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NCH Healthcare System, Inc. v. Paxerahealth Corp.

United States District Court, M.D. Florida, Fort Myers Division

December 17, 2019


          OPINION AND ORDER [1]


         Before the Court is Defendant PaxeraHealth Corp.'s (“Paxera”) Motion to Abstain Jurisdiction (Doc. 36) filed on October 11, 2019. Plaintiff NCH Healthcare Systems, Inc. (“NCH”) filed a Memorandum of Law in Opposition (Doc. 38) on October 24, 2019. For the following reasons, Paxera's motion is denied.


         This is an action for breach of contract and express warranty, unjust enrichment, fraudulent inducement, and deceptive and unfair trade practices under Florida law. (Doc. 30). Nearly two years ago, based on Paxera's promises, NCH purchased a Picture Archiving and Communication System (“PACS”). (Id. at ¶ 2). The system was intended to transmit, access, and store digital images of radiological studies. (Id. at ¶ 12). PACS, however, did not work as expected. (Id. at ¶¶ 19-28).

         The parties dispute the cause of the PACS breakdown. NCH says the software failed, while Paxera blames NCH staff. (Id. at ¶¶ 19-26). Due to the system failure, NCH terminated the contract after paying Paxera over $400, 000. (Id. at ¶¶ 28, 42, 48, 48, 49, 55, 59). Thereafter, Paxera filed a one-count breach of contract action against NCH in Massachusetts state court. (Doc. 36-1). NCH then sued Paxera in Florida state court. (Doc. 1-1 at 6-11). Paxera removed the action to this Court three months ago. (Doc. 1). Now, Paxera moves the Court to abstain from exercising jurisdiction over this case and stay the matter pending resolution of the parties' pre-existing state action in Massachusetts. (Doc. 36). For the reasons below, the Court finds abstention inappropriate here.


         “Abstention from the exercise of federal jurisdiction is the exception, not the rule, ” and is warranted only in “exceptional circumstances.” Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 813 (1976) (quotation marks omitted). To determine whether abstention is warranted, federal courts undertake two inquiries. First, courts determine whether the state and federal proceedings are parallel. See Ambrosia Coal & Const. Co. v. Pages Morales, 368 F.3d 1320, 1330 (11th Cir. 2004). This means the federal and state actions involve “substantially the same parties and substantially the same issues.” Id. Second, if parallel, courts weigh six factors:

(1) whether one of the courts has assumed jurisdiction over property, (2) the inconvenience of the federal forum, (3) the potential for piecemeal litigation, (4) the order in which the fora obtained jurisdiction, (5) whether state or federal law will be applied, and (6) the adequacy of the state court to protect the parties' rights.

Id. (citation omitted). Notably, no one factor is determinative, and the weight given to each factor may vary from case to case. See Id. at 1320. Nonetheless, federal courts have a “virtually unflagging obligation . . . to exercise the jurisdiction given them, ” Colorado River, 424 U.S. at 817 (citation omitted), and “[t]he doctrine of abstention . . . is an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it[.]” Id. at 813.


         Paxera argues the Court should abstain from exercising subject matter jurisdiction over this case pursuant to the Colorado River doctrine. (Doc. 36). NCH maintains Paxera fails to show exceptional circumstances that warrant this Court to abstain from exercising its jurisdiction. (Doc. 38). The Court agrees with NCH.

         The threshold issue before the Court is whether the federal and state cases are sufficiently parallel. Paxera asserts the cases are parallel because they arise out of the same operative facts and involve the same parties. (Doc. 36 at 4). NCH appears to concede the parties are the same, but argues the issues are not sufficiently parallel. (Doc. 38 at 8-10). More specifically, NCH asserts the issues are not parallel because its breach of express warranty and fraud and deception claims do not exist solely because a breach of contract occurred. (Id.). Rather, it argues these claims accrued as a result of Paxera's actions leading up to the agreement and during the purchase of the product. (Id. at 8-10, 13).

         The Eleventh Circuit has acknowledged that “[t]here is no clear test for deciding whether two cases contain substantially similar parties or issues.” Acosta v. James A. Gustino, P.A., 478 Fed.Appx. 620, 622 (11th Cir. 2012). Nonetheless, from the start, the balance weighs heavily in favor of exercising jurisdiction. See id. “Thus, if there is any substantial doubt about whether two cases are parallel the court should not abstain.” Id. (citation omitted). Moreover, “the decision to invoke Colorado River necessarily contemplates that the federal court will have nothing further to do in resolving any substantive part of the case.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 28 (1983).

         As an initial matter, there is no dispute that the state and federal cases involve the same parties. Thus, the remaining question before the Court is whether the ...

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