Coatings, Inc. v. National Cold Drawn, Inc., Civ. A. No. 85-C-89.

• Decision Date: 02 July 1985
• Docket Number: Civ. A. No. 85-C-89.
• Citation: 611 F. Supp. 958
• Parties: COATINGS, INC., a Wisconsin corporation, Plaintiff, v. NATIONAL COLD DRAWN, INC., an Illinois corporation, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

611 F. Supp. 958

COATINGS, INC., a Wisconsin corporation, Plaintiff, v. NATIONAL COLD DRAWN, INC., an Illinois corporation, Defendant.

Civ. A. No. 85-C-89.

United States District Court, E.D. Wisconsin.

July 2, 1985.

David J. Vergeront, Milwaukee, Wis., for plaintiff.

Kenneth R. Nowakowski, Milwaukee, Wis., for defendant.

DECISION AND ORDER

REYNOLDS, Chief Judge.

The issue before the Court in this diversity action is the defendant's motion to stay these proceedings pending the final disposition of a related action which is before the Circuit Court of Cook County, Illinois. The motion will be denied.

The plaintiff, Coatings, Inc. ("Coatings") is a Milwaukee steel processor that ordered steel bars according to specifications supplied by its Milwaukee customer, Trace-A-Matic, from the defendant, National Cold Drawn, Inc. ("National"), an Illinois steel broker. National obtained the steel bars from an Illinois supplier, Abcor Steel Company ("Abcor") and delivered them to Coatings, who processed them and delivered them to Trace-A-Matic. Coatings alleges that further processing by Trace-A-Matic disclosed defects in the steel, and Coatings seeks recovery from National for breach of contract.

Abcor filed the Cook County action against National on October 4, 1984, seeking payment for steel bars. National answered the complaint on November 5, 1984, and brought a counterclaim which referred to "the third party receiver of the steel bars" who had filed a claim against National. Since Coatings admits it reviewed a copy of this pleading before the instant action was filed on November 30, 1984, National contends that Coatings knew the identical issues had already been raised in the Cook County action. Coatings contends that it was not aware that the steel bars at issue in the Cook County action included the ones it had received until January 22, 1985, when National filed a third party complaint and amended counterclaim joining Coatings and a Texas purchaser, Oil Well Steel, Inc. ("Oil Well"). National filed a motion to stay this action on January 25, 1985, one week after it was removed from state court. Finally, the Court was notified on March 25, 1985 that Coatings had answered the third party complaint in Cook County and brought a counterclaim on the same grounds alleged herein.

The pendency of an action in state court is no bar to proceedings concerning the same matter in the federal court having jurisdiction, and federal courts have a virtually unflagging obligation to exercise the jurisdiction given them. Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 15, 103 S.Ct. 927, 936, 74 L.Ed.2d 765 (1983). The factors to be considered in deciding whether to stay the action include: 1) whether the state court assumed jurisdiction to the exclusion of other tribunals; 2) the inconvenience of the federal forum; 3) the desirability of avoiding piecemeal litigation; 4) the order in which the forums obtained jurisdiction; and 5) whether federal law provides the rule of decision. Id. at 15, 23.

The first factor, based on whether the state court assumed jurisdiction over property at issue, is inapplicable in this case. The second factor is not helpful, since witnesses and sources of proof are located in both Wisconsin and Illinois, and one party will be inconvenienced no matter what this Court decides. Moreover, the competing forums are not so distant as to make convenience a decisive factor.

The third factor weighs in favor of staying one of the actions, because the issues in the two actions are substantially the same, leading to what has been described as "a grand waste of efforts by both courts and parties." Microsoftware Computer Systems v. Ontel Corporation, 686 F.2d 531, 538 (7th Cir.1982). It is also true that "since a judgment by either court would ordinarily be res judicata in the other, the existence of such concurrent proceedings creates the serious potential for spawning an unseemly and destructive race to see which forum can resolve the same issues first." Arizona v. San Carlos Apache Tribe, 463 U.S. 545, 567, 103 S.Ct. 3201, 3214, 77 L.Ed.2d 837 (1983). Nonetheless, these considerations are always present when this question is raised, and the Supreme Court has...