Sydow v. Acheson & Co.

• Decision Date: 26 January 2000
• Docket Number: No. CIV. A. G-99-360.,CIV. A. G-99-360.
• Citation: 81 F.Supp.2d 758
• Parties: Michael SYDOW and Sydow & McDonald, L.L.P., Plaintiffs, v. ACHESON & CO., Deborah A., Acheson, Kevin W. Whitley, Connell Lightbody, Patrick G. Guy, Mark Steven, Robert W. Cameron, Glennys Bembridge, and Heather Donison, Defendants.
• Court: U.S. District Court — Southern District of Texas

81 F.Supp.2d 758

Michael SYDOW and Sydow & McDonald, L.L.P., Plaintiffs, v. ACHESON & CO., Deborah A., Acheson, Kevin W. Whitley, Connell Lightbody, Patrick G. Guy, Mark Steven, Robert W. Cameron, Glennys Bembridge, and Heather Donison, Defendants.

No. CIV. A. G-99-360.

United States District Court, S.D. Texas, Galveston Division.

January 26, 2000.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Russell Thomas Lloyd, O'Quinn & Laminack, Houston, TX, mediator.

Richard Lee Melancon, Melancon and Hogue, Michael W Hogue, Anthony G Buzbee, Melancon & Hogue, Friendswood, TX, for Michael Sydow, Sydow & McDonald.

George William Vie, III, Mills Shirley et al., Galveston, TX, Gary M Polland, Polland and Cook, Houston, TX, for Acheson & Company, Deborah A Acheson, Kevin W Whitley, Patrick G Guy, Mark Steven.

Wade B Williams, Lewis and Williams, Galveston, TX, for Robert W Cameron, Heather Donison, Connell Lightbody.

ORDER DENYING IN PART AND GRANTING IN PART DEFENDANTS' MOTIONS TO DISMISS AND DENYING DEFENDANTS' MOTIONS FOR MORE DEFINITE STATEMENT

KENT, District Judge.

Plaintiffs bring this claim against Defendants alleging a variety of claims arising from a contract allegedly reached by the parties in July 1995. Now before the Court are Motions to Dismiss for Lack of Subject Matter Jurisdiction, for Lack of Personal Jurisdiction, and for Forum non Conveniens, which were filed by Defendants Acheson & Company, Deborah A. Acheson, Kevin W. Whitley, Mark Steven, and Robert W. Cameron on August 4, 1999. Alternatively, Defendants move for More Definite Statement. Defendants Connell Lightbody and Heather Donison filed separate but identical Motions to Dismiss and Motions for More Definite Statement with the Court on November 15, 1999 and December 27, 1999, respectively. For the reasons stated below, the Motions to Dismiss and Motions for More Definite Statement submitted by Defendants Acheson & Co., Deborah A. Acheson, Kevin W. Whitley, Cornell Lightbody, Mark Steven, and Heather Donison are all DENIED, but Defendant Robert W. Cameron's Motion to Dismiss for Lack of Personal Jurisdiction is GRANTED.

I. FACTUAL SUMMARY

This suit stems from Defendants' alleged repudiation of a legally binding contract. In January 1994, Defendant Whitley, acting on behalf of all Defendants, entered into an agreement with Plaintiffs to jointly pursue the claims of eighty-four Canadian breast implant litigants in Texas state court.¹ Eventually, those suits were dismissed based on forum non conveniens.

Defendants, however, allegedly reached a second agreement with Plaintiffs in July 1995. That "contract" provided that Plaintiffs assist Defendants in representing one hundred nine of Defendants' Canadian breast implant claimants in a bankruptcy proceeding that had been filed in Michigan by the Dow-Corning Corp. Specifically, the "contract" called for Plaintiffs to aid Defendants in liquidating Defendants' clients' breast implant claims, regardless of whether such liquidation occurred in the United States or in a class action filed in Canada. Moreover, Plaintiffs agreed to assist Defendants in enforcing all judgments in United States bankruptcy court. In return, Plaintiffs were to receive a 50% share of the contingency fees obtained by Defendants.

In support of their obligations under the alleged contract, Plaintiffs claim to have allocated enormous time and resources conducting discovery and gathering evidence. Much correspondence between Plaintiffs and Defendants ensued, and on more than one occasion Defendants sent attorneys to Houston to access the voluminous materials Plaintiffs had accumulated in its Texas offices. Ultimately, the Canadian breast implant claims were liquidated through a class action filed in British Columbia, Canada. On February 16, 1999, the Supreme Court of British Columbia approved a $25 million settlement reached by the Canadian breast implant claimants and Dow-Corning, with payments beginning in late 2000. That court also approved a contingency fee agreement for class counsel, subject to the actions of an independent administrator. This settlement, however, now awaits confirmation by a United States Bankruptcy Court in Michigan. With a settlement for the Canadian breast implant litigants reached, Plaintiffs allege that Defendants have terminated the July 1995 agreement and therefore will refuse to compensate Plaintiffs as originally promised once the contingency fees become available. Consequently, Plaintiffs have filed suit against Defendants alleging breach of contract, breach of fiduciary duty, fraud, conversion, and promissory estoppel.

II. MOTION TO DISMISS

A. Standard of Review

The Federal Rules of Civil Procedure authorize a court, upon suitable showing, to dismiss any action or any claim within an action for failure to state a claim upon which relief can be granted. See FED. R. CIV. P. 12(b)(6). When considering a motion to dismiss, the Court accepts as true all well-pleaded allegations in the complaint, and views them in a light most favorable to the plaintiff. See Malina v. Gonzales, 994 F.2d 1121, 1125 (5th Cir. 1993). Unlike a motion for summary judgment, a motion to dismiss should be granted only when it appears without a doubt that the plaintiff can prove no set of facts in support of her claims that would entitle her to relief. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1067 (5th Cir. 1994).

B. Subject Matter Jurisdiction

Defendants first argue that Plaintiffs' claims are not ripe for adjudication, because Defendants have not collected any fees in connection with the breast implant settlement. The Court, however, finds the issue raised by Defendants moot, as Plaintiffs filed an Amended Complaint on December 2, 1999 seeking, pursuant to 28 U.S.C. § 2201 (1994), declaratory relief over the disputed fees once they are awarded and distributed to Defendants. Recognizing that a suit brought under the declaratory Judgment Act does not, by itself, confer jurisdiction upon federal courts, the Court must determine whether an independent basis for jurisdiction exists. See Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671-72, 70 S.Ct. 876, 878-79, 94 L.Ed. 1194 (1950). In this case, the Court holds that Plaintiffs' claims are valid under 28 U.S.C. § 1333.

While the Texas Plaintiffs cannot receive immediate enforcement of their declaratory claims, the fact remains that the $6 million contingency fee likely to be awarded to the Canadian Defendants as a result of the breast implant settlement exceeds the $75,000 threshold necessary to invoke diversity jurisdiction. See 28 U.S.C. § 1333. More importantly, because Defendants continue to vehemently deny a contractual obligation to split any portion of the fees with Plaintiffs, the Court finds that an actual, justiciable controversy exists concerning the parties' rights to the contingency fee award so as to confer subject matter jurisdiction upon the Court. See Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826 (1941) (observing that a "controversy" as contemplated by the Declaratory Judgment Act boils down to "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment"). Furthermore, because there is "a substantial possibility" that the fee award will in fact be granted, the case is ripe for adjudication notwithstanding the existence of a future contingency regarding the fee award. New Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 833 F.2d 583, 586-87 (5th Cir.1987) (noting that the judicial resolution of contingent claims is consistent with the purpose of the Declaratory Judgment Act, which is "`to settle actual controversies before they ripen into violations of law or breach of some contractual duty'" (quoting Hardware Mut. Cas. Co. v. Schantz, 178 F.2d 779, 780 (5th Cir. 1949))); see Chevron U.S.A., Inc. v. Traillour Oil Co., 987 F.2d 1138, 1154 (5th Cir. 1993) (concluding that "the ripeness inquiry focuses on whether an injury that has not yet occurred is sufficiently likely to happen to justify judicial intervention"). Given that there is a substantial possibility that Defendant will receive the contingency fees, the Court finds that Plaintiffs' claims present an actual controversy ripe for review. And, by exercising supplemental jurisdiction under 28 U.S.C. § 1331, the Court also possesses jurisdiction over Plaintiffs' remaining contract and tort claims. Accordingly, Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction is DENIED.

C. Personal Jurisdiction

Defendants next argue that the exercise of personal jurisdiction is improper. Defendants Acheson, Whitley, Steven, Cameron, and Donison all reside in Canada, and Defendants Acheson & Company and Connell Lightbody are both Canadian law firms each with a principal place of business outside of Texas. Together, all Defendants assert that contacts with Texas are so limited as to justify dismissal pursuant to FED. R. CIV. P. 12(b)(2), on the grounds that this Court lacks personal jurisdiction over them.²

In federal court, personal jurisdiction over a nonresident defendant is proper when: (1) the defendant is amenable to service of process under the forum state's long-arm statute, and (2) the exercise of personal jurisdiction over the defendant is consistent with due process. See Jones v. Petty-Ray Geophysical Geosource, Inc., 954 F.2d 1061, 1067 (5th Cir. 1992). The Texas long-arm statute authorizes service of process on a nonresident defendant if the defendant is determined to be "doing business" in Texas. See TEX. CIV. PRAC. & REM. CODE ANN. § 17.042. Because the phrase "doing business" has been interpreted to reach as far as the United States...