Nowling v. Aero Services Intern., Inc.

• Decision Date: 06 April 1990
• Docket Number: Civ. A. No. 90-775.
• Citation: 734 F. Supp. 733
• Parties: Gail P. NOWLING, et al. v. AERO SERVICES INTERNATIONAL, INC.
• Court: U.S. District Court — Eastern District of Louisiana

734 F. Supp. 733

Gail P. NOWLING, et al. v. AERO SERVICES INTERNATIONAL, INC.

Civ. A. No. 90-775.

United States District Court, E.D. Louisiana.

April 6, 1990.

COPYRIGHT MATERIAL OMITTED

Henry Dillon Murchison, Normand Francis Pizza and Sandra A. Vujnovich, Brook, Morial, Cassibry, Fraiche & Pizza, New Orleans, La., for plaintiffs.

Dando B. Cellini and Craig Lewis Caesar, McGlinchey, Stafford, Mintz, Cellini & Lang, P.C., Harry A. Rosenberg and Maria Nan Alessandra, Phelps, Dunbar, Marks, Claverie & Sims, Walter C. Thompson, Jr., Sessions, Fishman, Boisfontaine, Nathan, Winn, Butler & Barkley, New Orleans, La., Barry F. McNeil, Nina Cortell, Teresa J. Carson, Leonard A. Hirsch and George W. Bramblett, Jr., Haynes & Boone, Dallas, Tex., and Aubrey B. Hirsch, Jr., Locke, Purnell, Rain & Harrell, Ltd., New Orleans, La., for defendants and counter-claimants.

ORDER AND REASONS

FELDMAN, District Judge.

After hearing testimony and reviewing the exhibits presented in this case, the Court ruled on several matters. The plaintiffs and counter-defendants, Ronald and Gail Nowling, reurged their Motion to Remand, and that motion is DENIED. Their Motion to Vacate and Set Aside Court Order is also DENIED. The defendants and counter-plaintiffs, Aero and Triton Energy Corp., have applied for a Preliminary Injunction (a temporary restraining order was previously entered), which is GRANTED as to Aero, and DENIED without prejudice as to Triton. This opinion is now given in support of the Court's announced rulings.

I. Background

The Nowlings filed this suit in a Louisiana state court on February 28, 1990, seeking in part a declaration that the Louisiana Control Share Acquisition Act (LCSAA), La.R.S. 12:135-140.2, applies to the voting shares of Aero. Their suit was removed to this Court on March 2, 1990.

This dispute is a rather lengthy sequel to two earlier cases which were before this Court, Triton Energy Corp. v. Dibo Attar, C/A No. 88-3492, consolidated with Trenk Devel. Corp. v. Aero Serv. Int'l, Inc., C/A No. 88-3624.¹Trenk involved a hotly contested battle for corporate control of Aero in which Triton Energy, Trenk Development Company, and Robert Starer were competing suitors. Trenk was resolved when the parties agreed to a settlement after several days of trial. The undertakings of the parties and the findings of the Court were memorialized, first in the Findings of Fact and Stipulation of Conditional Dismissal, filed December 23, 1988, and later by the Findings of Fact and Stipulated Order of Dismissal dated May 22, 1989 (Trenk Orders). It is those orders which drive the present controversy. In the Trenk Orders, the Court found that "the Louisiana Control Share Acquisition Act does not apply to Aero Services International, Inc."² As part of the settlement of Trenk all the parties signed several agreements, among which were a Shareholders Agreement and a Standstill Agreement. Robert Starer, a director and then president of Aero, signed the agreements. He was a party in Trenk and is a counter-defendant here, although he is no longer Aero's president.

On August 7, 1989, Mr. Starer came once more before this Court with an application for a temporary restraining order to block Triton from purchasing Aero shares owned by Dibo Attar, another party in Trenk; he urged that the proposed purchase violated the Trenk Orders. Starer's temporary restraining order was denied, and on September 20, 1989 he dismissed his suit. But his interest in Aero did not falter.

In February 1990, a series of events occurred that culminated in this lawsuit: Mr. and Mrs. Nowling, who had been friends with Mr. Starer for several years (Mr. Nowling worked for Starer), met him for dinner on February 7th. On February 12th, Starer sent two letters to Aero's management about Aero's next shareholders meeting on March 29, 1990. One notified Aero of Starer's intention to present a resolution at the meeting scheduled for March 29th proposing that Aero be liquidated and that the LCSAA be implemented. The other raised objections to the draft of the proxy statement for the proposed meeting. On February 22nd, the Nowlings and Starer filed Schedule 13D forms with the Securities and Exchange Commission, acknowledging that they might each be considered a member of a group with the other under the Securities Exchange Act of 1934 (the 1934 Act). The following day, February 23rd, Mr. Nowling sent out notices of a competing shareholders meeting that he had called for March 29, 1990, at 10:00 a.m., the same time management proposed to hold a meeting.³ Then on February 28, 1990, the Nowlings filed their state court petition which gave birth to this dispute. Aero and Triton removed the suit to this Court.

II. The Motion to Remand

At a hearing that resulted in the issuance of a temporary restraining order, this Court denied the Nowlings' Motion to Remand without prejudice to permit the submission of evidence on the remand issue at the hearing.

A.

The Motion to Remand triggers inquiry into the Court's jurisdiction because it argues that there is no federal question pleaded on the face of the complaint, and, since Aero is incorporated in Louisiana, no other jurisdictional predicate for removal exists.⁴ This Court nevertheless has jurisdiction over the subject matter of this case.

1.

The familiar well-pleaded complaint rule requires that for a case to arise under federal law for purposes of jurisdiction, the federal claim must appear on the face of the complaint. Taylor v. Anderson, 234 U.S. 74, 75-76, 34 S.Ct. 724, 724, 58 L.Ed. 1218 (1914). The Nowlings' state court petition facially seeks nothing more than a request for a Louisiana state court to declare that the LCSAA, a Louisiana statute, applies to Aero's voting shares. That declaration, however, could then entitle the Nowlings to injunctive relief to prevent Triton from exercising its franchise with respect to its Aero shares; it would also delay the shareholders meeting indefinitely. The Nowlings contend that they have assiduously avoided any allegations under the 1934 Act, and carefully drafted their state law claims to avoid stating a cause of action cognizable under federal law. Their complaint, however, attacks all stock transactions after June 1987. Thus, what the Nowlings really want is not the isolated ruling of a state court, but a repudiation of this Court's earlier Trenk Orders by a state court. Courts are no longer bound by a medieval acquiescence to the text of pleadings. A party may not evade removal by drafting a complaint so as to artfully disguise the true purpose of the lawsuit. Villarreal v. Brown Express, Inc., 529 F.2d 1219, 1221 (5 Cir.1976); See also Federated Dept. Stores, Inc. v. Moitie, 452 U.S. 394, 101 S.Ct. 2424, 2427 n. 2, 69 L.Ed.2d 103 (1981). In fact, a purported state law claim that has sufficient federal character may be removed. Id. And a state law claim is said to have federal character when, as here, it calls into question a federal court order. Sullivan v. First Affiliated Sec., Inc., 813 F.2d 1368, 1375-76 (9 Cir.) cert. denied, 484 U.S. 850, 108 S.Ct. 150, 98 L.Ed.2d 106 (1987). The case literature is properly sensitive of the need to insure the integrity of federal mandates.

Moitie, for example, permits removal of state claims filed to circumvent the preclusive impact of a federal order, even where the removal statutes would not. Id. at 1375-76.

The Sullivan court noted that "The res judicata impact of a federal judgment is a question of federal law which a state court is bound to apply under the Supremacy Clause." 813 F.2d at 1376. Thus, a state claim barred by the preclusive nature of a federal order can be characterized as an artfully pleaded federal claim if it seeks to escape the order. Id. "A purported state claim," Sullivan wisely counsels, "based on the same operative facts would be in effect the same federal claim against which the judgment had been entered. The removing court could thus recharacterize the state claim as an artfully pleaded federal claim filed to circumvent the res judicata effect of the federal judgment." Id.

Although the petition filed by the Nowlings in state court purports to seek a declaratory judgment under state law only, its actual function is to avoid and attack the Trenk Orders. It cannot be looked upon as only innocently raising state law issues. The Nowlings claim that their state court suit was not an effort to trump the Trenk Orders, but only a wish to test the applicability of the LCSAA to Triton's purchase of Aero stock in August 1989. To believe that would be to substitute naivete' for common sense. Their state court petition betrays their argument by challenging all purchases going back to June 11, 1987.⁵ Consequently, this case is no more than an attempt to collaterally attack the Trenk Orders, and is possessed of the very kind of federal character sufficient to support removal.

2.

Even if the Nowlings' claims could not be said to possess the imperative federal character, the removal statutes still would not be the exclusive sources of removal jurisdiction. Yonkers Racing Corp. v. City of Yonkers, 858 F.2d 855, 863 (2 Cir.1988), cert. denied, ___ U.S. ___, 109 S.Ct. 1527, 103 L.Ed.2d 833 (1989). Other statutes vest federal courts with the authority to exercise jurisdiction, in exceptional circumstances, to protect an order issued in an earlier case. Id. Thus, for example, the All Writs Act, 28 U.S.C. § 1651(a), authorizes federal courts to issue orders to someone not party to an earlier action if it is necessary to avoid frustrating the implementation of the orders issued in the earlier case. Id. This Court, then, has the command to exercise its jurisdiction to avoid the real possibility of orders issuing from a state court that would be inconsistent with its own. Id. That kind of institutional prerogative has also been confirmed in a suit to enjoin a state court action under an exception to the Anti-Injunction...