The opinion of the court was delivered by: Grady, District Judge.
Plaintiff Community Consolidated School District No. 59 ("the
District"), an Illinois municipal corporation, contracted with F.J.
Richter Construction Co., Inc. ("Richter"), an Illinois corporation, to
construct an administrative office building. Defendant USF & G, a
Maryland corporation, executed payments and performance bonds in
connection with the project as surety: Richter is the principal on the
bonds and the District is the obligee.
The District became dissatisfied with Richter's performance and
eventually terminated it pursuant to their contract for failure to
perform. This alleged failure to perform, termination and its consequences
have resulted in the filing of multiple lawsuits in the Circuit Court of
Cook County, Illinois. In July 1984, Richter sued the District for breach
of contract, and the District counterclaimed, also for breach of
contract. Subsequently, USF & G sued the District in state court for an
accounting and declaratory judgment. Finally, one subcontractor is suing
Richter, USF & G and the District. The first three state suits (Richter
v. District, USF & G v. Richter, and USF & G v. District) have been
consolidated in state court.
The District's federal suit claims that due to Richter's breach of its
obligations under its contract with the District, USF & G must pay the
District in excess of $380,000.00, pursuant to the bond. USF & G has
indicated that its defense will be that the District materially breached
its contract with Richter, and that the underlying contract between
Richter and the District is void because the District failed to obtain
voter approval for the project pursuant to Ill.Rev.Stat. ch. 22, ¶
10-22.36. Memorandum in Support of USE & G's Motion to Dismiss or Abate
USF & G has moved for a dismissal or stay on the grounds that this suit
is duplicative of the above multiple state court proceedings. The
District concedes that at least one of the state suits (USF & G v.
District) involves issues identical to those found in the federal suit.
Memorandum in Opposition to United States Fidelity and Guaranty Company's
Motion to Dismiss or Abate at 3, n. 1. Richter's suit against the
District, combined with the District's counterclaim, also presents the
same breach of contract issues that the District seeks to litigate in
this court. See Memorandum in Support of USF & G's Motion, Exhs. A, B.
When identical suits are pending in state and federal court, the
federal court under certain circumstances may invoke what is commonly
termed "type four abstention," or "abstention to avoid duplicative
litigation." See Thompsen v. Ashner, 601 F. Supp. 471, 474 (N.D.Ill.
1985). This type of abstention was first treated in depth by the Supreme
Court in Colorado River Water Conservation District v. United States,
424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976). There, the Court
reversed the Tenth Circuit's reversal of the district court's dismissal
of a federal suit on abstention grounds. While recognizing the district
court's "virtually unflagging obligation" to exercise the jurisdiction
given it, the Court stated that there are exceptional situations in which
a court may abstain in order to avoid the waste of duplicative
litigation. Id. at 817-18, 96 S.Ct. at 1246. Although it stated that the
determination whether to abstain cannot rest on a "mechanical checklist,"
the Court did note several factors which may be taken into account: (1)
the order in which jurisdiction was obtained by the concurrent forums;
(2) inconvenience of the federal forum; (3) desirability of avoiding
piecemeal litigation; (4) absence of progress in the federal court
litigation; (5) presence in the suit of extensive rights governed by
state law; and (6) the parties' previous willingness to litigate similar
suits in state court. Id. at 818, 820, 96 S.Ct. at 1246, 1247. See Moses
H. Cone Hospital v. Mercury Construction Corp., 460 U.S. 1, 16, 103
S.Ct. 927, 937, 74 L.Ed.2d 765 (1983).
Recently, the Court confirmed its position that the abstention doctrine
in Colorado River should guide lower courts in determining whether to
abstain in order to avoid duplicative litigation. See Arizona v. San
Carlos, 463 U.S. 545, 103 S.Ct. 3201, 3215, 77 L.Ed.2d 837 (1983); Cone,
460 U.S. at 13-19, 103 S.Ct. at 935-39. San Carlos and Cone express the
Court's position that abstention is warranted in exceptional situations.
For example, as in Colorado River, the issue in San Carlos related to
water rights, which the Court found to be a state oriented subject under
the McCarran Act. Therefore, in San Carlos, as in Colorado River, the
Court found that the federal interest evinced in the MeCarran Act of
having the state adjudicate water rights issues called for abstention by
the federal court, even when the rights of the United States or Indians
were involved. San Carlos, 103 S.Ct. at 3215. In contrast, the Court
found abstention unwarranted in Cone, because the state remedy could be
inadequate, and because the case involved the issue of arbitrability,
which would be governed by federal law. Cone, 460 U.S. at 24, 103 S.Ct.
at 941. The Court noted in Cone that this state versus federal law issue
was only of ambiguous relevance in Colorado River, but that the issue
must always be a "major consideration" in determining whether to
abstain. Id. at 26, 103 S.Ct. at 942.
The Seventh Circuit has followed Colorado River and Cone in several
recent cases, e.g., Illinois Bell Telephone Co. v. Illinois Commerce
Commission., 740 F.2d 566 (7th Cir. 1984); Board of Education of Valley
View Community Unit School District No. 365U v. Bosworth, 713 F.2d 1316
(7th Cir. 1983); 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); and Microsoftware Computer Systems v. Ontel
Corp., 686 F.2d 531 (7th Cir. 1982). In Illinois Bell, the court found
that the district court had not abused its discretion in denying a stay,
noting that issues of federal law, deemed a major consideration in Cone,
were involved. Illinois Bell, 740 F.2d at 570. In Bosworth, the court
affirmed abstention, citing significant progress in the state court.
Bosworth, 713 F.2d at 1322. In Evans, the court remanded the district
court's decision to stay because the district court had only cited the
fact that the state suit had been filed one month prior to the federal
suit, and this factor alone could not be determinative. Evans, 693 F.2d
at 105. In Voktas, the court affirmed denial of a stay, noting that the
state court had stayed state proceedings because of its expressed
disinclination to try the case due to its complexity. Voktas, 689 F.2d at
105. Finally, in Microsoftware, the court reversed the district court's
denial of a stay, noting that the case involved no federal question, the
state suit was filed first, and "there would be a grand waste of efforts
by both the courts and the parties in litigating the same issues
regarding the same contract in two forums at once." Microsoftware, 686
F.2d at 538. The court in Microsoftware also took into account the fact
that the ordinary justification for having diversity jurisdiction was not
present, since the Illinois corporation, not the out-of-state party, had
filed the federal suit. Id. at 537.
While no clear guideline emerges from these Supreme Court and Seventh
Circuit opinions, we believe that certain generalizations can be made.
First, we must be biased against abstention — abstention is
warranted only in "exceptional" cases. Second, in order to determine
whether the instant case fits within the exception we can begin by
applying the six factors found in Colorado River and Cone:
(1) Order in which jurisdiction was obtained. This factor favors
abstention. While the completely duplicative actions were filed at
approximately the same time, the first case relating to this matter was
filed in state court six months before the federal case was filed, and
the District's counterclaim to that initial suit is basically duplicative
of its position in the federal suit;
(2) Inconvenience of the federal forum. There is no particularized
inconvenience, such as location distant from witnesses and other
evidence. See Mechanical Systems,
Inc. v. ...