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Lisa Boe, et al v. Christian World Adoption

April 21, 2011

LISA BOE, ET AL., PLAINTIFFS,
v.
CHRISTIAN WORLD ADOPTION, INC., ET AL., DEFENDANTS.



ORDER

The court heard defendant Christian World Adoption's ("CWA") motion to stay proceedings pending the resolution of a South Carolina state case (ECF 18) on March 2, 2011. Francesca Gianuario appeared for plaintiffs; Michael Tracy and Curtis Bostic appeared for defendant. More than a month following the hearing, plaintiffs filed an ex parte application to continue the trial date and related dates. (ECF 27.) CWA filed its opposition to the ex parte application on April 7, 2011. (ECF 31.) For the following reasons, CWA's motion to stay is GRANTED and plaintiffs' ex parte application is DENIED as moot. (ECF 27.)

I. PROCEDURAL HISTORY

Lisa and Frank Boe (the "Boes") entered into a contract with CWA for the adoption of a child in March 2007. (Pls.' Opp'n at 3, ECF 19.) The present motion stems from the fact that there is a suit brought by CWA against the Boes pending in South Carolina state court, while at the same time the instant suit brought by the Boes and their minor son Z.B. (together, "plaintiffs") against CWA and other defendants is proceeding in this court.

A. State court proceeding

On October 26, 2009, CWA brought a complaint alleging (1) libel or libel per se; (2) slander; and (3) breach of contract and seeking a declaratory judgment compelling arbitration against the Boes in South Carolina's Charleston County Court of Common Pleas (the "state suit"). (Def.'s Mem. P. & A. in Supp. Mot. to Stay ("Def.'s Mot.") at 1, ECF 18.) The Boes responded to the state suit by moving to dismiss for lack of personal jurisdiction on November 18, 2009; however, the motion was denied and the South Carolina court held that jurisdiction was proper on April 16, 2010. (Pls.' Opp'n at 5; Def.'s Mot. at 1; Bostic Decl., Ex. B, Order at 1-2, ECF 18-3.) After the South Carolina court's assertion of jurisdiction, the Boes filed their answer there, adding their son as a third party plaintiff as well as several third party defendants, and including eleven counterclaims: (1) wrongful adoption; (2) breach of contract; (3) breach of covenant of good faith and fair dealing; (4) breach of fiduciary duty; (5) negligent nondisclosure by a fiduciary/constructive fraud; (6) negligence; (7) negligent misrepresentation; (8) negligent infliction of emotional distress; (9) intentional infliction of emotional distress; (10) civil conspiracy; and (11) negligent supervision of a minor. (See Bostic Decl., Ex. C, ECF 18-4.) In their answer, the Boes asserted lack of personal jurisdiction as an affirmative defense. (Id. ¶ 26.) They are seeking: "1. That the complaint against [them] be dismissed . . . 2. . . . judgment in their favor . . . 3. [] actual damages in an amount according to proof at trial. 4. [] punitive damages in an amount to be determined at trial. 5. [] costs of suit. 6. [] such other and further relief as the Court deems just and proper." (Id. at 24.)

CWA filed a motion to compel arbitration in the South Carolina court on July 2, 2010, relying on provisions of its contract with the Boes.*fn1 Oral argument on the motion took place on November 5, 2010. (Tracy Decl., Ex. B, ECF 23-3; Def.'s Mot. at 3.) The South Carolina court granted CWA's motion on January 18, 2011, finding that the Federal Arbitration Act was applicable, ordering "all parties to the litigation [to] submit all causes of action to binding arbitration" and the arbitrator to apply South Carolina law, and staying the state proceeding pending the conclusion of the arbitration. (Tracy Decl., Ex. B.)

B. Federal court proceeding

Plaintiffs initiated the present lawsuit on January 22, 2010. (Compl., ECF 1.)

Plaintiffs allege twelve causes of action: (1) wrongful adoption; (2) breach of contract; (3) breach of covenant of good faith and fair dealing; (4) breach of fiduciary duty; (5) negligent nondisclosure by a fiduciary/constructive fraud; (6) negligence; (7) negligent misrepresentation; (8) fraud/intentional misrepresentation; (9) negligent infliction of emotional distress; (10) intentional infliction of emotional distress; (11) civil conspiracy; and (12) negligent supervision of a minor. (See id.) They seek: "1. Judgment in [their] favor . . . . 2. [] compensation in an amount according to proof at trial. 3. [] punitive damages in an amount to be determined at trial. 4. [] attorneys' fees . . . . 5. [] costs of suit. 6. [] such other and further relief as the Court deems just and proper." (Id. at 18.) Defendants filed an answer to the complaint on February 25, 2010. (ECF 8.)

CWA filed the present motion to stay on November 30, 2010. (ECF 18.) Plaintiffs filed their opposition on December 30, 2010. (ECF 19.) CWA filed its reply on February 22, 2011. (ECF 23.) Plaintiffs filed their ex parte application to continue the trial date and related dates on April 5, 2011. (ECF 27.) CWA filed its opposition to the ex parte application on April 7, 2011. (ECF 31.)

II. ANALYSIS - MOTION TO STAY

A. Colorado River Abstention Doctrine

i. Standard

The standard applicable to determining the pending motion to stay is found in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976), which declares that federal courts have a "virtually unflagging obligation [] to exercise the jurisdiction given them."*fn2 "Abstention from the exercise of federal jurisdiction is the exception, not the rule." Id. at 813. "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 . . . .'" Id. at 817 (quoting McClellan v. Carland, 217 U.S. 268, 282 (1910)). In deciding whether a stay is appropriate in the face of a parallel proceeding, courts must consider "'[wise] judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.'" Id. at 817 (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 183 (1952)). However, "the circumstances permitting the dismissal of a federal suit due to the presence of a concurrent state proceeding for reasons of wise judicial administration are considerably more limited than the circumstances appropriate for abstention." Id. at 818.

The court's "task is to ascertain whether there exist 'exceptional' circumstances, the 'clearest of justifications,' that can suffice under Colorado River to justify the surrender of [federal] jurisdiction." Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 25-26 (1983). Factors to be considered in performing this task include: "(1) whether either court has assumed jurisdiction over a res;*fn3 (2) the relative convenience of the forums; (3) the desirability of avoiding piecemeal litigation; [] (4) the order in which the forums obtained jurisdiction[;] (5) whether state or federal law controls; and (6) whether the state proceeding is adequate to protect the parties' rights." Nakash v. Marciano, 882 F.2d 1411, 1415 (9th Cir. 1989) (internal citations omitted). Other factors include the prevention of forum shopping and the substantial similarity of the two proceedings.*fn4 Travelers Indem. Co. v. Madonna, 914 F.2d 1364, 1368, 1372 (9th Cir. 1990). "[T]he decision whether to dismiss a federal action because of parallel state-court litigation does not rest on a mechanical checklist, but on a careful balancing of the important factors as they apply in a given case, with the balance heavily weighted in favor of ...


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