Fru-Con Construction Corp. v. Controlled Air, Inc., No. 08-1712.
Fru-Con Construction Corporation and Austin Maintenance and Construction, Inc. (collectively “Fru-Con”), hired Controlled Air to construct the gain receiving, storage, and milling system for an ethanol production facility in Ravenna, Nebraska. The parties entered into a contract that required all disputes (1) be brought in Missouri state court or the federal district court for the Eastern District of Missouri and (2) be governed by Missouri law. A dispute arose between the parties. Controlled Air supplied labor and materials until January 14, 2007, and Fru-Con assumed responsibility for the work on January 17, 2007.
Controlled Air then filed a construction lien under the Nebraska Construction Lien Act against Fru-Con for unpaid labor and materials. Fru-Con filed a breach of contract claim against Controlled Air in the federal court. Controlled Air subsequently filed a complaint against Fru-Con to foreclose the construction lien in Nebraska state court. Both parties filed motions to dismiss the other’s complaint, arguing that federal court and state court, respectively, could litigate the entire dispute. The Nebraska court refused to dismiss Controlled Air’s complaint, but the federal court abstained and dismissed Fru-Con’s complaint.
On appeal, the Eighth Circuit reversed the trial court’s decision. The court discussed the six Colorado River factors requiring abstention by a federal court, but focused on whether the claim pending in state court were parallel to the claim pending in federal court. The court specifically held that the two cases were not parallel because the state case related to a statutory lien for labor and materials provided prior to January 14, 2007, while the federal case revolved around a common law breach of contract claim for losses after January 17, 2007. The court wrote, “While both actions stem from the same project and contractual relationship, each is premised on a different wrong arising from different occurrences.”
written an interesting article