United States District Court, S.D. New York
May 6, 2005.
GEORGES MOUCHANTAF, d/b/a INTERNATIONAL PRESENTATION OF PERFORMERS, Plaintiff,
INTERNATIONAL MODELING AND TALENT ASSOCIATION, Defendant.
The opinion of the court was delivered by: MIRIAM CEDARBAUM, Senior District Judge
Defendant International Modeling and Talent Association
("IMTA") moves under the Colorado River abstention doctrine to
dismiss the complaint filed by plaintiff Georges Mouchantaf. For
the reasons that follow, IMTA's motion is granted.
On December 28, 2004, Mouchantaf commenced this action in the
Supreme Court of New York County. The complaint alleges that in
1987 Mouchantaf co-founded IMTA with his business partner, Helen
Rogers, for the purpose of organizing annual conventions and
events in which aspiring models and actors are presented to
professionals in the entertainment industry. In 1991, Mouchantaf
sold his interest in IMTA to George Chesteen, the current owner
and chief officer of IMTA, pursuant to a stock purchase
agreement. Under that agreement, Mouchantaf contracted to work
for IMTA for a period of three years at a stipulated salary. At
the end of that period, IMTA was required to pay Mouchantaf 10%
of its gross annual income in excess of $1.7 million. The
agreement also contained a perpetual non-compete provision that
precludes Mouchantaf from ever competing with IMTA.
The complaint also alleges that in early 2004, Mouchantaf
started a new business, International Presentation of Performers
("iPOP"), for the purpose of organizing events to showcase aspiring actors and models to entertainment professionals. When
IMTA learned about iPOP, it contacted Mouchantaf's prospective
clients and informed them that Mouchantaf was in breach of his
non-compete obligation under the 1991 stock purchase agreement.
Mouchantaf commenced an action for (1) a declaration that the
non-compete agreement is unenforceable, (2) an injunction to
prevent IMTA from tortiously interfering with Mouchantaf's
business relations, and (3) damages for IMTA's failure to pay him
all sums due under the stock purchase agreement.
On January 13, 2005, IMTA removed this action to federal court
on diversity grounds, and then moved to dismiss the complaint.
IMTA contends that there is a pending state action involving the
same parties, facts, and legal issues, and that this court should
accordingly abstain under Colorado River Water Conservation
Dist. v. United States, 424 U.S. 800 (1976).
On October 1, 2004, nearly three months before this action was
commenced, IMTA filed a complaint in the Superior Court of
Arizona, Maricopa County, against Mouchantaf and his Arizona
corporation, World Talent, Inc. The complaint alleges that
Mouchantaf violated the non-compete agreement by soliciting
IMTA's customers to participate in events organized by iPOP. IMTA
seeks damages arising from Mouchantaf's breach of the noncompete
agreement, as well as injunctive relief to prevent him from
competing with IMTA. On December 6, 2004, IMTA's action against Mouchantaf and World
Talent was consolidated with another action brought by IMTA
against Mouchantaf's former business partner, Helen Rogers, based
on similar allegations of breach of a non-compete agreement. On
November 15, 2004, World Talent filed an answer, and Mouchantaf
moved to dismiss the action for improper venue or, in the
alternative, to transfer the action to New York. On November 6,
2004, World Talent amended its answer, asserting counterclaims
and seeking (1) a declaration that the non-compete agreement is
unenforceable, and (2) damages for IMTA's tortious interference
with World Talent's business relations and for IMTA's defamatory
statements to third-parties. Mouchantaf's motion to dismiss or
transfer was denied by the Arizona court on January 7, 2005.
Discovery in the Arizona action has been proceeding.
Abstention under Colorado River rests on "considerations of
wise judicial administration, giving regard to conservation of
judicial resources and comprehensive disposition of litigation."
Colorado River, 424 U.S. at 817. Colorado River abstention,
however, is an "extraordinary and narrow exception to a federal
court's duty to exercise its jurisdiction," and applies only "in
exceptional circumstances where the order to the parties to
repair to state court would clearly serve a countervailing interest." FDIC v. Four Star Holding Co., 178 F.3d 97, 101 (2d
To determine whether abstention is appropriate, a federal court
"must weigh six factors, with the balance heavily weighted in
favor of the exercise of jurisdiction." Burnett v. Physician's
Online, Inc., 99 F.3d 72, 76 (2d Cir. 1996) (quoting Moses H.
Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16
(1983)) (internal quotation marks omitted). The six factors are:
"(1) assumption of jurisdiction over a res; (2) inconvenience of
the forum; (3) avoidance of piecemeal litigation; (4) order in
which the actions were filed; (5) the law that provides the rule
of decision; and (6) protection of the federal plaintiff's
rights." FDIC, 178 F.3d at 101; accord Burnett,
99 F.3d at 76. The decision to abstain does not depend "on a mechanical
checklist, but on a careful balancing of the important factors as
they apply in a given case." FDIC, 178 F.3d at 101.
Before considering the factors set forth in Colorado River, a
threshold determination is "whether the state and federal
proceedings are indeed parallel, i.e., whether substantially the
same parties are litigating the same issues in a state forum."
Kshel Realty Corp. v. City of New York, No. 01 Civ. 9039 (LMM),
2003 WL 21146650, *5 (S.D.N.Y. May 16, 2003) (quoting United
Nat'l Ins. Co. v. Waterfront N.Y. Realty, Corp., 948 F. Supp. 263, 271 (S.D.N.Y. 1996)) (internal quotation marks omitted);
accord Great South Bay Medical Care, P.C. v. Allstate
Insurance Co., 204 F. Supp.2d 492, 497 (S.D.N.Y. 2002). IMTA and
Mouchantaf are both parties to the Arizona action. The gravamen
of the two actions is virtually identical. Both actions center on
the enforceability of the non-compete agreement and on IMTA's
allegedly tortious interference with Mouchantaf's business
relations. While the Arizona action involves additional
defendants not parties here, that fact does not render the
proceedings non-parallel. See Great South Bay,
204 F. Supp.2d at 497. The fact that Mouchantaf asserts an additional claim for
sums due under the agreement likewise does not distinguish the
actions for purposes of Colorado River. Mouchantaf has not
argued that he is precluded from asserting this claim, which
involves the same parties and the same contract, in the Arizona
action. See Wiggin & Co. v. Ampton Invs., Inc.,
66 F. Supp.2d 549, 553 (S.D.N.Y. 1999) (Colorado River abstention was
warranted where plaintiff "can assert (as counterclaims) the same
claims raised here" in the parallel state action); see also
Telesco v. Telesco Fuel and Masons' Materials, Inc.,
765 F.2d 356, 362 (2d Cir. 1985); Great South Bay,
204 F. Supp.2d at 497. Consideration of Colorado River abstention in this case is
therefore appropriate. A. Assumption of jurisdiction over res
There is no res or property involved in the dispute between
IMTA and Mouchantaf. The absence of a res is a factor that weighs
slightly in favor of retaining jurisdiction. See Woodford v.
Community Action Agency of Greene County, Inc., 239 F.3d 517,
523 (2d Cir. 2001); Wiggin, 66 F. Supp.2d at 552-53.
B. Inconvenience of the forum
Although Mouchantaf resides in New York, IMTA's principal place
of business is in Arizona. The stock purchase agreement at the
center of the parties' dispute was executed in Arizona while
Mouchantaf was residing there. Mouchantaf's company, World
Talent, a defendant in the Arizona action, is an Arizona
corporation. Although witnesses other than the parties are likely
to be found throughout the country, on balance, the convenience
factor slightly favors Arizona. C. Desirability of avoiding piecemeal litigation
The Supreme Court has stated that "the most important factor in
our decision to approve the dismissal [in Colorado River] was
the `clear federal policy . . . [of] avoidance of piecemeal
adjudication.'" Cone Mem'l Hosp., 460 U.S. at 16 (quoting
Colorado River, 424 U.S. at 819). The predominant concern
expressed in Colorado River and its progeny is "the avoidance
of piecemeal or purely duplicative litigation and the concomitant
waste of judicial resources." Inn Chu Trading Co. v. Sara Lee
Corp., 810 F. Supp. 501, 508 (S.D.N.Y. 1992).
This factor is of paramount importance in this case. Given the
identity of issues in the state and federal actions, the
existence of concurrent proceedings creates "the serious
potential for spawning an unseemly and destructive race to see
which forum can resolve the same issues first, [which would be]
prejudicial, to say the least, to the possibility of reasoned
decision making by either forum." Arkwright-Boston Mfrs. Mut.
Ins. Co. v. City of New York, 762 F.2d 205, 211 (2d Cir. 1985)
(quoting Arizona v. San Carlos Apache Tribe of Arizona,
463 U.S. 545, 567-68 (1983)) (internal quotation marks omitted).
Moreover, the potentiality for inconsistent dispositions of
claims might "breed additional litigation on assertions of claim
and issue preclusion," which would clearly be wasteful. Id. Since the New York and Arizona actions center on identical
issues and are inextricably intertwined, the avoidance of
piecemeal and duplicative litigation is a decisive factor
favoring abstention in this case. See Telesco,
765 F.2d at 362 (affirming abstention in part because "the federal and state
actions are essentially the same"); Radioactive, J.V. v.
Manson, 153 F. Supp.2d 462, 474-75 (S.D.N.Y. 2001) (abstaining
where complaint was duplicative of cross-complaint filed in state
court, raising the same claims and legal issues); Inn Chu
Trading, 810 F. Supp. at 508 (abstaining where the "linchpin of
[plaintiff's] contract claims against both defendants" was "[t]he
same issue . . . at the core of the state action . . . [creating]
a strong likelihood of needless duplication of the state
D. Order in which the actions were filed
In evaluating this factor, "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."
Cone Mem'l Hosp., 460 U.S. at 21; accord Arkwright-Boston,
762 F.2d at 211. The Arizona action was filed first and has
progressed farther. The Arizona court has denied defendants'
motion to dismiss that action. Answers have been filed, asserting
as counterclaims two of the three claims Mouchantaf asserts here. Discovery commenced some time ago, and depositions
have already been taken.
In contrast, no answer has yet been filed in this action, and
discovery has not begun. This factor, therefore, weighs in favor
of abstention. E. The law providing the rule of decision
This diversity action raises issues of state law only.
Nevertheless, because the state law issues are neither novel nor
particularly complex, the absence of federal claims weighs only
slightly in favor of abstention. See De Cisneros v. Younger,
871 F.2d 305, 309 (2d Cir. 1989); Wiggin, 66 F. Supp.2d at 554.
F. Protection of plaintiff's rights in state court
There is no reason to believe, and Mouchantaf has provided
none, that the Arizona court cannot protect Mouchantaf's
procedural and substantive rights. There is likewise no question
that the full range of remedies available to Mouchantaf in this
court would be available in the Arizona action. The final factor
accordingly weighs in favor of abstention. See Wiggin, 66 F.
Supp.2d at 553.
G. Balancing the factors
The balance of factors overwhelmingly favors abstention in this
action. All but the first factor, which only slightly weighs
against abstention, favor abstention. As this Court has observed,
duplicative actions in different courts "decrease the chances of
both settlement and efficient resolution of the underlying
dispute." Radioactive, 153 F. Supp.2d at 477. Permitting this
action to proceed, therefore, would be inconsistent with "wise judicial administration,. . . . [the]
conservation of judicial resources, and [the] comprehensive
disposition of litigation." Colorado River, 424 U.S. at 817.
For the foregoing reasons, this court abstains. Accordingly,
defendant's motion to dismiss is granted.
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