United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Bank USA brought this suit against Marcia and Christopher
Swift to recover payments due on a mortgage note. Several
months earlier, Beal brought a state court action against the
Swifts to foreclose on the property subject to the mortgage
and to recover a personal deficiency judgment. See Beal
Bank USA v. Swift, Case 2016 CH 593 (Cir. Ct. Kane
Cnty., Ill. filed June 10, 2016) (state court complaint
reproduced at Doc. 7-1). The Swifts have moved to dismiss or
stay this case under the doctrine set forth in Colorado
River Water Conservation District v. United States, 424
U.S. 800 (1976), pending resolution of the state court
action. The motion is granted.
2011, an affiliate of Beal brought a foreclosure action on
the Swifts' property in state court. See LNV Corp. v.
Swift, Case 2011 CH 2069 (Cir. Ct. Kane Cnty., Ill.
filed June 2, 2011) (state court complaint reproduced at Doc.
7-2). That action was dismissed without prejudice in January
2016. Doc. 7-3 at 20.
2016, Beal filed a foreclosure action in state court against
the same property. Doc. 7-1. The complaint alleged that the
Swifts failed to pay what they owed under the note secured by
the mortgage, resulting in a debt of $449, 500.00 plus
interest and other charges. Id. at 3 ¶ 3J. The
complaint sought to foreclose on the property and also to
collect a “personal deficiency judgment” against
the Swifts for the total amount owed. Id. at 4
¶ 3M, 5.
November 2016, Beal filed the present suit in this court.
Doc. 1. The complaint alleges that the Swifts failed to make
payments due on the mortgage note, resulting in their owing
$449, 500.00 plus interest. Id. at ¶¶ 8,
11. As relief, Beal seeks a monetary judgment of $449, 500
plus interest and other charges. Id. at 3.
Swifts have moved this court to abstain in light of the
pendency of the state court action. Doc. 7. At the
presentment hearing, Beal suggested that the cases were not
parallel under Colorado River because the state
court action was an in rem action against the
property, while this suit is an in personam action
against the Swifts. When the court pointed out to Beal's
counsel (who does not represent Beal in state court) that the
state court complaint actually sought a personal deficiency
judgment against the Swifts, counsel said “we will
discuss that and thanks for bringing that to our
attention.” Beal then successfully moved to amend its
state court complaint to remove its request for a personal
deficiency judgment. Doc. 15-1 at 3; Doc 19-4.
Colorado River doctrine provides that “a
federal court may stay or dismiss a suit in federal court
when a concurrent state court case is underway, but only
under exceptional circumstances and if it would promote
‘wise judicial administration.'” Freed v.
J.P. Morgan Chase Bank, N.A., 756 F.3d 1013, 1018
(quoting Colorado River, 424 U.S. at 818); see
also Caminiti & Iatarola, Ltd. v. Behnke Warehousing,
Inc., 962 F.2d 698, 700 (7th Cir. 1992). The Supreme
Court “has cautioned that abstention is appropriate
only in ‘exceptional circumstances, ' and has also
emphasized that federal courts have a ‘virtually
unflagging obligation … to exercise the jurisdiction
given them.'” AXA Corporate Solutions v.
Underwriters Reins. Corp., 347 F.3d 272, 278 (7th Cir.
2003) (alteration in original) (quoting Colorado
River, 424 U.S. at 813, 817) (citation omitted). In
determining whether to abstain, the court's task is
“not to find some substantial reason for the exercise
of federal jurisdiction by the district court; rather, the
task is to ascertain whether there exist exceptional
circumstances, the clearest of justifications, that can
suffice under Colorado River to justify the
surrender of that jurisdiction.” Moses H. Cone
Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
25-26 (1983) (internal quotation marks and emphases omitted).
Colorado River analysis has two steps. First, the
court asks “whether the state and federal court actions
are parallel.” Freed, 756 F.3d at 1018;
see also Caminiti, 962 F.2d at 700. If the
proceedings are not parallel, Colorado River
abstention must be denied. Freed, 756 F.3d at 1018.
If the proceedings are parallel, the court then must weigh
ten non-exclusive factors to determine whether abstention is
Whether the Federal and State Cases Are Parallel
and federal suits need not be identical to be parallel.
See Adkins v. VIM Recycling, Inc., 644 F.3d 483,
498-99 (7th Cir. 2011) (“[F]or Colorado River
purposes … [p]recisely formal symmetry is
unnecessary.”); Interstate Material Corp. v. City
of Chicago, 847 F.2d 1285, 1288 (7th Cir. 1988)
(“Interstate is correct in its assertion that
differences exist. However, the requirement is of parallel
suits, not identical suits.”). Rather, suits are
parallel when “substantially the same parties are
contemporaneously litigating substantially the same issues in
another forum.” Freed, 756 F.3d at 1019.
“The question is not whether the suits are formally
symmetrical, but whether there is a substantial likelihood
that the [state] litigation will dispose of all claims
presented in the federal case.” AAR Int'l, Inc.
v. Nimelias Enters. S.A., 250 F.3d 510, 518 (7th Cir.
2001) (internal quotation marks omitted); see also Huon
v. Johnson & Bell, Ltd., 657 F.3d 641, 646 (7th Cir.
2011) (same). “Any doubt regarding the parallel nature
of the [state] suit should be resolved in favor of exercising
jurisdiction.” Adkins, 644 F.3d at 499
(alteration in original) (internal quotation marks omitted).
there is no dispute that the parties in the state and federal
cases are the same. Beal's argument against parallelism
submits that the cases advance different claims and remedies:
an in personam claim for a monetary judgment against
the Swifts in the federal case, and an in rem claim
for foreclosure against the property in the state case. Doc.
19 at 5-6. Beal's position fails for two independent
a party opposing abstention may not unilaterally manufacture
non-parallelism. In state court, Beal initially sought a
foreclosure against the property and a deficiency
judgment against the Swifts. The complaint in this court was
redundant, seeking a contract judgment against the Swifts on
the note. True, a deficiency judgment against the mortgagor
in a foreclosure action can occur only after a foreclosure
sale-with the deficiency judgment being the difference
between the amount owed and the amount for which the property
is sold, see 735 ILCS 5/15-1508(e); 735 ILCS
5/15-1508(b)(2)-while a contract claim on the note need not
await a foreclosure sale. See LP XXVI, LLC v.
Goldstein, 811 N.E.2d 286, 290 ( Ill. App. 2004)
(“These remedies may be pursued consecutively or
concurrently.”). That distinction, however, is
immaterial. A contract action on the note achieves the same
ultimate remedy as a foreclosure suit yielding a foreclosure
sale followed by a deficiency judgment-the bank recovers the
amount owed on the note-and both actions ultimately turn on
the same question-whether the mortgagors defaulted on the
note. So, as it originally stood, the state court action was
parallel with the federal suit. See Freed, 756 F.3d
at 1021 (“In short, the claims in both federal cases
are premised upon the scheme that is now before the state
court. … The cases rely on the same set of facts,
present substantially similar legal issues, and involve
substantially the same parties. We agree … that the
federal actions are parallel to … the state court
only after this court alerted Beal's federal counsel that
Beal's state court action pursued personal monetary
relief against the Swifts that it quickly amended its state
court complaint to drop that request for relief. Then, in its
Colorado River response brief, Beal argued that the
two actions are not parallel because the state court suit no
longer seeks that monetary relief. Beal's gambit fails,
for the Colorado River doctrine is not so naïve
as to allow a party to strategically and cynically manipulate
its pleadings to destroy parallelism. See Freed, 756
F.3d at 1020 (“The parallel nature of the actions
cannot be destroyed by … repackaging the same issue
under different causes of action.”); Clark v.
Lacy, 376 F.3d 682, 686-87 (7th Cir. 2004) (same);
Lumen Const., Inc. v. Brant Const. Co., Inc., 780
F.2d 691, 696 (7th Cir. 1985) (affirming abstention where the
alleged lack of parallelism stemmed from the federal
plaintiff's choice of which parties to bring into the
state case); Freed v. Friedman, __ F.Supp.3d __,
2016 WL 6070357, *6 (N.D. Ill. Oct. 17, 2016) (“[A]
finding that the cases are not parallel predicated on [the
plaintiff's choices of whom to join] would unjustly
reward strategic behavior, because [a potential
defendant's] absence from the state proceedings is
entirely attributable to [the plaintiff].”); Knight
v. DJK Real Estate Grp., LLC, 2016 WL 427614, *5 (N.D.
Ill. Feb. 4, 2016) (“[A party] by its unilateral choice
cannot destroy parallelism.”).
Colorado River in theory allowed parties to
unilaterally and intentionally engineer non-parallelism,
Beal's amendment of its state court complaint failed to
destroy the parallelism between the state court action and
this suit. As noted, actions are parallel if
“substantially the same parties are contemporaneously
litigating substantially the same issues in another
forum.” Freed, 756 F.3d at 1019. And
parallelism is satisfied where “there is a substantial
likelihood that the [state] litigation will dispose of all
claims presented in the federal case.” AAR
Int'l, 250 F.3d at 518 (internal quotation marks
omitted). Importantly, the test does not require that the
relief sought be the same. S ...