Goughnour v. Hayward Baker, Inc.

Filing 8

MEMORANDUM OPINION AND ORDER DENYING 4 PLAINTIFF'S MOTION TO REMAND. Further, Goughnours motion included a request for attorneys fees accrued in relation to the motion to remand, which is also DENIED. Signed by Senior Judge Frederick P. Stamp, Jron 2/6/2017. (copy to counsel via CM/ECF) (nmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
R. ROBERT GOUGHNOUR,
an individual,
Plaintiff,
v.

Civil Action No. 5:16CV191
(STAMP)

HAYWARD BAKER, INC.,
a corporation,
Defendant.
MEMORANDUM OPINION AND ORDER
DENYING PLAINTIFF’S MOTION TO REMAND
This is a declaratory judgment and breach of contract case
involving a licensing agreement for the rights to practice a patent
and a pending patent application.

The defendant removed the case

to this Court, citing diversity jurisdiction under 28 U.S.C.
§ 1332(a).

The plaintiff filed a motion to remand, arguing that

the amount in controversy does not exceed $75,000 exclusive of
interest and costs as required by § 1332(a).

For the following

reasons, the plaintiff’s motion is denied.
I.

Background

The plaintiff, Robert Goughnour (“Goughnour”), holds the
rights to United States Patent Number 5,800,090 (“the ‘090 patent”)
and

United

States

Application”).
system

used

Goughnour

Patent

Application

Number

10/352,583

(“the

The art of both patents covers an earthquake drain
in

the

entered

construction

into

a

of

licensing

structural
agreement

foundations.
with

Nilex

Construction, LLC (“Nilex”), permitting Nilex to practice the
patents in exchange for $150,000 and $0.10 per foot of earthquake
drains

installed

by

Nilex

that

practice

the

patents.

The

defendant, Hayward Baker, Inc. (“Hayward Baker”), purchased some of
Nilex’s assets and liabilities, including an assignment of the
licensing agreement to Hayward Baker.

Hayward Baker continued to

pay Goughnour under the licensing agreement through April 2016.
Goughnour alleges that Hayward Baker has since refused to make
payments under the licensing agreement.

Hayward Baker argues that

it is no longer obligated to make payments under the agreement
because, it asserts, the ‘090 patent has expired.

Goughnour seeks

a declaration that the licensing agreement requires Hayward Baker
to make payments for the practice of the ‘090 patent through
January 2023 and an order requiring specific performance.
Goughnour originally filed this civil action in the Circuit
Court of Brooke County, West Virginia.

Hayward Baker removed the

case to this Court, citing diversity jurisdiction.

In the notice

of removal, Hayward Baker alleges that Goughnour is a resident of
Wellsburg, West Virginia, and that Hayward Baker is a Delaware
corporation with its principal place of business in Hanover,
Maryland.

Hayward Baker alleges that the amount in controversy

exceeds $75,000 because it has paid Goughnour over $500,000 since
2014 under the licensing agreement, and would pay at least that
much more through the life of the licensing agreement.

2

II.

Applicable Law

A defendant may remove a case from state court to a federal
court with original jurisdiction.

28 U.S.C. § 1441.

Under 28

U.S.C. § 1332(a), district courts have original jurisdiction where
the dispute is between citizens of different states and the amount
in controversy exceeds $75,000 exclusive of interest and costs.
The

parties

citizenship

must
of

be

each

completely
plaintiff

citizenship of each defendant.”

must

be

meaning
different

that

“the

from

the

Hoschar v. Appalachian Power Co.,

739 F.3d 163, 170 (4th Cir. 2014).
time the action is filed.”

diverse,

Diversity is “assessed at the

Freeport-McMoRan, Inc. v. K N Energy,

Inc., 498 U.S. 426, 428 (1991).
The party seeking removal bears the burden of establishing
federal jurisdiction.
LLC,

460

F.3d

challenged,

the

576,

See In re Blackwater Security Consulting,
583

(4th

defendant

Cir.

must

preponderance of the evidence.

2006).

establish

When

removal

jurisdiction

by

is
a

Strawn v. AT&T Mobility LLC, 530

F.3d 293, 297-98 (4th Cir. 2008).

Further, this Court must

strictly construe its removal jurisdiction and remand if federal
jurisdiction is doubtful.

Hartley v. CSX Transp., Inc., 187 F.3d

422, 425 (4th Cir. 1999).
III.

Discussion

Goughnour does not dispute that the parties are diverse.
Rather, he argues that Hayward Baker fails to show that the amount

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in controversy exceeds $75,000 exclusive of interest and costs. He
argues that the amount of damages involved is speculative at this
time because there is no indication of how many earthquake drains
Hayward Baker may install in the future. Hayward Baker argues that
if Goughnour prevails it will be obligated to pay him more than
$75,000 per year until January 2023 based upon its expected
continued operations and upon payments made from 2014 through April
2016.
In a declaratory judgment action regarding the applicability
of a contract term, the amount in controversy is the value of the
contractual obligation at issue. See Mut. Life Ins. Co. of N.Y. v.
Moyle, 116 F.2d 434, 436 (4th Cir. 1940); Panhandle Farmers Mut.
Ins. Co., Inc. v. Ridge Crest Props., LLC, No. 5:13CV6, 2013 WL
4039948, *3 (N.D. W. Va. Aug. 7, 2013); Darbet, Inc. v. Bituminous
Cas. Corp., 792 F. Supp. 487, 489 (S.D. W. Va. 1992).

Here, the

dispute is over whether Hayward Baker is obligated to pay Goughnour
for the practice of the ‘090 patent through the term of the
licensing agreement.

The value of that obligation is the sum of

the payments Hayward Baker would make through the life of the
licensing agreement.
Hayward Baker points out that in 2014 it paid Goughnour a
total of $224,747 under the agreement.

ECF No. 1-1 at 1.

it paid him a total of $258,477 under the agreement.

Id.

the first four months of 2016, it paid him $101,593.

4

In 2015,
And in
Id.

If

Hayward Baker maintains its current practice of the ‘090 patent and
the Application through the term of the licensing agreement, it
would expect to owe Goughnour at least $200,000 per year—much more
than $75,000.
drain

Further, if Hayward Baker reduced its earthquake

installation

operations

to

only

five

percent

of

past

operations, from May 2016 through January 2023, it would still
expect to owe Goughnour $84,589.60.

See ECF No. 5 at 5 n.1.

Even if the value of the case is limited to Hayward Baker’s
defaulted

payments

from

May

2016

through

the

filing

of

the

complaint, December 2, 2016, those payments would likely exceed
$75,000 exclusive of interest and costs.

Hayward Baker asserts

that it paid Goughnour over $200,000 in 2014 and 2015 each, and
paid him $101,593 in the first four months of 2016 alone.
1-1 at 1.

ECF No.

Thus, based on Hayward Baker’s payment history, this

Court finds that those defaulted payments would more than likely
exceed $75,000 exclusive of interest and costs.

Accordingly, this

Court finds that § 1332(a)’s amount in controversy requirement is
met.
IV.

Conclusion

This Court finds subject matter jurisdiction under 28 U.S.C.
§ 1332(a).

Accordingly, Goughnour’s motion to remand (ECF No. 4)

is DENIED.

Further, Goughnour’s motion included a request for

attorneys fees accrued in relation to the motion to remand, which
is also DENIED.

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IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:

February 6, 2017

/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE

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