862 F. Supp. 2d 170
E.D.N.Y2012Background
- FKC is a Pennsylvania corporation; Solomons are Florida residents and officers/shareholder of FKC; SEC is a New York corporation; Levita is a key SEC officer.
- SSE was formed by SEC and SEA; SSE bid on NYCDEP projects; SEA controlled SSE with 51% vs SEC’s 49%.
- 2004 SFD Joint Venture among SEC, FKC, and DDR; profits split equally; 2004 rider provided each joint venturer a one-third interest; 2005 rider addressed 26th Ward Project.
- 2006 SFD Joint Venture superseded 2004 JV; profits split 50-50; rider gave each venturer a one-half interest in SEC’s interest.
- January 30, 2006 Support Services Agreement (SSA) with SEC providing administrative support to SSE and a fee for FKC’s consulting services; 2006 SSA requested monthly invoices.
- Queens Action ongoing since 2005, with DDR asserting claims; 2008 Queens court injunctions limited disbursement of funds; 2009-2011 accounting-related proceedings; arbitration judgment against FKC in 2010; Federal Action filed February 17, 2010 seeking funds under SSA, 2006 JV, and tax-related profits; Court adopts Colorado River abstention to stay/dismiss federal action in light of parallel state proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Colorado River abstention applies | Queens Action will resolve parallel claims; funds to be allocated via accounting | Federal and state actions are parallel and risk duplicative litigation; abstention appropriate | Granted; abstention warranted and federal action dismissed |
| Whether the Queens Action will adequately protect federal rights | Queens Action does not safeguard all rights asserted in federal complaint | Queens Action provides comprehensive accounting and relief; mitigates risk of improper disbursement | Held in favor of abstention; Queens Action adequate to protect rights |
Key Cases Cited
- Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (U.S. 1976) (establishes narrow abstention doctrine for parallel state-federal suits)
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S. 1983) (six-factor test and prudential abstention standard)
- Dittmer v. Cnty. of Suffolk, 146 F.3d 113 (2d Cir.1998) (parallelism requires substantial likelihood state action will dispose of federal claims)
- Arkwright-Boston Mfrs. Mut. Ins. Co. v. City of New York, 762 F.2d 205 (2d Cir.1985) (six-factor Colorado River framework and balancing emphasis on avoiding piecemeal litigation)
- Niagara Mohawk Power Corp. v. Hudson Black River Regulating District, 673 F.3d 84 (2d Cir.2012) (significant considerations when multiple state actions exist; recounts single federal action may address core issues)