Mayda Nazario-Lugo v. CARIBEVISIÓNHOLDINGS, INC., a/k/a C.V. Networks, a/k/a Caribe Vision Station Group, LLC

United States Court of Appeals
For the First Circuit
Nos. 10-1728; 10-1945
MAYDA NAZARIO-LUGO,
Plaintiff, Appellant,
v.
CARIBEVISIÓN HOLDINGS, INC.,
a/k/a C.V. Networks, a/k/a Caribe Vision Station Group, LLC,
Defendant, Appellee.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. José Antonio Fusté, U.S. District Judge]
Before
Lipez, Circuit Judge,
Souter, Associate Justice,*
and Howard, Circuit Judge.
Judith Berkan, with whom Mary Jo Méndez was on brief, for
appellant.
Ineabelle Santiago Camacho, with whom Rafael Escalera
Rodriguez, Amelia Caicedo Santiago, Viviana Berrios Gonzalez and
Reichard & Escalera were on brief, for appellee.
February 24, 2012
The Hon. David H. Souter, Associate Justice (Ret.) of the *
Supreme Court of the United States, sitting by designation.

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HOWARD, Circuit Judge. This diversity action involves an
ordinary contract dispute between the appellant, Mayda Nazario-Lugo
("Nazario"), and her former employer, appellee Caribevisión
Holdings, Inc. Nazario challenges the district court's decision to
dismiss without prejudice her federal complaint in deference to
litigation pending in the Commonwealth of Puerto Rico. See Colo.
River Water Conservation Dist. v. United States, 424 U.S. 800
(1976). We hold that this case does not present the extraordinary
circumstances required under the Colorado River doctrine to clearly
justify the surrender of federal jurisdiction. Therefore, we
reverse the judgment dismissing the action, and remand for further
proceedings.
I. Background
The facts, which are undisputed unless otherwise
indicated, may be sketched from the district court's order, the
parties' pleadings, and other documents in the record.
Caribevisión operates several television broadcasting
stations in Puerto Rico. In February 2008, Caribevisión entered
into a five-year contract with Nazario, employing her as president,
general manager, and sales director for its Puerto Rico operations.
Article 3 of the contract sets forth Nazario's compensation and
benefits, including details of her salary, bonus, commission,
health insurance and expense allowance.
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Article 4 of the contract governs several scenarios for
early termination. For instance, it identifies the monies
Caribevisión would be bound to pay Nazario if it terminated the
agreement "for cause" or, by contrast, if Nazario ended her
employment "for good reason," as defined in the contract. Article
4 also establishes procedures that each party is bound to follow in
a given termination scenario. Pertinent here, Article 4.05
entitled "General Release" provides: "Except where the termination
is the result of [Nazario's] death and notwithstanding the
foregoing, no payment shall be made by the Company to [Nazario]
under this Section 4 unless otherwise required by state, local or
federal law, until [Nazario] executes a general release of all
claims in a form reasonably approved by the Company."1
The parties' relationship began to deteriorate in 2009,
at least from Nazario's perspective. After on-going disagreements,
Nazario notified the company in June through a letter from her
attorney that she intended to terminate the contract for "good
reason" if Caribevisión did not rectify certain breaching conduct.
Among the alleged breaches, Nazario pointed to the company's
Article 6.03 provides in part: "This Agreement supercedes 1
any and all other agreements, either oral or in writing, between
the parties . . . and contains all of the covenants and agreements
between the parties with respect to the employment. . . . Any
modification of this Agreement will be effective only if it is in
writing and signed by the party to be charged." The parties later
altered some discrete terms of the contract by written agreement.
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failure to pay her commissions and work-related expenses to which
she was entitled. She also identified several "good reasons"
unrelated to Article 3 financial obligations, such as the company
taking actions that diminished her effective authority and impeded
her ability to carry out her responsibilities. She communicated
her intent to pursue litigation if the company did not honor its
contractual obligations. In its response letter, Caribevisión
denied some of the allegations but agreed that it owed her certain
"accrued expenses and benefits." The letter conditioned payment of
the acknowledged claims on her execution of a release under Article
4.05.
The parties scheduled a meeting for early September to
discuss their differences, but Caribevisión cancelled it. Nazario
then notified the company in a letter dated September 11, that she
was terminating the contract "for good reason," and she identified
her last day of work as September 16. In the letter, she disputed
the company's stance that she was required to sign a release prior
to collecting her Article 3 compensation pay. Nazario expressed
her willingness, however, to sign a release to receive termination
pay under Article 4.04, the "good reason" termination section, and
requested that the company draft one. She invited a meeting within
a defined time frame, seeking resolution without litigation.
Days later, the company notified Nazario that it was
terminating the contract "for cause," and filed a declaratory
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judgment action in a Puerto Rico Commonwealth court. It requested
that the local court declare the company's right, pursuant to
Article 4.05, to require Nazario to sign a release of liability
before it distributed any payment to her, and order her to do so.
It also averred that "it ha[d] always been willing to pay the
unpaid sums claim[ed] by Attorney Nazario" and deposited with the
court about $51,000 as the purported sum due.
In her answer, Nazario distinguished between compensation
pay under Article 3 and termination pay under Article 4, and took
the position that only payment for the latter was conditioned on an
Article 4.05 release. She requested that the court issue a
decision in line with this distinction. The parties both sought
payment for costs, expenses and attorney's fees, as outlined under
the contract.
In December 2009, while the Commonwealth court action was
pending, Nazario filed a breach of contract action in federal
court, invoking diversity jurisdiction. Her suit sought payment
both for Article 3 compensation and for Article 4 termination pay,
as well as an award of costs, attorneys' fees and interest. In
short order, she filed a motion for partial summary judgment to
establish, among other things, the company's liability for both
payment types -- about $57,500 for Article 3 compensation pay and
close to $730,000 for Article 4 "good reason" termination pay. For
purposes of the motion, she limited the "good reason" basis for her
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contract termination to the company's breach of its Article 3
financial obligations, rather than any other company misconduct
identified in her federal complaint. The company objected and also
filed a motion to dismiss the federal action on abstention grounds
under Colorado River, to which Nazario timely objected.
In April 2010, the district court granted the motion to
dismiss without prejudice while the local action was still pending.
It also denied as moot several pending motions, including Nazario's
motion for partial summary judgment. The district court later
denied her motion for reconsideration.
The following month, the Commonwealth court issued its
decision in the declaratory judgment action, concluding that "under
the clear terms of the agreement Caribevisión had no justification
whatsoever to demand that a release be signed under clause 4.05 of
the employment agreement, as a condition for [Nazario] receiving
the amounts owed [under Article 3]." Nazario, in turn, filed 2
another motion in federal court asking it to set aside its judgment
The local court awarded Nazario $500.00 for costs and 2
attorneys' fees pursuant to a contract term requiring such expenses
in the event litigation was necessary to enforce or interpret the
parties' agreement. It also remarked: "It is the court's view
that Ms. Nazario complied with the provisions of clause 4.04 of the
employment agreement, so that her request for termination of the
agreement for 'good reason' or just cause is valid." While the
parties have indicated that Caribevisión has appealed the
Commonwealth decision, we have received no further information on
the status of that appeal.
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of dismissal in light of the local court judgment. The district
court denied this motion as well. This appeal followed.3
II. Governing Law
We have explored the contours of the Colorado River
abstention doctrine before and need not survey its full terrain
here. See Jiménez v. Rodríguez-Pagan, 597 F.3d 18, 27-30 (1st Cir.
2010). Instead, we underscore a few central points before turning
to the particulars at hand.
To begin, there is nothing unusual about parallel
litigation resolving similar controversies in both state and
federal court. Admittedly, twin litigation may result in some
measure of inefficiency and wasted resources, and there is some
risk of inconsistent decisions from different courts on the same or
similar issues. See id. at 29; KPS & Assocs., Inc. v. Designs by
FMC, Inc., 318 F.3d 1, 10 (1st Cir. 2003). Nevertheless, federal
courts must abide by their "virtually unflagging obligation" to
exercise their lawful jurisdiction and resolve the matters properly
before them. Colo. River, 424 U.S. at 817; see Burns v. Watler,
931 F.2d 140, 145 (1st Cir. 1991) (relying on Cohens v. Virginia,
19 U.S. 264 (1821) to emphasize the longstanding federal court duty
to decide a controversy properly within its jurisdictional
The appellant separately appealed both the court's original 3
dismissal order and its decision rejecting her motion to set aside
the dismissal judgment. This opinion primarily involves the
dismissal judgment.
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authority). This duty, however, is not absolute, and departure
from it is permitted "in otherwise exceptional circumstances, where
denying a federal forum would clearly serve an important
countervailing interest." Quackenbush v. Allstate Ins. Co., 517
U.S. 706, 716 (1996) (internal quotation marks omitted).
Over time, categories of cases have emerged illustrating
when abstention may be appropriate. See id. at 716-19 (reviewing
various types of special circumstances that justify deference to
state court); Colo. River, 424 U.S. at 813-19 (outlining
circumstances that warrant federal abstention). These include the
traditional categories of abstention known as Pullman-, Burford-
and Younger-type cases. See Jiménez, 597 F.3d at 27 n.4; see also
Rio Grande Cmty. Health Ctr., Inc. v. Rullan, 397 F.3d 56, 68 (1st
Cir. 2005) (remarking that while the categories of special cases
are not hard and fast, their boundaries "do matter"). This case
involves a fourth circumscribed category of cases, those falling
under the Colorado River doctrine. This doctrine is to be used
sparingly and approached with great caution. See Colo. River, 424
U.S. at 817-18; Jiménez, 597 F.3d at 27; Elmendorf Grafica, Inc. v.
D.S. Am. (East), Inc., 48 F.3d 46, 50 (1st Cir. 1995). The crux of
the Colorado River doctrine is the presence of "exceptional"
circumstances displaying "the clearest of justifications" for
federal deference to the local forum in the interest of "wise
judicial administration, giving regard to conservation of judicial
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resources and comprehensive disposition of litigation." Colo.
River, 424 U.S. at 817-19.4
An evolving list of factors exists to aid in discerning
whether a particular case involves exceptional circumstances that
tip a scale heavily weighted in favor of the exercise of federal
jurisdiction. See Moses H. Cone Mem'l Hosp. v. Mercury Const.
Corp., 460 U.S. 1, 15-16 (1983); Jiménez, 597 F.3d at 27-28. So
far, the list includes:
(1) whether either court has assumed
jurisdiction over a res; (2) the geographical
inconvenience of the federal forum; (3) the
desirability of avoiding piecemeal litigation;
(4) the order in which the forums obtained
jurisdiction; (5) whether state or federal law
controls; (6) the adequacy of the state forum
to protect the parties' interests; (7) the
vexatious or contrived nature of the federal
claim; and (8) respect for the principles
underlying removal jurisdiction.
Jiménez, 597 F.3d at 27-28 (brackets omitted); see Currie v. Grp.
Ins. Comm'n, 290 F.3d 1, 10 (1st Cir. 2002) (remarking that the
non-exhaustive list is not a "litmus test" and "must remain a
Relying on the Colorado River doctrine to dismiss a federal 4
action seeking contract damages may be questionable. See
Quackenbush, 517 U.S. at 730 (holding that the district court erred
in remanding to state court, under Burford, a common-law suit for
contract and tort damages, in part because an abstention-based
dismissal historically has been appropriate only where a federal
court was sitting in equity; the Supreme Court declined to consider
whether an abstention-based stay order would have been proper). We
need not consider the implications of Quackenbush here because the
parties do not raise any law versus equity distinction, and this
case does not present the extraordinary circumstances necessary to
justify application of the Colorado River doctrine in any event.
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discretionary tool"). The weight to be given any given factor
depends on the circumstances at hand. See Moses H. Cone, 460 U.S.
at 16.
In the end, we must determine whether the district court
abused its discretion. "[T]he decision whether to defer to the
state courts is necessarily left to the discretion of the district
court in the first instance. Yet to say that the district court
has discretion is not to say that its decision is unreviewable;
such discretion must be exercised under the relevant" exceptional
circumstances test enunciated in Colorado River. Id. at 19; see
United States v. Fairway Capital Corp., 483 F.3d 34, 40 (1st Cir.
2007); cf. Sevigny v. Employers Ins. of Wausau, 411 F.3d 24, 26-27
(1st Cir. 2005) (noting that "decisions on abstract issues of law
are always reviewed de novo; and the extent of deference on 'law
application' issues tends to vary with the circumstances" (internal
quotation marks and brackets omitted)). It is enough here to 5
underscore that a decision to yield federal jurisdiction under the
Colorado River doctrine must rest on the clearest of justifications
See, e.g. Elmendorf Grafica, Inc., 48 F.3d at 50 (explaining 5
constraints of the district court's discretionary judgment in
applying the Colorado River doctrine); Villa Marina Yacht Sales,
Inc. v. Hatteras Yachts, 947 F.2d 529, 533-34 (1st Cir.
1991)(reviewing the vexatious litigation factor under the Colorado
River doctrine for clear error); Villa Marina Yacht Sales, Inc. v.
Hatteras Yachts, 915 F.2d 7, 13 (1st Cir. 1990) (vacating the
district court's Colorado River abstention decision because it
failed to apply the proper balancing test, and remanding for a new
decision).
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displayed by exceptional circumstances. See Moses H. Cone, 460
U.S. at 25; Colo. River, 424 U.S. at 818-19. Now, we turn to the
merits.
III. Analysis
The district court rested its dismissal order primarily
on three abstention factors: the interest in avoiding piecemeal
litigation; the progress of the Commonwealth case; and the
governance of local law over the parties' contract dispute. The
court gave some additional weight to the local court's receipt of
monies accompanying the declaratory judgment action, but deemed the
remaining factors neutral to its analysis -- namely, the
geographical inconvenience of the federal forum, the adequacy of
the protection afforded by the local forum, the vexatious or
contrived nature of the federal claim, and respect for the
principles underlying removal jurisdiction.
Nazario argues that the district court exceeded its
discretion in its application of the Colorado River factors to this
case. We agree, and our analysis of the factors can be fairly
swift.
Piecemeal Litigation
The district court weighted the piecemeal litigation
factor heavily in favor of abstention. In its view, the local
court's resolution of Caribevisión's declaratory judgment action
would render moot Nazario's federally filed breach of contract
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claim because of the identity of the issues in the two actions.
Relying on our decision in Currie, 290 F.3d 1, the court concluded
that resolution of the federal action would be akin to rendering an
advisory opinion, a circumstance favoring the yield of federal
jurisdiction in deference to the Commonwealth court. Currie,
however, has little bearing on this case.
Weight may be afforded to the piecemeal litigation factor
only where the implications and practical effects of litigating the
parallel actions provide an exceptional basis for surrendering
federal jurisdiction, such as a clear competing policy or some
special complication. See Jiménez, 597 F.3d at 29 (collecting
cases illustrating sufficient exceptional basis to give weight to
the piecemeal litigation factor). In Currie, for example, we
stayed resolution of the federal appeal in deference to a parallel
case pending in the state court system partly to avoid rendering an
advisory opinion. See Currie, 290 F.3d at 9-13. But the
extraordinary circumstances there differed greatly from those in
this case.
Briefly summarized, Currie involved (1) two federal
constitutional claims which the court was not inclined to resolve
if the federal statutory claim was dispositive, (2) the
entanglement of the federal statutory claim with a complex issue of
unsettled state law that was pending in the parallel local
litigation, and (3) an underlying subject matter in which the state
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had unusually strong interests, namely, state-provided insurance
benefits. See id. at 10. In stark contrast, Nazario's federal
action involves a simple contract dispute requiring application of
settled local law. The parallel actions here trigger, at most,
only routine risks presenting no occasion to animate the piecemeal
litigation factor. See, e.g., KPS & Assocs. , Inc., 318 F.3d at 11
(holding that parallel litigation on straightforward contract
dispute with primary importance only to the immediate parties did
not provide any weight for the piecemeal litigation factor).6
Progress of Litigation
The district court also determined that the progress of
the litigation in the Commonwealth court counseled in favor of
abstention. The court stated that it was "satisfied that the
parties have proceeded in the earlier case to the point where the
Commonwealth court can disburse proceeds upon adjudication on the
merits," and that "[t]he Commonwealth court already has in its
possession the means to resolve a substantial portion of the relief
[Nazario] demands." Setting aside the court's view of the relief
available to Nazario in the local forum, it also was required to
We are doubtful that the issues in the two courts 6
necessarily were identical. In any event, the district court took
a somewhat different approach in its subsequent orders rejecting
Nazario's motions for reconsideration and to set aside the
dismissal order. There, it emphasized Nazario's fair opportunity
to raise her side of the contract dispute in the local forum.
Whether or not the availability of the local venue may be relevant
to the exceptional-circumstances mix, mere availability, standing
alone, does not tip the scale. See Colo. River, 424 U.S. at 814.
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consider the comparable progress of the federal litigation. See
Moses H. Cone, 460 U.S. at 21-22 (holding that the chronology
factor focuses not only on the order in which the suits were filed,
but also on the comparable progress of the litigation in each
forum); Jiménez, 597 F.3d at 30 (discerning the procedural status
of each suit in order to compare their relative progress).
Engaging in this exercise demonstrates that the progress of the
litigation factor is a neutral one.
The federal docket shows that by the time that the
district court dismissed the federal action on April 15, 2010, it
had before it Nazario's motions for partial summary judgment and
for default. These two dispositive motions were essentially ripe
for decision, and granting either of them would have resolved
liability and potentially some of the damages issues.
Meanwhile, the local docket was advancing at a similar
pace. In March, the Commonwealth court had conducted a hearing on
the declaratory judgment action -- at a time when the federal court
was awaiting Caribevisión's English translation documents on the
summary judgment issues, and also had received Nazario's motion for
default. After the local hearing, that court awaited the parties'
submission of additional documents in order to adjudicate the
declaratory judgment action. By early April, Nazario had submitted
a motion for judgment on the pleadings in the local forum.
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At bottom, the local court was about as equally poised to
resolve the action before it -- the release question -- as the
federal court was to hear nearly the entirety of the parties'
contract dispute. See Moses H. Cone, 460 U.S. at 21 (holding that
measuring the comparable progress of the parallel suits is done in
a "pragmatic, flexible manner, with a view to the realities of the
case at hand"). The progress of litigation factor therefore points
in neither direction.
Source-of-Law
The district court found that the source-of-law factor
strongly favored abstention solely because the contract dispute was
governed by Puerto Rico law. It did so despite readily
acknowledging that its task in determining the parties' respective
contractual obligations "appear[ed] simple enough." Agreeing that
neither complex nor novel issues of local law are apparent, we
conclude that no weight should have been given to the source-of-law
factor.
It is only in "rare instances" that the presence of state-
law issues creates any momentum toward deferring to pending local
litigation under the Colorado River doctrine. See Moses H. Cone,
460 U.S. at 26; Villa Marina Yacht Sales, Inc. v. Hatteras Yachts,
915 F.2d 7, 15 (1st Cir. 1990). Such a rarity may arise where the
state-law issues "present particularly novel, unusual or difficult
questions of legal interpretation" that are best left to state court
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resolution. Elmendorf Grafica, Inc., 48 F.3d at 52; see, e.g.,
Jiménez, 597 F.3d at 30; Currie, 290 F.3d at 9-13. It is
appropriate that the rule is narrow; after all, there is nothing
extraordinary about federal courts being called upon to analyze the
law of different jurisdictions.
Here, the district court did not suggest that this simple
contract case involving settled local law constituted such a rarity,
and the appellee has not persuaded us. Compare Rojas-Hernandez, 925
F.2d at 496 (holding that "a relatively straightforward claim for
damages under Puerto Rico tort law [which was] neither unsettled nor
complex" did not display a "rare" circumstance weighing toward
surrendering federal jurisdiction), with Jiménez, 597 F.3d at 30
(concluding that source-of-law factor heavily weighed in favor of
abstention where the state law "issues that would inform [the
federal court's] jurisdictional analysis remain[ed] unsettled" and
could not be "intelligently answer[ed]" by the federal court absent
some clear indication from the local forum).
Res and the Remainder
With respect to the final factor relied on by the district
court -- whether either court has assumed jurisdiction over a res --
the court acknowledged that the contract claim involved "no tangible
assets per se." The court nevertheless appeared to give this factor
some weight. It concluded that, because Caribevisión deposited a
"considerable sum of money" with the state court and the dollar
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amount was a "subject of contention," the "prudential policy under
Colorado River favors abstention." We must take a different view.
In Jiménez, we likened the res factor to a "prudential"
lens that may focus more on avoiding the inconsistent disposition
of property, and less on in rem jurisdiction. 597 F.3d at 28 n.6;
cf. Fairway Capital Corp., 483 F.3d at 41 (examining relative
importance of state court's quasi in rem jurisdiction). We ascribed
some weight to the res factor because the parallel litigation there
involved the enforcement of an option contract to purchase a
penthouse apartment. See Jimenez, 597 F.3d at 28. Here, there is
simply no res involved at all, and, thus, no force animating this
factor.
As to the remaining factors, the district court found them
to be neutral and the appellee offers no argument that any
particular one weighs toward abstention. Nor does the appellee
argue that the district court's orders rejecting Nazario's motions
to reconsider and to set aside the dismissal include any other
grounds to support the district court's Colorado River analysis.
And although the appellant Nazario challenges the neutrality finding
of one factor and dismissal as the relief afforded, we need not
address either argument in light of our conclusion that none of the
factors that were relied upon by the district court create any
momentum toward abstention.
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In the end, Nazario's federal action is a garden variety
federal diversity case requiring only the application of settled
principles of state law to an ordinary contract dispute. The
parallel litigation, though giving rise to some normal risks of
inexpediency, does not display exceptional circumstances that
clearly justify departure from the federal court's obligation to
exercise jurisdiction in this contract damages case.
We note an additional aspect of this case. In her brief,
the appellant suggests that the company's filing of the local
declaratory judgment was based on what she asserts is an improper
motive. This accusation raises the question of whether a party's
motivation in pursuing parallel state litigation may be a relevant
ingredient in the exceptional-circumstances mix. The Supreme Court
has remarked that such an angle has "considerable merit." See Moses
H. Cone, 460 U.S. at 17-18 n.20; see also Villa Marina Yacht Sales,
Inc., 915 F.2d at 15 (indicating approval for reviewing vexatious
or contrived nature of both the federal and state court litigation).
We need not consider this aspect further, though, because even if
the company filed the local action in good faith, no exceptional
circumstances exist in this case warranting dismissal on abstention
grounds.
Finally, our decision revives at least Nazario's motions
for partial summary judgment and for default, and perhaps other
related pleadings. While the appellant urges us to resolve her
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motion for partial summary judgment, we decline to do so in the
first instance. Additionally, we leave it for the district court
to consider on remand the extent to which the local court's merits
decision on the release question impacts the issues pending in the
federal action.
IV. Conclusion
The judgment is reversed and the case is remanded to the
district court for further proceedings consistent with this opinion.
Costs to appellant.
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