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July 19, 1990

WARREN F. OLSEN, Defendant

Charles P. Kocoras, United States District Judge.

The opinion of the court was delivered by: KOCORAS


 This matter comes before the court on defendant's motion for abstention or a stay of this action. For the reasons set forth below, defendant's motion is denied.


 On January 12, 1989, defendant Warren Olsen executed a guaranty of indebtedness to plaintiff Harris Trust and Savings Bank on a loan issued to Highland Partners, Inc. At the same time, Salvatore Bonnano and Gerald Finkle entered into separate, but identical guaranties with the plaintiff on the same loan. The obligation of each individual was set at $ 450,000.00, the total loan amount. On January 31, 1989, plaintiff loaned Highland Partners $ 450,000.00 pursuant to Demand Note No. 294018.

 On March 6, 1990, Harris Bank sent a letter to each of the three guarantors. The letters were identical and sought payment of Demand Note No. 294018 from each of the individuals as guarantors of the loan to Highland Partners. Each of the three guarantors declined to pay the amount due on the note and this failure to pay constituted a default. As a result of this default, the plaintiff filed two lawsuits.

 On April 20, 1990, plaintiff Harris Bank filed suit in the Circuit Court of Cook County, Illinois, on two of the three guaranties. The four-count state court complaint contains two counts against each of the defendants. Counts I and III are styled "Contract" counts and seek the principal amount of Demand Note No. 294018 plus interest from Bonnano and Finkle, respectively, as guarantors. Counts II and IV are designated "Attorney's Fees," and seek the expenses of collection and enforcement of the guaranty from Bonnano and Finkle, respectively.

 On April 24, 1990, plaintiff Harris Bank filed the instant action against defendant Olsen in federal court. Count I of the two-count complaint is a "Contract" count and seeks the same relief from Olsen as Counts I and III of the state court action. Count II is entitled "Attorney's Fees," and seeks the same relief from Olsen as Counts II and IV of the state court complaint. With the exception of certain allegations pertaining to jurisdiction and venue, the allegations of the complaint before this court are the same as those made in the state court action against the other guarantors. In both complaints, the Harris Bank identifies itself as an Illinois corporation having its principal place of business in Chicago. Olsen is identified as a citizen of Wisconsin and Finkle and Bonnano are identified as citizens of Illinois.

 In response to the plaintiff's decision to file two separate lawsuits, defendant Olsen has filed this motion requesting the court to abstain from exercising its jurisdiction. In the alternative, defendant Olsen seeks a stay of the federal court action pending the outcome of the state court proceedings. Defendant Olsen invokes the Colorado River doctrine in support of his request for abstention.

 Defendant Olsen claims that this court should abstain from exercising its jurisdiction under the Colorado River doctrine "for reasons of wise judicial administration." Colorado River Water Conservation District v. United States, 424 U.S. 800, 812, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976). Defendant claims that this court should act to prevent "a grand waste of effort by both the courts and the parties in litigating the same issues regarding the same contract in two forums at once." Defendant's brief at 3 (quoting Microsoftware Computer Systems v. Ontel Corp., 686 F.2d 531, 538 (7th Cir. 1982)). Specifically, defendant Olsen contends that the threshold requirement of parallel actions is satisfied because "substantially the same parties are contemporaneously litigating substantially the same issues in another forum." Calvert Fire Insurance Co. v. American Mutual Reinsurance Co., 600 F.2d 1228, 1229 n. 1 (7th Cir. 1979). Defendant Olsen claims that because the guaranty which is the subject of this suit is identical to the guaranties at issue in the state court suit and also relates to the same demand note at issue in the state court proceeding, the actions are parallel.

 Defendant goes on to cite other factors which he claims counsel in favor of abstention. The state court action was filed first. The source of governing law is Illinois law and this case involves no issues of federal law. Defendant also contends that the state court action will adequately protect the federal plaintiff's rights as the federal plaintiff is an Illinois corporation. Accordingly, there can be little concern of local bias against the federal plaintiff in this case. Finally, defendant claims that maintenance of this action is contrary to the policy of the federal removal statute. Defendant suggests that the claim against the federal defendant is not separate and independent from the claims against the state defendants. Thus, according to defendant Olsen, to bring a portion of the action in this court contravenes the policy underlying 28 U.S.C. 1441, subsection c, which is to narrow federal jurisdiction.

 Plaintiff's Response challenges defendant's motion on several points. First, plaintiff attacks defendant's position with respect to the threshold requirement of parallel litigation. Plaintiff claims that the state and federal actions are different because each individual defendant has been sued on the individual guaranty into which he entered. Specifically, because each guarantor is potentially liable for the entire debt and each entered into an individual guaranty, plaintiff can pursue one of the defendants to the exclusion of the others. Accordingly, plaintiff argues that each guarantor occupies a distinct position with respect to plaintiff. Plaintiff next contends that defendant Olsen has provided no support for his assertion that the legal issues will be identical in both suits. Plaintiff points out that each guarantor can raise a defense to liability which may be unavailable to the others. Therefore, because distinct issues can be raised in the two suits, the federal suit is not duplicative of the state action.

 Alternatively, plaintiff contends that an analysis of the discretionary factors indicates that this court should retain jurisdiction. Plaintiff argues that there is no possibility of piecemeal litigation in that each court can fully resolve the dispute before it. While admitting that the Bank can be paid only once on a debt, plaintiff asserts that obtaining three separate judgments against the three separate guarantors does not constitute piecemeal litigation. Plaintiff also points out that neither the state nor the federal suit is particularly more advanced than the other. Additionally, plaintiff contends that contrary to defendant's assertion, the absence of a federal question does not favor abstention because such a result would discriminate against diversity jurisdiction. Plaintiff ...

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