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Bell v. Taylor

United States District Court, D. Hawaii

August 13, 2018

IAN BELL, Derivatively on Behalf of ECO SCIENCE SOLUTIONS, INC., Plaintiff,
v.
JEFFERY TAYLOR, DON LEE TAYLOR, L. JOHN LEWIS, S. RANDALL OVESON, and GANNON GIGUIERE, Defendants, and ECO SCIENCE SOLUTIONS, INC., a Nevada corporation, Nominal Defendant.

          ORDER DENYING DEFENDANT'S MOTION TO DISMISS OR, ALTERNATIVELY, TO STAY ACTION

          Leslie E. Kobayashi United States District Judge.

         Before the Court is Defendants Jeffrey Taylor (“J. Taylor”), Don Lee Taylor (“D. Taylor” and collectively “the Taylors”), L. John Lewis, S. Randall Oveson, Gannon Giguiere (collectively “Individual Defendants”), and Eco Science Solutions, Inc.'s (“Eco Science” and all collectively “Defendants”) Motion to Dismiss or, Alternatively, to Stay Action (“Motion”), filed on March 16, 2018. [Dkt. no. 35.] On March 19, 2018, Defendants filed a correction to the Motion, containing two exhibits inadvertently not attached to the Motion (“Correction”). [Dkt. no. 37.] Plaintiffs Ian Bell, Derivatively on Behalf of Eco Science Solutions, Inc. (“Bell”); and Marc D'Annunzio, Derivatively on Behalf of Eco Science Solutions, Inc. (“D'Annunzio” and collectively “Plaintiffs”) filed their memorandum in opposition on April 25, 2018, and Defendants filed their reply on May 11, 2018. [Dkt. nos. 46, 47.] This matter came on for hearing on June 4, 2018. Defendants' Motion is hereby denied for the reasons set forth below.

         BACKGROUND

         This action commenced on October 20, 2017. [Dkt. no. 1.] On February 23, 2018, Plaintiffs filed their Verified Consolidated Stockholder Derivative Complaint for Breach of Fiduciary Duty, Aiding and Abetting, Waste of Corporate Assets, and Unjust Enrichment (“Amended Complaint”). [Dkt. no. 34.] Plaintiffs allege the Individual Defendants profited by wrongfully manipulating the share price of Eco Science. Plaintiffs assert four claims under Nevada law: 1) breach of fiduciary duty (“Count I”); [id. at ¶¶ 122-28;] 2) aiding and abetting breach of fiduciary duty (“Count II”); [id. at ¶¶ 129-33;] 3) waste of corporate assets (“Count III”); [id. at ¶¶ 134-38;] and 4) unjust enrichment (“Count IV”), [id. at ¶¶ 139-42].

         In July 2017, a derivative action based on same the conduct as alleged in the Amended Complaint was filed in the First Judicial District Court of the State of Nevada in and for Carson City (“Nevada state action” and “Nevada state court”).[1]The Nevada state action is similar, but not identical, to the instant action. The Nevada state action does not name Gannon Giguiere as a defendant, and in addition to the four claims asserted in the Amended Complaint, also asserts claims for abuse of control and gross mismanagement.

         The instant Motion seeks stay or dismissal of this action in favor of the Nevada state action under the Colorado River doctrine.[2]

         STANDARD

         The Colorado River doctrine provides an exception to the rule that, “‘[g]enerally, as between state and federal courts, . . . the pendency of an action in the state court is no bar to proceedings concerning the same matter' in a federal court.” R.R. St. & Co. v. Transp. Ins. Co., 656 F.3d 966, 975 (9th Cir. 2011) (emphasis and some alterations in R.R. St.) (quoting Colorado River, 424 U.S. at 817, 96 S.Ct. 1236).

         The Ninth Circuit has stated:

Under “exceedingly rare” circumstances, Smith [v. Cent. Ariz. Water Conservation Dist.], 418 F.3d [1028, ] 1033 [(9th Cir. 2005)], “considerations of wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation, ” may counsel in favor of abstention, Colo. River, 424 U.S. at 817, 96 S.Ct. 1236 (alteration omitted) (internal quotation marks omitted).
Colorado River and its progeny provide a multi-pronged test for determining whether “exceptional circumstances” exist warranting federal abstention from concurrent federal and state proceedings. We evaluate eight factors in assessing the appropriateness of a Colorado River stay or dismissal:
(1) which court first assumed jurisdiction over any property at stake; (2) the inconvenience of the federal forum; (3) the desire to avoid piecemeal litigation; (4) the order in which the forums obtained jurisdiction; (5) whether federal law or state law provides the rule of decision on the merits; (6) whether the state court proceedings can adequately protect the rights of the federal litigants; (7) the desire to avoid forum shopping; and (8) whether the state court proceedings will resolve all issues before the federal court.
R.R. St., 656 F.3d at 978-79. . . .

Seneca Ins. Co., Inc. v. Strange Land, Inc., 862 F.3d 835, 841-42 (9th ...


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