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BOWER v. WEISMAN

December 31, 1986

SACHIKO T. BOWER, Plaintiff,
v.
FREDERICK R. WEISMAN, FREDERICK WEISMAN CO., and RARE PROPERTIES, INC., Defendants



The opinion of the court was delivered by: SWEET

SWEET, D.J.

Defendants Frederick R. Weisman ("Weisman"), Frederick Weisman Co. ("FWC") and Rare Properties, Inc. ("Rare Properties") have moved for an order (i) staying this action pending determination of a related case in state court in California, (ii) dismissing for failure to state a claim the First, Second, Third, and Fourth Claims of the Third Amended Complaint as against all defendants pursuant to Fed.R.Civ.P. 12(b)(6); and (iii) dismissing for failure to state a claim the Fifth Claim as against FWC and Rare Properties pursuant to Fed.R.Civ.P. 12(b)(6). Defendant FWC has moved to dismiss the action for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). Although they did not properly notice it, defendant Weisman has also moved to dismiss the Sixth claim for failure to state a claim pursuant to 12(b)(6), and all defendants have moved to dismiss the Third claim against all defendants for failure to plead fraud with particularity pursuant to Fed.R.Civ.P. 9(b), and the First through Fifth claims for failure to amend pleadings as directed by the court. Both defendants and Bower briefed these improperly noticed issues and, thus, non-movant Bower suffers no prejudice from the court's addressing them.

 Bower cross-moved for an order staying the defendants from proceeding in the California state actions until this action has been resolved.

 Parties were heard by counsel in this court on November 14, 1986. For the reasons set forth below, both defendants' and plaintiff's applications for stays are denied, Rare Properties' motion to dismiss for lack of personal jurisdiction is denied, defendants' 12(b)(6) motions to dismiss are denied, defendants 9(b) motions to dismiss are denied, and defendants motion to dismiss for failure to comply with previous order is denied.

 Prior Proceedings and the Present Complaint

 Bower commenced this action in New York State court on November 7, 1985. Defendants removed the case to this court, and since then there has been extensive motion practice and discovery. The court's June 30, 1986 opinion discusses the case's procedural history in more detail Bower v. Weisman, 639 F. Supp. 532 (S.D.N.Y. 1986) [hereinafter cited as Bower I ]. That opinion also outlines at greater length Bower's allegations in this action, which have changed primarily (although not entirely) in form rather than substance.

 For the purpose of the present motion, several procedural occurrences since then have become significant. The California State case filed by Weisman, FWC and Rare Properties after they removed this action from New York State court to this court has continued to progress. In the California case, Weisman and his companies enjoy the status of plaintiff, and Bower, plaintiff in this case, is relegated to the role of defendant. Weisman, who is 74, has invoked the California age preference state, Cal.Civ.Code § 36 (West 1979 & supp. 1981), which puts his trial on a faster track than other California cases. At present that action is scheduled for trial in California no later than January 15, 1987, although some question was raised at argument as to when a case with such a date would actually go out for trial. The California court has declined to stay its action pending resolution of this case.

 The other significant procedural fact is that in accordance with Bower I, Bower has amended her complaint. The Third Amended Complaint contains six claims: 1) a claim for breach of express contract; 2) a claim for fraud; 3) a claim for breach of contract and conversion; 4) a claim for trespass; 5) a claim for the intentional infliction of emotional harm; 6) a claim arising under California law for breach of implied contract. The first five claims are against Weisman, FWC, and Rare Properties; the sixth against Weisman alone.

 I. The Stays

 Bower has charged that Weisman's California lawsuit is a continuation of a pattern of harassment and intimidation that began when the couple's relationship deteriorated and Weisman allegedly used armed guards to evict her from what had until then been her home. She argues that Weisman filed a duplicative suit in a forum 3,000 miles from her home on the East Coast to increase her cost of vindicating her rights, as well as deprive her of the procedural advantage of proceeding as plaintiff in this case (as opposed to cross-complainant in California) and of her rightful choice of forum.

 Accepting that Bower has been put at a significant disadvantage by Weisman's procedural maneuvers, this court is nonetheless foreclosed from staying the ongoing California action. The Anti-Injunction Act, 28 U.S.C. § 2283, provides:

 A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.

 The settled rule is "that an injunction cannot issue to restrain a state action in personam involving the same subject matter from going on at the same time." 17 C. Wright, A. Miller & Cooper, Federal Practice and Procedure § 4225, at 335 (1978). In Atlantic coast Line R.R. Co. v. Brotherhood of Locomotive Engineers, 398 U.S. 281, 295-96, 26 L. Ed. 2d 234, 90 S. Ct. 1739 (1970), the Supreme Court wrote:

 Although the federal court did have jurisdiction of the railroad's complaint based on federal law, the state court also had jurisdiction over the complaint based on state law and the union's asserted federal defense as well . . . In short, the state and federal courts had concurrent jurisdiction in this case, and neither court was free to prevent either party from simultaneously pursuing claims in both courts. Therefore the state court's assumption of jurisdiction over the state law claims and the federal preclusion issue did not hinder the federal court's jurisdiction so as to make an injunction necessary to aid that jurisdiction.

 (citations omitted) (emphasis in original). Commenting on this passage, Wright, Miller and Cooper have concluded:

 It is immaterial that the state court action involves a federal question of federal law, or that findings in it may have a collateral estoppel effect in the federal action, or even that the state action may involve a claim that is a compulsory counterclaim in the federal action. The "necessary in aid of its jurisdiction" exception does not allow a federal court to enjoin state proceedings merely because they involve issues presented in a federal in personam action.

 17 Federal Practice and Procedure § 4225, at 336 (1978) (footnotes omitted). Accordingly, an order will not issue enjoining the California action. *fn1"

 As to defendants' application that the court stay this action, two Supreme Court cases set out the standards for when a federal court should stay litigation before it in deference to a pending state court action. In Colorado River Water Conservation Dis. v. United States, 424 U.S. 800, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976), the court adopted guidelines for determining when a federal court should dismiss a federal action in favor of a state court action, and in Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983), it held that the same standards should be applied where the remedy sought is a stay rather than dismissal, since "a stay is as much a refusal to exercise federal jurisdiction as a dismissal." Id. at 28.

 In Colorado River, the court addressed the circumstances under which a district court may decline to exercise or postpone its exercise of jurisdiction:

 [A]bstention is an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it. Abdication of the obligation to decide cases can be justified under this doctrine only in the exception circumstances where the order to the parties to repair to the State court would clearly serve an important countervailing interest. County of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 188-89, 3 L. Ed. 2d 1163, 79 S. Ct. 1060 (1958).

 424 U.S. at 813. The court then outlines the three general categories of abstention found in its previous decisions: (1) where a "federal constitutional issue . . . might be mooted or presented in a different posture by a state court determination of pertinent state law," id. at 814; (2) where "there have been presented difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar," id.; and (3) where "federal jurisdiction has been invoked for the purpose of restraining state criminal proceedings" or certain state enforcement proceedings, id. at 816.

 Of these three, the only category colorably implicated in this case is the second; Weisman argues that because Bower's sixth claim is grounded in California law, the issue is more appropriately litigated in the California court. The issues in this case, however, fall within legal terrain that California courts have stated out throughly. Here it is not doctrine but facts that might make for a difficult case, as is so often the situation in cases involving oral or implied contracts. Because "difficult questions of state law bearing on policy problems of substantial public import" have not been presented, this case does not merit a stay on such a ground.

 The Supreme Court has recognized that consideration of judicial administration can also sometimes warrant abstention, and hence a stay. Colorado River, 424 U.S. at 817. The Court identified three factors to consider in assessing a stay on the grounds of wise judicial administration: 1) "the inconvenience of the federal forum"; 2) "the desirability avoiding piecemeal litigation"; and 3) "the order in which jurisdiction was obtained." Id. at 818.

 In this case, considerations in the first of the three grounds do not cut either way. it would be more convenient for the defendant to litigate the issues in California, and more convenient for the plaintiff to litigate them here.

 Likewise, the third of the factors does not lead to a stay. The suit in federal court was initiated before the suit in state court, and discovery has progressed to advanced stages in both actions. Although the California age preference statute, Cal.Civ.Code § 36 (West 1979 & supp. 1981), may result in trial in the California action by January 15, 1987, to date no firm trial date has been set. In addition, defendants' present motion has contributed somewhat unnecessarily to the delay in this case. *fn2"

 Therefore, if the court is to stay this action, it would do so under the second factor, "the desirability of avoiding piecemeal litigation." As the Court explained in Moses H. Cone :

 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 dismiss 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.

 460 U.S. at 28 (emphasis added). Since the trespass claims are not a part of the california case, the court may have to resolve that issue even if the action were stayed pending resolution of the California case. it is possible therefore that the parallel state court litigation may, consequently, not be a vehicle for the "complete" resolution of the issues between the parties under Moses H. Cone. Of course, any duplicative or piecemeal litigation that this would cause can belaid squarely at the feet of Weisman, FWC, and Rare Properties; they, after all, ...


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