Custopharm, Inc. v. ChemWerth, Inc. et al

Filing 82

ORDER GRANTING 53 Motion to Dismiss. Defendants counterclaim for a declaratory judgment is DISMISSED. The remainder of Defendants counterclaims remain pending. Signed by Judge Robert Pitman. (dl)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
CUSTOPHARM, INC.,
Plaintiff,
v.
CHEMWERTH, INC., et al.,
Defendants.

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1:15-CV-841-RP

ORDER
Before the Court is Plaintiff Custopharm, Inc.’s Motion to Dismiss, (Dkt. 53). Plaintiff seeks
dismissal of Defendant Chemwerth, Inc.’s claim for a declaratory judgment that Plaintiff failed to
perform under the services agreement between the two parties. (Mot. Dismiss, Dkt. 53, at 2).
I. STANDARD OF REVIEW
“[T]he Texas Uniform Declaratory Judgment Act is not available to settle disputes already
pending before the court.” Richter, S.A. v. Bank of Am. Nat’l Trust & Sav. Ass’n, 939 F.2d 1176, 1197
(5th Cir. 1991) (internal quotation marks and citations omitted). For example, in John Chezik Buick Co
v. Friendly Chevrolet Co., 749 S.W.2d 591, 594 (Tex. App.—Dallas 1988, writ denied), a Texas appeals
court found that a declaratory judgment counterclaim was not properly brought because the issue
raised by the defendant—that no agency relationship existed—was already before the court as part
of the plaintiff’s case. But the Supreme Court of Texas has noted that “[i]n certain instances . . . a
defensive declaratory judgment may present issues beyond those raised by the plaintiff.” BHP
Petroleum Co. v. Millard, 800 S.W.2d 838, 841 (Tex. 1990) (citations omitted). In determining whether
a defendant’s defensive assertion of a declaratory judgment may proceed, the key question is
therefore whether the defendant’s claim presents issues beyond those already raised in the plaintiff’s
complaint.
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II. DISCUSSION
As a preliminary matter, the Court notes that there appears to be confusion between the
parties as to the scope of Plaintiff’s Motion to Dismiss. It is the Court’s understanding that the
instant motion relates only to Defendant’s claim for a declaration of failed performance (and not to
Defendant’s claims for breach of the services agreement, breach of promissory estoppel, or
attorney’s fees). (See, e.g., Reply, Dkt. 69, at 2 (“[T]he Court should grant Custopharm’s motion to
dismiss with respect to Defendant’s counterclaim for a declaratory judgment.”)). This order applies
only to that claim.
In its Answer and Counterclaims, Defendant “seeks a declaration that [Plaintiff] has failed to
perform services for [the product in question] and that, as a result, Plaintiff is prevented from
enforcing compensation under the Services Agreement and/or enforcing any other agreement
between the parties regarding [the product].” (Ans., Dkt. 19, ¶ 78). In the alternative, Defendant
seeks a declaration that it may “reduce any compensation owed to [Plaintiff] for [the product] to
recover for work on [the product] that had to be repeated as a result of [Plaintiff’s] failed
performance.” (Id. ¶ 79). Defendant maintains that its counterclaim for declaratory judgment “has
greater ramifications than [Plaintiff’s] claims because it will settle all future disputes between the
parties with respect to the royalties under the Services Agreement.” (Resp., Dkt. 60, at 4).
The Court concludes, however, that Defendant’s counterclaim for declaratory judgment
merely restates Defendant’s defenses to Plaintiff’s breach of contract claim. (See, e.g., Pl.’s Original
Pet., Dkt. 1-1, ¶ 42 (“Plaintiff has performed or tendered performance according to the terms of the
Agreement”); id. ¶ 43 (“[Defendant has] materially breached the Agreement . . . by failing to turn
over to Plaintiff its share of revenues according to the terms of the Agreement.”)). Defendant’s
counterclaim for declaratory judgment is therefore not properly before the Court and should be
dismissed.
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III. CONCLUSION
Plaintiff’s Motion to Dismiss, (Dkt. 53), is GRANTED. Defendant’s counterclaim for a
declaratory judgment is DISMISSED. The remainder of Defendant’s counterclaims remain
pending.

SIGNED on March 13, 2018.

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ROBERT PITMAN
UNITED STATES DISTRICT JUDGE

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