SDNY Stays Action Based on International Comity
January 16, 2025
Lower federal courts have developed several forms of abstention based on international comity. Some courts have adopted a doctrine of prescriptive comity abstention to dismiss federal statutory claims when facing a “true conflict” with foreign law. Some have embraced doctrines of adjudicative comity abstention that permit dismissals or stays of federal proceedings in favor of foreign courts. Several circuits (including the Second, Third, Fourth, Sixth, and Seventh) limit such abstention to cases of parallel proceedings; courts have developed a distinct doctrine for parallel bankruptcy proceedings. The Ninth Circuit, uniquely, authorizes a district court to dismiss a U.S. proceeding based on foreign relations concerns even when there is no parallel foreign proceeding.
On December 5, 2024, in Barboza v. Hughes Jiron, Judge J. Paul Oetken (Southern District of New York) applied the Second Circuit’s non-bankruptcy version of adjudicative comity abstention for parallel proceedings to stay an action for conversion in favor of a foreign divorce proceeding. The decision provides a good example of how this kind of abstention should operate.
A Costa Rican Divorce
Hans Tupper Barboza and Doreen Ann Hughes Jiron married in Costa Rica in 2015. Tupper Barboza had inherited money from his father, which was held in several family trusts. Between 2018 and 2021, he dissolved his portions of the trusts and transferred more than $10 million to his spouse to hold in New York accounts.
In 2020, the marriage began to come apart. Hughes Jiron asked Tupper Barboza to leave their home. Tupper Barboza began divorce proceedings in Costa Rica in 2022. Initially, he asked the Costa Rican court to award him 50% of the funds that he had transferred to his spouse during their marriage. Hughes Jiron responded that the funds were a gift that she was not obligated to return and that the divorce court lacked jurisdiction over the funds.
Tupper Barboza then filed an action for conversion and an accounting of the funds in the SDNY, arguing that they are part of his “personal wealth.” Hughes Jiron moved to dismiss the conversion action on grounds of international comity and under the doctrine of forum non conveniens.
Parallel Proceedings Abstention
The Second Circuit is one of the circuits that has multiple doctrines of international comity abstention, including prescriptive comity abstention, adjudicative comity abstention for parallel proceedings, and a separate doctrine for parallel bankruptcy proceedings.
The leading non-bankruptcy decision on parallel proceedings abstention in the Second Circuit is Royal & Sun Alliance Insurance Co. v. Century International Arms, Inc. (2006), which is the case to which Judge Oetken looked. As he noted, abstention “is the exception, rather than the rule,” which means that it requires more than the mere existence of a parallel foreign proceeding. Under Royal & Sun Alliance, a district court must consider:
the similarity of the parties, the similarity of the issues, the order in which the actions were filed, the adequacy of the alternate forum, the potential prejudice to either party, the convenience of the parties, the connection between the litigation and the United States, and the connection between the litigation and the foreign jurisdiction.
As Judge Oetken noted, the first two factors determine whether proceedings are parallel. In this case, the parties were obviously the same, and the court concluded that the issues were sufficiently similar. Although no conversion claim had been brought in Costa Rica, the Costa Rican court might find that the funds were marital property or otherwise subject to equitable distribution, essentially mooting the New York action. Even if the court in Costa Rica found that the funds were not marital property, he continued, its ruling might speak to the legal status of the funds in ways that might be instructive. Under Royal & Sun Alliance, the existence of parallel proceedings is a prerequisite to adjudicative comity abstention. And Judge Oetken held that these factors also weighed in favor of a stay.
Next, the court considered the adequacy of the foreign forum. Hughes Jiron was subject to suit in Costa Rica, but Tupper Barboza argued that the foreign court could not order the remedy he sought, namely return of the funds. Judge Oetken reasoned that the Costa Rican court had not yet determined whether it had jurisdiction over the disputed funds, which was all the more reason to stay the New York proceeding until that question was resolved.
With respect to potential prejudice and convenience, Tupper Barboza again argued that the foreign court could not grant him relief, to which Judge Oetken again responded that it would be best to wait and see. Tupper Barboza also argued that the funds were being depleted, but Judge Oetken found this speculative and that it weighed “only modestly” against a stay of the U.S. proceeding.
Turning to the relative connections to United States and Costa Rica, Judge Oetken reasoned that this issue turned on the foreign court’s decision. “If [the funds] are marital assets or otherwise within its jurisdiction, this case will bear a high relationship to Costa Rica and only a minor one (the presence of funds) to the United States,” he wrote. “And if the divorce court concludes it lacks authority over the funds, proceeding in this court will make sense, as the funds, the defendant, and several witnesses are located here.” Finding that four factors (in his grouping) weighed in favor of a stay and only one weighed modestly against, Judge Oetken stayed the conversion action to allow the foreign court to determine its jurisdiction over the disputed funds.
Although Judge Oetken did not address it expressly, the order in which the actions were filed also favored abstention in this case. The Costa Rican divorce proceeding was filed first. It seems particularly appropriate to defer to the first filed action when it was filed by the same party as the second action. Having initially sought return of half the funds as marital property in Costa Rican court, it is reasonable that the plaintiff should have to wait for that proceeding to run its course before changing strategy and filing another.
Forum Non Conveniens
Hughes Jiron also sought to dismiss the conversion action under the doctrine of foreign non conveniens. Judge Oetken denied this motion without prejudice. Forum non conveniens requires as a precondition that there is an adequate alternative forum. The court reasoned that Hughes Jiron had not carried her burden of establishing such a forum because it was not yet clear that the court in Costa Rica had jurisdiction over the funds. If that court concludes that it does have jurisdiction, Hughes Jiron may renew the motion.
Conclusion
I am no fan of international comity abstention doctrines. I have argued against prescriptive comity abstentionon this blog. Paul Stephan and I filed an amicus brief with the Supreme Court arguing against it (the Court declined to take the case). I have also argued against the Ninth Circuit doctrine of adjudicative comity abstention that allows dismissal based on foreign relations concerns in the absence of parallel proceedings. Maggie Gardner and I filed an amicus brief with the Supreme Court arguing against that (the Court did not reach the issue).
Parallel proceedings abstention makes more sense, particularly when it is weighted heavily against abstention, as it is in the Second Circuit. But there are some cases in which abstention makes sense, and Barboza is one of them. It was simply not yet clear what the court in Costa Rica would do and how its decision would affect the conversion action. Judge Oetken did not dismiss the action in New York; he simply stayed it pending resolution of the relevant questions in the foreign court. Sometimes it is sensible to wait and see.