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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
HBE CORPORATION,                                                                                  )
)
Plaintiff,                                                                                        )
)
vs.                                                                                               )   Case No. 4:09CV906 HEA
)
WAYNE BURRUS,                                                                                     )
)
Defendant.                                                                                        )
OPINION, MEMORANDUM AND ORDER
This matter is before the Court on Defendant’s Motion to Dismiss, or in the
Alternative, to Stay the Litigation, [Doc. No. 8].   Plaintiff opposes the Motion, and
has filed a written memorandum in opposition.   For the reasons set forth below, the
alternative Motion to Stay is granted.
Facts and Background
Plaintiff’s Complaint alleges the following facts:1
In a letter dated April 21, 2009, Defendant, a former salesman for Plaintiff,
threatened to sue Plaintiff if it failed to pay him a commission.   Defendant claimed
that the judgment he obtained in his previous suit against Plaintiff in the Circuit
1   The recitation of facts is take from the Complaint and the parties memoranda.  It is set
forth for the purposes of this motion only, and in no way relieves the parties of the necessary
proof of the facts in later proceedings.




Court for the County of St. Louis foreclosed any dispute that Plaintiff owed
Defendant a substantial commission.   Plaintiff filed the instant declaratory judgment
action under the provisions of 28 U.S.C. §§ 2201 and 2202.   Jurisdiction is based on
the Court’s diversity of citizenship jurisdiction, 28 U.S.C. § 1332.   Plaintiff seeks a
declaration from this Court that it is not obligated to pay a commission to Defendant
on a specific project, the Hanford project, based on the doctrine of claim preclusion,
(Count I).   Count II, brought in the alternative, seeks a declaration that Defendant is
not entitled to a commission under the terms of the parties’ agreement.    This action
was filed on June 10, 2009, six weeks after Defendant’s letter.   Defendant brought
suit against Plaintiff in the Circuit Court for the County of St. Louis, Missouri on
July 2, 2009, seeking commission on the Hanford project.   The parties agree that the
issues and parties in this suit are identical to the instant action.
Defendant was employed by Plaintiff from 1989 through 2001.   Plaintiff
provides design and construction services throughout the United States.   It has a
health care division.   Defendant worked for Plaintiff as Vice President of Sales in
the health care division.   During Defendant’s employment, the parties entered into a
sales compensation contract referred to as the Sales Compensation Plan.   Under the
Plan, Plaintiff agreed to pay Defendant commissions for a construction contract if
Plaintiff and the customer executed a construction contract and Plaintiff received
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money on the executed construction contract.   The Plan also provided that a sales
person must be in the employment of Plaintiff at the time the commission was
earned, otherwise, no commission was due.   The Plan did not define the term
“earned.”
Plaintiff’s employment was terminated on March 28, 2001.   Subsequent to his
termination, Plaintiff executed and received money on a number of construction
contracts for which Defendant claims to have brought in to Plaintiff, and for which
Plaintiff refused to pay commissions.
Defendant sued Plaintiff in the State Court seeking to recover commissions.
The first action was filed in September, 2002 and voluntarily dismissed by
Defendant in October, 2003.   Defendant filed a second action in the State Court in
September, 2004.   A jury returned a verdict in favor of Defendant on July 19, 2007.
No claim on the Hanford project was submitted to the jury in this trial.
Subsequent to the filing of the instant action, Defendant filed the third State
Court action which seeks a commission for the Hanford project.   Defendant now
moves to dismiss or stay this action based on the pending State Court action.
Discussion
The Declaratory Judgment Act confers on federal courts “unique and
substantial discretion in deciding whether to declare the rights of litigants.”   Wilton
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v. Seven Falls Co., 515 U.S. 277, 286 (1995).   The statute provides that a court
“may declare the rights and other legal relations of any interested party seeking such
declaration,” id. (quoting 28 U.S.C. § 2201(a)) (emphasis in original case, not
original statute).   The Declaratory Judgment Act is “an enabling Act, which confers
a discretion on the courts rather than an absolute right on the litigant.”   Id. at 287
(quoting Public Serv. Comm’n of Utah v. Wycoff Co., 344 U.S. 237, 241 (1952)).
In Wilton, the Supreme Court reaffirmed the application of Brillhart v. Excess
Insurance Co. of America, 316 U.S. 491 (1942), to a declaratory judgment action:
Over 50 years ago, in Brillhart . . . , this Court addressed
circumstances virtually identical to those present in the case before us
today.   An insurer, anticipating a coercive suit, sought a declaration in
federal court of nonliability on an insurance policy.   The District Court
dismissed the action in favor of a pending state garnishment
proceedings, to which the insurer had been added as a defendant . . .
[T]his Court held that, “although the District Court had jurisdiction of
the suit under the Federal Declaratory Judgments (sic) Act, it was
under no compulsion to exercise that jurisdiction.”   The Court
explained that “ordinarily it would be uneconomical as well as
vexatious for a federal court to proceed in a declaratory judgment suit
where another suit is pending in state court presenting the same issues,
not governed by federal law, between the same parties.”   The question
for a district court presented with a suit under the Declaratory
Judgment Act, the Court found, is “whether the questions in
controversy between the parties to the federal suit, and which are not
foreclosed under the applicable substantive law, can better be settled in
the proceeding pending in the state court.”
Wilton, 515 U.S. at 282 (quoting Brillhart) (internal citations omitted).
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Thus, the Declaratory Judgment Act gives this Court discretion to determine
whether to exercise jurisdiction in a declaratory judgment action or to abstain in
favor of a parallel state court proceeding.   See Capitol Indem. Corp. v. Haverfield,
218 F.3d 872, 874 (8th Cir. 2000) (citing Wilton, 515 U.S. at 289-90).   The Eighth
Circuit has instructed that a district court’s “key consideration . . . is ‘to ascertain
whether the issues in controversy between the parties to the federal action . . . can
be better settled by the state court’ in light of the ‘scope and nature of the pending
state court proceeding.’”   Evanston Ins. Co. v. Johns, 530 F.3d 710, 713 (8th Cir.
2008) (quoting Capital Indem., 218 F.3d at 874) (citing Brillhart, 316 U.S. at 495).
If the issues would be better settled in the pending state court proceeding, “the
district court must dismiss the federal action because ‘it would be uneconomical as
well as vexatious for a federal court to proceed in a declaratory judgment suit where
another suit is pending in a state court presenting the same issues, not governed by
federal law, between the same parties.’” Capital Indem., 218 F.3d at 874-75
(quoting Brillhart, 316 U.S. at 495).    Accordingly, although federal courts
ordinarily have a “virtually unflagging obligation” to exercise the jurisdiction
conferred on them by Congress, Colo. River Water Conservation Dist. v. United
States, 424 U.S. 800, 817, (1976), in the declaratory judgment context, “the normal
principle that federal courts should adjudicate claims within their jurisdiction yields
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to considerations of practicality and wise judicial administration.”   Wilton, 515 U.S.
at 288.
Defendant asserts that the State Court action is better suited to resolve the
dispute existing between the parties, because: (1) The State Court Action involves
the identical issues set forth in Plaintiff’s complaint; (2) all of the interests of the
parties to this action can be fully and satisfactorily addressed in the State action; (3)
the issues raised by the federal complaint are   purely a matter of state law and there
are no federal defenses or claims
Plaintiff opposes the motion to dismiss or stay arguing that its first filed action
should take precedence over the subsequently filed third State Court proceeding.
The Court finds that the State Court Action and this case are parallel, as both
involve the same parties, Plaintiff and Defendant herein, and identical issues
regarding whether Defendant is entitled to a commission on the Hanford project. As
a result, the Court has discretion to determine whether to exercise jurisdiction over
Plaintiff’s declaratory judgment action or to abstain in favor of the State Court.   See
Capitol Indem., 218 F.3d at 874.   It must determine whether the issues in
controversy between the parties “can be better settled by the state court” in light of
the “scope and nature of the pending state court proceeding.”   Evanston, 530 F.3d
at 713 (quoted case omitted).
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“[T]he normal principle that federal courts should adjudicate claims within
their jurisdiction yields to considerations of practicality and wise judicial
administration.”   Wilton, 515 U.S. at 288.   The principle of “wise judicial
administration” weighs in favor of declining to exercise discretionary jurisdiction
over Plaintiff’s request for declaratory relief.   Because this action and the State
Court Action are parallel, allowing both actions to proceed runs the risk of
inconsistent rulings and would be uneconomical and vexatious for the parties and a
waste of judicial resources.   The core issues in this case are whether Defendant is
precluded from litigating his claim for commission or, alternatively, whether
Defendant is entitled to a commission under the Plan.    The determination of these
issues are purely  matters of state law and there are no federal defenses or claims.
The State Court has previously tried the second suit regarding the parties Plan.   The
familiarity and expertise of the State Court with issues regarding the Plan and
parties presented in the second action, and the State Court’s superior ability to
interpret the State Court’s prior substantive rulings, is a relevant factor in the
abstention analysis.   All of the issues pending between the parties can be
satisfactorily adjudicated in the State Court action, which the Court believes will
effectively and efficiently resolve the request for declaratory relief.
Further, the Court does not believe that Defendant’s selection of the State
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forum was a result of procedural maneuvering, but rather was based on the State
Court’s history and familiarity with prior litigation between the parties.
Plaintiff strenuously argues that because it filed this action prior to the filing
of Defendant’s State Court action, the Court should observe and follow the “first
filed” doctrine.   Ordinarily, the Court would look to the timing of the filing of the
actions.   However, in the context of determining whether to exercise jurisdiction
under the Declaratory Judgment Act, the Court is less compelled to strictly follow a
first filed doctrine.   See Wilton, 515 U.S. at 280; American States Insurance Co,
2008 WL 163588 (E.D. Mo 2008).
Having determined that it should abstain from deciding Plaintiff’s claims, the
Court further determines that this action should be stayed rather than dismissed.
“[W]here the basis for declining to proceed is the pendency of a state proceeding, a
stay will often be the preferable course, because it assures that the federal action can
proceed without risk of a time bar if the state case, for any reason, fails to resolve
the matter in controversy.”   Wilton, 515 U.S. at 288 n.2.   See also Int’l Ass’n of
Entrepreneurs of Am. v. Angoff, 58 F.3d 1266, 1271 (8th Cir.1995); Hart and
Wechsler’s The Federal Courts and the Federal System 1193 (5th ed.2003)
(discussing the distinction between a stay and a dismissal).   As the Supreme Court
has concluded, an order staying an action “does not constitute abnegation of judicial
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duty.   On the contrary, it is a wise and productive discharge of it.   There is only
postponement of decision for its best fruition.” Louisiana Power & Light Co. v. City
of Thibodaux, 360 U.S. 25, 29 (1959); Royal Indem. Co. v. Apex Oil Co. 511 F.3d
788, 797 (8th Cir. 2008).
Conclusion
For the foregoing reasons, the Court concludes in the exercise of its discretion
that the issues raised by this action would be better settled in the Circuit Court for
the County of St. Louis.   As a result, the Court will grant Defendant’s alternative
motion to stay this action in favor of the State Court Action because “it would be
uneconomical as well as vexatious for a federal court to proceed in a declaratory
judgment suit where another suit is pending in a state court presenting the same
issues, not governed by federal law, between the same parties.”   Brillhart, 316 U.S.
at 495.
Accordingly,
IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss is
DENIED.
IT IS FURTHER ORDERED that Defendant’s alternative Motion to Stay,
[Doc. No. 8], is Granted to the extent that this action is stayed pending its
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resolution in the Circuit Court for the County of St. Louis.
Dated this 23rd   day of October, 2009.
HENRY EDWARD AUTREY
UNITED STATES DISTRICT JUDGE
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