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Lumen Construction Inc. v. Brant Construction Co.

December 30, 1985


Appeal from the United States District Court for the Northern District of Indiana, Hammond Division. No. H83-690--Michael S. Kanne, Judge.

Author: Will

Before CUDAHY and RIPPLE, Circuit Judges, and WILL, Senior District Judge.*fn*

WILL, Senior District Judge.

This appeal presents the recurring question of whether a district court properly exercised its discretion to abstain in deference to a parallel state court proceeding. The district court, based on "considerations of 'wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation," dismissed the case without prejudice. Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976), quoting Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183, 96 L. Ed. 200, 72 S. Ct. 219 (1952). We affirm the district court's decision to abstain, but modify its order of dismissal to a stay.


Defendant-appellee City of Valparaiso Board of Public Works ("Valparaiso") received a grant from the Environmental Protection Agency ("EPA") to expand the city's wastewater treatment plant. A basic condition of the grant was that at least ten percent of the amount expended would be paid to minority business enterprises. Valparaiso hired defendant-appellee Cole & Associates ("Cole") as its consulting engineer and representative on the project and, on July 9, 1982, contracted with defendant-appellee Brant Construction Company ("Brant") to perform construction work. The contract price was in excess of nineteen million dollars.

In accordance with the conditions of the grant, Brant subcontracted excavation work on the project to plaintiff-appellant Lumen Construction Company ("Lumen"), a qualified minority business enterprise owned and operated by an Hispanic couple, plaintiffs-appellants Mary and Louis Villasenor. Lumen leased equipment and purchased materials from defendant-appellee Region Management & Leasing, Inc. ("Region Management").

Lumen began work on the project in September, 1982. The following spring, Region Management filed claims with Valparaiso for amounts allegedly owing from Lumen. In response, Valparaiso withheld payments due to Brant, and Brant in turn withheld payments from Lumen. After settlement negotiations proved fruitless, Brant filed an interpleader action in the Lake Superior Court sitting in East Chicago, Indiana on June 17, 1983. (The case has since been transferred to the Jasper Superior Court). Subsequently, Brant notified Lumen that its performance on the project was not in compliance with the subcontractor agreement.

Relations between the parties continued to worsen and, in August 1983, Brant ordered Lumen to cease work on the project. A week later, Lumen--who had not yet responded to Brant's interpleader complaint--filed a second state court suit in Porter Superior Court naming Brant as a defendant. (The suit was dismissed without prejudice on October 12, 1983). In addition, Lumen filed claims against Brant with Valparaiso. Meanwhile, Region Management and defendant-appellee United States Fidelity & Guarantee Company ("Fidelity") filed various claims, counterclaims, and cross-claims in the original interpleader suit.

Lumen finally responded to Brant's complaint for interpleader on November 7, 1983. On that date, Lumen filed its answers to the claims raised by Brant, Region Management, and Fidelity and also filed its "Counterclaim, Cross-Claim and Third-Party Complaint." In the latter pleading, Lumen asserted affirmative claims for relief based on alleged violations of 42 U.S.C. ยงยง 1981, 1983, 1985, 1986, and 2000(d) (1982) and various state statutory and common law theories. By a virtually identical document filed in the district court on the same day, Lumen initiated the instant federal action.*fn1

The defendants in the federal case filed motions to dismiss based, first, on the pendency of related state court proceedings and, second, on alleged deficiencies in the complaint. In an opinion dated March 22, 1985, the district court dismissed the case without prejudice. Nothing that the plaintiffs' civil rights claims arose out of a contractual dispute, the court found that it would be impossible to decide the federal claims without some resolution of the state law issues. Rather than engage in piecemeal adjudication, the court found that the doctrine of Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976), counseled in favor of a dismissal. In closing, the district court observed that dismissal would not burden the parties since the federal court litigation had "not moved forward substantially." Due to its disposition of the Colorado River issue, the court did not decide whether the complaint should also be dismissed for failure to state a claim.


Lawyers may institute duplicative suits for any number of reasons, few of which tend to inspire judicial admiration. "Reactive" litigation--suits filed by one who is a defendant in prior proceedings based upon the same factual controversy, see Vestal, Reactive Litigation, 47 Iowa L. Rev. 11 (1961)--may be motivated by a desire to delay the progress of the case; to impose travel burdens on one's adversary; to take advantage of procedural opportunities available in only one forum; to obtain the supposed advantages of being a plaintiff; to avoid perceived prejudice in the original forum; or to benefit from perceived prejudice in the second forum. Note, Federal Court Stays and Dismissals in Deference to Parallel State Court Proceedings: The Impact of Colorado River, 44 U. Chi. L. Rev. 641, 643-44 (1977). Motivation aside, the extent to which these tactical considerations affect the outcome of cases is open to question.

When a case proceeds on parallel tracks in state and federal court, the threat to efficient adjudication is self-evident. But judicial economy is not the only value that is placed in jeopardy. The legitimacy of the court system in the eyes of the public and fairness to the individual litigants also are endangered by duplicative suits that are the product of gamesmanship or that result in conflicting adjudications.*fn2 Cf. R. Pound, The Causes of Popular Dissatisfaction with ...

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