Gannett v. Clark

Filed: April 30, 2002

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 01-2475
(CA-01-1447-A)

Gannett Company, Incorporated,

Plaintiff - Appellant,

versus

The Clark Construction Group, Incorporated,

Defendant - Appellee.

O R D E R

The court amends its opinion filed April 18, 2002, as follows:

On page 13, footnote 9, line 1 -- the phrase “jurisdiction or

res factor” is corrected to read “jurisdiction over res factor.”

For the Court - By Direction

/s/ Patricia S. Connor
Clerk
 PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

GANNETT COMPANY, INCORPORATED,
Plaintiff-Appellant,

v. No. 01-2475

THE CLARK CONSTRUCTION GROUP,
INCORPORATED,
Defendant-Appellee.

Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
James C. Cacheris, Senior District Judge.
(CA-01-1447-A)

Argued: February 28, 2002

Decided: April 18, 2002

Before WILLIAMS and KING, Circuit Judges, and
Andre M. DAVIS, United States District Judge for the
District of Maryland, sitting by designation.

____________________________________________________________

Reversed and remanded by published opinion. Judge Williams
wrote
the opinion, in which Judge King and Judge Davis joined.

____________________________________________________________

COUNSEL

ARGUED: Philip John Harvey, VENABLE, BAETJER & HOW-
ARD, L.L.P., McLean, Virginia, for Appellant. Robert Milton
Moore,
MOORE & LEE, L.L.P., McLean, Virginia, for Appellee. ON
BRIEF: David G. Lane, Christine M. McAnney, VENABLE, BAET-
JER & HOWARD, L.L.P., McLean, Virginia, for Appellant.
Charlie
C.H. Lee, Richard O. Wolf, MOORE & LEE, L.L.P., McLean, Vir-
ginia; E. Mabry Rogers, Walter J. Sears, Arlan D. Lewis,
BRADLEY,
ARANT, ROSE & WHITE, L.L.P., Birmingham, Alabama, for
Appellee.

____________________________________________________________

OPINION

WILLIAMS, Circuit Judge:

Gannett Company, Inc. (Gannett) filed this diversity
jurisdiction
action against Clark Construction Group, Inc. (Clark) in the
United
States District Court for the Eastern District of Virginia,
alleging
breach of contract. The district court abstained from
exercising juris-
diction, applying the doctrine of Colorado River Water
Consv. Dist.
v. United States, 424 U.S. 800, 813 (1976), which allows a
district
court to abstain where parallel litigation exists in federal
and state
court and exceptional circumstances warrant abstention.1
Upon
reviewing the district court's decision to abstain for abuse
of discre-
tion, we conclude that the district court misapplied several
of the Col-
orado River factors and that exceptional circumstances do
not justify
abstention in this case. Accordingly, we reverse and remand.

I.

Clark entered into a contract with Gannett to build
Gannett's new
USA Today headquarters complex in McLean, Virginia. Under
the
terms of the contract, Clark was required to complete the
project sub-
stantially by June 17, 2001, and to complete the project
finally by
August 8, 2001. Clark claims that it met these deadlines and
that Gan-
nett breached the contract by failing to pay Clark for its
work. Gan-
nett, by contrast, argues that Clark did not meet the
deadlines and that
Gannett has suffered damages as a result of Clark's failure
to com-
plete the work in a timely fashion.
____________________________________________________________
1
"Although not technically a doctrine of abstention, the
Colorado
River doctrine has become known as such. . . ." Al-Abood v. El-
Shamari,
217 F.3d 225, 232 n.3 (4th Cir. 2000).

2
 In August 2001, Clark submitted to Gannett a request for
payment
for the work it had completed. The request included claims
by eleven
of Clark's subcontractors. Clark and Gannett were unable
to reach an
agreement as to the parties' respective obligations under
the contract,
and three separate proceedings followed.

On September 19, 2001, Gannett filed this federal action
pursuant
to diversity jurisdiction, alleging that Clark breached the
contract (the
Federal Contract Action). The next day, Clark filed a breach
of con-
tract action against Gannett in the Circuit Court for Fairfax
County,
Virginia (the State Contract Action). On October 10, 2001,
Clark filed
a bill of complaint against Gannett in the chancery division
of the Cir-
cuit Court for Fairfax County, Virginia to enforce an
earlier-obtained
mechanic's lien on the property underlying the contract
dispute, the
USA Today headquarters complex (the State Lien Action).

On October 29, 2001, Gannett filed motions in the State
Contract
Action and the State Lien Action to abate, or, in the
alternative, to
stay those actions pending resolution of Gannett's breach of
contract
claim in the Federal Contract Action. Two days later, Clark
filed a
motion in the Federal Contract Action to dismiss or, in the
alternative,
to stay, arguing that the district court should abstain from
exercising
jurisdiction pursuant to Colorado River. The district court
denied the
motion to dismiss2 but granted the motion to stay.

Gannett filed a timely notice of appeal to this court.
Thereafter,
Clark amended its Bill of Complaint in the State Lien Action
and
joined as respondent-defendants in that action eleven
subcontractors
who had filed mechanic's liens against Gannett's property.

II.

We begin with the premise that "[a]bstention from the
exercise of
federal jurisdiction is the exception, not the rule."
Colorado River,
424 U.S. at 813. As has been reiterated time and again, the
federal
courts have a "virtually unflagging obligation . . . to
exercise the juris-
diction given them." Id. at 817; Quackenbush v. Allstate Ins.
Co., 517
____________________________________________________________
2
Clark has not cross-appealed the district court's denial
of its motion
to dismiss.

3
U.S. 706, 716 (1996); Richmond, Fredericksburg & Potomac
R.R. v.
Forst, 4 F.3d 244, 251 (4th Cir. 1993); Spann v. Martin, 963
F.2d
663, 673 (4th Cir. 1992).

For a federal court to abstain under the Colorado River
doctrine,
two conditions must be satisfied. As a threshold
requirement, there
must be parallel proceedings in state and federal court.
Colorado
River, 424 U.S. at 813. Second, "exceptional circumstances"
warrant-
ing abstention must exist. Id. Without establishing a rigid
test, the
Supreme Court has recognized several factors that are
relevant in
determining whether a particular case presents such
exceptional cir-
cumstances: (1) jurisdiction over the property; (2)
inconvenience of
the federal forum; (3) the desirability of avoiding piecemeal
litigation;
(4) the order in which jurisdiction was obtained; (5) whether
federal
law is implicated; and (6) whether the state court
proceedings are ade-
quate to protect the parties' rights. Id. at 818; Moses H.
Cone Mem'l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 23, 26 (1983).

We review a district court's decision to abstain under
Colorado
River for abuse of discretion. See New Beckley Mining Corp.
v. Int'l
Union, UMWA, 946 F.2d 1072, 1074 (4th Cir. 1991). "Of course,
an
error of law by a district court is by definition an abuse of
discretion."
Hunter v. Earthgrains Co. Bakery, 281 F.3d 144, 150 (4th Cir.
2002).
"Further, even if a district court applies the correct legal
principles to
adequately supported facts," a reviewing court is obliged to
reverse
if the "court has a definite and firm conviction that the
court below
committed a clear error of judgment in the conclusion it
reached upon
a weighing of the relevant factors." Westberry v. Gislaved
Gummi AB,
178 F.3d 257, 261 (4th Cir. 1999) (citation omitted).
Accordingly, we
will reverse the district court for abuse of discretion if
the district
court fails to "exercise its discretion in accordance with
the Colorado
River `exceptional circumstances test.'" New Beckley, 946
F.2d at
1074 (citation omitted); see also Moses H. Cone, 460 U.S. at 19
("Yet
to say that the district court has discretion is not to say
that its deci-
sion is unreviewable; such discretion must be exercised
under . . .
Colorado River's exceptional-circumstances test.").
4
 A.

Gannett concedes that the district court correctly
determined that
the State Contract Action is parallel with the Federal
Contract Action
but argues that the State Lien Action is not parallel with
the Federal
Contract Action. The district court did not make any finding
as to
whether the State Lien Action and the Federal Contract
Action were
parallel.3 Thus, we must determine de novo whether the
State Lien
____________________________________________________________
3
Clark argues that the district court implicitly held
that the State Lien
Action is parallel to the Federal Contract Action and that
this finding was
not an abuse of discretion. For support, Clark notes that
the district
court's order reflects that the district court "fully
understood that there
were three pending actions." (Appellee's Br. at 14.) While it
is true that
the district court clearly and fully understood that there
were three pend-
ing actions, this fact cuts against Clark's position because,
while the dis-
trict court noted all three actions, it discussed only two of
them. The
court defined the "Federal Action" as the federal breach of
contract
action, the "State Action" as the state breach of contract
action, and the
mechanic's lien action as the "State Lien Action." (J.A. at
413-14.) When
describing the issue presented by Clark, the district court
stated that
Clark "claims that the State Action presents almost
identical facts and
claims as the Federal Action." (J.A. at 417.) The district
court then stated
that Clark "asserts that the Court should dismiss or stay
the instant action
pending the outcome of the State Action." (J.A. at 417-18.)
The district
court ruled that the "Federal Action and the State Action
are duplicative."
(J.A. at 420.) No mention is made regarding whether the
"State Lien
Action" is duplicative of the other proceedings, and no
indication is
given that the district court was considering the question
of whether the
"State Lien Action" was duplicative of the "Federal Action."
Thus, it is
apparent that the district court failed to determine
whether the State Lien
Action is parallel to the Federal Contract Action.

Clark also argues that Gannett is judicially estopped
from asserting
that the State Lien Action is not parallel to the Federal
Contract Action,
pointing to prior representations by Gannett in the state
proceedings in
which Gannett stated that the State Lien Action was
parallel to the Fed-
eral Contract Action. Even assuming that the question of
whether pro-
ceedings are parallel is subject to principles of estoppel or
waiver, Clark
has failed to demonstrate that any representations by
Gannett regarding
the parallel nature of the proceedings amounted to
intentional deception
for the purpose of gaining an unfair advantage. John S. Clark
Co. v. Fag-
gert & Frieden, P.C., 65 F.3d 26, 29 (4th Cir. 1995) ("The
`determina-
tive factor' in the application of judicial estoppel is
whether the party
who is alleged to be estopped `intentionally misled the
court to gain
unfair advantage.'" (quoting Tenneco Chems., Inc. v. William
Burnett &
Co., 691 F.2d 658, 665 (4th Cir. 1982)).

5
Action is parallel with the Federal Contract Action. See,
e.g., Village
of Westfield, N.Y. v. Welch's, 170 F.3d 116, 121-22 (2d Cir.
1999)
(recognizing that the appellate court has the authority to
apply Colo-
rado River test where the district court fails to do so in
first instance).

"Suits are parallel if substantially the same parties
litigate substan-
tially the same issues in different forums." New Beckley,
946 F.2d at
1073. Clark and Gannett are both parties to the Federal
Contract
Action and the State Lien Action. The Federal Contract
Action and
the State Lien Action, however, involve different issues
with different
requisites of proof. For example, the State Lien Action
requires the
equity court to ascertain the validity and amount of the
underlying
debt, see, e.g., York Fed. Savings & Loan v. Hazel, 506 S.E.2d
315,
317 (Va. 1998), which involves demonstrating that a contract
exists
for the work performed. In this case, however, enforcement
of the
mechanic's lien is not dependent on questions of breach of
contract,
which will be resolved only through the separate breach of
contract
action, in that Clark and Gannett have not asserted their
respective
breach of contract claims in the State Lien Action.4 Cain v.
Rea, 166
____________________________________________________________
4
We note that it appears that the equity court in the
State Lien Action
possesses the power to resolve the breach of contract
issues, in which
case the State Lien Action arguably would be parallel to
the Federal Con-
tract Action, but neither Clark nor Gannett has sought such
relief in the
State Lien Action. Virginia recognizes a distinction between
actions in
equity and actions at law, see generally Meade v. Meade, 69
S.E. 330,
332 (Va. 1910) (discussing the division of law and equity), but
the equity
court may assume jurisdiction over all legal issues
necessary to resolve
a dispute. Johnston & Grommett Bros. v. Bunn & Monteiro, 62
S.E. 341,
342 (Va. 1908) ("[I]f it appears that the complainants are
entitled to
recover . . ., the court can proceed to give judgment in their
favor for the
amount due, although they may have failed to establish
their right to a
lien; it being well settled that, when a court of equity has
once acquired
jurisdiction of a cause upon equitable grounds, it may go on
to a com-
plete adjudication, even to the extent of establishing legal
rights and
granting legal remedies which would otherwise be beyond
the scope of
its authority."); Nagle v. Newton, 63 Va. (22 Gratt.) 814, 825
(1872)
("[I]t is competent for the court having possessed itself of
the subject by
proper exercise of its [equity] jurisdiction, to do complete
justice
between the parties; and as ancillary to that purpose, may
ascertain dam-
ages sustained by the defendant . . . .").

6
S.E. 478, 480 (Va. 1932) ("[The mechanic's lien action] does not
arise out of, nor is it the essence of the contract for labor,
nor depen-
dent on the motives which suggest its being enforced."); Va.
Code
Ann. § 43-3(a) (Michie 1999) (providing that all persons
"performing
labor or furnishing materials" for the "construction,
removal, repair or
improvement" of any building may perfect a mechanic's lien);
Va.
Code Ann. § 43-22 (Michie 1999) (providing that a lien is
enforced
by filing a bill with an "itemized statement of his account,
showing
the amount and character of the work done or materials
furnished, the
prices charged therefor, the payments made, if any, the
balance due,
and the time from which interest is claimed thereon, the
correctness
of which account shall be verified by the affidavit of
himself, or his
agent").

Moreover, the actions seek different remedies. In the
State Lien
Action, Clark seeks a lien and foreclosure on the property,
whereas
in the Federal Contract Action, Gannett seeks compensatory
damages
for the alleged breach of contract. Clark concedes that it
would not
be fully compensated for its asserted damages by recovery
in the State
Lien Action; thus, Clark has asserted its own breach of
contract claim
against Gannett in the State Contract Action.5 (Appellee's
Br. at 4)
("Clark's mechanic's lien action against Gannett does not
include all
amounts owed by Gannett to Clark."). Because the issues and
the
sought-after relief in the Federal Contract Action and the
State Lien
Action are not substantially the same, the actions are not
parallel pro-
ceedings. See Al-Abood v. El-Shamari, 217 F.3d 225, 232-33
(4th Cir.
2000) (holding that claims were not parallel for Colorado
River pur-
poses where they were predicated on common underlying
facts but
involved separate issues); New Beckley, 946 F.2d at 1074 ("A
differ-
ence in remedies is a factor counseling denial of a motion to
abstain."); McLaughlin v. United Va. Bank, 955 F.2d 930, 935
(4th
Cir. 1992) (reversing abstention on the basis that the
federal and state
actions were not parallel where, "[i]n addition to party
differences, it
would appear that a breach of contract claim pending in the
federal
____________________________________________________________
5
In the State Lien Action, Clark seeks recovery of
approximately $11.2 million, whereas in the State Contract
Action, Clark seeks recovery
of approximately $26.7 million. (Appellee's Br. at 28.) Clark
has not
asserted its breach of contract claim against Gannett in the
Federal Con-
tract Action.

7
case is not pending, nor has it ever been pending, in the state
court
proceeding").

B.

As noted above, the Federal Contract Action and the
State Contract
Action are parallel proceedings. Nevertheless, our inquiry
is not at an
end. See McLaughlin, 955 F.2d at 934 ("Despite what may
appear to
result in a duplication of judicial resources, the rule is
well recognized
that the pendency of an action in the state court is no bar
to proceed-
ings concerning the same matter in the Federal court having
jurisdic-
tion." (internal quotation marks omitted)). Rather, even when
a
federal action is parallel to a state action, only
"exceptional circum-
stances" justify a federal court in avoiding its "virtually
unflagging
obligation . . . to exercise the jurisdiction given [it]."
Colorado River,
424 U.S. at 817. Accordingly, we next must consider whether
the dis-
trict court abused its discretion in finding that
"exceptional circum-
stances" warranted abstention.

The district court's determination that exceptional
circumstances
warranted abstention was premised primarily upon four
factors: the
possibility of piecemeal litigation that would result from
retaining
jurisdiction, the fact that the claim solely involved Virginia
law, the
fact that the circuit court was able to provide adequate
relief, and the
circuit court's jurisdiction over the property. We first
address each of
these factors and then turn to Gannett's contentions
regarding the
remaining Colorado River factors. In conducting this review,
we note
that "[t]he decision whether to dismiss a federal action
because of par-
allel state-court litigation does not rest on a mechanical
checklist, but
on a careful balancing of the important factors as they
apply in a
given case, with the balance heavily weighted in favor of
the exercise
of jurisdiction." Moses H. Cone, 460 U.S. at 16.

1. Piecemeal Litigation

The district court found that the danger of piecemeal
litigation was
the "most significant[ ]" factor warranting abstention.
"Piecemeal liti-
gation occurs when different tribunals consider the same
issue,
thereby duplicating efforts and possibly reaching different
results."
American Int'l Underwriters, Inc. v. Continental Ins. Co., 843
F.2d

8
1253, 1258 (9th Cir. 1988). The threat of inconsistent
results and the
judicial inefficiency inherent in parallel breach of
contract litigation,
however, are not enough to warrant abstention. See Gordon
v. Luksch,
887 F.2d 496, 497-98 (4th Cir. 1989) ("Only in the most
extraordi-
nary circumstances . . . may federal courts abstain from
exercising
jurisdiction in order to avoid piecemeal litigation. It
follows that
because of the virtually unflagging obligation of the
federal courts to
exercise the jurisdiction given them, pendency of an action
in state
court by itself does not bar proceedings in federal court.")
(internal
citations and quotation marks omitted); Villa Marina Yacht
Sales, Inc.
v. Hatteras Yachts, 915 F.2d 7, 16 (1st Cir. 1990) ("[Colorado
River
abstention] is not warranted simply because related issues
otherwise
would be decided by different courts, or even because two
courts oth-
erwise would be deciding the same issues. As noted above,
something
more than a concern for judicial efficiency must animate a
federal
court's decision to give up jurisdiction."). Instead, for
abstention to be
appropriate, retention of jurisdiction must create the
possibility of
inefficiencies and inconsistent results beyond those
inherent in paral-
lel litigation, or the litigation must be particularly
ill-suited for resolu-
tion in duplicate forums. See, e.g., Moses H. Cone, 460 U.S. at
16
(noting that "[b]y far the most important factor in our
decision to
approve the dismissal there was the clear federal policy .
. . [of]
avoidance of piecemeal adjudication of water rights in a
river system,
as evinced in the McCarran Amendment." (internal citations
and quo-
tation marks omitted)); Luksch, 887 F.2d at 497-98; Villa
Marina, 915
F.2d at 13, 16.

Clark argues that the district court properly abstained
because inef-
ficiencies would result from the district court's retention
of jurisdic-
tion. Clark has not demonstrated, however, that retention
of
jurisdiction exacerbates the inefficiencies of this litigation
beyond
those inefficiencies inherent in duplicative proceedings. As
outlined
above, regardless of abstention, Clark's breach of contract
claim will
be resolved in a separate proceeding from its mechanic's lien
claim.6
____________________________________________________________
 6
Although Clark indicated to the district court that it
would seek to
consolidate the two state court proceedings and stated at
oral argument
that "consolidation is a possibility," Clark has not sought
consolidation,
see supra note 5. Even assuming the district court was
justified in relying

9
There is no reason that the state court is better suited to
resolve the
contract dispute between Clark and Gannett than is the
federal court.
Moses H. Cone, 460 U.S. at 20-21 (holding that danger of
piecemeal
litigation did not justify abstention because federal court
was as well-
suited to resolve the question of arbitrability as was the
state court —
claims possibly would have to be resolved in two state
forums regard-
less of whether federal court retained jurisdiction).
Moreover, Clark
has disavowed any argument that breach of contract actions
generally
should not be resolved through duplicative proceedings.

Clark next argues that, even assuming that the inherent
inefficiency
of duplicative litigation does not support abstention in this
case, the
fact that its subcontractors are not parties in the Federal
Contract
Action weighs in favor of abstention because the
subcontractors
would not be bound by the Federal Contract Action,
creating the pos-
sibility of inconsistent results. Cf. Am. Bankers Ins. Co. v.
First State
Ins. Co., 891 F.2d 882, 885 (11th Cir. 1990) (holding that the
pres-
ence of an additional party in state court weighs slightly in
favor of
abstention because piecemeal litigation may result). The
fact that the
subcontractors are not parties to the Federal Contract
Action, how-
ever, does not warrant abstention because they also are not
parties to
the State Contract Action. Consequently, they would not be
bound by
the result in either the State Contract Action or the
Federal Contract
Action. Thus, contrary to Clark's assertions, retention of
jurisdiction
in the Federal Contract Action does not result in a greater
possibility
of inconsistent results than are otherwise inevitable, given
the current
procedural posture of this litigation.7 Indeed, it appears
that the dis-
____________________________________________________________
upon Clark's assurances regarding consolidation in deciding
to abstain,
we must address whether abstention is appropriate based
upon the cur-
rent posture of the state court actions. Cf. Lumen Constr.,
Inc. v. Brant
Constr. Co., 780 F.2d 691, 697 n.4 (7th Cir. 1985) (holding
that the
reviewing court in a Colorado River abstention case is not
limited to the
information available at the time of the district court's
order and opinion;
instead, the reviewing court should "look at the total
situation as it stands
at the time of the appeal").
 7
In light of our conclusion that the State Lien Action is
not parallel to
the Federal Contract Action, we need not address whether
the possibility
of inconsistent results between those actions justifies
abstention. We

10
trict court could obtain jurisdiction over the
subcontractors if Clark
chose to implead the contractors pursuant to Federal Rule
of Civil
Procedure 14.8 See Fed. R. Civ. P. 14(a) (permitting a
defendant to
implead a person "who is or may be liable" to the defendant);
28
U.S.C.A. § 1367(b) ("the district courts shall not have
[supplemental]
jurisdiction under subsection (a) over claims by plaintiffs
against per-
sons made parties under Rule 14 . . ." (emphasis added)).
Accord-
ingly, the fact that the subcontractors are not currently
parties in the
Federal Contract Action does not weigh in favor of
abstention.

Finally, the district court stated that abstention was
appropriate
because "decisions in the concurrent federal and state suits
for breach
of contract might render different outcomes . . . ." (J.A. at
424.) The
threat of different outcomes in these breach of contract
actions, how-
ever, is not the type of inconsistency against which
abstention is
____________________________________________________________

note, however, that the threat of piecemeal litigation
would not be
increased were we to conclude that the State Lien Action is
parallel to
the Federal Contract Action because, although the
subcontractors have
been joined as defendants in the State Lien Action, this
joinder is insuffi-
cient to enforce the subcontractors' claims under Virginia's
mechanic's
lien statute. Isle of Wight Materials Co. v. Cowling Bros.,
431 S.E.2d 42,
44 (Va. 1993) ("Merely being named as a defendant in an
enforcement
action of another lienor is not the equivalent of either
filing an indepen-
dent suit or intervening in the suit of another."). Thus,
under Virginia
law, the subcontractors will have to bring their
enforcement actions sepa-
rately or join as plaintiffs in Clark's enforcement action. Id.
Accordingly,
given the current posture of the case, the threat of
inconsistent results
would not be alleviated by abstention, even if the State
Lien Action and
the Federal Contract Action were parallel proceedings.
8
At oral argument, Clark contended that Federal Rule
of Civil Proce-
dure 11 would bar it from impleading its subcontractors. We
disagree.
Gannett currently has a breach of contract action pending
against Clark,
and, if Gannett is able to establish any breach by Clark,
appropriate sub-
contractors may be liable in whole or in part to Clark for
that breach. As
Clark concedes, at this stage, it is impossible to determine
which subcon-
tractors could be found liable for any breach established
by Gannett.
Thus, Rule 11 would permit Clark to implead all of its
subcontractors on
the basis that each "may be" liable to Clark if it is found
liable to Gan-
nett. Fed. R. Civ. P. 14(a).

11
designed to protect, in that Gannett and Clark are both
parties to the
Federal and State Contract Actions; thus, res judicata
effect will be
given to whichever judgment is rendered first.
Quackenbush, 517
U.S. at 713. Insofar as abstention does not lessen the threat
of ineffi-
ciency or inconsistent results beyond those inherent in the
duplicative
nature of these proceedings and there is nothing in the
nature of
breach of contract actions that renders the fact of
duplicative proceed-
ings exceptionally problematic, the district court abused
its discretion
by determining that the possibility of piecemeal litigation
weighs in
favor of abstention.

2. Whether State Or Federal Law Is Implicated And
Whether The State Court Proceedings Are Adequate
To Protect The Parties' Rights

The district court also found that the presence of state
law and the
fact that the state court proceedings were adequate to
protect Clark's
and Gannett's rights weighed in favor of abstention. The
district court
stated that "there is nothing special in the relief requested
that requires
that the case be litigated in federal court," noting that
"Virginia law
alone governs." (J.A. at 425, 426 (citation omitted).)

Although the district court is correct insofar as it
suggests that
"[f]ederal courts abstain out of deference to the paramount
interests
of another sovereign, and the concern is with principles of
comity and
federalism," Quackenbush, 517 U.S. at 723, the Supreme
Court has
made clear that the presence of state law and the adequacy
of state
proceedings can be used only in "rare circumstances" to
justify Colo-
rado River abstention. See Moses H. Cone, 460 U.S. at 26.
Instead,
these factors typically are designed to justify retention of
jurisdiction
where an important federal right is implicated and state
proceedings
may be inadequate to protect the federal right, id., or
where retention
of jurisdiction would create "needless friction" with
important state
policies, Quackenbush, 517 U.S. at 717-18 (explaining the
historic
framework for abstention and noting that the Supreme
Court's absten-
tion jurisprudence "reflect[s] a doctrine of abstention
appropriate to
our federal system, whereby the federal courts, exercising
a wise dis-
cretion, restrain their authority because of scrupulous
regard for the
rightful independence of the state governments and for the
smooth
working of the federal judiciary." (internal quotation marks
omitted)).

12
That state law is implicated in this breach of contract
action "do[es]
not weigh in favor of abstention, particularly since both
parties may
find an adequate remedy in either state or federal court."
Luksch, 887
F.2d at 498; see also Black Sea Investment Ltd. v. United
Heritage
Corp., 204 F.3d 647, 651 (5th Cir. 2000) (noting that these
factors
only rarely can be used to support abstention); Ryan v.
Johnson, 115
F.3d 193, 200 (3d Cir. 1997) ("When the state court is
adequate, how-
ever, th[is] factor carries little weight."); Bethlehem
Contracting Co.
v. Lehrer/McGovern, Inc., 800 F.2d 325, 328 (2d Cir. 1986)
("[The
adequacy of the state forum], like choice of law, is more
important
when it weighs in favor of federal jurisdiction. It is thus of
little
weight here."). Moreover, in a diversity case, such as this
one, federal
courts regularly grapple with questions of state law, and
abstention on
the basis of the presence of state law, without more, would
undermine
diversity jurisdiction. Evans Transp. Co. v. Scullin Steel Co.,
693 F.2d
715, 717 (7th Cir. 1982) ("[U]ntil Congress decides to alter
or elimi-
nate the diversity jurisdiction we are not free to treat the
diversity liti-
gant as a second-class litigant, and we would be doing just
that if we
allowed a weaker showing of judicial economy to justify
abstention
in a diversity case than in a federal-question case."). Thus,
the district
court abused its discretion by concluding that the presence
of Virginia
law and the fact that the dispute adequately could be
litigated in state
court militated in favor of abstention.

3. Jurisdiction Over The Property

In analyzing the last factor as one weighing in favor of
abstention,
the district court concluded that the state court has
jurisdiction over
the property, apparently basing this conclusion on the fact
that the
State Lien Action is an in rem action. As noted above,
however, the
district court did not rule that the State Lien Action is
parallel to the
Federal Contract Action, supra at 5 & n.3, and we have
concluded
that the State Lien Action is not parallel. Therefore, the
district court
erred by referencing the State Lien Action in its
"exceptional circum-
stances" analysis. Moreover, both the State Contract Action
and the
Federal Contract Action are in personam proceedings; thus,
neither of
the parallel proceedings has jurisdiction over the
property. Accord-
ingly, this factor weighs against abstention.9
____________________________________________________________
9
Related to the jurisdiction over res factor of the
Colorado River doctrine is the Princess Lida doctrine, see
Princess Lida of Thurn & Taxis

13
 4. Order of Priority And Reactive Nature of Filings

Finally, Gannett contends that the district court did not
properly
take into account the order in which jurisdiction was
obtained or the
reactive nature of the state court filings as factors
weighing in favor
of retaining jurisdiction. The Supreme Court has emphasized
that the
order of filing should be viewed pragmatically, meaning
that "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." Moses H. Cone, 460 U.S. at 21. Because the State
Con-
tract Action was filed within a day of the Federal Contract
Action and
both had progressed at similar paces, the district court
correctly found
that this factor does not weigh heavily in favor of
abstention.10 See
Colorado River, 424 U.S. at 820 (concluding that abstention
was
appropriate even though the federal suit was filed first);
Kruse v.
Snowshoe, 715 F.2d 120, 124 (4th Cir. 1983) (noting that the
district
court did not abuse its discretion in declining to abstain
where state
____________________________________________________________

v. Thompson, 305 U.S. 456, 465-66 (1939), which holds that a
federal court may not exercise jurisdiction when granting
the relief sought would
require the court to control property over which another
court already has
jurisdiction. The Princess Lida doctrine is inapplicable,
however,
because the Federal Contract Action is an action entirely
for money dam-
ages. See, e.g., Al-Abood v. El-Shamari, 217 F.3d 225, 232 (4th
Cir.
2000) (holding that the Princess Lida doctrine does not
apply where the
federal action "does not depend on or involve exercising
jurisdiction over
th[e] res").
10
The district court held that this factor was "neutral"
and did not
weigh either for or against abstention. In the context of
Colorado River
abstention, however, it is inaccurate to state that this
factor is of no
weight. As the Moses H. Cone Court emphasized, "our task in
cases such
as this is not to find some substantial reason for the
exercise of federal
jurisdiction by the district court; rather, the task is to
ascertain whether
there exist `exceptional' circumstances, the`clearest of
justifications,'
. . . to justify the surrender of jurisdiction." Moses H. Cone,
460 U.S. at
25-26. Thus, although this factor does not weigh heavily in
favor of exer-
cising federal jurisdiction, it counsels against abstention.
See, e.g., Mur-
phy v. Uncle Ben's Inc., 168 F.3d 734, 738-39 (5th Cir. 1999)
(holding
that where the state and federal suits are proceeding at
similar paces, this
factor weighs against abstention).

14
and federal actions were filed within two days of one
another and
similar progress had been made in each). Similarly, the
district court
did not abuse its discretion in determining that the state
court filings
were not vexatious or reactive.

III.

In sum, while legitimate concerns stemming from the
important
principles of comity and federalism certainly will weigh in
favor of
abstention in another case, none of these concerns,
reflected in the
Colorado River factors, weigh in favor of abstention in this
case. We
are mindful that the task in a Colorado River abstention
case is "to
ascertain whether there exist exceptional circumstances,
the clearest
of justifications, . . . to justify the surrender of
jurisdiction." Moses
H. Cone, 460 U.S. at 25-26 (internal quotation marks omitted).
Because no factor or combination of factors in this case
gives rise to
"exceptional circumstances, the clearest of justifications,"
warranting
abstention, we are left with a "definite and firm conviction
that the
court below committed a clear error of judgment in the
conclusion it
reached upon a weighing of the relevant factors,"
Westberry, 178 F.3d
at 261, and failed to "exercise its discretion in accordance
with the
Colorado River `exceptional circumstances test.'" New
Beckley, 946
F.2d at 1074 (citation omitted). Were we to affirm in this
case, virtu-
ally all cases involving parallel litigation would warrant
abstention
under Colorado River, a result that is foreclosed by
Supreme Court
precedent. Accordingly, we reverse the district court's
judgment stay-
ing the action and remand for the district court to
reinstate proceed-
ings consistent with this opinion.

REVERSED AND REMANDED

15