Compumedics USA, Inc. v. Capital Partners Financial Group USA, Inc.

Filing 86

MEMORANDUM OPINION AND ORDER. Signed by Judge Royce C. Lamberth. (mgr)

FILED
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION

COMPUMEDICS USA, INC.

FEB 0
62018

TCTC

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PLAINTIFF,

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v.

Civil No. SA-16-CV-00522-RCL

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CAPITAL PARTNERS FINANCIAL GROUP
USA, INC.

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DEFENDANT &

THIRD-PARTY PLAINTIFF

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v.

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HUMBLE SURGICAL HOSPITAL, LLC;
AND MUSTAPHA KIBIRIGE, M.D.

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THIRD-PARTY DEFENDANTS

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Memorandum Opinion:
Denying the Third-Party Defendants' Motion to Dismiss the Third-Party Complaint

The third-party defendants in this

caseHumble Surgical Hospital and Mustapha

Kibirige (collectively "Humble Surgical")ask the Court to dismiss Capital Partners's third-party
complaint against them. (ECF #5 5). Humble Surgical argues (1) that the Court lacks subject-

matter jurisdiction over the third-party complaint because the Humble Surgical and Capital
Partners are non-diverse parties, and (2) that venue is improper in this Court because another action
is pending in Harris County covering the same matters alleged in the third-party complaint. The

Court will DENY Humble Surgical's motion in its entirety.

THE MOTION TO DISMISS FOR LACK OF SUBJECT-MATTER JURISDICTION
The problem that Humble Surgical presents to the Court sounds like a sample problem
from a first-year civil procedure class.
The plaintiffCompumedics, a citizen of North

Carolinafiled suit against the

defendantCapital Partners, a citizen of Texasin Minnesota state court. Compumedics asserted
only state-law claims against Capital Partners. Capital Partners removed the action to the United
States District Court for the District of Minnesota pursuant to 28 U.S.C.

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1441. The basis for

removal was diversity jurisdiction because the parties are citizens of different states and the amount
in controversy exceeds $75,000. The suit was then transferred to the Western District of Texas.

Once the suit arrived in the Western District of Texas, Capital Partners impleaded

Humble Surgical, also a citizen of Texas, under Rule 14.1 Capital Partners alleges that Humble
Surgical is "liable to [Capital Partners] for all or part of Compumedics's claim against Capital

Partners." (ECF #40 at 2). Given these facts, does the Court have subject-matter jurisdiction over

the impleader claim against Humble Surgical?
The Court clearly does not have original jurisdiction over the impleader claim. First,

Capital Partners asserts no federal claims against Humble Surgical. Therefore, subject-matter

jurisdiction over the impleader claim cannot lie in federal-question jurisdiction.

(See

28 U.S.C. §

1331). Second, although the value of the underlying claim exceeds $75,000, Capital Partners and

the Humble Surgical Parties are all citizens of Texas. And because they are non-diverse parties,
subject-matter jurisdiction over the impleader claim cannot lie in diversity jurisdiction.
U.S.C.

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(See

28

1332(a)).

In its reply brief, Humble Surgical incorrectly asserts that it is joined under Rule 19. But Rule 19 does not govern
third-party practice. Third-party practice is properly governed by Rule 14, under which a "defending party may, as
third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the
claim against it." (FED R. Civ. P. l4(a)(l)). That is exactly what Capital Partners did in this case.
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Because the Court does not have original jurisdiction over the impleader claim, the

Court must examine whether it has supplemental jurisdiction over the impleader claim pursuant to
28 U.S.C. § 1367. Subsection (a)

of that statute says:

Except as provided in subsections (b) and (c) or as expressly
provided otherwise by Federal statute, in any civil action of which
the district courts have original jurisdiction, the district courts shall
have supplemental jurisdiction over all other claims that are so
related to claims in the action within such original jurisdiction that
they form part of the same case or controversy under Article III of
the United States Constitution. Such supplemental jurisdiction shall
include claims that involve the joinder or intervention of additional
parties.
(28 U.S.C. § 1367(a)). First, there is a civil action over which the Court has original jurisdiction

Compumedics's suit against Capital Partners. The Court's original diversity jurisdiction over that
suit is unchallenged. Second, the impleader claim at issue is "so related" to the claims in that

action as to "form part of the same case or controversy under Article III." (Id.). The impleader
claim seeks indemnity/contribution for the exact claims asserted in the Compumedics action. No
claim could be more related. And third, as the last sentence of § 1367(a) makes clear, it does not

matter that the impleader claim arises from third-party practice.

Humble Surgical argues that

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1367(b) prevents the exercise of supplemental

jurisdiction over the impleader claim. The relevant portion of that subsection says:
In any civil action of which the district courts have original
jurisdiction founded solely on section 1332 of this title, the district
courts shall not have supplemental jurisdiction under subsection (a)
over claims by plaintiffs against persons made parties under Rule
Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure.
(28 U.S.C.

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1367(b)). Humble Surgical argues that because it is party to this suit pursuant to the

operation of Rule 14 that supplemental jurisdiction cannot be had over the claim against it. But
this is incorrect. The Court only lacks supplemental jurisdiction over claims by "plaintiffs" against

persons made parties under Rule 14. But "plaintiffs" and "third-party plaintiffs" are not the same.
So the impleader claim is not a claim by a plaintiff against persons made parties under Rule 14.

Rather, it is a claim by a defendant/third-party plaintiff against persons made parties under Rule
14. In the context of this suit, only hypothetical claims by Compumedics (the lone plaintiff in this

case) against Humble Surgical would be barred by

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1367(b). But there are no such claims.

As such, it is clear that the Court has supplemental jurisdiction over Capital Partners's

impleader claim against Humble Surgical. Therefore, Humble Surgical's motion to dismiss that
claim pursuant for lack of subject-matter jurisdiction will be DENIED.

THE MOTION TO DISMISS FOR IMPROPER VENUE
Humble Surgical argues that the impleader claim should also be dismissed for improper
venue. Humble Surgical's primary argument is that the same facts and claims asserted in the

impleader claim were also asserted in another action brought by Capital Partners against Humble
Surgical in Texas state court in Harris County. Therefore, according to Humble Surgical (and

according to Compumedics, who also chimed in on this issue), the impleader claim should be

dismissedor at least stayedin accordance with the prior-action-pending doctrine.
v.

(See Adams

Ca. Dep 't of Health Sen's., 487 F.3d 684, 688 (9th Cir. 2007); Curtis v. Citibanck, NA., 226

F.3d 133, 138-39 (2d Cir. 2000)). Not only that, but it appears that Capital Partners has taken

contrary positions in these two suits. (See ECF #56 at 3-4 (relating how Capital Partners alleged
in the Harris County action that Humble Surgical agreed to pay it for the sleep-study systems at
issue in this case, but alleged in this Court that Humble Surgical agreed to pay Compumedics
directly for the sleep-study systems)).
The Court is not persuaded by these contentions. Capital Partners has amended its
claims in the Harris County action, withdrawing the claims that relate to the dispute before this

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Court. As such, the problems ofjudicial inefficiency and inconsistent judgments that motivate the

prior-action-pending doctrine are no longer of concern. And to the extent that any concerns
remain, the Court is confident that the application of resjudicata as necessary will likewise avoid

judicial inefficiency and inconsistent judgments.

Therefore, the Court will DENY Humble

Surgical's motion to dismiss for improper venue.

CONCLUSION
For the reasons given above, the Court will DENY in its entirety the third-party

defendants' motion to dismiss the third-party complaint pursuant to FED. R. Civ. P. 12(b)(1) and/or
I 2(b)(3).

A separate order wifi issue.

SIGNED this

dayofFebruary, 2018.

HON RABLE ROYCE LAMBERTH
UNITED STATES DISTRICT JUDGE

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