Transocean Offshore USA, Inc. v. Catrette , 239 F. App'x 9 ( 2007 )


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  •                                                           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
    ))))))))))))))))))))))))))
    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    that this opinion should not be published and is not precedent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.
    2
    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.
    3
    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.
    4
    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
    5
    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
    6
    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--
    7
    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
    8
    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
    9
    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,
    10
    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.
    11