United States District Court, D. Alaska
MARK E. PFEFFER, an individual; and ROBERT B. ACREE, an individual, Plaintiffs,
v.
EVERBANK, a federal savings bank, Defendant.
ORDER RE MOTION TO DISMISS DECLARATORY JUDGMENT
ACTION
SHARON
L. GLEASON UNITED STATES DISTRICT JUDGE.
Before
the Court at Docket 6 is EverBank's Motion to Dismiss
Declaratory Judgment Action Under Abstention and Ripeness
Doctrines. The motion has been fully briefed.[1] Oral argument was
held on October 16, 2017. For the following reasons, the
motion will be granted.
BACKGROUND
In
December 2014, EverBank loaned $28.6 million to 716 West
Fourth Avenue, LLC (“716 LLC”).[2] As part of the
transaction, Mark Pfeffer and Robert Acree
(“Plaintiffs”) signed a guaranty agreement
(“Guaranty”) in favor of EverBank.[3] In March 2016,
716 LLC defaulted on the loan.[4] 716 LLC, Plaintiffs, and EverBank
then entered into a forbearance agreement.[5]
Based
on allegations that the terms of the forbearance agreement
had not been met, EverBank filed a complaint in Alaska
Superior Court against 716 LLC on April 28,
2017.[6] On July 18, 2017, Plaintiffs initiated
this case (the “Federal Declaratory Action”)
seeking declaratory relief regarding the extent of their
potential liability under the Guaranty.[7] Two days later,
EverBank filed its Second Amended Complaint in state court,
naming the Plaintiffs in this case as additional defendants
in the state court action and asserting additional claims,
including claims for fraud and piercing the corporate
veil.[8]
On
August 18, 2017, EverBank filed the motion now before the
Court-its Motion to Dismiss Declaratory Judgment Action.
EverBank asks this Court to decline to exercise jurisdiction
in this case under the abstention doctrine or to dismiss this
case based on the ripeness doctrine.[9]
JURISDICTION
Plaintiffs
and EverBank are residents of different states and the amount
in controversy exceeds $75, 000. Therefore, the Court has
diversity jurisdiction pursuant to 28 U.S.C. § 1332.
Under diversity jurisdiction, the Court applies federal
procedural law and Alaska substantive law.[10]
DISCUSSION
“When
ruling on a motion to dismiss, [a court] may ‘generally
consider only allegations contained in the pleadings,
exhibits attached to the complaint, and matters properly
subject to judicial notice.'”[11] The Court
“accept[s] factual allegations in the complaint as true
and construe[s] the pleadings in the light most favorable to
the nonmoving party.”[12]
1.
Abstention Doctrine
“[W]hen
a party requests declaratory relief in federal court and a
suit is pending in state court presenting the same state law
issues, there exists a presumption that the entire suit
should be heard in state court.”[13] In
determining whether to abstain from issuing a declaratory
judgment, a federal court considers the three factors
articulated by the Supreme Court in Brillhart v. Excess
Ins. Co.: [(1)] “avoiding needless determination
of state law issues; [(2)] discouraging forum shopping; and
[(3)] avoiding duplicative litigation.”[14] In
Allstate v. Herron, the Ninth Circuit identified
additional factors for a district court to consider,
including whether retaining jurisdiction would:
“resolve all aspects of the controversy in a single
proceeding; . . . serve a useful purpose in clarifying the
legal relations at issue; . . . permit one party to obtain an
unjust res judicata advantage; . . . risk entangling federal
and state court systems; or . . . jeopardize the convenience
of the parties.”[15] The Court now turns to consideration
of these factors.
a.
Determination of State Law Issues
The
Guaranty at issue provides that it “will be governed by
federal law applicable to Lender and, to the extent not
preempted by federal law, the laws of the State of Alaska
without regard to its conflicts-of-laws
provisions.”[16] The interpretation of the two Guaranty
terms at issue in this case appear to present solely issues
of contract interpretation under Alaska law. Plaintiffs have
not identified any issue regarding federal law; they
acknowledge “[i]t is unclear whether federal law may be
implicated by the contractual clauses in
question.”[17] Accordingly, retaining jurisdiction
would require this Court to decide basic issues of state
contract law. This factor weighs in favor of abstaining.
b.
Forum Shopping
EverBank
filed its action in state court in April 2017, three months
before Plaintiffs filed this Federal Declaratory
Action.[18] But Plaintiffs note that this federal
case “was the first action filed involving Plaintiffs
or the Guaranty.”[19] “Timing is only one
consideration when deciding whether to entertain a
declaratory judgment action, and the
Wilton/Brillhart factors sometimes compel a
court to decline to entertain an earlier-filed action in
favor of a later-filed action.”[20]
Plaintiffs
filed this federal action two days before EverBank filed its
Second Amended Complaint in state court that added Plaintiffs
as parties to that lawsuit and added allegations similar to
those made in this Federal Declaratory Action. However, as
guarantors of 716 LLC's note, Plaintiffs were likely
unsurprised when they were named as defendants in the state
case. Plaintiffs had been in negotiations with EverBank for
many months prior to initiating this action. 716 LLC's
counsel also represents Plaintiffs in this case. Plaintiff
Robert Acree is the majority owner of 716 LLC; Plaintiff Mark
Pfeffer is the LLC's acting manager.[21]
Plaintiffs' initiation of this action is not inconsistent
with forum shopping. This factor weighs in favor of
abstaining from issuing a declaratory judgment.
c.
Duplicative Litigation
EverBank
asserts that the state court and federal court actions both
involve the same parties and same issues and that the state
court action “is a more comprehensive
proceeding.”[22] Plaintiffs respond that they are seeking
a “quick and clear declaration” of two specific
issues that should not ...