Ray Mart, Inc. v. Stock Building Supply of Texas

• Decision Date: 14 February 2006
• Docket Number: Civ.A. No. 1:05-CV-855.
• Citation: 435 F.Supp.2d 578
• Parties: RAY MART, INC. d/b/a Tri-Supply Company and Weldon Vybiral, Plaintiffs, v. STOCK BUILDING SUPPLY OF TEXAS, L.P., Defendant.
• Court: U.S. District Court — Eastern District of Texas

435 F.Supp.2d 578

RAY MART, INC. d/b/a Tri-Supply Company and Weldon Vybiral, Plaintiffs, v. STOCK BUILDING SUPPLY OF TEXAS, L.P., Defendant.

Civ.A. No. 1:05-CV-855.

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

February 14, 2006.

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Bruce Manuel Partain, Gary James Linthicum, Wells Peyton Greenberg & Hunt LLP, Beaumont, TX, for Plaintiffs.

William Stephen Cockerham, III, Bridget Alison Blinn, Hunton & Williams, Dallas, TX, for Defendant.

MEMORANDUM AND ORDER

CRONE, District Judge.

Pending before the court are Defendant Stock Building Supply of Texas, L.P.'s ("Stock") Expedited Motion to Transfer Venue (# 3) and Plaintiffs Ray Mart, Inc. d/b/a Tri-Supply Company ("Tri-Supply") and Weldon Vybiral's ("Vybiral") (collectively "Plaintiffs") Motion to Remand (# 11). Defendant seeks a transfer of venue under 28 U.S.C. § 1404(a) from the United States District Court for the Eastern District of Texas, Beaumont Division, to the United States District Court for the Western District of Texas, Waco Division. Plaintiffs seek remand to state court of this declaratory judgment and breach of employment contract action against Stock, asserting that this court lacks subject matter jurisdiction. Having reviewed the motions, the submissions of the parties, the pleadings, and the applicable law, the court is of the opinion that Plaintiffs' motion to remand should be denied and that Defendant's motion to transfer venue should be granted.

I. Background

On December 14, 2005, Plaintiffs filed suit against Stock in the 172nd Judicial District Court of Jefferson County, Texas, asserting a variety of claims stemming from Vybiral's employment contract with Stock. Specifically, Plaintiffs seek a declaratory judgment that the covenant-not-to-compete provision in Vybiral's employment contract with Stock is unenforceable. Vybiral also asserts a claim for breach of the employment contract, alleging that Stock failed to pay him certain work-related bonuses. Plaintiff Vybiral is a citizen and resident of Moody, Bell County, Texas. Tri-Supply is a Texas corporation with its principal place of business located in Jefferson County, Texas. Defendant Stock is a Delaware limited partnership. Its general partner, Stock Building Supply, Inc., is a citizen of North Carolina, and its limited partner, Stock Building Supply West, Inc., is a Utah corporation with its principal place of business in North Carolina.

From 1990 until 2003, Jeld-Wen, Inc. ("Jeld-Wen") employed Vybiral as the general manager of its Temple, Texas, door mill operation. In 2003, Stock purchased Jeld-Wen, including its door mill operation in Temple, which Stock now operates. On January 13, 2003, Vybiral signed an employment agreement with Stock. The employment contract contains a covenant against competition, which restricts Vybiral for two years after the termination of his employment from "engag[ing] in any business that the Employer currently conducts or enters into during the term of Employee's employment hereunder, within a 100 mile radius of Employer's Temple, Texas branch (the Branch)." Vybiral alleges that, upon its acquisition of Jeld-Wen, Stock told him that his "compensation, including the calculation of [his] bonus, work duties, and conditions would remain the same as they had been with JELD-WEN, Inc."

On November 30, 2005, Vybiral notified Stock that he was resigning and gave a two-week notice. The following day, Stock terminated his employment. Vybiral received a letter from Stock's counsel dated December 9, 2005, which states that Stock has information leading it to believe that Vybiral may have engaged in conduct that violated his employment agreement by: "1) working for, or acting on behalf of, Tri-Supply; 2) soliciting Stock customers on behalf of Tri — Supply; and 3) soliciting Stock employees to quit their employment with Stock and come work for Tri-Supply."

On January 1, 2006, Vybiral commenced employment at Tri-Supply, which operates a door mill and pre-hanging shop in Temply Texas. The doors are sold to commercial builders, residential builders, and the public throughout the State of Texas.

In their original petition, Plaintiffs request: (1) a declaration that the covenant against competition provision in Vybiral's employment contract with Stock is unenforceable; (2) monetary damages for breach of Vybiral's employment contract because Stock did not pay him bonuses commensurate with bonuses he received when he was employed by Jeld-Wen; and (3) reasonable and necessary attorneys' fees, costs of court, and interest as permitted by Texas law. Plaintiffs do not allege a specific amount of damages, stating that the damages sought are within the jurisdictional limits of the court.

On December 19, 2005, Stock removed this case to federal court on the basis of diversity of citizenship, asserting that "there is complete diversity of citizenship between the parties, in that the parties are citizens and residents of different states and the amount in controversy is in excess of $75,000.00 exclusive of interest and costs." On the same day, Stock filed its motion to transfer venue to the Waco Division of the United States District Court for the Western District of Texas. Plaintiffs filed a motion to remand on January 6, 2006, maintaining that the claimed damages do not exceed the required federal jurisdictional minimum of $75,000.00. See 28 U.S.C. § 1332.

II. Analysis

A. Federal Jurisdiction in Removed Actions

"Federal courts are courts of limited jurisdiction." Peoples Nat'l Bank v. Office of Comptroller of the Currency of United States, 362 F.3d 333, 336 (5th Cir. 2004); accord Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir.), cert. denied, 534 U.S. 993, 122 S.Ct. 459, 151 L.Ed.2d 377 (2001); Bobo v. Christus Health, 359 F.Supp.2d 552, 554 (E.D.Tex.2005). "They possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree. It is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction." Kokkonen, 511 U.S. at 377, 114 S.Ct. 1673 (citations omitted); see also Boone v. Citigroup, Inc., 416 F.3d 382, 388 (5th Cir.2005). Furthermore, "[i]t is often stated that a federal court cannot transfer a case if subject matter jurisdiction does not exist." Reed v. Fina Oil & Chem. Co., 995 F.Supp. 705, 708 (E.D.Tex.1998) (citing Coons v. American Horse Show Ass'n, Inc., 533 F.Supp. 398, 400 (S.D.Tex.1982) (citing 15 CHARLES A. WRIGHT, ARTHUR R. MILLER, & EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE § 3844, at 211 (2d ed.1986))). Hence, in the interests of judicial economy, the court will determine whether federal subject matter jurisdiction exists over this controversy before addressing Stock's motion to transfer venue. See id.

Federal courts have subject matter jurisdiction and are authorized to entertain causes of action only where a question of federal law is involved or where there is diversity of citizenship between the parties and the amount in controversy exceeds $75,000.00, exclusive of interest and costs. See 28 U.S.C. §§ 1331, 1332; Lincoln Prop. Co. v. Roche, ___ U.S. ___ ___, 126 S.Ct. 606, 613, 163 L.Ed.2d 415 (2005); McDonal v. Abbott Labs., 408 F.3d 177, 181 (5th Cir.2005); Howery, 243 F.3d at 914-15; Hart v. Bayer Corp., 199 F.3d 239, 246 (5th Cir.2000); Moore v. Powers, 279 F.Supp.2d 821, 824 (E.D.Tex.2003). In a removed action, a district court is required to remand the case to state court if at any time before final judgment, it determines that it lacks subject matter jurisdiction. See 28 U.S.C. § 1447(c); McDonal, 408 F.3d at 182. When considering a motion to remand, the removing party bears the burden of establishing federal jurisdiction and that removal was proper. See Boone, 416 F.3d at 388; see also Garcia v. Koch Oil Co. of Tex., Inc., 351 F.3d 636, 638 (5th Cir.2003); Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir.2002); accord Howery, 243 F.3d at 919; De Aguilar v. Boeing Co. ("De Aguilar II"), 47 F.3d 1404, 1408 (5th Cir.), cert. denied, 516 U.S. 865, 116 S.Ct. 180, 133 L.Ed.2d 119 (1995); Spill Textile Corp. v. Spilltech Envtl., Inc., 223 F.Supp.2d 790, 792 (E.D.Tex.2002).

The existence of federal subject matter jurisdiction is determined at the time of removal from state court. See Bissonnet Invs. LLC v. Quinlan (In re Bissonnet Invs. LLC), 320 F.3d 520, 525 (5th Cir.2003) (citing Arnold v. Garlock, 278 F.3d 426, 434 (5th Cir.2001)); Wingate v. Kerr-McGee Rocky Mountain Corp., 353 F.Supp.2d 779, 782 (E.D.Tex.2005); Jones v. American Home Prods. Corp., 344 F.Supp.2d 500, 502 (E.D.Tex.2004). In order to determine whether jurisdiction is present, the claims set forth in the state court petition are considered as of the date of removal. See Manguno, 276 F.3d at 723 (citing Cavallini v. State Farm Mut. Auto. Ins. Co., 44 F.3d 256, 264 (5th Cir. 1995) (stating that "a complaint amended post-removal cannot divest a federal court of jurisdiction")); Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000); Madden v. Able Supply Co., 205 F.Supp.2d 695, 699 (S.D.Tex.2002). Any ambiguities are resolved against removal because the removal statute is strictly construed in favor of remand. See Bosky v. Kroger Tex., LP, 288 F.3d 208, 211 (5th Cir.2002); Manguno, 276 F.3d at 723; Acuna v. Brown & Root Inc., 200 F.3d 335, 339 (5th Cir.), cert. denied, 530 U.S. 1229, 120 S.Ct. 2658, 147 L.Ed.2d 273 (2000); Bobo, 359 F.Supp.2d at 554; Spill Textile Corp., 223 F.Supp.2d at 792.

The state court petition is usually consulted to determine the amount in controversy, and the sum claimed by the plaintiff controls if the claim is apparently made in good faith. See Dow...