Bank One, N.A. v. Coates, No. Civ.A. 3:00CV671LN.

• Court: United States District Courts. 5th Circuit. Southern District of Mississippi
• Writing for the Court: Tom S. Lee
• Citation: 125 F.Supp.2d 819
• Parties: BANK ONE, N.A., Plaintiff, v. Clarence COATES, Defendant.
• Docket Number: No. Civ.A. 3:00CV671LN.
• Decision Date: 02 January 2001

125 F.Supp.2d 819 BANK ONE, N.A., Plaintiff,
v.
Clarence COATES, Defendant. No. Civ.A. 3:00CV671LN. United States District Court, S.D. Mississippi, Jackson Division. January 2, 2001.

Page 820

William H. Leech, Mark H. Tyson, McGlinchey Stafford, Jackson, MS, for plaintiff.

Suzanne Griggins Keys, Byrd & Associates, Jackson, MS, for defendant.

MEMORANDUM OPINION AND ORDER

TOM S. LEE, Chief Judge.

There are presently pending in this cause for resolution a number of motions, including plaintiff Bank One's motion to compel arbitration, and defendant's motions for abstention, to join additional parties

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and dismiss, and for discovery. The parties have responded to each other's motions and the court, having considered the memoranda of authorities, together with attachments, submitted by the parties, concludes that defendant's motions should be denied, and that Bank One's motion should be granted, for reasons that follow.

On October 20, 1999, the defendant herein, along with thirty-seven others, filed suit in the Circuit Court of the Second Judicial District of Bolivar County, Mississippi, against several defendants, including Bank One, alleging claims stemming from his purchase of a home satellite system. In that lawsuit, defendant, who financed his purchase of the satellite system through a revolving credit card plan with Bank One, asserts various claims against Bank One involving alleged improper actions on Bank One's part in connection with such financing.

As of November 22, 1999, none of the defendants in the state court action had been served with process. Nevertheless, one of the named defendants, Sky Scanner Satellite, voluntarily entered an appearance on that date and filed a notice of removal to the United States District Court for the Northern District of Mississippi,¹ asserting in its removal petition that the plaintiffs' claims arose under one or more of several federal laws, including, inter alia, the federal Truth in Lending Act, 15 U.S.C. § 1601 et seq., so that there was federal jurisdiction over the case under 28 U.S.C. § 1331. On a motion by the plaintiffs in that action, Judge Neal Biggers entered an order on August 23, 2000 remanding the case to state court.²

Shortly thereafter, on September 7, 2000, Bank One filed the present action in this court alleging that all of the claims asserted against it by the plaintiffs in the Bolivar County lawsuit are subject to an agreement by the parties to submit their disputes to binding arbitration. Bank One contemporaneously filed identical federal court suits against each of the other thirty-seven state court plaintiffs. Soon after service on the defendant herein, Bank One moved to compel arbitration in accordance with § 4 of the Federal Arbitration Act, 9 U.S.C. § 4, to which defendant responded in opposition.³

Included in defendant's response to Bank One's motion to compel arbitration is a request for abstention by this court in deference to the pending Bolivar County action; and accompanying defendant's response is a separate motion to join necessary parties and conduct discovery. By that motion, defendant requests the joinder of additional defendants and consequent dismissal (since their joinder, if permitted, would destroy diversity). Defendant asks, alternatively, that in the event the court declines defendant's request to dismiss or abstain, defendant be allowed discovery of allegedly "critical facts" relating to the alleged arbitration agreement prior to any ruling by the court on Bank One's motion to compel arbitration. Thus, the court has before it for consideration Bank One's motion to compel arbitration, and requests by defendant for joinder and dismissal of this action, for abstention and, alternatively, for a stay of the motion to compel arbitration while defendant conducts discovery. Since defendant's motion for joinder is, ultimately, addressed to this court's jurisdiction,

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that motion will be considered first.

MOTION FOR JOINDER OF NECESSARY PARTIES

As both parties recognize, although the Federal Arbitration Act expressly authorizes the filing of petitions to compel arbitration in federal district courts, the FAA treats arbitration simply as one means of resolving disputes that lie within the jurisdiction of the federal courts, Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 291, 115 S.Ct. 834, 848, 130 L.Ed.2d 753 (1995), and does not itself grant the federal courts subject matter jurisdiction, id.; therefore, an action brought in federal court to compel arbitration requires an independent basis for federal jurisdiction, such as federal question or diversity jurisdiction, Specialty Healthcare Mgt., Inc. v. St. Mary Parish Hosp., 220 F.3d 650, 653 (5th Cir.2000) (citing Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n. 32, 103 S.Ct. 927, 942 n. 32, 74 L.Ed.2d 765 (1983)); Atlantic Aviation, Inc. v. EBM Group, Inc., 11 F.3d 1276, 1280 (5th Cir. 1994). In this case, defendant contends, and Bank One acknowledges, that in accordance with Judge Biggers' ruling, there is no federal question jurisdiction. Bank One maintains, however, that there is diversity jurisdiction inasmuch as Bank One, an Ohio corporation, and defendant, a Mississippi resident, are of diverse citizenship and as the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332. For his part, defendant submits that Bank One has, in effect, attempted to manufacture diversity jurisdiction by deliberately failing to join necessary parties to this action, and in particular, by failing to join Bank One's in-state agents/employees with whom defendant directly dealt in connection with the sale/finance transaction that is the subject of the underlying litigation. Defendant thus moves the court to add as a party "S. Broadwater," the agent/employee who dealt with him; and he submits that once Broadwater is joined, there will be no diversity jurisdiction and the case will be dismissed, mooting all other issues.

Defendant's contention that others who had some involvement in the underlying transaction are necessary parties to this suit within the contemplation of Federal Rule of Civil Procedure 19 is not well taken. In this case, Bank One seeks to compel arbitration pursuant to the terms of an alleged arbitration agreement between Bank One and the defendant. The fact that the defendant may have asserted claims in the state court suit against others who had some involvement in the underlying transaction does not make those others necessary parties to this action, in which the sole issue is whether the defendant is to be compelled to arbitrate its claims against Bank One. See Snap-On Tools, Corp. v. Mason, 18 F.3d 1261, 1266-67 (5th Cir.1994) (nondiverse parties joined as alleged joint tortfeasors in state court action are not indispensable parties in a diversity-based motion to compel arbitration). Accordingly, Bank One's motion for joinder will be denied; and as diversity jurisdiction exists as to the parties to this action, defendant's accompanying request for dismissal will be denied.

DEFENDANT'S REQUEST FOR ABSTENTION

The court also rejects defendant's argument that the court, even should it find some basis for federal jurisdiction, should nevertheless refrain from exercising its jurisdiction in the interest of avoiding "the piece mealing of litigation." In this vein, defendant, contending that Bank One's filing of these thirty-eight separate lawsuits against each of the state court plaintiffs is "merely a defensive vexatious maneuver by Bank One, seeking to find some court that would hear its arguments," urges this court to abstain in deference to the pending state court suit as that suit was filed first, involves state law claims and provides Bank One an adequate forum for pursuing its efforts to compel arbitration. The court, however, is wholly unpersuaded that circumstances exist in this case which

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would warrant the court's abdication of its jurisdictional powers.

In Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), the Supreme Court concluded that the determination whether to stay a proceeding to compel arbitration under 9 U.S.C. § 4 in favor of state court litigation is governed by the "exceptional circumstances" standard articulated by the Court in Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976). Ordinarily, the pendency of litigation in state court is not a bar to proceedings in federal court involving the same subject matter and the federal court, if possessed of jurisdiction, must ordinarily entertain the action. See id. 817, 96 S.Ct. at 1246 ("`the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction,' and ... the federal courts have a `virtually unflagging obligation ... to exercise the jurisdiction given them.'"). However, the Colorado River abstention doctrine, upon which defendant relies, is premised on a recognition that there are "exceptional circumstances" in which a federal court, even though it has subject matter jurisdiction, should decline to exercise that jurisdiction in favor of a concurrent state court action in the interest of comity and conservation of judicial resources. Id. (in exceptional and limited circumstances, federal court may dismiss federal suit in favor of state court action based on "considerations of wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation"); see Black Sea Inv., Ltd. v. United Heritage Corp., 204 F.3d 647, 650 (5th Cir.2000) ("The Colorado River abstention doctrine is based on principles of federalism, comity, and conservation of judicial resources.").

The Supreme Court has emphasized that the Colorado River doctrine "represents an `extraordinary and narrow exception' to...