Chaganti & Associates, P.C. v. Nowotny

• Decision Date: 05 December 2006
• Docket Number: No. 05-2065.,Nos. 05-1101/05-2075.,s. 05-1101/05-2075.,05-2065.
• Citation: 470 F.3d 1215
• Parties: CHAGANTI & ASSOCIATES, P.C., Appellant, v. Thomas NOWOTNY; Roger V. Vardeleon, Appellees. In re Chaganti & Associates, P.C., Petitioner.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1215

470 F.3d 1215

CHAGANTI & ASSOCIATES, P.C., Appellant, v. Thomas NOWOTNY; Roger V. Vardeleon, Appellees In re Chaganti & Associates, P.C., Petitioner.

Nos. 05-1101/05-2075.

No. 05-2065.

United States Court of Appeals, Eighth Circuit.

Submitted: September 29, 2006.

Filed: December 5, 2006.

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Naren Chaganti, Los Angeles, CA, for Appellant/Petitioner.

Neal F. Perryman, Winthrop B. Reed, III, Sandra Sperino, Stephen M. Durbin, Lewis & Rice, St. Louis, MO, for Appellees.

Before RILEY and COLLOTON, Circuit Judges, and KYLE¹, District Judge.

COLLOTON, Circuit Judge.

Chaganti & Associates, P.C., ("C & A"), brought an action in Missouri state court alleging that the defendants, Thomas Nowotny and Roger Vardeleon, interfered with the corporation's economic advantage, conspired to injure its business, and restrained trade. Nowotny and Vardeleon removed the case to the United States District Court for the Eastern District of Missouri, and the district court denied C & A's motion for remand.

Roughly a year and a half later, the district court found that all parties had agreed to settle the case, and granted the defendants' motion to enforce settlement. After C & A's principal, Dr. Suren Chaganti, refused to sign the settlement documents, the court held C & A in contempt of court. C & A appeals the district court's denial of remand, the grant of the defendants' motion to enforce settlement, and several other rulings. C & A also petitions for a writ of mandamus to vacate the court's contempt and sanctions order. A panel of this court consolidated these matters and granted a stay pending appeal of the district court's contempt and sanctions order. We now deny the petition for writ of mandamus and affirm all of the district court's orders, except for the order imposing sanctions for contempt of court.

I.

Chaganti and Associates, P.C., is a corporation owned entirely by Suren Chaganti ("Dr.Chaganti"), a psychiatrist. Dr. Chaganti maintained staff privileges at the St. Anthony's Medical Center in St. Louis, Missouri. While Dr. Chaganti was at St. Anthony's, the medical center's Behavioral Health Care Review Committee began an inquiry into his practice. Thomas Nowotny was chair of the Review Committee. Based on the results of the committee's inquiry, Roger Vardeleon, then president of the St. Anthony's medical staff, sent Dr. Chaganti a letter in March 2002. The letter stated that Dr. Chaganti's staff privileges could be revoked if he did not fulfill certain certification and educational requirements. Dr. Chaganti did not fulfill these requirements, and in June 2003, the St. Anthony's Medical Executive Committee recommended that the medical center terminate Dr. Chaganti's staff privileges.

On February 20, 2003, several months before the Medical Executive Committee recommended that Dr. Chaganti's privileges be terminated, C & A filed a petition in St. Louis City Circuit Court alleging that Nowotny and Vardeleon had interfered with C & A's economic advantage, conspired to injure its business, and restrained trade. The petition did not indicate the state or federal laws on which the claims were based. On March 28, 2003, Nowotny and Vardeleon filed a motion to transfer the case within the Missouri court system to St. Louis County. In C & A's response to this motion, filed on April 4, C & A alleged for the first time that Nowotny and Vardeleon had "violated antitrust laws of the United States." Based on this allegation, Nowotny and Vardeleon filed a notice of removal in the United States District Court for the Eastern District of Missouri on April 18, 2003. C & A then moved to remand the case to state court on the ground that removal was untimely, but the district court denied the motion.

After the case was removed to federal court, Winthrop Reed, an attorney for Nowotny and Vardeleon, began to discuss the possibility of settlement with C & A's attorney, Naren Chaganti ("Naren"). According to Reed's sworn declaration, on August 25, 2004, he and Naren entered into a settlement agreement on behalf of C & A, Nowtony, Vardeleon, and St. Anthony's Medical Center. According to Reed, the agreement had the following terms: Dr. Chaganti agreed to complete specified educational requirements, dismiss this case and another he had filed in state court, sign a mutual release, and execute a letter withdrawing his application for reappointment to the medical staff at St. Anthony's. After all parties executed the mutual release, the executed documents would be held in escrow. The Medical Executive Committee then would be notified that the matter was settled and would conclude its investigation of Dr. Chaganti. Provided that the Committee closed its investigation and determined that it was not required to report Dr. Chaganti to the National Practitioners Data Bank, the executed documents would be released from escrow.

On August 27, 2004, the parties filed a joint motion with the district court requesting an extension of time on all dates. The motion advised the court that the parties had reached an "agreement in principle," and requested additional time to conclude settlement arrangements. In September 2004, Reed drafted the documents called for by the alleged agreement and gave them to Naren for review. According to Reed's declaration, Naren approved these documents and said that Dr. Chaganti would sign them. Reed avers that on October 1, Naren informed him that Dr. Chaganti had decided that he would not withdraw his application for reappointment to St. Anthony's, and thus would not sign the settlement documents.

After Dr. Chaganti declined to sign the settlement documents, Nowotny and Vardeleon filed a motion to enforce the alleged settlement. Reed attached a sworn declaration describing the course of settlement negotiations, and he also attached the unsigned settlement documents. Chaganti's response denied that any such agreement existed. On November 30, 2004, the court held a hearing on the motion to enforce settlement, during which the court questioned Reed and Naren about their negotiations. Naren acknowledged that he had discussed the possibility of settlement with Reed, but insisted that they had reached no agreement and that he had no authority to settle the case. The court also spoke briefly with Dr. Chaganti by telephone during the hearing.

At the close of the hearing, the court ruled that Naren did have authority to enter into a settlement agreement and that he had done so. Consequently, the court granted Nowotny and Vardeleon's motion to enforce settlement and ordered Dr. Chaganti to "execute the required documents necessary to effectuate the parties' settlement of this matter within ten (10) days." (J.A. at 336). The court also warned C & A that "[f]ailure to comply with this order may result in the imposition of sanctions." (Id.). Dr. Chaganti never signed any of the settlement documents and on April 14, 2005, the court granted the defendants' motion to hold C & A in contempt, sanctioning C & A five hundred dollars per day until Dr. Chaganti signed the settlement documents. On April 15, 2005, C & A filed a petition for writ of mandamus challenging this ruling, and on August 23, 2005, we stayed the ruling pending appeal.

II.

C & A appeals the district court's denial of its motion to remand the case to Missouri state court on the ground that removal to federal court was improper. We review de novo the district court's exercise of removal jurisdiction and denial of a motion to remand. United States v. Todd, 245 F.3d 691, 693 (8th Cir.2001).

The federal removal statute provides that a civil defendant generally must file a notice of removal within thirty days of receiving the initial pleading setting forth the claim of relief. 28 U.S.C. § 1446(b). The statute also provides, however, that if the "case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant . . . of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable." Id.

Under the "well-pleaded complaint rule," a case in which federal jurisdiction is based on a federal question ordinarily is not removable unless the "federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). C & A's original petition was entitled "Petition for Interference in Business Advantage; Conspiracy to Injure a Business; Unlawful Restraint of Trade." (J.A. at 19-27). It made no reference to any federal statute and did not advance any claim that was necessarily based on federal law. The only legal citation in the petition referred to a business interference case decided by the Missouri Supreme Court under Missouri law. (Id. at 21, 24). The most natural reading of the petition was that it contained claims based on Missouri law. The petition did not include allegations from which the defendants reasonably should have ascertained that the case was removable.

C & A first asserted that it was advancing a federal claim on April 4, 2003, in its response to the defendants' motion to transfer. Unlike C & A's initial complaint, the response contained an explicit reference to "antitrust laws of the United States." At that point, it was clear that the petition raised a federal claim, and the thirty-day period for removal commenced at that time.

C & A contends that under the "artful pleading doctrine," the case was removable when C & A filed its petition in February. The artful pleading doctrine, a corollary to the well-pleaded complaint rule, allows a defendant to remove a case to federal court when the plaintiff has attempted to defeat removal by failing to plead a necessary federal question. Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 475, 118...