Farias v. Bexar County Bd. of Trustees for Mental Health Mental Retardation Services, Nos. 89-5620

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Writing for the Court: Before CLARK, Chief Judge, and GARZA and DAVIS; REYNALDO G. GARZA; CLARK
• Citation: 925 F.2d 866
• Parties: 55 Fair Empl.Prac.Cas. 721, 56 Empl. Prac. Dec. P 40,713, 18 Fed.R.Serv.3d 1396 George FARIAS, Plaintiff-Appellant, v. BEXAR COUNTY BOARD OF TRUSTEES FOR MENTAL HEALTH MENTAL RETARDATION SERVICES, et al., Defendants-Appellees.
• Decision Date: 11 March 1991
• Docket Number: Nos. 89-5620,90-5504

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925 F.2d 866 55 Fair Empl.Prac.Cas. 721,
56 Empl. Prac. Dec. P 40,713, 18 Fed.R.Serv.3d 1396 George FARIAS, Plaintiff-Appellant,
v.
BEXAR COUNTY BOARD OF TRUSTEES FOR MENTAL HEALTH MENTAL
RETARDATION SERVICES, et al., Defendants-Appellees. Nos. 89-5620, 90-5504. United States Court of Appeals,
Fifth Circuit. March 11, 1991.
Rehearing and Rehearing En Banc
Denied April 12, 1991.

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Glen D. Mangum, David Garcia, Jr., Mangum & White, Inc., San Antonio, Tex., for plaintiff-appellant.

James Eddie Ingram, John T. Reynolds, Butler & Binion, and Roy R. Barrera, Sr., Roy R. Barrera, Jr., Nicholas & Barrera, San Antonio, Tex., for Bexar County Bd. of Trustees and Lopez and Rutledge.

Edward Schweninger, San Antonio, Tex., for Bexar County Bd. of Trustees.

Donald J. Walheim, San Antonio, Tex., for Alamo Heights.

Harvey L. Hardy, San Antonio, Tex., for Castle Hills.

Arthur L. Walker, Austin, Tex., for City of Olmos Park.

Charles S. Frigerio, and Baldemar A. Jimenez, Asst. City Attys., Office of the City Atty., San Antonio, Tex., for City of San Antonio.

James A. Kosub, Malinda A. Gaul, Kosub & Gaul, San Antonio, Tex., for Heard, Hall, Smith, Martin & Oliva.

Appeals from the United States District Court for the Western District of Texas.

Before CLARK, Chief Judge, and GARZA and DAVIS, Circuit Judges.

REYNALDO G. GARZA, Circuit Judge:

George Farias sued various defendants in Texas state court alleging federal and state claims. Several of the defendants removed the case to federal court. After a bench trial, the district judge entered judgment in favor of the defendants. Following this judgment, Farias brought a new suit in state court alleging similar claims. The federal district judge enjoined the new suit under the relitigation exception to the Anti-Injunction Act. Farias appeals both the earlier judgment and the later injunction to our court. We affirm the judgment but reverse the grant of injunction.

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AN OVERVIEW

George Farias served as executive director of the Bexar County Mental Health Mental Retardation Center from October 1979 to January 1988. For more than two years, Farias worked without a written contract. Thereafter he worked under a series of written letter agreements. Farias accepted his last written employment contract in January 1987. That contract expired by its terms on August 31, 1987, and required the Center's Board of Trustees to give Farias 120 days written notice of the Board's intent not to renew.

After his contract expired on August 31, 1987, Farias worked without a contract. In November 1987, the Board appointed a committee to evaluate Farias's performance as executive director. Less than a month later, on December 8, 1987, the Board voted not to renew Farias's contract. Farias worked for thirty days after the December 8 meeting and received an additional ninety days severance pay.

In April 1988, Farias sued multiple defendants in Texas state court, ¹ alleging various state and federal claims. Some of the defendants petitioned for removal to federal district court under 28 U.S.C. Secs. 1441(b) and 1443 based on the fact that Farias had raised federal claims. Farias moved to remand the case to state court on the ground that some defendants had not joined the petition for removal. The district court denied Farias's motion to remand, finding that the nonremoving defendants were merely "nominal" or "formal" parties.

Meanwhile the nonremoving parties filed motions to dismiss under Fed.R.Civ.P. 12(b)(6). Farias filed a motion to strike because the nonremoving parties had never consented to removal. Farias moved, in the alternative, for an extension of time to respond. The district court denied Farias's motions and granted the motions to dismiss.

Nine days after the district court denied his motion for remand, Farias demanded a jury trial and moved, in the alternative, for a jury trial under Fed.R.Civ.P. 39(b). The defendants moved to strike Farias's jury demand under Fed.R.Civ.P. 81(c). ² The court granted defendants' motion to strike and ordered a bench trial.

Farias filed an amended complaint on May 19, 1989. On June 19, 1989, defendants filed their amended answer. On the first day of trial, Farias objected to some affirmative defenses in the amended answer, claiming that the defenses had not been previously asserted. Defendants denied that the defenses were new. The district court refused to strike the defenses and allowed the defendants to submit evidence supporting those defenses.

After a bench trial, the judge entered final judgment in favor of defendants. Farias then filed another suit in Texas state court alleging violations of the Texas Open Meetings Act, Tex.Rev.Civ.Stat.Ann. art. 6252-17. The new state court action stems from the same transactions that led to the case now before this court. Defendants moved to enjoin the suit in state court under the relitigation exception of the Anti-Injunction Act. See 28 U.S.C. Sec. 2283. Defendants also requested Rule 11 sanctions against Farias and his counsel. The district court granted the motion to enjoin but denied the request for sanctions.

CASE NUMBER 89-5620

REMOVAL, REMAND AND THOSE NOMINAL PARTIES

Nominal Parties

After some of the defendants petitioned

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for removal ³, Farias moved for remand. See 28 U.S.C. Sec. 1447(c). The district court denied Farias's motion, finding that the nonremoving defendants were merely "nominal" or "formal" parties. Farias challenges the district court's order on the following two grounds: (1.) all defendants named in the state court action must join in or consent to removal when the basis for removal is the district court's federal question jurisdiction and this did not happen; and (2.) even if the nominal-parties exception applies to federal question cases, the nonremoving defendants in this case are more than "nominal" or "formal" parties.

"[A]ll defendants who are properly joined and served must join in the removal petition, and ... failure to do so renders the petition defective." Getty Oil Corp., Div. of Texaco, Inc. v. Insurance Co. of N. Am., 841 F.2d 1254, 1262 (5th Cir.1988) (citations omitted); see Johnson v. Helmerich & Payne, Inc., 892 F.2d 422, 423 (5th Cir.1990). There is an exception to this general rule, however. "Nominal" or "formal" parties need not join in the removal petition. See Robinson v. National Cash Register Co., 808 F.2d 1119, 1123 (5th Cir.1987); B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549-50 (5th Cir. Unit A Dec.1981); Tri-Cities Newspapers, Inc. v. Tri-Cities Printing Pressmen and Assistants' Local 349, Int'l Printing Pressmen and Assistants' Union of N. Am., 427 F.2d 325, 327 (5th Cir.1970). To establish that non-removing parties are nominal parties, "the removing party must show ... that there is no possibility that the plaintiff would be able to establish a cause of action against the non-removing defendants in state court." B., Inc., 663 F.2d at 549.

Diversity/Federal Question, Same Rule Applies

Because the basis for removal jurisdiction in this case was federal question jurisdiction, Farias contends the nominal parties exception is not applicable. The nominal party cases in our circuit have dealt solely with diversity jurisdiction. See, e.g., Robinson, 808 F.2d 1119 (5th Cir.1987); Green v. Amerada Hess Corp., 707 F.2d 201 (5th Cir.1983), cert. denied, 464 U.S. 1039, 104 S.Ct. 701, 79 L.Ed.2d 166 (1984); B., Inc., 663 F.2d 545 (5th Cir.1981); Tedder v. F.M.C. Corp., 590 F.2d 115 (5th Cir.1979); Tri-Cities Newspapers, Inc., 427 F.2d 325 (5th Cir.1970). Until now, the exception has not been applied to a case in which removal is based on federal question jurisdiction. The grandaddy case in our circuit dealing with nominal parties and removal is Tri-Cities Newspapers, Inc., 427 F.2d 325 (5th Cir.1970). Tri-Cities discusses nominal parties as being those parties who are neither necessary nor indispensable to join in the action. Id. at 327. The Tri-Cities test of whether defendants are nominal parties "is whether in the absence of the [defendant], the Court can enter a final judgment consistent with equity and good conscience which would not be in any way unfair or inequitable to the plaintiff." Id. (quoting Stonybrook Tenants Assoc., Inc. v. Alpert, 194 F.Supp. 552, 559 (D.Conn.1961)). The test places no limitation on whether removal is based on diversity or federal question jurisdiction and neither do we ⁴. Since equity is the major concern in the nominal party inquiry, no limitation should be placed on the type of jurisdiction used to remove the action from state to federal court. Similarly, the test for determining a nominal party stated above applies equally whether diversity or federal question jurisdiction is the mode of

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removal. The bottom line concern in determining a nominal party is whether the plaintiff can establish a cause of action against the nonremoving defendant in state court.

The bottom line concern answered

In this case, for reasons to be explained, we find the plaintiff could in no way establish a cause of action in state court against the nonremoving defendants. The only duty placed on the nonremoving defendants by Texas law is the duty to enter into a contract between them stipulating the number of the Bexar County Board of Trustees for Mental Health Mental Retardation Services to be appointed from the region. See Tex.Rev.Civ.Stat.Ann. art. 5547-203 Sec. 3.01(a) (Vernon Supp.1990). Farias contends the nonremoving defendants are liable because they were negligent in failing to establish criteria for the selection of Board members, negligent in entrusting authority to the Board of Trustees and negligent in failing to supervise or exercise any degree of control over the Board of Trustees. Although Farias sues on these grounds, no duty existed on the part of the nonremoving defendants to perform these duties. If no duty exists there can be no breach of duty and no negligence. See...