Opinion
Civil Action No. 04-2317-GTV.
October 26, 2004
MEMORANDUM AND ORDER
Plaintiff Thrivent Financial for Lutherans ("Thrivent Financial") brings this interpleader action against Defendants, potential beneficiaries of a variable annuity contract purchased by Arthur T. Croisant, now deceased. Defendant John K. Croisant, in his capacity as executor of the estate of Arthur T. Croisant, filed an amended answer and several counterclaims against Thrivent Financial. The counterclaims asserted negligence, negligent representation, breach of fiduciary duty, violations of the Kansas Securities Act, K.S.A. §§ 17-1251 et seq., and violations of the Kansas Consumer Protection Act, K.S.A. §§ 50-601 et seq. In summary, Defendant John Croisant alleges that two representatives of Thrivent Financial wrongfully induced Arthur Croisant to exchange his fixed annuity contract, purchased from Thrivent Financial, for the variable annuity contract at issue in this action. Defendant Croisant asserts that when Arthur Croisant died, the value of the variable annuity contract had decreased over $50,000 since the purchase date.
Plaintiff asserts jurisdiction under the court's diversity jurisdiction, 28 U.S.C. § 1332, and the federal interpleader statute, 28 U.S.C. § 1335.
This action is before the court on Thrivent Financial's motion to strike Defendant John Croisant's counterclaims (Doc. 8). The basis for Thrivent Financial's motion is that Defendant Croisant has previously filed the same five claims against Thrivent Investment Management, Inc. ("Thrivent Investment"), a wholly owned subsidiary of Thrivent Financial, in a case currently pending in this court before United States District Judge Julie Robinson, John Croisant v. Thrivent Investment Management, Inc., Case No. 04-4023. Thrivent Financial contends that the interest of judicial economy would not be served by litigating duplicate claims in two separate courts and that Defendant Croisant's counterclaims should be dismissed to avoid inconsistent rulings. Thrivent Financial points out that Judge Robinson has already dismissed the Kansas Securities Act claim against Thrivent Investment, and asserts that Defendant Croisant should not be able to overcome that dismissal by asserting the identical claim before this court. Finally, Thrivent Financial maintains that if Defendant Croisant believed that he had independent claims against Thrivent Financial and Thrivent Investment for the alleged wrongdoing involving the sale of a financial investment, then he could have sued all potentially liable Thrivent entities in his lawsuit before Judge Robinson. Thrivent Financial states that this action should proceed only as an interpleader action to decide who, among the adverse claimants, is entitled to benefits from the variable annuity contract.
Defendant Croisant responds twofold. First, he asserts that the two representatives involved in the sale of the variable annuity contract were associated with the respective predecessors in interest of both Thrivent Financial and Thrivent Investment at the time of the subject transaction. Because the law treats parent and subsidiary corporations as separate entities, Defendant Croisant maintains that Thrivent Financial and Thrivent Investment are subject to separate liability. Second, Defendant Croisant contends that his counterclaims could be considered compulsory, and thus, he would be otherwise barred from asserting them.
The court concludes that Defendant Croisant's counterclaims should be dismissed based on the principles of the first-to-file rule. See Nuway Paper, L.L.C. v. York Paper Co., No. 4:99-CV-156, 2001 U.S. Dist. LEXIS 1368, at *6-7 (W.D. Mich. Feb. 7, 2001) (striking a third-party complaint because it was duplicative of another federal lawsuit). "As a general rule, the first suit filed has priority, unless there are circumstances which justify giving priority to a later-filed action."Employers Reinsurance Corp. v. MSK Ins., Ltd., No. 01-2608-CM, 2003 WL 21143105, at *6 (D. Kan. Mar. 31, 2003) (citation omitted). Federal courts apply this rule "to situations in which essentially the same issues and litigants are involved in two substantially identical causes of action before federal courts in different districts." Ed Tobergte Assocs. v. Zide Sport Shop of Ohio, Inc., 83 F. Supp. 2d 1197, 1198 (D. Kan. 1999). "The policy avoids the waste of duplication, rulings which may intrude on the authority of sister courts and piecemeal resolution of issues that call for a uniform result." Universal Premium Acceptance Corp. v. Oxford Bank Trust, No. 02-2448-KHV, 2002 WL 31898217, at *1 (D. Kan. Dec. 10, 2002). Application of the rule requires court to consider:
(1) the adequacy of the relief available in the alternative forum; (2) promotion of judicial efficiency; (3) the identify of the parties and the issues in the two actions; (4) the likelihood of prompt resolution in the alternative forum; (5) the convenience of the parties, counsel and witnesses; and (6) the possibility of prejudice to any party.Nuway Paper, L.L.C., 2001 U.S. Dist. LEXIS 1368, at *6 (citations omitted).
An evaluation of these factors supports dismissal of Defendant Croisant's counterclaims. First, notwithstanding the fact that Judge Robinson has already dismissed one of Defendant Croisant's claims, the relief available to him is no different here than it is before Judge Robinson. Second, the interest of judicial efficiency weighs against simultaneous adjudication of identical claims. Not only would it be a waste of judicial resources, but as Plaintiff points out, it would create the risk of inconsistent judgments. Third, as mentioned before, the factual and legal issues are the same. Defendant Croisant argues against dismissal by asserting that Thrivent Financial and Thrivent Investment are two different corporations and thus subject to separate liability. While the court does not contest the validity of those legal concepts, the court is persuaded that any prejudice Defendant Croisant might suffer by dismissing his counterclaims is minimal. Thrivent Financial's interests are well represented in the suit before Judge Robinson. In fact, both Thrivent Financial and Thrivent Invenstment, as well as Defendant Croisant, are represented by the same attorneys in these disputes. Moreover, Defendant Croisant could add Thrivent Financial as a party defendant to Judge Robinson's case. Fourth, a prompt and efficient resolution to Defendant Croisant's claims is available with Judge Robinson, as that case was filed four months earlier and discovery has already commenced. Finally, forcing the parties to litigate the same issues in two forums does not appear to be a convenient way for them to resolve their disputes. In sum, all considerations weigh in favor of deferring to Judge Robinson for adjudication of Defendant Croisant's claims. Accordingly, Plaintiff's motion to strike is granted.
IT IS, THEREFORE, BY THE COURT ORDERED that Plaintiff's motion to strike Defendant Croisant's counterclaims (Doc. 8) is granted.
Copies of this order shall be transmitted to counsel of record.