Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-02794/USCOURTS-azd-2_06-cv-02794-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO

NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Margaret Khouri, 

Plaintiff, 

vs.

Yuma Gastroenterology, P.C., et al., 

Defendants. 

Yuma Gastroenterology, P.C., et al.,

Counterclaimants,

vs. 

Margaret Khouri,

Counterdefendant. 

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No. CV 06-02794-PHX-FJM

ORDER

I.

The court has before it plaintiff/counterdefendant Khouri's ("plaintiff") "Motion to

Dismiss Counterclaim" (doc. 8); defendants/counterclaimants Yuma Gastroenterology P.C.,

Esker, Sanghvi and Anireddy's ("defendants") "Opposition to Motion to Dismiss

Counterclaim and Motion for Leave to Amend Counterclaim" (doc. 10) and "[Proposed]

Amended Counterclaim" (attached as an exhibit to doc. 10); plaintiff's "(1) Reply in Support

of Motion to Dismiss; & (2) Opposition to Motion for Leave to Amend Counterclaim" (doc.

Case 2:06-cv-02794-FJM Document 17 Filed 04/24/07 Page 1 of 7
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1

 Although plaintiff moves to dismiss defendants' "counterclaim," defendants' answer

alleges counterclaims of defamation and slander, breach of fiduciary duty and breach of

contract. See Answer (doc. 5) at 9-11. For the sake of clarity, we note that this order

addresses our ability to assert jurisdiction over each counterclaim. 

2

 Defendants alternatively seek leave to amend to assert independent jurisdictional

bases. Because we conclude that we have supplemental jurisdiction over the counterclaims,

we do not reach defendants' alternative argument, and deny the motion to amend on grounds

of mootness.

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12). and defendants' "Reply in Further Support of Their Motion to Amend" (doc. 14).1

Plaintiff moves to dismiss pursuant to Rule 12(b)(1), Fed. R. Civ. P., arguing that we do not

have supplemental jurisdiction over defendants' counterclaims. For the reasons stated below,

we deny plaintiff's motion.2

II.

We have original jurisdiction over plaintiff's claims pursuant to 28 U.S.C. § 1332. If

defendants' counterclaims are so related to plaintiff's claims "that they form part of the same

case or controversy," we have supplemental jurisdiction over the counterclaims pursuant to

28 U.S.C. § 1367(a). Counterclaims that derive from the same "common nucleus of

operative fact" as the original claims form part of the same case or controversy as the original

claims. United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S. Ct. 1130, 1138 (1966). 

Plaintiff argues that we have supplemental jurisdiction under § 1367(a) if defendants'

counterclaims are compulsory; that is, if they arise "out of the transaction or occurrence" that

is the subject matter of plaintiff's claims. See Motion to Dismiss at 3 (quoting Fed. R. Civ.

P. 13(a)). The Ninth Circuit applies the "logical relationship" test to determine whether a

counterclaim is compulsory. In re Pinkstaff, 974 F.2d 113, 115 (9th Cir. 1992). A logical

relationship exists between the counterclaim and the claim when "the same operative facts

serve as the basis of both claims or the aggregate core of facts upon which the claim rests

activates additional legal rights otherwise dormant in the defendant." Id. Also, claims have

a logical relationship when " 'the essential facts of the various claims are so logically

connected that considerations of judicial economy and fairness dictate that all the issues be

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resolved in one lawsuit.' " Hydranautics v. FilmTec Corp., 70 F.3d 533, 536 (9th Cir. 1995)

(quotation omitted). 

The logical relationship test bears obvious similarity to the Section 1367(a) common

nucleus inquiry. In fact, the First, Fifth, and Eleventh Circuits' compulsory counterclaim

analyses have been described as "co-extensive" with Section 1367(a)'s accord of jurisdiction

over claims arising from a common nucleus of operative fact. 3 James Wm. Moore et al.,

Moore's Federal Practice - Civil § 13.10. However, the Ninth Circuit's Rule 13(a) logical

relationship test is more restrictive than other circuits' Rule 13(a) common nucleus of

operative facts analyses. Id. Therefore, in determining whether we have supplemental

jurisdiction over defendants' counterclaims, Rule 13(a) precedent is informative. However,

to the extent that it is more restrictive than the analysis derived from Gibbs, 383 U.S. at 725,

86 S. Ct. at 1138, it is not controlling for purposes of determining whether we have Section

1367(a) jurisdiction. 

III.

Plaintiff's complaint alleges nine causes of action: breach of the parties' shareholder

agreement, breach of fiduciary duty, tortious breach of the shareholder agreement, violation

of Arizona's Anti-Trust Act, assault and battery, intentional infliction of emotional distress,

wrongful discharge in violation of the Arizona Employment Protection Act, intentional

interference with contractual relations and business expectancy, and Violation of A.R.S. §

13-2301. See Complaint (doc. 1). Plaintiff contends that from approximately February 2001

until March 31, 2006, she was a shareholder and employee of defendant Yuma

Gastroenterology, P.C., where defendants Anireddy, Esker and Sanghvi were also

shareholders and employees. Id. at 3-4. Plaintiff states that defendants attempted to force

plaintiff to forego her interest in Yuma Gastroenterology, and to "quit her medical practice

in the Yuma area." Id. at 4. 

Defendants allege counterclaims of defamation and slander, breach of fiduciary duty,

and breach of employment contract and shareholder agreement. Answer at 9-11. They also

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contend that in January 2005, plaintiff spoke with a physician defendants sought to recruit

to their medical practice. Id. at 9. Plaintiff allegedly "knowingly made false statements to

that physician concerning [defendants'] honesty, integrity, virtue and reputation," and those

statements were designed to, and did, bring defendants into "disrepute, contempt and/or

ridicule." Id. Further, defendants assert that plaintiff breached her fiduciary duties by

"engaging in conduct detrimental to" defendants' interests, by impugning defendants'

reputation, "failing to discharge her obligations as a physician employee" of Yuma, and

"intentionally acting in a manner designed to injure" defendants. Id. at 10.

A.

Plaintiff first argues that we cannot exercise jurisdiction over defendants'

counterclaims because they do not share a logical relationship with plaintiff's claims, and

involve "discreet [sic] issues of law and fact." Motion to Dismiss at 5. In particular, plaintiff

contends that her claims "relate[] to the events leading up to and underlying" plaintiff's

February 2006 termination, but the counterclaims relate to events "that occurred around the

time [plaintiff] allegedly made defamatory statements," around January 2005. Id. 

We reject this argument. A comparison of the parties' claims and counterclaims

indicates that they share a common nucleus of operative facts. Plaintiff's assault and battery

claim specifies that the underlying conduct occurred on February 12, 2006. Complaint at 8.

However, none of the remaining claims focuses on so limited a time period. Instead, they

implicate events that occurred throughout the course of plaintiff's four years of employment

at Yuma Gastroenterology. For example, plaintiff's intentional infliction of emotional

distress claim alleges that defendants had a "malicious plan" to force plaintiff out of the

Yuma Gastroenterology practice. Id. at 9. Although plaintiff alleges that she was forced to

resign in February 2006, her wrongful termination claim alleges that defendants "wrongfully

and repeatedly demanded that Plaintiff relinquish her interest" in Yuma. Id. at 10. 

In defending against plaintiff's wrongful discharge claim, which implicates events

"leading up to and underlying" plaintiff's resignation, Motion to Dismiss at 2, defendants will

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3

 Plaintiff also argues that "there is no indication that the same evidence will be used

to support" the parties' claims. Id. at 6. For the reasons stated above, we conclude that

plaintiff's claims and defendants' counterclaims that are contract-based will involve evidence

of the parties' shareholder and employment agreements, and the parties' conduct. Similarly,

defendants' defamation and slander counterclaims will implicate some of the evidence related

to a wrongful discharge defense. 

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also introduce evidence regarding plaintiff's conduct throughout the course of her four years

of employment. Defendants allege that the events surrounding the allegedly defamatory and

slanderous statements occurred during plaintiff's Yuma Gastroenterology employment.

Therefore, defendants' defense to plaintiff's wrongful termination claim and defendants'

defamation and slander counterclaims will implicate overlapping events and evidence. 

Defendants' remaining counterclaims (breach of fiduciary duty and breach of

employment contract and shareholder agreement) implicate the parties' shareholder and

employment agreements. Four of plaintiff's claims (breach of the parties' shareholder

agreement, breach of fiduciary duty, tortious breach of the shareholder agreement, and

intentional interference with contractual relations and business expectancy) do the same.

Adjudication of these claims and counterclaims will involve the parties' agreement and

conduct as fiduciaries over the course of plaintiff's employment. Further, adjudication will

look beyond the months leading up to plaintiff's resignation. Indeed, plaintiff concedes that

both the counterclaims and her own claims "involve the employee-shareholder relationship."

Motion to Dismiss at 5. Plaintiff's participation in that relationship lasted several years.3

B.

Plaintiff next argues that we lack supplemental jurisdiction over the counterclaims

because defendants "do not allege that [plaintiff's] alleged defamation and slander, breach

of contract and breach of fiduciary duty resulted in or are any way related to her termination

and the events leading up to her termination." Motion to Dismiss at 6. Defendants respond

that the events which form the basis of their counterclaims "led to and underlie" plaintiff's

termination. Opposition at 3. Plaintiff argues that this characterization is "disingenuous"

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because the counterclaims do not "allege that [plaintiff] was 'terminated,' much less that her

'termination' was in any way related to the counterclaims." Reply at 3. 

The fact that the counterclaims fail to allege some sort of logical relationship with

plaintiff's termination is immaterial. Allegations regarding plaintiff's termination have no

effect on the validity of the causes of action defendants have stated in their counterclaims.

However, defendants will answer plaintiff's claims with evidence regarding the shareholder

agreement, and plaintiff's conduct throughout the course of her employment. That same

evidence will be used to establish defendants' counterclaims. Therefore, although the

counterclaims do not make explicit mention of plaintiff's termination, they nevertheless form

part of the same controversy as plaintiff's claims.

C.

Finally, considerations of fairness support our conclusion. If we do not have

supplemental jurisdiction over defendants' defamation and slander claims, defendants would

be forced to litigate those claims in an alternative forum. However, our adjudication of

plaintiff's wrongful termination claim might include an adjudication of the truthfulness of the

statements defendants allege are defamatory and slanderous. As a result, even if defendants

re-filed their defamation and slander claims, issue preclusion could defeat them. See Pochiro

v. Prudential Ins. Co., 827 F.2d 1246, 1251 (9th Cir. 1987) ("As long as the allegedly

defamatory statements are sufficiently related to subject matter of the original action, they

may be barred as compulsory counterclaims.").

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THEREFORE, IT IS ORDERED DENYING plaintiff's motion to dismiss

counterclaim (doc. 8) and it FURTHER ORDERED DENYING defendants' motion for

leave to amend counterclaim (doc. 10) on grounds of mootness.

DATED this 23rd day of April, 2007.

Case 2:06-cv-02794-FJM Document 17 Filed 04/24/07 Page 7 of 7