Ridgewood Clinics, Inc. v. Verma, No. 4:97CV45-B-D. (N.D. Miss. 5/__/1997)
| Decision Date | 01 May 1997 |
| Docket Number | No. 4:97CV45-B-D.,4:97CV45-B-D. |
| Parties | RIDGEWOOD CLINICS, INC., a Mississippi Corporation, PLAINTIFF v. SATISH C. VERMA, M.D. DEFENDANT. SATISH C. VERMA, M.D. COUNTERCLAIM PLAINTIFF v. KRISHAN K. GUPTA, M.D., Individually, ABHA GUPTA, Individually and RIDGEWOOD CLINICS, INC., a Mississippi Corporation, jointly and severally COUNTERCLAIM DEFENDANTS. |
| Court | U.S. District Court — Northern District of Mississippi |
This cause comes before the court on defendant/counterclaim plaintiff Dr. Verma's timely motion to remand and for attorney's fees, costs and expenses, including sanctions. The court has duly considered the parties' pleadings and memoranda and is ready to rule.
Ridgewood Clinics, Inc. [hereinafter the Clinic], brought this action in state court for an accounting, compensatory damages for alleged breach of its employment agreement with Dr. Verma and injunctive relief to enforce a covenant not to compete. Dr. Verma filed an answer and a separate counterclaim against the Clinic, Dr. Gupta, the Clinic's president, and Mrs. Gupta, the Clinic's director/manager seeking actual and punitive damages for breach of employment contract, fraud and bad faith and tortious interference with professional relations, rescission of the contract and voidance of the non-competition covenant. Dr. Verma was admitted to the United States pursuant to a resident alien H-1BV visa status under federal immigration statutes and regulations. The Clinic, through Dr. Gupta, applied for and was designated as Dr. Verma's employer for three years as a condition precedent to his immigrant visa status. Accordingly, the counterclaim alleges violations of federal immigration laws and regulations.1
The Clinic, Dr. Gupta and Mrs. Gupta removed this cause on the ground of federal question jurisdiction. The notice of removal states in part: "the Counterclaim/Third Party Complaint of Verma asserts claims and alleged violations arising under the Constitution, laws, or treaties of the United States." Consistent with the notice of removal, the removing parties, in opposition to the instant motion, assert that "removal of this matter was predicated upon the allegations contained in Dr. Verma's Counterclaim/Third-Party Complaint against Dr. Gupta, Mrs. Gupta and the Clinic."2 The notice designates the Clinic as the counterdefendant and Dr. and Mrs. Gupta as third-party defendants. The threshold issue is whether the removing parties have the statutory right to remove. 28 U.S.C. § 1441(a) provides, in pertinent part:
any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants....
(Emphasis added.) It is well settled that counterclaim defendants cannot remove an action to federal court. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 85 L. Ed. 1214 (1941) (). See Estate of Spragins v. Citizens Nat'l Bank of Evansville, 563 F. Supp. 424, 426 (N.D. Miss. 1983) (). Therefore, the Clinic clearly has no right to remove as a counterdefendant.
With respect to Dr. and Mrs. Gupta, the removing parties contend: "Under F.R.C.P. 13 and 14, as well as M.R.C.P. 13 and 14, the pleading [entitled "Counterclaim"] constitutes a thirdparty complaint because it brings in new parties to the litigation and lodges a complaint against them."3 Since a state's "procedural provisions cannot control the privilege of removal granted by the federal statute," the federal rules of procedure are determinative of the nature of the subject pleading.4 Chicago, Rock Island & Pac. R.R. Co. v. Stude, 346 U.S. 574, 580 (1954) (citing Shamrock Oil & Gas Corp., 313 U.S. at 104) ("The removal statute, which is nationwide in its operation, was intended to be uniform in its application, unaffected by local law definition or characterization of the subject matter to which it is to be applied")). Fed. R. Civ. P. 14(a), entitled "Third-Party Practice," provides in pertinent part:
When Defendant May Bring in Third Party.
At any time after commencement of the action a defending party, as a third-party plaintiff, may cause a summons and complaint to be served upon a person not a party to the action who is or may be liable to the third-party plaintiff for all or part of the plaintiff's claim against the third-party plaintiff....The third-party defendant may assert against the plaintiff any defenses which the third-party plaintiff has to the plaintiff's claim. The third-party defendant may also assert any claim against the plaintiff arising out of the transaction or occurrence that is the subject matter of the plaintiff's claim against the third-party plaintiff.
The counterclaim cannot be construed as a third-party complaint under the express terms of Rule 14(a). Dr. and Mrs. Gupta are not parties who are or may be liable to Dr. Verma for all or part of the Clinic's claim against Dr. Verma. In fact, Dr. Gupta, in his capacity as president of the Clinic, signed the Clinic's complaint. The rule clearly contemplates the plaintiff and third-party defendant as adversaries.5 As discussed infra, the Fifth Circuit has allowed removal by third-party defendants "where the third-party complaint seeks indemnity based on a separate obligation owed to the defendant (such as a contractual indemnity obligation)." Jones v. Petty-Ray Geophysical, Geosource, Inc., 954 F.2d 1061, 1066 (5th Cir.), cert. denied, 506 U.S. 867, 121 L. Ed. 2d 136 (1992) (citing Carl Heck Engineers, Inc. v. Lafourche Parish Police Jury, 622 F.2d 133, 136 (5th Cir. 1980)).6
Fed.R.Civ.P. 13(h) provides:
Joinder of Additional Parties. Persons other than those made parties to the original action may be made parties to a counterclaim or cross-claim in accordance with the provisions of Rules 19 and 20.
Rule 19 pertains to joinder of persons needed for just adjudication; Rule 20 pertains to permissive joinder of parties. The counterclaim alleges misconduct on the part of the Clinic, Dr. Gupta and Mrs. Gupta, e.g., "Counter-claim plaintiff further alleges against the defendants jointly and severally his claim for punitive damages in that all of the activities and conduct of the defendants were done with actual malice...."7 The counterclaim asserts against Dr. and Mrs. Gupta, as well as the Clinic, jointly and severally a right to relief regarding the same series of transactions or occurrences. The court finds that Dr. Verma's pleading is unequivocally a counterclaim against Dr. and Mrs. Gupta, as well as the Clinic. Dr. and Mrs. Gupta are not thirdparty defendants. "Since the [Guptas] are counterclaim defendants, they cannot remove this suit to federal court." Tindle v. Ledbetter, 627 F. Supp. 406, 407 (M.D. La. 1986). In Tindle plaintiff Tindle, the distributor for Justice Brothers Distributing Co., Inc., filed a state court action against his predecessor, Ledbetter, to enjoin interference with his business. Ledbetter filed the equivalent of a federal counterclaim against Tindle, Justice Brothers Distributing Co., Inc., and two corporate officers under a state anti-monopoly statute.8 The three added parties removed on the ground that the claim against them constituted a separate and independent third-party claim. Id. The court held that the added parties "must be considered as additional defendants in counterclaim and not as third party defendants" under Rule 13(h). Id. (emphasis added).9 See OPNAD Fund, Inc. v. Watson, 863 F. Supp. 328 (S.D. Miss. 1994) ().
The removing parties further contend that Dr. Verma should be realigned as the plaintiff and that they should be realigned as defendants pursuant to the Supreme Court's functional test10:
The plaintiff...is the party whose intent to achieve a particular result, such as the recovery of property or money, is the "mainspring of the proceedings," and who is responsible for the continued existence of the action. The party opposing or resisting the plaintiff's claim is the defendant, who may remove.
General Motors Corp. v. Gunn, 752 F. Supp. 729, 731 (N.D. Miss. 1990) (citations omitted). General Motors Corp. v. Gunn is clearly distinguishable from the instant cause. The Clinic commenced this action in state court to recover damages for breach of contract and to enforce a covenant not to compete. The removing parties assert that Dr. Verma's conduct following his termination from employment triggered the need for injunctive relief sought in the complaint and that "the certainty of litigation by Dr. Verma" motivated the Clinic to take "the first step."11 The Clinic's filing in anticipation of litigation instituted by Dr. Verma is not analogous to General Motor Corporation's filing of a bill of discovery in state court merely to obtain or preserve evidence for use in an anticipated action to be brought by Gunn. 752 F. Supp. at 732. The court rejects the removing parties' assertion that Dr. Verma "precipitated the state law action" for purposes of determining the "mainspring of the proceedings."12 Having terminated Dr. Verma, the Clinic concedes that it filed first as a preemptive strike to enforce the covenant not to compete. It appears to the court that Dr. Verma, through his counterclaim, is primarily resisting enforcement of the covenant not to compete in light of its impact on his visa status and his need for a successor employer/sponsor under the federal immigration visa statutes. The Clinic made a tactical decision to file first and did so in state court, thereby availing itself of state court jurisdiction to litigate issues raised in both the complaint and counterclaim, regarding the subject employment agreement including the covenant not to compete.13 Accordingly, the court finds that...
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