IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA
January 8, 2013
AGCS MARINE INSURANCE COMPANY, PLAINTIFF,
AMERICAN TRUCK & TRAILER BODY COMPANY, ET AL., DEFENDANTS.
Defendant American Truck and Trailer Body Company (ATTB) has filed a motion to dismiss or stay this action; plaintiff AGCS Marine Insurance Company (AGCS) has opposed and plaintiff has filed a reply. The court ordered the motion submitted without argument and now DENIES the motion.
On October 28, 2011 plaintiff AGCS filed a complaint in the Fresno division of this court, invoking the court's diversity jurisdiction and alleging that defendant ATTB entered into an agreement to modify a 2011 Freightliner; that it stored the Freightliner too close to the adjoining property, in violation of municipal codes governing the storage of combustible material; that the adjoining property stored large quantities of boxes and other combustible materials, also in violation of municipal code; that the Freightliner was destroyed by fire; and that AGCS insured the owner of the Freightliner. The complaint contains five causes of action:
(1) non-return of personal property; (2) negligence/willful misconduct; (3) breach of implied contract; (4) breach of bailment; and (5) breach of warranty.
At the scheduling conference held on February 28, 2012, the Fresno Magistrate Judge assigned at the time directed the parties to meet and confer about "having the matter (and related state matters) litigated in the San Joaquin County State Court or, if no agreement can be reached, having the matter transferred to the Sacramento Division . . . which is the proper venue if the matter is to remain in district court." (ECF Nos. 14, 15.) In a status report filed April 12, 2012, the parties noted their continued disagreement about transfer or dismissal. (ECF No. 17.) The Magistrate Judge then transferred the case to the Sacramento division on April 20, 2012. (ECF No. 18.)
Defendant filed the instant motion on November 9, 2012, arguing that the instant case should be stayed or dismissed in light of a case filed in San Joaquin County Superior Court American Truck v. Taylor Farms, Case No. 39-2011-00270180 CU-PO-STK; this case was filed in September 2011, stemming from the fire that started on the Taylor Farms property adjacent to ATTB's property. It asks the court to take judicial notice of a complaint from the San Joaquin County Superior Court action.
A court may take judicial notice "'of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to the matters at issue.'" United States v. Black, 482 F.3d 1035, 1041 (9th Cir. 2007) (quoting United States ex. rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992)). Because the state court records here are essential to the resolution of the pending motion, the court will take judicial notice of them. They show that on September 28, 2011, ATTB filed suit against Taylor Farms Pacific, Inc. in San Joaquin County Superior Court, alleging that ATTB's property is adjacent to that of Taylor Farms; that Taylor Farms stored plastic bins and boxes in a parking lot that adjoined ATTB's premises; that Taylor Farms did not have a permit for storing the bins and did not store them in compliance with state and municipal fire codes; that Taylor Farms failed to maintain clear space around the bins or enclose them in a suitable fence; that Taylor Farms stored the bins within ten feet of the property line; that on September 10, 2010, a fire started on Taylor Farms' property and spread to ATTB's premises, where it damaged property stored there, including truck chassis. (ECF No. 27-2 at 13-27.) The complaint includes five causes of action: (1) negligence; (2) liability under California Health & Safety Code §§ 13007 & 13008; (3) negligence per se; (4) trespass; and (5) nuisance.
In response, plaintiff's counsel avers that he filed an action in Alameda County because its insured, Golden State, is based in Alameda County and had a contract with ATTB, but he eventually dismissed rather than litigate over the proper venue for the breach of an electronically signed contract. (Declaration of Dennis A. Cammarano ¶ 4, ECF No. 28-1.) He then filed the instant complaint in federal court. Id. He has also asked the court to take judicial notice of the docket of ATTB's action in San Joaquin County Superior Court; the court grants this request as well.
The first to file rule is not one of the enumerated bases for dismissal in Rule 12 of the Federal Rules of Civil Procedure. Some courts have considered a motion based on primacy of filing to be a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) or for improper venue under Rule 12(b)(3). Ervin v. Kelly, No. C10--5145 BHS, 2010 WL 2985675 (W.D. Wash. Jul. 23, 2010); E-Z-Em, Inc. v. Mallinckrodt, Civil Action No. 2--09--cv--124, 2010 WL 1378820 (E.D. Tex. Feb. 26, 2010). Other courts have found such a motion to be outside the ambit of Rule 12(b) motions. Fujitsu Ltd. v. Nanya Techn. Corp., No. C 06-6613 CW, 2007 WL 484789 at *5 (N.D. Cal. Feb. 9, 2007). The Ninth Circuit has said that a motion to abstain pending resolution of a state court action does not "seek relief provided under Rule 12(b)." Aetna Life Ins. Co. v. Alla Med. Servs., Inc., 855 F.2d 1470, 1475 (9th Cir. 1988); Manna v. Greenburgh No. 11 Sch. Dist., 2 F. Supp. 2d 461, 463 n.1 (S.D.N.Y. 1998) (declining to treat abstention motion as one brought under Rule 12(b)). Because the motion is not one to dismiss under Rule 12(b)(6), the court may consider material outside the record. See FED.R.CIV.P. 12(d).
Defendant argues that under the "first-to-file" rule, this action should be dismissed or stayed in light of the earlier filed state court action. Plaintiff counters that the doctrine applies only when the earlier and later cases have both been filed in district court. It then argues that a stay is not appropriate by virtue of Colorado River*fn1 abstention. In reply defendant contends that a stay is appropriate even if the court applies the test for Colorado River abstention.
The court agrees with plaintiff that the first-to-file rule is not applicable here. Under that doctrine, as a matter of comity, a court has the discretion to dismiss, stay or transfer a case when a complaint involving the same or similar issues and parties has already been filed in another district. Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622, 625 (9th Cir. 1991); Adoma v. University of Phoenix, 711 F. Supp. 2d 1142, 1146 (E.D. Cal. 2010). "Because 'the first to file priority presumption has evolved from and is applied in cases involving intra-federal conflicts between federal district courts of concurrent jurisdiction' in order to promote efficiency and to avoid duplicative litigation, it 'is not necessarily the guidepost for the setting here, where parallel litigation is pending in federal and state courts.'" Just Film, Inc. v. Merchant Servs, Inc., No. C 10--1993 CW, 2012 WL 10555, at *4 (N.D. Cal. Jan. 3, 2012) (quoting Newmont USA Ltd. v. Am. Home Assurance Co., No. CV--09--33--JLQ, 2009 WL 1764517, at *3 (E.D. Wash. June 21, 2009)).
Nevertheless, the existence of the state court action may provide a basis for a stay in some circumstances. In Colorado River, the Court recognized that while federal courts have a "virtually unflagging obligation  to exercise the jurisdiction given them," abstention may be appropriate in exceptional circumstances. Colorado River, 424 U.S. at 813, 817. "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 the 'clearest of justifications' counsel the surrender of [federal] jurisdiction." Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 25-26 (1983) (emphasis in original). The court should consider these factors in deciding whether to stay or dismiss a case: "(1) whether either court has assumed jurisdiction over a res;*fn2 (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; exact parallelism of the actions is not required. Smith v. Central Arizona Water Conservation District, 418 F.3d 1028, 1033 (9th Cir. 2005); Travelers Indem. Co. v. Madonna, 914 F.2d 1364, 1368, 1372 (9th Cir. 1990); see generally R.R. Street & Co., Inc. v. Transport Ins. Co., 656 F.3d 966, 979 n.9 (9th Cir. 2011) (discussing common law roots of the factors).
"[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 the exercise of jurisdiction. The weight to be given to any one factor may vary greatly from case to case, depending on the particular setting of the case." Cone, 460 U.S. at 16. "Any doubt as to whether a factor exists should be resolved against a stay, not in favor of one." Travelers Indem., 914 F.2d at 1369.
A. Convenience of the Forums
ATTB is located in Tracy, California, while AGCS's principal place of business is in Illinois. Counsel for both parties are located in Los Angeles. This factor is neutral, as neither forum appears to have marked advantages or disadvantages.
B. Avoiding Piecemeal Litigation "'Piecemeal litigation occurs when different tribunals consider the same issue, thereby duplicating efforts and possibly reaching different results.'" Travelers Indem., 914 F.2d at 1369 (quoting American Int'l Underwriters v. Continental Ins. Co., 843 F.2d 1253, 1258 (9th Cir. 1988)). However, the "mere possibility of piecemeal litigation does not constitute an exceptional circumstance." R.R. Street & Co., 656 F.3d at 979.
As the two here actions raise different issues, there is no danger of the sort of piecemeal litigation Colorado River abstention would prevent: the instant case addresses only ATTB's liability stemming from its alleged negligence and violation of state guidelines governing combustible material, while the San Joaquin County case addresses only Taylor Farms' liability stemming from its alleged negligence and violations of state and local codes. Given the pleadings currently before the court, it does not appear this court will be considering the same issues as the San Joaquin County Superior Court. This factor thus does not favor abstention.
C. Order In Which The Forums Obtained Jurisdiction "'Priority should not be measured exclusively by which complaint was filed first, but rather in terms of how much progress has been made in the two actions.'" Travelers Indem., 914 F.2d at 1370 (quoting Cone, 460 U.S. at 21). Although the state action was filed earlier, its docket shows there have been several case management conferences apparently involving only ATTB, because Taylor Farms did not file its answer to ATTB's complaint until November 29, 2012; another case management conference has now been scheduled. ECF No. 28-4 at 2-3. In this court, in contrast, a pretrial scheduling order has issued after the parties appeared and cooperated in filing a joint status report. ECF Nos. 23, 25. This factor does not favor abstention.
D. Controlling Law
The parties agree that California law controls the disposition of this action, a factor which favors abstention. As only state law claims are pled, there are no federal law issues that weigh against surrender of jurisdiction. See Cone, 460 U.S. at 26. This factor favors abstention.
E. Adequacy of State Court
The Ninth Circuit has said that "[t]his factor involves the state court's adequacy to protect federal rights, not the federal court's adequacy to protect state rights." Travelers Indem., 914 F.2d at 1370. As this case does not involve any federal rights, this factor is neutral.
F. Forum Shopping "In the Colorado River context, [the Ninth] Circuit has held that forum shopping weighs in favor of a stay when the party opposing the stay seeks to avoid adverse rulings made by the state court or to gain a tactical advantage from the application of federal court rules." Travelers Indem., 914 F.2d at 1371. There is a suggestion that AGCS has engaged in forum shopping, as it dismissed its state court complaint because of perceived difficulties in litigation in that forum. This factor favors abstention.
G. Similarity of the Actions
Proceedings are "substantially similar when 'substantially the same parties are contemporaneously litigating substantially the same issues in another forum.'" Sabbag v. Cinnamon, No. 5:10-cv-02735-JF (HRL), 2010 WL 8470477, at *5 (N.D. Cal. Dec. 10, 2010) (quoting Travelers Cas. and Sur. Co. of America v. Comerica Bank, No. CIV. S-08-366 FCD/KJM, 2009 WL 2136922, at *3 (E.D.Cal. July 15, 2009) (quoting Interstate Material Corp., 847 F.2d at 1288)). "[A]pplication of the Colorado River doctrine does not require an exact duplication of the parties involved or the claims asserted." Id. at *5.
Although the genesis of both actions is the fire that started on the Taylor Farms property, AGCS is not a party to the state action, while Taylor Farms is not a party to the instant action. Moreover, the focus of the actions is different, with little if any overlap. This factor does not favor abstention.
Two factors, including the important forum shopping factor, favor abstention.
Three factors do not favor abstention, including factors that deserve significant weight, those of avoiding piecemeal litigation and the amount of progress made in this court. The rest are neutral. Under these circumstances, balancing and weighing the relevant factors, this court heeds the Supreme Court's caution that a court should dismiss or stay an action only in exceptional circumstances. As there are no such circumstances here, the court denies defendant's motion to dismiss or stay the action (ECF No. 27).
IT IS SO ORDERED.
UNITED STATES DISTRICT JUDGE