Auto Money North, LLC v. Fentress Brown

• Court: Court of Appeals for the Fourth Circuit
• Decided: June 20, 2023
• Docket: 22-1296
• Status: Unpublished

Opinion

USCA4 Appeal: 22-1296 Doc: 27 Filed: 06/20/2023 Pg: 1 of 4

UNPUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 22-1296

AUTO MONEY NORTH, LLC,

Plaintiff - Appellant,

v.

FENTRESS BROWN,

Defendant - Appellee.

Appeal from the United States District Court for the District of South Carolina, at Rock Hill. J. Michelle Childs, District Judge. (0:21-cv-00393-JMC)

Submitted: May 24, 2023 Decided: June 20, 2023

Before DIAZ and THACKER, Circuit Judges, and MOTZ, Senior Circuit Judge.

Affirmed by unpublished per curiam opinion.

ON BRIEF: Lindsey W. Cooper Jr., M. Linsay Boyce, LAW OFFICES OF L. W. COOPER JR., LLC, Charleston, South Carolina; M. Dawes Cooke, Jr., BARNWELL WHALEY PATTERSON & HELMS, LLC, Charleston, South Carolina, for Appellant. James R. Faucher, Drew Brown, BROWN, FAUCHER, PERALDO & BENSON, PLLC, Greensboro, North Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit. USCA4 Appeal: 22-1296 Doc: 27 Filed: 06/20/2023 Pg: 2 of 4

PER CURIAM:

Auto Money North, LLC, appeals the district court’s order declining to exercise

jurisdiction over Auto Money North’s declaratory judgment action based on the pendency

of a parallel action in state court. On appeal, Auto Money North argues that the court

abused its discretion in determining that consideration of the relevant factors favored

abstention. For the following reasons, we affirm.

We review for an abuse of discretion a district court’s decision declining to exercise

jurisdiction over a declaratory judgment action while a parallel action is pending in state

court. Med. Mut. Ins. Co. of N.C. v. Littaua, 35 F.4th 205, 208 (4th Cir. 2022). The district

court’s discretion to abstain in such a situation is broad. Id. Under the Declaratory

Judgment Act, a district court with proper jurisdiction “may declare the rights and other

legal relations of any interested party seeking such declaration, whether or not further relief

is or could be sought.” 28 U.S.C. § 2201(a). “The Supreme Court has repeatedly

characterized the Declaratory Judgment Act as an enabling Act,” Penn-Am. Ins. Co. v.

Coffey, 368 F.3d 409, 412 (4th Cir. 2004) (internal quotation marks omitted), which

“merely permits federal courts to hear those cases rather than granting litigants a right to

judgment,” Littaua, 35 F.4th at 208 (internal quotation marks omitted).

We have stated that the “two principal criteria guiding the policy in favor of

rendering declaratory judgments are (1) when the judgment will serve a useful purpose in

clarifying and settling the legal relations in issue, and (2) when it will terminate and afford

relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.”

Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 325 (4th Cir. 1937) (internal quotation

2 USCA4 Appeal: 22-1296 Doc: 27 Filed: 06/20/2023 Pg: 3 of 4

marks omitted). We also have recognized that hearing declaratory judgment actions in

federal court while a parallel state case is pending “is ordinarily uneconomical, vexatious,

and risks a gratuitous interference with state court litigation.” Littaua, 35 F.4th at 208

(internal quotation marks omitted). Accordingly, we require consideration of four factors

(the “Nautilus factors”) in the decision whether to hear such a declaratory judgment action:

(1) whether the state has a strong interest in having the issues decided in its courts; (2) whether the state courts could resolve the issues more efficiently than the federal courts; (3) whether the presence of overlapping issues of fact or law might create unnecessary entanglement between the state and federal courts; and (4) whether the federal action is mere procedural fencing, in the sense that the action is merely the product of forum-shopping.

Id. at 208-09 (internal quotation marks omitted); see Nautilus Ins. Co. v. Winchester

Homes, Inc., 15 F.3d 371, 376-77 (4th Cir. 1994), abrogated in part on other grounds by

Wilton v. Seven Falls Co., 515 U.S. 277 (1995).

We have reviewed the record and conclude that the district court did not abuse its

broad discretion in determining that each of the four factors favors abstention. With respect

to the first factor, we agree with the district court that North Carolina’s courts have a strong

interest in determining the applicability of the North Carolina Consumer Finance Act, and

that Auto Money North failed to show a compelling federal interest strong enough to

overcome North Carolina’s significant interest in the application of its laws. Indeed, with

respect to the second factor, the North Carolina state courts can ably apply North Carolina

law. Turning to the third factor, we note that, in the North Carolina action, Appellee

brought suit against Auto Money North alleging that it had engaged in unlawful loan

practices in violation of North Carolina law. In the present case, Auto Money North sought

3 USCA4 Appeal: 22-1296 Doc: 27 Filed: 06/20/2023 Pg: 4 of 4

to litigate whether North Carolina or South Carolina law applied to the loan agreements at

issue, in addition to raising a breach of contract claim. Therefore, we agree with the district

court that litigating this action would necessarily involve determinations of facts and law

at issue in the North Carolina action. Finally, as to the fourth factor, Auto Money North

filed suit immediately after Appellee brought the North Carolina action, and Auto Money

North unsuccessfully attempted to achieve a federal hearing by removing the North

Carolina action to district court. Moreover, Auto Money North has had ample opportunity

to litigate these issues in several cases brought in North Carolina’s state courts.

We therefore conclude that the district court did not abuse its discretion in finding

that the four Nautilus factors favored abstention and dismissing the action. Accordingly,

we affirm the district court's order. We dispense with oral argument because the facts and

legal contentions are adequately presented in the materials before the court and argument

would not aid the decisional process.

AFFIRMED