Foxfield Villa Associates, LLC v. Regnier

918 F. Supp. 2d 1192, 2013 WL 183749, 2013 U.S. Dist. LEXIS 7048
CourtDistrict Court, D. Kansas
DecidedJanuary 17, 2013
DocketCase No. 12-2528-CM
StatusPublished
Cited by7 cases

This text of 918 F. Supp. 2d 1192 (Foxfield Villa Associates, LLC v. Regnier) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Foxfield Villa Associates, LLC v. Regnier, 918 F. Supp. 2d 1192, 2013 WL 183749, 2013 U.S. Dist. LEXIS 7048 (D. Kan. 2013).

Opinion

MEMORANDUM AND ORDER

CARLOS MURGUIA, District Judge.

This matter is before the court on defendant Bank of Blue Valley (“BOBV”)’s motion to dismiss or, in the alternative, to stay the present proceedings against all parties under the Colorado River doctrine (Doc. 21).1 Plaintiffs filed suit against BOBV, BOBVs Board of Directors, BOBVs holding company Blue Valley Ban Corp. (“Ban Corp.”), and members of Ban Corp.’s Board of Directors under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and Kansas common law. For the reasons stated below, BOBV’s motion is granted in part and denied in part and a stay is entered as to all parties.

I. Background

On September 1, 2011, plaintiffs filed a petition against BOBV in the District Court of Johnson County, Kansas, (“state action” or “state-court action”) related to a loan transaction that took place on March 24, 2008. BOBV was the sole defendant in the state action. Plaintiffs filed a motion for leave to file an amended petition on May 17, 2012 and the court set a hearing date on the motion for Monday, August 13, 2012. Importantly, according to BOBV, plaintiffs’ proposed first amended petition originally added all of the parties and claims presently before this court, including the RICO claim. Plaintiffs did not follow through with their proposed amendment including these claims and parties, however. Instead, plaintiffs filed the instant action on Friday, August 10, 2012, and then revised their motion for leave to amend, removing the additional claims and defendants. Plaintiffs’ revised amended state-court petition alleged twenty-three counts against BOBV for breach of contract, promissory estoppel, equitable estoppel, declaratory judgment, unclean hands, fraudulent nondisclosure, fraud, breach of the duty of good faith and fair dealing, breach of fiduciary duty, tortious interference with contract and business expectancy, negligent and malicious breach of contract, unjust enrichment, rescission, equitable subordination, negligent and/or reckless failure to supervise, and civil conspiracy.

BOBV filed a counterclaim against plaintiffs in the state action to collect on the promissory note and personal guaranties executed by the plaintiffs, and to foreclose on the real property securing the transaction at issue. On August 10, 2012, nearly a year after filing the state-court suit, the same plaintiffs filed the instant action against BOBV, BOBV’s Board of Directors, Ban Corp., and Ban Corp.’s Board of Directors. Both the state and federal actions are based on the same alleged fraudulent statements or misrepresentations by defendants in connection with the March 2008 loan transaction. The instant action contains six counts that are similar to the claims brought in the state court case: fraudulent nondisclosure, fraud, breach of fiduciary duty, tortious interference, failure to supervise, and civil conspiracy. In addition, plaintiffs brought one federal claim under RICO.

[1196]*1196Plaintiffs and BOBV hold differing views on the motives behind plaintiffs’ decision to withdraw and revise their motion for leave to amend and instead file the instant action in this court. Plaintiffs state that they elected to assert the RICO claim in federal court because it arises under federal statute, and because this court is supposedly more experienced in handling such a claim. By contrast, BOBV argues that plaintiffs’ decision to bring the lawsuit to a second front was a strategic litigation tactic designed to make the defense of this litigation more cumbersome for BOBV. The court expresses no opinion on the motives behind plaintiffs’ decision; however, the court finds it important to consider this background in obtaining a complete picture of the case history.

Assuming plaintiffs factual allegations as true, Ban Corp. is the holding company for BOBV, and BOBV is a wholly-owned subsidiary of Ban Corp. Defendant Robert Regnier (“Regnier”) is the President, Chief Executive Officer (“CEO”) and Chairman of the Board of Directors of Ban. Corp. Defendant Regnier is also the CEO and Chairman of the Board of Directors of BOBV. Defendant Donald H. Alexander (“Alexander”) was a director of BOBV and Ban Corp. Defendants Harvey S. Bodker (“Bodker”), Suzanne E. Dotson (“Dotson”), Charles S. Hunter (“Hunter”), and Richard L. Bond (“Bond”) were all directors of BOBV. Defendants Michael J. Brown (“Brown”), Robert D. Taylor (“Taylor”), Thomas A. McDonnell (“McDonnell”), and Anne D. St. Peter (“St. Peter”) were all directors of Ban Corp.

II. Legal Standard

As a preliminary matter, the court will briefly address plaintiffs’ argument that BOBV’s motion is not an approved pre-answer motion. Plaintiffs are correct that a motion requesting dismissal or a stay under the Colorado River doctrine does not fall under any enumerated provision of Federal Rule of Civil Procedure 12(b). However, the court exercises its discretion to consider additional pre-answer motions, including a motion to stay or dismiss under the Colorado River doctrine. See Intravascular Research Ltd. v. Endosonics Corp., 994 F.Supp. 564, 567 n. 3 (D.Del.1998) (citing Int’l Ass’n of Entrepreneurs of Am. v. Angoff, 58 F.3d 1266, 1271 (8th Cir.1995)); see also Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494-96, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942) (noting that district courts have discretion to recognize additional pre-answer motions, including motions to stay a federal action when a parallel state action is pending).

Under the Colorado River doctrine, where a federal court would otherwise have concurrent jurisdiction with a state court, the federal court may “dismiss or stay a federal action in deference to pending parallel state court proceedings.” Fox v. Maulding, 16 F.3d 1079, 1080 (10th Cir.1994) {“Fox I”) (citing Colorado River v. U.S., 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976)). The federal court has discretion in such a situation to stay or dismiss the federal suit for reasons of “wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.” Id. at 1081 (quoting Colorado River, 424 U.S. at 817-18, 96 S.Ct. 1236) (quotation and quotation marks omitted). Federal courts have a “virtually unflagging obligation ... to exercise the jurisdiction given them” and thus application of the doctrine is appropriate only in “exceptional” circumstances. Id. (quoting Colorado River, 424 U.S. at 817-18, 96 S.Ct. 1236).

Certain factors under the Colorado River doctrine guide the federal court in determining whether to dismiss or stay a federal action that parallels a state action. First, the federal court must analyze [1197]*1197whether the state court suit and the federal suit are in fact “parallel.” Reality Tech., Inc. v. CounterTrade Prods., Inc., No. 10-cv-01791-PAB-KLM, 2011 WL 2134409, at *2 (D.Colo. May 27, 2011). If this test is met, the court may then apply the nonexhaustive factors delineated in Colorado River, 424 U.S. at 818, 96 S.Ct. 1236, and Moses H. Cone Mem’l Hasp. v. Mercury Constr. Corp.,

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918 F. Supp. 2d 1192, 2013 WL 183749, 2013 U.S. Dist. LEXIS 7048, Counsel Stack Legal Research, https://law.counselstack.com/opinion/foxfield-villa-associates-llc-v-regnier-ksd-2013.