ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
Before: SCIRICA, COWEN and NYGAARD, Circuit Judges.
Tara Ryan appeals from the district court's decision to dismiss her diversity action under the doctrine set forth in Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S. Ct. 1236 (1976), and subsequent cases. Because the district court applied Colorado River abstention incorrectly, we will reverse.
In 1995, Ryan attended a party at a beach house owned by Charles and LouAnn Johnson and rented for the summer to the remaining defendants. The exterior, second-floor deck of the house suddenly collapsed, injuring at least thirty-three persons, including Ryan, who suffered a serious spinal injury. To date, seventeen of these persons have filed suit.
Ryan filed this diversity action in federal district court, alleging that the defendants negligently caused her injuries. The remaining sixteen plaintiffs, however, were nondiverse from the defendants and filed their suits in the New Jersey Superior Court. In that state court action, twenty-two other parties have been joined as third-party defendants, including contractors, realtors and predecessors in title.
Defendants in the federal action moved the district court to abstain from exercising its jurisdiction under Colorado River, arguing that the presence of parallel state and federal proceedings involving the same issues counseled in favor of abstention. The district court, in an unreported opinion, agreed and granted the motion, primarily to avoid "piecemeal litigation" and because the case was likely to involve complex state law issues. This appeal followed.
It is axiomatic that federal courts have a "virtually unflagging obligation . . . to exercise the jurisdiction given them" by Congress. Colorado River, 424 U.S. at 817, 96 S. Ct. at 1246. This precept can be traced at least as far back as Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 404 (1821), where the Supreme Court, speaking through Chief Justice Marshall, stated:
It is most true that this Court will not take jurisdiction if it should not: but it is equally true, that it must take jurisdiction if it should. . . . We have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not given. The one or the other would be treason to the constitution.
This principle is no less true in cases where, as here, there is a parallel litigation in a state court. "The rule is well recognized 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 . . . ." Colorado River, 424 U.S. at 817, 96 S. Ct. at 1246 (quoting McClellan v. Carland, 217 U.S. 268, 282, 30 S. Ct. 501, 505 (1910)); accord Chicot County v. Sherwood, 148 U.S. 529, 534, 13 S. Ct. 695, 697-98 (1893); University of Maryland v. Peat Marwick Main & Co., 923 F.2d 265, 275-76 (3d Cir. 1991) ("The general rule regarding simultaneous litigation of similar issues in both state and federal courts is that both actions may proceed until one has come to judgment, at which point that judgment may create a res judicata or collateral estoppel effect on the other action.") (citing McClellan).
Nevertheless, in Colorado River, the Supreme Court recognized that there are certain extremely limited circumstances in which a federal court may defer to pending state court proceedings based on considerations of "wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation." 424 U.S. at 817, 96 S. Ct. at 1246. It emphasized that "[a]bdication of the obligation to decide cases can be justified . . . only in the exceptional circumstances where the order ...