16-2716-cv CMGRP, Inc. v. Agency for the Performing Arts, Inc., et al.

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRON IC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated Term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the

26 th day of April, two thousand seventeen.

Present: ROSEMARY S. POOLER, RICHARD C. WESLEY, SUSAN L. CARNEY, Circuit Judges

.

_____________________________________________________

CMGRP, INC.,

Plaintiff-Appellee

,

v. 16-2716-cv

AGENCY FOR THE PERFORMING ARTS, INC., MAGGIE GALLANT, SHEILA MUNGUIA, JENNA HUDSON,

Defendants-Appellants

.

____________________________________________________

Appearing for Appellants: Robert E. Rigr ish, Bodker, Ramsey, Andrews, Winograd & Wildstein, P.C., Atlanta, GA.

Appearing for Appellee: Robert S. Wh itman, Seyfarth Shaw LLP (John W. Egan, on the brief ), New York, NY.

Appeal from the United States District C ourt for the Southern Di strict of New York (Schofield, J. ).2 ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the order of said Dist rict Court be and it hereby is AFFIRMED

.

Defendants-Appellants Agency for the Perf orming Arts, Inc. (“APA”), Maggie Gallant, Sheila Munguia, and Jenna Hudson (collectively, “Defendants”) appeal th e July 8, 2016 order of
the United States District Court for the S outhern District of New York (Schofield, J. ) granting the motion of Plaintiff-Appellee CMGRP, Inc. (“CMGRP”) to remand the action to the Supreme Court of the State of New York and granting CM GRP’s request for costs and attorneys’ fees pursuant to 28 U.S.C. § 1447(c). Ap pellants challenge the order’s aw ard of fees and costs. We assume the parties’ familiarity with the underlying facts, procedural history, and specification of
issues for review.

“[O]ur review of a district court’s award of attorney’s f ees and costs under [28 U.S.C. §] 1447(c) is for abuse of discretion.” Calabro v. Aniqa Halal Live Poultry Corp. , 650 F.3d 163, 166 (2d Cir. 2011).

Under 28 U.S.C. § 1447(c), “[a]n order rema nding the case [to state court] may require payment of just costs and any actual expenses, in cluding attorney fees, incu rred as a result of the removal.” 28 U.S.C. § 1447(c). “[A]bsent unusual circumstances, [however,] courts may award attorney’s fees under [Section] 1447(c) only wh ere the removing party lacked an objectively reasonable basis for seeking removal.” Calabro , 650 F.3d at 166. Further, “[w]hen a court
exercises its discretion in this ma nner, . . . its reasons for departing from the general rule should be faithful to the purposes of awarding f ees under [Section] 1447(c),” which include disincentivizing actions that “d elay[] resolution of the case, impose[] additional costs on both parties, and waste[] judicial resources.” Martin v. Franklin Capital Corp. , 546 U.S. 132, 140-41 (2005) (internal quotation marks omitted).

Here, Defendants claimed that the court ha d diversity jurisdicti on over an action with non-diverse parties because CMGRP had “fraudule ntly joined” an impr oper party, Munguia, to the case simply to eliminate diversity. It is well settled that “[a] plaintiff may not defeat a federal court’s diversity jurisdic tion and a defendant’s right of removal by merely joining as defendants parties with no real connec tion to the controversy.” Whitaker v. Am. Telecasting, Inc. , 261 F.3d 196, 207 (2d Cir. 2001) (quoting Pampillonia v. RJR Nabisco, Inc. , 138 F.3d 459, 460-61 (2d Cir. 1998)). In order to prove fraudulent joinder, the defendant “must demonstrate, by clear and convincing evidence . . . that ther e is no possibility, based on the pl eadings, that the plaintiff can state a cause of action against the non -diverse defendant in state court.” Id. (quoting Pampillonia , 138 F.3d at 461).

In this case, however, the district court di d not abuse its discretion in concluding that Defendants had no “objectively reasonable” basi s on which to argue that CMGRP could not possibly state a breach-of-contract claim agains t Munguia. “Under New York law, a breach of contract claim requires proof of (1) an agreemen t, (2) adequate performance by the plaintiff, (3) breach by the defend ant, and (4) damages.” Fischer & Mandell, LLP v. Citibank, N.A. , 632 F.3d 793, 799 (2d Cir. 2011). “Accept[ing] facts allege d as true and interpre t[ing] them in the light most favorable to plaintiff,” Miglino v. Bally Total Fitness of Greater N.Y., Inc. , 985 N.E.2d 128, 134 (N.Y. 2013), CMGRP pled that: (1) Munguia signed a C ode of Conduct Non-3 Solicitation Agreement with CMGRP; (2) CMGR P did not violate the agreement; (3) Munguia violated the agreement by beginning to work fo r APA “in direct competition with” CMGRP, including by “directly or indirectly solicit[ing] CMGRP clients and prosp ects,” less than a year after she left CMGRP; and (4) CMGRP su ffered damages. App’x at 26, 28. Although Defendants argue that Munguia and Gallant’s affidavits contradict the complaint’s allegations and that the non-compete clause is overbroad and therefore not fully enforceable, neither of these contentions, even if true, would make it impo ssible for CMGRP’s claim against Munguia to
survive a motion to dismiss in New York state court. See Miglino , 985 N.E.2d at 134 (holding that, on a motion to dismiss, movant’s affidavi ts could not overcome complaint’s allegations; see also Brown & Brown, Inc. v. Johnson , 34 N.E.3d 357, 362-63 (N.Y. 2015) (finding factual dispute as to whether overbroa d restrictive covenant could st ill be partially enforced).

In addition, the district cour t’s award served the purposes of Section 1447(c). Defendants argue that CMGRP’s filing of the New York stat e case was itself abusive behavior. But in the context of wasteful litigation, as elsewhere in life and the la w, “[t]wo wrongs don’t make a right.” Utah v. Strieff , 136 S. Ct. 2056, 2065 (2016). This removal simply delayed resolution of the instant action, imposed additional costs on bo th parties, and wasted federal and state

resources. See Martin , 546 U.S. at 140-41.

CMGRP also seeks attorneys’ fees and cost s for the instant appeal. Section 1447(c) is limited by its terms to “[a]n order remanding the case.” 28 U.S.C. § 1447(c). “Because we are not remanding the case,” we are not “empowe r[ed]” “to grant [CMGRP’s] request for attorney[s’] fees.” Spielman v. Merrill Lynch, Pierce, Fenner & Smith, Inc. , 332 F.3d 116, 130 (2d Cir. 2003). The “request for costs is properl y before us, [however,] not pursuant to Section 1447(c), but under Rule 39 of the Federa l Rules of Appellate Procedure.” Id. ; see Fed. R. App. P. 39(a)(2). CMGRP’s request for costs is granted.

We have considered the remainder of Defenda nts’ arguments and find them to be without merit. Accordingly, the order of the district court hereby is AFFIRMED.

FOR THE COURT: Catherine O’Hagan Wolfe, Clerk