Murray Law Firm et al v. Phipps Anderson Deacon, L.L.P. et al
Filing
17
ORDER & REASONS: granting 2 Defendants' Motion to Dismiss for Improper Venue. Plaintiffs' cause of action is DISMISSED WITHOUT PREJUDICE. Signed by Judge Carl Barbier on 7/8/16. (sek)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
MURRAY LAW FIRM, ET AL.
CIVIL ACTION
VERSUS
NO: 16-3675
PHIPPS ANDERSON DEACON,
LLP, ET AL.
SECTION: “J”(1)
ORDER & REASONS
Before
the
Court
is
a
Motion
to
Dismiss
for
Forum
Non
Conveniens or Improper Venue (Rec. Doc. 3) filed by Defendants
Phipps Anderson Deacon, LLP, et al., an opposition thereto (Rec.
Doc. 9) filed by Plaintiffs Murray Law Firm, et al., and a reply
thereto filed by Defendant. (Rec. Doc. 16.) Having considered the
motion and legal memoranda, the record, and the applicable law,
the Court finds that the motion should be GRANTED.
FACTS AND PROCEDURAL BACKGROUND
The
motion
before
this
Court
pertains
to
Plaintiffs’
declaratory judgment action. Because this dispute is related to a
more complex family of lawsuits, a brief factual background is
necessary. Plaintiffs and Defendants are attorneys or law firms
who, in 2006, brought suit on behalf of farmers whose rice crops
were contaminated by genetically-modified rice developed by Bayer
Corporation. These claims were brought in various state and federal
courts. Ultimately, the federal cases were consolidated in the
United States District Court for the Eastern District of Missouri
as In re: Genetically-Modified Rice Litig., No. 406 MD 1811, 666
F.Supp.2d 1004 (E.D. Mo. Oct. 9, 2009). Pursuant to consolidation,
the court established a Plaintiffs’ Leadership Committee (“PLC”)
and a Common Benefit Fund (“CBF”). The PLC performed work on behalf
of all consolidated cases and was paid later on an hourly basis
out of the CBF.
In the end, there was a unitary settlement negotiation which
resolved the federal and state cases and resulted in separate
settlement agreements. Some of the state court settlements were
settled through the “GMB Agreement” (Rec. Doc. 2-2) which was
executed around July, 2011. After the execution and performance of
the various settlements, including the GMB Agreement, the PLC
brought an action against the Plaintiffs and Defendants of this
action
claiming
that
Plaintiffs
and
Defendants
were
unfairly
enriched by their efforts in settling the case and demanded a share
of the attorney’s fees earned through the GMB Agreement. That
action is referred to as the “Rice Fee Dispute” and is currently
pending in the County Court at Law in Nueces County, Texas. Id. at
110.
The action before this Court pertains to the costs incurred
in defending the Rice Fee Dispute. In that action, Defendants filed
a cross-claim against Plaintiff alleging that on or around July
25, 2014, Plaintiffs promised to pay the legal defense fees and
2
related costs in the Rice Fee Dispute. In response, on March 7,
2016, Plaintiffs filed a declaratory judgment action in the Civil
District Court for the Parish of Orleans, State of Louisiana. (Rec.
Doc. 1-1.) On April 25, 2016, that action was removed to this Court
under 28 U.S.C. § 1332. (Rec. Doc. 1.) Plaintiffs’ declaratory
judgment action, and whether it is properly before this Court, is
the only matter currently before this Court and discussed herein.
PARTIES’ ARGUMENTS
Defendants argue that Plaintiffs declaratory judgment action
should be dismissed under forum non conveniens or, alternatively,
under 28 U.S.C. § 1406(a) for improper venue. (Rec. Doc. 2-1.)
Defendants argue that the parties to this action are currently
litigating the same disputed contract matter in state court, that
such action involves the same parties, facts, and controversy, and
that it was filed prior to Plaintiffs’ declaratory judgment action
against Defendants. (Rec. Doc. 2, at 1.) Defendants argue that the
underlying
dispute
settlement
payments
concerns
and
the
distribution
attorney’s
fees
and
of
state
expenses
court
from
a
Qualified Settlement Fund (“QSF”) to which Plaintiffs are a party.
Id. Further, Defendants argue that the QSF includes a mandatory
venue provision establishing Nueces County, Texas as the proper
choice of forum for any claim related to attorney’s fees. Id.
Defendants argue that a substantial portion of the events giving
3
rise to the present controversy occurred in Texas, not Louisiana,
which makes this Court the improper venue. (Rec. Doc. 2-1, at 9.)
Finally, Defendants argue that the private and public interest
factors under forum non conveniens weigh in favor of dismissing
this suit and transferring it to Nueces County. Id. at 5.
Plaintiffs argue that the forum selection clause of the GMB
Agreement is irrelevant and not binding on this action. First,
Plaintiffs argue that this dispute pertains to an alleged promise
to pay attorney’s fees in defense of the Rice Fee Dispute, and
that such promise does not arise from the GMB Agreement. (Rec.
Doc. 9, at 3.) As such, Plaintiffs urge this court to ignore the
forum selection provision of the GMB Agreement. As to the pending
action in Nueces County, Plaintiffs ask this Court to note that
they
“are
cross-claim
challenging
in
the
the
[sic]
procedural
Neuces
propriety
County
of
action,
Defendants
as
it
is
fundamentally unrelated to the underlying action pending there. As
it relates to forum non conveniens and the other venue questions
currently pending, Plaintiffs merely asks [this] Court to consider
that the Defendants’ choice of forum is controversial, and may
have been inappropriate under that forum’s laws.” Id. at fn. 3
(emphasis in original). Second, Plaintiffs argue that the Gilbert
4
private and public factors under forum non conveniens do not
warrant dismissal of this action. Id. at 3-9.1
LEGAL STANDARD
The Declaratory Judgment Act provides, in relevant part: “In
a case of actual controversy within its jurisdiction . . . any
court of the United States, upon the filing of an appropriate
pleading, may declare the rights and other legal relations of any
interested party seeking such declaration, whether or not further
relief is or could be sought. 28 U.S.C. § 2201(a). In Wilton v.
Seven Falls, the Supreme Court made it clear that, because the
Declaratory Judgment Act is “‘an enabling Act, which confers a
discretion on the courts rather than an absolute right upon the
litigant’,”
the
district
court
has
“unique
and
substantial
discretion in deciding whether to declare the rights of litigants.”
Wilton
v.
Seven
Falls
Co.,
515
U.S.
277,
287-88
(1995).
A
determination that this court has jurisdiction does not determine
whether the declaratory action should be decided or dismissed. Id.
at 282.
Following
Orix
Credit
Alliance
v.
Wolfe,
to
decide
a
declaratory action this Court is required to determine: (1) whether
the declaratory action is justiciable; (2) whether this court has
1
Gilbert is reference to Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947).
5
the authority to grant declaratory relief; and (3) whether to
exercise its discretion to decide or dismiss the action. SherwinWilliams Co. v. Holmes Cty., 343 F.3d 383, 387 (5th Cir. 2003)
(citing Orix Credit All., Inc. v. Wolfe, 212 F.3d 891, 895 (5th
Cir. 2000)). For a declaratory action to be justiciable it must
seek to resolve an “actual controversy” rather than an abstract or
hypothetical dispute. Id. Generally, an actual controversy exists
when
“a
substantial
controversy
of
sufficient
immediacy
and
reality exists between parties having adverse legal interests.”
Orix, 212 F.3d at 896. Whether the facts are sufficiently immediate
to establish an actual controversy is a case-by-case inquiry. Id.
The Fifth Circuit has decided that when a state lawsuit is
pending, more often than not, issuing a declaratory judgment will
be tantamount to issuing an injunction—providing the declaratory
plaintiff an end run around the requirements of the Anti–Injunction
Act.2 Texas Emps' Ins. Ass'n v. Jackson, 862 F.2d 491, 506 (5th
Cir.1988). Thus, as a general rule, the district court may not
consider the merits of the declaratory judgment action when 1) a
declaratory defendant has previously filed a cause of action in
state court against the declaratory plaintiff, 2) the state case
The Anti–Injunction Act provides: A court of the United States may not grant
an injunction to stay proceedings in a State court except as expressly
authorized by Act of Congress, or where necessary in aid of its jurisdiction,
or to protect or effectuate its judgments. 28 U.S.C. § 2283. The parties do not
contend, and the Court does not find, that any of the exceptions to the act are
applicable in this case.
2
6
involves the same issues as those involved in the federal case,
and 3) the district court is prohibited from enjoining the state
proceedings under the Anti–Injunction Act. Jackson, 862 F.2d at
506; see also, Samuels v. Mackell, 401 U.S. 66, 73 (1971). The
Court has found that the issuance of a declaratory judgment in
such situations would be antithetical to the noble principles of
federalism and comity. See Jackson, 862 F.2d at 505. However, if
the court has discretion to decide a declaratory judgment, the
Court must balance the following factors in deciding whether to
dismiss the action: 1) whether there is a pending state action; 2)
whether
plaintiffs
filed
suit
in
anticipation
of
a
suit
by
defendant; 3) whether the plaintiff engaged in forum shopping in
bringing the claim; 4) whether any inequalities will ensue by
allowing the declaratory plaintiff to gain precedence in time or
to change forums; 5) whether the federal court is a convenient
forum; and 6) whether retaining the suit would further judicial
economy. St. Paul Ins. Co. v. Trejo, 39 F.3d 585, 590–91 (5th
Cir.1994).
DISCUSSION
Although not briefed by either party, the Court must first
determine whether it has the discretion to decide Plaintiffs’
declaratory judgment action. Second, the Court must determine
whether it will exercise its discretion to decide the present
7
declaratory judgment action. To determine whether this Court has
the discretion decide Plaintiffs’ declaratory judgment action, the
Court
must
determine
whether
the
declaratory
action
is
justiciable. For a declaratory action to be justiciable it must
seek to resolve an “actual controversy” rather than an abstract or
hypothetical dispute. Orix, 212 F.3d at 896. Generally, “an actual
controversy exists when ‘a substantial controversy of sufficient
immediacy and reality exists between parties having adverse legal
interests.”
Orix,
212
F.3d
at
896.
Whether
the
facts
are
sufficiently immediate to establish an actual controversy is a
case-by-case inquiry. Id. Here, the Court finds that the action is
justiciable. See Ross v. Digioia, No. 11-1827, 2012 WL 5877843, at
*6 (E.D. La. Nov. 20, 2012) (finding declaratory action justiciable
where parties disputed existence of an agreement). Specifically,
the parties dispute whether an agreement exists. Such agreement
bears directly on the relationship between the parties and the
money that is or may be owed. Id.
Second, the Court must determine whether it has the authority
to grant declaratory relief. Orix, 212 F.3d at 896. Defendants’
main argument to dismiss this action is that the exact issue before
this Court is currently pending in state court in Nueces County,
Texas. (Rec. Doc. 2; Rec. Doc. 2-2). Plaintiffs only counter by
arguing that they “are challenging the procedural propriety of
Defendants’ cross-claim in the [sic] Neuces county action, as it
8
is
fundamentally
unrelated
to
the
underlying
action
pending
there.” (Rec Doc. 9, at 3, fn. 3.) The issue before this court—
whether an alleged agreement was entered between Plaintiffs and
Defendants— is currently pending in the Nueces County by a crossclaim asserted by Defendant against Plaintiff. (Rec. Doc. 2-2, at
120-124.) In Texas state court, Defendants argue that there is an
“implied in fact” contract which was breached. Id.
Third, under the Anti-Injunction Act, this Court does not
have authority to enjoin the proceedings already commenced in
Nueces County. See EnCana Oil & Gas (USA) Inc. v. Simpson, No. 101171, 2011 WL 1979671, at *4-5 (W.D. La. May 20, 2011). Much like
the court in Simpson, this Court is convinced that Plaintiffs’
attempt to bring a declaratory action in this Court was an attempt
to race to a determination of the legal relationship between the
parties prior to the Nueces County court’s determination. The Court
in Simpson found such a determination sufficient to hold that it
did not have the authority to consider the declaratory judgment
under the Anti-Injunction Act. Id. at *4-5.
However, in the alternative, this Court declines to exercise
its judicial discretion to consider the declaratory action before
it. The language of the Declaratory Judgment Act provides that a
court “may declare the rights and other legal relations of any
interested party seeking such declaration.” 28 U.S.C. § 2201(a)
(emphasis added). “There is . . . nothing automatic or obligatory
9
about the assumption of jurisdiction by a federal court to hear a
declaratory judgment action.” Wilton, 515 U.S. 277, 286 (1995)
(citing E. Bochard, Declaratory Judgments 312–314 (2d ed. 1941)).
However, a district court may not dismiss a request for declaratory
relief on the basis of a whim or personal disinclination. Granite
State Ins. Co. v. Tandy Corp., 986 F.2d 94 (5th Cir.1992) (internal
citations and quotations omitted).
To ensure this Court does not abuse its discretion, it must
address and balance the purposes of the Declaratory Judgment Act
and the factors relevant to the abstention doctrine on the record.
Travelers Ins. Co. v. Louisiana Farm Bureau Fed’n, Inc., 996 F.2d
774, 779 (5th Cir. 1993). The relevant factors, commonly referred
to as the Trejo factors, include (1) whether there is a pending
state court action in which all of the matters in controversy may
be fully litigated, (2) whether the declaratory plaintiff filed
suit in anticipation of a lawsuit filed by the defendant, (3)
whether the declaratory plaintiff engaged in forum shopping in
bringing the suit, (4) whether possible inequities in allowing the
declaratory plaintiff to gain precedence in time or to change forum
exist, (5) whether the federal court is a convenient forum for the
parties and witnesses, (6) whether retaining the lawsuit in federal
court would serve the purposes of judicial economy, and (7) whether
the federal court is being called on to construe a state judicial
decree involving the same parties and entered by the court before
10
whom the parallel state suit between the same parties is pending.
Sherwin–Williams, 343 F.3d at 388 (citing St. Paul Insur. Co. v.
Trejo, 39 F.3d 585, 590–591 (5th Cir.1994)). The Court will address
each of the Trejo factors.
1.
Whether there is a Pending State Court Action
Defendants argue, and Plaintiffs concede, that there is a
pending state court action which addresses the same issue before
this Court. (Rec. Doc. 2, at 1; Rec. Doc. 9, at 3, fn. 3.) The
Fifth Circuit was clear in Sherwin-Williams when it provided that
“if the federal declaratory judgment action raises only issues of
state law and a state case involving the same state law [issue is
pending], generally the state court should decide the case and the
federal court should exercise its discretion to dismiss the federal
suit.” Sherwin-Williams, 343 F.3d at 390. This factor weighs
strongly in favor of dismissal.
2.
Whether Plaintiffs Filed Suit in Anticipation of a Suit
by Defendant
The second factor addresses whether a declaratory plaintiff
is using the declaratory judgment process to gain access to a
federal forum on improper or unfair grounds. Sherwin–Williams, 343
F.3d at 390. In this case, Plaintiffs filed the declaratory
judgment action three days after Defendants filed a cross-claim in
11
Nueces County. Specifically, Defendants filed their cross claim on
March
4,
2016
in
Nueces
County
(Rec.
Doc.
2-2,
at
19)
and
Plaintiffs filed this declaratory judgment action on March 7, 2016
in Civil District Court for the Parish of Orleans. (Rec. Doc. 11.) While Plaintiffs did not file suit in anticipation of a lawsuit
filed by Defendant, due to the temporal proximity of the two
actions, it appears that Plaintiff filed suit in direct response
to
Defendant’s
cross-claim
in
an
attempt
to
access
a
more
convenient forum for themselves. This factor weighs in favor of
dismissal. See Travelers Ins. Co., 996 F.2d at 777.
3.
Whether Plaintiff Engaged in Forum Shopping in Bringing
the Claim
The court in Sherwin-Williams described “forum shopping” as
a “narrower category of federal declaratory judgment lawsuits
filed for reasons found improper or abusive, other than selecting
a forum or anticipating related litigation.” 343 F.3d at 390. By
filing this action in this Court Plaintiffs were not “abusive” or
“improper”. Nor is there evidence that Plaintiff sought this forum
to take advantage of favorable law. Id. at 399. Accordingly, this
factor does not weigh in favor of dismissal.
12
4.
Whether Inequality Will Ensue by Allowing the Plaintiff
to Gain Precedence in Time or to Change Forums
There is no trial date set in this federal court action, and
the
parties
have
not
provided
information
regarding
the
disposition of the parallel state court action other than that it
is currently on-going. Thus, there is no indication that Plaintiffs
are gaining a precedence in time, which does not weigh in favor of
dismissal. See Branton Tools, LLC v. Exco Operating Co., LP, No.
14-2417, 2015 WL 4662004, at *7 (W.D. La. Aug. 5, 2015).
However, if judgment were rendered in favor of Plaintiff it
may result in of res judicata or issue preclusion. Again, the issue
in this Court is whether there is an implied-in-fact contract
between Plaintiffs and Defendants. The same issue between the same
parties, while on cross-claim, is before the Nueces County court.
This weighs in favor of dismissal. Cf. Ironshore Specialty Ins.
Co. v. Tractor Supply Co., 624 F. App’x 159, 168 (5th Cir. 2015).
5.
Whether the Federal Court is a Convenient Forum for the
Parties and Witnesses
The fifth factor addresses efficiency considerations—whether
this Court is a convenient forum for the parties and witnesses and
whether
retaining
the
lawsuit
would
serve
judicial
economy.
Sherwin–Williams, 343 F.3d at 391. Plaintiffs argue that this forum
is more convenient than Nueces County, Texas. (Rec. Doc. 13.)
13
Plaintiffs point to the Fifth Circuit’s “100 mile rule” which is
generally used in a court’s forum non conveniens analysis. In re
Volkswagen of America, Inc., 545 F.3d 304, 316 (5th Cir. 2008).
Plaintiffs argue that they are five-hundred and fifty-five miles
from the Nueces County court. (Rec. Doc. 13, at 6.) Further,
Plaintiffs allege that the average distance between the identified
witnesses and this Court is seventy-five and one half miles less
than the average distance between the witnesses and the Nueces
County court. Id. Plaintiffs also indicate that Defendants are
located five-hundred and forty-three miles from this Court and
one-hundred and forty-three miles from the Nueces County court.
Id.
Either
court
which
decides
this
matter
is
relatively
inconvenient for the parties. However, the parties have already
commenced litigation in Nueces County, Texas prior to Plaintiffs
declaratory
judgment
action
in
this
Court.
The
parties
will
continue to litigate this issue, with others, in Nueces County.
Accordingly, the Court finds this factor weighs minimally in favor
of dismissal.
6.
Whether Retaining the Lawsuit in Federal Court Serves
the Purposes of Judicial Economy
The
sixth
Trejo
factor
also
addresses
efficiency
considerations—whether this Court is a convenient forum for the
parties and witnesses and whether retaining the lawsuit would serve
14
judicial economy. Sherwin–Williams, 343 F.3d at 391. The sixth
factor also weighs in favor of abstention as judicial economy will
be better served in Nueces County, Texas. Again, both of the
parties are in litigation in Nueces County. In fact, allowing
Plaintiff to maintain its declaratory judgment action in this Court
would be inefficient for both parties, as both would be required
to litigate issues in this forum and in Nueces County, Texas.
Accordingly, this factor favors dismissal.
7.
This Court is Not Being Called on to Construe a State
Judicial Decree Involving the Same Parties and Entered
by the Court Before Whom the Parallel State Suit Between
the Same Parties Pending
Accordingly, this factor is neutral. Chevron U.S.A., Inc. v.
Cureington, No. 10-0764, 2011 WL 1085661, at *9 (W.D. La. Feb. 18,
2011).
In conclusion, five of the seven Trejo factors weigh in favor
of dismissal. Thus, even if this court had the authority to
consider this declaratory judgment action without violating the
Anti–Injunction Act it would abstain from doing so under the facts
and circumstances of this case.
15
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendants’ Motion to Dismiss for
Improper Venue (Rec. Doc. 2) is GRANTED. Plaintiffs’ cause of
action is DISMISSED WITHOUT PREJUDICE.
New Orleans, Louisiana this 8th day of July, 2016.
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
16
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