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Community State Bank v. Wilson

United States District Court, W.D. Arkansas, Texarkana Division

September 24, 2019



          Susan O. Hickey, Chief United States District Judge.

         Before the Court is Defendant J. Schuyler Marvin’s Amended Motion to Dismiss. (ECF No. 75). Intervenor Gary Wilson has responded. (ECF No. 77). Plaintiff Community State Bank has also responded. (ECF No. 78). No. other party has filed a response, and their time to do so has passed. See Local Rule 7.2(b). Defendant Marvin has replied. (ECF No. 79). The Court finds the matter ripe for consideration.[1]

         I. BACKGROUND[2]

         This interpleader action arises as a result of the 26th Judicial District Court of Louisiana’s (the “Louisiana state court”) issuance of a warrant of seizure for forfeiture of certain funds held in a checking account by Plaintiff, a state-chartered banking corporation located in Bradley, Arkansas. Plaintiff takes the position that the Louisiana state court lacks personal jurisdictional over it-an Arkansas bank holding money in Arkansas-and thus, the seizure warrant has no binding effect and should be treated as a competing claim for the funds that should be resolved in this interpleader case.

         Beginning in October 2017, the Bossier Parish Sheriff’s Office began investigating Intervenor Wilson and his family for suspected criminal activity. (ECF No. 70-5, pp. 2-9). At some point, the State of Louisiana brought criminal charges against Intervenor Wilson in what appears to be case number C-227668I, first for perjury and, later, for racketeering.[3]

         On March 16, 2018, Defendant Maxine Wilson opened a checking account with Plaintiff by depositing five cashier’s checks totaling $255, 209.47 (the “Fund”) that were payable to Jennifer Harting Wilson-Intervenor Wilson’s wife. Defendant Maxine Wilson indorsed the checks based on a signed power of attorney granted to her by Jennifer Wilson. Plaintiff later learned that Jennifer Wilson was deceased.[4]

         On April 27, 2018, the Louisiana state court served Plaintiff with a warrant of seizure for forfeiture of the Fund pursuant to Louisiana Revised Statute 15:1356, which, in relevant part, provides for forfeiture and disposition of money used in or obtained from conduct in violation of Louisiana’s Racketeering Act. The warrant ordered Plaintiff to relinquish the Fund in the form of a cashier’s check made out to the 26th Judicial District Attorney’s Office in Bossier Parish, Louisiana, to be preserved and safeguarded by Defendant Marvin-the district attorney there- until further order of the Louisiana state court.

         On May 9, 2018, Plaintiff Community State Bank commenced this interpleader action to resolve competing claims to the Fund and later filed an amended complaint to bring this case under both Federal Rule of Civil Procedure 22 and the federal interpleader statute, codified at 28 U.S.C. § 1335.

         On August 28, 2018, the Louisiana state court granted in part and denied in part a motion to quash the Louisiana seizure warrant. (ECF No. 44-1). Specifically, the Louisiana state court quashed the warrant as to $118, 209.47 of the Fund. (ECF No. 44-1). The Louisiana state court left the warrant intact as to the remaining $132, 000.00 of the Fund, “if [it] comes in possession of the State.” (ECF No. 44-2).

         From the onset of this case, Defendant Marvin has argued on multiple occasions that the Court should dismiss the case pursuant to various abstention doctrines. On January 29, 2019, the Court directed Defendant Marvin to file a formal motion to dismiss discussing the issue of abstention.

         On March 26, 2019, Defendant Marvin did so, filing the instant motion. He argues that because the Louisiana state court has already asserted jurisdiction over the Fund, this Court should decline to exercise concurrent jurisdiction pursuant to the prior exclusive jurisdiction doctrine. Alternatively he argues that dismissal is appropriate under the Colorado River, Pullman, and Burford abstention doctrines. Accordingly, Defendant Marvin asks that the Court dismiss this case without prejudice. Plaintiff and Intervenor Wilson oppose the motion.


         Defendant Marvin moves, presumably under Federal Rule of Civil Procedure 12(b)(1), [5]for dismissal of this case based on four alternative abstention doctrines. The Court will begin by addressing Defendant Marvin’s argument regarding the prior exclusive jurisdiction doctrine. If necessary, the Court will then address the arguments regarding Colorado River, Pullman, and Burford abstention.

         A. Prior Exclusive Jurisdiction Doctrine

         Under the so-called doctrine of prior exclusive jurisdiction, “when one court is exercising in rem jurisdiction over a res, a second court will not assume in rem jurisdiction over the same res.” Marshall v. Marshall, 547 U.S. 293, 311 (2006) (footnote added). Thus, “the court first assuming jurisdiction over property may maintain and exercise that jurisdiction to the exclusion of the other.” Princess Lida of Thurn & Taxis v. Thompson, 305 U.S. 456, 466 (1939).

         The prior exclusive jurisdiction doctrine is premised on the notion that “[t]he possession of the res vests the court which has first acquired jurisdiction with the power to hear and determine all controversies relating thereto, and for the time being disables other courts of co-ordinate jurisdiction from exercising a like power.” Farmers’ Loan & Trust Co. v. Lake St. Elevated R. Co., 177 U.S. 51, 61 (1900). “This rule is essential to the orderly administration of justice, and to prevent unseemly conflicts between courts whose jurisdiction embraces the same subjects and persons.” Merritt v. Am. Steel-Barge Co., 79 F. 228, 231 (8th Cir. 1897). When the doctrine is applicable, the Court is bound to treat it as a mandatory rule of judicial abstention, not as a matter of judicial discretion. See Sexton v. NDEX W., LLC, 713 F.3d 533, 536 n.5 (9th Cir. 2013) (collecting cases); see also 1 Elizabeth M. Bosek et al., Cyc. of Fed. Proc. § 2:178 (3d ed. 2019) (describing the prior exclusive jurisdiction doctrine as mandatory).

         The doctrine of prior exclusive jurisdiction applies in only two circumstances. First, and most commonly, the doctrine applies when there are multiple proceedings in which different courts are attempting to assert jurisdiction over the same property at the same time. See, e.g., United States v. Bank of N.Y. & Trust Co., 296 U.S. 463, 480-81 (1936) (holding first-filed state cases took precedence over later-filed federal cases); Penn Gen. Cas. Co. v. Commonwealth of Penn. ex rel. Schnader, 294 U.S. 189, 197 (1935) (holding federal court had jurisdiction over first-filed federal suit). Second, and less commonly, the doctrine applies when a court has acquired some form of specialized, continuing jurisdiction over the property that, even in the absence of a pending case, precludes other courts from exercising jurisdiction over the same property in later cases. See, e.g., State Eng’r v. S. Fork Band of the Te-Moak Tribe, 339 F.3d 804, 810-11 (9th Cir. 2003) (holding federal court lacked jurisdiction where water rights were under state court’s continuing jurisdiction pursuant to a seventy year old decree); In re Trust Created by Hill, 728 F.Supp. 564, 567-68 (D. Minn. 1990) (holding federal court lacked jurisdiction where state court’s continuing jurisdiction and supervisory responsibility over a trust had attached decades earlier). Defendant Marvin does not argue for the second application, so the Court need only concern itself with the first, more common usage of the doctrine.

         The parties seem to agree that for the prior exclusive jurisdiction doctrine to deprive the Court of jurisdiction over this case, the following conditions must be met: (1) this case and the Louisiana state case must be actions in rem or quasi in rem, rather than in personam;[6] and (2) the state action must have commenced prior to this action and proceeded to a degree that the Louisiana state court asserted jurisdiction over the Fund. The Court will now separately take up those issues.

         1. Nature of This Action

         The Court must first determine whether this interpleader action is in personam or in rem. Over a century ago, the United States Supreme Court appeared to imply that interpleader actions are in personam. See N.Y. Life Ins. Co. v. Dunlevy, 241 U.S. 518, 521 (1916) (stating an interpleader case “was an attempt to bring about a final and conclusive adjudication of [the plaintiff’s] personal rights”). However, subsequent Supreme Court rulings on jurisdiction and service of process have diminished Dunlevy and blurred the distinction between actions in personam and in rem. See First Tenn. Nat’l Bank, Chattanooga v. Fed. Deposit Ins. Corp., 421 F.Supp. 35, 37 (E.D. Tenn. 1976) (summarizing the post-Dunleavy nature of interpleader). As a result, the nature of interpleader actions is unclear, and conflicting authority abounds on the issue. Compare Metro. Prop. & Cas. Ins. Co. v. Shan Trac, Inc., 324 F.3d 20, 25 (1st Cir. 2003) (“Interpleader actions are in personam, not in rem.”) with Gen. Atomic Co. v. Duke Power Co., 553 F.2d 53, 57 (10th Cir. 1977) (stating that an interpleader action “is an in rem or quasi in rem suit”), and Roland v. Hickman, No. 2:15-cv-1133-JCM/VCF, 2016 WL 1183085, at *4 (D. Nev. Mar. 28, 2016) (holding that an interpleader action is quasi in rem).

         The Court need not spend too much time deciding the nature of this action. Defendant Marvin argues that this case is in rem, and no party has argued otherwise. In the absence of any argument to the contrary, the Court agrees with Defendant Marvin and finds that this interpleader case is in rem because “[t]he Court’s jurisdiction is limited to the disposition of the [Fund]. Once the [Fund] is exhausted, the Court has no more power to adjudicate the parties’ rights [i]n personam.” Equifax, Inc. v. Luster, 463 F.Supp. 352, 363 (E.D. Ark. 1978), aff’d sub nom. Ark. La. Gas Co. v. Luster, 604 F.2d 31 (8th Cir. 1979).

         Next, the Court must determine whether a state forfeiture proceeding commenced under La. R.S. 15:1356 prior to the filing of this case and proceeded far enough that the Louisiana state court asserted jurisdiction over the Fund. If so, the Court will then determine the nature of that proceeding.

         2. Commencement, Progress, and Nature of State Court Action

         Next, the Court must determine whether a state forfeiture proceeding commenced under La. R.S. 15:1356 prior to the filing of this case and proceeded far enough that the Louisiana state court asserted jurisdiction over the Fund. If so, the Court must also determine whether that proceeding is in rem.

         “Civil and criminal forfeitures have distinct legal purposes, [and] the procedures used to perfect each type of forfeiture are dramatically different.” State v. Edwards, 2000-1246 (La. 6/1/01), 787 So.2d 981, 991. The most obvious difference is that criminal forfeitures are considered a part of a criminal prosecution and, thus, are subject to criminal procedural rules, whereas civil forfeitures are prosecuted in independent civil actions directly against the offending property. Id.

         “Civil forfeiture is the process by which governments seize property without compensating its owner, based on its connection with the commission of crime.” Id. at 990. Civil forfeitures in Louisiana are considered actions in rem, and for a court to obtain in rem jurisdiction, the government must take possession of the property through an act of either actual or constructive seizure. Id. at 991. After the state seizes property for forfeiture, the state will then file a forfeiture complaint and prosecute its claim. Id.; La. R.S. 15:1356(C-D).

         Conversely, criminal forfeitures in Louisiana are actions in personam that are taken against a criminal defendant. Edwards, 787 So.2d at 991. “Criminal forfeitures are premised on a punitive theory, whereby forfeiture serves the important penal interests associated with the criminal process.” Id. at 990. Thus, “a criminal conviction is a necessary predicate for any criminal forfeiture.” Id. at 991.

         As an initial matter, the Court wishes to address an issue that the parties gloss over, namely, whether a forfeiture proceeding was indeed instituted in Louisiana state court before this case was filed. Defendant Marvin asserts that a forfeiture proceeding was instituted, pointing to the Louisiana seizure warrant, dated April 19, 2018, having preceded this case, which was filed on May 9, 2018. The seizure warrant states in relevant part that “probable cause exists to believe that the [Fund] is subject to possible forfeiture” and that the district attorney’s office “should be allowed to proceed at this time with an assert forfeiture procedure.” (ECF No. 71-5). However, this permissive language merely authorizes the district attorney’s office to initiate a forfeiture proceeding; it does not explicitly open such a proceeding. Defendant Marvin points to no authority standing for the proposition that a forfeiture proceeding is necessarily initiated when a Louisiana state court issues a seizure warrant, and the Court is unable to locate any such authority. To the contrary, it appears that the issuance of a seizure warrant does not commence a civil forfeiture proceeding in Louisiana, as all civil cases are initiated by the filing of a pleading. See La. Code Civ. Proc. art. 421 (providing that civil actions are “commenced by the filing of a pleading presenting the demand to a court of competent jurisdiction”); de la Vergne v. de la Vergne, 479 So.2d 549, 550 (La. Ct. App. 1985) (same).

         Further, the Louisiana racketeering statute provides that “a forfeiture proceeding shall be instituted promptly” after property is seized for forfeiture. See La. R.S. 15:1356(C-D). Thus, Louisiana law expressly contemplates that forfeiture proceedings brought under the racketeering statute must be formally commenced sometime after the issuance of a seizure warrant and the subsequent seizure of property for forfeiture. Id.; see also La. R.S. 40:2608(1)(a) (requiring, in a different forfeiture context, the commencement of forfeiture proceedings after the seizure of property by filing a petition for forfeiture within a certain time after giving the property owner written notice of intent to seek forfeiture); La. R.S. 40:2613(A)(1) (providing, in a different forfeiture context, that an in rem forfeiture proceeding may be brought by a district attorney pursuant to a notice of pending forfeiture or a verified petition for forfeiture).

         Nothing in the record reflects that Defendant Marvin or any other district attorney formally instituted a forfeiture proceeding in Louisiana state court after the seizure warrant was issued. For example, Defendant Marvin has not provided the Court with a copy of a filed forfeiture complaint or a copy of the docket sheet for a separate forfeiture case asserted against the Fund. At most, the record shows the existence of multiple criminal cases filed by the State of Louisiana against Intervenor Wilson. However, these criminal cases cannot themselves constitute an in rem proceeding because they are brought directly against Intervenor Wilson. Moreover, any forfeiture proceeding instituted as part of the criminal cases would be actions in personam because in rem civil forfeiture cases are prosecuted in separate civil actions directly against the offending property. Edwards, 787 So.2d at 991.

         The Court notes that the State of Louisiana filed a “motion for civil forfeiture” in one of the above-mentioned criminal cases, on which the state court set a hearing for August 28, 2018. (ECF No. 67-1). On August 28, 2018, in what is listed as docket number “227, 688F, Criminal File 17-4964, ” the state court quashed the seizure warrant in part. (ECF No. 44-1). The parties provide no information about docket number “227, 688F, Criminal File 17-4964.” With no other information, the Court cannot tell whether the quashing of the seizure warrant took place in one of the above-mentioned criminal cases against Intervenor Wilson, or in a separate forfeiture proceeding.

         The Court is inclined to assume the former because the above-referenced case number includes “criminal” in it, and it seems unlikely that a civil forfeiture proceeding would be assigned a criminal case number. Furthermore, the minutes report for one of the criminal cases against Intervenor Wilson-case number C-227668I-reflects the state court’s quashing of the seizure warrant, which lends further credence to the possibility that the seizure warrant was quashed in one of the criminal cases rather than in a separate civil forfeiture proceeding. (ECF No. 44-2). Ultimately, however, the Court need not pursue this issue further because, keeping in mind the narrow nature of the prior exclusive jurisdiction doctrine, see Seitz v. Fed. Nat’l. Mortg. Ass’n, 909 F.Supp.2d 490, 505 (E.D. Va. 2012), the Court declines to guess at, or assume, the existence of a separate civil forfeiture proceeding.

         Accordingly, the Court finds that Defendant Marvin has not provided the Court with sufficient evidence to allow a finding that an in rem state forfeiture action preceded this case. Thus, the requisites of the prior exclusive jurisdiction doctrine have not been shown, and the Court will not dismiss this case pursuant to that doctrine. As such, the Court will now turn to Defendant Marvin’s various abstention arguments.

         B. ...

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