Bryfogle v. Carvel Corp.

• Decision Date: 14 July 1987
• Docket Number: Civ. A. No. 87-983.
• Citation: 666 F. Supp. 730
• Parties: James C. BRYFOGLE and Mitzi Bryfogle v. CARVEL CORPORATION.
• Court: U.S. District Court — Eastern District of Pennsylvania

666 F. Supp. 730

James C. BRYFOGLE and Mitzi Bryfogle v. CARVEL CORPORATION.

Civ. A. No. 87-983.

United States District Court, E.D. Pennsylvania.

July 14, 1987.

Bernard V. O'Hare, Bethlehem, Pa., for plaintiff.

Duane Tyler, Philadelphia, Pa., for defendant.

MEMORANDUM AND ORDER

HUYETT, District Judge.

Plaintiffs, James and Mitzi Bryfogle ("the Bryfogles") entered into a written franchise agreement ("License Agreement") with defendant, Carvel Corporation ("Carvel") on May 13, 1975 under which the plaintiffs operated a Carvel ice cream store. The parties continued as franchisor and franchisee until the License Agreement expired in October, 1985, when the Bryfogles vacated the premises. On January 26, 1986, Carvel terminated its lease of the store. Subsequently, the Bryfogles entered into a lease for the identical property and commenced business on December 5, 1986, opening a store named "Mitzi's Ice Cream" which sold ice cream as well as greeting cards and gift items. The Bryfogles have, according to their complaint, completely remodeled the store thus removing any vestiges of Carvel.

On January 8, 1987, Carvel commenced an action in the Supreme Court of the State of New York, County of Westchester, pursuant to paragraph 28 of the License Agreement, which reads, in pertinent part:

It is mutually understood and agreed that this Agreement shall be deemed to have been made in the State of New York, County of Westchester, and that any and all performance thereunder, or breach thereof shall be interpreted, governed and construed pursuant to the laws of the State of New York, and the parties consent that New York State shall be a forum where any cause of action arising under this Agreement may be instituted.

In the New York case, Carvel sought to enjoin the Bryfogles from operating their store on the grounds that they violated the non-competition clause in paragraph 31 of the License Agreement, which reads:

To prevent dilution of the exclusivity of the valuable Carvel know-how and Carvel trade secrets to be acquired by Licensee hereunder, it is agreed as part of the consideration to, and inducement for, Licensor entering into this agreement that in the event Licensee sells the Carvel Store or abandons the Carvel Store provided for in this license, or in the event this license is terminated for any reason except for Licensor's breach, then for a period of three (3) years next following such event Licensee shall not directly or indirectly engage in whole or in part in the production, distribution or sale of ice cream or other frozen desserts whether as a proprietor, employee, officer, director, agent, joint venturer, partner or other capacity whatsoever, within a radius of two (2) miles of the site of the within Carvel store. The provisions of this paragraph shall survive termination, abandonment or other cancellation of this agreement.

Additionally, Carvel sought an accounting of the Bryfogles profits, damages for trademark infringement, and past due monies owed to Carvel.

The Bryfogles instituted an action in the Court of Common Pleas of Northampton County, Pennsylvania, seeking to enjoin Carvel from prosecuting the New York action. The Court of Common Pleas granted the injunction of February 20, 1987.¹ Carvel then removed the action to this court.

Although I had originally scheduled an injunction hearing in this matter, the parties agreed that the case should be resolved on the basis of the pending motions. Pending are the Bryfogles' motion to remand and Carvel's motion to dismiss the complaint and to dissolve the preliminary injunction, or in the alternative, for summary judgment. For the reasons that follow, the motion to remand will be denied, summary judgment shall be granted in favor of Carvel, and the preliminary injunction shall be dissolved.

I. Motion to Remand

An action is removable only if it could have originally been brought in federal court. 28 U.S.C. § 1441(a). Carvel asserts that this case could have been brought in this court pursuant to 28 U.S.C. § 1332. It is undisputed that the citizenship of the parties is diverse. Plaintiffs argue, however, that the amount in controversy does not exceed ten thousand dollars.

The right of removal is decided by the pleadings, viewed as of the time when the petition for removal is filed. Albright v. R.J. Reynolds Tobacco Co., 531 F.2d 132, 135 (3d Cir.), cert. denied, 426 U.S. 907, 96 S.Ct. 2229, 48 L.Ed.2d 832 (1976). In their complaint, the Bryfogles seek to enjoin the New York action and also request "such damages as the court deems mete and just including exemplary damages and attorney's fees." (Complaint at 9). In a case where, as here, plaintiffs seek an injunction, the amount in controversy is measured by the value of the interest sought to be protected by the equitable relief requested. Spock v. David, 469 F.2d 1047, 1062 (3d Cir.), stay denied, 409 U.S. 971, 93 S.Ct. 301, 34 L.Ed.2d 235 (1972); Hirsch v. Jewish War Veterans, 537 F.Supp. 242, 243 (E.D.Pa.1982).

In the instant case, the Bryfogles seek to stop a suit in New York. The outcome of the New York action could cause the Bryfogles to lose considerably more than ten thousand dollars, since Carvel seeks damages in excess of six million dollars. See motion to remand ex. A (Carvel complaint). Moreover, they could be forced to move their business location and plaintiffs aver that at "considerable expense" they remodeled the store. Complaint ¶ 10; see also motion to dismiss ex. 7 at 9. Plaintiffs also seek monetary damages, despite their effort to downplay this part of their prayer for relief by calling it an "afterthought". See pls' brief sur motion to remand at 9.

Unless it appears to a legal certainty that the claim set forth in the complaint is for less than the jurisdictional amount, the amount in controversy requirement is deemed satisfied. St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938); Bloom v. Barry, 755 F.2d 356, 358 (3d Cir.1985) (applying legal certainty test). Upon review of the pleadings, I find that the Bryfogles seek to protect interests which exceed ten thousand dollars, and that it does not appear to a legal certainty that the amount in controversy is less than the jurisdictional amount. Thus, the amount in controversy requirement is satisfied.

Plaintiffs' second argument for remand is that the Pennsylvania action is ancillary to the New York action and is therefore not removable. Plaintiffs rely on cases which have held that proceedings ancillary to an action pending in state court should not be removed. See, e.g., International Org. Masters, Mates & Pilots, Local No. 2 v. International Org. Masters, Mates & Pilots, 342 F.Supp. 212 (E.D.Pa.1972); Overman v. Overman, 412 F.Supp. 411 (E.D. Tenn.1976); Nowell v. Nowell, 272 F.Supp. 298 (D.Conn.1967); Hedrick v. Santa Fe Trail Transp. Co., 74 F.Supp. 805 (W.D. Mo.1947). Initially, I note that I am not persuaded that this Pennsylvania action, which seeks to stop a New York action, in "ancillary" to the New York case. More importantly, however, the reasoning of the cases on which the Bryfogles rely is inapposite. These cases hold that remand is appropriate where the federal court action is essentially a part of the state court action, because of the difficulties and inefficiencies of litigating what is, in essence, one action in two different forums. "Bifurcation of a case into two forums may do it `practical violence.' From a pragmatic viewpoint, it `would be wasteful to have the appendage in federal court when the principal claim is being litigated in state court.'" International Org. Masters, 342 F.Supp. at 214 (citations and footnotes omitted). In the present case, plaintiffs argue that this action is ancillary to the New York action; yet a remand to Pennsylvania state court would not obviate the problem of litigating one action in two forums since litigation would still be occurring in both Pennsylvania and New York state courts. In conclusion, I find this argument for remand to be without merit.

The Bryfogles next argue that Carvel waived its right to remove. They argue that this action is an answer or an affirmative defense to the New York action, only different from the garden-variety defensive pleading in the "unimportant circumstance that it was filed in Pennsylvania" as a separate complaint. Pls. brief sur motion to remand at 13. Thus, plaintiffs conclude that Carvel is really a plaintiff and cannot remove since, under 28 U.S.C. § 1441, only defendants have the right to remove. There is no merit to this argument. Carvel is plainly a defendant in this action; it instituted no action in Pennsylvania and is involved in this case only because it must defend itself.

Alternatively, the Bryfogles argue that since Carvel could have sued plaintiffs in federal court but chose a New York forum, Carvel "spurned" a federal arena and waived its right to a federal forum, even by removal. The right of removal may be lost or waived, but the intent to waive removal must be clear and unequivocal. Haun v. Retail Credit Co., 420 F.Supp. 859, 863 (W.D.Pa.1976); Carpenter v. Illinois Cent. Gulf R.R., 524 F.Supp. 249, 251 (M.D.La. 1981). Plaintiffs have presented no evidence that Carvel sought to waive removal and no stipulation about waiver appears in the License Agreement. The right to remove may also be waived if a defendant takes substantial defensive action in state court before petitioning for removal. Haun, 420 F.Supp. at 863. In this case, Carvel did not defend itself in state court and filed for removal within one day of the issuance of the injunction. Thus, I conclude Carvel did not waive its right to remove this action.

Lastly, plaintiffs contend that Carvel's motives for removal to "hie the case back to New York" are an improper use of the removal statute. It is, of course, always true that a defendant will remove only when it perceives removal to be an...