United States District Court, E.D. Michigan, Northern Division
ORDER GRANTING IN PART MOTION TO DISMISS, STAYING AND
ADMINISTRATIVELY CLOSING CASE
L. LUDINGTON, UNITED STATES DISTRICT JUDGE
20, 2016, Plaintiff Cass River Farms, LLC,
(“Cass”) filed a complaint against Defendants
Hausbeck Pickle Co. (“Hausbeck”) and Timothy A.
Hausbeck, the president of the company. ECF No. 1. The
complaint asserts five counts, all related to a contractual
dispute between the parties over the delivery of and payment
for several large shipments of banana and jalapeño
peppers. Compl. at 5-10, ECF No. 1. Counts One, Two, and
Three assert that Defendants' rejection of delivery and
underpayment under the relevant contracts violated the
Perishable Agricultural Commodities Act (PACA), 7 U.S.C.
499(e). Counts Four and Five assert standard breach of
contract claims based on the same refusal to accept the
to Cass's filing of this suit, Hausbeck filed a complaint
on April 21, 2016, in Saginaw County Circuit Court which
named Cass as a defendant and alleged three counts of breach
of contract, one count of tortious interference with a
business relationship or expectancy, and one count of
defamation. Compl. at 11, ECF No. 1. On June 21, 2016, Cass
removed that action to federal court. See Hausbeck Pickle
Co. v. Cass River Farms, LLC, No. 1:16-cv-12281. On July
21, 2016, Hausbeck filed a motion to remand its suit to state
court. On September 3, 2016, this Court granted that motion
and remanded the suit to state court.
22, 2016, Hausbeck filed a motion to dismiss this action,
arguing that abstention pursuant to Colorado River Water
Conservation Dist. v. United States is appropriate given
the separate suit currently pending in state court. 424 U.S.
800 (1976). Because the state court action brought by
Hausbeck contests the same material issues as this suit, the
Court will stay this action.
case arises out of a series of contracts the parties entered
into regarding the sale of large quantities of banana and
jalapeño peppers. Cass is a Michigan company that both
grows peppers and enters into purchase contracts with peppers
grows all over the world. Compl. at 1, 3. Hausbeck is another
Michigan company that purchases peppers and then resells them
to large-volume consumers, like restaurant chains.
Id. at 1, 3. Hausbeck and Cass have a longstanding
relationship and have entered into many contracts for the
sale of peppers. Id. at 3. Both parties are suing
the other in separate actions, each alleging that the other
breached several contracts.
claims arise out of alleged breaches of two contracts the
parties entered into, Contract 35 and Contract 1019.
Id. Cass represents that those contracts created an
obligation for Cass to deliver 10.5 million peppers to
Hausbeck. Id. Pursuant to Contract 35, Cass
contracted to deliver 2 million peppers to Hausbeck at $0.45
per pound. Id. at 4. Under Contract 1019, Cass
agreed to provide 8.5 million pounds of peppers to Hausbeck
at $0.42 per pound. Id. According to Cass, delivery
on Contract 35 was not to begin until after April 1, 2016.
Id. On June 9, 2016, Timothy Hausbeck emailed Cass
and indicated that Hausbeck would accept only 8.5 million
pounds of peppers. Id. at 6. This email reflected
Hausbeck's theory that Cass had breached Contract 35 by
failing to timely deliver. See Hausbeck Email, ECF
No. 1, Ex. 5. Cass argues that the email constituted an
anticipatory repudiation of Contracts 35 and 1019.
Id. Cass immediately responded, requesting that
Hausbeck meet its contractual obligations under both
contracts and accept delivery. Id. Cass also
notified Hausbeck that it was asserting a claim to full
payment under the contracts pursuant to the PACA.
Id. When Cass began delivering peppers, Hausbeck
accepted only 8.5 million pounds of peppers. Id. at
5-7. Further, Hausbeck paid only $0.42 per pound of peppers
that were delivered, consistent with its obligations under
Contract 1019 and not Contract 35. Id. Cass is now
suing Hausbeck for rejecting delivery and underpaying
pursuant to Contracts 35 and 1019 in violation of the PACA.
Cass is also bringing common law breach of contract claims
complaint filed in state court, Hausbeck alleges that Cass is
the party who breached the contracts between them. Hausbeck
Compl., ECF No. 1, Ex. 1. According to Hausbeck, delivery
under Contract 35 was to occur during the winter 2016 season.
Id. at 3. Delivery under Contract 1019 was to occur
between April 20, 2016, and July 7, 2016. Id. at 4.
Hausbeck alleges that Cass dramatically undersupplied
Hausbeck during the winter 2016 season, which Hausbeck
alleges ended on April 30, 2016. Id. at 7. Because
Cass breached Contract 35, Hausbeck brought suit in state
court on April 21, 2016. Id. at 1, 8-12. Hausbeck
alleges that Cass's failure to timely deliver the peppers
under Contract 35 resulted in Hausbeck losing a contract with
Subway. Id. at 7. Hausbeck argues that it accepted
pepper deliveries during the summer of 2016 pursuant only to
has filed a motion to dismiss in this case which asserts that
because Cass's claims could be raised in the currently
pending state court action, this Court should decline to
exercise jurisdiction over this case. The general rule is
that “the pendency of an action in the state court is
no bar to proceedings concerning the same matter in the
Federal court having jurisdiction.” McClellan v.
Carland, 217 U.S. 268, 282 (1910). See also RSM
Richter, Inc. v. Behr Am., Inc., 729 F.3d 553, 557 (6th
Cir. 2013) (“The Supreme Court has repeatedly held . .
. that the mere pendency of a state-court case concerning the
same subject matter as a federal case is not reason enough to
abstain.”). However, in Colorado River, the
Supreme Court held that abstention by federal courts was
justified by the need for judicial efficiency and
federal-state comity in some limited circumstances where
there was a “contemporaneous exercise of
concurrent” jurisdiction by state and federal courts.
424 U.S. at 817. Still, because federal courts have a
“virtually unflagging obligation . . . to exercise the
jurisdiction given them, ” id., abstention is
disfavored. Federal courts should decline to hear a case over
which they have jurisdiction only in extraordinary and narrow
circumstances where the justification for abstention is
clear. Colorado River, 424 U.S. at 813; RSM
Richter, Inc., 729 F.3d at 557.
order to determine whether the exceptional circumstances
necessary to justify Colorado River abstention are
present, a court must engage in a two-step inquiry. First,
the court must determine whether the state proceeding is
truly parallel to the federal case. Crawley v. Hamilton
Cty. Comm'rs, 744 F.2d 28, 31 (6th Cir. 1984). The
relevant question is not whether the state claim could
“be modified so as to make it identical to the current
federal claim.” Id. Rather, the issue is
whether the cases are currently parallel. Id.
“[E]xact parallelism . . . is not required.”
Nakash v. Marciano, 882 F.2d 1411, 1416 (9th Cir.
1989). Rather, the two proceedings need only be
“substantially similar.” Id. (omitting
citations). The parties in the two cases need not be
identical. Bates v. Van Buren Twp., 122 F. App'x
803, 806 (6th Cir. 2004). If the state action is broader than
the federal action, that only makes it “more likely
that it will not be necessary for the federal courts to
determine the federal question. Id. at 807. Broadly,
the relevant inquiry is whether resolution of the state court
action will resolve the contested issues in the federal
action. See Baskin v. Bath Twp. Bd. of Zoning
Appeals, 15 F.3d 569, 572 (6th Cir. 1994); Wright v.
Linebarger Googan Blair & Sampson, LLP, 782
F.Supp.2d 593, 603 (W.D. Tenn. 2011).
the court must determine whether “judicial economy
warrants abstention.” Blakev. Wells Fargo
Bank, NA, 917 F.Supp.2d 732, 737 (S.D. Ohio 2013). The
“decision whether to dismiss a federal action because
of parallel state-court litigation does not rest on a
mechanical checklist, but on a careful balancing of the
important factors as they apply in a given case, with the
balance heavily weighted in favor of the exercise of