{"id":890640,"date":"2016-08-09T10:47:49","date_gmt":"2016-08-09T16:47:49","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=890640"},"modified":"2016-08-09T10:47:49","modified_gmt":"2016-08-09T16:47:49","slug":"tennessee-federal-district-court-holds-that-contractor-may-pursue-both-breach-of-contract-action-in-federal-court-and-lien-enforcement-action-in-state-court-abstention-not-required","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/tennessee-federal-district-court-holds-that-contractor-may-pursue-both-breach-of-contract-action-in-federal-court-and-lien-enforcement-action-in-state-court-abstention-not-required\/","title":{"rendered":"Tennessee Federal District Court Holds That Contractor May Pursue Both Breach of Contract Action in Federal Court and Lien Enforcement Action In State Court \u2013 Abstention Not Required"},"content":{"rendered":"<p>Jane Fox Lehman | <a href=\"https:\/\/constructlaw.com\/2016\/08\/04\/tennessee-federal-district-court-holds-that-contractor-may-pursue-both-breach-of-contract-action-in-federal-court-and-lien-enforcement-action-in-state-court-abstention-not-required\/\" target=\"_blank\">Pepper Hamilton LLP<\/a> | August 4, 2016<\/p>\n<p><strong><em>Summit Contracting Grp., Inc. v. Ashland Heights, LP<\/em>, \u00a02016 U.S. Dist. LEXIS 60662 (M.D. Tenn. May 6, 2016)<\/strong><\/p>\n<p>Ashland Heights, LP (\u201cOwner\u201d) contracted with Summit Contracting Group, Inc. (\u201cContractor\u201d) to construct an assisted living facility in Tennessee.\u00a0 After completing the project, Contractor alleged that Owner had failed to pay Contractor in full for the work it performed; to make timely payments; to provide Contractor a time extension for inclement weather; and to deposit retainage into an interest-bearing escrow account as required by Tennessee\u2019s Retainage Law.<\/p>\n<p>Contractor filed a <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/no-coverage-for-faulty-workmanship-where-underlying-claim-is-strictly-breach-of-contract\/\" target=\"_blank\">breach of contract<\/a> and Retainage Law action in federal district court, seeking damages and litigation costs in excess of $1.5 million (the \u201cContract Action\u201d).\u00a0 Contractor concurrently filed a mechanic\u2019s lien action in state court seeking enforcement of the lien in the amount of $1,074,688.74 (the \u201cLien Action\u201d).<span id=\"more-1480\"><\/span><\/p>\n<p>Owner argued before the federal district court that the Contract Action should be dismissed without prejudice pursuant to what is known as the <em>Colorado River<\/em> Doctrine.\u00a0 In <em>Colorado River Water Conservation Dist. v. United States<\/em>, 424 U.S. 800 (1976), the Supreme Court explained that considerations of judicial economy and federal-state comity may justify federal court abstention in situations of contemporaneous exercise of jurisdiction by state and federal courts.\u00a0 Federal courts are to grant a stay or dismissal of litigation where the cases are \u201cparallel,\u201d meaning \u201csubstantially the same parties\u201d are contemporaneously litigating \u201csubstantially the same issues\u201d such that there is a \u201csubstantial likelihood that the state litigation will dispose of all claims presented in the federal case.\u201d<\/p>\n<p>The federal district court noted that the Fourth and Eight Circuits had both addressed the specific question of whether a <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/lien-on-me-mechanics-liens-and-design-professionals-liens\/\" target=\"_blank\">lien enforcement<\/a> action in state court was \u201cparallel\u201d to a contract action in federal court.\u00a0 Both Circuit Courts held that the actions involved different issues, different requisites of proof, and different remedies such that a ruling on the lien claim would not resolve the contract claim.\u00a0 <em>See Gannet Co. v. Clark Constr. Grp., Inc.<\/em>, 286 F.3d 737 (4<sup>th<\/sup> Cir. 2002); <em>Fru-Con Constr. Corp. v. Controlled Air, Inc.<\/em>, 574 F.3d 527 (8<sup>th<\/sup> Cir. 2009).<\/p>\n<p>The court found that the Lien Action and the Contract Action similarly involved different issues, different requisites of proof, and\u00a0 different remedies.\u00a0 The Lien Action was premised on Tennessee\u2019s mechanic\u2019s lien law, while the Contract Action was premised on the common law elements of breach of contract and the Retainage Law.\u00a0 The Lien Action sought enforcement of a mechanic\u2019s lien in the amount of $1,074,688.74, while the Contract Action sought well in excess of that amount in damages for breach of contract, statutory penalties, and in attorney\u2019s fees.\u00a0 The Lien Action raised only the issue of whether Contractor provided labor and materials for which Owner failed to pay, while the Contract Action raised the issues of whether Owner breached the parties\u2019 contract and whether Contractor incurred damages.\u00a0 Accordingly, there was substantial doubt that resolution of the Lien Action would result in a complete resolution of the issues between the parties, and thus <em>Colorado River<\/em> abstention was inappropriate.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Jane Fox Lehman | Pepper Hamilton LLP | August 4, 2016 Summit Contracting Grp., Inc. v. Ashland Heights, LP, \u00a02016 U.S. Dist. LEXIS 60662 (M.D. Tenn. May 6, 2016) Ashland Heights, LP (\u201cOwner\u201d) contracted with Summit Contracting Group, Inc. (\u201cContractor\u201d) to construct an assisted living facility in Tennessee.\u00a0 After completing the project, Contractor alleged that&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/tennessee-federal-district-court-holds-that-contractor-may-pursue-both-breach-of-contract-action-in-federal-court-and-lien-enforcement-action-in-state-court-abstention-not-required\/\">Continue reading <span class=\"screen-reader-text\">Tennessee Federal District Court Holds That Contractor May Pursue Both Breach of Contract Action in Federal Court and Lien Enforcement Action In State Court \u2013 Abstention Not Required<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9,8],"tags":[158,224,9720,184],"class_list":["post-890640","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","category-mechanics-lien-rights","tag-breach-of-contract","tag-construction-contract","tag-federal-district-court","tag-mechanics-lien-law","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Tennessee Federal District Court Holds That Contractor May Pursue Both Breach of Contract Action in Federal Court and Lien Enforcement Action In State Court \u2013 Abstention Not Required - Advise &amp; 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