Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.


United States District Court, Northern District of Illinois, E.D

June 28, 1983


The opinion of the court was delivered by: Shadur, District Judge.


Mechanical Systems, Inc. ("MSI") brings this diversity action against The Cadre Corporation ("Cadre") asserting misrepresentations and inadequate performance by Cadre in connection with a construction project on which both parties were subcontractors. Cadre has now moved alternatively (1) to stay further proceedings in this action pending resolution of a virtually identical Delaware state court case, Cadre Corporation v. Mechanical Systems, Inc., No. 83 C-AP-26, or (2) to transfer this action to the District Court for the District of Delaware pursuant to 28 U.S.C. § 1404(a) ("Section 1404(a)"). For the reasons stated in this memorandum opinion and order Cadre's motion is denied entirely.


MSI is a Delaware corporation with its principal place of business in Illinois. Cadre is a Georgia-based corporation (as to both its place of incorporation and its principal place of business). In 1980 MSI and Cadre, working closely together, submitted complementary bids for construction and installation of an emission control system (the "System") at the East Moline, Illinois foundry owned by John Deere & Company ("Deere"). Those bids contemplated MSI would install equipment and component parts furnished by Cadre and would supply and install other parts of the System as designed and engineered by Cadre. Deere's general contractor, Blount Brothers Corporation ("Blount"), accepted the bids and the parties completed the work. According to MSI's Complaint, Cadre forced MSI to incur financial losses by (1) performing its project responsibilities in a deficient and untimely manner and (2) making misrepresentations that induced MSI to tender a non-remunerative bid.

In a February 11, 1982 letter to Cadre, MSI had demanded payment for substantially the same claims presented in its Complaint. MSI later decided to defer any legal action against Cadre, preferring instead to seek recovery from Blount and Deere via arbitration proceedings. Then Cadre's February 23, 1983 letter for the first time asserted MSI owed Cadre approximately $12,-000 for certain design work. On March 29,1983 — shortly after the arbitration proceedings had ended — both Cadre and MSI sent letters threatening legal action if the other did not pay the requested amount. Cadre was the first to carry out its threat, filing the Delaware state court action April 6, 1983 — approximately two weeks before MSI brought this lawsuit. Cadre's Complaint there raises substantially the same issues as are involved here: It seeks (1) reimbursement for the allegedly unpaid design work*fn1 and (2) a declaration as to its liability to MSI.

Motion To Stay

Over the past few years our Court of Appeals has issued at least four opinions as to a federal court's power to refrain from exercising its jurisdiction pending the outcome of a parallel state proceeding. Evans Transportation Co. v. Scullin Steel Co., 693 F.2d 715 (7th Cir. 1982); Voktas, Inc. v. Central Soya Co., Inc., 689 F.2d 103 (7th Cir. 1982); Microsoftware Computer Systems, Inc. v. Ontel Corp., 686 F.2d 531 (7th Cir. 1982); Calvert Fire Insurance Co. v. American Mutual Reinsurance Co., 600 F.2d 1228 (7th Cir. 1979). Though its initial stabs at this elusive issue were somewhat inconsistent, Evans (its most recent decision) provides a coherent analytical framework that reconciles those discrepancies with a heavy application of judicial gloss.

Evans (693 F.2d at 717) reaffirmed the Court's adherence to the "exceptional circumstances" formulation of Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976):

  Although Colorado River involved special factors that
  warranted abstention in favor of the parallel state action, the
  Court formulated the issue in general terms: "In assessing the
  appropriateness of dismissal in the event of an exercise of
  concurrent jurisdiction, a federal court may also consider [in
  addition to whether

  the state court has assumed jurisdiction over property, see
  id. at 818, 96 S.Ct. at 1246-1247] such factors as the
  inconvenience of the federal forum, the desirability of
  avoiding piecemeal litigation, and the order in which
  jurisdiction was obtained by the concurrent forums. No one
  factor is necessarily determinative. . . . Only the clearest of
  justifications will warrant dismissal. Id. at 818-19, 96
  S.Ct. at 1247 (citations omitted).

Evans also reviewed several important ramifications of the Colorado River doctrine:

    1. Satisfaction of the Colorado River test warrants a stay,
  not outright dismissal, of the federal action (even though
  Colorado River spoke in terms of dismissal). 693 F.2d at

    2. Colorado River demands the same showing of judicial
  economy regardless of the jurisdictional predicate (diversity
  or federal-question) of the federal proceeding. Id. at 717.

    3. Parallel federal actions require a lesser showing of
  judicial economy to justify suspension of proceedings.
  Microsoftware had prescribed those liberal abstention
  standards and confirmed their applicability to situations
  where the plaintiff in the later-filed federal action fails
  to exercise its right to remove the parallel state suit to a
  federal forum (as actually occurred in Microsoftware). Id.
  at 719.

    4. Abstention is not justified by the mere fact the state
  suit was filed before the federal one. Id. at 720.

    5. "Inconvenience of the federal forum" requires a
  balancing of the relative convenience of the two courts
  involved, embracing such factors as convenience to the
  witnesses and parties and each court's familiarity with the
  applicable substantive law. Id. at 720.*fn2

Cadre can find no comfort in the Colorado River abstention principles:*fn3

    1. Delaware jurisdiction has not been assumed over any

    2. While the Delaware suit was brought first, that factor
  alone is not determinative. Indeed it hardly carries any
  weight at all given (a) the threshold status of both
  proceedings and (b) the proximity of their filing dates. See
  Evans, 693 F.2d at 720.

    3. Considerations of convenience overwhelmingly favor
  resolution of the parties' dispute in this forum rather than
  in the Delaware state court:

    (a) Convenience of the witnesses is particularly well served
  by adjudicating the controversy here, for the witnesses each
  side expects to call include:

    (1) MSI personnel in Illinois who worked on the System,
    prepared and negotiated the MSI-Blount subcontract or
    communicated with Cadre employees in coordinating the two
    subcontracts involving MSI and Cadre,

    (2) Cadre personnel in Atlanta, Georgia who ordered and
    supervised delivery of materials to the project, performed
    design work or prepared and negotiated the Cadre-Blount

(3) Blount employees in Illinois and Dayton, Ohio and

    (4) perhaps employees of Cadre's and MSI's subcontractors who
    reside in Georgia, Illinois or other states bordering on
    Illinois (e.g., Michigan).

  While it is unclear how many witnesses in Illinois and the
  neighboring states can be reached by this Court's subpoena
  power, there can be no doubt those witnesses would find this
  forum much more convenient than the distant Delaware forum. And
  as for the Atlanta witnesses, neither forum offers
  significantly more convenience.

    (b) Much the same may be said as to convenience of the
  parties. MSI not only conducts most of its business in
  Illinois, but also has its offices in this District. It has
  never had an office or transacted any business in Delaware.
  Its only connection with that state is indeed attenuated: It
  has appointed a registered agent there, as Delaware requires
  of any corporation organized under its laws. As for Cadre,
  both forums are relatively distant from its Atlanta offices.
  Thus the substantial convenience of an Illinois forum to MSI
  greatly outweighs whatever marginal convenience (if any) a
  Delaware forum holds for Cadre.

    (c) Though not a critical factor, the costs of transporting
  documents will also be minimized by litigation here rather
  than in Delaware. Relevant documents possessed by MSI, Deere
  and Blount are located in Illinois (in Rock Island and Cook
  Counties). Location of Cadre's documentation — Atlanta,
  Georgia — is neutral in terms of convenience.

    (d) Finally this Court is a more convenient forum because
  Illinois law is likely to apply to virtually all aspects of
  the Complaint:

    (1) Count I involves alleged misrepresentations made by Cadre
    during negotiations held in Illinois.

    (2) Count IV asserts Cadre's contractual obligation to pay
    for work performed by MSI at the Illinois construction site.

    (3) Counts II and III attack Cadre's performance of its
    obligations under its subcontract and a purported agreement
    with MSI — actions that arguably took place at its Atlanta
    offices. Nevertheless because those actions related to an
    Illinois construction project, the breach of contract
    components of those counts may well be controlled by Illinois
    law. Moreover the Illinois choice of law provision in Cadre's
    proposal to Blount (which became part of its subcontract)
    reinforces that conclusion. As for the negligence components
    of those counts, Illinois or Georgia — but certainly not
    Delaware — is the state with "the most significant contacts."

  In short, all conceivable aspects of the convenience inquiry
  point decidedly towards this federal forum — so much so that
  this Court has not really had to engage in the "balancing"
  process ordinarily required by that abstention criterion.

    4. Colorado River's final factor (424 U.S. at 800, 96 S.Ct.
  1236) — "desirability of avoiding piecemeal litigation" — has
  no relevance in this case, for the Delaware lawsuit and this
  action involve essentially the same issues. And as Evans
  made clear, the judicial diseconomies of having two parallel
  lawsuits instead of one do not counsel abstention. Even were
  that prospect a relevant concern, its weight is considerably
  diminished by the very real possibility the Delaware state
  court will grant MSI's pending motion for dismissal on forum
  non conveniens grounds in light of that lawsuit's tenuous
  connections with Delaware.

In sum, Colorado River's nonexhaustive list of abstention considerations does not support deferral to the Delaware state court. And because Cadre has not identified any other "special factors counseling . . . against the exercise of jurisdiction," Voktas, 689 F.2d at 107 (quoting Calvert Fire, 600 F.2d at 1234), this Court must deny Cadre's motion to stay.*fn4

Section 1404(a) Motion To Transfer

As an alternative to a stay, Cadre seeks to transfer this action to the District of Delaware under Section 1404(a):

  For the convenience of the parties and witnesses, in the
  interest of justice, a district court may transfer any civil
  action to any other district or division where it might have
  been brought.

That too must be denied.

Of course the Colorado River doctrine obviously differs from the Section 1404(a) inquiry in important respects. But this Court's earlier analysis of relative convenience leaves absolutely no doubt that transfer is unwarranted under Section 1404(a)'s substantive criteria — even assuming the Delaware court continues to adjudicate the state action.

Cadre advances two additional arguments for transfer not addressed in connection with its motion to stay:

    1. Having both the federal and state actions in Delaware
  obviates the need for two sets of attorneys and documents.

    2. Management Statistics for 1981 for the District Courts
  indicate the average time from issue to trial in civil cases
  is 11 months in the District of Delaware and 17 months in the
  Northern District of Illinois. Threedy Aff. Ex. A.

This Court is not very sympathetic to the first contention, for the wound of the Delaware action is self-inflicted by Cadre and could be healed simply by abandoning that inconvenient forum. As for the second, any pair of litigants that addresses the issues and concludes discovery with dispatch can go to trial in this Court's courtroom too in less than a year.
*fn5 But most important, even if accepted both arguments pale in comparison to the factors that overwhelmingly favor retention.


Cadre's motion to stay or transfer this action is denied. Cadre is directed to answer the Complaint on or before July 8,1983.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.