Case of the Day: Gardner v. Letcher
Posted on October 19, 2012
The case of the day is Gardner v. Letcher (D. Nev. 2012). Alfred Letcher sold an Arizona mine to Christopher Gardner in 2008 for $3.6 million. According to Gardner, the parties also signed an agreement at the time that allowed Gardner to rescind the sale contract within a year and in return receive the purchase price back, less $50,000 in liquidated damages. Letcher claimed the supposed rescission agreement was forged. Gardner demanded rescission and Letcher refused.
Gardner sued Letcher for breach of contract in the court in the Canton of Vaud in Switzerland. According to an Article 6 certificate from the US Central Authority, or rather its contractor, the documents were served on Lechter, though Lechter denied having notice of the action and asserted that Gardner had not served him properly under the Hague Service Convention (the grounds for this contention aren’t clear, especially in light of the Article 6 certificate). In any event, Letcher failed to appear in the Swiss case, and the court there entered a default judgment against him.
Gardner sought recognition and enforcement of the Swiss judgment in the U.S. District Court in Nevada (Nevada has enacted the UFCMJRA). But Gardner had previously recorded notice of a lien on Gardner’s property in Las Vegas under Nevada law, and Letcher had successfully sued Gardner in the Nevada court seeking expungement of the notice of lien. After the expungement, Letcher sold the property. Gardner then filed an action in the state court seeking to foreclose on the property, but the court awarded Letcher summary judgment on the several grounds, including that the supposed rescission agreement was not authentic, but on reconsideration it narrowed its decision’s rationale, which in the end relied only on the point that Letcher no longer owned the Las Vegas property. Both Gardner and Letcher appealed, and the appeal was pending.
The court, on Letcher’s motion, stayed the recognition and enforcement action under the doctrine of Colorado River abstention. Without going in to great detail, the doctrine’s aim is to avoid unnecessary conflict between state and federal courts. Relevant factors include the similarity of the cases, the order in which the cases were commenced, whether state law controls, and avoidance of piecemeal litigation. The factors favored abstention, and thus the judge stayed the case pending the outcome of the appeal in the state court.