MEMORANDUM & ORDER
Presently before the court is a motion filed by defendant Schlesinger Electrical Contractors, Inc. (“SEC” or “defendant”)
BACKGROUND
The following facts are drawn from the Complaint, the parties’ submissions in connection with the instant motion, and the documents incorporated by reference therein.
I. The Parties and the Agreements
Plaintiff FKC is a Pennsylvania corporation authorized to do business in New York. (Compl. ¶ 8.) Plaintiffs Robert and Jane Solomon, residents of Florida, are principal officers of FKC, and Jane Solomon is its sole shareholder.
In or about August 2004, SEC and non-party Siemens Energy & Automation, Inc. (“SEA”), a Delaware corporation that provided electrical, engineering, and automation solutions in the construction industry, organized a limited liability company under the name Schlesinger-Siemens Electrical, LLC (“SSE”). (See id. ¶ 15; id. Ex. E, Amended and Restated Operating Agreement of Schlesinger-Siemens LLC, dated 10/17/2005 (“Am. Op. Agmt.”); Kalish Decl. Ex. B, Verified Complaint, dated 12/16/2005 (“FKC Queens Compl.”) ¶10.) See also First Keystone Consultants, Inc. v. DDR Constr. Servs.,
On or about August 20, 2004, SEC, FKC, and non-party DDR Construction Services, Inc. (“DDR”), a New Jersey corporation that provides consulting and other services to entities in the construction industry, entered into a Pre-Bidding and Joint Venture Agreement under the name SFD Associates (the “2004 SFD Joint Venture”) through which those three entities agreed to assist in the bidding and performing of SEC’s part of the Projects, and split in equal thirds any profits SEC earned from the Projects.
According to plaintiffs, on August 29, 2005, FKC and SEC executed a letter agreement (the “August 29, 2005 Agreement”) providing that upon award of the 26th Ward Project to SSE, FKC was to receive “$1,500 per week expenses from the [2004 SFD Joint Venture] charged as a job cost” and “$3,000 per week draw against First Keystone’s share of the profits” from the 2004 SFD Joint Venture. (Compl. Ex. G, Letter from Robert Solomon to Jacob Levita, dated 8/29/2005 (“8/29/2005 Agmt.”); Kalish Decl. Ex. H, FKC Queens Counterclaims ¶ 682.) The NYCDEP awarded SSE the 26th Ward Project on or about August 31, 2005. (Kalish Decl. Ex. G, Verified Answer of Third-Party Defendants Schlesinger and Levita and Counterclaims Against Third Party Plaintiffs and Plaintiffs, dated 1/12/2009 (“SEC Queens Counterclaims”) ¶¶ 344, 431, Exhibit D.)
On October 17, 2005, SEC and SEA executed an Amended and Restated Operating Agreement of SSE (the “2005 Amended Operating Agreement”), which provided that SSE was to “engage in the business of bidding upon, and, if the successful bidder, negotiating, executing and performing ... projects for the [NYC-DEP] ____” (Compl. Ex. E, Am. Op. Agmt. ¶ 1.3.) Pursuant to the 2005 Amended Operating Agreement, SEC’s role included estimating installation materials and other resource requirements, de
On or about January 30, 2006, SEC and SSE entered into a Support Services Agreement (the “January 30, 2006 SSA”), pursuant to which SEC agreed to supply certain administrative support services to SSE to facilitate the operation of SSE’s business of bidding on and performing the Projects. (Compl. Ex. A, Support Services Agreement, dated 1/30/2006 (“1/30/2006 SSA”) ¶¶ 1.1, 2.1.) Among the services SEC agreed to provide SSE were the business consulting services of FKC, for which FKC was to be paid a fee not to exceed $156,000 per year. (Id. Exhibit A; Compl. ¶¶ 15, 17-18.) The January 30, 2006 SSA provided that SEC would invoice SSE on a monthly basis for the administrative support SEC provided. (Compl. Ex. A, 1/30/2006 SSA ¶ 2.2.)
On or about October 31, 2006, SEC and FKC entered into two Pre-Bidding and Joint Venture Agreements of SFD Associates (the “2006 SFD Joint Venture”) through which FKC agreed to assist in the bidding and performing of SEC’s part of the Projects, and split any profits SEC earned from the Projects.
The following chart represents graphically the relevant parties and agreements, as described in the Complaint, the parties’ submissions in connection with the instant motion, and the documents incorporated by reference thereto:
II. The Queens Action
In December 2005, plaintiffs commenced litigation (the “Queens Action”) against DDR in New York Supreme Court, Queens County (the “Queens court”), alleging, inter alia, that DDR had withdrawn from the 2004 SFD Joint Venture. (See Kalish Decl. Ex. B, FKC Queens Compl.) See also First Keystone Consultants, Inc. v. DDR Constr. Servs., Index. No. 27095/2005. Among the relief sought by plaintiffs was a declaratory judgment that DDR was not entitled to any profits derived from the 2004 SFD Joint Venture’s work on the 26th Ward Project. (Kalish Decl. Ex. B, FKC Queens Compl. ¶ 32.)
In April 2006, DDR counterclaimed against plaintiffs and asserted third-party claims against the SEC defendants and SSE
On November 24, 2008, the Queens court granted DDR “summary judgment as to DDR’s entitlement to an accounting” of the 2004 SFD Joint Venture. (See Case No. 09-CV-9605(ALC)(AGP) (S.D.N.Y.), ECF No. 63-3, Short Form Order, First Keystone Consultants, Inc. v. DDR Constr. Servs., Index. No. 27095/2005 (N.Y.Sup.Ct. Nov. 24, 2008).) See also DDR Constr.,
(1) disbursing funds of [the 2004 SFD Joint Venture] and [the 2006 SFD Joint Venture] as compensation for themselves or any of their relatives, except by further order of this court, (2) disbursing funds of [the 2004 SFD Joint Venture] and [the 2006 SFD Joint Venture] as a distribution of profits, except by further order of this court, and (3) disbursing funds of [the 2004 SFD Joint Venture] and [the 2006 SFD Joint Venture] in any other manner, except in the ordinary course of business or by further order of this court.
(Kalish Reply Decl. Ex. T, Queens P.I. at 4.) Although the Queens court denied DDR’s motion for an order appointing a referee to conduct the accounting of the 2004 SFD Joint Venture, the New York Appellate Division, Second Department, laier reversed on that issue, stating, “the referees appointed by the Supreme Court in its prior orders ... never conducted such an accounting. DDR was a partner in SFD Associates, and is entitled to an accounting of that joint venture.” First Keystone Consultants, Inc. v. DDR Constr. Servs.,
On January 12, 2009, in the Queens Action, the SEC defendants served an Answer and counterclaims on DDR and cross-claims on plaintiffs. (Kalish Decl. ¶ 26; Kalish Decl. Ex. G, SEC Queens Counterclaims.) There, the SEC defendants alleged, inter alia, that (1) DDR had withdrawn from the 2004 SFD Joint Venture; (2) FKC had breached the 2006 SFD Joint Venture by failing to pay FKC’s share of costs and expenses pursuant to the 2006 SFD Joint Venture, including insurance costs and business operating expenses; and (3) FKC had breached the 2006 SFD Joint Venture by entering into improper agreements and incurring improper expenses. (Kalish Decl. Ex. G, SEC Queens Counterclaims ¶¶ 295-379, 457-73, 483-99.) As relief, the SEC defendants sought, inter alia, (1) a declaratory judgment that DDR retained no interest in the 2004 SFD Joint Venture, the 26th Ward Projects, or the Croton Projects; (2) dissolution of the 2004 SFD Joint Venture; (3) an accounting and dissolution of the 2006 SFD Joint Venture; and (4) an order directing plaintiffs to return $587,736.26 allegedly embezzled from SEC’s Chase Bank accounts. (Id. ¶¶ 295-410, 474-82, 563-67, 622-38.)
On February 11, 2009, plaintiffs served an Answer and counterclaims on the SEC defendants in the Queens Action (Kalish Decl. ¶ 27; Kalish Decl. Ex. H, FKC
III. The Arbitration Judgment
On or about September 12, 2008, SEC served and filed a Demand for Arbitration on FKC seeking payment of monies drawn by FKC against future profits of a joint venture between FKC and SEC formed on January 21, 2004 (the “Coney Island Joint Venture”).
IV. The Federal Action
Plaintiffs commenced the instant action (the “Federal Action”) on February 17, 2010 seeking, inter alia, (1) distribution of funds allegedly owed to FKC, pursuant to the January 30, 2006 SSA, as compensation for consulting services performed by FKC for SSE in connection with bidding on and performing the Projects (Compl. ¶ 1(a), 3, 17-25; id. Ex. A, 1/30/2006 SSA); (2) distribution of funds allegedly owed to FKC, pursuant to the 2006 SFD Joint Venture, arising from Project payments for union labor furnished by SEC in connection with the performance of the Projects (the “Variance Amounts”)
On March 12, 2010, the SEC defendants filed their Answer to the Complaint and counterclaimed against plaintiffs alleging, inter alia, breach of fiduciary duty and breach of the 2006 SFD Joint Venture by transferring funds from SSE’s bank accounts to plaintiffs’ own accounts. (SEC E.D.N.Y. Counterclaims ¶¶ 144-79.) The SEC defendants also alleged that FKC had made certain fraudulent conveyances to the Solomons, and that SEC was entitled to pierce FKC’s corporate veil and recover from the Solomons personally for the arbitration judgment rendered by the New York Supreme Court, Kings County on January 6, 2010. (Id. ¶¶ 90-143).
DISCUSSION
I. Colorado River Abstention
Defendant’s motion seeks dismissal of plaintiffs’ first, second, and third causes of action pursuant to the doctrine of abstention articulated by the United States Supreme Court in Colorado River Water Conservation District v. United States,
Colorado River abstention is appropriate in limited “situations involving the contemporaneous exercise of concurrent jurisdictions, either by federal courts or by state and federal courts.” Colorado River Water Conservation Dist. v. United States,
A. The Queens Action and the Federal Action are Parallel.
The threshold question in determining whether a federal court should abstain under Colorado River from exercising concurrent jurisdiction with a state court is whether the proceedings are “parallel.” Dittmer v. Cnty. of Suffolk,
The court has reviewed the parties’ submissions, including the numerous pleadings in the Queens Action asserting claims, counterclaims, and cross-claims, which clearly demonstrate that the Queens Action and the instant Federal Action are parallel. As an initial matter, all of the parties remaining in the instant Federal Action are also parties to the Queens Action. Although the Queens Action involves an additional party, DDR, “that fact does not render the proceedings non-parallel.” Mouchantaf v. Int’l Modeling & Talent Ass’n,
Further, the subject matter of the Federal Action, in which the parties dispute their respective rights to funds arising out of the NYCDEP Projects, is also at issue
In both the Queens Action and the instant Federal Action, the essential elements of plaintiffs’ claims are that SEC violated its contractual obligations to distribute funds earned by SEC in connection with the Projects. Plaintiffs’ first cause of action in the Federal Action seeks the payment for business consulting services allegedly performed by FKC for SSE in connection with the Projects.
In both the Queens Action and the Federal Action, FKC and SEC have asserted multiple claims against each other arising out of alleged-breaches of, and payments sought under, the 2006 SFD Joint Ven
Moreover, the relief sought by FKC in the Federal Action — distribution of business consulting fees, Variance Amounts, and profits — is ultimately also sought in the Queens Action and will be determined by the accountings of the 2004 and 2006 SFD Joint Ventures sought by the three parties in the Queens Action, including the parties in the Federal Action. It is undisputed that in the Queens Action, (1) DDR sought and was granted summary judgment as to its entitlement to an accounting of the 2004 SFD Joint Venture; (2) both SEC and FKC have requested an accounting of the 2006 SFD Joint Venture and distribution of any funds found due and owing pursuant to that agreement; and (3) the court issued a preliminary injunction prohibiting FKC and SEC from disbursing funds of the 2004 and 2006 SFD Joint Ventures in any manner “except in the ordinary course of business or by further order of th[e] court.”
The accounting of the 2006 SFD Joint Venture sought by FKC in the Queens Action is broad in scope and includes, inter alia, “all bank statements and tax records ... to determine the exact amount of monies received under the contracts, the exact amount of monies retained by and/or paid out by SEC, and [the] exact amount of monies that remain due and owing to [FKC].” (Kalish Deck Ex. H, FKC Queens Counterclaims ¶ 701.) The terms of both the 2004 and 2006 SFD Joint Ventures provide that profits from the Projects will be distributed “after paying or providing for the payment of (a) all known costs and expenses and (b) reserves for such unsettled claims, overruns and other contingencies ... and after repaying all sums advanced for working capital....” (Kalish Deck Ex. A, 2004 SFD JV ¶ 21; Compl. Ex. B, 2006 SFD JV ¶ 20.) By necessity, therefore, a proper accounting in the Queens Action of the 2004 and 2006 SFD Joint Ventures will factor in the costs and expenses for business consulting fees, labor variance charges, and other services or equipment supplied in connection with the performance of the Projects, as any unsettled claims for such items would need to be deducted before profits were distributed to the Joint Venture partners. Thus, to the extent that plaintiffs are entitled to any of the profits or gains they seek in the Federal Action, those funds, if any, will be determined and allocated in the Queens Action after the accounting is completed. See Stone,
In the Federal Action, distribution of any profits or gains derived from the Projects — and, therefore, disposition of some or all of plaintiffs’ claims — by the federal court may in fact be proscribed by the Queens court’s injunction, which predates the filing of the Federal Action. Although FKC insists that the injunction applies only to “profits” earned on the NYCDEP Projects, and not to “gains” such as the Variance Amounts, (Pl. Opp. at 8), this argument is unavailing. On its face, the injunction is not limited to “profits” but instead applies to all “funds” of the 2004 and 2006 SFD Joint Ventures. (Kalish Reply Deck Ex. T, Queens P.I. at 4.) In any event, it is not the place of this court to determine the scope of another court’s injunction. See United States v. Barnett,
Accordingly, because the Queens Action will determine and dispose of all of plaintiffs’ claims in the Federal Action, the court finds that the two actions are parallel for the purpose of Colorado River abstention. ■
B. The Colorado River Factors Warrant Dismissal.
A district court deciding whether to stay or dismiss a federal proceeding that is parallel to one pending in a state court must consider six factors: (1) whether the controversy involves a res over which one of the courts has assumed jurisdiction; (2) whether the federal forum is less inconvenient than the other for the parties; (3) whether staying or dismissing the federal action will avoid piecemeal litigation; (4) the order in which the actions were filed, and whether proceedings have advanced more in one forum than in the other; (5) whether federal law provides the rule of decision; and (6) whether the state procedures are adequate to protect the plaintiffs federal rights. Woodford v. Cmty. Action Agency of Greene Cnty., Inc,
In applying these factors, a district court should be mindful that “the decision whether to dismiss a federal action because of parallel state-court litigation does not rest on a mechanical checklist, but on a careful balancing of the important factors as they apply in a given case, with the balance heavily weighted in favor of the exercise of jurisdiction.” Moses H. Cone,
Plaintiffs have failed to present any argument with respect to the Colorado River factors set forth above. Nevertheless, the court has undertaken an analysis of the factors based on the record before it.
i. Jurisdiction over a Res
The first factor is whether either court has assumed jurisdiction over any res or property. In this case, both the Queens court and the federal court have issued
On November 26, 2008, more than a year before the Federal Action was filed, the Queens court issued a preliminary injunction prohibiting, “except in the ordinary course of business or by further order of [the Queens] court,” the parties from “disbursing funds” of the 2004 and 2006 SFD Joint Ventures for themselves, as a distribution of profits, and “in any other manner.” (Kalish Reply Decl. Ex. T, Queens P.I. at 4.)
Approximately two years later, on November 22, 2010, pursuant to a consent motion filed by all parties to the Federal Action and “so ordered” by this court, J.P. Morgan Chase Bank, N.A. (“Chase Bank”) deposited into the federal court registry the sum of $598,716.14, representing funds to which all parties in the Federal and Queens Actions have asserted claims. (See ECF No. 36, Letter Motion to Deposit Funds, filed 10/28/2010; ECF No. 37, Reply in Support re Letter Motion, filed 10/28/2010; ECF No. 43, Letter Withdrawing Objection to Payment of Funds into Court Registry, filed 11/1/2010; ECF No. 51, Consent Motion to Deposit Funds, filed 11/22/2010; Order Granting Motion to Deposit Funds, dated 11/22/2010; ECF No. 55, Letter Motion to Dismiss, filed 12/13/2010.) The Clerk of this court thereafter deposited those funds in an interest-bearing account, and the claims against Chase Bank were dismissed. (See Order Granting Motion to Dismiss, dated 12/15/2010; ECF No. 57, Clerk’s Judgment dated 12/15/2010.)
Although a federal court’s jurisdiction over a res is a factor that normally militates in favor of retaining jurisdiction over the lawsuit, the court does not find this factor to be compelling under the circumstances in this case. Here, the solitary purpose of depositing the funds into this court’s registry was to allow Chase Bank to withdraw from the Federal Action, and no determination was made as to whether those funds were to be used to satisfy the parties’ claims in the Federal Action. On the contrary, the federal court made no suggestions as to how, when, or under what terms the deposited funds might be distributed.
Further, there is strong evidence in the record on which this court could find that the funds deposited into this court’s registry very likely are subject to the preexisting injunction issued by the Queens court on November 26, 2008, more than a year before the Federal Action was filed. (See Kalish Reply Decl. Ex. T, Queens P.I.) Indeed, DDR, a party to the Queens Action, has asserted that the money deposited in the court’s registry “is comprised of labor variance profits and was and remains the subject of the Queens County Action ... [and DDR] will regard any distribution of these monies in the manner requested by First Keystone and/or Schlesinger as a violation of the Preliminary Injunction, whether through settlement or otherwise.” (ECF No. 47, Letter from Ronald M. Neumann to Magistrate Judge Gold, dated 11/8/2010 (attaching letter from DDR’s counsel to counsel for Chase Bank).) By prohibiting disbursement of any funds from the 2004 and 2006 SFD Joint Ventures during the pendency of the Queens Action, the Queens court apparently has asserted jurisdiction over those funds before the instant Federal Action was even commenced. The fact that the funds are held in the federal court’s registry does not authorize this court to allocate such funds where doing so may very well contravene a pre-existing order of the Queens court. Whether the funds in the federal court’s registry are in fact subject to the injunction, however, must be decided by the Queens court that issued it, and not by
Moreover, the facts here are distinguishable from those in Stone v. Patchett, No. 08-CV-5171,
By contrast, in the instant case, the state court is presiding over the accounting that is necessary to determine the parties’ rights to funds derived from the Projects, and also has issued the preliminary injunction prohibiting the parties from altering the status quo by distributing the funds. Further distinguishing the instant case from Stone, the federal court here has not issued any orders to the remaining parties with respect to the disputed funds. Instead, the federal court’s order concerning the disputed funds was limited to directing Chase Bank, which is no longer a party to the litigation, to deposit the funds into the court’s registry so that the remaining parties could litigate their rights thereto, here or elsewhere. Accordingly, because the Queens court has issued an injunction prohibiting distribution of the disputed funds, while the federal court has simply provided a mechanism for preserving the status quo, the court finds that this factor weighs in favor of abstention.
ii. Inconvenience of the Federal Forum
The second factor, whether the federal forum is less inconvenient than the state forum for the parties, weighs slightly against abstention in this case. Inconvenience under this factor refers to the geographic location of the respective courthouses. See Arkwright-Boston Mfrs. Mut. Ins. Co. v. City of New York,
On February 17, 2010, the Solomons initiated the instant action in the United States District Court for the East
The address argument for removal is specious — our address' (75-25 153rd Street, Flushing, N.Y. 11367 Apt 316) is valid and Siemens has an office in Maspeth Queens.... We chose to prosecute the case in Queens Supreme Court after careful consideration of the following: ... Queens Court is close to our residence where as it is difficult, both physically and financially, to travel to [the Eastern District courthouse in Brooklyn at] Cadman Plaza from Flushing — (a bus and multiple subways .are required) — facts known to the defendants.
(Kalish Deck Ex. S, Letter to the Hon. Dora L. Irizarry and Chief Magistrate Judge Steven M. Gold, dated 4/25/2011.) Nevertheless, giving respectful consideration to the Solomons’ purported residence in Florida and the FKC plaintiffs’ choice of forum in this case, the court finds that the inconvenience factor weighs slightly against abstention because the geographic location of the federal courthouse in Brooklyn, as opposed to the Queens County courthouse, is of little consequence.
iii. Piecemeal Litigation
The Supreme Court has stated that “the most important factor in our decision to approve the dismissal [in Colorado River ] was the ‘clear federal policy ... [of] avoidance of piecemeal adjudication.’” Moses H. Cone,
The crux of plaintiffs’ claims in both the Queens Action and the Federal Action is that they were deprived of money owed to them in connection with the performance of the Projects. Although no party yet has sought an accounting in the Federal Action, an accounting would be required in order to determine plaintiffs’ entitlement to the Project funds.
Moreover, in considering other actions commenced by the FKC plaintiffs regarding the same agreements, both the Nassau County Supreme Court and the Queens County Supreme Court have acknowledged that a single comprehensive accounting of all the funds arising out of the Projects is required in order to determine the parties’ rights thereunder. • In March 2008, the Nassau County Supreme Court transferred an action arising out of the same set of agreements to Queens County to be consolidated with the Queens Action, stating:
Even though First Keystone and Schlesinger claim to have their own feud, arising from an agreement made after DDR’s departure [the 2006 SFD Joint Venture], that feud has the fingerprints of the [2004] SFD [Joint Venture] and the circumstances under which that joint venture morphed into a new one. Until the funds received under the 26th Ward Project are accounted for, to the view of the court, there is no firm ground upon which an accounting between First Keystone can take place.... DDR seeks an accounting of SFD. First Keystone seeks an accounting of “SFD” — only minus DDR’s interest. One accounting should take place, not two separate ones, (citations omitted).
(Kalish Reply Deck Ex. U, Short Form Order, First Keystone Consultants, Inc. v. Schlesinger Elec. Contractors, Inc., Index. No. 22828/2007 (N.Y. Sup.Ct. Nassau Cnty. Mar. 3, 2008) (“Nassau 3/3/2008 Transfer Order”) at 4.) Similarly, during a status conference in October 2011, the Queens court advised plaintiffs that “to prove your case either here or [in the Federal Action], you have to know what you are talking about, which includes the accounting.” (EOF No. 125, Status Report dated 11/4/2011, attaching Transcript of Proceedings in Queens Supreme Court, dated 10/12/2011 (“10/12/2011 Queens Tr.”) at 12.)
As discussed above, the accountings of the 2004 and 2006 SFD Joint Ventures sought by the parties in the Queens Action will necessarily consider the fees, profits, and other gains due and owing to FKC pursuant to the parties’ agreements related to the Projects and, accordingly, will determine what may be due and owing to FKC in the Federal Action. As the Second Circuit has noted, “[t]he existence of such concurrent proceedings creates the serious potential for spawning an unseemly race to see which forum can resolve the same issues first [which would be] prejudicial, to say the least, to the possibility of reasoned decision-making by either forum.” Arkwright-Boston,
The risk of piecemeal adjudication is especially great where a party in one lawsuit is absent from the other. As the Second Circuit has explained:
[T]he primary context in which we have affirmed Colorado River abstention in order to avoid piecemeal adjudication has involved lawsuits that posed a risk of inconsistent outcomes not preventable by principles of res judicata and collateral estoppel. The classic example arises where all of the potentially liable defendants are parties in one lawsuit, but in the other lawsuit, one defendant seeks a declaration of nonliability and the other potentially liable defendants are not parties.
Woodford,
If the Federal Action were to proceed, SEC could be faced with conflicting liability in the two cases. For example, if the federal court awarded FKC half of SEC’s interest in the profits and gains from the Projects, and the Queens court ruled that DDR was entitled to one third of SEC’s interest in all profits and gains therefrom, SEC would be subject to inconsistent directives from the courts. Although a finding by the Queens court that DDR was a one-third partner in the 2004 SFD Joint Venture may be binding on FKC and SEC in the Federal Action, a finding in the Federal Action that FKC is entitled to 50 percent of the Variance Amounts would not have a preclusive effect on DDR in the Queens Action. Thus, DDR’s absence from the Federal Action creates a significant risk of inconsistent adjudication, weighing in favor of abstention. See, e.g., De Cisneros v. Younger,
Although plaintiffs assert that the Federal Action does not involve any funds relating to the 2004 SFD Joint Venture (PI. Opp. at 4), a careful review of the timing of the Projects and agreements raised in the Complaint reveals that plaintiffs’ assertion is baseless. Plaintiffs’ Complaint alleges that “[a]ll of the claims stated in this Complaint arise from the dealings between FKC and SEC in connection with the aforementioned Projects ... and contractual agreements” (Compl. ¶ 16), including the 2005 26th Ward Projects and the 2006 Croton Projects (id. ¶¶ 13-14). In plaintiffs’ first cause of action, for example, plaintiffs seek compensation for business consulting services performed by FKC for SSE pursuant to the
The Second Circuit’s recent opinion in Niagara Mohawk Power Corporation v. Hudson Black River Regulating District,
Accordingly, the avoidance of piecemeal litigation weighs strongly in favor of abstention in this case.
iv. Filing Order
The fourth factor, the order in which the actions were filed, “does not rest
The record before the court demonstrates that during the five years preceding the commencement of the Federal Action and thereafter, the Queens Action has advanced much further than the Federal Action. Cf. Niagara Mohawk,
Objecting to the defendant’s motion to dismiss pursuant to Colorado River abstention, plaintiffs’ counsel complains that the Queens Action is “moving at a glacial pace” (Pl. Opp. at 8) and is “hopelessly mired in controversy” (id. at 1). However, it appears that any delay has been caused by the parties’ own bitter disputes, including over who will bear the cost of the accounting ordered by the Queens court. (See 9/7/2011 Queens Tr. at 5-6; 10/12/2011 Queens Tr. at 10-11.) Indeed, the record demonstrates that the judge in the Queens Action repeatedly has advised the parties that he is willing to schedule the case for trial. (See, e.g., 9/7/2011 Queens Tr. at 4, 8; 10/12/11 Queens Tr. at 8-12.) Cf. Niagara Mohawk,
Discovery in the Federal Action has not progressed nearly as far as in the Queens Action. At every opportunity, the parties have thwarted the progress in this case by filing unnecessary and acrimonious correspondence. (See generally Docket Sheet, First Keystone Consultants, Inc. v. Schlesinger Elec. Contractors, Inc., No. 10-CV-696(KAM)(SMG) (E.D.N.Y.).) Further, in light of the impending accounting in the Queens Action, and with the parties’ consent, the federal court stayed discovery in the Federal Action with respect to all claims and counterclaims except for plaintiffs’ third cause of action and defendant’s first through fifth counterclaims. {See EOF No. 62, Transcript of proceedings held on 12/22/2010, at 4, 7, 17; Minute Entry for Telephone Conference held on 12/22/2010; see also Minute Entry for Telephone Conference held on 5/27/2011; Minute Entry for Status Conference held on 6/28/2011; Minute Entry for Status Conference held on 9/22/2011.) To the extent that the parties still have not conducted the accounting ordered in the Queens Action based on a purported inability or unwillingness to pay for the accounting, the same purported financial infirmity would likely exist in the Federal Action, where an accounting would be required to determine the amount of plaintiffs’ claims.
In sum, upon careful examination of the relative progress of the state and federal proceedings, the court finds that the Queens Action, which was filed long before the Federal Action, is far more advanced. See De Cisneros,
v. Governing Law
Turning to the fifth Colorado River factor regarding governing law, the Federal Action invokes this court’s diversity jurisdiction and involves only claims arising under state law. The Second Circuit has noted that “[a]s all diversity suits raise issues of state law, their presence does not weigh heavily in favor of surrender of jurisdiction.” Arkwñght-Boston,
vi. Protection of Federal Plaintiffs’ Rights
The sixth Colorado River factor is whether the state court proceeding will adequately protect the rights the plaintiffs are seeking to vindicate in the federal lawsuit. Specifically, the court must determine whether “the parallel state-court litigation will be an adequate vehicle for the complete and prompt resolution of the issues between the parties.” Moses H. Cone,
Further, plaintiffs’ confidence in the Queens Supreme Court is evidenced in their filing of lawsuits in that forum, including one as recently as February 2011. (See Summons with Notice, Solomon v. Siemens Indus., Inc., Index No. 4636/2011 (N.Y. Sup.Ct. Queens Cnty. Feb. 23, 2011) (subsequently removed by the defendant to the United States District Court for the Eastern District of New York and assigned docket number 11-CV1321(DLI) (SMG)).) Accordingly, the sixth factor weighs in favor of abstention.
vii. Other Factors
In addition to the six factors already discussed, some courts considering whether to abstain under Colorado River have found “that the vexatious or reactive nature of either the federal or the state litigation may influence the decision whether to defer to a parallel state litigation.” Moses H. Cone,
Similarly, plaintiffs in this case filed both the Queens Action and the instant Federal Action, as well as two other actions in Nassau County and Bronx County Supreme Court, all relating to or arising out of the same universe of Projects and agreements among the same parties presently before the Queens court. (See ECF No. 142-7, Verified Complaint, First Keystone Consultants, Inc. v. Schlesinger Elec. Contractors, Inc., Index. No. 22828/2007 (N.Y. Sup.Ct. Nassau Cnty. Dec. 20, 2007); ECF No. 142-2, Verified Complaint, First Keystone Consultants, Inc. v. N.Y. City Dep’t of Envtl. Prot., Index No. 303366/2010 (N.Y. Sup.Ct. Bronx Cnty. Apr. 23, 2010).) In addition, plaintiffs have asserted cross-claims or counterclaims in at least two other actions in New York federal courts also relating to the same Projects and agreements in the Queens Action. See, e.g., DDR Constr. Servs., Inc. v. Siemens Indus., Inc., No. 09-CV-9605(ALC)(AGP) (S.D.N.Y.); Solomon v. Siemens Indus. Inc., No. 11-CV-1321(DLI)(SMG) (E.D.N.Y.). Although it was SEC that first asserted cross-claims against FKC in the Queens Action, FKC did not hesitate to assert counterclaims against SEC. Moreover, as SEC asserts, the timing of the instant Federal Action is highly suspect, as it was filed only six weeks after SEC obtained a judgment in Kings County Supreme Court against plaintiffs confirming an arbitration award of $545,147.48. (Def. Mem. at 3, 20; Kalish Decl. Ex. R, Order and Judgment, dated 1/6/2010.)
In opposition to defendant’s motion to dismiss pursuant to Colorado River, plaintiffs claim that they “have informed the Queens court that they have no desire to pursue that action further because they understand that the original defendants in that case, [DDR], ... have no funds or assets from which to satisfy a potential future judgment.” (Pl. Opp. at 1.) Nevertheless, given the numerous cross-claims, third-party claims, and counterclaims asserted and the thousands of pages of discovery exchanged in the
Based on the foregoing analysis, the court finds that Colorado River abstention is appropriate in this case. Despite the strong presumption against surrendering federal jurisdiction, the Colorado River factors demonstrate that this is an extraordinary case in which the interests of “conservation of judicial resources and comprehensive disposition of litigation” weigh heavily in favor of abstention. Colorado River,
Plaintiffs’ first, second, and third causes of action are dismissed. In addition, because SEC’s sixth, seventh, eighth, and ninth counterclaims are necessarily related to plaintiffs’ claims, those claims are also dismissed.
SEC seeks in the alternative to dismiss plaintiffs Complaint pursuant to Federal Rule of Civil Procedure 12(b)(7), arguing that DDR is an indispensible party under Federal Rule of Civil Procedure 19. (Def. Mem. at 20-23.) The court need not reach this issue because the court has already determined that all of plaintiffs’ remaining claims must be dismissed.
CONCLUSION
For the reasons set forth above, defendant’s motion to dismiss plaintiffs’ Complaint is granted. Accordingly, plaintiffs’ first, second, and third causes of action, as well as defendant’s sixth, seventh, eighth, and ninth counterclaims, are dismissed. Having determined that defendant’s remaining counterclaims relate to a separate arbitration judgment and there is no just reason for delay, the court respectfully requests the Clerk of the Court to enter judgment dismissing plaintiffs’ first, second, and third causes of action, and defendant’s sixth, seventh, eighth, and ninth counterclaims. See Fed.R.Civ.P. 54(b). By April 30, 2012, the parties shall jointly seek clarification from the Queens County Supreme Court as to whether the funds presently in the registry of the Clerk of this court are subject to the Queens court’s injunction, shall jointly report back to this court as to whether or not the funds should be transferred to the Queens County Clerk, and shall submit copies of any orders by the Queens court on this issue.
SO ORDERED.
Notes
. The Complaint also asserted claims against J.P. Morgan Chase Bank, N.A., s/h/a JPMorgan Chase & Co. ("Chase Bank”) and Jacob Levita ("Levita”), a principal officer of SEC. (ECF No. 1, Complaint filed 2/17/2010 ("Compl.”) ¶¶ 10-12, 24-25, 29, 31-33.) On December 15, 2010, pursuant to an agreement among the parties, the court dismissed with prejudice all claims against defendant Chase Bank — including plaintiffs fourth cause of action and defendant’s first and second cross-claims — after Chase Bank deposited $598,716.14 with the registry of the Clerk of this court. (Order Granting Motion to Dismiss, dated 12/15/2010; ECF No. 57, Clerk’s Judgment dated 12/15/2010.) On January 3, 2011, pursuant to a stipulation by the parties, all claims against Levita were dismissed with prejudice. (ECF No. 61, Stipulation of Dismissal, dated 12/28/2010; Order dated 1/3/2011.)
. SEC asserts that if the court dismisses plaintiffs’ first, second, and third causes of action, dismissal of defendant's sixth, seventh, eighth, and ninth counterclaims is also appropriate. (See ECF No. 100-28, Memorandum of Law of Defendant Schlesinger Electrical Contractors, Inc. in Support of Motion to Dismiss Plaintiffs' First, Second and Third Causes of Action, dated 6/30/2011 ("Def. Mem.”) at 23-24; ECF No. 101-3, Reply Memorandum of Law of Defendant Schlesinger Electrical Contractors, Inc. in Support of Motion to Dismiss Plaintiffs’ First, Second and Third Causes of Action, dated 7/27/2011 ("Def. Reply”) at 7.)
. The parties inappropriately assume the court's familiarity with the facts of the case and the longstanding relationships and history of multiple lawsuits, cross-claims, and counterclaims among the parties. Further, the parties’ submissions are convoluted and replete with excess verbiage and inappropriate ad hominem attacks. To the extent that certain documents referred to in the parties' submissions have not been submitted or certain facts have not been adequately presented, the court has looked for background and clarification to the records in the cases before the Honorable Duane A. Hart of New York Supreme Court, Queens County, and before the Honorable Richard J. Holwell and the Honorable Andrew L. Carter of the United' States District Court for the Southern District of New York. See First Keystone Consultants, Inc. v. DDR Constr. Servs., Index No. 27095/2005 (N.Y. Sup.Ct. Queens Cnty.); DDR Constr. Servs., Inc. v. Siemens Indus.,
. The court finds that plaintiffs have satisfied their burden of establishing that the court has subject matter jurisdiction, based on the parties’ diversity, pursuant to 28 U.S.C. § 1332, (see ECF No. 141, [Solomons’] Response to Order to Show Cause, filed 2/29/2012), notwithstanding evidence in the record that the Solomons filed a subsequent state action that was removed to the United States District Court for the Eastern District of New York, alleging that they are residents of Queens, New York, (see ECF No. 100, Declaration of Melvin J. Kalish in Support of Motion to Dismiss, dated 6/30/2011 ("Kalish Deck”) Ex. S, Letter to the Hon. Dora L. Irizarry and Chief Magistrate Judge Steven M. Gold, dated 4/25/2011; see also Summons with Notice, Solomon v. Siemens Indus., Inc., Index No. 4636/2011 (N.Y. Sup.Ct. Queens Cnty. Feb. 23, 2011)).
. The NYCDEP Projects successfully bid upon by SSE in affiliation with the 2004 SFD Joint Venture included, inter alia, (i) Contract
. One of the Pre-Bidding and Joint Venture Agreements noted that the three 26th Ward Projects already had been awarded to the' Joint Ventures prior to October 31, 2006, the effective date of the 2006 SFD Joint Venture agreement. (Compl. Ex. B, 2006 SFD JV.) The other Pre-Bidding and Joint Venture Agreement, effective October 31, 2006, stated that the Joint Ventures "have been declared by the City of New York as the low bidder on” the Croton Contracts. (Id.)
. On October 5, 2009, the New York Supreme Court, Queens County dismissed all of DDR’s claims against SSE, and the Second Department affirmed. See First Keystone v. DDR Constr. Servs. Inc.,
. DDR served plaintiffs with its Verified Answer to Verified Complaint and Counterclaim on April 11, 2006, and its First Amended Verified Answer to Verified Complaint and Amended Counterclaim on November 19, 2007. (Kalish Decl. ¶¶ 22, 24; Kalish Decl. Ex. C, Verified Answer to Verified Complaint and Counterclaim, dated 4/11/2006; Kalish Decl. Ex. E, DDR Queens Counterclaims • against FKC.) DDR served the SEC Defendants and SSE with its Verified Third Party Complaint on April 14, 2006, and its Second Amended Verified Third Party Complaint on December 23, 2008. (Kalish Decl. ¶¶ 23, 25; Kalish Decl. Ex. D, Verified Third Party Com
. Like the later joint ventures formed by FKC and SEC, the Coney Island Joint Venture was organized to bid on and perform electrical work for a NYCDEP project, specifically, the Coney Island Water Pollution Control Plant Primary Settling Tank Odor Control Building Reconstruction (the "Coney Island Project"). (Kalish Decl. Ex. B, FKC Queens Compl. ¶ 34; Kalish Decl. Ex. G, SEC Queens Counterclaims ¶¶ 276, 278, Exhibit A; Kalish Reply Decl. Ex. T, Queens P.I. at 2.) FKC and SEC agreed that all profits and losses from the Coney Island Joint Venture would be divided equally. (Kalish Decl. Ex. G, SEC Queens Counterclaims Exhibit A ¶ 5.1.) FKC and SEC designated DDR to act as the field project manager for the Coney Island Project. (Kalish Deck Ex. B, FKC Queens Compl. ¶ 35; Kalish Decl. Ex. G, SEC Queens Counterclaims ¶¶ 19, 279, Exhibit A ¶ 6.2.)
. The agreement pursuant to which SEC agreed to pay the Variance Amounts to FKC
[P]ursuant to a January 2006 labor variance Agreement, SSE would pay labor costs to SEC at a fixed hourly rate. This allowed each side to hedge against variations in labor costs, with SEC assuming the risk that labor costs would increase, and SSE assuming the risk of decreased labor costs. As it played out, the labor costs were below the amount set in the agreement.
(SEC E.D.N.Y. Counterclaims ¶ 26.)
. "A motion to dismiss based on the abstention doctrine is also considered as a motion made pursuant to [Federal Rule of Civil Procedure] 12(b)(1).” City of New York v. Milhelm. Attea & Bros., Inc.,
. The court notes that the nature of the parties’ submissions, which improperly assume this court’s familiarity with the parties, agreements, events, and other facts and circumstances, further reveals the parties' long history of litigation over the same issues in at' least eight other lawsuits, including the Queens Action. (See ECF No. 50, Letter transmitting chart of duplicative claims, dated 11/12/2010, at 3; Solomon v. Siemens Indus., Inc., No. 11-CV-1321(DLI)(SMG) (E.D.N.Y.).)
. To the extent FKC alleges that SEC may contend that any payments received by FKC from SEC were made pursuant to the August . 29, 2005 Agreement, and not pursuant to the January 30, 2006 SSA (see Compl. ¶¶ 17-25), FKC has requested that issue to be resolved in the Queens Action, where FKC seeks a declaratory judgment that the August 29, 2005 Agreement "is in full force and effect....” (Kalish Decl. Ex. H, FKC Queens Counterclaims ¶ 707.)
. Whether plaintiffs are due the payments sought in the second and third causes of action in the Federal Action will be determined by the Queens Action. In the Queens Action, both FKC and SEC have sought an accounting to determine the profits derived from the Projects, including labor provided by SEC to be paid under the 2006 SFD Joint Venture. (See Kalish Decl. Ex. H, FKC Queens Counterclaims ¶ 701 (seeking "a detailed accounting pursuant to the JV Agreements ... to determine the exact amount of monies received under the contracts, the exact amount of monies retained by and/or paid out by SEC, and [the] exact amount of monies that remain due and owing to Plaintiff”); Kalish Decl. Ex. G, SEC Queens Counterclaims ¶ 566 (seeking “an accounting of the books and records from July 2007 ... to the present”).)
. Although the parties have submitted transcripts of proceedings in the Queens Action in which FKC and DDR purportedly sought to dismiss their affirmative claims, the parties have not presented any reliable evidence that those claims have, in fact, been dismissed in the Queens Action. (See ECF No. 112, Letter Providing Transcript, dated 9/14/2011, attaching Transcript of Proceedings in Queens Supreme Court, dated 9/7/2011 (“9/7/2011 Queens Tr.”), at 3, 9-10; 10/12/2011 Queens Tr., at 3-7, 15-17.) Further, to the extent that FKC’s and SEC’s cross-claims and counterclaims remain, the accounting that both
. In dismissing the Complaint, the court notes that the Supreme Court has rejected any distinction between a stay of federal litigation and an outright dismissal for purposes of Colorado River abstention. See Moses H. Cone,
. The parties agree that SEC’s first through fifth counterclaims relate to a separate arbitration judgment entered by the New York Supreme Court, Kings County, and that the issues therein are not being litigated elsewhere. (ECF No. 102-1, Declaration of Richard H. Agins in Opposition to Motion of Schlesinger Electrical Contractors Inc. to Dismiss the Complaint, dated 7/18/2011, ¶¶ 4, 9; Def. Mem. at 24; Def. Reply at 7-8.) Although SEC could have filed the claims in New York Supreme Court, this court will retain jurisdiction over those counterclaims.