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Eagle Marine Industries, Inc v. Conagra Foods

November 9, 2006


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


This matter is before the Court on defendants' motion to stay (Doc. 11). Plaintiff has responded to the motion (Doc. 12) and defendants have replied (Doc. 16). Defendants have also moved for the Court to hear oral arguments on their motion (Doc. 26). For the following reasons, defendants' motion to stay will be GRANTED IN PART AND DENIED IN PART.


Eagle Marine Industries, Inc. (Eagle Marine) filed this action against Conagra Foods Inc. (Conagra Foods) and Conagra International Fertilizer Company, Inc. (Conagra International) (sometimes collectively referred to as Conagra) on June 30, 2006. Eagle Marine leases certain property to Conagra Foods and Conagra International on the Mississippi River in Sauget, Illinois (the premises). Under the terms of its lease, Conagra Foods is obligated to defend, indemnify and hold Eagle Marine harmless in any legal proceeding resulting from an injury on the premises. Eagle Marine claims Conagra Foods is in default under the lease because it has refused to fulfill this obligation in a lawsuit in St. Clair County, Illinois arising from the death of Chadwick Blackwell, who suffered a life-ending injury on the premises in 2004. Eagle Marine also claims Conagra Foods is in default under the lease for various instances of negligence that gave rise to Blackwell's death and for several reasons unrelated to Mr. Blackwell's suit. It also claims that Conagra International is in default under its lease. Based on this conduct, Eagle Marine has set forth the following seven claims for relief in its complaint: Breach of Contract (Conagra Foods), Declaratory Judgment (Conagra Foods), Forcible Entry and Detainer (Conagra Foods), Breach of Contract (Conagra International), Declaratory Judgment (Conagra International), Forcible Entry and Detainer (Conagra International) and Trespass (Conagra International).

Conagra requests a stay of these proceedings pursuant to Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817-21 (1976), in light of Mr. Blackwell's case. As Eagle Marine filed a third-party complaint in that case (before it filed the instant action) seeking indemnification and contribution, Conagra believes the Court should stay these proceedings in the interest of judicial economy. Conagra Foods claims it has no obligation to indemnify or defend Eagle Marine in Mr. Blackwell's case and has moved to dismiss the third-party complaint for that reason. That motion is fully briefed and the parties await a ruling from the state court.


I. Abstention

In ruling on a request to abstain under Colorado River, a federal court must be mindful of its "virtually unflagging obligation" to exercise the jurisdiction given it. Tyrer v. City of Beloit, Ill., 456 F.3d 744, 750-51 (7th Cir. 2006) (internal quotation marks omitted). Because of this obligation, a court should only abstain when presented with the "clearest of justifications." AAR Intern., Inc. v. Nimelias Enter. S.A., 250 F.3d 510, 518 (7th Cir. 2001) (citation omitted). In most cases, "the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction." Colorado River, 424 U.S. at 817 (internal quotations omitted). Nevertheless, a federal court may stay an action in favor of concurrent state proceedings when it would promote "wise judicial administration." AXA Corp. Solutions v. Underwriters Reins. Corp., 347 F.3d 272, 278 (7th Cir. 2003) (internal quotations omitted).

A. Brillhart Abstention

Before proceeding further, the Court notes that this case presents a more complicated procedural question than the parties acknowledged in their briefs. The complication arises from Eagle Marine's coupling of its requests for declaratory relief with related and unrelated claims for monetary and injunctive relief. Normally, when a federal court is asked to stay a declaratory judgment action in favor of parallel state court proceedings, it should proceed under the discretionary standard set forth in Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942), not Colorado River's exceptional circumstances test. Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995); Sta-Rite Ind., Inc. v. Allstate Ins. Co., 96 F.3d 281, 287 (7th Cir. 1996). Neither party has addressed Brillhart or how it should apply in this case. Nevertheless, as the Courts of Appeals often engage in claim-specific abstention (i.e., abstention from some, but not all claims in an action), it is reasonable to apply different abstention doctrines to separate claims in the same case. See Nationwide Ins. v. Zavalis, 52 F.3d 689, 692 (7th Cir. 1995); Addiction Specialists, Inc. v. Township of Hampton, 411 F.3d 399, 414-15 (3d Cir. 2005); Redner v. Citrus County, Fla., 919 F.2d 646, 651-52 (11th Cir. 1990); see also Majors v. Engelbrecht, 149 F.3d 709 (7th Cir. 1998). Accordingly, the Court will apply the principles set forth in Brillhart and its progeny to Eagle Marine's requests for declaratory relief.

The standard set forth in Brillhart is less onerous than that under Colorado River because of the permissive nature of the Declaratory Judgment Act. Under 28 U.S.C. § 2201, a district court "may declarethe rights and other legal relations" of the parties to a declaratory judgment action, but by its terms, a district court is not required to do so. Brillhart, 316 U.S. at 494. As stated in Brillhart, "it [is] uneconomical as well as vexatious for a federal court to proceed in a declaratory judgment suit where another suit is pending in a state court presenting the same issues, not governed by federal law, between the same parties." 316 U.S. at 495. As such, "[g]ratuitous interference with the orderly and comprehensive disposition of a state court litigation should be avoided." Id. Whether such avoidance is appropriate depends upon "whether the questions in controversy between the parties to the federal suit, which are not foreclosed under the applicable substantive law, can better be settled in the proceeding pending in the state court." Id. A court should look into the scope of the proceedings in state court, the nature of the defenses open to the defendant there and whether the claims of all parties can be adjudicated satisfactorily in that proceeding. Id.

In exercising its discretion under Brillhart, the Seventh Circuit also requires courts to consider whether the declaratory suit presents a question distinct from the issues raised in the state court proceeding, whether the parties to the two actions are identical, whether going forward with the declaratory action will serve a useful purpose in clarifying the legal obligations and relationships among the parties or will merely amount to duplicative and piecemeal litigation, and whether comparable relief is available to the plaintiff seeking a declaratory judgment in another forum or at another time.

Zavalis, 52 F.3d at 692.

In Nationwide Ins. v. Zavalis, the University of Illinois filed suit in state court against several students who set fire to the Astroturf in its football stadium, Astroturf Industries, Inc. and an insurance company that issued a performance and warranty bond as to, among other things, the flammability of the Astroturf. Id. at 690. Nationwide Insurance, one student's insurance company, subsequently filed a declaratory judgment action in federal court seeking a declaration that it had no duty to defend or indemnify the student under its policy, which contained an exclusion for intentional property damage. Id. In addressing whether the district court's decision to abstain was appropriate, the court began by noting that the issues in the two cases were distinct; Nationwide was not a party to the state court action and, as such, its duty to defend and indemnify the student was not at issue there. Id. at 693. The court noted, however, that to the extent the student's entitlement to a defense and indemnity depended on the nature of his conduct, the declaratory action might present factual questions that the state court had already been asked to decide. Id. The Court upheld the trial court's decision to abstain from the indemnity issue because it turned on the conduct underlying the state action. Under those circumstances, the "nature of the students' actions [was] a question properly ...

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