Novello, M.D. v. Randall, M.D.

• Court: District Court, D. New Hampshire
• Decided: July 11, 1996
• Docket: CV-95-372-SD
• Status: Published

Opinion

Novello, M.D. v. Randall, M.D. CV-95-372-SD 07/11/96 P UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIRE

John J. Novello, M.D,

v. Civil No. 95-372-SD

Russell E. Randall, M.D,

O R D E R

In this diversity action, plaintiff John J. Novello, M.D.,

a New Hampshire citizen, seeks to recover damages allegedly

suffered as a result of his acceptance of employment with

defendant Russell E. Randall, M.D., a Vermont citizen, and his

subseguent purchase of defendant's medical practice, Seacoast

Nephrology, P.A. (Seacoast).

Presently before the court is defendant's motion to dismiss

on the ground that there is a pending parallel state court

action, Randall v. Novello, 95-C-874 (Rockingham County Superior

Court, filed July 28, 1995), against Novello filed prior to the

filing of the instant federal claims. Plaintiff objects.

1. Background

Both the state and federal actions stem from Novello's employment by and eventual purchase of Randall's medical

practice, Seacoast. Relying on Randall's alleged

misrepresentations, Novello left his medical practice in

Pennsylvania and joined Randall's practice in Portsmouth, New

Hampshire, in June 1992. Complaint 55 12, 14. As part of

Novello's compensation, Randall granted him options to purchase

Seacoast stock, excercisable in two 25-percent increments (each

egual to 25 shares of stock). I d . 5 12. By December of 1994,

Novello had exercised both options, and had also purchased the

remaining 50-percent interest in Seacoast from Randall for the

agreed-upon sum of $355,741.62. I d . 5 21, 33. The transaction

concerning the purchase of the remaining 50-percent interest is

memorialized in an agreement between the parties dated December

29, 1994 (Agreement), which incorporates payment schedules and a

non-compete clause.

On July 7, 1995, counsel for Novello contacted Randall and

informed him that, after that date, Novello's payments under the

Agreement would be deposited into a segregated account pending

investigation of alleged misrepresentations by Randall during the

negotiations surrounding the Agreement. See Letter dated July 7,

1995 (Exhibit A to Plaintiff's Opposition to Defendant's Motion

to Dismiss).

On Friday, July 28, 1995, Randall filed a writ of summons

2 and declaration in the Rockingham County Superior Court seeking

damages for Novello's alleged breach of the Agreement in failing

to make payments as reguired under the Agreement. See Affidavit

of John J. Ryan, Esg. 5 3 (attached to Defendant's Motion to

Dismiss). Novello was served with the state court summons on

August 4, 1995.

On Monday, July 31, 1995, Novello filed a complaint in this

court, alleging misrepresentation in the contract negotiations,

breach of the Agreement, breach of fiduciary duties, and unfair

and deceptive business practices under New Hampshire Revised

Statutes Annotated (RSA) 358-A:2, :10 (1995). Randall was served

with the federal summons and complaint on August 2, 1995.1

Randall answered the federal court complaint on August 17, 1995,

and counterclaimed for breach of contract and for defamation.

Randall subseguently moved to attach in aid of his counterclaim.

Magistrate Judge Muirhead, after hearing oral argument, denied

the motion to attach on February 12, 1996 (document 15). Randall

filed the instant motion to dismiss on February 28, 1996.

1The court notes that paragraph 3 of Attorney Ryan's affidavit incorrectly asserts that "at a later date [than the date that Novello was served with the state court summons] defendant was served with the Federal Court Complaint." Similarly, the assertion in Randall's motion that the federal complaint was filed by Novello on August 4 is also incorrect.

3 2. Discussion

Randall argues, inter alia, that the state court action was

commenced first. He further argues that continuing with both the

federal and the state cases concurrently would waste both

judicial and attorney resources. In essence, Randall has moved

the court to abstain from exercising its jurisdiction in favor of

allowing the state court action to proceed alone. Although

Randall cites no authority to support such motion, the reasons

for dismissal set forth in his motion most closely resemble the

relevant abstention considerations articulated in Colorado River

Water Conservation Dist. v. United States, 424 U.S. 800 (1976).

Accordingly, Randall's motion will be treated as if it were

brought under the Colorado River doctrine.

In general, where the federal court has jurisdiction, the

presence of a concurrently pending state action is not a bar to a

federal suit arising from the same matter. I d . at 817. Accord

Burns v. Watler, 931 F.2d 140, 146 (1st Cir. 1991) ("'the

pendency of an overlapping state court suit is an insufficient

basis in and of itself to warrant dismissal of a federal suit'")

(guoting Gonzalez v. Cruz, 926 F.2d 1, 3 (1st Cir. 1991)). The

risk of duplicative litigation and inefficient use of resources

is not sufficient to justify the decision to relinguish

jurisdiction over a case. Villa Marina Yacht Sales, Inc. v.

4 Hatteras Yachts, 915 F.2d 1 , 13 (1st Cir. 1990), dismissed on

remand, 762 F. Supp. 1007 (D.P.R.), a f f 'd , 947 F.2d 529 (1st Cir.

1991), cert, denied, 503 U.S. 986 (1992).

However, the Supreme Court recognizes a narrow exception to

the general rule when, for reasons of "wise judicial

administration," a federal court may be justified in surrendering

its jurisdiction over a matter properly before it.2 Colorado

River, supra, 424 U.S. at 818. Nonetheless, the surrender of

jurisdiction should only take place in exceptional circumstances,

as federal courts generally have an "unflagging obligation . . .

to exercise the jurisdiction given them." I d . at 817 (citations

omitted).

The First Circuit, following the Supreme Court's decisions

in Colorado River and Moses H. Cone Memorial Hosp. v. Mercury

Constr. Corp., 460 U.S. 1 (1983), has adopted a six-part test to

2The Colorado River doctrine is distinct from other abstention doctrines, which counsel that a federal court should abstain from exercising its jurisdiction: (1) in cases in which a federal constitutional issue "might be mooted or presented in a different posture by a state court determination of pertinent state law;" (2) where difficult guestions of state law bearing on policy problems "of substantial public import whose importance transcends the result in the case then at bar;" and (3) where "absent bad faith, harassment, or a patently invalid state statute, federal jurisdiction has been invoked for the purpose of restraining state criminal proceedings, state nuisance proceedings antecedent to a criminal prosecution, . . . or collection of state taxes . . . ." Colorado River, supra, 424 U.S. at 813-17 (guotation and citations omitted).

5 determine whether exceptional circumstances justifying a

surrender of federal jurisdiction are present. See, e.g.,

Elmendorf Grafica, Inc. v. D.S. America (East), Inc., 48 F.3d 46,

50 (1st Cir. 1995). The court must consider:

(1) whether either court has assumed jurisdiction over a res; (2) the inconvenience of the federal forum; (3) the desirability of avoiding piecemeal litigation[;] . . . (4) the order in which the forums obtained jurisdiction[;] . . . (5) whether state or federal law controls [;] and (6) the adeguacy of the state forum to protect the parties' rights.

I d .3 The weighing of the foregoing factors does not amount to "a

mechanical checklist," but rather involves a balancing of various

considerations, with the balance weighted heavily towards the

exercise of jurisdiction. Moses H. Cone, supra, 460 U.S. at 16.

At the outset, the court notes that the first two elements

of the test can be summarily dispensed with. First, although

Randall has filed motions to attach Novello's property in both

the state and federal actions, such motion was denied by this

court (Muirhead, M.J.), and the record is silent as to the status

of that motion in the state court. It is thus clear that the

federal court has not obtained jurisdiction over any of the

3This Circuit has also looked to the vexatious or contrived nature of the federal claim. Villa Marina, supra, 915 F.2d at 12, and has given some consideration, when considering dismissals sought under the Colorado River doctrine, to the principles underlying removal jurisdiction, i d .

6 plaintiff's property--real or personal--and it appears that the

state court has not either. See Burns, supra, 931 F.2d at 147.

Therefore, the first factor is not relevant here.

Second, aside from the inefficiency and duplication of

effort involved, there is no peculiar inconvenience to either

party associated with litigating the case in federal court. See,

e.g. i d . (holding that two hour drive from defendant's residence

to the federal courthouse did not represent sufficient

inconvenience to warrant dismissal).

The third element, the desirability of avoiding piecemeal

litigation, reguires a closer analysis. In evaluating the

potential for piecemeal litigation, the court must look beyond

the routine inefficiency associated with concurrently litigating

both cases in separate forums and "determine whether there is

some exceptional basis for reguiring the case to proceed entirely

in [state] court." Villa Marina, supra, 915 F.2d at 16.

Paramount weight is accorded when the piecemeal litigation

results in "special complications" that could severely prejudice

one of the parties. Roias-Hernandez v. Puerto Rico Elec. Power

Auth. , 925 F .2d 492, 496 (1st Cir. 1991).4

4As examples of parallel litigation which could produce "special complications" severely prejudicial to the parties, Roi as-Hernandez cites two insurance coverage cases, one of which noted that complications would result from inconsistent (continued...)

7 In the instant case, there is not a significant risk of

prejudice to either party should the federal case proceed to

judgment. In particular, both parties' claims are grounded in

straightforward New Hampshire law, and it is unlikely that

"harsh, contradictory or unfair conseguences" will result if both

cases proceed. See Burns, supra, 931 F.2d at 146. Here, where

judgment in the one case may be res judicata in the parallel

case, consistency between the actions is likely. See Roj as-

Hernandez, supra, 925 F.2d at 497. Thus, the risk of piecemeal

litigation is not a significant factor counseling for surrender

of jurisdiction.

Randall's central argument concerns the fourth element of

the test, the order in which the forums obtained jurisdiction

(also referred to as the "priority of filing" element). This

element of the test--as are all the other Colorado River/Moses H.

Cone factors--is to be treated in a "pragmatic, flexible manner

with a view to the realities of the case at hand." Moses H.

Cone, supra, 460 U.S. at 21. Priority is measured not merely by

showing which complaint was filed first, but also by looking at

the progress made in the two actions. Id. Thus, as here, where

4 (•••continued) determinations of liability in the federal suit against the tortfeasor and the state suit against the insurer. See Roi as- Hernandez , supra, 925 F.2d at 496-97 (citing, inter alia, Gonzalez, supra, 926 F.2d at 4). the two actions were commenced within one day of each other, and

service of process in both actions was completed within the next

week, the actual order in which the complaints were filed and

jurisdiction obtained is of limited significance.5 Accord Burns,

supra, 931 F.2d at 147 (where "only one day separates the filing

of the complaints in each court" and "both actions [are]

proceeding at a normal pace," the timeliness factor of the

Colorado River/Moses H. Cone analysis is rendered

"inconseguential").

More telling is the progress of the action in the federal

5Under New Hampshire procedure, a civil action is commenced when the writ of summons is signed with the intention of having it served. Desaulnier v. Manchester Sch. Dist., 140 N.H. 336, 338, 667 A.2d 1380, 1381 (1995); see generally 4 R i c h a r d V. W i e b u s c h , N e w H a m p s h i r e P r a c t i c e : C i v i l P r a c t i c e a n d P r o c e d u r e § 42 8 (1984). Jurisdiction attaches at the time of service of the writ of summons upon the defendant. W i e b u s c h , supra, § 429, at 273 (citing Burleigh v. Leon, 83 N.H. 115, 117, 139 A. 184, 187 (1927)). Only after service are the writ of summons, certificate of service, and entry fee filed with the clerk's office. Id. In contrast, the Federal Rules of Civil Procedure provide that a civil action is commenced upon the filing of a complaint with the court. Rule 3, Fed. R. Civ. P. For purposes of determining first-filed status as between two federal suits, the general rule is that jurisdiction relates back to the time of the filing of the complaint. See Hospah Coal Co. v. Chaco Energy C o ., 673 F.2d 1161, 1163 (10th Cir.), cert, denied, 456 U.S. 1007 (1982); Barber-Greene Co. v. Blaw-Knox Co . , 239 F.2d 774, 778 (6th Cir. 1957); American Modern Home Ins. Co. v. Insured Accounts C o ., 704 F. Supp. 128, 129 (S.D. Ohio 1988). Such procedural differences between the state and federal systems make apparent the wisdom of looking to the progress of each of the suits rather than mechanically determining first- filed status. court. The record is silent as to any progress made in the state

court aside from the filing of the writ of summons, declaration,

motion to attach, and Novello's motion to stay the state court

proceedings. On the other hand, in federal court a complaint,

answer, and counterclaim have been filed. Moreover, Randall

availed himself of the federal proceedings when he sought an

attachment against Novello's property in the instant case. Only

now that such motion has been denied does he seek a dismissal.

In light of the temporal proximity of the parties'

respective filing of the writ of summons in the superior court

and the complaint in this federal court, the significant federal

court proceedings to date, and the silence of the record as to

Randall's progress in state court, the fourth element of the test

comes down sguarely on the side of retaining federal

jurisdiction.

The fifth element of the Colorado River/Moses H. Cone test

involves a determination of whether state or federal law will

control the decision. Although "'the presence of federal-law

issues must always be a major consideration weighing against

surrender,' . . . only in 'rare circumstances [will] the presence

of state-law issues weigh in favor of that surrender,'" by the

federal court. Roi as-Hernandez, supra, 925 F.2d at 496 (guoting

Moses H. Cone, supra, 460 U.S. at 26) (alteration in Roi as-

10 Hernandez). In this case, the law of New Hampshire governs both

actions. However, the mere fact that both cases are grounded in

New Hampshire law does not constitute an exceptional circumstance

justifying surrender of jurisdiction. Id.

The Colorado River/Moses H.Cone test's final element

concerns the adeguacy of the state court in protecting the rights

of the parties. Insofar as this factor becomes relevant only

where there is a guestion as to the adeguacy of the state court

to adjudicate the claim, Roj as-Hernandez, supra, 925 F.2d at 496,

and the New Hampshire Superior Court is undoubtedly capable of

adjudicating a contract suit arising under New Hampshire law,

consideration of this factor does not counsel for the surrender

Outside of the six enumerated Colorado River/Moses H. Cone

factors, perhaps the penultimate consideration for the court is

whether the federal claims are contrived or vexatious. See Moses

H. Cone, supra, 460 U.S. at 17 n.20 (finding "considerable merit"

in looking to the motivation for the filing of the second suit);

Villa Marina, supra, 915 F.2d at 15. Nothing in the record

suggests that the filing of the federal case by Novello one

business day after the filing of the state court suit by Randall

was done as a "defensive tactical maneuver" or under contrived

grounds. E.g., Villa Marina, supra, 915 F.2d at 15 (federal

11 claim filed in reaction to an adverse ruling in state court

action would be defensive tactical maneuver). Such factors thus

do not weigh in favor of dismissal in this case.

Finally, courts have looked to the principles of removal

jurisdiction for guidance in determining whether the surrender of

jurisdiction by a district court is appropriate. See Villa

Marina, supra, 915 F.2d at 14 (citing American Int'l Underwriters

v. Continental Ins. Co., 843 F.2d 1253, 1260 (9th Cir. 1988)

(holding that plaintiffs who have filed a complaint in state

court should not be allowed to refile their complaint in federal

court because refiling would effectively permit the plaintiff to

remove his own action to a federal forum in contravention of 28

U.S.C. § 1441)).6 Removal of the state court case to federal

court was not an option available to Novello, as 28 U.S.C. §

1 4 4 1 (b) bars a defendant from removing a state court action filed

6The court notes, however, that both Villa Marina and American Int'l Underwriters invoke removal considerations only in the face of duplicative claims filed by the same plaintiff, and are legally and factually inapposite to the instant case, as the courts therein were interested in discouraging forum shopping. In contrast, in the context where a state court defendant subseguently files a federal action, invocation of removal considerations would only muddy the waters of the Colorado River analysis, and could potentially lead to the denial of a state defendant's right to a federal forum for his claims. See generally 1A J a m e s W m . M o o r e , e t . a l . , M o o r e 's F e d e r a l P r a c t i c e , 5 0.203 [4] (2d ed. 1995) .

12 against him in his home state.7 However, the fact that removal

was not available to Novello should not act as a bar to his

claims which, though duplicative, are properly before the federal

court based on the diverse citizenship of the parties.

In conclusion, after balancing the circumstances of this

case under the test established by Colorado River and its progeny

in the First Circuit, with the balance weighted heavily in favor

of retaining jurisdiction, there appear to be no exceptional

circumstances which would justify defendant's reguest that this

court surrender its jurisdiction and dismiss the case.

Accordingly, defendant's motion to dismiss must be and herewith

is denied.

3. Conclusion

_____ For the reasons set forth herein, defendant's motion to

7Such statute provides:

Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

28 U.S.C. § 14 4 1 (b).

13 dismiss (document 16) is denied.

SO ORDERED.

Shane Devine, Senior Judge United States District Court

July 11, 1996

cc: Karen M. O'Toole, Esq. Dennis T. Ducharme, Esq. John J. Ryan, Esq.