Scott & Fetzer Co. v. McCarty, C 76-675.

• Court: United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
• Writing for the Court: Norman R. Fisher, Jr., Cleveland, Ohio, Erwin G. Goovaerts, Franklin, N. J., for defendant
• Citation: 450 F. Supp. 274
• Parties: The SCOTT & FETZER CO., Plaintiff, v. John S. McCARTY, Defendant.
• Docket Number: No. C 76-675.,C 76-675.
• Decision Date: 04 February 1977

450 F. Supp. 274

The SCOTT & FETZER CO., Plaintiff,
v.
John S. McCARTY, Defendant.

No. C 76-675.

United States District Court, N. D. Ohio, E. D.

February 4, 1977.

450 F. Supp. 275

Barry L. Springel, Cleveland, Ohio, for plaintiff.

Norman R. Fisher, Jr., Cleveland, Ohio, Erwin G. Goovaerts, Franklin, N. J., for defendant.

MEMORANDUM OPINION AND ORDER WITH FINDINGS OF FACT AND CONCLUSIONS OF LAW

LAMBROS, District Judge.

I. FACTS

There are no sharply disputed questions of fact. Plaintiff Scott & Fetzer Company has brought this action (the Ohio action) against defendant John S. McCarty, seeking a declaratory judgment that plaintiff's termination of a Distributor Agreement with the defendant was in accordance with the terms of that agreement and was not violative of the New Jersey Franchise Practices Act. Subsequently, defendant in this case brought suit in the Superior Court of New Jersey (the New Jersey action) seeking damages for termination of the same Distributor Agreement as violative of the New Jersey Franchise Practices Act and as violative of New Jersey common law. The New Jersey action has been removed to the United States District Court for the District of New Jersey. The Kirby Co., alleged to be a subsidiary corporation and/or division of the Scott & Fetzer Company, is a party-defendant in the New Jersey action.

Plaintiff in this action has its principal place of business in Ohio. Defendant resides in New Jersey. Both the Ohio and New Jersey actions concern the same Distributor Agreement. Both actions include the Scott & Fetzer Company and John S. McCarty as adverse parties.

Plaintiff has manifested an intention, in the event of trial, of calling three witnesses who reside in the Northern District of Ohio. Plaintiff has submitted evidence that relevant documents regarding this transaction are located in the Northern District of Ohio.

Plaintiff has moved for a preliminary injunction enjoining the defendant, John S. McCarty, and his attorneys from further prosecuting Civil Action No. 76-1775 now pending in the United States District Court for the District of New Jersey, (the New Jersey action) and further ordering defendant and his attorneys to enter into a stipulation with plaintiff to stay all further proceedings in said action. Defendant has made a cross motion seeking either to dismiss the complaint in this action, to transfer this cause from this district to the United States District Court for the District of New Jersey, or to stay all further proceedings in this cause until the conclusion of Civil Action No. 76-1775 now pending in the United States District Court for the District of New Jersey.

II. THE COUNTERCLAIM ISSUE

Plaintiff asserts that the relief sought in the New Jersey action is properly the subject of a compulsory counterclaim in this action. The New Jersey action involves the same contract and the same facts involving that contract. McCarty's claim that the contract violates New Jersey common law, and McCarty's prayer for damages in the New Jersey action, are both matters arising out of the same transaction or occurrence at issue in this action. All claims set forth by McCarty in the New Jersey action constitute compulsory counterclaims in this action.

450 F. Supp. 276

The requirement of Rule 13(a), Fed.Rules Civ.Proc., that a pleading shall state as a counterclaim any claim which the pleader has against any opposing party if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim, is particularly directed against one who fails to assert a counterclaim in one action and then institutes a second action in which that counterclaim becomes the basis of the complaint. Southern Construction Co. v. United States, 371 U.S. 57, 83 S.Ct. 108, 9 L.Ed.2d 31 (1962). In the absence of unusual circumstances, subsequent actions having as their basis claims properly assertable as compulsory counterclaims in a prior action have been enjoined or dismissed. United Fruit Company v. Standard Fruit and Steamship Company, 282 F.Supp. 338 (D.Mass.1968); Jepco Corp. v. Greene, 171 F.Supp. 66 (S.D. N.Y.1959). However, cross-motions in this action have made several alternatives available to assure that only one court will consider these related causes of action. In such a case all alternatives must be considered to determine the best method of realizing Rule 13(a)'s single-suit objective. Columbia Plaza Corporation v. Security National Bank, 173 U.S.App.D.C. 403, 525 F.2d 620 (1975).

III. BALANCE OF CONVENIENCE

While a court first acquiring jurisdiction of a controversy should, as a general rule, enjoin subsequent proceedings in other jurisdictions, countervailing equitable considerations may mitigate against issuance of such an injunction. Wheeling-Pittsburgh Steel Corp. v. Donovan Wire and Iron Company, 416 F.Supp. 602 (N.D.Ohio 1976). Upon a motion to transfer the case to a district where a subsequent related action was filed, a balance of convenience must be determined. Barber-Greene...