OHI ASSET (CT) LENDER v. WOODLAND MANOR IMPROV., No. CA 09-219 ML.

CourtU.S. District Court — District of Rhode Island
Writing for the CourtDAVID L. MARTIN, United States Magistrate
Citation687 F. Supp.2d 12
PartiesOHI ASSET (CT) LENDER, LLC, v. WOODLAND MANOR IMPROVEMENT ASSOCIATION by and through Allan M. SHINE, in his capacity as Court-appointed, Trustee.
Decision Date26 January 2010
Docket NumberNo. CA 09-219 ML.
687 F.Supp.2d 12

OHI ASSET (CT) LENDER, LLC,
v.
WOODLAND MANOR IMPROVEMENT ASSOCIATION by and through Allan M. SHINE, in his capacity as Court-appointed, Trustee.

No. CA 09-219 ML.

United States District Court, D. Rhode Island.

January 26, 2010.


687 F. Supp.2d 14

Daniel E. Burgoyne, R. Kelly Sheridan, Jr., Roberts, Carroll, Feldstein & Peirce, Inc., Providence, RI, Dana M. Campbell, Leighton Aiken, Owens Clary & Aiken, LLP, Dallas, TX, for OHI Asset (CT) Lender, LLC.

Joseph Avanzato, Nicholas R. Mancini, Adler Pollock & Sheehan P.C., Providence, RI, for Trustee.

ORDER

MARY M. LISI Chief Judge.

This matter is before the Court on a Report and Recommendation issued by Magistrate Judge Martin on January 11, 2010. None of the parties have filed any objection and the time for doing so has passed. The Court, therefore, adopts the Report and Recommendation in its entirety. Defendant's Motion to Dismiss or in the Alternative to Stay on Grounds of Abstention is DENIED.

SO ORDERED:
REPORT AND RECOMMENDATION

DAVID L. MARTIN, United States Magistrate Judge.

Before the Court is Defendant's Motion to Dismiss or in the Alternative to Stay on Grounds of Abstention (Doc. # 9) ("Motion to Dismiss or Stay" or "Motion"). The Motion has been referred to me for preliminary review, findings, and recommended disposition pursuant to 28 U.S.C. § 636(b)(1)(B). For the reasons stated below, I recommend that the Motion be denied.

Overview

This is an action for declaratory judgment. See Complaint (Doc. # 1) ¶¶ 18-21. Plaintiff OHI Asset (CT) Lender, LLC ("Plaintiff" or "OHI"), asks that the Court declare the respective rights and obligations of OHI and Defendant Woodland Manor Improvement Association ("Defendant" or "WMIA") under three agreements relating to a private sewer system operated by WMIA that services property owned by OHI in Coventry, Rhode Island. See id.

WMIA contends that although OHI has the right, as a successor property owner, to use the private sewer system, OHI must execute a sewer use agreement with WMIA and pay WMIA a "one-time" fee for continued use in an amount to be determined by the Trustee. See Plaintiff's Memorandum in Opposition to Defendant's Motion to Dismiss or, in the Alternative, to Stay on Grounds of Abstention ("Plaintiff's Mem.") at 6-7; id., Exhibit ("Ex.") 1 at 2 (Letter from Maggiacomo to Sheridan of 7/14/09). OHI seeks a judgment declaring that as a transferee or successor in title, it is not required to pay a fee for the continued use of the system (as distinguished from a connection fee or fee for water consumption). See Plaintiff's Mem. at 7.

By the instant Motion, WMIA seeks dismissal or a stay of OHI's Complaint on grounds of abstention. See Motion at 1. WMIA contends that the issues in dispute can be more appropriately addressed by the state superior court which has assumed custody and control of the sewer system through its appointed trustee and is the forum in which WMIA's ongoing trusteeship proceeding is pending. See Memorandum of Law in Support of Defendant's Motion to Dismiss or in the Alternative to Stay on Grounds of Abstention ("Defendant's Mem.") at 1; see also Reply Memorandum of Law in Support of Defendant's

687 F. Supp.2d 15

Motion to Dismiss, or in the Alternative to Stay, on Grounds of Abstention ("Reply Mem.") at 2.

Facts1

In the late 1970s, a group of developers in Coventry, Rhode Island, sought to obtain sewer disposal service for a number of parcels of real estate (the "Coventry Properties") which were then under development. See Defendant's Mem. at 2; Complaint ¶ 6. On May 30, 1978, acting through an entity called the Mapleroot Development Corporation ("Mapleroot"), the developers entered into a sewage disposal agreement (the "1978 Agreement") with the Town of West Warwick (the "Town") pursuant to which the Town agreed to provide sewage treatment for effluent from the Coventry Properties. See Joint Statement of Facts (Doc. # 17) ("JSF") ¶ 1; Complaint ¶¶ 6-7. The effluent would be delivered to the Town's sewage treatment plant via a private sewage system, consisting of a sewage pumping system and sewer line (collectively the "Sewer Line"). See JSF ¶ 1.

WMIA was formed to manage and operate the Sewer Line for the benefit of five of the Coventry Properties that were eligible to be connected to the Sewer Line. See Defendant's Mem. at 2. On January 28, 1981, Mapleroot, WMIA, Woodland Manor I Associates, Woodland Manor II Associates, and Boston Neck Realty Company entered into a Declaration of Rights and Covenants regarding the construction of the Sewer Line (the "Declaration of Rights"). JSF ¶ 2.

As of September 10, 2003, Haven Health Center of Coventry, LLC. was the owner of a 300-bed nursing home (the "Coventry Health Center") that was serviced by the Sewer Line. Id. ¶ 3. On September 10, 2003, Coventry Sewage Associates, WMIA, Haven Eldercare of New England, LLC, and Haven Health Center of Coventry, LLC, entered into a sewer use agreement (the "2003 Sewer Use Agreement"). Id. ¶ 4. Following execution of the 2003 Sewer Use Agreement, Haven Eldercare of New England, LLC, or Haven Health Center of Coventry, LLC (or one of their affiliated entities), (a) made payments on account of the one-time continuation fee set out in the 2003 Sewer Use Agreement and (b) commenced paying the annual service fee pursuant to monthly invoices. Id. ¶ 5.

As of January 24, 2006, WMIA had acquired ownership of the Sewer Line from Coventry Sewage Associates.2 Id. ¶ 6. By order dated February 10, 2006, Allan M. Shine, Esq., was appointed Permanent Trustee of WMIA (the "Trustee") with all the powers of a state court receiver pursuant to the Order Appointing Trustee (the "WMIA Trusteeship Action"). Id. ¶ 7. The WMIA Trusteeship Action was filed in the Kent County Superior Court to satisfy requirements of the United States Department of Housing and Urban Development ("HUD") for issuing insurance for financing the sale of Woodland Manor I and

687 F. Supp.2d 16

Woodland Manor II, apartment complexes serviced by the Sewer Line.3 Id.

On or about November 20, 2007, Haven Eldercare of New England, LLC, Haven Health Center of Coventry, LLC, Coventry Equities, LLC (an affiliated entity of Haven Eldercare of New England, LLC and/or Haven Health Center of Coventry, LLC), and certain of their affiliated entities filed Petitions for Relief under Title 11 of the United States Code (the "Bankruptcy Case") in the United States Bankruptcy Court for the District of Connecticut (the "Bankruptcy Court"). See id. ¶ 8. On or about July 4, 2008, the Bankruptcy Court entered that certain Order (A) Authorizing Sale of Certain Debtors' Assets to OHI Asset (CT) Lender, LLC and OHI (Connecticut), Inc. Free and Clear of Liens, Claims, and Encumbrances Pursuant to 11 U.S.C. § 363; (B) Authorizing the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases of Non-Residential Real Property and Fixing Cure Amounts; and (C) Granting Related Relief (the "Order"). The Order approved, inter alia, OHI's acquisition of Coventry Health Center subject to an Asset Purchase and Operations Transfer Agreement dated July 7, 2008. See id. ¶ 9. None of the debtors in the Bankruptcy Case assumed the 2003 Sewer Use Agreement during the course of the Bankruptcy Case, and therefore the 2003 Sewer Use Agreement was not assigned to OHI. See id. ¶ 10.

As of the date that the instant action was initiated, OHI was not a party to the WMIA Trusteeship Action. See id. ¶ 11. From the time that OHI acquired Coventry Health Center, OHI (or its lessee) has been using the Sewer Line and has been paying the Trustee for such use. See id.

687 F. Supp.2d 17

Travel

Plaintiff filed its Complaint in this Court on May 11, 2009. See Docket. On July 23, 2009, Defendant filed the instant Motion to which Plaintiff filed a response on August 17, 2009. See id. A hearing was held on September 10, 2009. See id. On September 25, 2009, the parties filed the JSF which the Court had requested at the hearing. See id. Thereafter, the Court took the matter under advisement.

Abstention

Abstention from the exercise of federal jurisdiction is the exception, not the rule. 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. Abdication of obligation to decide cases can be justified under this doctrine only in the exceptional circumstances where the order to the parties to repair to the state court would clearly serve an important countervailing interest.

Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 813, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976)(internal quotation marks omitted).

There are also certain very limited circumstances outside the abstention context in which a federal court may dismiss an action in deference to a concurrent state suit. Arizona v. San Carlos Apache Tribe of Arizona, 463 U.S. 545, 551-52, 103 S.Ct. 3201, 77 L.Ed.2d 837 (1983) (explaining that dismissal in Colorado River could not be supported under the doctrine of abstention in any of its forms, but that it was justified as an application of traditional principles of "wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation")(quoting Colorado River, 424 U.S. at 817, 96 S.Ct. 1236) (alteration in original). Among the circumstances which may counsel against concurrent federal proceedings are "the comprehensive nature of the state proceedings and the considerable expertise and technical resources available in those proceedings." Id. at 552, 103 S.Ct. 3201 (citing Colorado River, 424 U.S. at 819-20, 96 S.Ct. 1236).

Discussion

I. Colorado River Abstention

WMIA argues that abstention is appropriate in this case pursuant to the abstention doctrine articulated in Colorado River....

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3 practice notes
  • Stoncor Grp., Inc. v. Peerless Ins. Co., 16 Civ. 4574 (LAK) (GWG)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • August 15, 2018
    ...Inc., 2015 WL 1622031, at *6 (D.S.D. Apr. 10, 2015) ; OHI Asset (CT) Lender, LLC v. Woodland Manor Improvement Ass'n ex rel. Shine, 687 F.Supp.2d 12, 17 (D.R.I. 2010), are inapposite. The latter made this statement with regard to abstention under Colorado River Water Conservation District v......
  • Sanchez v. SEGUROS TRIPLE S, INC., Civil No. 08-1215 (GAG).
    • United States
    • United States District Courts. 1st Circuit. District of Puerto Rico
    • February 22, 2010
    ...favor of Transportistas. Thus, the court GRANTS summary judgment as to Plaintiff's claim against Transportistas and DISMISSES the same. 687 F. Supp.2d 12 IV. For the reasons discussed above, the court DENIES IN PART and GRANTS IN PART defendant's motion for summary judgment. (Docket No. 45)......
  • Arbella Prot. Ins. Co. v. Regan Heating & Air Conditioning, Inc., C.A. No. 15-441 S
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Rhode Island
    • June 10, 2016
    ...made at thePage 5 time the federal action is filed. See OHI Asset (CT) Lender, LLC v. Woodland Manor Improvement Ass'n ex rel. Shine, 687 F. Supp. 2d 12, 23 (D.R.I. 2010). In determining whether the actions are parallel, the Court examines whether "the same parties [are] involved in both pr......
3 cases
  • Stoncor Grp., Inc. v. Peerless Ins. Co., 16 Civ. 4574 (LAK) (GWG)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • August 15, 2018
    ...Inc., 2015 WL 1622031, at *6 (D.S.D. Apr. 10, 2015) ; OHI Asset (CT) Lender, LLC v. Woodland Manor Improvement Ass'n ex rel. Shine, 687 F.Supp.2d 12, 17 (D.R.I. 2010), are inapposite. The latter made this statement with regard to abstention under Colorado River Water Conservation District v......
  • Sanchez v. SEGUROS TRIPLE S, INC., Civil No. 08-1215 (GAG).
    • United States
    • United States District Courts. 1st Circuit. District of Puerto Rico
    • February 22, 2010
    ...favor of Transportistas. Thus, the court GRANTS summary judgment as to Plaintiff's claim against Transportistas and DISMISSES the same. 687 F. Supp.2d 12 IV. For the reasons discussed above, the court DENIES IN PART and GRANTS IN PART defendant's motion for summary judgment. (Docket No. 45)......
  • Arbella Prot. Ins. Co. v. Regan Heating & Air Conditioning, Inc., C.A. No. 15-441 S
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Rhode Island
    • June 10, 2016
    ...made at thePage 5 time the federal action is filed. See OHI Asset (CT) Lender, LLC v. Woodland Manor Improvement Ass'n ex rel. Shine, 687 F. Supp. 2d 12, 23 (D.R.I. 2010). In determining whether the actions are parallel, the Court examines whether "the same parties [are] involved in both pr......

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