Menendez v. Timberblinds, LLC

• Decision Date: 04 March 2022
• Docket Number: Civil Action 4:21-CV-914
• Parties: VICTOR MENENDEZ, Plaintiff, v. TIMBERBLINDS, LLC; PETER BOLENEUS; and HUNTER DOUGLAS, INC., Defendants.
• Court: U.S. District Court — Eastern District of Texas

VICTOR MENENDEZ, Plaintiff,
v.
TIMBERBLINDS, LLC; PETER BOLENEUS; and HUNTER DOUGLAS, INC., Defendants.

Civil Action No. 4:21-CV-914

United States District Court, E.D. Texas, Sherman Division

March 4, 2022

MEMORANDUM OPINION AND ORDER

AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE

Pending before the Court is Plaintiff's Motion to Remand (Dkt. #8). Having considered the motion and the relevant pleadings, the Court finds that the motion should be GRANTED IN PART and DENIED IN PART.

BACKGROUND

The parties' dispute arises from the events surrounding Plaintiff Victor Menendez (“Menendez”)'s employment at Timberblinds, LLC (“Timberblinds”).^[1]

I. Factual Background

Menendez has been in the indoor/outdoor blinds and shades industry for over twenty-five years and operated his own company, Extravagant Design, LLC, d/b/a EX Design Group (“EX Design”) from 2004 to 2017 (Dkt. #4 ¶ 8). In 2013, Menendez invented a product called: “Hem Bar for Use with Architectural Structure Covering” (the “Hem Bar”), which was designed to maintain the stability and utility of outdoor shades-especially in inclement weather (Dkt. #4 ¶ 9).

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In 2016, Menendez decided to expand EX Design and began discussions with Timberblinds' president, Defendant Peter Boleneus (“Boleneus”) (Dkt. #4 ¶¶ 10-11). Based on these discussions, it was agreed that Timberblinds would hire Menendez as the Vice President of Timberblinds' Outdoor Products Division and purchase certain assets of EX Design (Dkt. #4 ¶¶ 13, 19).

Timberblinds and Menendez memorialized their understanding of the purchase of EX Design, employment of Menendez, and a related loan in four separate agreements: (1) an Employment Agreement (Dkt. #4, Exhibit 2), (2) an Asset Purchase Agreement (Dkt. #4, Exhibit 1), (3) a Loan and Repayment Agreement (Dkt. #4, Exhibit 3), and (4) a Promissory Note (Dkt. #4, Exhibit 4) (collectively, the “Agreements”). The Agreements between Timberblinds and Menendez included general assignment provisions allowing Timberblinds to assign all of its rights and obligations to an affiliate. All of the Agreements except the Asset Purchase Agreement were later assigned by Timberblinds to Hunter Douglas, Inc. (“Hunter Douglas”), Timberblinds' parent company (Dkt. #13 at p. 9).

As the Vice President of Timberblinds' Outdoor Division, Menendez was tasked with the design, production, marketing, sale, and installation of all outdoor products (Dkt. #4 ¶ 19). In this role, Menendez worked directly with Boleneus. At some point, Menendez's relationship with Timberblinds and Boleneus began to sour. According to Menendez, his ability to meet his obligations under the Agreements was critically thwarted by Boleneus' wrongful interference and harassment (Dkt. #4 ¶ 55). More specifically, Menendez alleges that Boleneus repeatedly denied Menendez's requests for appropriately skilled employees and equipment; disregarded Menendez's concerns regarding quality control and end-user safety during manufacturing; ordered Menendez to terminate, without cause, seven important Outdoor Division team members; and undermined Menendez in front of his team by making false and baseless accusations of insubordination and

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self-dealing (Dkt. #4 ¶¶ 26-31). In addition, Menendez alleges that he was harassed, threatened, and ultimately coerced by Boleneus into transferring or relinquishing his own property that was not included in the Asset Purchase Agreement, such as EX Design's phone number, website, and proprietary customer list, as well as a Bobcat MT55 Track Loader leased by Menendez in his own his name (Dkt. #4 ¶¶ 35-37).

Similarly, Menendez claims Boleneus, Timberblinds, and Hunter Douglas (collectively, the “Defendants”) repeatedly pressured and harassed Menendez to sign an assignment of all of his rights in the Hem Bar to Hunter Douglas, though this invention was not listed in the Asset Purchase Agreement (Dkt. #4 ¶ 39). When Menendez refused, Menendez claims Timberblinds, Boleneus, and/or Hunter Douglas forged Menendez's signature on a document purporting to assign all intellectual property rights in the Hem Bar invention, including the right to patent, to Hunter Douglas (Dkt. #4 ¶¶ 40-42). On June 22, 2018, Hunter Douglas recorded this purported assignment with the United States Patent and Trademark Office (“USPTO”) and filed an application to patent Menendez's Hem Bar in its own name (Dkt. #4 ¶¶ 41, 43).

Ultimately, in January of 2021, Timberblinds informed Menendez that it was merging the Outdoor Division with a newly purchased company and transitioning Menendez into a sale position (Dkt. #4 ¶ 45). Given that the Employment Agreement stated that Menendez was to be employed “in an executive position as the Vice President of [Timberblinds'] outdoor product division” through December 31, 2021, and in light of the conduct by Boleneus, Menendez declined to remain at Timberblinds and tendered his resignation in March of 2021 (Dkt. #4 ¶¶ 46-48).

II. Procedural Background

The dispute from the events surrounding Menendez's employment at Timberblinds resulted in three separate lawsuits.

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On June 15, 2021, Menendez filed the first suit in the United States District Court for the Eastern District of Texas seeking declaratory relief, injunctive relief, and damages against Hunter Douglas for filing the fraudulent assignment of the Hem Bar invention bearing Mendez's forged signature. Menendez further requested a writ of mandamus directing the USPTO and its commissioner to halt prosecution of the Hem Bar patent application under Hunter Douglas' name (see Menendez v. Hunter Douglas Inc. et al, Case No. 4:21-cv-00451). Following the filing of this action, Hunter Douglas, on September 22, 2021, unilaterally assigned all of its purported rights in the Hem Bar invention to Plaintiff (Dkt. #4 ¶ 50).

On September 24, 2021, Hunter Douglas initiated the second suit in the United States District Court for the Eastern District of Texas against Menendez for breach of contract and breach of the duty of loyalty (see Hunter Douglas v. Menendez, Case No. 4:21-cv-00741).

On October 14, 2021, Menendez initiated the underlying action in the 416th Judicial District Court of Collin County, Texas against the Defendants. Menendez and Boleneus are citizens of Texas (Dkt. #4 ¶¶ 2, 5). Likewise, Timberblinds is a limited liability company and alleged to be a citizen of Texas (Dkt. #4 ¶ 3).^[2] Hunter Douglas is a Delaware corporation with its principal place of business located in New York and is thus a citizen of Delaware and New York for diversity purposes (Dkt. #4 ¶ 5). The Original Petition (“Petition”) alleges various tort and contract claims against Defendants. For example, Menendez asserts claims for constructive termination, breach of contract, theft and conversion of Menendez's personal property, as well as theft and misappropriation of his Hem Bar and trade secrets. Defendants were served with a copy of the summons and Petition on October 19, 2021 (Dkt. #1, Exhibit A).

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On November 18, 2021, Hunter Douglas removed the case to this Court on the basis of federal diversity jurisdiction pursuant to 28 U.S.C. §§ 1332 and 1441 (Dkt. #1 ¶ 7). Hunter Douglas asserts there is diversity jurisdiction because the real parties in interest, Menendez and Hunter Douglas, are diverse, and the amount in controversy exceeds the statutory threshold (Dkt. #1 ¶¶ 6-7). Hunter Douglas also asserts that both Timberblinds and Boleneus consent to removal, though their consent is not necessary since they are not properly named parties (Dkt. #1 ¶ 38). On December 1, 2021, Menendez filed a motion to remand (Dkt. #8). Menendez argues that this Court should remand this action since Menendez, a Texas citizen, asserts state law tort and contract claims against Timberblinds and its president, Boleneus, both of whom are also citizens of Texas (Dkt. #8 at p. 5). On December 16, 2021, Hunter Douglas filed its response (Dkt. #13). On December 23, 2021, Menendez filed his reply, (Dkt. #17), and on January 3, 2022, Hunter Douglas filed its sur-reply (Dkt. #18).

LEGAL STANDARD

A defendant may remove any civil action from state court to a district court of the United States which has original jurisdiction. 28 U.S.C. § 1441. District courts have original jurisdiction over all civil actions that are between citizens of different states and involve an amount in controversy in excess of $75, 000, exclusive of interest and costs. 28 U.S.C. § 1332. The party seeking removal “bears the burden of establishing that federal jurisdiction exists and that removal was proper.” Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002); Weaver v. Zurich Am. Ins. Co., No. Civ. A. H-10-1813, 2010 WL 3910053, at *1 (S.D. Tex. Oct.1, 2010). The removal statute must “be strictly construed, and any doubt about the propriety of removal must be resolved in favor of remand.” Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281-82 (5th Cir. 2007). A district court is required to remand the case to state court if,

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at any time before final judgment, it determines that it lacks subject matter jurisdiction. See 28 U.S.C. § 1447(c); Groupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 571 (2004).

For diversity jurisdiction to exist under 28 U.S.C. § 1332(a)(1), there must be complete diversity of citizenship between plaintiffs and defendants. 28 U.S.C. § 1332. In determining whether complete diversity exists, a federal court “must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy.” Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 460-61 (1980). To establish that a non-removing defendant is a nominal party, 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 defendant in state court. Farias v. Bexar Cty. Bd. of Trs. for M.H.M.R...