Transocean Offshore USA, Inc. v. Catrette

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS January 12, 2007
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
)))))))))))))))))))))))))) Clerk

No. 06-30474
Summary Calendar

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TRANSOCEAN OFFSHORE USA, INC.

Plaintiff–Appellant

v.

DAVID CATRETTE

Defendant–Appellee

Appeal from the United States District Court
for the Eastern District of Louisiana
No. 2:05-CV-6328

Before DEMOSS, STEWART, and PRADO, Circuit Judges.

PER CURIAM:*

This is an appeal from a district court’s order staying this

litigation in favor of similar state court litigation. Because

the district court abused its discretion in staying this case, we

REVERSE the district court’s order and REMAND the case for

further proceedings consistent with this opinion.

I. FACTUAL AND PROCEDURAL BACKGROUND

*
Pursuant to 5TH CIRCUIT RULE 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIRCUIT
RULE 47.5.4.
 Defendant-Appellee David Catrette (“Catrette”) was employed

as a mechanic by Plaintiff-Appellant Transocean Offshore USA,

Inc. (“Transocean”), for approximately ten years. On April 9,

2003, Catrette reported to a Transocean medic that he was

experiencing discomfort in his right shoulder as a result of an

accident on the M/V DISCOVERER SPIRIT.1 After an examination,

the medic gave Catrette an anti-inflammatory and released him to

resume work.

Catrette made no further complaints about his shoulder until

February 12, 2004, when he advised Transocean that he had

sustained a rotator cuff injury as a result of his accident in

2003. Catrette requested further treatment as well as

compensation for his expenses arising out of the injury.

Transocean’s claims handler, Shuman Consulting Services, L.P.,

(“Shuman Consulting”) arranged for Catrette to see Dr. Jay

Binder, an orthopedic specialist. Dr. Binder concluded that

Catrette did not have a torn rotator cuff, but did recommend a

course of physical therapy. Catrette claims that Dr. Binder

informed Shuman Consulting of his diagnosis and recommendation,

but that no one ever told Catrette of the results.

Transocean and Catrette then entered into a settlement

agreement (the “Release”). In exchange for $4000, Catrette

1
The date of the alleged accident is disputed, but the
court need not resolve that issue in order to reach its decision
in this case.

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agreed to release and indemnify Transocean from any and all

claims Catrette might have arising out of the alleged accident.

The agreement was memorialized before a court reporter in a

transcript of the settlement proceedings. Catrette did not have

his own attorney during these proceedings.

Catrette later claimed that he was subsequently diagnosed

with a rotator cuff tear. Therefore, on June 27, 2005, Catrette

commenced litigation under the Jones Act against Transocean in

the United States District Court for the Eastern District of

Louisiana. Catrette voluntarily dismissed his complaint three

days later and refiled his suit in a Louisiana state court on

July 14, 2005. Catrette filed a motion for partial summary

judgment in state court, asking the state court to invalidate the

Release as a result of lack of consent and inadequate

consideration, based on the fact that Catrette was not aware of

Dr. Binder’s conclusions when he agreed to the Release. The

state court denied Catrette’s motion, finding there were genuine

issues of material fact regarding the validity of the Release.

Transocean filed the instant lawsuit on December 2, 2005,

seeking damages from Catrette as a result of Catrette’s breach of

the Release. Transocean filed a motion for partial summary

judgment, to which Catrette responded by filing a motion to

dismiss and, alternatively, a motion to stay the suit in favor of

his state court lawsuit. The district court granted the stay,

and Transocean now appeals.

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 II. JURISDICTION AND STANDARD OF REVIEW

Transocean premises federal subject matter jurisdiction on

diversity of citizenship, see 28 U.S.C. § 1332, and admiralty

jurisdiction, see 28 U.S.C. § 1333, and made an admiralty

designation under Rule 9(h) of the Federal Rules of Civil

Procedure. We have jurisdiction over the district court’s order

granting the stay under 28 U.S.C. § 1291. See Moses H. Cone

Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 8-13 (1983);

see also Am. Guar. & Liab. Ins. Co. v. Anco Insulations, Inc.,

408 F.3d 248, 250 (5th Cir. 2005). We review a district court’s

decision to stay a federal suit pending the outcome of state

court litigation for an abuse of discretion; however, we consider

any legal interpretations underpinning the decision de novo.

Black Sea Inv., Ltd. v. United Heritage Corp., 204 F.3d 647, 649-

50 (5th Cir. 2000); see also Stewart v. W. Heritage Ins. Co., 438

F.3d 488, 491 (5th Cir. 2006).

III. DISCUSSION

It is well established that federal courts have a “virtually

unflagging” obligation to exercise the jurisdiction given to

them. Colo. River Water Conservation Dist. v. United States, 424

U.S. 800, 817 (1976). As a result, the pendency of an action in

state court is typically no bar to proceedings concerning the

same matter in federal court. Id. There are, however, several

exceptions to this general rule.

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 One such exception is found in Brillhart v. Excess Insurance

Co. of America, 316 U.S. 491 (1942), which is applicable when the

federal suit seeks only declaratory relief. Under Brillhart, a

federal court may stay a declaratory judgment suit in favor of

state court litigation if, after consideration of several

factors, the court determines that the suit would be better

handled by the state court. Sherwin-Williams Co. v. Holmes

County, 343 F.3d 383, 389 (5th Cir. 2003) (listing six factors a

court should consider). However, when the federal suit seeks

monetary or other relief, even if declaratory relief is also

requested, the standard found in Colorado River is used to

determine whether a stay of the federal proceedings is warranted.

Am. Guar., 408 F.3d at 250-51. Under Colorado River, the

district court’s discretion to stay is “narrowly circumscribed”

and requires the existence of “exceptional circumstances” before

a stay is permissible. See id.; Southwind Aviation, Inc. v.

Bergen Aviation, Inc., 23 F.3d 948, 951 (5th Cir. 1994) (per

curiam).

Here, Transocean’s federal suit seeks monetary relief by way

of a breach of contract claim. The district court did not apply

either Brillhart or Colorado River in its analysis, but did

characterize Transocean’s federal suit as “virtually tantamount

to a declaratory judgment action . . . .” (4/19/06 Order &

Reasons at 10.) There was no finding, however, that Transocean’s

breach of contract claim was frivolous or that it was included

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solely to prevent application of the more lenient Brillhart

standard. See Kelly Inv., Inc. v. Cont’l Common Corp., 315 F.3d

494, 497 n.4 (5th Cir. 2002) (applying Colorado River when claims

for coercive relief were not frivolous and there was no evidence

they were added solely to avoid Brillhart). Thus, under this

court’s precedent, stay of the federal proceedings must be

analyzed under Colorado River. See Southwind Aviation, 23 F.3d

at 951 (holding that, because suit requested damages for breach

of contract, Colorado River applied, even though district court

characterized suit as declaratory judgment action).

A. Colorado River Analysis

We turn now to whether this case meets the exceptional

circumstances test outlined in Colorado River. As an initial

matter, a stay under Colorado River is permissible only when the

federal and state cases are “parallel.” Am. Guar., 408 F.3d at

251; Diamond Offshore Co. v. A&B Builders, Inc., 302 F.3d 531,

540 (5th Cir. 2002). This means that the suits must involve the

same parties and the same issues. Am. Guar., 408 F.3d at 251;

Diamond Offshore, 302 F.3d at 540.

If the federal and state cases are parallel, the court then

engages in a multi-factored analysis to determine whether there

are exceptional circumstances warranting a stay of the federal

litigation. Stewart, 438 F.3d at 491. The relevant factors

identified by the Supreme Court are: (1) the assumption by either

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court over a res; (2) the relative inconvenience of the forums;

(3) avoidance of piecemeal litigation; (4) the order in which

jurisdiction was obtained; (5) the extent to which federal law

provides the rules of decision on the merits; and (6) the

adequacy of the state proceedings to protect the rights of the

party invoking federal jurisdiction. Id.; see also Colo. River,

424 U.S. at 818. We do not apply these factors mechanically, but

carefully balance them “‘with the balance heavily weighted in

favor of the exercise of jurisdiction.’” Brown v. Pac. Life Ins.

Co., 462 F.3d 384, 395 (5th Cir. 2006) (quoting Moses H. Cone,

460 U.S. at 16).

We first note that it is questionable whether the federal

and state proceedings in this case are in fact parallel. While

the parties are the same in each case, the claims and issues are

not. Catrette’s state court suit includes a claim of negligence

against Transocean that is not present in the federal suit, and

Transocean’s federal suit contains a claim for breach of contract

that the state court suit does not. The Colorado River doctrine

cannot be invoked if the suits are not parallel; however, this

court has not always required a precise identity of parties and

issues. Brown, 462 F.3d at 395 n.7. In this case, because we

ultimately conclude that abstention is not proper, we need not

determine whether these proceedings are truly parallel. See id.

Turning next to the consideration of the factors used in the

Colorado River analysis, we observe that the first two factors--

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assumption by the court over a res and relative inconvenience of

the forums--do not weigh in favor of abstention. Neither court

has assumed jurisdiction over a res, and the cases are both in

Louisiana and convenient for the parties.

The third factor, avoidance of piecemeal litigation, weighs

only slightly in favor of abstention. As explained by this court

in Stewart v. Western Heritage Insurance Co., the Colorado River

doctrine does not prohibit duplicative litigation, but only

piecemeal litigation. 438 F.3d at 492. The assertion of res

judicata following a decision by either the federal or state

court in this case would eliminate any problem of inconsistent

judgments. See id. As the litigation stands, though, with the

negligence claim in state court and the breach of contract claim

in federal court, this factor does militate toward abstention.

The order in which jurisdiction was obtained does not weigh

heavily in favor of abstention. Although Catrette’s state court

suit was first filed, Transocean could not have filed first, as

it was Catrette’s filing of the state court suit that created

Transocean’s breach of contract claim. As to the final two

factors, general maritime law provides the rules of decision in

both cases, and the state court is capable of protecting

Transocean’s rights. Both of these factors are neutral and do

not persuade this court that exceptional circumstances exist.

In sum, the avoidance of piecemeal litigation is the only

factor in the Colorado River analysis that leans toward

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permitting a stay of the federal litigation in this case. This

one factor, however, is insufficient to create the exceptional

circumstances necessary to warrant a stay of the federal

proceedings. See Stewart, 438 F.3d at 493 (finding district

court abused its discretion in staying federal litigation when

avoidance of piecemeal litigation was only factor weighing in

favor of abstention). Accordingly, granting a stay under the

Colorado River doctrine would be an abuse of discretion in this

case.

B. The District Court’s Analysis

As noted above, the district court did not rely on either

Brillhart or Colorado River in making its decision to stay the

case. Instead, the district court determined that a stay was

appropriate because (1) Catrette has a right to a jury trial in

state court on his Jones Act claim, but would not have a right to

a jury trial in federal court; and (2) proceeding with the

federal action would amount to a “constructive removal” of

Catrette’s Jones Act claim, which is not removable as a matter of

law.

We make no comment on whether the district court’s analysis

of Catrette’s right to a jury trial in federal court is correct.

We do, however, note that neither the Supreme Court nor this

court has ever held that a stay is appropriate solely because a

jury trial is available in one forum, but not another. Indeed,

the availability of a jury trial is not one of the factors the

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Supreme Court has authorized lower courts to consider in

determining whether a stay is warranted under Brillhart or

Colorado River.

As for the district court’s concern about a constructive

removal, this court has found no Supreme Court or court of

appeals opinion that even recognizes constructive removal. The

closest Catrette has come to case law on constructive removal is

Great Lakes Dredge & Dock Co. v. Ebanks, 870 F. Supp. 1112 (S.D.

Ga. 1994). In that case, the district court granted a motion to

dismiss a declaratory judgment claim in federal court when the

injured seaman had filed a Jones Act claim in state court. Id.

at 1119. The court noted that the declaratory judgment claim

amounted to a “backdoor” removal. Id. at 1118. This statement,

however, came in a discussion of the Brillhart factors, since the

court specifically refused to apply the strict standard found in

Colorado River, and, thus, this case is distinguishable from the

case at hand. Id. Further, because the federal suit in Great

Lakes was only a declaratory judgment, it resembled a

“constructive removal” much more closely than does this case,

where damages for a breach of contract are also sought.

The district court cites numerous cases for the proposition

that it is permissible to stay or dismiss a federal declaratory

judgment action in favor of a state court Jones Act claim. See,

e.g., Torch, Inc. v. Leblanc, 947 F.2d 193 (5th Cir. 1991); Rowan

Cos. v. Griffin, 876 F.2d 26 (5th Cir. 1989); Taira Lynn Marine,

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Inc. v. Blanchard, No. 00-CV-2161, 2000 WL 1520959 (E.D. La. Oct.

12, 2000); Belle Pass Towing Corp v. Cheramie, 763 F. Supp. 1348

(E.D. La. 1991). None of these cases, however, applied the

Colorado River exceptional circumstances standard, because all of

the cases dealt only with federal declaratory judgments. Our

precedent demands that we apply Colorado River in this case

because Transocean has sought monetary damages for breach of

contract. Therefore, those cases, which were analyzed under a

more lenient standard, do not persuade this court that a stay is

appropriate under Colorado River.

Consequently, the district court abused its discretion when

it did not apply Colorado River to its analysis of Catrette’s

motion to stay and, instead, stayed the case on grounds not

recognized by this court or the Supreme Court. As a result, we

reverse the district court’s order staying this litigation and

remand for further proceedings.

IV. CONCLUSION

For the reasons above, we REVERSE the district court’s order

staying this litigation and REMAND for further proceedings

consistent with this opinion.

REVERSED and REMANDED.

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