Virginia Lawyers Weekly VA Lawyers Weekly
Where a party that lost its arbitration case argued the arbitrators exceeded their authority and jurisdiction, but the same issues had been litigated and were pending before a circuit court, the federal court dismissed the petition on abstention grounds.
Background
Cartograf USA Inc. filed a petition to vacate an arbitration award issued by a three-member tribunal of the American Arbitration Association. It alleges the tribunal exceeded its authority and jurisdiction to arbitrate phases two and three of Cartograf’s construction contract with Choate Construction Company.
Choate seeks to dismiss Cartograf’s petition for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted. In addition, because the same issues have been fully litigated and are pending final judgment in Chesterfield County Circuit Court, Choate argues that this court should abstain from exercising its jurisdiction under the Colorado River doctrine.
On Dec. 28, 2022, while Choate’s motion to dismiss was pending before this court, the circuit court confirmed the arbitration award, which is the same arbitration award at issue before this court.
Abstention
“Although the prescribed analysis is not a ‘hard-and-fast’ one in which application of a ‘checklist’ dictates the outcome, six factors have been identified to guide the analysis for Colorado River abstention.” Those factors include: (1) whether the subject matter of the litigation involves property where the first court may assume jurisdiction to the exclusion of others; (2) whether the federal forum is an inconvenient one; (3) the desirability of avoiding piecemeal litigation; (4) the relevant order in which the courts obtained jurisdiction and the progress achieved in each action; (5) whether state law or federal law provides the rule of decision on the merits and (6) the adequacy of the state proceeding to protect the parties’ rights.
In applying the first Colorado River factor to this case, Cartograf appears to concede that “Cartograf does not cite a federal question in its Petition, nor can it.” Under the second factor, the inconvenience of the federal forum in this case is inconsequential.
Third, the desire to avoid piecemeal litigation heavily favors abstention. The fourth factor relating to the relevant order in which the courts obtained jurisdiction and the progress achieved in each action weighs heavily in favor of abstention.
As to the fifth factor, although Cartograf seeks relief under the Federal Arbitration Act, Virginia courts have concurrent jurisdiction over the claim, “making the rule less significant.” In addition, both forums would apply the substantive law of Virginia as provided in the construction contract. Accordingly, the fifth factor is inconsequential. Under the final factor, there is no evidence to suggest that Virginia courts are somehow inadequate to protect the parties’ rights under the arbitration agreement.
Defendant’s motion to dismiss on abstention grounds granted.
Cartograf USA Inc. v. Choate Construction Company, Case No. 3:22-cv-632, April 7, 2023. EDVA at Richmond (Hudson). VLW 023-3-200. 17 pp.
