15‐1465‐cv
Aventura Technologies, Inc. v. World of Residensea II Ltd.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE
OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A
SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE
FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A
PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY
COUNSEL.
At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in
the City of New York, on the 20th day of April, two thousand sixteen.
PRESENT: RALPH K. WINTER,
DENNY CHIN,
SUSAN L. CARNEY,
Circuit Judges.
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AVENTURA TECHNOLOGIES INC.,
Plaintiff‐Appellant,
v. 15‐1465‐cv
WORLD OF RESIDENSEA II LTD.,
Defendant‐Appellee.
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FOR PLAINTIFF‐APPELLANT: Bryan Ha, White Plains, New York.
FOR DEFENDANT‐APPELLEE: Adria G. Notari, McAlpin Conroy, P.A.,
Miami, Florida.
Appeal from the United States District Court for the Eastern District of
New York (Hurley, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the order of the district court is VACATED, and the
case is REMANDED for further proceedings consistent with this order.
Plaintiff‐appellant Aventura Technologies, Inc. (ʺAventuraʺ) appeals the
district courtʹs April 6, 2015 order affirming a magistrate judgeʹs order granting a stay of
its action against defendant‐appellant World of Residensea II Ltd. (ʺResidenseaʺ)
pursuant to Colorado River Water Conservation District v. United States, 424 U.S. 800
(1976) (ʺColorado Riverʺ), in deference to a parallel lawsuit in Florida state court arising
from the same transaction and events. Each party claims that the other breached a
contract between them which provided for Aventuraʹs installation and repair of
surveillance equipment on Residenseaʹs residential ship. On appeal, Aventura argues
that the district court abused its discretion in abstaining from adjudicating its claims.
We assume the partiesʹ familiarity with the underlying facts, the procedural history of
the case, and the issues on appeal.
As a threshold matter, the district courtʹs stay order was appealable under
28 U.S.C. § 1291 as a final order, because the district court effectively surrendered its
power to resolve the case to the Florida court. See Gen. Reins. Corp. v. Ciba‐Geigy Corp.,
853 F.2d 78, 80 (2d Cir. 1988) (ʺAn order staying an action is final when its sole purpose
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and effect are the surrender of jurisdiction to a state court.ʺ). Additionally, ʺa district
court order granting a stay of litigation pursuant to Colorado River meets each of the
three requirements of the collateral‐order doctrine and therefore is appealable under
§ 1291.ʺ Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 276 (1988) (citing
Moses H. Cone Memʹl Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983)). 1
Turning to the district courtʹs order, we note that the Colorado River
abstention doctrine is a limited doctrine that may apply where traditional categories of
abstention do not. Vill. of Westfield v. Welchʹs, 170 F.3d 116, 120 (2d Cir. 1999). The
doctrine recognizes that, while ʺthe rule is that the pendency of an action in the state
court is no bar to proceedings concerning the same matter in the Federal court having
jurisdiction, exceptional circumstances may on occasion permit the dismissal of a
federal suit due to the presence of a concurrent state proceeding for reasons of wise
judicial administration.ʺ Zemsky v. City of New York, 821 F.2d 148, 152 (2d Cir. 1987)
(alterations and internal quotation marks omitted) (citing Colorado River, 424 U.S. at 817,
818). In determining whether such circumstances exist, ʺthe district court must weigh
six factors, with the ʹbalance heavily weighted in favor of the exercise of jurisdiction.ʹʺ
Burnett v. Physicianʹs Online, Inc., 99 F.3d 72, 76 (2d Cir. 1996) (quoting Moses H. Cone,
460 U.S. at 16). Those factors are: (1) the assumption of jurisdiction by either court over
1 Section 1291 provides, in relevant part, that ʺ[t]he courts of appeals . . . shall have
jurisdiction of appeals from all final decisions of the district courts of the United States.ʺ 28
U.S.C. § 1291.
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any res or property, (2) the inconvenience of the federal forum, (3) the avoidance of
piecemeal litigation, (4) the order in which jurisdiction was obtained, (5) whether state
or federal law supplies the rule of decision, and (6) whether the state court proceeding
will adequately protect the rights of the party seeking to invoke federal jurisdiction. Id.
(citing Bethlehem Contracting Co. v. Lehrer/McGovern, Inc., 800 F.2d 325, 327 (2d Cir.
1986)). ʺIn this analysis, the balance is heavily weighted in favor of the exercise of
jurisdiction. Thus, the facial neutrality of a factor is a basis for retaining jurisdiction, not
for yielding it.ʺ Woodford v. Cmty. Action Agency of Greene Cty., Inc., 239 F.3d 517, 522 (2d
Cir. 2001) (alterations and internal citation marks omitted).
While we review the district courtʹs decision to stay a case on abstention
grounds for abuse of discretion, the standard of review is ʺsomewhat rigorous.ʺ Vill. of
Westfield, 170 F.3d at 120. This is because federal courts have a ʺvirtually unflagging
obligation . . . to exercise the jurisdiction given them.ʺ Colorado River, 424 U.S. at 817.
Accordingly, the courtʹs discretion ʺmust be exercised within the narrow and specific
limits prescribed by the particular abstention doctrine involved. . . . [T]here is little or no
discretion to abstain in a case which does not meet traditional abstention requirements.ʺ
Vill. of Westfield, 170 F.3d at 120 (quoting Dittmer v. County of Suffolk, 146 F.3d 113, 116
(2d Cir. 1998)).
We conclude that the district court abused its discretion in granting the
motion to stay the action. First, the district court did not give sufficient weight to ʺthe
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heavy presumption favoring the exercise of jurisdiction.ʺ Bethlehem Contracting, 800
F.2d at 327. In his order granting the stay motion, the magistrate judge did not
acknowledge the presumption, and he did not recognize that the federal courts have a
ʺvirtually unflagging obligation . . . to exercise the jurisdiction given them,ʺ Colorado
River, 424 U.S. at 817, or that ʺthe balance [is] heavily weighted in favor of the exercise
of jurisdiction.ʺ Moses H. Cone, 460 U.S. at 16. None of these concepts is mentioned in
the order. Moreover, while the district judge acknowledged the presumption on review
of the magistrate judgeʹs order, the district judge essentially surmised that the
magistrate judge must have taken the presumption into account because he found that
Residensea ʺsatisfied its burden under Colorado River and Moses H. Cone.ʺ App. at 128.
In the absence of any discussion of the presumption, we are unable to determine that
the magistrate judge adequately considered the courtʹs obligation to exercise
jurisdiction.
Second, while the magistrate judge acknowledged the six factors to be
considered in deciding a Colorado River motion, he discussed only three of them. He did
not discuss whether the controversy involves a res over which one of the courts has
jurisdiction, whether one forum is more inconvenient than the other, or whether federal
admiralty law or state law governs.2 And, even assuming state law governs, the
2 We note that even where jurisdiction is premised on diversity, admiralty law can
apply. Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 22‐23 (2004). ʺWhen a contract is a maritime one,
and the dispute is not inherently local, federal law controls the contract interpretation.ʺ Id. at
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magistrate judge did not consider whether New York or Florida law would apply. All
of these factors clearly are relevant in this case.
Third, the magistrate judgeʹs analysis of the remaining three factors does
not reflect the ʺcareful balancingʺ that animates Colorado River abstention. Bethlehem
Contracting, 800 F.2d at 327. The courtʹs determination that it should avoid ʺpiecemeal‐
litigation . . . because there is a real risk that litigation could occur in installments,ʺ App.
at 128, failed to appreciate that ʺabstention [may not] be based simply on an aversion to
deciding an issue prior to a state courtʹs adjudication.ʺ Woodford, 239 F.3d at 525. ʺEach
court is free to proceed in its own way and in its own time, without reference to the
proceedings in the other court. Whenever a judgment is rendered in one of the courts
and pleaded in the other, the effect of that judgment is to be determined by application
of the principles of res adjudicata.ʺ Kline v. Burke Constr. Co., 260 U.S. 226, 230 (1922). In
deciding that the state court proceeding was further along, the district court failed to
acknowledge that in the state action, Aventura had not filed an answer, had only filed a
pre‐answer motion to dismiss in the state action for lack of personal jurisdiction, and
that the parties had engaged in only limited jurisdictional discovery in connection with
that motion. ʺ[P]riority should not be measured exclusively by which complaint was
22‐23. Whether or not a contract is a maritime one ʺʹdepends upon . . . the nature and character
of the contract,ʹ and the true criterion is whether it has ʹreference to maritime service or
maritime transactions.ʹʺ Id. at 24 (quoting N. Pac. S.S. Co. v. Hall Bros. Marine Ry. & Shipbuilding
Co., 249 U.S. 119, 125 (1919)).
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filed first, but rather in terms of how much progress has been made in the two actions.ʺ
Moses H. Cone, 460 U.S. at 21. The magistrate judge also concluded that the sixth factor
weighed in favor of abstention without stating a reason or determining its weight.
Fourth, the district court erred by applying a highly deferential standard
of review rather than de novo review. Pursuant to Federal Rule of Civil Procedure 72(b),
if a magistrate judgeʹs order resolves a matter that is ʺdispositive of a claim or defense,ʺ
then ʺ[t]he district judge must determine de novo any part of the magistrate judgeʹs
disposition that has been properly objected to.ʺ Fed. R. Civ. P. 72(b)(1),(3). As
discussed above, just as an order staying a case pursuant to Colorado River is an
appealable order, we conclude such an order is dispositive of a claim or defense in the
sense that the federal plaintiff loses his ability to pursue his claim in federal court. See
Moses H. Cone, 460 U.S. at 10; accord Shands Jacksonville Med. Ctr., Inc. v. Natʹl Union Fire
Ins. Co., No. 3:14‐CV‐930‐J‐34JBT, 2015 WL 5714870, at *3 (M.D. Fla. Sept. 22, 2015).
Hence, the district court should have reviewed the magistrate judgeʹs order de novo.
Accordingly, we VACATE the order of the district court and REMAND
the matter for reconsideration of the Colorado River factors under the appropriate
standard of review.
FOR THE COURT:
Catherine OʹHagan Wolfe, Clerk
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