Friday, July 20, 2007

S.D.N.Y. Finds Plaintiff's Claim Plausible; Denies Defendant's Motion to Stay Under Colorado River Doctrine

Per Vladimir v. Cowperthwait, Slip Copy, 2007 WL 1964157 (S.D.N.Y. Jul 03, 2007) (NO. 06 CIV 5863 JGK):

Based on the present allegations, the plaintiff has, at the very least, pleaded a plausible claim that the plaintiff was an intended third-party beneficiary of the Management Agreement between the defendants and Campbell and thus entitled to assert a claim for breach of the Management Agreement. See, e.g., Flickinger v. Harold C. Brown & Co., Inc., 947 F.2d 595, 600 (2d Cir.1991) ("Where performance is to be rendered directly to a third party under the terms of an agreement, that party must be considered an intended beneficiary." (quoting Cauble v. Mabon Nugent & Co., 594 F.Supp. 985, 991 (S.D.N.Y.1984))); see also Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1974 (2007) (stating that the plaintiff must plead "enough facts to state a claim to relief that is plausible on its face"); Cress v. Wilson, No. 06 Civ. 2717, 2007 WL 1686687, at *3-*4 (S.D.N.Y. June 6, 2007) (discussing the applicable standards on a motion to dismiss pursuant to Rule 12(b) (6)).

. . .

In the alternative, relying on the doctrine established in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976) and its progeny, the defendants seek to stay this action pending the resolution of a related proceeding in New York state court. See, e.g., Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 15-16 (1983). However, "[f]ederal district courts have an unflagging duty to adjudicate matters properly within their jurisdiction, and are not to decline jurisdiction simply because the issues presented may be decided in another forum." Greater New York Metro. Food Council v. McGuire, 6 F.3d 75, 77 (2d Cir.1993) (citing Colorado River, 424 U.S. at 813-14). "The obligation to shoulder the jurisdictional burden is not one lightly to be renounced. A district court may abdicate its duty only in exceptional circumstances." Id. (emphasis added); see also De Cisneros v. Younger, 871 F.2d 305, 307 (2d Cir.1989) (explaining the six factors that courts must consider in analyzing whether to grant a Colorado River stay).

In this case, carefully balancing all of the relevant factors and weighing the balance heavily in favor of exercising jurisdiction, the defendants have not established exceptional circumstances to warrant a Colorado River stay. In particular, although the state action is based on many of the same underlying facts as the federal action, the two cases present non-identical causes of action, thus undercutting any argument that the litigations are simply duplicative. Moreover, the state court action is presently stayed. Staying the federal action would, at least temporarily, preclude the plaintiff from proceeding in either forum on any claim for relief. In light of these circumstances and considering all of the other relevant factors, the defendants' request for a stay is denied.


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