Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
12-21-1995
NYLife Dist., Inc. v. Adherence Grp., Inc., et al.
Precedential or Non-Precedential:
Docket 94-5725
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 94-5725
___________
NYLIFE DISTRIBUTORS, INC.
vs.
THE ADHERENCE GROUP, INC;
JOSEPH GERASOLO;
PATRICK BLEACH;
DENNIS SCHNELL;
DONALD THOMAS;
RICHARD HESSEN;
JAMES LYONS;
ELIZABETH GERASOLO
Joseph Gerasolo, Elizabeth Gerasolo, and
Patrick Bleach,
Appellants
___________
Appeal from the United States District Court
for the District of New Jersey
(D.C. Civ. No. 94-cv-00637)
___________
Argued
November 29, 1995
Before: MANSMANN, SCIRICA and ROTH, Circuit Judges.
(Filed December 21, 1995)
___________
William J. Salmond, Esquire
Alan J. Karcher, Esquire (ARGUED)
Karcher, Salmond, Ronan & Rainone
10 Parsonage Road
CN 2908
Edison, NJ 08818
Counsel for Appellee
Christopher J. Carey, Esquire
Tompkins, McGuire & Wachenfeld
100 Mulberry Street
1
Gateway Four
Newark, NJ 07102
2
Raymond A. Connell, Esquire (ARGUED)
Connell, Losquadro & Zerbo
17 State Street
New York, NY 10004
Counsel for Appellants
___________
OPINION OF THE COURT
__________
MANSMANN, Circuit Judge.
In this case of first impression, we consider whether
the broad discretionary standard set forth in Brillhart v. Excess
Ins. Co. of America, 316 U.S. 491 (1942), or the more narrow
"exceptional circumstances" test enunciated in Colorado River
Water Conservation Dist. v. United States, 424 U.S. 800 (1976),
applies to a district court's decision to dismiss an interpleader
action commenced under 28 U.S.C. § 1335 (1993), in favor of
parallel state court proceedings. Guided by the Supreme Court's
recent decision in Wilton v. Seven Falls Co., ___ U.S. ___, 115
S. Ct. 2137 (1995), where the Court determined that the Brillhart
standard applies in declaratory judgment actions, we hold that a
motion to dismiss a federal statutory interpleader action during
the pendency of a parallel state court proceeding is addressed to
the sound discretion of the district court.
Following the commencement of this section 1335
interpleader action, one of the defendant-claimants commenced a
state court action. After the district court determined that the
requirements of the statute had been met, but before the dispute
to the stake had been adjudicated, this defendant filed a motion,
essentially requesting that the district court defer to the state
3
court action. Conflating the two-step nature of an interpleader
action, the district court was of the belief that all federal
claims had been eliminated and terminated the case. Instead, the
court should have exercised its discretion to decide in which
forum, federal or state, the unresolved dispute to the stake
could be better determined. We will, therefore, vacate the
district court's termination order and remand the case for the
court to make this decision.
I.
Since its commencement, this case has taken a number of
procedural twists and turns. We begin by reviewing those aspects
of its history that are relevant to the issues before us.
On February 15, 1994, NYLife Distributors, Inc., the
averred administrator of the "Mainstay Mutual Fund", filed a
complaint in interpleader in the United States District Court for
the District of New Jersey under 28 U.S.C. § 1335 (1993),0
against The Adherence Group, Inc. ("TAG")0 and several TAG
employees, including Joseph Gerasolo, the company's former
0
Rule 22 of the Federal Rules of Civil Procedure is also
a provision for interpleader. Fed. R. Civ. P. 22. While both
statutory interpleader under 28 U.S.C. § 1335 (1993), and rule
interpleader allow a person holding property to join in a single
suit two or more persons asserting claims to that property, they
are dissimilar in several ways; most notably, unlike statutory
interpleader which confers subject matter jurisdiction on the
federal courts, rule interpleader is purely procedural. Rule 22
interpleader is not implicated in, nor is it relevant, to this
appeal.
0
The Adherence Group, Inc. refers to itself in its
briefs as "TAG" and we adopt that designation.
4
President0 and Patrick Bleach, its former Executive Vice
President. NYLife is a New York corporation; TAG is organized
under the laws of Delaware and has its principal place of
business in New Jersey; Gerasolo is a citizen of New York; and
Bleach is a citizen of New Jersey.
In its complaint, NYLife asserted that it was subject
to conflicting demands from the defendants for monies it was
holding in Mainstay Mutual Fund accounts opened for TAG employees
in connection with TAG's executive compensation plan.0 Claiming
no interest in the money, NYLife further alleged that it intended
to deposit the money with the court and requested that the
defendants be required to interplead and settle among themselves
their respective rights to the fund. On February 16, 1994, the
individual defendants' total balance in the Mainstay Mutual Fund,
which amounted to $215,489.50, was deposited in the court's
Registry.
On March 7, 1994, Gerasolo and Bleach filed an answer
to the interpleader complaint averring, inter alia, that TAG's
claims were barred by certain settlement agreements, and brought
a counterclaim against NYLife, alleging that NYLife's liquidation
0
Elizabeth Gerasolo, Joseph Gerasolo's wife, was also
joined as a defendant in the interpleader action. For the sake
of convenience, we will refer to Joseph and Elizabeth Gerasolo
collectively as "Gerasolo".
0
More specifically, NYLife alleged that at about the same
time it received a letter from TAG's attorney advising that
"monies . . . had been improperly diverted from [TAG] to the
[Mainstay Mutual Fund] accounts of the individual defendants . .
." and directing that "no funds be distributed from any of the
accounts of the individual defendants until further notice[]", it
received a request from one of the individual defendants for
money from his Mainstay Mutual Fund account.
5
of their respective Mainstay Mutual Fund accounts was a breach of
contractual and fiduciary duties. Additionally, Gerasolo and
Bleach filed a cross-motion requesting, inter alia, that NYLife's
interpleader action be dismissed, except for the purpose of
determining the damages they had allegedly sustained as a result
of NYLife's actions.
On March 17, 1994, TAG filed an answer to NYLife's
complaint, admitting that it and the individual defendants had
subjected NYLife to conflicting claims for Mainstay Mutual Fund
monies.
Shortly thereafter, on March 23, 1994, TAG and its sole
shareholder, TAG/SCIB Services A.G., commenced an action in the
Superior Court of New Jersey, Middlesex County, against Gerasolo
and Bleach, alleging that they had wrongfully appropriated TAG
assets, including the monies deposited in the Mainstay Mutual
Fund, through fraud, embezzlement and conversion, and against the
Moore Stephens Accounting Firm, TAG's auditor, for failure to
uncover the fraud. The complaint was later amended on July 20,
1994, to join the law firm of Connell, Losquadro & Zerbo and
unknown "John Doe" fictional defendants for allegedly conspiring
with Gerasolo and Bleach to defraud TAG.
On May 19, 1994, the district court issued an order
granting NYLife's motion for a judgment in interpleader in the
amount of $215,489.50; dismissing NYLife from the case and from
any future liability for the payment of the money into the court
Registry; ordering that the defendants be enjoined from
instituting any other action against NYLife or its affiliates
6
based on NYLife's commencement of the interpleader action;
awarding NYLife its attorneys' fees and costs; and dismissing the
cross-motion for dismissal and counterclaim against NYLife that
Gerasolo and Bleach had filed.
On June 1, 1994, Gerasolo and Bleach filed an amended
answer to the interpleader complaint, adding cross-claims against
TAG under New Jersey law for breach of contract, violations of
the New Jersey Conscientious Employee Protection Act, 34 N.J.
Stat. Ann. § 19-1 et seq. (1988), and malicious abuse of process.
Thereafter, the parties engaged in discovery.
On July 7, 1995, TAG filed a motion asking the district
court to dismiss the cross-claims Gerasolo and Bleach had
asserted against it and to transfer the interpleaded fund to the
Superior Court of New Jersey; in the alternative, TAG asked the
court to retain the fund while the parties litigated their
entitlement to the money in the action TAG had commenced in the
New Jersey state court.
By order dated October 26, 1994, the district court
granted TAG's motion. Of the view that its May 19, 1994 order,
which granted NYLife's motion for judgment in interpleader,
denied Gerasolo's and Bleach's cross-motion for dismissal of the
interpleader action and dismissed the counterclaim against
NYLife, had "eliminat[ed]" all federal claims in this case[]",
the court concluded that TAG was requesting that the court invoke
its discretion under 28 U.S.C. § 1367(c) (1993) and decline to
exercise supplemental jurisdiction over Gerasolo's and Bleach's
state law cross-claims. Citing 28 U.S.C. § 1367(c)(3), which
7
provides that a district court "may decline to exercise
supplemental jurisdiction over a claim . . . if the district
court has dismissed claims over which it has original
jurisdiction[]", the court decided not to exercise its
supplemental jurisdiction over the cross-claims based on its
belief that no federal claims remained in the case. Accordingly,
in its October 26, 1994 order, the court dismissed the cross-
claims, retained jurisdiction over the interpleaded fund pending
the outcome of the state court litigation (at which time the
party who prevails in the state court may apply to the district
court for a distribution of the fund) and administratively
terminated the case.
Gerasolo and Bleach bring this appeal from the district
court's October 26, 1994 order, contending that due to the
court's misinterpretation of 28 U.S.C. § 1335, it in effect
improperly "abstained" from this statutory interpleader action.0
II.
The federal interpleader statute, 28 U.S.C. § 1335
(1993), is a remedial device which enables a person holding
property or money to compel two or more persons asserting
mutually exclusive rights to the fund to join and litigate their
0
The district court's October 26, 1994 order turned on
its interpretation of the federal interpleader statute, 28 U.S.C.
§ 1335, which then formed the basis of the court's application of
the supplemental jurisdiction statute, 28 U.S.C. § 1367(c)(3)
(1993). Accordingly, our review is plenary. See Air Courier
Conference of Am./Int'l Comm. v. United States Postal Serv., 959
F.2d 1213, 1217, n.3 (3d Cir. 1992) (statutory construction or
interpretation is a legal issue subject to plenary review).
8
respective claims in one action. 3A J. Moore & J. Lucas, Moore's
Federal Practice § 22.02[1] (2d ed. 1994). The benefits of the
device to both the stakeholder and the claimants are substantial.
It relieves the stakeholder from determining at his peril the
merits of competing claims and shields him from the prospect of
multiple liability; it gives the claimant who ultimately prevails
ready access to the disputed fund. Id.
Section 1335 grants original jurisdiction to the
district courts over interpleader actions and sets forth certain
requirements that must be met before the action may be
maintained. For example, although the citizenship of the
stakeholder is irrelevant for jurisdictional purposes, the
statute calls for diversity of citizenship between two or more of
the adverse claimants, requires that the amount in controversy,
which is measured by the value of the stake, be $500, and compels
the stakeholder to deposit the money or property at issue in the
court's Registry or, in the alternative, to give a bond payable
to the clerk of courts in the appropriate amount.0 28 U.S.C.
0
Section 1335 provides:
§ 1335. Interpleader
(a) The district courts shall have
original jurisdiction of any civil action of
interpleader or in the nature of interpleader
filed by any person, firm, or corporation,
association, or society having in his or its
custody or possession money or property of
the value of $500 or more, or having issued a
note, bond, certificate, policy of insurance,
or other instrument of value or amount of
$500 or more, or providing for the delivery
or payment or the loan of money or property
9
§ 1335(a). Additionally, 28 U.S.C. § 2361 (1994) provides for
nationwide service on all claimants in statutory interpleader
actions and allows a district court in a section 1335
interpleader case to enjoin any state or federal proceedings
affecting the stake; 28 U.S.C. § 1397 (1993) provides that
section 1335 interpleader cases may be brought where one or more
of the claimants reside.0
of such amount or value, or being under any
obligation written or unwritten to the amount
of $500 or more, if
(1) Two or more adverse claimants, of
diverse citizenship as defined in section
1332 of this title, are claiming or may claim
to be entitled to such money or property, or
to any one or more of the benefits arising by
virtue of any note, bond, certificate, policy
or other instrument, or arising by virtue of
any such obligation; and if (2) the plaintiff
has deposited such money or property or has
paid the amount of or the loan or other value
of such instrument or the amount due under
such obligation into the registry of the
court, there to abide the judgment of the
court, or has given bond payable to the clerk
of the court in such amount and with such
surety as the court or judge may deem proper,
conditioned upon the compliance by the
plaintiff with the future order or judgment
of the court with respect to the subject
matter of the controversy.
(b) Such an action may be entertained
although the titles or claims of the
conflicting claimants do not have a common
origin, or are not identical, but are adverse
to and independent of one another.
28 U.S.C. § 1335 (1993).
0
Section 2361 states:
§ 2361. Process and procedure
10
An action commenced under section 1335 typically
involves two steps: during the first, the district court
determines whether the requirements of the statute have been met
and whether the stakeholder may be relieved from liability;
during the second, it actually adjudicates the defendants'
adverse claims to the interpleaded fund. New York Ins. Co. v.
Connecticut Dev. Auth., 700 F.2d 91, 95 (2d Cir. 1983); 7 C.
Wright, A. Miller & M. Kane, 7 Federal Practice and Procedure
In any civil action of interpleader
or in the nature of interpleader under
section 1335 of this title, a district court
may issue its process for all claimants and
enter its order restraining them from
instituting or prosecuting any proceeding in
any State or United States court affecting
the property, instrument or obligation
involved in the interpleader action until
further order of the court. Such process and
order shall be returnable at such time as the
court or judge thereof directs, and shall be
addressed to and served by the United States
marshals for the respective districts where
the claimants reside or may be found.
Such district court shall hear and
determine the case, and may discharge the
plaintiff from further liability, make the
injunction permanent, and make all
appropriate orders to enforce its judgment.
28 U.S.C.§ 2361 (1994).
Section 1397 states:
§ 1397. Interpleader
Any civil action of interpleader or in
the nature of interpleader under section 1335
of this title may be brought in the judicial district
in which one or more of the claimants reside.
28 U.S.C. §1397 (1993).
11
§ 1714 (2nd ed. 1986). The second stage, which proceeds like any
other action, is ultimately resolved by the entry of a judgment
in favor of the claimant who is lawfully entitled to the stake.
See Diamond Shamrock Oil & Gas Corp. v. Commissioner of Revenues,
422 F.2d 532, 534 (8th Cir. 1970).
Here the district court completed the first step of
interpleader on May 19, 1994, when it granted NYLife's motion for
a judgment in interpleader and discharged NYLife from liability.
The court did not, however, proceed to section 1335's second step
-- the unresolved dispute between the claimants for the
interpleaded fund, which was, like the first, within the court's
original jurisdiction. We thus hold that the district court's
conclusion that all federal claims had been dismissed by virtue
of its May 19, 1994 order was in error, and that its October 26,
1994 decision to terminate the case in favor of TAG's pending
state court action on this basis was as well erroneous. It
necessarily follows and we further conclude that the district
court erred when it also dismissed Gerasolo's cross-claims under
28 U.S.C. § 1367(c)(3) (1993) on October 26, 1994, believing that
all claims over which it had original jurisdiction had been
eliminated from the case.
Our analysis, however, does not end here. We turn next
to the legal principles that are implicated by that portion of
TAG's motion which in effect requested that the interpleader
action be dismissed so as to allow the parties to resolve their
dispute over the Mainstay Mutual Fund monies in the New Jersey
state court.
12
III.
It is, of course, the general rule that the mere
pendency of a similar action in a state court does not require,
nor even permit, a federal court to refuse to hear or to stay an
action that is properly within its jurisdiction, and that both
state and federal actions should go forward until one of them
results in a judgment that may be asserted as res judicata in the
other, McClellan v. Carland, 217 U.S. 268, 281-82 (1910).
Nonetheless, three doctrines of abstention have evolved which
allow the district courts to decline to hear cases over which
they have jurisdiction.0 The parties are in agreement that these
traditional abstention doctrines, which rest on considerations of
proper constitutional adjudication or federal-state relations, do
not apply in this case.
Over the years, an additional ground for dismissing or
staying a federal action in favor of state court proceedings has
developed; it is aimed at avoiding duplicative litigation and is
premised on considerations which concern the efficient
administration of judicial resources and the comprehensive
0
The three traditional doctrines of abstention are:
Pullman abstention, which is proper when a state court
determination of a question of state law might moot or change a
federal constitutional issue, Railroad Comm'n of Texas v. Pullman
Co., 312 U.S. 496 (1941); Burford abstention, which applies when
questions of state law in which the state has expressed a desire
to establish a coherent policy on a matter of substantial public
concern are raised, Burford v. Sun Oil Co., 319 U.S. 315 (1943);
and Younger abstention, which is appropriate where, absent bad
faith, harassment, or a patently invalid state statute, federal
jurisdiction has been invoked to restrain state criminal
proceedings. Younger v. Harris, 401 U.S. 37 (1971).
13
disposition of cases. See Colorado River Water Conservation
Dist. v. United States, 424 U.S. 800, 818 (1976). In our view,
it is this additional category that is raised here.
A.
Some fifty years ago, in Brillhart v. Excess Ins. Co.,
316 U.S. 491 (1942), the Supreme Court held that the district
courts may decline to hear lawsuits brought under the Federal
Declaratory Judgment Act, 28 U.S.C. § 2201(a), in favor of
pending state actions for reasons of judicial economy, even where
they have jurisdiction. Wilton v. Seven Falls Co., ___ U.S. ___,
115 S. Ct. 2137, 2140 (1995). In Brillhart, the Excess Insurance
Company of America commenced a declaratory judgment in federal
court to determine its rights under a reinsurance agreement with
Central Mutual Insurance Company. Subsequently, Excess Insurance
was joined in a Missouri state court garnishment proceeding that
had been brought by Dewey Brillhart, the administrator of an
estate, against Central Insurance to collect on a default
judgment. Brillhart then moved to dismiss the declaratory
judgment action, principally on the ground that the issues Excess
Insurance raised could be decided in the state garnishment
proceeding. The district court granted Brillhart's motion to
dismiss, apparently to avoid delay, without considering whether
Excess Insurance's declaratory judgment claims could be resolved
in the garnishment proceeding. The Court of Appeals for the
Eighth Circuit reversed, holding that dismissal of the
declaratory judgment action was an abuse of discretion, and
14
remanded the case to the district court, directing it to proceed
to the merits.
Reversing the court of appeals and remanding to the
district court for another determination of the motion, the
Supreme Court stated that "[a]lthough the [d]istrict [c]ourt had
jurisdiction . . ., it was under no compulsion to exercise that
jurisdiction[]", 316 U.S. at 494, and made clear that the
district courts have the discretion to dismiss a declaratory
judgment action when "it would be uneconomical as well as
vexatious for a federal court to proceed in a declaratory
judgment suit where another suit is pending in a state court
presenting the same issues, not governed by federal law, between
the same parties." Id. at 495. The Court did not articulate all
of the considerations which should guide a district court's
decision in this regard; it did provide, however, that the court
"should ascertain whether the questions in controversy between
the parties to the federal suit[] . . . can better be settled in
the proceeding pending in state court[]", assess "the scope of
the pending state proceeding and the nature of the defenses open
there[]", and evaluate "whether the claims of all parties in
interest can satisfactorily be adjudicated in that proceeding,
whether necessary parties have been joined, [and] whether such
parties are amenable to process in that proceeding, etc." Id.
Later, in the 1976 Colorado River case, 424 U.S. at
800, the Supreme Court revisited the propriety of a district
court's decision to dismiss a federal suit in favor of a
concurrent state court proceeding for reasons of judicial economy
15
and efficiency. There, the government filed a complaint pursuant
to 28 U.S.C. § 1345 (1993), which grants the district courts
original jurisdiction of all civil actions commenced by the
United States, against some 1,000 non-federal water users for a
declaration of the government's rights to water in certain
Colorado rivers and their tributaries. Shortly after the federal
suit was commenced, one of the defendants commenced a state
proceeding for the purpose of adjudicating all government claims
to the water, both state and federal. Several parties in the
federal action then filed a motion to dismiss, asserting that the
district court did not have jurisdiction. Without deciding the
jurisdictional question, the district court abstained. On
appeal, the Court of Appeals for the Tenth Circuit reversed,
holding that the district court had jurisdiction and that
abstention was inappropriate.
Reversing the court of appeals' judgment, the Supreme
Court confirmed that federal courts may, in appropriate
circumstances, defer to state court proceedings for reasons of
wise judicial administration, but, without discussing Brillhart,
announced a very different standard. 424 U.S. at 817. Where in
Brillhart the Court warned district courts against "[g]ratuitous
interference with the orderly and comprehensive disposition of a
state court litigation" and directed them to exercise discretion
in deciding whether or not to proceed, 316 U.S. at 495, in
Colorado River the Court referred to the "virtually unflagging
obligation of the federal courts to exercise the jurisdiction
given them[]", and set forth an "exceptional circumstances" test
16
of several factors that the district courts should utilize. 424
U.S. at 817-18. These factors are whether either court has
assumed jurisdiction over property, the inconvenience of the
federal forum, avoidance of piecemeal litigation, and the order
in which the courts obtained jurisdiction. Id. at 818.
Two years after its decision in Colorado River, the
Court decided Will v. Calvert Fire Ins. Co., 437 U.S. 655 (1978),
which concerned an action for an alleged violation of the federal
securities laws commenced in federal court during the pendency of
a related state court case. Relying on Brillhart, a plurality of
the Court reversed the grant of a petition for a writ of mandamus
ordering the district court to adjudicate the claim. According
to the plurality, Colorado River had not "undermined[d] the
conclusion of Brillhart that the decision whether to defer to the
concurrent jurisdiction of a state court is, in the last
analysis, a matter committed to the district court's discretion."
Id. at 664. Four Justices, however, joined Justice Brennan's
dissent, which took issue with the plurality's reliance on
Brillhart and its disregard for the Colorado River exceptional
circumstances test. Id. at 668-77. Chief Justice Burger,
although concurring in the judgment, agreed with the dissent that
the Colorado River test was controlling. Id. at 668. In his
dissenting opinion, Justice Brennan observed that while Brillhart
concerned an action for a declaratory judgment where federal
jurisdiction is "discretionary", Calvert involved a claim under
the Securities Exchange Act of 1934 over which the federal courts
17
have been given "non-discretionary", exclusive jurisdiction. Id.
at 672.
Subsequently, in Moses H. Cone Memorial Hosp. v.
Mercury Constr. Corp., 460 U.S. 1 (1983), the Court ruled that
the Colorado River exceptional circumstances test, not the
Brillhart discretionary approach, applies to a district court's
decision to stay a diversity of citizenship action brought under
section 4 of the United States Arbitration Act of 1925, 9 U.S.C.
§ 4, seeking an order compelling arbitration, id. at 14-19, and
added two factors to the test -- which forum's substantive law
governs the merits of the litigation and the adequacy of the
state forum to protect the parties' rights. Id. at 26. In doing
so, the Court rejected the argument that Calvert had changed the
law, noting that the majority of the Court in Calvert reaffirmed
the Colorado River exceptional circumstances test, id. at 17, and
that Calvert was distinguishable, since it involved the issuance
of a writ of mandamus under 28 U.S.C. § 1651, where the movant
must show a clear and indisputable right to the writ, not a
typical appeal. Id. at 18.
Given these conflicting messages, not surprisingly
circuit conflicts have arisen over the standard which governs a
district court's decision to stay a declaratory judgment action
in favor of parallel state proceedings; several courts, including
our own, have applied the discretionary standard articulated in
Brillhart, e.g., Travelers Ins. Co. v. Louisiana Farm Bureau
Federation, Inc., 996 F.2d 774, 778, n.12 (5th Cir. 1993) and
Terra Nova Ins. Co. v. 900 Bar, Inc., 887 F.2d 1213 (3d Cir.
18
1989), while other courts applied the relatively narrow
exceptional circumstances test developed in Colorado River. E.g.,
Employers Ins. of Wausau v. Missouri Elec. Works, Inc., 23 F.3d
1372, 1374, n.3 (8th Cir. 1994).
Quite recently, the Supreme Court resolved the conflict
in Wilton, ___ U.S. ___, 115 S. Ct. at 2137, holding that the
Brillhart discretionary standard governs a district court's
decision to stay a federal declaratory judgment action during the
pendency of parallel state court proceedings. There a dispute
between the Hill Group and other parties over the ownership and
operation of oil and gas properties in Winkler County, Texas, was
headed toward litigation. The Hill Group asked London
Underwriters to provide it with coverage under several insurance
policies in the event it was sued; London Underwriters refused.
Following a three-week trial in Winkler County, a jury verdict in
excess of $100 million was entered against the Hill Group. After
the Hill Group gave London Underwriters notice of the verdict,
the insurer filed an action under the Declaratory Judgment Act,
28 U.S.C. § 2201(a) (1988 ed., Supp. V), in federal court,
seeking a declaration that the policies did not cover the Hill
Group's liability. This action was voluntarily dismissed, but
later refiled when the Hill Group sued London Underwriters on the
insurance policies in a state court. The Hill Group then moved
to dismiss or, in the alternative, to stay London Underwriters'
declaratory judgment action. Observing that the state lawsuit
encompassed the coverage issues raised in the declaratory
judgment action and concluding that a stay was warranted in order
19
to avoid piecemeal litigation, the district court issued a stay;
noting that "'[a] district court has broad discretion to grant
(or decline to grant) declaratory judgment[]'", the Court of
Appeals for the Fifth Circuit affirmed. Id. at 2139-40.
The Supreme Court also affirmed. Its decision was
premised on "[d]istinct features of the Declaratory Judgment
Act," which in the Court's view, "justify a standard vesting
district courts with greater discretion in declaratory judgment
actions than that permitted under the `exceptional circumstances'
test of Colorado River and Moses H. Cone." Id. at 2142. After
noting the statute's "textual commitment to discretion" wherein a
court "may declare the rights and other legal relations of any
interested party seeking such a declaration," 28 U.S.C. §2201(a),
and the "breadth of leeway [it has] always understood [the Act]
to suggest", the Court concluded that "[b]y the Declaratory
Judgment Act, Congress sought to place a remedial arrow in the
district court's quiver"; it created "an opportunity, rather than
a duty, to grant a new form of relief to qualifying litigants."
Id. at 2143. Accordingly, the Court held that "[c]onsistent with
the nonobligatory nature of the remedy, a district court is
authorized, in the sound exercise of its discretion, to stay or
to dismiss an action seeking a declaratory judgment before trial
or after all arguments have drawn to a close." Id. (footnote
omitted). The Court further held that the district courts are
vested with discretion to make these determinations in the first
instance and that their decisions should be reviewed under the
abuse of discretion standard. Id. at 2144.
20
We turn now to the standard that governs a district
court's decision to dismiss or stay an interpleader action
commenced under 28 U.S.C. § 1335 (1993), due to the pendency of
concurrent state court proceedings.
B.
At the outset, we observe that district courts have
traditionally assumed that they possess broad equitable
discretion to decline jurisdiction over a statutory interpleader
lawsuit where in their view there is a pending state proceeding
that obviates the need for the federal action. In B. J. Van
Ingen & Co. v. Connolly, 225 F.2d 740 (3d Cir. 1955), for
example, when we affirmed the district court's dismissal of an
interpleader action, we agreed that "in all the circumstances
there was insufficient equity in the [plaintiff's] present
complaint to make it incumbent upon a federal court to interfere
by way of interpleader with what the state court [was] doing."
Id. at 744. We also observed that the district court had
"properly considered and given weight" to the plaintiff's
position in deciding that "[the plaintiff] might equitably be
left to have its responsibility and duty with references to the
fund in question decided in the comprehensive New Jersey suit."
Id. at 743. See also American Airlines, Inc. v. Block, 905 F.2d
12, 14 (2d Cir. 1990) ("[I]t is well recognized that interpleader
is an equitable remedy, and a federal court may abstain from
deciding an interpleader action if another action could
adequately redress the threat that the stakeholder might be held
21
doubly liable."); Koehring Co. v. Hyde Const. Co., 424 F.2d 1200,
1202 (7th Cir. 1970) ("[A] federal district court [has] the
discretion to dismiss an action in statutory interpleader on
grounds of equity and comity, when the interests of the
stakeholder and all claimants will be adequately protected in a
pending state court proceeding[]".); Humble Oil & Refining Co. v.
Copeland, 398 F.2d 364, 368 (4th Cir. 1968) ("The genesis of
interpleader is equity, and we perceive no reason why it should
be denied the remedial flexibility of a chancellor's decree.
Thus, the district court can stay its proceedings [and] permit
the parties to litigate ownership of the royalties in [state
court] . . . ."); Equitable Assur. Soc. v. Porter-Englehart, 867
F.2d 79, 83 (1st Cir. 1989) (agreeing that the federal courts may
in their discretion dismiss or stay statutory interpleader
actions in favor of ongoing state proceedings); Hickok v. Gulf
Oil Co., 265 F.2d 798 (6th Cir. 1959) (same). Contra Boston Old
Colony Ins. Co. v. Balbin, 591 F.2d 1040 (5th Cir. 1979) (holding
that a district court may not abstain from an interpleader action
where important state public policy and "unusual circumstances"
are not present).
Our review has not produced nor have the parties
suggested any cases which analyze the scope of a district court's
discretion under 28 U.S.C. § 1335 (1993) to defer to state
proceedings in light of the Supreme Court decisions we have
discussed. We believe our threshold inquiry is whether the
exceptional circumstances test set forth in Colorado River
Conservation Dist. v. United States, 424 U.S. 800 (1976), must
22
invariably be applied whenever a district court with jurisdiction
considers a request to defer to a state court action. In our
view, it need not. We read the Supreme Court's decisions,
beginning with Brillhart v. Excess Ins. Co., 316 U.S. 491 (1942),
and ending with Wilton v. Seven Falls Co., ___ U.S. ___, 115 S.
Ct. 2137 (1995), to instruct that the exceptional circumstances
test is not universal and will yield in cases where the statute
which grants a district court the authority to decide a matter
"justif[ies] [as does the Declaratory Judgment Act] a standard
vesting district courts with greater discretion . . . than that
permitted under the `exceptional circumstances' test of Colorado
River and Moses H. Cone." See Wilton, ___ U.S. ___, 115 S. Ct.
at 2140.
Accordingly, we look to the interpleader statute to
determine which standard -- the discretionary approach taken in
Brillhart or the exceptional circumstances test set forth in
Colorado River -- governs a district court's decision to dismiss
a federal interpleader action in favor of pending state
proceedings. We initially observe that historically and under
the statute, interpleader is a suit in equity. Sanders v. Armour
Fertilizer Works, 292 U.S. 190, 199 (1934); 4 J. Pomeroy, A
Treatise on Equity Jurisprudence § 1320 (5th ed. 1941).0 A
0
The first federal Interpleader Act was passed in 1917.
Act of Feb. 22, 1917, ch. 113, 39 Stat. 929 (1917) (repealed
1926). The present provisions at 28 U.S.C. § 1335 (1993) and 28
U.S.C. § 2361 (1994) are bottomed on the Act as amended in 1936.
3A J. Moore & J. Lucas, Moore's Federal Practice, § 22.06 (2d ed.
1994). In the 1936 Act, the district courts were given original
jurisdiction "[o]f suits in equity begun by bills of interpleader
or bills in the nature of bills of interpleader . . . ." Act of
23
federal interpleader court, therefore, by the nature of its
jurisdiction proceeds with broad discretion. Meredith v. City of
Winter Haven, 320 U.S. 228, 235 (1943). ("[A]n appeal to the
equity jurisdiction conferred on [the] federal courts is an
appeal to the sound discretion which guides the determinations of
courts of equity."). Hecht Co. v. Bowles, 321 U.S. 321, 329
(1944) ("The essence of equity jurisdiction has been the power of
the chancellor to do equity and to mould each decree to the
necessities of the particular case. Flexibility rather than
rigidity has distinguished it.").
Hence, one of two related questions we face is whether
under section 1335, the district courts retain their traditional
equitable discretion when deciding whether to hear a statutory
interpleader case or defer to a state court; and the other is
whether the district courts have a "virtually unflagging
obligation" to exercise their section 1335 jurisdiction. In this
regard, we find the Supreme Court's decision in Weinberger v.
Romeo-Barcelo, 456 U.S. 305 (1982), instructive. There, the
Court considered whether, under the Federal Water Pollution
Control Act, as amended, 33 U.S.C. § 1251 et seq. (1976 ed. and
Supp. IV), the district courts must enjoin violations of the Act
or whether they retain the broad discretion that equity
jurisdiction provides them in deciding issues of injunctive
relief. To decide the issue, the Court looked to the overall
structure and language, purpose and legislative history of the
Jan. 20, 1936, ch. 13, 49 Stat. 1096 (1936) (current version at
28 U.S.C. § 1335(a)).
24
Act to determine whether Congress clearly intended to alter
traditional equity practices, stating:
`[T]he comprehensiveness of [the district
court's] equitable jurisdiction is not to be
denied or limited in the absence of a clear
and valid legislative command. Unless a
statute in so many words, or by a necessary
and inescapable inference, restricts the
court's jurisdiction in equity, the full
scope of that jurisdiction is to be
recognized and applied. The great principles
of equity, securing complete justice, should
not be yielded to light inferences or
doubtful construction.'
Id. at 313 (quoting Porter v. Warner Holding Co., 328 U.S. 395,
398 (1946)).
The Court cautioned, however, that "[of] course,
Congress may intervene and guide or control the exercise of the
courts' discretion, but we do not lightly assume that Congress
has intended to depart from established principles." Id. at 313.
Ultimately, the Court found nothing in the Clean Waters
Act's language, structure, purpose or legislative history
evidencing Congress' intent to deny the courts their traditional
equitable discretion in deciding matters of equitable relief. Id.
at 319. Compare Bowles, 321 U.S. at 321 (holding that the phrase
"shall be granted" in section 925 of the Emergency Price Control
Act of 1942, 50 U.S.C. § 901 et seq., does not mean that
injunctions for violations of the Act are mandatory; "if Congress
had intended to make such a drastic departure from the tradition
of equity practice, an unequivocal statement of its purpose would
have been made.") with TVA v. Hill, 437 U.S. 153 (1978) (holding
that the plain language and purpose of the Endangered Species
25
Acts, 16 U.S.C. 1531 et seq., contains a flat ban on the
destruction of critical habitats, thereby foreclosing the
exercise of the usual discretion possessed by a court of equity
and requiring a district court to enjoin violations of the Act).
Against this backdrop, we turn to the text and
structure, purpose and legislative history of section 1335 to
determine the parameters of the district courts' discretion to
decline jurisdiction and defer to state court proceedings for the
sake of judicial administration and efficiency, looking
specifically for any indication that Congress sought to limit a
federal interpleader court's broad equitable discretion in such
matters.
Starting with the statute's language and structure, we
find that the text of section 1335, when considered with 28
U.S.C. § 2361 (1994), is inconclusive. Section 1335(b) of the
interpleader statute provides that an action over which the
district courts are granted original jurisdiction under section
1335(a) "may be entertained", even where the titles to or claims
of the conflicting claimants are adverse and independent of one
another. 28 U.S.C. § 1335(b) (emphasis added). Although section
1335(b) is cast in discretionary terms, its permissive tone may
relate solely to Congress' decision to abolish in the
interpleader statute certain "historical limitations" that had
been imposed on interpleader actions. See 3A J. Moore & J.
Lucas, Moore's Federal Practice § 22.11 (2d ed. 1994) (The four
historical requisites to a strict bill of interpleader were "same
debt, common origin, disinterested shareholder and the absence of
26
independent liability. . . ."). Section 2361, which authorizes
the district courts to issue nationwide process and enjoin other
actions affecting the stake, arguably suggests that a court may
not decline to hear the case, stating that "[the] district court
shall hear and determine the case, and may discharge the
plaintiff from further liability, make the injunction permanent,
and make all appropriate orders to enforce its judgment." 28
U.S.C. § 2361 (emphasis added). We have not found any clues in
other portions of section 13350 or section 2361 or in relevant
legislative history to elucidate this language and its meaning.
It does not seem likely, however, that at the same time Congress
by way of section 2361 gave the district courts the considerable
0
In support of their argument that the exceptional
circumstances test set forth in Colorado River Water Conservation
Dist. v. United States, 424 U.S. 800 (1976), should guide a
district court's decision to dismiss a federal interpleader
action in favor of pending state proceedings, Gerasolo and Bleach
rely heavily on section 1335(a), which states in pertinent part
that "[t]he district courts shall have original jurisdiction of
any civil action of interpleader or in the nature of
interpleader. . . ." 28 U.S.C. § 1335(a) (1993) (emphasis
added). In our view, section 1335(a) represents Congress'
decision to grant jurisdiction to the district courts in
interpleader actions; it is not, as Gerasolo and Bleach urge, a
directive on Congress' part that the district courts exercise
that jurisdiction.
We note that Congress typically uses the language we
see in 28 U.S.C. § 1335(a) when granting jurisdiction to the
district courts. See, e.g., 28 U.S.C. § 1331 (1993) ("The
district courts shall have original jurisdiction of all civil
actions arising under the Constitution, laws or treaties of the
United States."); Id. § 1332(a) ("The district courts shall have
original jurisdiction of all civil actions where the matter in
controversy exceeds the sum or value of $50,000 . . . and is
between -- (1) citizens of different States . . . . "); Id. §1345
("[T]he district courts shall have original jurisdiction of all
civil actions . . . commenced by the United States. . . .").
27
tool of nationwide process, retained their equitable power to
order injunctive relief, and even granted them injunctive
authority over state courts, thereby exempting statutory
interpleader actions from the proscriptions of the Anti-
Injunction Act, 28 U.S.C. § 2283 (1994), it intended to narrow,
if not eliminate, the district courts' discretion in deciding
whether the issues raised in an interpleader action may be better
resolved in a state court. We thus see section 2361 as a source
of authority for the district courts, not as a command to the
courts to exercise jurisdiction. We therefore resolve any
ambiguities in sections 1335 and 2361 with regard to the district
courts' capacity to decline jurisdiction in favor of that
interpretation which preserves the courts' equitable discretion.
See Bowles, 321 U.S. at 329.
As to the purpose of section 1335, it has long been
recognized that the interpleader statute is remedial, aimed at
assisting a party who fears the vexation of defending multiple
claims to a fund or property under his control by providing him
the opportunity to satisfy his obligation in a single proceeding.
See State Farm Fire & Casualty Co. v. Tashire, 386 U.S. 523, 533
(1967). Indeed, the trend over the years has been directed
toward increasing the availability of interpleader and relaxing
historical, technical restraints on the device. For example, the
first interpleader statute, passed in 1917, limited the district
courts' jurisdiction to strict bills of interpleader brought by
an insurance company or a fraternal beneficiary society, Act of
Feb. 22, 1917, ch. 113, 39 Stat. 929 (1917) (repealed 1926); by
28
1936, statutory interpleader was, as it still is, available to
"any person, firm, corporation, association, or society. . . ."
Act of Jan. 20, 1936, ch. 13, 49 Stat. 1096 (1936) (current
version at 28 U.S.C. § 1335(a)). Moreover, since initially
enacted, statutory interpleader has been greatly broadened to
include within its purview disputes concerning a wide range of
obligations and competing claims. Id. (current version at 28
U.S.C. § 1335(a),(b)).0 See Zechariah Chaffee, Jr., The Federal
Interpleader Act of 1936: I. and II., 45 Yale L.J. 963, 1161
(1936). This expansion of the remedy leads us to conclude that
by the interpleader statute, Congress was more interested in
providing an opportunity to litigants to resolve disputes, than
in creating a duty in the district courts to exercise the
jurisdiction given them therein.
0
A Senate Report summarized the modifications made to
the statute by the Act of 1936 as follows:
Bills in the nature of interpleader are
included;
The class of parties entitled to use of
the remedy is broadened;
The scope of interpleader is extended
over other subjects than insurance;
The titles or claims supporting the
action are extended;
The venue is made more convenient for
claimants;
A bond is permitted as an alternative
deposit;
Privity among claimants is abolished;
Interpleader is allowed defensively in
actions at law.
S. Rep. No. 558, 74th Cong., 1st Sess. 1 (1935).
29
Finally, although the statute's scant legislative
history does not shed light on the question we are deciding, it
does not reveal any evidence of intent on Congress' part to limit
or otherwise alter traditional equity practice in section 1335
cases or to make the interpleader remedy obligatory.
We thus hold that the discretionary standard enunciated
in Brillhart governs a district court's decision to dismiss an
action commenced under the interpleader statute during the
pendency of parallel state court proceedings.
IV.
In Wilton v. Seven Falls Co., ___ U.S. ___, 115 S. Ct.
2137 (1995), the Court held that the decision to entertain a
declaratory judgment action in view of a pending parallel state
action is committed to the district courts in the first instance
because "facts bearing on the usefulness of the . . . remedy, and
the fitness of the case for resolution, are particularly within
their grasp." Id. at 2144. We believe that the same holds true
in interpleader cases brought under 28 U.S.C. §1335 (1993). Thus,
this case must be remanded to the district court for it to
exercise its sound discretion in deciding whether to dismiss this
action in favor of the proceeding pending in the Superior Court
of New Jersey.
On remand, the district court should determine, as a
threshold matter, whether the state court action is indeed
"parallel"; that is, whether it encompasses the competing claims
to the Mainstay Mutual Fund monies that are raised here. Since
30
the very basis for deference is the avoidance of needless
duplicative litigation, the absence of a parallel state
proceeding, as we have defined it in this context, would counsel
against, if not proscribe, dismissal. Thereafter, in considering
TAG's motion, the district court should bear in mind that neither
the mere pendency of a parallel state court action nor the mere
presence of state law issues in this case would support
dismissal; the court must remain cognizant of the purpose of the
interpleader statute, ultimately determining where the competing
claims that expose the stakeholder to multiple lawsuits and
liability "can better be settled." See Brillhart v. Excess Ins.
Co., 316 U.S. 491, 495 (1942). In this regard, the court should
evaluate which forum will protect the stakeholder more
effectively while providing the claimants with the more
efficient, convenient, and expeditious vehicle to settle their
dispute to the fund. We would also expect the district court to
evaluate the conduct of the parties in litigating both the
federal and state actions to ensure that procedural fencing,
forum shopping or gamesmanship is not rewarded. We do not intend
the considerations we have enunciated to be comprehensive, and
leave it to the district court to consider any other factors it
finds relevant.
Finally, as the Court noted in Wilton, "where the basis
for declining to proceed is the pendency of a state proceeding, a
stay will often be the preferable course, insofar as it assures
that the federal action can proceed without risk of a time bar if
the state case, for any reason, fails to resolve the
31
controversy". Id. at 2143, n.2. Accordingly, the district court
should also consider whether a stay of this action, rather than a
dismissal, is appropriate, in the event it decides that the
parties are to resolve the issues raised in this action in the
state court.
V.
For the foregoing reasons, we will vacate the district
court's October 26, 1994 order and remand the case to the
district court for further proceedings on the Adherence Group's
July 7, 1994 motion which requested that the court defer to the
New Jersey state court proceeding as to the interpleaded claims
and dismiss the cross-claims brought against it by Gerasolo and
Bleach.
32
NYlife v. The Adherence Group
No. 94-5725
----------------------------------------------------------------
ROTH, Circuit Judge:
I agree with the majority's conclusion that the
district court improperly terminated the interpleader
proceedings, mistakenly believing that all federal claims had
been dismissed. Unlike the majority, however, I am of the
opinion that, after concluding that jurisdiction was proper under
28 U.S.C. § 1335 and dismissing the stakeholder from future
liability, the district court was obligated to adjudicate the
remainder of the interpleader proceeding. I therefore
respectfully dissent.
The majority opinion concludes that the broad
discretionary standard enunciated by the Supreme Court in
Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942), should
be applied in this case. I disagree. Having completed the first
stage of this interpleader proceeding, the district court was
obligated to entertain the second stage of the proceeding,
abstaining in favor of parallel state court proceedings only if
exceptional circumstances required. Thus, I would hold that the
appropriate standard to apply in this case is the "exceptional
circumstances" test established by the Supreme Court in Colorado
33
River Water Conservation Dist. v. United States, 424 U.S. 800
(1976).
I believe that the majority misinterprets the recent
Supreme Court decision in Wilton v. Seven Falls Co., ___ U.S.
___, 115 S.Ct. 2137 (1995). In my opinion, Wilton restricts the
application of Brillhart's discretionary standard to actions
brought under the Declaratory Judgment Act or similar statutes
giving district courts express discretionary jurisdiction. Id.
at 2142. Beyond the declaratory judgment context and in the
absence of express language granting jurisdictional discretion,
however, federal courts have a "virtually unflagging obligation .
. . to exercise the jurisdiction given them" by Congress. Id.;
Colorado River, 424 U.S. at 817-18. Because this case clearly
falls outside of the declaratory judgment context and because
there is no statutory indication that there is a discretionary
character to the second stage of an interpleader proceeding,
Brillhart's broad discretionary standard should not be applied in
this case.
In Wilton, the Court acknowledged that the suggestion
"that Brillhart might have application beyond the context of
declaratory judgments was rejected by the Court in Moses H. Cone
Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 103 S.Ct.
927, 74 L.Ed.2d 765 (1983)." Wilton, 115 S.Ct. at 2142. The
Declaratory Judgment Act "has been understood to confer on
federal courts unique and substantial discretion," id. (emphasis
added), because it provides that a court "may declare the rights
and other legal relations of any interested party seeking [a]
34
declaration." 28 U.S.C. § 2201(a) (1988 ed., Supp. V) (emphasis
added). It is clear from the language of the Act that Congress
intended federal courts to have discretion when deciding whether
to hear actions involving declaratory relief.
Section 1335, however, contains no language indicating
that Congress intended courts to have such jurisdictional
discretion when adjudicating interpleader proceedings. On the
contrary, section 1335(a) provides that "[t]he district courts
shall have original jurisdiction of any civil action of
interpleader . . . ."0 28 U.S.C. § 1335(a). Section 1335 was
intended to allow more parties to bring interpleader actions in
federal courts by broadening the availability and the nature of
relief. Congress therefore minimized diversity requirements,
lowered the required amount in controversy, and provided for
nationwide service of process. 28 U.S.C. §§ 1335(a) & 2361; see
3A MOORE'S FEDERAL PRACTICE ¶ 22.11 (1995). Nothing in prior
Supreme Court decisions allows this court to carve out a
discretionary niche based on the equitable nature of interpleader
relief where Congress has clearly expressed its desire to provide
a federal forum for diverse litigants. "'[I]t was never a
doctrine of equity that a federal court should exercise its
judicial discretion to dismiss a suit merely because a State
court could entertain it.'" Colorado River, 424 U.S. at 813-14
0
While I agree with the majority's characterization of
section 1335(b), I believe that the word "shall" in section
1335(a) cannot be ignored merely because its use by Congress is
"typical," as suggested by the majority opinion. Op. at 27,
n.10.
35
(quoting Alabama Pub. Serv. Comm'n v. Southern Ry. Co., 341 U.S.
341 (1951)).
Abstention in favor of the state court proceeding is
particularly disconcerting in this case because the federal
proceeding was well underway. Indeed, as discussed in the
majority opinion, the first stage of the proceeding had been
entirely completed: the complaint was filed and answered, the
court found that the jurisdictional requirements had been met and
dismissed NYLife Distributors from the case and from any future
liability. The only thing remaining for the court to do was to
resolve the dispute between the claimants for the interpleaded
fund.
The federal court clearly had priority over this case.
Moses H. Cone, 460 U.S. at 21 ("[P]riority 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").
"It has been held . . . that the court first assuming
jurisdiction over property may exercise that jurisdiction to the
exclusion of other courts[.]" Colorado River, 424 U.S. at 818,
96 S.Ct. at 1246-47 (citing Donovan v. City of Dallas, 377 U.S.
408, 412 (1964); Princess Lida v. Thompson, 305 U.S. 456, 466
(1939); United States v. Bank of New York & Trust Co., 296 U.S.
463, 477 (1936)). Thus, because the federal proceedings were
clearly "prior" to the state action, dismissing the federal
claims seems all the more like an unjust abdication of the
court's duty to exercise jurisdiction granted.
36
I dissent from the majority's opinion because it
effectively reads diversity jurisdiction out of the interpleader
statute whenever a similar action is pending in a state court. As
with jurisdiction granted under the diversity statute, once a
case is properly commenced in a federal court, the case should
stay there unless there is a recognized reason for abstention or
transfer. I am disturbed by what I construe as the judicial
destruction of a congressionally created federal remedy. In my
opinion, allowing courts broad authority to decide when to
abstain from exercising jurisdiction clearly granted by Congress
is an inappropriate exercise of judicial authority.
I would apply the more narrow Colorado River test here
in order to adequately uphold federal jurisdiction and the
purposes of the law.0 If Congress desires federal courts to have
broad discretion to abstain from resolving disputes brought under
the interpleader statute, then Congress, not this court, should
make its desire clear by clarifying the language of the statute.
0
I believe that this court may apply the exceptional
circumstances test without remanding the issue to the district
court given the adequacy of the record in this case. The Supreme
Court has articulated a non-exclusive list of factors relevant to
a determination of whether exceptional circumstances exist. That
list includes: "the assumption by either court of jurisdiction
over a res, the relative convenience of the fora, avoidance of
piecemeal litigation, the order in which jurisdiction was
obtained by the concurrent fora, whether and to what extent
federal law provides the rules of decision on the merits, and the
adequacy of state proceedings." Wilton, 115 S.Ct. at 2142.
Balancing these factors "heavily weighted in favor of the
exercise of jurisdiction," Moses H. Cone Memorial Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 16 (1983), I would hold that
the district court improperly abstained and should have exercised
its jurisdiction by completing the adjudication properly
commenced in federal court.
37