One case deserves our focus because a sister circuit applied the "prior-exclusive-jurisdiction rule" to deny the United States' request to enjoin a state court proceeding in which the government claimed an interest in the property subject to litigation. See United States v. Certified Indus., Inc., 361 F.2d 857 (2d Cir. 1966). In Certified Industries, a subcontractor filed a mechanic's lien against a contractor in New York state court to recoup unpaid fees and later attempted to foreclose on the lien.

Where the judgment sought is strictly in personam, for the recovery of money or for an injunction compelling or restraining action by the defendant, both a state court and a federal court having concurrent jurisdiction may proceed with the litigation, at least until judgment is obtained in one court which may be set up as res [ ]judicata in the other.Penn Gen. Cas. Co. v. Pennsylvania ex rel. Schnader, 294 U.S. 189, 195, 55 S.Ct. 386, 79 L.Ed. 850 (1935); accord Markham v. Allen, 326 U.S. 490, 494, 66 S.Ct. 296, 90 L.Ed. 256 (1946) (collecting cases); see also United States v. Certified Indus., Inc., 361 F.2d 857, 860 (2d Cir. 1966) (quoting Markham, 326 U.S. at 494, 66 S.Ct. 296); Citibank, N.A. v. Data Lease Fin. Corp., 645 F.2d 333, 338-39 (5th Cir. Unit B 1981) (citing Kline, 260 U.S. at 229, 43 S.Ct. 79); Lot 85, 100 F.3d at 743 (quoting Penn Gen., 294 U.S. at 198, 55 S.Ct. 386); State Eng'r v. S. Fork Band of Te-Moak Tribe of W. Shoshone Indians, 339 F.3d 804, 811 (9th Cir. 2003) (quoting Penn Gen., 294 U.S. at 195, 55 S.Ct. 386); Goncalves ex rel. Goncalves v. Rady Child.'s Hosp. San Diego, 865 F.3d 1237, 1254 (9th Cir. 2017) (same).

The United States' first argument, relying primarily on Leiter Minerals, Inc. v. United States, 352 U.S. 220, 77 S.Ct. 287, 1 L.Ed.2d 267 (1957), is that Article 3-A does not apply to it because the statute lacks express words so indicating. We implicitly rejected this argument in United States v. Certified Indus., Inc., 361 F.2d 857, 862 (2d Cir. 1966), where we assumed that the United States would be subject to Article 3-A's statute of limitations. We now explicitly reject the argument, joining at least one district court in our Circuit that has, in analyzing Article 3-A's representative capacity requirement, found the statute's procedural requirements to be applicable to the United States. See Quantum Corporate Funding v. Bast Hatfield, Inc., No. 5:04-cv-137, 2005 WL 1926610, *2-3, 2005 WL 1926610, at *6, 2005 U.S. Dist. LEXIS 14222, *18-*23 (N.D.N.Y. June 8, 2005).

As with Article 3-A's representative action requirement, the United States is subject to Article 3-A's prohibition against prior pending actions when asserting its Article 3-A rights, and the United States' failure to comply with this requirement warrants dismissal. In United States v. Certified Industries, Inc., 361 F.2d 857 (2d Cir. 1966), an Article 3-A case in which the United States was seeking unpaid taxes, the Second Circuit held that the United States was not entitled to an injunction against prior state court proceedings that would have conflicted with the United States' claims in federal court. Although the United States was seeking unpaid taxes under Article 3-A, the court nonetheless treated the United States' Article 3-A claim as a state law claim-not a claim on a federal tax lien.

While the Second Circuit does not appear to have directly addressed this "difficult question with regard to federal-state relations" in the Younger context, it has denied "that a stay [should be] automatically granted simply on the application of the United States." United States v. Certified Indus., Inc., 361 F.2d 857, 859 (2d Cir. 1966) ; see also United States v. Augspurger, 452 F. Supp. 659, 668 (W.D.N.Y. 1978) ("[T]he general rules of comity do apply even when the United States is the plaintiff."). Instead, it is "necessary to inquire ‘whether the granting of an injunction [is] proper in the circumstances of this case.’ "

Actions to foreclose mechanic's liens are in rem in nature. See N.Y. Lien Law § 70; United States v. Certified Industries Inc., 361 F.2d 857, 860 ("There can be little doubt that the initial foreclosure proceeding in the state court was a proceeding in rem.") The American Building Supply Corporation action was prior in time to the instant case. Therefore, under the rule of United States v. Bank of New York Trust Co., 296 U.S. 463, 477, 56 S.Ct. 343, 80 L.Ed. 331 (1936) and Penn General Casualty Co. v. Pennsylvania, 294 U.S. 189, 195, 55 S.Ct. 386, 79 L.Ed. 850 (1935), it would be improper for this Court to assume jurisdiction over the same res (i.e., the premises developed by Avalon Bay) by entertaining Plaintiff's claim for foreclosure of its lien.

In reaching the opposite conclusion, the district court cited our decision in United States v. Certified Industries, Inc. for the proposition that "a stay [should not be] automatically granted simply on the application of the United States" because it is "necessary to inquire ‘whether the granting of an injunction [i]s proper in the circumstances of this case.’ " 361 F.2d 857, 859 (2d Cir. 1966) (quoting Leiter , 352 U.S. at 226, 77 S.Ct. 287 ). This proposition, while true, does not weigh in favor of abstention.

United States v. Klein, 303 U.S. 276, 58 S.Ct. 536, 82 L.Ed. 840 (1938). See also Markham v. Allen, 326 U.S. 490, 66 S.Ct. 296, 90 L.Ed. 256 (1946); Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456, 59 S.Ct. 275, 83 L.Ed. 285 (1939); United States v. Certified Industries, Inc., 361 F.2d 857 (2d Cir. 1966); Banco National de Cuba v. Sabbatino, 307 F.2d 845 (2d Cir. 1962), rev's on other grounds, 376 U.S. 398, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964); Albuquerque National Bank v. Citizens National Bank, 212 F.2d 943 (5th Cir. 1954); Purcell v. Summers, 126 F.2d 390 (4th Cir.), cert. denied, 317 U.S. 640, 63 S.Ct. 32, 87 L.Ed. 516 (1942). While such title issues as are first determined by the Kansas court may become binding on the parties to the Texas District Court action under the doctrines of res judicata or collateral estoppel if properly set up by plea in the latter court, the mere act of resolving those disputed issues which are common to both proceedings in Kansas will not disturb the Texas District Court's constructive possession or control of the land.

In Rossi, however, the First Circuit (although in the context of Younger abstention) did not make a distinction between an enforcement action for a substituted bond and mechanic's lien - it referred to the proceeding as an “in rem” action even though the lien was bonded off. Rossi, 489 F.3d at 28, 35, 37 (explaining how the proceeding is an in rem action to enforce a mechanic's lien even after plaintiff obtained a lien substitution by paying the state court registry and dissolving the lien); see also United States v. Certified Indus., Inc., 361 F.2d 857, 860-62 (2nd Cir. 1966) (determining that a proceeding is still in rem even when a mechanic's lien is substituted out for the bond). Although state lien enforcement actions are clearly in rem proceedings, and the Court accordingly weighs this factor in favor of abstention, this Court does not weigh this first factor “heavily” in favor of abstention considering this bond substitution. See Comau, LLC v. Bayview Elec. Co., LLC, No. 2012865, 2021 WL 1037728, at *8 (E.D. Mich. Mar. 17, 2021) (noting that the first Colorado River factor weighed in favor of abstention, although “not heavily,” because the lien was discharged through a “surety bond”).

However, the Second Circuit has held that federal district courts may adjudicate matters indirectly related to the state's exercise of in rem jurisdiction over a piece of property in a mechanic's lien foreclosure, as long as "the final judgment does not undertake to interfere with the state court's possession save to the extent that the state court is bound by the judgment to recognize the right adjudicated by the federal court." United States v. Certified Indus., Inc., 361 F.2d 857, 860 (2d Cir. 1966) (quoting Markham v. Allen, 326 U.S. 490, 494 (1946)). Even though the claims here remain inextricably linked with the issues of beach-of-contract pending before the Indiana Court, the damages requested do not independently implicate a res and none of the causes of action before this court is a proceeding in rem.