United States Court of Appeals, District of Columbia Circuit
January 25, 2019
from the United States District Court for the District of
Columbia (No. 1:17-cv-00621)
D. Sadowski argued the cause for appellant. With him on the
briefs was Richard W. Luchs.
Creighton R. Magid argued the cause and filed the brief for
appellees District of Columbia Water and Sewer Authority, et
al. Curtis A. Boykin and Frederick A. Douglas entered
A. Racine, Attorney General, Office of the Attorney General
for the District of Columbia, Loren L. AliKhan, Solicitor
General, Caroline S. Van Zile, Deputy Solicitor General, and
Sonya L. Lebsack, Assistant Attorney General, were on the
brief for appellees The District of Columbia, et al.
Before: Garland, Chief Judge, Katsas, Circuit Judge, and
Williams, Senior Circuit Judge.
Garland, Chief Judge
plaintiff in this case appeals from a decision staying
proceedings on its federal complaint. The district court
granted the stay pursuant to the Colorado River
doctrine, which permits a federal court to stay or dismiss a
federal action in favor of a concurrent action in state court
under "exceptional circumstances." Colo. River
Water Conservation Dist. v. United States, 424 U.S. 800,
813 (1976). Because there are no exceptional circumstances
here, we reverse the grant of the stay. We explain our
decision in some detail in order to ensure that Colorado
River is confined to its banks.
facts underlying this appeal concern the efforts of Edge
Investment, LLC -- a real estate development company -- to
construct a three-story building on an undeveloped parcel of
land in Washington, D.C. Edge alleges that, by 2013, it had
nearly completed construction of the building after having
obtained various zoning and construction clearances from
District of Columbia authorities. Those included the D.C.
Water and Sewer Authority ("D.C. Water") and the
D.C. Department of Consumer and Regulatory Affairs (DCRA).
See Compl. ¶¶ 41, 57-58.
turned out, Edge's building sat atop the Northeast
Boundary Tunnel Sewer, a large storm sewer that forms an
important piece of the District of Columbia's sewer
infrastructure. When Edge learned this in December 2013, it
hired an engineering firm, which concluded that the building
did not present any danger to the Tunnel Sewer. According to
D.C. Water, however, subsequent inspections in 2014 revealed
a crack in the Tunnel Sewer requiring demolition of the
building to prevent further damage. See id.
¶¶ 77, 98, 109-11. In April 2015, DCRA issued an
order to raze the building pursuant to D.C. Code §
6-801, which empowers the Mayor to remove "unsafe"
structures posing a threat to public safety. Compl. Ex. N
(J.A. 115). And in May 2015, a contractor for D.C. Water,
Celtic Demolition, Inc., razed the building.
January 8, 2016, D.C. Water sued Edge, the District of
Columbia, and seven other defendants for negligence in the
Superior Court of the District of Columbia, seeking to
recover the $3.6 million it spent to raze Edge's building
and repair the Tunnel Sewer. On October 24, 2016, Edge filed
counterclaims against D.C. Water, alleging that it had
violated Edge's due process rights under the U.S.
Constitution, engaged in a taking without just compensation
in violation of the Fifth Amendment, trespassed, and
negligently failed to timely notify Edge of the location of
the Tunnel Sewer as required by the D.C. Code. On November 7,
Edge filed a third-party complaint in Superior Court,
leveling similar allegations against the District of
Columbia. Edge's third-party complaint also sought to
quiet title as against the District and anyone acting on its
behalf, including D.C. Water. In December 2016, the District
removed the Superior Court case to federal district court.
Several months later, the case was remanded back to Superior
April 6, 2017, Edge commenced the instant federal case in the
U.S. District Court for the District of Columbia. Edge's
complaint named the District, D.C. Water, and several
additional defendants, including Celtic Demolition and D.C.
Water's then general manager, George S. Hawkins. The
federal complaint asserted that the individual defendants had
engaged in an unlawful conspiracy under the Racketeer
Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.
§ 1962(c), and that the District and D.C. Water had
acted without properly delegated authority under D.C. Code
§ 6-801(a). The remaining causes of action substantially
overlap Edge's Superior Court counterclaims and
third-party complaint. See Compl. ¶¶
251-85 (due process); id. ¶¶ 286-92
(unconstitutional takings); id. ¶¶ 335-49
(negligent supervision and negligence); id.
¶¶ 350-60 (trespass); id.¶¶
361-65 (quiet title).
9 and 21, 2017, respectively, D.C. Water and Hawkins moved to
stay or dismiss the federal case in favor of the Superior
Court proceedings. The motion was based on the Supreme
Court's decision in Colorado River Water Conservation
District v. United States, which permits deferral under
"exceptional" circumstances "due to the
presence of a concurrent state proceeding." 424 U.S. at
818. On March 30, 2018, the district court granted the stay,
concluding this was such an exceptional case. Edge
Supreme Court explained in Colorado River,
"[g]enerally, as between state and federal courts, the
rule is that the pendency of an action in the state court is
no bar to proceedings concerning the same matter in the
Federal court having jurisdiction." 424 U.S. at 817
(internal quotation marks omitted). This, the Court said, is
a consequence of the "virtually unflagging obligation of
the federal courts to exercise the jurisdiction given
them." Id. Accordingly, "the circumstances
permitting the dismissal of a federal suit due to the
presence of a concurrent state proceeding" must be
"exceptional." Id. at 818.
the subsequent Supreme Court and D.C. Circuit cases
addressing the Colorado River doctrine have stressed
the unflagging obligation of the federal courts to exercise
their jurisdiction, which only "exceptional
circumstances" can overcome. Indeed, Moses H.
Cone repeatedly referred to this as "Colorado
River's exceptional-circumstances test."
Moses H. Cone Mem'l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 16, 17, 19 (1983). So, too, have
later cases. See Wilton v. Seven Falls Co., 515 U.S.
277, 279 (1995); Handy v. Shaw, Bransford, Veilleux &
Roth, 325 F.3d 346, 349 (D.C. Cir. 2003); Reiman v.
Smith, 12 F.3d 222, 224 (D.C. Cir. 1993).
Colorado River and Moses H. Cone, the Court
described "some of the factors relevant" to whether
a case represents the kind of exceptional circumstances
required to defer to state court proceedings. Moses H.
Cone, 460 U.S. at 15. Those include which "court
first assum[ed] jurisdiction over property . . . [;] . . .
the inconvenience of the federal forum; the desirability of
avoiding piecemeal litigation; and the order in which
jurisdiction was obtained by the concurrent forums."
Id. (quoting Colo. River, 424 U.S. at 818).
Other recognized factors are "whether federal or state
law controls and whether the state forum will adequately
protect the interests of the parties." Handy,
325 F.3d at 352 (citing Moses H. Cone, 460 U.S. at
Court cautioned, however, that the decision to defer
"does not rest on a mechanical checklist, but on a
careful balancing of the important factors as they apply in a
given case, with the balance heavily weighted in favor of the
exercise of jurisdiction." Moses H. Cone, 460
U.S. at 16; see Handy, 325 F.3d at 353 (same). It
emphasized that "[o]nly the clearest of
justifications will warrant" deferral. Moses H.
Cone, 460 U.S. at 16 (quoting Colo. River, 424
U.S. at 819) (emphasis in Moses H. Cone). And, as
befits an exception so described, the Supreme Court has found
sufficient justification only in the circumstances described
in Colorado River itself,  while this court has never
found such circumstances.
respect to the standard that appellate courts must apply in
reviewing a district court decision to defer to parallel
state proceedings, Moses H. Cone instructed as
[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 standard
prescribed by this Court. In this case, the relevant standard
is Colorado River's exceptional-circumstances
460 U.S. at 19. "Whether the [district] court applied
the proper legal standard in exercising [its] discretion . .
. is a question of law reviewed de novo."
Handy, 325 F.3d at 349; see id. at 353
(holding that "the district court's dismissal of
[plaintiff's] claim constitutes legal error"). As
the Supreme Court did in Moses H. Cone, we conclude
that "the District Court in this case abused its
discretion in granting the stay" because deferral was
unwarranted under the exceptional-circumstances test. 460
U.S. at 19.
deciding whether to grant the stay, the district court ran
through a list of what it described as six "Colorado
River factors." Edge Inv., LLC v. District of
Columbia, 305 F.Supp.3d 22, 28 (D.D.C. 2018). Following
its examination of those factors, the court stated: "In
sum, the Court concludes that [one] factor . . . is
irrelevant, [two] factors . . . are neutral, and [three]
factors . . . favor abstention. Thus, the Court concludes
that this constitutes an 'exceptional circumstance'
where abstention is warranted." Id. at