US v. Fairway Capital Corp, No. 06-2023. The government of the Virgin Islands filed a claim with a receiver. There were equitable and legal claims. The District Court stated the procedures for making objections. There were a number of objections made, including the one that the U.S. District Court for the District of Rhode Island did not have jurisdiction over the equitable claims for possession of land in the Virgin Islands. Meanwhile, a territorial court was deciding an eviction action over the land.
So, the first issue is abstention. The court concludes that Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976) is not required, because although the territorial court was entertaining in rem jurisdiction over the land, “the importance of the Territorial Court's quasi in rem jurisdiction is diminished by the fact that 15 U.S.C. § 687c(b) gives a district court ‘exclusive jurisdiction’ over the property of an SBA receivership estate” (even if Virgin Islands law did govern the effect given to a stipulated settlement) Moreover, the Rhode Island forum was not inconvenient, nor would there be piecemeal litigation. After going though all the eight factors, the First finds that Colorado abstention is not required, because the only one going for abstention was that the territorial court was first to obtain jurisdiction.
Secondly, the First looks at Odell v. H. Batterman & Co. (2d. Cir. 1918) abstention. This is fairly straightforward, even if it is a doctrine from the Second Circuit. It holds that “the receivership court should allow the tenant's landlord to pursue eviction proceedings in a parallel proceeding in state court.” But Odell was a 1918 case, which apparently hasn’t been cited since 1952. Back in 1918, apparently there was no federal forum for the landlord to pursue his claim. But in this case there is.
The court then holds that there is no right to a “plenary” hearing because the territorial government couldn’t identify any factual problems with the receiver’s report on either the equitable or monetary claims.
Finally, it gets to the merits, and holds that, under Virgin Island law a settlement could be enforced, and the government could be bound by the results of the receivership proceeding.
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