JOHN McBRYDE, District Judge.
Came on for consideration the motion of plaintiff, USHEALTH Group, Inc., to dismiss the counterclaim asserted by defendants, William Oliver South, Jerry D. Blackburn, and Gustavo Fraga. The court, having considered the motion, the response of defendants, the reply, the record, and applicable authorities, finds that the motion should be granted.
This action concerns the alleged failure of defendants to comply with material terms of conditional offer letters that allowed defendants to participate in plaintiff's Equity Incentive Plan ("EIP") (also referred to as the "Restricted Stock Plan").
Separately, the parties are engaged in arbitration regarding disputes arising from defendants' employment by subsidiaries of plaintiff, USHEALTH Career Agency, Inc. ("USHEALTH Career"), and Small Business Insurance Advisors, Inc. ("SBIA").
The court's memorandum opinion and order of February 4, 2015, by which the court denied defendants' motion to compel arbitration, sets out the contentions of the parties more fully.
On April 10, 2015, defendants filed their consolidated answer and affirmative defenses and counterclaim (hereinafter "Defs.' Countercl."). The counterclaim first seeks a declaratory judgment pursuant to 28 U.S.C. § 2201 that (a) SBIA is the mere alter ego of plaintiff; (b) defendants' entitlement to participate in the EIP was directly conditioned on their performance under an Independent Marketing Organization Agreement ("Agreement") with SBIA, and (c) plaintiff has unclean hands due to its making an agreement to arbitrate with defendants and thereafter filing the instant action. In addition, defendants assert a claim for abuse of process, alleging that this action is designed to disrupt the ongoing arbitration between the parties.
Plaintiff urges that the court should decline to exercise its discretion to grant the declaratory relief. In particular, plaintiff says that the matters to be declared are advisory in nature because they do not affect claims asserted in this action, but rather go to the arbitration. Plaintiff further urges that the claim for abuse of process is insufficient because no process is identified, plaintiff's alleged ulterior motive does not matter, and defendants have not pleaded an actual injury.
Rule 8(a)(2) of the Federal Rules of Civil Procedure provides, in a general way, the applicable standard of pleading. It requires that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), "in order to give the defendant fair notice of what the claim is and the grounds upon which it rests,"
Moreover, to survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), the facts pleaded must allow the court to infer that the plaintiff's right to relief is plausible.
The Declaratory Judgment Act is an enabling act that confers discretion on the courts, rather than absolute rights on litigants.
The Fifth Circuit has instructed district courts to use a three-step analysis in determining whether to entertain requests for declaratory judgment.
Here, plaintiff does not argue that the court lacks authority to grant a declaratory judgment. Instead, plaintiff urges that the counterclaim is not justiciable as the matters defendants seek to have determined are not relevant to plaintiff's claims. And, plaintiff focuses on the third element, the court's discretion. In that regard, it notes that the Fifth Circuit has set forth the following (nonexclusive) factors to consider in determining whether to dismiss a declaratory judgment action: (1) whether there is a pending state action in which all of the matters in controversy may be fully litigated, (2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant, (3) whether the plaintiff engaged in forum shopping in bringing the suit, (4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist, (5) whether the federal court is a convenient forum for the parties and witnesses, (6) whether retaining the lawsuit in federal court would serve the purposes of judicial economy, and (7) whether the federal court is being called on to construe a state court judicial decree involving the same parties and entered by the court before whom the parallel state suit between the same parties is pending.
This case is unusual in the sense that there is not a pending or threatened state court case that any party is seeking to avoid. There is, however, a pending arbitration involving defendants and SBIA. Such arbitration is properly considered, like a pending state court action, in determining whether to proceed with a declaratory judgment suit.
The other part of defendants' counterclaim is for abuse of process. The elements of a claim for abuse of process under Texas law are: (1) defendant made an illegal, improper, or perverted use of process, neither warranted nor authorized by the process; (2) the defendant had an ulterior motive or purpose in exercising such use; and (3) the plaintiff suffered injury as a result of the illegal act.
In this case, defendants' only allegation with regard to process-if it can even be considered as regarding process-is that plaintiff "commenced the Action below by filing three virtually identical claims against [defendants] in the District Court of Tarrant County, Texas claiming that [defendants] were never entitled to participate in the EIP Plan." Defs.' Countercl. at 14, ¶ 18. If the court assumes that the process was citations issued as part of the commencement of the state court action, as a matter of law, there could have been no abuse. Defendants do not allege any facts to show that any process was used for a purpose for which it was not intended.
Inasmuch as defendants have done nothing more than recite the elements of a cause of action for abuse of process along with legal conclusions, dismissal is appropriate.
For the reasons discussed herein,
The court ORDERS that plaintiff's motion to dismiss defendants' counterclaim be, and is hereby, granted and defendants' counterclaim be, and is hereby, dismissed.
The court determines that there is no just reason for delay in, and hereby directs, entry of final judgment as to the dismissal of the counterclaim.