United States v. Fairway Capital Corp.

United States Court of Appeals
For the First Circuit

No. 06-2023

UNITED STATES OF AMERICA,
Plaintiff, Appellee,

v.

FAIRWAY CAPITAL CORPORATION,
Defendant,

GOVERNMENT OF THE VIRGIN ISLANDS,
Claimant, Appellant,

THE LAW OFFICES OF HOLLAND & KNIGHT, LLP,
as Counsel to Joseph M. DiOrio, Trustee for Arnold Kilberg;
HENRY D. VARA; FRANCIS DIMENTO; JAMES C. CALLAHAN,
Claimants.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Ronald R. Lagueux, U.S. District Judge]

Before

Torruella, Circuit Judge,
Stahl, Senior Circuit Judge,
and Howard, Circuit Judge.

John J. Jacko, III, with whom H. Marc Tepper and Buchanan
Ingersoll & Rooney PC were on brief, for claimant-appellant.
Thomas W. Rigby, Chief Counsel for SBIC Liquidation, Office of
General Counsel, U.S. Small Business Administration, with whom
Stacey P. Nakasian and Duffy Sweeney & Scott, LTD. were on brief,
for appellee.

April 11, 2007
 TORRUELLA, Circuit Judge. This is a case involving a

claim for possession of property and a monetary claim that the

Government of the Virgin Islands ("GVI") made against the Small

Business Administration ("SBA") receivership estate for Fairway

Capital Corporation. The SBA Receiver recommended that GVI's

possessory claim be denied, and that its monetary claim be granted

in part. GVI filed an objection, but the district court affirmed

the Receiver's Report and Recommendation. GVI now appeals the

court's disposition of its claims before the Receiver. After

careful consideration, we affirm.

I. Factual Background

A. Before the Receivership Proceedings

Protestant Cay is an island in the Virgin Islands. In

1964, the Virgin Islands legislature approved Act 1179, which

authorized GVI to negotiate a fifty-year lease for Protestant Cay.

The same year, GVI leased the land on Protestant Cay to Hotel-On-

The-Cay, Inc. for fifty years (the "Ground Lease"). In exchange

for the lease, Hotel-On-The-Cay, Inc. agreed to pay rent to GVI, to

construct a hotel, and to pay GVI a portion of the profits from the

hotel.

In 1969, GVI and Hotel-On-The-Cay, Inc. executed

Amendment No. 1 to the Ground Lease to protect the rights of

lenders who might hold a mortgage over the leasehold interest. No

legislative approval was sought for the amendment.

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 Hotel-On-The-Cay, Inc. assigned its interest in the

Ground Lease to Oliver Plunkett ("Plunkett"). In 1980, Plunkett

filed a declaration in the Virgin Islands stating his intention to

create 2,900 weekly timeshare units to be known as "Hotel On The

Cay Resort" (the "Resort"). Plunkett had a fair bit of success,

selling 1,500 of the units. However, by 1982, 1,400 units remained

unsold, forcing Plunkett to declare bankruptcy. In 1986, the

trustee in Plunkett's bankruptcy conveyed Plunkett's interest in

the Ground Lease to Harborfront Properties, Inc. ("Harborfront")

and Plunkett's interest in the unsold timeshare units to Protestant

Cay, Ltd. ("PCL").

In 1990, Legend Resorts L.P. ("Legend") and TSA

Acquisition, Inc. ("TSA") agreed to acquire the unsold timeshare

units from PCL. In order to finance the acquisition, Legend and

TSA borrowed $1.7 million (the "Legend Loan") from Fairway Capital

Corp. ("Fairway"), a Small Business Investment Company as defined

in 15 U.S.C. § 681. The Legend Loan was secured by a mortgage on

the unsold timeshare units; Fairway was also made a 20% limited

partner in Legend. In addition, Harborfront gave Fairway a

mortgage on Harborfront's interest in the Ground Lease; Harborfront

later assigned the Ground Lease to Fairway in 1991. Thus, as of

1991, Fairway held (a) a mortgage interest in the unsold timeshare

units, (b) a mortgage interest in the Ground Lease, and (c) a 20%

limited partnership interest in Legend. The same year, GVI and

-3-
Legend entered into Amendment No. 2 to the Ground Lease, which

provided in part that the lease would be subject to cancellation by

the lessor if the lessee was in arrears for sixty days after notice

of default. As with Amendment No. 1, this amendment was not

separately approved by the legislature.

In order to service the Legend Loan, Fairway formed a

subsidiary named Participation Services Corporation ("PSC") in

1994. Fairway assigned its interest in the Legend Loan to PSC the

same year. Legend defaulted on the Legend Loan, and PSC foreclosed

on the mortgages, naming Legend, TSA, Harborfront, and GVI in the

foreclosure action. A stipulated judgment of foreclosure was

entered on June 7, 1996. Thus, as of that date, PSC became the

owner of (a) the leasehold interest in the Ground Lease and (b) the

unsold timeshare units.

GVI then sent notice to Legend and Fairway that Legend

was in arrears and that GVI would terminate the Ground Lease.

Sixty days later, GVI filed an eviction action against Legend and

Fairway in the Territorial Court of the Virgin Islands (the

"eviction action"). Neither Legend nor Fairway appeared, and the

Territorial Court entered a default judgment on September 18, 1997.

On December 31, 1997, PSC filed a motion to intervene and to set

aside the default judgment in the eviction action. At the same

time, a similar motion was filed by Hotel On the Cay Timeshare

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Association, Inc. ("HOTC"), an entity incorporated by the owners of

the sold timeshare units. Both motions were granted.

On May 22, 1998, GVI and HOTC entered into a settlement

agreement, which the parties refer to as the "Stipulated

Settlement." The Stipulated Settlement provided that in exchange

for HOTC withdrawing its intervention in the eviction action, GVI

would recognize HOTC as the lessee of the timeshare resort,

including the unsold timeshare units. In addition, the Stipulated

Settlement stated that HOTC would not be deemed a successor to

Legend or Fairway. Finally, the parties agreed in the Stipulated

Settlement that in the event that Legend and Fairway prevailed in

the eviction action and their lease of the resort was reinstated,

GVI would give credit to Legend and Fairway for all of HOTC's rent

payments. After concluding the Stipulated Settlement with HOTC,

GVI continued to prosecute its eviction action against Legend and

Fairway in the Territorial Court, filing a motion for summary

judgment on December 22, 1999.

On January 19, 2000, the SBA filed a complaint against

Fairway in the United States District Court for the District of

Rhode Island. The SBA's complaint asked that Fairway be placed in

receivership because of Fairway's breach of various SBA regulations

and its failure to pay amounts owed to the SBA. On March 13, 2000,

the district court entered an order placing Fairway in receivership

and imposing a stay on all litigation involving Fairway, including

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GVI's eviction action. At this time, the Territorial Court had not

yet ruled on GVI's motion for summary judgment in the eviction

action. Thus, as of March 13, 2000, PSC continued to hold an

interest in the Ground Lease and the unsold timeshare units subject

to the outcome of the stayed eviction proceedings. In March 2002,

the district court ordered these interests transferred to the

Fairway receivership estate.1

B. The Receivership Proceedings

GVI filed two claims with the SBA Receiver: an equitable

claim asking for immediate possession of the unsold timeshare units

and a monetary claim asking for $1,450,760 for unpaid rent, taxes,

unemployment insurance contributions, and associated costs,

interest, and penalties. The Receiver recommended denying the

equitable claim and granting the monetary claim to the extent of

$430,421.84. The Receiver found that the remainder of GVI's

monetary claim was either not supported by evidence that met

requirements set forth in the "Notice to Creditors," or that the

claim covered time during which neither Fairway nor Legend were in

possession of the resort.

1
PSC and its successor Pantheon were found to be instruments and
alter egos of Fairway. See Hotel on the Cay Time-Sharing Ass'n,
Inc. v. Kilberg, 2000 WL 34019282 at *10 (D.R.I. Apr. 6, 2000). As
such, assets owned by PSC and Pantheon were deemed to be assets of
Fairway.

-6-
 At a preliminary hearing on the Receiver's Report, held

on February 16, 2005, the district court stated the procedure for

making objections:

Any objectors should file their materials
within 30 days as the order provides. The
Receiver will have 30 days to respond. And
then when I have that material, I will make a
determination of whether I can decide those
matters on the papers or whether a bench trial
is necessary. And I will reserve decision on
that until I see those papers.

After GVI stated that it would raise the issue of abstention, the

court responded:

I think [GVI] should put forth all of its
contentions in the objection, and then [the
Receiver will] respond to it, and then I'll
decide whether I'm going to have a hearing
separately on that question of abstention or
not.

GVI filed an objection to the Receiver's Report and Recommendation,

suggesting that the court abstain from deciding whether GVI was in

actual possession of the unsold timeshare units, and in the

alternative, arguing that GVI was in actual possession of the

unsold timeshare units, and thus would be entitled to judgment on

its equitable claim. GVI's objection also stated that it was

entitled to an additional $120,000 on its monetary claim, of which

it identified approximately $59,000 as being undisputed.

At a hearing on the objection on July 12, 2005, the court

asked GVI if it wanted to "present any evidence, any testimonial

evidence." GVI responded, "Not in addition to what's already been

-7-
submitted, your Honor, that's correct." GVI then proceeded to

state that only its monetary claim was properly before the court

because the district court lacked jurisdiction over its equitable

claim for possession of the unsold timeshare units. The court

responded, "I thought everything was before the court. I have

jurisdiction over the whole works." GVI then argued that the court

lacked jurisdiction because the court had jurisdiction only over

assets possessed by Fairway, and that Fairway did not possess the

Resort. The court responded, "That's a question I will have to

decide, not the Territorial Court of the Virgin Islands. I have

exclusive jurisdiction of this matter. I've already ruled that.

I denied the lifting of the stay." The court then explained:

I have taken exclusive jurisdiction of this
matter and any property that the Receiver
claims that belongs to Fairway. And you want
to contest that? Fine. That's what I'm here
to hear. . . . I will make a decision as to
whether the receiver owns those 1400 units of
timeshares, not the Territorial Court of the
Virgin Islands. . . . Now, if you say its not
before me today, then we'll put it before me
at some later time, but I considered it before
me today. I considered that I would hear
arguments on those issues, all those issues
today. And I'm prepared to take it under
advisement and write a written opinion about
this Court's jurisdiction, the question of
abstention, the question of title, the
question of forfeiture of the ground lease,
the power of the governor to enter into a
settlement stipulation which transferred title
to the tenants association, all the issues in
this case. I'm prepared to decide them all.

After a brief colloquy, GVI responded:

-8-
 [T]o the extent that you believe jurisdiction
exists over a possession issue and claim, it's
our understanding that we would have the
opportunity to participate in a plenary
hearing on that issue.

The court answered, "I thought it was before me now. The Receiver

denied your equitable claim. So that matter is before me unless

you're waiving it."

Both GVI and the Receiver proceeded to make their

arguments regarding jurisdiction, abstention, and the substantive

question of whether or not GVI was in possession of the unsold

timeshare units. After both parties made their arguments, GVI

stated, "The issue of whether there exists a timeshare interest

that the receiver has title to is clearly one that's entitled to a

plenary hearing, whether it's something that is effectively

resolved in the territorial court or here." The court asked, "What

do you mean by that, plenary hearing?" GVI answered:

Well, [the Receiver] take[s] the position that
they actually have title in this mortgage
leasehold interest, which we say doesn't exist
anymore. So clearly there's a conflict there.
To the extent that they claim this title
exists, that's an issue that would have to be
fully litigated.

The court responded:

I gave you an opportunity to litigate it here
today. You were advised that if you had any
evidence to present on any of these issues,
you present it today.

GVI then stated:

-9-
 My understanding, and this was going to the
last point, so maybe I misunderstood you
earlier. In an earlier proceeding before your
Honor, you indicated that there would be a
full and fair opportunity to address the
concerns of [GVI], you know, to the extent
that evidence needs to be presented at a full
hearing, and I was articulating earlier that
[there are] logistical difficult[ies in
bringing witnesses.] . . . I was under the
impression that once you determined whether
there was jurisdiction here, which you said
you were going to make that determination,
that we would be given the opportunity to have
that hearing at another time.

The court responded, "Well, your impression is wrong. I

set aside two days to take testimony here starting today and

tomorrow. . . . My order from the bench was clear that when I was

going to hear this matter, I would hear any evidence you had to

present on any of these issues." GVI then conceded that, "what

we're talking about here and now, your Honor, are issues of law .

. . . [A]ll of the issues that are before your Honor in any event

really are issues of law that are based upon the record that is

before you, that are contained in our briefs." The court then

stated, "You had an opportunity to present any evidence you wanted

to present today. You didn't choose to do so. So I'm taking this

case under advisement."

On June 8, 2006, the court issued a written decision

affirming its jurisdiction over the unsold timeshare units and

rejecting GVI's arguments for abstention, its equitable claim for

possession, and its request for a higher monetary claim. The court

-10-
then affirmed and accepted the Receiver's Report and Recommendation

with respect to GVI's claims. GVI now appeals.

II. Discussion

GVI makes four claims. First, GVI argues that the

district court should have abstained from deciding whether GVI was

entitled to possession of the unsold timeshare units. Second, GVI

suggests that the district court did not give it sufficient

opportunity to present evidence in favor of its claims. Third, GVI

argues that the district court wrongly concluded that it was not

entitled to possession of the unsold timeshare units. Fourth, GVI

contends that the district court erroneously resolved its monetary

claim. We take each claim in turn.

A. Abstention

GVI argues that the Territorial Court was in a better

position than the district court to hear its equitable claims for

possession and that the district court should have abstained from

hearing the case. GVI argues that two theories of abstention

support this argument: the doctrine of abstention discussed in

Colorado River Water Conservation Dist. v. United States, 424 U.S.

800 (1976), and the doctrine of abstention referenced in Odell v.

H. Batterman Co., 223 F. 292 (2d Cir. 1915).2

2
GVI also proposes a third theory of abstention based on the
holding in Princess Lida of Thurn and Taxis v. Thompson, 305 U.S.
456 (1939). Princess Lida held that "if the two suits are in rem,
or quasi in rem, so that the court, or its officer, has possession
or must have control of the property which is the subject of the

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 1. Colorado River Abstention

In Colorado River, the Supreme Court held that in certain

circumstances, a court may abstain from hearing a case "due to the

presence of a concurrent state proceeding for reasons of wise

judicial administration." 424 U.S. at 818. We have emphasized

that these circumstances are quite limited, and that there is a

"heavy presumption favoring the exercise of jurisdiction." Villa

Marina Yacht Sales, Inc. v. Hatteras Yachts, 915 F.2d 7, 13 (1st

Cir. 1990). We consider eight factors in determining whether such

limited circumstances exist:

(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; (6) the
adequacy of the state forum to protect the
parties' interests; (7) the vexatious or
contrived nature of the federal claim; and (8)
respect for the principles underlying removal
jurisdiction.

KPS & Assocs. v. Designs by FMC, Inc., 318 F.3d 1, 10 (1st Cir.

2003). These factors are not "exhaustive, nor is any one factor

necessarily determinative." Id. Where a district court has

litigation in order to proceed with the cause and grant the relief
sought the jurisdiction of the one court must yield to that of the
other." 305 U.S. at 466. We have treated the issue of a state
court's in rem or quasi in rem jurisdiction as the first factor to
be considered in the Colorado River abstention analysis, and as
such, it is unnecessary to address abstention under Princess Lida
separately. See Bergeron v. Estate of Loeb, 777 F.2d 792, 799 (1st
Cir. 1985) (discussing application of Princess Lida doctrine in
Colorado River context).

-12-
declined to exercise its discretion to abstain from hearing a case

under Colorado River doctrine, we review for abuse of discretion.

Río Grande Cmty. Health Ctr., Inc. v. Rullán, 397 F.3d 56, 68 (1st

Cir. 2005).

As to the first factor, the district court found that in

the eviction action, the Territorial Court did not exercise in rem

(or quasi in rem) jurisdiction over the unsold timeshare units. We

disagree. A quasi in rem action requires that "the court or its

officer have possession or control of the property which is the

subject of the suit in order to proceed with the cause and to grant

the relief sought." Penn Gen. Cas. Co. v. Pennsylvania, 294 U.S.

189, 195 (1935). Here, the Territorial Court must have

jurisdiction over the resort (including the unsold timeshare units)

in order to adjudicate GVI's possessory claim. As such, it is only

the parties' interests in the resort that serve as the basis of the

Territorial Court's jurisdiction. See Virgin Islands v. Legend

Resorts, L.P., 39 V.I. 12, 14 (V.I. Terr. Ct. 1998) (noting that

the subject of GVI's eviction action was "an interest related to

the leasehold"); Schindel v. Pelican Beach Inc., 16 V.I. 237, 250

(V.I. Terr. Ct. 1979) (describing a quasi in rem action as one that

"ha[s] the effect of adjudicating the parties' 'rights to

property'"); see also State Eng'r v. S. Fork Band of the Te-Moak

Tribe of W. Shoshone Indians of Nev., 339 F.3d 804, 811 (9th Cir.

2003) ("But 'it is the [parties'] interest[s] in the property that

-13-
serve[] as the basis of the jurisdiction.' Therefore, the action

is quasi in rem." (quoting Black's Law Dictionary 1245 (6th ed.

1990)). Because GVI brought the eviction action to adjudicate

GVI's rights to the unsold timeshare units, i.e., whether it was

entitled to possession, the Territorial Court had "jurisdiction

over a res." KPS & Assocs., 318 F.3d at 10.

Nevertheless, a state court's quasi in rem jurisdiction

does not make abstention mandatory. See Bergeron v. Estate of

Loeb, 777 F.2d 792, 798 (1st Cir. 1985) ("Considering the Colorado

River factors in turn, we do not think that the Nevada state

district court's assumption of in rem jurisdiction over the trust

res compels dismissal here."). Here, the importance of the

Territorial Court's quasi in rem jurisdiction is diminished by the

fact that 15 U.S.C. § 687c(b) gives a district court "exclusive

jurisdiction" over the property of an SBA receivership estate.

Because the eviction action had not proceeded to final judgment,

the unsold timeshare units remained the property of the Fairway

estate at the time that GVI made its claim.3 While it may be true

3
GVI suggests that it possessed the unsold timeshare units, and
thus that the property was not part of the Fairway estate. This
allegation is at odds with the fact that GVI brought an eviction
action, which is "[a]n action for the recovery of the possession of
the premises." V.I. Code Ann. tit. 28, § 789(b). If GVI had been
in actual possession of the unsold timeshare units, it would not
have needed to bring an action for their recovery. Whether GVI is
ultimately entitled to possession is not determinative of whether
GVI was in actual possession of the unsold timeshare units at the
time that the eviction action was stayed.

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that § 687c(b) gives a district court discretion over whether to

retain jurisdiction over the property of an estate, it was not an

abuse of discretion for the district court to have concluded that

jurisdiction was necessary to disentangle Fairway's assets. See

United States v. Royal Bus. Funds Corp., 29 B.R. 777, 779-80

(S.D.N.Y. 1983) ("[T]he purpose of the federal receivership was to

protect the assets pending the Small Business Administration's

recovery on its investment, as well as to permit discovery of any

past abuses of program funds." (quoting United States v. Norwood

Capital Corp., 273 F. Supp. 236, 240 (D. S.C. 1967))). In addition,

the district court was only determining the validity of GVI's claim

to rights in the unsold timeshare units; as the Supreme Court

stated in Princess Lida, "an action in the federal court to

establish the validity or the amount of a claim constitutes no

interference with a state court's possession or control of a res."

305 U.S. at 467; see also Bergeron, 777 F.2d at 799 (stating that

Colorado River abstention was inappropriate where "claims against

the [res] appear to be unrelated to the administration of the

[res]"); Mattei v. V/O Prodintorg, 321 F.2d 180, 184 (1st Cir.

1963) ("[A] state court may properly adjudicate rights in property

in the possession of a federal court and . . . the same procedure

may be followed by a federal court with respect to property in the

possession of a state court."). Because of the district court's

"exclusive jurisdiction" over the timeshare units, we conclude that

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the Territorial Court's quasi in rem jurisdiction over the units

does not strongly favor abstention.

With respect to the second factor, we agree with the

district court that the federal forum was not inconvenient.

Although GVI initially claimed the need to present witnesses and

evidence, it later renounced that desire when it stated to the

court that "all of the issues that are before your Honor in any

event really are issues of law that are based upon the record that

is before you, that are contained in our briefs."4 Even though

Rhode Island may be physically distant from the Virgin Islands, in

this era of electronic communications, legal arguments travel

quickly. Because there was no need to bring any witnesses or

present any evidence, GVI's claims of inconvenience carry little

weight. See Villa Marina Yacht Sales, 915 F.2d at 15 (noting that

the inconvenient forum factor is "concerned with the physical

proximity of the federal forum to the evidence and witnesses").

The third factor requires the district court to determine

whether there is a risk that "piecemeal litigation" would result if

the case was held in a federal forum. The district court found

that there was little risk of piecemeal litigation. We agree. The

4
Indeed, we can discern no evidentiary disputes here; it appears
that the primary disagreements are over the contractual
construction of the Stipulated Settlement, which is a matter of
law. See U & W Indus. Supply, Inc. v. Martin Marietta Alumina,
Inc., 34 F.3d 180, 185 (3d Cir. 1994) (finding that "[t]he
construction of an unambiguous contract is a matter of law for the
court").

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concern for piecemeal litigation does not arise simply when two

courts might exercise parallel jurisdiction; "in considering

whether the concern for avoiding piecemeal litigation should play

a role in this case, the district court must look beyond the

routine inefficiency that is the inevitable result of parallel

proceedings to determine whether there is some exceptional basis

for requiring the case to proceed entirely in [state] court." Id.

at 16. In Colorado River, the Supreme Court found an exceptional

basis where the federal statute that provided the cause of action

had a "clear federal policy [of] . . . the avoidance of piecemeal

adjudication." 424 U.S. at 819. In the present case, the

jurisdictional statute at issue evinces a clear federal policy of

resolving all disputes over Fairway's property in federal court.

See 15 U.S.C. § 687c(b) (noting that in a SBA receivership

proceeding, a court may "take exclusive jurisdiction of the

licensee or licensees and the assets thereof, wherever located; and

the court shall have jurisdiction in any such proceeding to appoint

a trustee or receiver to hold or administer under the direction of

the court the assets so possessed" (emphasis added)).

In addition, we have found that a risk of piecemeal

litigation arises when "a ruling from the [state court] . . . would

render our opinion merely advisory." Rivera-Feliciano v.

Acevedo-Vilá, 438 F.3d 50, 62 (1st Cir. 2006). Here, there is

little risk of that occurring: regardless of the ruling of the

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Territorial Court, GVI would not be entitled to possession of the

unsold timeshare units. If the Territorial Court was to rule in

the eviction proceeding that Fairway was entitled to possession,

then GVI would not be entitled to possession of the unsold

timeshare units. If the Territorial Court ruled in favor of GVI in

the eviction proceeding, GVI would still not be entitled to

possession of the unsold timeshare units because it has already re-

leased the property to HOTC.5 Thus, a later ruling by the

Territorial Court would have no effect on the district court's

determination that GVI is not entitled to possession of the unsold

timeshare units. Accordingly, there is little risk of piecemeal

litigation.

As for the fourth factor, neither party disputes the fact

that the Territorial Court obtained jurisdiction over the unsold

timeshare units before the district court, and that this factor

weighs in favor of abstention.

With regard to the fifth factor, the district court is

correct that this case does not present one of the "rare

circumstances [where] the presence of state-law issues may weigh in

favor of [the] surrender" of federal jurisdiction. Moses H. Cone

Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 26 (1983). The

5
GVI argues that a third possibility exists: that the Territorial
Court would rule the Stipulated Settlement unenforceable, and thus
HOTC's leasehold interest would revert to GVI. We find this
argument implausible. See infra Part II.C.

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district court found that the only issue involving Virgin Islands

law was the interpretation of the Stipulated Settlement because, as

we explained before, the only way that GVI could obtain possession

of the unsold timeshare units is if (a) it prevailed in the

eviction action and (b) the Stipulated Settlement was considered

unenforceable. The only argument based on Virgin Islands law that

GVI propounds in favor of finding the Stipulated Settlement

unenforceable is that the Stipulated Settlement violates V.I. Code

Ann. tit. 31, § 205(c), which states that no lease of Government

property exceeding one year shall be valid unless approved by the

legislature.6 In light of the statutory policy of giving federal

courts exclusive jurisdiction to resolve disputes over property

involved in a SBA receivership proceeding, 15 U.S.C. § 687c(b), we

conclude that it was within the discretion of the district court to

find that the presence of a single state law issue did not outweigh

the federal interests here.

As to the sixth factor, we do not agree with the district

court that the Territorial Court would be inadequate to protect

federal interests simply because it is not a court constituted

6
The district court was correct to conclude that any remaining
questions of contract construction under Virgin Islands law could
be resolved by reference to the Restatement (Second) of Contracts.
See James v. Zurich-Amer. Ins. Co., 203 F.3d 250, 255 (3d Cir.
2000) ("All of the ALI Restatements of the Law (thus including the
Restatement (Second) of Contracts . . .) have been adopted as
definitive sources of rules of decision by the Virgin Islands
Legislature.").

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under Article III of the Constitution. State and territorial

courts are normally competent to hear cases that involve federal

interests. See, e.g., Gulf Offshore Co. v. Mobil Oil Corp., 453

U.S. 473, 479 (1981) ("[T]he presumption of concurrent jurisdiction

can be rebutted by an explicit statutory directive, by unmistakable

implication from legislative history, or by a clear incompatibility

between state-court jurisdiction and federal interests."). The

statement in 15 U.S.C. § 687c(b) that a federal court "may take

. . . exclusive jurisdiction" over the assets of a SBA receivership

estate is not sufficient to establish an "explicit statutory

directive" to divest state courts of all jurisdiction over matters

involving those assets, nor is there an "unmistakable implication

from legislative history" to that effect. See Gulf Offshore Co.,

453 U.S. at 479. Nor has the SBA Receiver argued that there is

clear incompatibility between state court jurisdiction and federal

interests. See id. Thus, the Territorial Court would not

necessarily have been an inadequate forum to hear GVI's possessory

claim. However, the fact that the Territorial Court might be an

adequate forum does not militate in favor of abstention; we

understand this factor to be important only when it disfavors

abstention. See Bethlehem Contracting Co. v. Lehrer/McGovern,

Inc., 800 F.2d 325, 328 (2d Cir. 1986). In other words, because

"the possibility that the state court proceeding might adequately

protect the interests of the parties is not enough to justify the

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district court's deference to the state action," id., we find that

this factor is neutral.

The seventh factor is the "vexatious or contrived nature

of the federal claim." The district court did not address this

factor directly. However, we do not see any basis for an argument

that the receivership proceedings were "vexatious" or "contrived."

Finally, the eighth factor is "respect for the principles

underlying removal jurisdiction." The district court did not make

any finding as to this factor, but we believe that it does not

favor abstention. In Villa Marina Yacht Sales, we stated that this

factor was relevant if a plaintiff was attempting to evade the

policy in 28 U.S.C. § 1441 that only a defendant be able to remove

a lawsuit from state court to federal court. 915 F.2d at 14. We

do not see how this factor is relevant in the present case, where

GVI has evinced no desire to remove its eviction action from the

Territorial Court to federal court.

Thus, of the eight factors, only one factor favors

abstention: that the Territorial Court obtained jurisdiction before

the district court did. The remaining factors are either neutral

or favor a federal forum. Given that federal courts have a

"virtually unflagging obligation" to exercise jurisdiction,

Colorado River, 424 U.S. at 817, we do not believe that the

district court abused its discretion in determining that this case

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did not present the "exceptional" circumstances required for

abstention.

2. "Odell Abstention"

In Odell v. H. Batterman & Co., the Second Circuit held

that where a federal receiver had taken a tenant into receivership

(because of financial problems), the receivership court should

allow the tenant's landlord to pursue eviction proceedings in a

parallel proceeding in state court. 223 F. at 299. The Second

Circuit held that "[a] landlord has a right, which the court cannot

properly disregard, to have its claim to the possession of [its]

property passed upon and determined, and, if found to be valid, it

has a right to be restored to the immediate possession of the

property." Id. One might understand Odell to stand for the

proposition that where a blanket stay of litigation would prohibit

a party from having its claim of possession adjudicated, a federal

court may exercise its discretion to lift the stay as to that

party. Thus, our review is for abuse of discretion. See, e.g.,

Manhattan Rubber Mfg. Co. v. Lucey Mfg. Co., 5 F.2d 39, 41 (2d Cir.

1925) (finding that Odell applied an abuse of discretion standard);

see also New Eng. Power and Marine, Inc. v. Town of Tyngsborough

(In re Middlesex Power Equip. & Marine, Inc.), 292 F.3d 61, 69 (1st

Cir. 2002) (noting that appellate courts review discretionary

abstention decisions for abuse of discretion).

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 Odell was decided in 1918, and has not been cited since

1952. We need not decide whether it should be resurrected because

there is a clear and significant difference between the facts of

Odell and the situation here. In Odell, the landlord seeking to

regain possession of his property had no forum in which to pursue

a remedy; its state court action was stayed, and the federal court

did not provide an opportunity for resolution of its claims. 223

F. at 299. GVI, however, has a federal forum for the resolution of

its claims: the district court. In fact, GVI has had its

possessory claim adjudicated. Thus, even assuming that we would

recognize a doctrine of Odell abstention, we would find that the

district court did not abuse its discretion in refusing to abstain

from hearing GVI's possessory claim.

B. Plenary Hearing

GVI argues that it was entitled to a plenary hearing on

its equitable and monetary claims, and that the district court did

not provide it with one. The district court treated the Receiver's

Report and Recommendation much like a summary judgment: it

determined that there were no material disputes of fact and

resolved the questions of law. Cf. City Equities Anaheim v.

Lincoln Plaza Dev. Co. (In re City Equities Anaheim), 22 F.3d 954,

958 (9th Cir. 1994) ("Like many litigants, Lincoln sought to end a

suit based on the absence of any disputed material facts. In this

respect, its motion was akin to a motion for summary judgment.").

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Summary judgment is appropriate only when "there is no genuine

issue of material fact." Vives v. Fajardo, 472 F.3d 19, 21 (1st

Cir. 2007). We review a grant of summary judgment de novo. Id.

GVI's claim that it was entitled to a plenary hearing

cannot succeed because it fails to identify any disputed issues of

fact. This was ultimately the same position GVI took in the

district court. The court ordered GVI to put all of its objections

(both factual and legal) to the SBA Receiver's Report and

Recommendation in one single motion. GVI failed to raise any

issues of fact in this motion. At the hearing on GVI's motion,

when asked whether it had any additional evidence, GVI stated "Not

in addition to what's already been submitted." Although GVI later

asked for an evidentiary hearing on its equitable and monetary

claims, after the court denied the request, GVI retreated and

instead stated that "what we're talking about here and now, your

Honor, are issues of law."

In light of GVI's on-the-record position that there were

no factual disputes, and in light of GVI's inability to now point

to evidence that would establish a disputed issue of material fact,

we conclude that the district court did not err in approving the

SBA Receiver's report and denying GVI an evidentiary hearing on its

claims. See United States v. Ianniello, 824 F.2d 203, 207 (2d Cir.

1987) (finding no need for a plenary hearing where the court "gave

defendants ample opportunity to rebut the government's case").

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 C. GVI's Equitable Claim for Possession

GVI argues that the court erred in denying its equitable

claim for possession of the unsold timeshare units. Because there

appear to be no disputed facts, we review the court's decision de

novo. See Villafañe-Neriz v. FDIC, 75 F.3d 727, 730 (1st Cir. 1996)

("As the essential facts are not in dispute, and all that is before

us is a question of law, our review of the district court's

decision is de novo."); Hope Furnace Assocs. v. FDIC, 71 F.3d 39,

42 (1st Cir. 1995).

We begin by assuming, as the district court appears to

have done, that GVI was entitled to terminate the Ground Lease with

Fairway and that this would give GVI possession of the unsold

timeshare units. However, GVI has entered into the Stipulated

Settlement with HOTC, which gives HOTC possession of the units.

Thus, if the Stipulated Settlement is valid and enforceable, HOTC,

and not GVI, would be entitled to equitable possession of the

timeshare units.7 The district court found that the Stipulated

7
GVI also raises an objection to consideration of the Stipulated
Settlement under Federal Rule of Evidence 408. Rule 408 provides
that a settlement agreement may not be used to prove "liability
for, invalidity of, or amount of a claim that was disputed as to
validity or amount." Here, the Stipulated Settlement is not being
used as evidence of liability on the part of GVI. To the contrary,
we have assumed for the purposes of argument that Fairway was
liable and that GVI was entitled to terminate the Ground Lease.
Instead, we use the Stipulated Settlement only to determine whether
GVI has subsequently relet the unsold timeshare units to another
party, in which case GVI would no longer be entitled to possession
of the premises. Thus, the district court's use of the Stipulated
Settlement does not implicate Rule 408 concerns.

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Settlement was valid and enforceable, and thus denied GVI's

equitable claim for possession. We agree that GVI is not entitled

to possession of the unsold timeshare units.

GVI raises two arguments against enforcing the Stipulated

Settlement. First, GVI argues that V.I. Code Ann. tit. 31, § 205

(c) requires that all dispositions of government property,

including each individual lease and subsequent reletting, be

approved by the legislature of the Virgin Islands. Section 205(c)

states, in relevant part:

[N]o sale, exchange, lease or sublease of
government real estate, nor any use permit of
the same for a term exceeding one year
(including the period of any allowable
extensions or renewals) nor sublease of
government real estate for a term exceeding
five years (including the period of any
allowable extensions or renewals) shall be
deemed binding upon the Government of the
United States Virgin Islands, unless and until
(1) such proposed sale or exchange or such
proposed lease or sublease shall have been
submitted to the Legislature, while in regular
or special session, (2) shall have been
approved by the Legislature.

V.I. Code Ann. tit. 31, § 205(c). Although there do not appear to

be any Virgin Islands law decisions that interpret Section 205(c),

we find GVI's proposed interpretation of the law to be highly

improbable. First, neither of the prior amendments to the Ground

Lease appear to have received legislative approval. In addition,

V.I. Code Ann. tit. 3, § 218(a)(5) appears to give the Department

of Property and Procurement of the Virgin Islands the power to

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"manage rental properties owned or controlled by the Government,

except as limited by Federal law, hotels, and housing development

programs or projects; and make inventory and establish forms and

procedures for the sale, rental, or disposition thereof." In

addition, Article 8.03(b) of Amendment No. 2 to the Ground Lease,

whose validity is not in dispute, plainly states that in the event

of a lessee's default, GVI may "[e]ither cancel this Lease by

notice or without canceling this Lease, relet the Lease premises or

any part thereof upon such terms and conditions as shall appear

advisable to [GVI]." Thus, while § 205(c) may require some

authorizing act for the disposition of government real estate, we

do not believe it requires the legislature to engage in the

minutiae of defaults and relettings. Because the legislature

authorized the initial lease of Protestant Cay in Act No. 1178

(April 2, 1964), we conclude that no additional legislative

approval was needed for the Stipulated Settlement, which relet the

premises to HOTC.8

8
To the extent that GVI claims that the Stipulated Settlement
constituted an entirely new lease, we agree with the district court
that, in the absence of contrary indication, contracts should be
construed so as to be legal and enforceable. Restatement (Second)
of Contracts, § 203(a) cmt. c. Thus, in accordance with this canon
of contract construction, we construe the Stipulated Settlement to
be a valid and lawful reletting rather than an invalid and unlawful
separate lease. This conclusion is bolstered by the fact that GVI
calls the Stipulated Settlement "merely an attempt to mitigate
GVI's damages," rather than a new contractual arrangement. See
Appellant's Br. at 59.

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 GVI's second argument is that the SBA Receiver may not

use the Stipulated Settlement to deny GVI's equitable claim because

Fairway was neither a party to the agreement nor an intended

beneficiary of the agreement. Thus, GVI argues, the only party who

may use the Stipulated Settlement to deny GVI's claim is HOTC. The

district court found that "the Receiver was appointed to receive

the claims of all creditors of the Fairway Estate and to recommend

the disposition of those claims." Thus, the district court

concluded that the SBA Receiver could use the Stipulated Settlement

in determining whether GVI was entitled to possession of the unsold

timeshare units.

Section 687c(b) gives a court the power to put a Small

Business Investment Company into receivership; "the receiver is

charged with the responsibility for obtaining possession of the

assets of the corporation prior to its liquidation." Small

Business Administration v. Segal, 383 F. Supp. 198, 203 (D. Conn.

1974). Receivership is "an attempt to provide equitable relief on

the road to some form of full and final relief." 13 Moore's

Federal Practice § 66.03. Thus, "a district court in its

discretionary supervision of an equitable receivership may deny

remedies like rescission and restitution where the equities of the

situation suggest such a denial would be appropriate." United

States v. Vanguard Inv. Co., 6 F.3d 222, 227 (4th Cir. 1993).

Here, the SBA Receiver was charged with collecting, disentangling,

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and liquidating the assets of Fairway. The SBA Receiver collected

the unsold timeshare units because Fairway was "in possession" of

them at the time the receivership proceedings were brought. GVI

then submitted a equitable claim to the Receiver because it

believed that it was entitled to possession of the resort.

However, the SBA Receiver was not limited to merely determining

whether GVI's claim to the unsold timeshare units was superior to

that of Fairway. Rather, the SBA Receiver was entitled to

determine, based on the evidence submitted, whether GVI had any

equitable claim to possession of the unsold timeshare units. While

Fairway may or may not have been entitled to possession of the

unsold timeshare units,9 it is clear from the Stipulated Settlement

that GVI was not entitled to possession of them. Thus, neither the

SBA Receiver nor the district court erred in concluding that, based

on the Stipulated Settlement, GVI's possessory claim to the unsold

timeshare units should be denied.

D. GVI's Monetary Claim

GVI also brought a monetary claim against the Fairway

receivership estate in the amount of $1,450,760. The district

court granted $430,421.84 of the claim, denying the remainder. GVI

argues that at a minimum, it was entitled to $489,552.09. This

9
In this respect, HOTC also submitted a monetary, but not a
possessory, claim to the Receiver. Whether HOTC or the
receivership estate would prevail in a possessory claim is beyond
the scope of this opinion.

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discrepancy appears to be the result of a disagreement as to when

PSC stopped managing the resort and HOTC took over. GVI claims

that PSC stopped managing the resort on May 31, 1998, and thus it

is entitled to rent until this date. The district court, relying

on the findings of fact in Hotel on the Cay Time-Sharing Assoc. v.

Kilberg, 2000 WL 34019282 (D.R.I. 2000), found that PSC stopped

managing the resort on May 31, 1997. GVI seems to suggest that

some of the findings of fact in that case were erroneous. However,

GVI does not point to any evidence that it submitted which would

suggest that Kilberg got the date wrong, or that its date is the

correct date. Simply put, GVI cannot show, based on the record,

what was wrong with the district court's disposition of its

monetary claim. Accordingly, we detect no error.

III. Conclusion

For the reasons stated herein, we affirm the judgment of

the district court.

Affirmed.

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