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Corus Bank, N.A. v. Guardiola

December 17, 2008

CORUS BANK, N.A., PLAINTIFF,
v.
EDUARD DE GUARDIOLA, DEFENDANT.



The opinion of the court was delivered by: Wayne R. Andersen United States District Judge

Judge Wayne R. Andersen

MEMORANDUM OPINION AND ORDER

This case is before the Court on the motion of Defendant Eduard de Guardiola to abstain under the Colorado River doctrine. For the following reasons, the motion to abstain is granted.

BACKGROUND

This litigation stems from a Florida real estate deal in which Florida Land Parcels, LLC (FLP) purchased land in Palm Harbor Florida. The purchase was financed by LaSalle Bank, N.A., which received a mortgage on the property. FLP's plan was to develop the property into a community consisting of some 774 condominium apartments.

In July 2005, FLP, along with two limited liability companies, Pre-Property B, LLC and Carvill Limited Partnership (Borrowers), obtained a second loan for $112,560,000 from Plaintiff Corus Bank which was secured by the property as well as by buildings the Borrowers planned to build there. As part of this loan agreement, LaSalle assigned its rights to Corus and the Borrowers assumed FLP's payment obligations. As alleged in the Complaint, Defendant Eduard de Guardiola "directly or indirectly owns an interest in each borrower." Corus required de Guardiola both to sign the loan agreement on behalf of the Borrowers, as well as to guarantee that loan. In 2006, de Guardiola negotiated and signed amendments to the loans that extended their maturity dates (Amended Loan Agreement). At the same time, de Guardiola also signed an Amended and Restated Guaranty.

In January 2008, Corus sued both the Borrowers and de Guardiola in the Circuit Court of Pinellas County Florida. In its Complaint in Florida state court, Corus alleged that the Borrowers were in default on the Amended Loan Agreement for failing to make monthly payments. Corus sought to foreclose on the real estate securing the loan and also sought payment from de Guardiola on his guaranty. The Borrowers responded by asserting that, based on additional negotiations in late 2007, the Amended Loan Agreement had been modified such that the Borrowers were not in default. de Guardiola also answered the Complaint and maintained that the guaranty was itself unenforceable.

On June 10, 2008, Corus dismissed de Guardiola without prejudice from the Florida case and, two days later, filed suit against him on the same guaranty in this case. The Borrower's underlying liability still remains to be decided in the Florida court and that case is still ongoing. After written and oral discovery, the Florida court has conducted hearings and a summary judgment motion is pending.

In the meantime, de Guardiola has moved to intervene in the Florida state case. The Florida judge, conducted a hearing on de Guardiola's motion to intervene and ruled that if this Court abstains, then it would grant the motion to intervene and decide any issues related to the guaranty.

DISCUSSION

Under the Colorado River doctrine, a federal court has discretion to dismiss or stay a suit over which it has jurisdiction when there is a parallel state case pending and a dismissal or stay of the federal case would "promote wise judicial administration." Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976). Because federal courts have a "virtually unflagging obligation to exercise the jurisdiction given them," there is a general presumption against abstaining under Colorado River and only the "clearest of justifications" will warrant a dismissal or stay of the federal case. AAR Intel, Inc. v. Nameless Enter., S.A., 250 F.3d 510, 517 (7th Cir. 2001). "If there is any substantial doubt that the parallel litigation will be an adequate vehicle for the complete and prompt resolution of the issues between the parties," then the federal court should not abstain. Id. at 518.

Determining whether to abstain involves a two-part inquiry. First, the Court must determine whether the state and federal cases are parallel. AXA Corp. Solutions v. Underwriters Reinsurance Corp., 347 F.3d 272, 278 (7th Cir. 2003). If the cases are parallel, the Court must consider ten separate factors to determine whether abstention is appropriate. Id. The Court considers each part of the inquiry in turn.

I. Parallel Proceedings

The first question is whether the state and federal cases are actually parallel. AXA Corp. Solutions, 347 F.3d at 278; AAR Intel, 250 F.3d at 517. Suits are considered parallel if "substantially the same parties are litigating substantially the same ...


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