Thus it is possible that, as
here, the state court case would have fully resolved the
federal litigation only if the state court reached one of two
possible outcomes. Both Nakash and Bakie then, could be
read as suggesting that a Colorado River stay may issue even
if parallel state proceedings may not fully resolve a federal
case.
     However, in another line of cases, we have expressly
held that a “substantial doubt” about whether continued
federal litigation would be necessary after resolution of state
proceedings precludes a stay. See Intel Corp. v. Advanced
Micro Devices, Inc., 12 F.3d 908, 912–13 (9th Cir. 1993). In
Intel, the parties were engaged in a copyright infringement
dispute over intellectual property. Id. at 910–12. The
district court stayed federal proceedings under Colorado
River pending resolution of a state court action reviewing the
propriety of an arbitrator’s award of a license to use the
disputed intellectual property. Id. We reversed, explaining
that the “concurrent state court proceedings w[ould] resolve
all the issues in [the federal case] only if the arbitration award
[was] confirmed.” Id. at 913 & n.5. “In contrast, if the state
court overturn[ed] the arbitration award, then the case
                    ERNEST BOCK, LLC V. STEELMAN                          21

w[ould] return to federal court for the adjudication of the
underlying copyright claims.” Id. at 913 & n.6. Applying
Moses Cone, we found a “substantial doubt as to whether the
state proceedings w[ould] resolve the federal action.” Id.
We found such a “substantial doubt” to be “dispositive,”
concluding that it was “sufficient to preclude a Colorado
River stay.” Id. Thus, we found that where one of two
possible state court rulings would necessitate additional
litigation in a parallel federal case, a Colorado River stay
could not issue.
    Although few of our subsequent cases appear to confront
these exact factual circumstances, we have repeatedly
affirmed Intel’s logic. See, e.g., State Water Res. Control
Bd., 988 F.3d at 1204 (“We have repeatedly emphasized that
a Colorado River stay is inappropriate when the state court
proceedings will not resolve the entire case before the
federal court.”); Holder, 305 F.3d at 859 (“In this Circuit,
the narrow Colorado River doctrine requires that the pending
state court proceeding resolve all issues in the federal suit.”);
Smith, 418 F.3d at 1033 (same); cf. R.R. Street, 656 F.3d at
982 (affirming Colorado River stay when all parties agreed
that a state case would “resolve all issues raised in the
Federal Action”). 17

17
   We acknowledge that when a case is “controlled by contradictory
precedents . . . the appropriate mechanism for resolving an irreconcilable
conflict is . . . [a] call for en banc review.” Atonio v. Wards Cove Packing
Co., Inc., 810 F.2d 1477, 1478–79 (9th Cir. 1987) (en banc). But “[i]t is
our obligation, nonetheless, to reconcile [conflicting precedents], if
possible, so as to avoid an intracircuit conflict necessitating en banc
consideration.” Edwards v. Marin Park, Inc., 356 F.3d 1058, 1065 (9th
Cir. 2004) (citation omitted).
  We cannot say that the tension between Intel, Nakash, Bakie, and their
progeny is irreconcilable as applied here. First, unlike this case, it is not
22                 ERNEST BOCK, LLC V. STEELMAN

   Other circuits have also adopted disparate approaches.
For example, the Third Circuit has explained that:

         As the Supreme Court pointed out in Moses
         H. Cone, the Colorado River doctrine applies
         only if there is parallel state court litigation
         involving the same parties and issues that will
         completely and finally resolve the issues
         between the parties . . . . In other words,
         because of the requirement of a parallel state
         court proceeding, stays entered under the
         authority of Colorado River will normally
         have the effect of putting the plaintiff
         ‘effectively out of federal court’ and
         surrendering jurisdiction to the state tribunal.

Marcus v. Abington, 38 F.3d 1367, 1371–72 (3d Cir. 1994)
(citations omitted). 18 In another case, a Colorado River

clear that the state court proceedings in Bakie and Nakash could result
only in binary outcomes, one of which would require federal litigation.
Second, the panels in Nakash and Bakie did not find a “substantial doubt”
that state proceedings would fail to resolve all federal issues. Because
we find such a “substantial doubt” in this case, Moses Cone precludes a
stay. See Intel, 12 F.3d at 912–13. Finally, because Colorado River
requires balancing several non-exclusive factors, Nakash and Bakie
would not control the outcome of this case even if we found that the
parallelism factor did not preclude a stay. Thus, any tension between our
precedents does not definitively control the outcome of this case.
18
  In Marcus, the Third Circuit ultimately dismissed the appeal for lack
of jurisdiction after concluding that the district court’s stay merely
“delay[ed] the federal adjudication” rather than “deprived the federal
plaintiff of a federal adjudication to which he or she may be entitled.”
38 F.3d at 1372. But that case is procedurally distinct from this one
because the court previously explained that federal litigation would
remain no matter how the state court ruled. See id. at 1370–71 (“Once
                    ERNEST BOCK, LLC V. STEELMAN                          23

dismissal was improper when a party “may at some point
still be entitled to a federal forum for its diversity action” if
the state court ruled in a certain way. Ingersoll-Rand Fin.
Corp. v. Callison, 844 F.2d 133, 134 (3d Cir. 1988). 19
    But the Seventh Circuit is more permissive. In one
recent case, that court summarized two prior decisions in
which a “plaintiff in concurrent state and federal actions
raised claims in the federal court that would have been fully
resolved if the state court ruled one way, but only partially
addressed if the state court ruled in the other direction.
Nevertheless, [the Seventh Circuit] held that the state and
federal actions were parallel” such that a Colorado River
stay could issue. Loughran v. Wells Fargo Bank, N.A., 2
F.4th 640, 649 (7th Cir. 2021) (discussing Freed v. JP
Morgan Chase Bank, N.A., 756 F.3d 1013 (7th Cir. 2014)
and Lumen Constr., Inc. v. Brant Constr., Co., 780 F.2d 691
(7th Cir. 1985)). The court declined to “read Moses Cone as
establishing rigid criteria for stay orders.” Id. at 646.
    In the context of this case, we conclude that the Intel and
the Third Circuit approach is most consistent with the
Supreme Court’s instruction in Moses Cone that “it would
be a serious abuse of discretion to grant [a Colorado River]
stay” if there is “any substantial doubt” as to whether
“parallel state-court litigation will be an adequate vehicle for

the stay is lifted, the state court’s disposition of the criminal proceeding
will have a negligible impact on the subsequent federal adjudication . . .
. [N]either side will be foreclosed by collateral estoppel with respect to
the federal issues.”).
19
  The Callison court ultimately agreed that a Colorado River stay, rather
than dismissal, was proper, but only because Congress evinced a clear
policy preference to litigate certain parallel securities law issues in state
court. 844 F.2d at 136–37.
24                 ERNEST BOCK, LLC V. STEELMAN

the complete and prompt resolution of the issues between the
parties.” 460 U.S. at 28 (emphasis added). Indeed, the Court
explained that a Colorado River stay “necessarily
contemplates that the federal court will have nothing further
to do in resolving any substantive part of the case.” Id.; see
also Gulfstream Aerospace Corp., 485 U.S. at 278 (“[T]he
granting of a Colorado River [stay] necessarily implies an
expectation that the state court will resolve the dispute. . .
.”). When one possible outcome of parallel state court
proceedings is continued federal litigation, we find a
“substantial doubt” that the state court action will provide a
“complete and prompt resolution of the issues,” because the
federal court may well have something “further to do.”
Moses Cone, 460 U.S. at 28.
    Here, because additional federal litigation would be
necessary if the New Jersey courts enforce the Steelmans’
guarantees, we have a “substantial doubt as to whether the
state proceedings will resolve the federal action.” Intel, 12
F.3d at 913 (relying on Moses Cone, 460 U.S. at 28). As
both the Supreme Court and our court have held, such a
doubt “precludes the granting of a stay” under Colorado
River. Id. 20

20
   We note that our holding is consistent with the general rule that “exact
parallelism . . . is not required.” See Nakash, 882 F.2d at 1416. The
issues and parties in parallel state proceedings need not be identical so
long as they are “substantially similar.” Id. For example, a Colorado
River stay could still be warranted if parallel state proceedings involve
additional parties or claims, as long as the state court will necessarily
resolve all issues between parties in the federal action. See R.R. Street,
656 F.3d at 982–83 (finding sufficient parallelism even where parallel
cases did not involve identical parties because the parties in the federal
suit agreed that the state action would “resolve all issues raised in the
                   ERNEST BOCK, LLC V. STEELMAN                         25

    Although we are sympathetic to the prudential concerns
that the district court weighed in favor of a stay, 21 we
conclude that the federal and state proceedings are not
sufficiently parallel to justify abdication of federal
jurisdiction. 22
                  V. Docket Management Stay
    Finally, Defendants argue that even if the Colorado
River stay was improper, the district court had the inherent
authority to stay federal proceedings pursuant to its docket
management powers. The Supreme Court first recognized
this authority in Landis v. North American Co., 299 U.S. 248
(1936), explaining that “the power to stay proceedings is
incidental to the power inherent in every court to control the
disposition of the causes on its docket with economy of time
and effort for itself, for counsel, and for litigants.” Id. at 254.
We have since identified three non-exclusive factors courts

Federal Action”). We simply find a substantial doubt in this case that
New Jersey state proceedings will completely resolve the federal action.
21
   At oral argument, counsel discussed alternatives to a stay that might
resolve some of these concerns. See Oral Arg. at 8:20–9:05, 21:50–
26:30. For example: (1) Defendants could post a bond to ameliorate
concerns about asset transfers; (2) the district court might have authority
to enjoin future asset transfers; or (3) the parties could stipulate to
jurisdiction and venue over the federal claims in New Jersey state court,
ensuring resolution of all disputes in one court. On remand, we
encourage the parties and the district court to explore these and other
alternatives that could resolve or ameliorate the administrative concerns
identified by the district court. However, we find that these concerns are
not sufficient to set aside the district court’s “virtually unflagging
obligation” to exercise jurisdiction. Colorado River, 424 U.S. at 817.
22
   Because we conclude that the district court’s error in applying the
Colorado River factors is dispositive, we need not proceed to abuse of
discretion review. See Seneca, 862 F.3d at 840.
26               ERNEST BOCK, LLC V. STEELMAN

must weigh when deciding whether to issue a docket
management stay: (1) “the possible damage which may
result from the granting of a stay”; (2) “the hardship or
inequity which a party may suffer in being required to go
forward”; and (3) “the orderly course of justice measured in
terms of the simplifying or complicating of issues, proof, and
questions of law.” Lockyer v. Mirant Corp., 398 F.3d 1098,
1110 (9th Cir. 2005) (quoting CMAX, Inc. v. Hall, 300 F.2d
265, 268 (9th Cir. 1962)).
    Here, the parties contest whether these factors support a
stay. But as the district court recognized, “because this case
involves simultaneous and related federal and state actions,
the proper analysis is under Colorado River, not Landis.”
We have held that “[a] district court may, in its discretion,
stay or dismiss a federal case in favor of related state
proceedings” in only two circumstances: “(1) when an action
seeks only declaratory relief, or (2) when exceptional
circumstances exist [under Colorado River].” Scotts Co.
LLC v. Seeds, Inc., 688 F.3d 1154, 1158 (9th Cir. 2012)
(internal citations omitted). We suggested that to expand the
scope of permissible stays beyond these contexts would
“undermin[e] the Colorado River doctrine.” Id.
    Following this principle, we join other circuits to
expressly hold that the Colorado River factors control
whether a stay can issue in favor of parallel state
proceedings. See, e.g., Cottrell v. Duke, 737 F.3d 1238,
1249 (8th Cir. 2013) (“To permit a district court to rely
solely on its inherent power to control its docket, when the
effect of the district court’s order is to accomplish the same
result contemplated by Colorado River, would allow a court
to bypass the rigorous test set out by the Supreme Court.”);
Evans Transp. Co. v. Scullin Steel Co., 693 F.2d 715, 717
(7th Cir. 1982) (“[I]t is not enough, to justify abstention, that
                     ERNEST BOCK, LLC V. STEELMAN                       27

a failure to stay the federal suit may result in judicial
diseconomy—in having two active lawsuits instead of
one.”). 23 A docket management stay may not issue in favor
of parallel state proceedings if the Colorado River factors do
not support a stay. See Scotts Co. LLC, 688 F.3d at 1158.
Because Colorado River does not support a stay, neither can
the district court’s docket management authority.
                              VI. Conclusion
   Following the Supreme Court’s instruction in Moses
Cone, we cannot uphold a stay as the New Jersey proceeding
may not fully resolve the issues pending before the district
court.
       REVERSED and REMANDED. 24

23
  See also AIIRAM LLC v. KB Home, No. 19-CV-00269-LHK, 2019 WL
3779185, at *6 (N.D. Cal. Aug. 12, 2019) (reaching the same result but
noting that “the Ninth Circuit has not spoken to th[is] precise question”).
24
     The parties shall bear their own costs on appeal.