United States District Court, D. Kansas
MEMORANDUM AND ORDER
SAM A. CROW, Senior District Judge.
The case comes before the court on the motions to dismiss or stay (Dks. 6 and 8) filed by the defendants Barton Thomas and Farm Bureau Life Insurance Company ("FBLIC"). Both movants argue for the court's application of the Colorado River doctrine, and FBLIC separately argues for discretionary denial of declaratory judgment jurisdiction under the Brillhart standard. The plaintiff, Shari Springer, is suing her brother, Barton Thomas, alleging she was a joint beneficiary with her brother on FBLIC annuities owned by their father, Blaine Thomas, until her father's signature was forged on change of beneficiary forms which did not name her as a beneficiary. Information on the annuities was withheld from the plaintiff, her mother and her father for some time. Just four days after learning about the annuities, Blaine Thomas died before correcting the beneficiaries.
Springer seeks relief on four counts. Her first count seeks a declaratory judgment against Barton Thomas and FBLIC that the change in beneficiaries in June of 2012 "was the product of fraud, forgery and/or undue influence" rendering the beneficiary forms void. She also asks that the declaratory judgment order FBLIC to turn over the annuities' proceeds to her. Her second count is an action for fraud and forgery against Barton Thomas for having the false or forged change of beneficiaries executed with the intent to defraud the plaintiff of her inheritance. She asks for damages against Barton in the amount of $280, 939.66 and for punitive damages. Her third count is an action against Barton Thomas for interference with expectancy in the annuities by his malicious actions to deprive her of that interest through "fraudulent representations regarding said changes, undue influence over Blaine Thomas, duress of Blaine Thomas and others and misrepresentations and concealment regarding these actions." (Dk. 1, ¶ 58). The plaintiff asks for actual and punitive damages. Her fourth count is alleged as an alternative action against Barton Thomas to her second count for fraud and forgery. She alleges Barton used "threats, intimidation, coercion and compulsion in order to force Blaine Thomas" to remove the plaintiff as a beneficiary to the annuities. She seeks actual and punitive damages here too.
Springer filed her complaint in this court on March 27, 2015. She asserts diversity jurisdiction under 28 U.S.C. § 1332. She alleges she is a resident of Nevada, the defendant Thomas is a resident of Kansas, and the defendant FBLIC has its principal place of business in Iowa. The amount in controversy exceeds $75, 000 considering just her alleged share of the annuities.
Approximately two weeks before this federal action was filed, FBLIC filed a petition for interpleader and declaratory and injunctive relief in the District Court of Riley County, Kansas. FBLIC's first amended petition filed on March 13, 2015, names as defendants: the children of Blaine Thomas, Shari Springer and Barton Thomas; their mother, Armeda Thomas; the other beneficiaries named on the annuities; and Cindy Thomas as the listed beneficiary entitled to the proceeds of the payment contract. (Dk. 9-1). The petition alleges that Armeda Thomas is the surviving wife of Blaine Thomas and that she is asserting the annuity contracts and payment contract are part of the Blaine Thomas' augmented estate to which she is entitled to a spousal share. The petition describes the named beneficiaries- Barton Thomas, Jade Cole, Kelsey Thomas, Layton Thomas, Norman Thomas, and Jennifer Whalen-as those listed in FBLIC's records entitled to the proceeds of the annuities upon Blaine Thomas' death. The petition notes that Cindy Thomas claims the proceeds of the payment contract as its sole beneficiary. Finally, the petition alleges:
16. Springer claims she was a listed beneficiary to the Annuity Contracts along with Barton Thomas before June of 2012. She asserts fraudulent and forged beneficiary change forms were provided to FBLIC to substitute Norman Thomas, Kelsey Thomas, Layton Thomas, Jade Cole and Jennifer Whalen in her place as beneficiaries to the Annuity Contracts.
17. Accordingly, Springer claims she is entitled to the proceeds of the Annuity Contracts as a "co-beneficiary" of those agreements.
(Dk. 9-1, p. 4). FBLIC pleads that "it cannot reasonably determine who are the appropriate payees and in what amounts, " and asks the court to exercise its discretion and either have these proceeds deposited with the court or retained by FBLIC until the court resolves the competing claims to the funds now held by FBLIC. Id. FBLIC prays that the parties be restrained from commencing any action against it regarding these annuities or contract payment and that a judgment be entered requiring the defendants to settle their rights to these proceeds and discharging plaintiff from all liability except to the parties found to be entitled to the proceeds. Id. at pp. 4-5.
The defendant Barton Thomas asks for an order that either dismisses or stays Springer's action, because the pending Riley County interpleader suit is parallel to Springer's federal action for declaratory judgment and state tort liability and because the relevant factors favor the federal court declining or staying its exercise of jurisdiction under the Colorado River doctrine. FBLIC likewise asks the court to abstain based on similar arguments but adds an argument for not exercising declaratory judgment jurisdiction against it based on Brillhart v. Excess Ins. Co., 316 U.S. 491 (1942). The plaintiff denies that the state interpleader action is parallel to her federal action and contends the factors here do not establish exceptional circumstances for Colorado River abstention.
The Supreme Court recently reiterated "the principle that a federal court's obligation to hear and decide' cases within its jurisdiction is virtually unflagging.'" Lexmark Intern., Inc. v. Static Control Components, Inc., ___ U.S. ___, 134 S.Ct. 1377, 1386 (2014) (quoting Sprint Communications, Inc. v. Jacobs, 571 U.S. ___, 134 S.Ct. 584, 591 (2013) (quoting Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976))). The Tenth Circuit has also said that, "this obligation, although great, is not absolute, " and that, "[i]t is well-established that federal courts have the power to refrain from hearing, ' among other things, cases which are duplicative of a pending state proceeding.'" D.A. Osguthorpe Family Partnership v. ASC Utah, Inc., 705 F.3d 1223, 1233 (10th Cir.) (quoting Quakenbush v. Allstate Insurance Co., 517 U.S. 706, 716-17 (1996)), cert. denied, 133 S.Ct. 2831 (2013). The Colorado River doctrine has as its "core" principle-"the avoidance of duplicative litigation"- and that the doctrine "concerns itself with efficiency and economy" with the goal "to preserve judicial resources.'" Id. (quoting Rienhardt v. Kelly, 164 F.3d 1296, 1302 (10th Cir. 1999)). The Colorado River doctrine is built upon the notion that, "judicial economy concerns may justify deferral of a federal suit when pending state litigation will resolve the issues presented in the federal case." Rienhardt, 164 F.3d at 1302 (citing Colorado River, 424 U.S. at 817-20). Still, "the appropriate circumstances for deferral under the Colorado River Doctrine are considerably more limited than the circumstances appropriate for abstention' and must be exceptional.'" Id. at 1303 (quoting Colorado River, 424 U.S. at 817-18).
Thus, in approaching these cases, the Tenth Circuit counsels:
As a general rule, "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, 96 S.Ct. 1236 (quoting McClellan v. Carland, 217 U.S. 268, 282, 30 S.Ct. 501, 54 L.Ed. 762 (1910)). But, at times, "reasons of wise judicial administration" must weigh in favor of "permitting the dismissal of a federal suit due to the presence of a concurrent state proceeding." Id. at 818, 96 S.Ct. 1236. Granted, these occasions are not ordinarily encountered. Yet such "circumstances, though exceptional, do nevertheless exist." Id.
D.A. Osguthorpe Family Partnership, 705 F.3d at 1233. The Tenth Circuit regards the "better practice is to stay the federal action pending the'" state's outcome, because if "the state proceedings to do not resolve all the federal claims, a stay preserves an available federal forum in which to litigate the remaining claims, without plaintiff having to file a new federal action.'" Foxfield Villa Associates, LLC v. Regnier, 918 F.Supp.2d 1192, 1197 (D. Kan. 2013) (quoting Fox v. Maulding, 16 F.3d 1079, 1083 (10th Cir. 1994)).
Before balancing the different factors, "the district court must determine whether the state and federal proceedings are parallel. Suits are parallel if substantially the same parties litigate substantially the same issues in different forums." Allen v. Board of Educ., Unified School Dist. 436, 68 F.3d 401, 403 (10th Cir. 1995) (quoting Fox. v. Maulding, 16 F.3d at 1081); see Jones v. Great Southern Life Ins. Co., 232 F.3d 901 (10th Cir. 2000) (Table). "Just as the parallel nature of the actions cannot be destroyed by simply tacking on a few more defendants, neither can it be dispelled by repackaging the same issue under different causes of action.'" Gerbino v. Sprint Nextel Corp., 2013 WL 2405558 at *3 (D. Kan. may 31, 2013) (quoting Clark v. Lacy, 376 F.3d 682, 686-87 (7th Cir. 2004)). Consequently, this initial step does not require ...