Having found the threshold requirement satisfied, defendant Olsen proceeds to analyze the discretionary factors set out by the Colorado River Court. Defendant Olsen asserts that because both the state and federal courts are considering the same legal issues, there is potential for piecemeal litigation, thus abstention is warranted. Defendant also claims that there exists the potential for conflicting results with respect to facially identical obligations and also the potential for double recovery.
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 concedes that the state and federal courts have concurrent jurisdiction, however, plaintiff contends that this fact alone would not overcome the federal courts' obligation to exercise jurisdiction.
In this court's prior opinion of J.I.K. Realty v. Steward, No. 87 C 2839 (N.D.Ill. Dec. 28, 1989), we provided an elaborate summary of the current state of abstention. We noted that the general rule in such cases is that mere duplicative litigation pending in state court does not provide a sufficient reason for a federal court to abstain. See Colorado River Water Conservation District v. United States, 424 U.S. 800, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976). As the Supreme Court summarized in Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983), this rule obtains because "'the pendency of an action in the state court is no bar to proceedings concerning the same matter in the federal court having jurisdiction,' and . . . the federal courts have a 'virtually unflagging obligation . . . to exercise the jurisdiction given them.'" Id. at 15 (quoting Colorado River Water Conservation District v. United States, 424 U.S. 800, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976)). Moreover, the general rule applies even where federal jurisdiction is based solely on diversity of citizenship, which, after Erie, necessarily involves the federal application of purely state law. See Meredith v. Winter Haven, 320 U.S. 228, 236, 88 L. Ed. 9, 64 S. Ct. 7 (1943) (abstention generally inappropriate in diversity cases).
This general rule is a natural by-product of the broad sphere of jurisdiction shared by federal and state courts. Where Congress has provided for the exercise of Article III jurisdiction, this jurisdiction, whatever its nature, must be exercised in the absence of extraordinary circumstances. In the average situation, then, conflicting results from duplicative litigation are to be avoided solely by operation of res judicata.
Mandatory federal jurisdiction, however, has never been the strict rule. Thus, the federal courts, in the interest of federalism, have created common law doctrines under which a federal court may abstain from deciding: (1) issues of federal constitutional law where the clarification of state law by state courts might obviate the need to reach the constitutional question; (2) issues of unclear state law which are intimately involved with the state government's "sovereign prerogative"; (3) issues necessarily involving complex state administrative procedures; and (4) issues involving federal remedies which could interfere with certain forms of ongoing state proceedings. See, e.g., Railroad Comm'n of Tex. v. Pullman, 312 U.S. 496, 85 L. Ed. 971, 61 S. Ct. 643 (1941) (federal constitutional law); Louisiana Power & Light Co. v. City of Thibodaux, 360 U.S. 25, 3 L. Ed. 2d 1058, 79 S. Ct. 1070 (1959) (unclear state law); Burford v. Sun Oil Co., 319 U.S. 315, 63 S. Ct. 1098, 87 L. Ed. 1424 (1971) (state administrative procedures); Younger v. Harris, 401 U.S. 37, 27 L. Ed. 2d 669, 91 S. Ct. 746 (1971) (interference with state proceedings). For a number of years, these were thought to be the exclusive grounds for a federal court's decision to abstain in favor of state proceedings of any kind.
Then, in 1976, the Supreme Court confirmed the existence of yet another abstention doctrine. In Colorado River, supra, the Court held that federal courts may abstain out of deference to ongoing state proceedings even in situations where neither Pullman, Thibodaux, Burford, nor Younger abstention apply, but only in exceptional circumstances. Colorado River, 424 U.S. at 818. Although partially grounded in principles of federalism like the other abstention doctrines, Colorado River abstention is primarily designed to ensure "'wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.'" Id. at 817 (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)). Although abstention among the federal courts to avoid duplicative litigation within the federal court system had been common for years, the Colorado River Court extended the principle to duplicative litigation occurring between federal and state courts, but within strict limitations. As the court explained:
Given [the virtually unflagging] obligation [of the federal courts to exercise the jurisdiction given them], and in the absence of weightier considerations of constitutional adjudication and state-federal relations, the circumstances permitting the dismissal of a federal suit due to the presence of a concurrent state proceeding for reasons of wise judicial administration are considerably more limited than the circumstances appropriate for [the other forms of] abstention. The former circumstances, though exceptional, do nevertheless exist.