Quiktech LLC v. H & R Block Enterprise LLC

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IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
QUIKTECH, LLC, §
§
Plaintiff, §
§
V. § No. 3:24-cv-1672-S-BN
§
H&R BLOCK ENTERPRISES LLC, §
§
Defendant. §
FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE
UNITED STATES MAGISTRATE JUDGE
Background
On February 2, 2026, Defendant H&R Block Enterprises LLC filed a Motion for
Injunction or, in the Alternative, for an Order Directing Quik Tech, LLC to
Immediately Dismiss the State Court Action. See Dkt. No. 65.
The motion reports that Quik Tech, LLC on January 20, 2026 filed in a Dallas
County, Texas state court a lawsuit styled Quik Tech, LLC v. LEC Management, Inc.,
et al., Cause No. DC-26-01067, in the 134th Judicial District Court, Dallas County,
Texas (the “State Court Action”), in which Quik Tech (according to H&R Block) asserts
substantially identical claims against H&R Block arising from the same facts and
transactions at issue in this federal action. See Dkt. No. 65 at 1.
H&R Block’s motion asks the Court to “enjoin [Quik Tech] from proceeding with
[this] duplicative state court lawsuit that Quik Tech filed in Dallas County, Texas”
and argues that “Quik Tech’s conduct constitutes a transparent attempt to circumvent
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this Court’s jurisdiction and evade the consequences of its flagrant discovery
violations” and that “[t]he duplicative state court action undermines federal
jurisdiction, threatens inconsistent results, wastes judicial resources, and prejudices
H&R Block, which has already invested substantial time and expense litigating this
matter in federal court.” Id. at 1-2.
H&R Block’s motion asserts that “[a]n injunction is necessary to protect this
Court’s jurisdiction, prevent Quik Tech from forum shopping to avoid sanctions, and
ensure that this dispute is resolved efficiently in a single forum.” Id. at 2.
According to H&R Block, “[a]bsent an injunction, Quik Tech could continue to
divest this Court of its removal jurisdiction by filing additional ‘separate’ state actions
with respect to the same claims asserted in this case, effectively choosing to litigate
piecemeal in multiple forums while avoiding federal court oversight and sanctions for
repeated discovery obligations,” and “allowing the duplicative state court action to
proceed could lead to inconsistent, diverging, or even conflicting results on identical
factual and legal issues.” Id. at 10. H&R Block contends in the motion that it “could
be required to defend the same claims in two forums simultaneously, potentially
resulting in contradictory findings of fact, inconsistent applications of law, and
duplicative discovery burdens.” Id.
Since that motion’s filing, United States District Judge Karen Gren Scholer has
entered final judgment in this case, in which the Court ordered that “Plaintiff Quik
Tech, LLC’s claims against Defendant H&R Block Enterprises LLC are DISMISSED
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WITH PREJUDICE under Federal Rules of Civil Procedure 37(b)(2) and 41(b).” Dkt.
No. 77.
The Court retains jurisdiction to decide the pending applications for attorneys’
fees, which were awarded before entry of final judgment and dismissal of Quik Tech’s
claims with prejudice. See Dkt. Nos. 70 & 71.
But, as the undersigned explained in a March 10, 2026 Electronic Order
Requiring Status Report on Motion for Injunction, the Court questioned “whether
H&R Block still intends to pursue its [] Motion for Injunction or, in the Alternative,
for an Order Directing Quik Tech, LLC to Immediately Dismiss the State Court
Action” and, so, directed H&R Block to, by Monday, March 23, 2026, file a status report
in light of the entry of final judgment and dismissal with prejudice of Quik Tech’s
clams against H&R Block in this federal case.” Dkt. No. 79.
H&R Block filed its Status Report on Motion for Injunction [ECF 79] and
explained that it “continues to pursue its Motion for Injunction and requests that the
Court rule on the pending motion” and that, “[a]lthough this Court has entered final
judgment dismissing Plaintiff Quik Tech, LLC’s [] claims against H&R Block with
prejudice under Federal Rules of Civil Procedure 37(b)(2) and 41(b) (Dkt. 77), the
duplicative state court action filed by Quik Tech in Dallas County, Texas remains
pending and continues to prejudice H&R Block.” Dkt. No. 82 at 1.
H&R Block asserts that
• Quik Tech’s state court action “asserts substantially identical claims
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against H&R Block arising from the exact same factual allegations as the
federal action that has now been dismissed with prejudice”;
• “[t]he only differences between the State Court Action and this federal
action are that Quik Tech added two additional defendants – LEC
Management, Inc. and David Bryan French (individually) – both of whom
are Texas residents whose joinder defeats diversity jurisdiction and
prevents removal of the State Court Action to federal court”;
• “[w]hile this Court has dismissed Quik Tech’s federal claims with
prejudice, that dismissal does not eliminate the need for the requested
injunctive relief”;
• “although this Court’s dismissal with prejudice has res judicata effect
barring Quik Tech from relitigating the same claims against H&R Block,
Quik Tech has strategically structured the State Court Action to create
arguments against the application of res judicata: [1)] Quik Tech added
two non-diverse defendants (LEC Management, Inc. and David Bryan
French individually) who were not parties to the federal action; [2)] Quik
Tech may argue that the State Court Action involves ‘different parties’
and thus res judicata does not apply; [and 3)] Quik Tech may argue that
the federal dismissal was based on discovery sanctions rather than a
merits determination, potentially creating arguments against claim
preclusion”;
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• “H&R Block will be forced to litigate these res judicata issues in state
court – incurring substantial additional expense and delay – unless this
Court enjoins the duplicative State Court Action”;
• “allowing Quik Tech to proceed with the State Court Action would
directly undermine this Court’s judgment dismissing Quik Tech’s claims
with prejudice as a sanction for Quik Tech’s repeated discovery violations
and bad faith conduct,” because, “[i]f Quik Tech is permitted to pursue
the identical claims in state court after having those claims dismissed
with prejudice in federal court as a sanction for discovery abuse, it would
effectively nullify this Court’s judgment and reward Quik Tech’s bad
faith conduct,” and, so, “[a]n injunction is necessary to protect and
effectuate this Court’s judgment”;
• H&R Block believes that “Quik Tech intends to continue pursuing the
duplicative State Court Action in defiance of this Court’s judgment”;
• 28 U.S.C. § 1446(d) “constitutes an express authorization for federal
courts to enjoin duplicative state court proceedings filed to subvert
federal removal jurisdiction,” and “that this federal action has now
concluded does not eliminate the authority to enjoin the State Court
Action,” where “Quik Tech filed the State Court Action while this federal
case was still pending and actively litigated, with the express purpose of
circumventing this Court’s jurisdiction and evading sanctions for
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discovery violations”;
• “Quik Tech strategically added two non-diverse Texas defendants to the
State Court Action to defeat diversity jurisdiction and prevent removal
back to federal court”;
• “the State Court Action continues to cause H&R Block substantial
ongoing prejudice,” where “H&R Block is required to defend the identical
claims in state court that have already been litigated and dismissed with
prejudice in this federal action”; and
• “the continued pendency of the State Court Action creates the risk of
inconsistent determinations,” where, “[w]hile this Court dismissed Quik
Tech’s claims with prejudice based on Quik Tech’s egregious discovery
violations and bad faith conduct, the state court will not have the benefit
of the extensive record developed in this federal action regarding Quik
Tech’s repeated failures to comply with discovery obligations and court
orders.”
Dkt. No. 82 at 1-6.
H&R Block alternatively requests that, “if this Court declines to issue a formal
injunction under the All Writs Act and Anti-Injunction Act, the Court should” “order
Quik Tech to immediately dismiss H&R Block from the State Court Action with
prejudice,” where the “Court possesses inherent authority to direct parties to take
actions necessary to prevent interference with the court’s jurisdiction and orderly
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administration of justice” by imposing “an appropriate sanction for conduct which
abuses the judicial process” and as “necessary or warranted to control docket and
maintain orderly administration of justice.” Dkt. No. 65 at 12 (cleaned up); Dkt. No.
82 at 8.
And, “[i]n addition to requesting a ruling on the pending Motion for Injunction,
H&R Block respectfully requests that the Court award H&R Block its reasonable
attorneys’ fees and costs incurred in preparing, filing, and pursuing the Motion for
Injunction and impose a fine of $500.00 per day for each day that Quik Tech refuses
to dismiss H&R Block from the State Court Action.” Dkt. No. 82 at 6.
And H&R Block asserts that “Quik Tech’s conduct in filing the duplicative State
Court Action constitutes an independent basis for sanctions under this Court’s
inherent authority or under 28 U.S.C. § 1927, which authorizes courts to impose
sanctions against attorneys who ‘multipl[y] the proceedings in any case unreasonably
and vexatiously.’” Id. at 7. According to H&R Block, “[t]he duplicative State Court
Action has unreasonably multiplied these proceedings and warrants an award of fees
and costs to H&R Block.” Id.
Legal Standards and Analysis
Even assuming – as H&R Block asserts – that 28 U.S.C. § 1446(d) would
generally authorize the Court to enjoin, as appropriate, a duplicative state court
proceedings filed to subvert federal removal jurisdiction, consistent with the Anti-
Injunction Act, 28 U.S.C. § 2283, and that the Court’s inherent powers and 28 U.S.C.
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§ 1927 might permit sanctions, including attorneys’ fees, as H&R Block additionally
or alternatively requests, the Court should, in its discretion, deny H&R Block’s motion
and all of its requested relief.
This federal case is at an end and resulted in a final judgment of dismissal of
Quik Tech’s claims against Defendant H&R Block Enterprises LLC with prejudice.
See Dkt. No. 77.
The Anti-Injunction Act cabins what the Court could now do by way of
injunctive relief and, in the face of that statute’s “absolute prohibition against
enjoining state court proceedings” (“unless the injunction falls within one of [the] three
specifically defined exceptions”) and its animating policy concerns (and for the
additional reasons explained below), the Court should decline H&R Block’s invitations
to employ its sanctions or contempt powers to achieve the same result. Atl. Coast Line
R. Co. v. Bhd. of Locomotive Eng’rs, 398 U.S. 281, 286 (1970).
“Through the Anti-Injunction Act, 28 U.S.C. § 2283, the Congress imposed a
general prohibition on the federal courts from interfering in state judicial
proceedings.” J.R. Clearwater Inc. v. Ashland Chem. Co., 93 F.3d 176, 178 (5th Cir.
1996). “The Anti-Injunction Act generally bars federal courts from granting
injunctions to stay proceedings in state courts,” but “the Act includes three exceptions
under which a federal court may enjoin state court proceedings in limited
circumstances: ‘A Court of the United States may not grant an injunction to stay
proceedings in a State Court except as expressly authorized by Congress, or where
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necessary in aid of its jurisdiction, or to protect or effectuate its judgments.’”
Blanchard 1986, Ltd. v. Park Plantation, LLC, 553 F.3d 405, 407 (5th Cir. 2008)
(quoting 28 U.S.C. § 2283).
“These exceptions are narrowly construed.” Next Level Commc’ns LP v. DSC
Commc’ns Corp., 179 F.3d 244, 249 (5th Cir. 1999). “Any doubts as to the propriety of
an injunction must be resolved in favor of allowing the state court action to go
forward.” J.R. Clearwater, 93 F.3d at 179.
And “an injunction, even where allowed by the letter of [one of the exceptions],
remains permissive at the discretion of the federal court, which discretion should be
exercised in the light of the historical reluctance of federal courts to interfere with
state judicial proceedings.” Blanchard, 553 F.3d at 407-08 (cleaned up).
The second, “in-aid-of-jurisdiction” exception does not warrant an injunction
here where the Court has now entered its final judgment. This is not an instance in
which “some federal injunctive relief may be necessary to prevent a state court from
so interfering with a federal court’s consideration or disposition of a case as to
seriously impair the federal court’s flexibility and authority to decide that case.” Atl.
Coast, 398 U.S. at 295.
H&R Block instead relies on the first, “expressly authorized” exception, and the
United States Court of Appeals for the Fifth Circuit has held that the removal statute,
28 U.S.C. § “1446(d) has long been recognized as one of the statutory exceptions to §
2283.” Fulford v. Transp. Servs. Co., 412 F.3d 609, 612 (5th Cir. 2005) (cleaned up).
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Section 1446(d) “states that once removal has taken place, ‘the State court shall
proceed no further unless and until the case is remanded.’” Id. (cleaned up).
“[O]nce a case is removed, the state court no longer enjoys concurrent
jurisdiction over the dispute. The anti-injunction act, therefore, does not bar an
injunction of a state court proceeding which purports to exercise jurisdiction over a
removed case.” Matter of Meyerland Co., 910 F.2d 1257, 1263 (5th Cir. 1990), on reh’g,
960 F.2d 512 (5th Cir. 1992). And, “where a district court finds that a second suit filed
in state court is an attempt to subvert the purposes of the removal statute, it is
justified and authorized by § [1446(d)] in enjoining the proceedings in the state court.”
Frith v. Blazon-Flexible Flyer, Inc., 512 F.2d 899, 901 (5th Cir. 1975).
But, although H&R Block argues otherwise, that this federal action has now
concluded does eliminate any compelling reason for the Court to exercise any
discretion it may have to enjoin the state court action.
The Court has entered a final judgment in this case, which – beyond some
collateral attorneys’ fees matters – is no longer pending or being adjudicated here.
H&R Block can pursue whatever appropriate action it can in state court based on this
Court’s final judgment, but the state court action is not, at this point, subverting the
purposes of the removal statute by proceeding with the already-removed action or even
with an action that is pending simultaneously with this federal action.
Any so-called “race to res judicata” is over with the entry of final judgment here.
And that judgment has whatever force it will have in state court under the rules that
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the separate sovereign state court applies, and H&R Block can enforce that judgment
and press the Texas state court for any relief that applicable res judicata and claim
preclusion doctrines will afford it. See generally Kelly Inv., Inc. v. Cont’l Common
Corp., 315 F.3d 494, 499 (5th Cir. 2002) (“Should one court render judgment before
the other, res judicata will ensure proper order.”).
Even if the “expressly authorized” exception could apply where Quik Tech filed
the state court action before the Court entered final judgment in this case – and even
if, as H&R Block apparently fears, applicable res judicata and claim preclusion
doctrines may not entitle it to dismissal of Quik Tech’s claims against it in state court
– the Court should decline to take the extraordinary steps of enjoining the separate
sovereign state court or deploying sanctions authority under its inherent powers or
Section 1927 or (apparently, based on H&R Block’s request for a daily fine) civil
contempt authority to effectuate more than this Court’s final judgment of dismissal
with prejudice in this case would of its own force.
And the Court should decline H&R Block’s requested relief regardless of the
fact that Quik Tech has included two, non-diverse defendants in its state court action.
Quik Tech did not sue those defendants in the removed action, and this Court was
never asked to consider whether either was improperly joined, such that the case
might’ve been properly removed despite their sharing Quik Tech’s citizenship.
The Court need not adopt a rule “requiring a finding of [improper] joinder before
it could conclude that a second lawsuit filed in state court was meant to subvert the
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purposes of the removal statute” to nevertheless conclude that including those two
defendants does not justify the Court exercising its discretion to now enjoin the state
court action as filed against H&R Block, much less as against these two defendants
whom Quik Tech has sued for the first time. Fulford v. Transp. Servs. Co., 412 F.3d
609, 613 (5th Cir. 2005). And, if H&R Block believed the defendants were improperly
joined (as the relevant standards in this context provide), it could have removed the
state court action. Cf. id. at 614. But H&R Block has not done so and instead reports
that the two new defendants’ joinder defeats diversity jurisdiction and prevents
removal of the newly-filed state court action to federal court.
H&R Block has not invoked the third, so-called “relitigation” exception, which
applies to permit an injunction that is “necessary to protect or effectuate [the federal
court’s judgment[].” Aptim Corp. v. McCall, 888 F.3d 129, 143 (5th Cir. 2018) (cleaned
up).
But, even if H&R Block had, the Court should not exercise its discretion to
enjoin the state court action relying on that exception.
The relitigation “exception was designed to permit a federal court to prevent
state litigation of an issue that previously was presented to and decided by the federal
court.” Id. (cleaned up). “A federal court that has entered a final judgment entitled to
preclusive effect may, to protect or effectuate its judgment[], stay state-court
proceedings when it is clear that the state court ruling that would interfere with the
enforcement of the federal court’s judgment is not preclusive and is not entitled to full
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faith and credit.” Id.
Put another way, “[t]his provision is sometimes called the ‘relitigation
exception’ to the [Anti-Injunction Act] because it allows federal courts to stay state-
court proceedings in order to prevent a party from relitigating in state court issues
that have been decided by the federal court.” Hill v. Washburne, 953 F.3d 296, 307-08
(5th Cir. 2020) (cleaned up). The “exception is designed to implement well-recognized
concepts of claim and issue preclusion” and, in so doing, “authorizes an injunction to
prevent state litigation of a claim or issue that previously was presented to and
decided by the federal court.” Smith v. Bayer Corp., 564 U.S. 299, 306 (2011) (cleaned
up).
But H&R Block does not point to anything other than the filing of the action
and its belief that Quik Tech will continue pursuing it against H&R Block and the
possibility that the state court may not apply res judicata or collateral estoppel
doctrines to the full extent that H&R Block would like.
That is not enough where the Supreme Court has explained that, “in applying
this exception, we have taken special care to keep it strict and narrow”; that, “[a]fter
all, a court does not usually get to dictate to other courts the preclusion consequences
of its own judgment,” and “[d]eciding whether and how prior litigation has preclusive
effect is usually the bailiwick of the second court”; and “issuing an injunction under
the relitigation exception is resorting to heavy artillery,” such that “every benefit of
the doubt goes toward the state court,” and “an injunction can issue only if preclusion
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is clear beyond peradventure.” Id at 306-07 (cleaned up).
And, so, even if the Court could properly choose to apply the relitigation
exception here, that H&R Block may need to litigate in state court the extent to which
res judicata and collateral estoppel doctrines apply to this Court’s judgment of
dismissal with prejudice as a discovery sanction does not, under the circumstances,
warrant the Court exercising its discretion to enjoin Quik Tech’s state court action
against both H&R Block and two defendants who were never before this Court in this
federal case. Accord id. at 318 (“The Act’s relitigation exception authorizes injunctions
only when a former federal adjudication clearly precludes a state court decision. As
we said more than 40 years ago, and have consistently maintained since that time,
‘[a]ny doubts ... should be resolved in favor of permitting the state courts to proceed.’
Atlantic Coast Line, 398 U.S., at 297, 90 S.Ct. 1739. Under this approach, close cases
have easy answers: The federal court should not issue an injunction, and the state
court should decide the preclusion question.”).
And, for many of the same reasons explained above, the Court should decline to
impose sanctions – including ordering Quik Tech to immediately dismiss H&R Block
from the State Court Action with prejudice – under its inherent powers or Section
1927, as H&R Block additionally and alternatively requests. The Court should, in its
discretion, deny H&R Block’s requests for sanctions where, with the Court’s final
judgment entered on the basis of litigation-ending discovery sanctions, the pending
state court action does not threaten this Court’s judicial authority or proceedings or
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reflect the persistent prosecution of a meritless claim. See Ayala v. Enerco Grp., Inc.,
569 F. App’x 241, 251 (5th Cir. 2014); Positive Software Sols., Inc. v. New Century
Mortg. Corp., 619 F.3d 458, 461 (5th Cir. 2010).
Finally, H&R Block points to no other authority on which the Court could
properly rely to award H&R Block the attorneys’ fees that it incurred in filing this
motion for an injunction or sanctions – even assuming that awarding fees could be
warranted where the motion’s other requested relief is denied – or to “impose a fine of
$500.00 per day for each day that Quik Tech refuses to dismiss H&R Block from the
State Court Action.” Dkt. No. 82 at 6; see generally Martin v. Trinity Indus., Inc., 959
F.2d 45, 47 (5th Cir. 1992) (explaining that, to show that civil contempt is warranted,
a moving party must establish “1) that a court order was in effect, 2) that the order
required certain conduct by the respondent, and 3) that the respondent failed to
comply with the court’s order”).
Recommendation
The Court should deny Defendant H&R Block Enterprises LLC’s Motion for
Injunction or, in the Alternative, for an Order Directing Quik Tech, LLC to
Immediately Dismiss the State Court Action [Dkt. No. 65].
A copy of these findings, conclusions, and recommendation shall be served on
all parties in the manner provided by law. Any party who objects to any part of these
findings, conclusions, and recommendation must file specific written objections within
14 days after being served with a copy. See 28 U.S.C. § 636(b)(1); FED. R. CIV. P. 72(b).
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In order to be specific, an objection must identify the specific finding or
recommendation to which objection is made, state the basis for the objection, and
specify the place in the magistrate judge’s findings, conclusions, and recommendation
where the disputed determination is found. An objection that merely incorporates by
reference or refers to the briefing before the magistrate judge is not specific. Failure
to file specific written objections will bar the aggrieved party from appealing the
factual findings and legal conclusions of the magistrate judge that are accepted or
adopted by the district court, except upon grounds of plain error. See Douglass v.
United Servs. Auto. Ass’n, 79 F.3d 1415, 1417 (5th Cir. 1996).
DATED: April 2, 2026
_________________________________________
DAVID L. HORAN
UNITED STATES MAGISTRATE JUDGE
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