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Vail Services Group, LLC v. Dines

United States District Court, D. Colorado

June 21, 2018

VAIL SERVICES GROUP, LLC, Plaintiff,
v.
GEORGE ALLEN DINES, Defendant.

          ORDER GRANTING MOTION TO STAY CASE

          CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Defendant George Allen Dines's Motion to Dismiss or Stay this case pending the resolution of related state court proceedings. (Doc. # 36.) Plaintiff Vail Services Group, LLC objects to the motion. (Doc. # 40.) For the following reasons, the Court overrules that objection, grants Defendant's motion, and stays this case.

         I. BACKGROUND

         Plaintiff asserts only one claim against Defendant-breach of a personal guarantee. (Doc. # 1.) Plaintiff specifically alleges that Defendant is liable as the personal guarantor of a contract between Plaintiff and the Dines Agency, LLC. (Id. at ¶¶ 1, 16-20.) As guarantor, Defendant promised “to pay and fulfill all obligations of the Dines Agency, LLC specifically including but not limited to payment of all obligations under the . . . contract between the Dines Agency and [Plaintiff].” (Doc. # 1-1.) Plaintiff contends that Dines Agency failed to pay its debts under the contract; Plaintiff therefore sought payment from Defendant as guarantor, and Defendant refused to pay, thereby breaching the agreement. (Doc. # 1 at ¶ 15.)

         To prevail on its sole claim of breach against Defendant, Plaintiff must first establish, among other things, that it had a valid contract with the Dines Agency-a point which Defendant vehemently contests. (Doc. # 5 at 5, 12.) Plaintiff must also establish, as it acknowledges in its Complaint, that it “performed under the contract between [it] and the Dines Agency, but the Dines Agency . . . breached the contract”- other points that Defendant denies. (Doc. ## 1 at ¶ 18; 5 at 9, 12.)

         These very issues-the existence of a valid underlying contract and breach-are the subject of litigation in Vail Services Group, LLC v. Dines Agency LLC, No. 2017-CV-34597, (Dist. Ct. Denver Cty, Dec. 11, 2017), currently scheduled for arbitration before Judge Boyd Boland, which is predicted to occur “by October 1, 2018.” (Doc. # 36-3 at ¶¶ 1, 3.) Because the issues in this case are dependent on issues being arbitrated, Defendant requests that this case either be dismissed or stayed pursuant to the Colorado River doctrine. See Colo. River Water Conserv. Dist. v. United States, 424 U.S. 800 (1976). Plaintiff objects to a dismissal or stay of this case, primarily arguing that the arbitration is non-binding on the parties and issues in this case; thus, this action should proceed alongside the arbitration.

         II. DISCUSSION

         Under the Colorado River doctrine, a federal court may dismiss or stay federal proceedings when a parallel proceeding is pending in another forum. See Rienhardt v. Kelly, 164 F.3d 1296, 1302 (10th Cir. 1999). The doctrine likewise applies to parallel proceedings subject to arbitration. THI of New Mexico at Las Cruces, LLC v. Fox, 727 F.Supp.2d 1195, 1208 (D.N.M. 2010)

         A. PARALLEL ACTIONS

         Before applying the Colorado River factors, the Court must first determine “whether the state and federal proceedings are parallel.” Allen v. Bd. of Educ., Unified Sch. Dist. 436, 68 F.3d 401, 402 (10th Cir.1995); Fox v. Maulding, 16 F.3d 1079, 1081 (10th Cir.1994). The “exact identity of parties and issues is not required. Rather, state and federal proceedings are sufficiently parallel if ‘substantially the same parties litigate substantially the same issues.'” Hamilton v. Emerald Isle Lending Co., No. 10-CV-02713-REB-KMT, 2011 WL 1990568, at *11 (D. Colo. Apr. 6, 2011); Allen, 68 F.3d at 402.

         The Plaintiff in this lawsuit and the arbitration are identical (Vail Services Group). Although the defendants are not identical, for the purposes of applying the Colorado River doctrine, the Court finds that they are “substantially the same.” See, e.g., U.S. v. City of Las Cruces, 289 F.3d 1170, 1182 (10th Cir. 2002) (“[I]n the Colorado River context ... exact identity of parties and issues is not required. Rather, state and federal proceedings are sufficiently parallel if substantially the same parties litigate substantially the same issues.”) (internal citations omitted). The Defendant in this case is alleged to be the guarantor of a contract entered into by one of the defendants in the arbitration- the Dines Agency. Indeed, the validity and enforceability of that contract is the primary subject of the arbitration, and both the Defendant in this case and the defendants to the arbitration argue against the validity and enforceability of that contract. Thus, the Defendant in this case and the arbitration defendants' interests are entirely congruent. See, e.g., Lumen Constr., Inc. v. Brant Constr. Co., Inc., 780 F.2d 691, 695 (7th Cir. 1985) (where interests of parties in both suits are congruent, abstention may be appropriate notwithstanding fact that parties are not identical.).

         The Court also finds that the issues in the proceedings are substantially similar. Indeed, the sole claim in the instant case is inseparable from the substantially related issue being arbitrated-whether the underlying contract between Plaintiff and the Dines Agency was valid, enforceable, and/ breached. If not, the guarantee holds no weight. If contract is deemed valid, the guarantee may attach to it. The Court rejects, as unsupported by any legal authority, Plaintiff's arguments that the cases are not parallel because (1) the Defendant in this case did not agree to arbitration and is not bound by it; and (2) the personal guarantee is “absent from arbitration.” Plaintiff is essentially arguing that the existence of different defendants and claims render the actions not parallel. That is simply incorrect, and numerous courts have held otherwise. See, e.g., Int'l Asset Mgmt., Inc. v. Holt, 487 F.Supp.2d 1274, 1284 (N.D. Okla. 2007) (finding the state and federal cases parallel because the sole issue presented in the federal case was also at issue in the state case regardless of the fact that the state case involved additional, unrelated claims).

         Moreover, Plaintiff's suggestion that this case is not parallel to the arbitration because “Plaintiff need not show a judgment on the breach of . . . contract to establish an ‘obligation' on [Defendant's] part to pay” is without merit. Plaintiff highlights a distinction without a difference. True, Plaintiff need not show a separate “judgment” on the breach, but Plaintiff nonetheless must show the existence of a valid contract and a breach of that contract to proceed with its claims against Defendant in this case. Because the arbitration is set to adjudicate those very issues, it is “parallel” to this litigation.

         B. COLORADO ...


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