Southern Industrial Contractors, LLC v. Neel-Schaffer, Inc. et al

REPLY to Response to Motion re Response in Opposition to Motion, to Reinstate Stay

S.D. Miss.February 21, 2019

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF MISSISSIPPI SOUTHERN DIVISION SOUTHERN INDUSTRIAL CONTRACTORS, LLC Plaintiff, v. NEEL-SCHAFFER, INC., T.L. WALLACE CONSTRUCTION, INC., THOMPSON ENGINEERING, INC., CH2M HILL, INC., W.G. YATES & SONS CONSTRUCTION COMPANY, ROY ANDERSON CORP., YATES ANDERSON, JV, QUALITY ENGINEERING SERVICES, INC., AND MISSISSIPPI DEVELOPMENT AUTHORITY Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CIVIL ACTION NO. 1:17cv255 LG-JCG ______________________________________________________________________________ THOMPSON ENGINEERING, INC.’S REPLY TO PLAINTIFF’S RESPONSE IN OPPOSITION TO MOTION TO REINSTATE STAY ______________________________________________________________________________ COMES NOW Defendant Thompson Engineering, Inc. ("Thompson”), and submits this Reply to Plaintiff Southern Industrial Contractors, LLC’s (“SIC”) Response in Opposition to Motion to Reinstate Stay (Doc. 303), stating as follows: Introduction SIC contends this Court lacks the authority to control its own docket and stay this action. The United States Supreme Court would disagree: There are sound reasons for our reiteration of the rule that a district court's decision to defer proceedings because of concurrent state litigation is generally committed to the discretion of that court. No one can seriously contend that a busy federal trial judge, confronted Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 1 of 18 2 both with competing demands on his time for matters properly within his jurisdiction and with inevitable scheduling difficulties because of the unavailability of lawyers, parties, and witnesses, is not entrusted with a wide latitude in setting his own calendar. Will v. Calvert Fire Ins. Co., 437 U.S. 655, 664-65, 98 S. Ct. 2552, 2558 (1978). SIC cites two cases from the U.S. District Court for the Northern District of Texas in support of its position that the Colorado River doctrine is the only avenue whereby this Court may stay this action. These decisions are not binding on this Court, conflict with decisions from other district courts in the Fifth Circuit—including the Southern District of Mississippi—and in other circuit courts across the country. Regardless of whether the Colorado River abstention doctrine is applicable under these facts, this Court may stay this action in accordance with the principles enunciated in Landis and consistently reaffirmed in more than 80 years of decisional precedent. Argument SIC, in arguing that “…the proper standard which must be applied in determining whether a stay should be granted would be that set forth by the U.S. Supreme Court in Colorado River…” is wholly reliant on Fishman Jackson PLLC v. Israely, 180 F. Supp. 3d 476 (N.D. Tex. 2016) (Doc. 303, p. 8). SIC’s reliance on Fishman, which is not binding on this Court, is misplaced. This Court has the authority to stay this action under the inherent powers identified in Landis. In the alternative, Thompson contends that the Colorado River doctrine also provides an avenue for a stay under these facts. The Motion to Reinstate the Stay is due to be granted. Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 2 of 18 3 I. Thompson, and the remaining Consultant Defendants, are entitled to a stay pursuant to Landis. A. The analysis in Fishman is predicated on a strained interpretation of the Fifth Circuit’s reasoning in Am. Guarantee & Liab. Ins. Co. v. Anco Insulations, Inc. The Fishman opinion criticized other district courts (including this Court)1, contending that “[t]hese courts essentially treat Colorado River and Landis as equal alternative bases to grant a stay in deference to a state court deciding overlapping issues.” Fishman, supra at 486. In arriving at this position, the Fishman Court relied on the Fifth Circuit’s decision in Am. Guarantee & Liab. Ins. Co. v. Anco Insulations, Inc., 408 F.3d 248 (5th Cir. 2005). SIC did not reference the Fifth Circuit Court’s Opinion in Anco, which, if assigned the interpretation accorded by Fishman, would seemingly preclude a Landis stay in this context. See Fishman, supra at 484-86. Given the Fishman Court’s reliance on this opinion from the Fifth Circuit Court, a discussion of Anco is necessary to address the mistaken analysis set forth by the Fishman court and, in turn, SIC. In Anco, the Court noted that “[o]ne of two standards governs the propriety of a decision to stay based on considerations of wise judicial administration, depending on whether the federal suit is purely declaratory or seeks other relief,” and identified the Supreme Court’s decisions in Brillhart2 and Colorado River3 as enunciating those standards. Anco, supra at 250. Importantly, however, the Anco Court made no mention of Landis, or “the power to stay proceedings [which] 1 The Fishman Court calls attention to “Davenport v. HansaWorld, USA, No. 2:12-CV-233-KS-MTP, 2016 U.S. Dist. LEXIS 8164, 2016 WL 320953, at *1 (S.D. Miss. Jan. 25, 2016) (deferring to a state court based on the Landis decision without mentioning the Colorado River standard)” as one of these decisions. Fishman at 485. 2 “If the federal suit seeks only a declaration of rights, the district court's discretion to stay or dismiss the suit is governed by a standard derived from Brillhart v. Excess Insurance Co. of America, 316 U.S. 491, 86 L. Ed. 1620, 62 S. Ct. 1173 (1942).” Anco, supra at 250. 3 “If the suit involves a request for monetary or other relief, the district court's discretion to stay is "narrowly circumscribed" by its obligation to hear cases within its jurisdiction, even if declaratory relief is also requested, and the propriety of a stay is governed by the ‘exceptional circumstances’ standard of Colorado River Water Conservation District v. United States, 424 U.S. 800, 817-19, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976).” Id. at 250-51. Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 3 of 18 4 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.”4 See Anco, generally. There is no language in Anco that forecloses the exercise of the Court’s inherent power to stay its proceedings. See Fishman, generally. Rather, the Anco Court cited to Southwind Aviation v. Bergen Aviation, 23 F.3d 948 (5th Cir. 1994), in identifying Brillhart and Colorado River as the “two standards govern[ing] the propriety of a decision to stay based on considerations of wise judicial administration.” Anco at p. 250 n.8. A review of the language in Southwind is revealing. First, the Southwind Court also made no reference to Landis. Secondly, and perhaps most importantly, the Southwind court exclusively considered dismissal of an action pursuant to the doctrine of abstention. Southwind at 949. The Southwind Court noted, “[w]e apply one of two different tests when reviewing a district court's exercise of its discretion to abstain because of the presence of ongoing parallel state litigation, depending on the substantive nature of the litigation.” Id. at 950. (emphasis added).5 4 Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). 5 The Southwind Court continued, When a district court is considering abstaining from exercising jurisdiction over a declaratory judgment action, it must apply standards derived from Brillhart v. Excess Insurance Co. of America. … Consistent with Brillhart, abstention from a declaratory judgment action is ordinarily appropriate when the state offers an adequate alternative forum in which to resolve the particular dispute. In contrast, when actions involve coercive relief the trial court must apply the standards enunciated by the Court in Colorado River and reaffirmed in Moses H. Cone. Although district courts likewise have "discretion" to abstain under these circumstances, such discretion is narrowly circumscribed by--as the Court stated in Colorado River --their "virtually unflagging obligation … to exercise the jurisdiction given them." Consequently, a district court should abstain under these circumstances only in the "exceptional" case. Southwind Aviation v. Bergen Aviation, 23 F.3d 948, 950-51 (5th Cir. 1994) (emphasis added). Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 4 of 18 5 Thompson does not argue for reinstatement of the stay pursuant to the abstention doctrine. Rather, the request is based on this Court’s authority under Landis “to stay actions with due regard to “economy of time and effort for itself, for counsel, and for litigants.” (Doc. 293, p. 3). The only authority6 cited by SIC that questions this authority is a case from the Northern District of Texas which criticizes this Court’s decision in Davenport v. HansaWorld. To be clear, SIC has cited no binding authority suggesting that Landis has been weakened by the Supreme Court’s decision in Colorado River, or that Colorado River is the exclusive doctrine through which a district court may enter a stay while a state court action remains pending. B. The Fishman decision is in conflict with decisions from multiple other courts in the Fifth Circuit, including the Southern District of Mississippi. What is clear is that federal district courts in this circuit and elsewhere have exercised and continue to exercise the authority to stay actions pending the outcome of litigation in state court without engaging in the Colorado River analysis. Indeed, SIC fails to address the incongruity between the Fishman decision and the same Court’s reasoning in MidTexas Int'l Ctr., Inc. v. Myronowicz: Even if abstention is not warranted under the Colorado River doctrine, a federal court has the inherent power to stay proceedings "to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants." Itel Corp. v. M/S Victoria U (Ex Pishtaz Iran), 710 F.2d 199, 203 (5th Cir.1983), quoting Landis v. North American Co., 299 U.S. 248, 254, 57 S. Ct. 163, 81 L. Ed. 153 (1936). The Fifth Circuit has specifically recognized that district courts have inherent power to stay a federal lawsuit in favor of a concurrent state court proceeding even when other standards for abstention are not strictly met. See id.; PPG Industries, Inc. v. Continental Oil Co., 478 F.2d 674, 679- 6 SIC also cites ROI Grp., Inc. v. Stull, 2016 U.S. Dist. LEXIS 64529 (N.D. Tex. May 17, 2016), a decision out of the same Court, just five weeks later, which relied on the analysis in Fishman. Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 5 of 18 6 82 (5th Cir. 1973). The exercise of the court's inherent power is warranted in this case. 2006 U.S. Dist. LEXIS 55387, at *22 n.6 (N.D. Tex. Aug. 9, 2006). Interestingly, Fishman was cited by the U.S. District Court for the Eastern District of Louisiana in that Court’s arrival at an altogether different conclusion. Ha Thi Le v. Lease Fin. Grp., LLC, 2017 U.S. Dist. LEXIS 111918 (E.D. La. 2017). In Ha Thi Le, the Court cited Fishman for its collection of decisions interpreting Landis, but chose to issue a stay without engaging in the Colorado River analysis. 2017 U.S. Dist. LEXIS 111918 (E.D. La. 2017). The Ha Thi Le Court acknowledged defendants’ argument that the claims against them were barred by the doctrine of res judicata, but chose instead “to stay consideration of the individual plaintiffs’ claims … (and hence the res judicata question)” pending the outcome of state court litigation in New York. Id. at 17-18 (“Even if the motions are denied and the New York litigation moves forward, however, staying the individual plaintiffs' claims is the most convenient and just manner of proceeding. Doing so avoids imposing undue hardship or inequity on any party and best preserves the ‘orderly course of justice.’ See Israely, 180 F. Supp. 3d at 482-83.”). Numerous other district courts in the Fifth Circuit have exercised their authority to initiate stays pending the outcome of state court litigation without engaging in the Colorado River analysis. See, e.g., Slaughter v. Atkins, 2014 U.S. Dist. LEXIS 135186 (M.D. La. Sep. 24, 2014)7; 7 The Slaughter Court cited PPG and Landis, supra, and held as follows: This Court finds that it is premature to engage in a res judicata analysis of the two cases because there has not been a final judgment in the state court proceedings. However, Defendants have made a compelling case that res judicata may be appropriate once the state court judgment is finalized. For reasons of efficiency and the avoidance of waste, a federal district court is authorized to stay a matter while a parallel state case is on appeal. Defendants are persuasive in their argument that staying this matter would be a productive and efficient discharge of [*9] this Court's judicial duty. The Court finds that there is sufficient cause to believe that until a final judgment is reached in state court, Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 6 of 18 7 Davenport v. HansaWorld, 2016 U.S. Dist. LEXIS 8164, at *4 (S.D. Miss. Jan. 25, 2016) (“Therefore, in weighing the interests of the parties, as well as the interests of justice, it is evident that a stay is warranted in this case.”); Nationwide Prop. & Cas. Ins. Co. v. Dunn, 2014 U.S. Dist. LEXIS 192587, at *3 (S.D. Miss. 2014) (citing the Court’s “inherent power to stay its proceedings” and finding “that in the interest of judicial economy all discovery in this action should be stayed pending resolution of the underlying state court lawsuit or pending further order.”); RMail Ltd. v. Amazon.com, Inc., 2014 U.S. Dist. LEXIS 25597 (E.D. Tex. Jan. 30, 2014). C. The Fishman decision is in conflict with decisions from multiple other courts across the country. Explaining the distinction between Colorado River abstention and the inherent power to stay proceedings pursuant to Landis, the Court in Fannie Mae v. Quicksilver LLC stated: As the Supreme Court of the United States has made clear, federal district courts have an inherent power to stay proceedings before them. This "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." Landis v. North Am. Co., 299 U.S. 248, 254, 57 S. Ct. 163, 81 L. Ed. 153 (1936). When duplicative proceedings are pending in various courts, a stay does not depend on a showing that two lawsuits are the same "and the issues identical." Id. Although parallel proceedings are required under Colorado River abstention, the inherent power recognized in Landis has not been abrogated by the Colorado River doctrine. See Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 21 n.23, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1983). 2014 U.S. Dist. LEXIS 139792, at *6 (M.D.N.C. Oct. 1, 2014). continued litigation of this matter would be inefficient and wasteful. Therefore, the Court holds that a stay of proceedings is appropriate. Slaughter, supra, at *8-9. Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 7 of 18 8 The U.S. District Court for the Middle District of North Carolina is not alone in these interpretations of Colorado River and Landis. See, e.g. Freed v. Friedman, 215 F. Supp. 3d 642, 658 (N.D. Ill. 2016) (noting “insofar as Rosenbauer held that the court's inherent authority to stay may apply even where full-blown Colorado River abstention does not, its conclusion is sound,” and collecting cases in support thereof); see also United Specialty Ins. Co. v. Bani Auto Grp., Inc., 2018 U.S. Dist. LEXIS 181943, at *12-13 (N.D. Cal. Oct. 23, 2018) (denying request for abstention pursuant to Colorado River, but ordering stay pursuant to Landis); see also Craggs Constr. Co. v. Fed. Ins. Co., 2007 U.S. Dist. LEXIS 35354, at *6 (M.D. Fla. May 15, 2007) (“Staying this case is simply a matter of using judicial resources (both state and federal) most appropriately.”); Dames v. Gimbel, 1989 U.S. Dist. LEXIS 8297, at *7 (S.D.N.Y. July 12, 1989) (“In granting this stay, however, this Court has not declined to exercise its jurisdiction over this action under the principles of abstention enunciated in Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976).”). These persuasive authorities support a finding that the Colorado River doctrine is not the exclusive means to stay an action while another action remains pending in state court. D. Thompson satisfies the criteria for entry of a stay pursuant to Landis. In, Bayer AG v. Novartis Crop Prot., Inc., the U.S. District Court for the Middle District of Louisiana articulated the criteria the Court may consider in determining whether to enter a stay pursuant to Landis: The determination of whether to grant a stay calls for the exercise of judgment which must weigh competing interests and maintain an even balance. Landis at 166. The court should consider the possible damage, hardship and inequities to the parties to the lawsuit and the relationship of the stay to the fulfillment of judicial objectives of simplification of the issues in question and trial of the case. 2000 U.S. Dist. LEXIS 18395, at *7 (M.D. La. June 26, 2000). Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 8 of 18 9 Respectfully, Thompson contends the Court may also want to consider whether a party is attempting to manipulate different tribunals by asserting contradictory sets of facts and by altering theories of damages and recovery, when it could have simply joined all parties in a single action. If so, the Court may choose to factor that into shaping an appropriate remedy to limit the potential for double recovery by SIC and to preclude the possibility of double recovery against the Consultant Defendants. A recent amended pleading by SIC reflects its intent and willingness to shape-shift its pleadings to avoid the repercussions of its actions. In Thompson’s Memorandum in Support of Motion to Reinstate Stay (Doc. 293) filed on Feb 1, 2019, Thompson asserted several points regarding the similarity in the allegations made by SIC against the MSPA with the allegations made by SIC against the Consultant Defendants. These points support the explanation as to how the current posture of the cases exposes the Consultant Defendants to potential double exposure for indemnity, and to potentially lay the groundwork for the application of an estoppel defense against SIC. Specifically, Thompson stated: “A stay until SIC’s identical claims for recovery against the MSPA are resolved is also warranted.” (Doc 293, page 3) “In that action, SIC alleges the MSPA’s consultants provided defective, incomplete, inadequate and insufficient plans upon which it relied, and that the MSPA exhibited indecision and lack of expediency resulting in project delays and significant extra work.” (Doc 293, page 4) The Court’s Order of June 26, 2018 granting Thompson’s Motion to Stay (Doc. 284 at footnote 1, pages 6, 7) recognizes that the claims against the MSPA and against the Consultant Defendants both arose out of the same facts and seek damages for problems caused by the same debris field and same allegedly defective plans. And as the Court recognized in this footnote, SIC’s suggestion it would attempt to better delineate specific monetary claims between the MSPA and the Consultant Defendants (Doc 245, pages 17-19) would accomplish nothing since the same precipitating event underlying the allegations in both case involve the alleged problems with the same debris field and same allegedly defective plans. (Doc 293, page 4,5) As set out above, Court has recognized that SIC’s claims against both the MSPA and the Consultant Defendants arise out of the same facts, and seek damages for problems caused by the same debris field and same allegedly defective plans. If SIC prevails against the MSPA, its ability to seek double recovery against these Consultant Defendants in the instant case would likely be Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 9 of 18 10 precluded based upon the prohibition against double recovery from a single injury. (Doc 293, page 6). In an attempt to defend against these points, and only one day before filing its Memorandum in Support of Response in Opposition to Motion to Reinstate Stay (Doc. 303), SIC amended its complaint against the MSPA in an attempt to disguise the identical nature of its recovery between this action and the MSPA action. (See Doc 302-3). To be clear, SIC has not released any claims and has not limited its recovery against the MSPA. Instead, in an effort to be able to discount the points in Thompson’s brief set out above, SIC now only alleges “The MSPA has failed to make payment to SIC on pay applications for work performed and has failed to make payment for SIC’s extra work and delays” and asserts “the MSPA owes and shall pay to SIC all amounts due for work performed by SIC including extra work performed by SIC, all costs and expenses incurred by SIC as a result of breach of contract and the wrongful termination by the MSPA, and all other damages, costs…” (See Doc 302-3, pages 8, 11). The following day, on February 14, 2019, SIC submitted its opposition memorandum to the Court asserting: The issues which will be decided in the SIC/MSPA litigation are separate from the issues which will be decided in this lawsuit against Defendants. The disputes in state court regarding whether the termination provisions of the contract are mutually exclusive, whether the purported termination for cause was wrongful, and whether the MSPA is entitled to its withholding of liquidated damages has no bearing on whether the conduct of the Defendants in this litigation fell below the standard of care. (Doc. 303, page 7). SIC’s assertions the “issues which will be decided in the SIC/MSPA litigation are separate from the issues which will be decided in this lawsuit against Defendants” is without merit. SIC’s allegations against the Consultant Defendants includes the following allegations: 11. SIC, as general contractor, was a third-party beneficiary of the contract(s) to which the Consultant Defendants were parties in connection with the Project, and SIC reasonably Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 10 of 18 11 relied upon the proper engineering, contract administration, and project management services of Consultant Defendants for SIC to perform its work on the Project. (Doc 1, page 4, 5) 20. SIC's damages as asserted herein, including all delay and extra work on the Project, were proximately caused and/or aggravated by the wrongful acts, errors, negligence and omissions of the Consultant Defendants in connection with the design, project management, and construction administration of the Project, including but not limited to, failure to properly manage, coordinate, inspect and administer requests for information and other consultant processes on this Project; failure to properly and timely approve and/or recommend change orders which included warranted requests for design modifications, additional time, and additional compensation; failure to properly provide construction inspection services; errors, omissions, incompleteness and inadequacy of the plans, specifications, and other contract documents; and disruption and/or interference with the performance of SIC and/or its subcontractors. (Doc 1, page 7). Respectfully, there is simply too much in SIC’s Complaint in this case alleging breach of the Consultant’s contractual duties with the MSPA for SIC to credibly argue its breach of contract action against the MSPA is “separate” from its action against the MSPA. This Court noted as such when it stated: “Southern Industrial states that it will seek leave of Court to amend its federal and state court Complaints to state different claims against the Consultant Defendants and the Port Authority. It is unclear how amendment of the Complaints could change this Court’s determination, as both Complaints arose out of the same facts and seeks damages for problems caused by the same debris field and the same allegedly defective plans…” (Doc 284, page 6) Here, as discussed in Thompson’s Motion, because of Thompson and other defendants’ contracts with the MSPA that contain indemnity obligations requiring that these entities indemnify the MSPA under certain circumstances, the denial of this Motion to Stay exposes the Consultant Defendants in this action to double exposure and is therefore extremely prejudicial. Moreover, if SIC prevails in the MSPA state court action, it will have been compensated for its damages, and its ability to seek double recovery against these Consultant Defendants in the instant case would Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 11 of 18 12 likely be precluded based upon the prohibition against double recovery from a single injury. Moreover, if the Consultant Defendants prevail against SIC, but then the MSPA does not prevail, then SIC would have benefited from inconsistent verdicts. Meanwhile, if the MSPA prevails in the state court action, the instant claims will likely be subject to dismissal on the grounds of collateral estoppel and/or res judicata. The consideration of these facts under the Landis criteria support reinstatement of the stay. SIC also asserts “Thompson does not cite to a single authority supporting its position that a stay could be warranted due to a speculative future indemnity claim.” (Doc 303, page 16). Thompson has not cited authority stating that a defendant at risk of multiple potential exposures for the same loss would pose an injustice, but it should be manifestly obvious that such exposure is problematic. At this stage, it is undeniable that such a risk exists, and that risks poses a significant harm to the Consultant Defendants. While Thompson cannot definitely state that it will be subject to an indemnity claim at the conclusion of the SIC/MSPA litigation, the litigation clauses in these contracts exist for a reason. The allegations in paragraphs 11 and 20 of the complaint in this action set out above allege that Thompson and others breached their contractual obligations to the MSPA, and thus the indemnity provisions in these same agreements between the consultants and the MSPA (See Doc. 292-3) may expose Thompson to liability even after this present action is over. What is also true is that our research has not been able to locate a fact pattern in which a plaintiff has created such a legal quagmire with so many competing claims in so many different forums. Further on this point, SIC argues that “there is no possibility that the MSPA will seek indemnity from the Defendants in the future for the same damages that SIC recovers from the Defendants in this action as SIC will not be entitled to a double recovery from the MSPA.” (Doc Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 12 of 18 13 303, page 16) This point directly contradicts SIC’s earlier representation to the Court that this action and the MSPA action are not related, or else why would the possibility of double recovery even be a potential issue? Instead, intentionally or not, SIC seems to acknowledge that the potential exists. SIC’s other argument that this case should proceed because depositions and discovery has been exchanged also misses the mark. SIC has benefitted by forum shopping by availing itself of the federal court action, even though its complaint was filed against the MSPA not quite a year prior. A party should not enjoy the fruits of forum shopping, and the first filed case should be allowed to proceed. Further, what is missing from SIC’s briefs to date is any cogent, good-faith explanation as to why it has chosen such a convoluted litigation strategy in pursuing so many different legal actions in so many different forums. In truth, there is no good-faith explanation, and SIC should not benefit from employing its “divide and confuse” strategy that is so wasteful of judicial resources. II. Alternatively, Thompson is entitled to a stay pursuant to the Colorado River doctrine. Under Colorado River abstention, the Court’s “abstention decision must be based on considerations of ‘[w]ise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.’” African Methodist Episcopal Church v. Lucien, 756 F.3d 788, 797 (5th Cir. 2014). The Court must first determine whether the federal and state court actions are “parallel.” Id. SIC contends that “proceedings are parallel when they involve the same parties and the same claims.” (Doc. 303, p. 10). However, the Fifth Circuit has noted, it may be that there need not be applied in every instance a mincing insistence on precise identity’ of parties and issues. In light of our duty to consider wise judicial administration, conservation of judicial resources, and comprehensive disposition of litigation, we Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 13 of 18 14 look both to the named parties and to the substance of the claims asserted in each proceeding African Methodist Episcopal Church, at 797. The actions here are parallel. While the defendants are different in these proceedings, the theory of recovery, as discussed in Thompson’s Memorandum (Doc. 293), are the same. Next, as noted by SIC, there are six factors that the court must balance on a case-by-case basis to determine whether exceptional circumstances warrant abstention: 1) assumption by either court of jurisdiction over a res, 2) relative inconvenience of the forums, 3) avoidance of piecemeal litigation, 4) the order in which jurisdiction was obtained by the concurrent forums, 5) to what extent federal law provides the rules of decision on the merits, and 6) the adequacy of the state proceedings in protecting the rights of the party invoking federal jurisdiction. African Methodist Episcopal Church, at 798. In this instance, factors(1), (3), (4), and (5) and weigh in favor of abstention while factors (1) and (6) are neutral. The first Colorado River factor, assumption by either court of jurisdiction over a res, is at worst neutral. SIC cites Extreme Energy Servs., LLC v. Gator Energy Operating, LLC, 2011 WL 2747710 (W.D. La. June 24, 2011) for the proposition that because neither federal court has assumed jurisdiction over any res, in this case the factor support exercising federal jurisdiction. However, the facts underpinning this matter and the facts of the cases at issue in Gator Energy are inapposite. There, a state-court action alleged that defendants were liable to Gator and the other working interest owners of an oil well because of negligence and unfair trade practices. The federal-court suit at issue began as a suit on open account, by which a party sought to recover for services provided but for which it was not paid. Negligence and unfair trade practices claims were then added to the federal-court action via counterclaim. In determining that the first Colorado River element weighed against abstention, the Gator Energy Court noted that “there is no evidence that either court has taken control or asserted Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 14 of 18 15 jurisdiction over a piece of property, a vessel, or any other res.” Id. at *4. Here, however, this Court should consider the fact that the parallel SIC v. MSPA matter involves damage claims against a state agency. As such, a res of the State of Mississippi—and its taxpayers—is at issue in the first filed matter over which the Harrison County Circuit Court has taken jurisdiction. The first factor weighs in favor of abstention, or is at worst neutral. Because Fifth Circuit law is clear that when the respective state and federal courts are in the same geographic location, the inconvenience factor weight against abstention, and this Court and the Harrison County Circuit Court are both located in Gulfport, Mississippi, Thompson concedes that this factor weighs against abstention. The third Colorado River factor, avoidance of piecemeal litigation, plainly weighs in favor of abstention. As SIC correctly notes, the Fifth Circuit has made it clear that “the real concern…is the avoidance of piecemeal litigation, and the concomitant danger of inconsistent rulings with respect to a piece of property.” (SIC Resp., Doc 293, page 6) citing Black Sea Inv., Ltd. v. United Heritage Corp., 204 F.3d 647, 650–51 (5th Cir. 2000). The risk of piecemeal litigation in this matter is similar to that in Stewart v. Western Heritage Ins., 438 F.3d 488 (5th Cir.2006), where, the Fifth Circuit found this factor to be in favor of abstention8. As set out in detail in Thompson’s Motion to Reinstate Stay and again supra, the threat of inconsistent rulings between the instant matter and the SIC v. MSPA matter is great. As such, this factor weighs in favor of abstention. 8In Stewart, the Fifth Circuit noted that the “potential, however, does exist for some piecemeal litigating as the state court is the only forum hearing the breach of fiduciary duty claims and claims against Dunn (an individual defendant in that matter). For the remaining issues, a plea of res judicata after the completion of one suit could eliminate the problem of inconsistent judgments. (internal citations omitted). Nonetheless, as the litigation presently exists, the third factor favors abstention.” As in Stewart, the state court here is the only forum hearing the claims against MSPA, which opens the door to piecemeal litigation. Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 15 of 18 16 The fourth factor considered under Colorado River also favors abstention. The Fifth Circuit has noted that where Colorado River identifies this factor as “the order in which jurisdiction was obtained by the concurrent forums,” the test is “how much progress has been made in the two actions.” Stewart, 438 F.3d at 492. While SIC’s claims that progress in the instant matter is ahead of progress made in the SIC v. MSPA litigation, SIC ignores that fact that MSPA counsel has been permitted to attend—and has in fact attended—the depositions previously taken in this matter. Further, SIC fails to note that MSPA counsel has attended depositions taken in the SIC v. P&H arbitration, as well as the final evidentiary hearing held in that matter. Again, SIC has benefitted by forum shopping by availing itself of the federal court action, even though its complaint was filed so many months prior. SIC should not enjoy the fruits of forum shopping, and the first filed case should be allowed to proceed unimpeded by the instant action, which the SIC v. MSPA litigation is now free to do. Given these unusual circumstances, the facially greater progress in discovery conducted in this matter not weigh against abstention. The fifth Colorado River factor, to what extent federal law provides the rules of decision on the merits, weighs in favor of abstention in this extreme case. SIC posits that this factor cannot weigh in favor of abstention as a matter of law. (SIC Resp., Doc 293, page 14). This is an incorrect statement of law. The Fifth Circuit has noted that while the presence of a federal law issue “must always be a major consideration weighing against surrender [of jurisdiction],” the presence of state law issues weighs in favor of abstention “in rare circumstances.” Evanston Ins. Co. v. Jimco, Inc., 844 F.2d 1185, 1193 (5th Cir.1988) (emphasis supplied). While the term “rare circumstances” has not been tightly defined, SIC’s plainly obvious attempts to manipulate different tribunals (including this one) by asserting contradictory sets of facts and by altering theories of Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 16 of 18 17 damages and recovery when it could have simply joined all parties in a single action, necessitates abstention to allow a Mississippi state court to decide the state law questions at issue. The sixth, and final, Colorado River factor, the adequacy of the state proceedings in protecting the rights of the party invoking federal jurisdiction, may only be deemed neutral or against abstention. Black Sea v. United Heritage, 204 F.3d at 651. Despite SIC’s claim that this federal forum is “more suited” to protect its rights than the Circuit Court of Harrison County, SIC has failed to offer any evidence or argument in support of this proposition. Instead, because the MSPA, i.e. the party that actually terminated SIC from the subject Project, is a party to the state court matter (but not the instant matter), that state proceedings are in a superior position to protect SIC’s rights related to is claim on the Project. As such, this factor is, therefore, neutral. For these reasons and for the reasons set forth by the YAJV Defendants’ Reply, Thompson respectfully requests a reinstatement of the pending stay of litigation in this action. Respectfully submitted, this the 21st day of February 2019. /s/ Christopher D. Meyer C. WILLIAM DANIELS, JR. (MSB #104924) CHRISTOPHER D. MEYER (MSB #103467) Counsel for Defendant Thompson Engineering, Inc. OF COUNSEL: BURR & FORMAN LLP P.O. Box 2287 Mobile, AL 36652 Telephone: (251) 344-5151 Facsimile: (251) 344-9696 bdaniels@burr.com and Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 17 of 18 18 BURR & FORMAN LLP The Pinnacle at Jackson Place 190 E. Capitol Street, Suite M-100 Jackson, MS 39201 Telephone: 601-355-3434 Facsimile: 601-355-5150 cmeyer@burr.com CERTIFICATE OF SERVICE I hereby certify that on February 21, 2019, I served a copy of the foregoing on all counsel of record by Notice of Electronic Filing, or, if the party served does not participate in Notice of Electronic Filing, by U.S. First Class Mail, hand delivery, fax, or electronic email. /s/ Christopher D. Meyer OF COUNSEL Case 1:17-cv-00255-LG-JCG Document 305 Filed 02/21/19 Page 18 of 18