Feinstein v. Brown
| Decision Date | 11 February 2004 |
| Docket Number | No. C.A. 03-436S.,C.A. 03-436S. |
| Citation | 304 F.Supp.2d 279 |
| Parties | Alan Shawn FEINSTEIN, Alan Shawn Feinstein Foundation, and The Feinstein Foundation, Plaintiffs, v. J. LARRY BROWN, Defendant. |
| Court | U.S. District Court — District of Rhode Island |
Mark B. Morse, Esq., Law Office of Mark B. Morse, Providence, RI, for plaintiffs.
Brooks R. Magratten, Esq., Vetter & White, Incorporated, Providence, RI, John H. Henn, Esq., Foley Hoag, LLP, Boston, MA, for defendant.
DECISION AND ORDER
The "first-filed rule" is an equitable doctrine of venue selection followed universally "[w]here identical actions are proceeding concurrently in two federal courts ... the first filed action is generally preferred in a choice-of-venue decision." Cianbro Corp. v. Curran-Lavoie, Inc., 814 F.2d 7, 11 (1st Cir.1987). This case tests the application of the rule to a scenario in which one party files a state court action that is subsequently removed to federal court, and the other party sues in a different federal court after the state action was filed, but before its removal. The question is whether the state filing date or the date of removal is the relevant date for applying the first-filed rule. Finding that the state court action is first-filed, and that there are no other circumstances warranting transfer of venue, the Court denies the Defendant's motion to transfer venue to the District of Massachusetts, or to dismiss or stay the case.
The following facts are derived from the Complaint and from the parties' filings in support of and in opposition to the motion. Plaintiff Alan Shawn Feinstein ("Feinstein"), a businessman and philanthropist, is the executive director of Plaintiff Alan Shawn Feinstein Foundation ("ASFF") and a director of Plaintiff The Feinstein Foundation (collectively "Plaintiffs"). On March 17, 2000, Feinstein entered into a contract with Defendant J. Larry Brown whereby ASFF would contribute $3 million, over three years, in charitable funding to support various good works of the Center on Hunger and Poverty, of which Brown is the executive director.
Things did not go well. Brown claims that Feinstein and ASFF failed to make any of the promised payments, and Plaintiffs rejoin that Brown was unable to fulfill any of the material terms of the agreement. The parties exchanged frequent correspondence in an attempt to resolve their differences. However, on April 22, 2002, Brown wrote a letter to the Rhode Island Foundation that particularly offended Feinstein. In that letter, Plaintiffs allege that
Brown deliberately misrepresented facts to the Rhode Island Foundation and misrepresented Feinstein's dealings with three Rhode Island-based colleges, ... two specifically-named Rhode Island non-profit institutions, and other unnamed institutions ... [and] referred to the "consideration of legal action" as the only thing which would induce Feinstein to fulfill alleged legal commitments.
The relationship continued to deteriorate, until finally, in an August 12, 2003 letter, counsel for Brown wrote to Feinstein, ASFF, and the Rhode Island Foundation complaining of Feinstein's failure to pay any of the promised contributions, and stating:
We will be happy to review any information, including documents, that you think we need to review, and consider any contrary arguments that you may wish to make. As you can imagine, bringing suit on a charitable pledge and promise, however clear and binding as is the case here, is never an undertaking that is pursued without exhausting all means of alternative resolution....
Def. Answer and Counterclaims, Ex. C.
On August 28, 2003, in response to this letter and a progressively worsening relationship with the Rhode Island Foundation (caused, in Feinstein's opinion, by Brown's defamatory remarks), Plaintiffs sued Brown in Providence County Superior Court for defamation, tortious interference with advantageous business relations, and breach of contract. On September 25, 2003, Brown removed that action to this Court. He then answered the complaint on September 30, 2003, and asserted counterclaims for breach of contract and a declaratory judgment that Brown did not defame Feinstein.
On September 17, 2003, Brown filed an action in the United States District Court for the District of Massachusetts. The parties agree that the claims raised in this action mirror the counterclaims that Brown asserted in the first action. Brown now moves, pursuant to 28 U.S.C. § 1404(a),1 to transfer venue in the action in this Court to Massachusetts, based on the first-filed rule and other equitable considerations relating to venue.
The first-filed rule, as applied in the First Circuit, typically governs the choice of venue when identical actions proceed concurrently in two federal courts. See, e.g., Coady v. Ashcraft & Gerel, 223 F.3d 1, 11 (1st Cir.2000) (); TPM Holdings, Inc. v. Intra-Gold Indus., Inc., 91 F.3d 1, 2 (1st Cir.1996) (); Cianbro Corp. v. Curran-Lavoie, Inc., 814 F.2d 7, 11 (1st Cir.1987) (); Nortek, Inc. v. Molnar, 36 F.Supp.2d 63, 65 (D.R.I.1999) ().
No court in this circuit, however, has had occasion to consider how the rule operates when "Action A" is filed in state court, and then removed to federal court after"Action B" is filed in a different federal court. In such a procedural posture, Defendant argues that the earlier of the date of removal of Action A and the date of the filing of Action B is controlling, because Def. Mem. at 5 (emphasis omitted).
Every court that has confronted this issue has disagreed.2 For example, in Manufacturers Hanover Trust Co. v. Palmer Corp., 798 F.Supp. 161 (S.D.N.Y.1992), the court faced precisely the same situation: defendant filed an action in New Jersey state court; plaintiff filed a second, parallel action in the Southern District of New York six days later; and plaintiff removed the first action to New Jersey federal court thereafter. Id. at 166. After noting that the Second Circuit had not squarely addressed that procedural sequence, the court found "ample authority for the proposition that the state court filing date is the relevant benchmark." Id. (). The court further observed that "[t]he principles underlying removal also weigh in favor of the state filing date." Id. ( ) . Since Palmer, several other courts have reached the same conclusion. See, e.g., 800-Flowers, Inc. v. Intercontinental Florist, Inc., 860 F.Supp. 128, 131 n. 1 (S.D.N.Y.1994); Affinity Memory & Micro, Inc. v. K & Q Enters., Inc., 20 F.Supp.2d 948, 954 n. 10 (E.D.Va.1998); First Health Group Corp. v. Motel 6 Operating L.P., No. 00C524, 2000 WL 984160, at * 2 (N.D.Ill. July 17, 2000).
This writer agrees with the reasoning of these courts, and has found no factually similar case that has been decided to the contrary. The action filed by Plaintiffs in state court and subsequently removed to this Court is first-filed.
Although there is a "strong presumption" favoring a plaintiff's choice of venue in the first-filed action, see Coady, 223 F.3d at 11, that presumption may be overcome:
The preference for the first-filed action is not a per se rule, but rather a policy governed by equitable considerations: "the forum where an action is first filed is given priority over subsequent actions, unless there is `a showing of balance of convenience in favor of the second action,' or there are special circumstances which justify giving priority to the second[.]"
SW Indus., Inc. v. Aetna Cas. & Sur. Co., 653 F.Supp. 631, 634 (D.R.I.1987) (citations omitted). Defendant submits that both special circumstances and the balance of convenience favor transferring venue to the District of Massachusetts.
When the first-filed action is the result of a preemptive "race to the courthouse," a court may allow a later-filed case to proceed in place of the first-filed action. See Cianbro Corp., 814 F.2d at 11. Defendant contends that Plaintiffs reacted to Brown's August 12, 2003 letter by filing an "anticipatory" suit, thereby depriving Brown of the first-filed benefit unfairly. See Def. Mem. at 7.
Defendant has fallen far short of demonstrating the existence of special circumstances....
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