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Card v. Graystone Mortgage Corporation

United States District Court, S.D. Indiana, Indianapolis Division

January 20, 2015

JAMES A. CARD, Plaintiff,
v.
GRAYSTONE MORTGAGE CORPORATION, Defendant.

ORDER ON MOTION TO STAY

TANYA WALTON PRATT, District Judge.

This matter is before the Court on Defendant Graystone Mortgage Corporation's ("Graystone") Motion to Stay (Filing No. 59). Graystone requests a stay of this action pending resolution of related lawsuits in Florida federal and state courts. Plaintiff James A. Card ("Mr. Card") objects to the motion. For the reasons set forth below, Graystone's Motion is GRANTED.

I. BACKGROUND

Mr. Card initiated this action alleging that Defendants CSC Credit Services, Inc. and Graystone violated various provisions of the Fair Credit Reporting Act ("FCRA") (Filing No. 1). Specifically, this action relates to the inaccurate reporting by an installment account on Mr. Card's credit file and consumer reports. Mr. Card alleges that Bahamas Sales Associate, LLC ("BSA") issued a promissory note to him in connection with the purchase of real estate in the Bahamas (the "Promissory Note"). Thereafter, BSA's parent company, Ginn Financial Services, LLC ("Ginn"), contracted with Graystone for access to a computer service that allowed Ginn to service the Promissory Note. At the request of Ginn, Graystone reported information about Mr. Card and the Promissory Note to the national consumer reporting agencies under Graystone's subscriber number instead of having Ginn obtain its own subscriber number for the reporting. In essence, Graystone furnished the information about Mr. Card's Promissory Note under the direction of Ginn to the national consumer reporting agencies. Under its arrangement with Ginn, Graystone also furnished information to the national consumer reporting agencies about other similar promissory notes held by other individuals and entities who purchased similar properties in the Bahamas.

A number of lawsuits ensued surrounding the Promissory Note and the other promissory notes. Mr. Card's Promissory Note is the subject of two different lawsuits pending in Florida courts. One of the lawsuits is pending in the United States District Court for the Middle District of Florida (the "Florida federal court action"). The other is pending in the Circuit Court of the Seventh Judicial Circuit in Flagler County, Florida (the "Florida state court action"). In those actions, Mr. Card contends that the Promissory Note was fraudulently obtained and is invalid and unenforceable. The current action differs from the Florida cases by naming different defendants and asserting claims under the FCRA. Graystone seeks a stay of this action pending the outcome of the Florida lawsuits.

II. LEGAL STANDARD

"The doctrine of abstention, under which a District Court may decline to exercise or postpone the exercise of its jurisdiction, is an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it." Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 813 (1976) (quoting County of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 188-89 (1959)).

If a parallel action is before another federal district court, "the general principle is to avoid duplicative litigation." Id. at 817. A stay eliminates concerns of duplicative litigation. Clark v. Lacy, 376 F.3d 682, 687 (7th Cir. 2004).

The approach for concurrent federal-state jurisdiction is more limited than wholly federal concurrent jurisdiction because of the federal court's obligation to exercise its original jurisdiction. Colo. River, 424 U.S. at 817-18. As noted in Colorado River, the principles governing concurrent federal-state jurisdiction "rest on considerations of wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation." Id. at 817 (internal quotation marks and citation omitted).

To determine whether a stay is appropriate in the context of concurrent federal-state jurisdiction, the Court must first determine whether the state and federal court actions are parallel. Freed v. J.P. Morgan Chase Bank, N.A., 756 F.3d 1013, 1018 (7th Cir. 2014).

For a state court case to be parallel to a federal court case under the Colorado River doctrine, there must be a substantial likelihood that the state litigation will dispose of all claims presented in the federal case. The cases need not be identical to fulfill the requirement of parallelism, but the court must examine whether substantially the same parties are contemporaneously litigating substantially the same issues in another forum. The court should also examine whether the cases raise the same legal allegations or arise from the same set of facts.

Id. at 1018-19. "If the actions are not parallel, the Colorado River doctrine does not apply and the court need not address the second part of the analysis." Id. at 1018. However, if the federal and state court actions are parallel, "the court must decide whether abstention is proper by carefully weighing ten non-exclusive factors." Id. The factors are:

1) whether the state has assumed jurisdiction over property;
2) the inconvenience of the federal forum;
3) the desirability of avoiding piecemeal litigation;
4) the order in which jurisdiction was obtained by the concurrent forums;
5) the source of governing law, state or federal;
6) the adequacy of state-court action to protect the ...

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