Inge ex rel. Cent. Motorcycle Roadracing Ass'n v. Walker
| Decision Date | 15 September 2016 |
| Docket Number | CIVIL ACTION NO. 3:16-CV-0042-B |
| Parties | PEYTON INGE, INDIVIDUALLY AND ON BEHALF OF THE CENTRAL MOTORCYCLE ROADRACING ASSOCIATION, Plaintiff, v. WALTER WALKER, TED PHILLIPS, JOHN ORCHARD, STEVEN MCNAMARA, JAMES DUGGER, TY HOWARD, ERIC FALT, CENTRAL MOTORCYCLE ROADRACING ASSOCIATION, NANCY SELLECK, BILL SYFAN, and TOM ANDERSON, Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Before the Court is Plaintiff's Motion to Remand and Request for Attorneys' Fees. Doc. 20. For the following reasons, the Court DENIES Plaintiff's Motion.
According to Plaintiff Peyton Inge (Inge), "[t]his lawsuit is a textbook example of what happens when good old boys encounter an individual who dares question how hundreds of thousands of dollars in nonprofit corporation cash are accounted for." Doc. 20-1, Pl.'s Fourth Am. Pet. and Req. for Declaratory Relief ¶ 17 [hereinafter Pet.]. In reality, it is a case about a former member of a nonprofit motorcycle hobby club, Inge, who accused a number of current and former club directors of violating the Racketeer Influenced and Corrupt Organizations Act (RICO) and committing several state law torts. Id. ¶¶ 20, 53-79.
The Central Motorcycle Roadracing Association (Corporation or CMRA) is a 650-member, Texas-based 501(c)(7) nonprofit corporation that (1) issues motorcycle race licenses to allow motorcyclists to participate in races across the country; and (2) hosts its own motorcycle races. Id. ¶¶ 3, 21-22. The Corporation is governed by a seven-person Board of Directors (Board), that, according to Inge, is supposed to conduct annual elections for two to three of its seven seats. Id. ¶ 24. In practice, however, Inge alleges it operates more like a cabal in that directors return for multiple terms and engage in nefarious schemes, including: failing to make board meetings and financial records readily available to members, embezzling money,1 engaging in insider deals,2 and manipulating elections.3
As to the electoral fraud specifically, Inge points to Defendant Nancy Selleck's behavior during the CMRA's 2014 election where she allegedly did the following:
[Former Secretary] Selleck used her position as Secretary and Administrator of the CMRA's website and computer forum to intentionally suggest that [Inge] committed certain nefarious acts in an effort to injure [his] reputation and expose [him] to public hatred, ridicule, contempt, reputational damage, and financial injury . . . [and]to throw the election [to another candidate] because she was afraid [Inge] would win.
Id. ¶ 36 (footnote omitted). Inge then noticed discrepancies in previous election results that favored Selleck-supported candidates, including Selleck's husband, Syfan. Id. ¶ 37. Specifically, Inge alleges that Selleck has been responsible for mainlining membership lists, mailing election ballots to non-eligible voters, and failing to mail ballots to some eligible voters. Id. ¶ 37. After discovering these discrepancies, Inge brought them to the attention of Board member James Dugger (Dugger), suggested someone may have manipulated the ballots, and requested that the Board conduct a private audit. Id. ¶ 38. Dugger and/or fellow Board member John Orchard (Orchard) refused to conduct an audit. Id. ¶ 39. Undeterred, Inge posted a series of questions directed toward the Board on the CMRA website, asking about the ballot discrepancies and about inconsistencies regarding previous CMRA tax returns. Id. ¶ 40. Selleck answered his questions but her answers "enraged" the other Defendants, some of whom allegedly (1) began to publically ridicule Inge; (2) decided, behind the scenes, to terminate his race license; and (3) schemed to leak certain information that would jeopardize Inge's membership in the organization. Id. ¶¶ 41-42.
In response to Defendants' behavior, Inge requested that the Board partially audit the CMRA's 2014 election results, disclose financial records and meeting minutes, and apologize to the CMRA "for their verbal abuse," presumably of him. Id. ¶ 44. Rather than comply, Defendants hired an attorney, as they believed a "member" had threatened to sue the CMRA and was being uncooperative. Id. ¶ 44. Defendants allegedly stated that Inge's intent was to "destroy the CMRA." Id. ¶ 46. Defendants spread the "malicious falsities" that Inge's allegations were false in order to convey to the organization that Inge was a "sue-happy malcontent." Id. ¶¶ 47, 49. These statementsapparently reached beyond CMRA members to Inge's colleagues at his law firm. Id. ¶ 47. One defendant, Orchard, separately emailed all 650 CMRA members and "misrepresent[ed] facts about [Inge] and [his] goals"; according to Inge, Orchard also posted that email to the CMRA forum. Id. ¶ 50. Inge alleges that a few days after Orchard's email was sent, a group of racers voiced their disagreement with Orchard's posts, at which point Orchard locked the thread, and Defendants voted to revoke Inge's license—without the required hearing—based on his posted questions. Id. ¶ 51.
On December 17, 2014, Inge sued Defendants in the 191st Judicial District Court of Dallas County Texas. Doc. 1-8, Pl.'s Orig. Pet. Over the course of the next year, Inge amended his petition multiple times, and the parties engaged in a slew of discovery disputes. See Doc. 1, Notice of Removal. On December 17, 2015, one year after he filed his initial petition, Inge filed his Fourth Amended Petition and Request for Declaratory Relief, the now-operative pleading in this case. Doc. 20-1, Pet. There, Inge brought the following claims: (1) a RICO claim against Walker, Orchard, McNamara, Selleck, Syfan, and Anderson (Doc. 21-1, Pet. ¶¶ 53-60); (2) a shareholder derivative action and related ultra vires claims against Phillips, Orchard, McNamara, Dugger, Howard, Falt, Selleck and Syfan (Id. ¶¶ 61-64); (3) general "individual harm" allegations against Phillips, Orchard, McNamara, Dugger, Howard, Falt, Selleck, and Syfan (Id. ¶ 65); (4) slander and libel claims against all Defendants (Id. ¶¶ 66-76); (5) a breach of contract claim against the CMRA (Id. ¶¶ 77-78), and, finally, (6) a conspiracy claim against all Defendants except the CMRA (Id. ¶ 79). Inge also requested that each Defendant answer his Requests for Disclosure "within fifty (50) days of service of this First Amended Petition and Requests for Disclosure on Defendants" (Id. ¶ 80); and asked for declaratory relief (Id. ¶¶ 81-82) and damages (Id. ¶ 82).
On January 7, 2016, Defendants removed the case to this Court (Doc. 1, Notice of Removal) and, approximately two weeks later, Inge moved to remand it back to state court. Doc. 20, Pl.'s Mot. to Remand and Req. For Att'y Fees [hereinafter Mot. to Remand]. Defendants then responded to Inge's Motion, and Inge replied in turn. Doc. 32, Defs.' Resp.; Doc. 43, Pl.'s Reply. Inge's Motion is now ready for review.
Motions for remand are governed by 28 U.S.C. § 1447(c), which provides that "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c) (2012). When considering a motion to remand, "[t]he removing party bears the burden of showing that federal jurisdiction exists and that removal was proper." Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002).
The federal removal statute, 28 U.S.C. § 1441(a), permits a defendant to remove to federal court any civil action that falls within the original jurisdiction of the district courts. District courts "have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. This, however, raises "significant federalism concerns" because removal effectively "deprive[s] the state court of an action properly before it." Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281 (5th Cir. 2007) (quoting Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362, 365 (5th Cir. 1995)). As a result, the removal statute must be strictly construed, and "any doubt about the propriety of removal must be resolved in favor of remand." Id. at 281-82; see also Manguno, 276 F.3d at 723.
Applying the above standard, for the reasons that follow, the Court concludes that Defendants' removal of this action to federal court was proper, and that the Court will continue to exercise supplemental jurisdiction over Plaintiff's remaining state-law claims. Contrary to Plaintiff's assertions, the Court does not have the authority to remand the entire case back to state court, as Plaintiff's RICO claim gives this Court original jurisdiction. Furthermore, as also addressed below, the Court finds that the factors embodied in 28 U.S.C. § 1367 as well as judicial economy, fairness, convenience, and comity militate in favor of exercising supplemental jurisdiction over the remaining state-law claims.
Inge argues that this Court should decline to exercise jurisdiction over his RICO claim and instead remand the entire case because (1) Texas has concurrent jurisdiction and (2) the parties have already engaged in discovery and related disputes for over a year, so remanding the case would "permit Defendants to re-litigate novel issues of law." Doc. 21, Br. in Supp. of Pl.'s Mot. to Remand ¶ 2 [hereinafter Pl.'s Brief].
Defendants counter that exercising federal question jurisdiction is not discretionary in federal courts, and therefore, district courts cannot remand live, federal claims to state court.4 Thus, because Inge's RICO claim is live and properly removed, the Court does not have discretion to remand theentire case back to state court. Doc. 32, Defs.' Resp. 3. For this reason, Defendants argue the Court should deny Inge's motion and refuse to remand this case. Id.
Inge replies with a set of general propositions, including the fact that...
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