Court Opinion

ID: 990399
Source: CourtListenerOpinion
Date Created: 2013-07-03 23:20:57.175661+00
Date Added: 2024-06-11T08:10:44.675945
License: Public Domain

Filed:    September 19, 1996

                    UNITED STATES COURT OF APPEALS

                        FOR THE FOURTH CIRCUIT

                            Nos. 95-3043(L)
                           (CA-94-3492-PJM)

Marriott PLP Corporation, et al,

                                              Plaintiffs - Appellants,

           versus

John S. Tuschman, etc.,

                                                 Defendant - Appellee.

                              O R D E R

           The Court amends its opinion filed September 19, 1996, as

follows:
           On page 2, section 1 -- case number 95-1658 is corrected

to read "96-1658."

                                       For the Court - By Direction

                                          /s/ Patricia S. Connor

                                                    Acting Clerk
UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

MARRIOTT PLP CORPORATION; HOST
MARRIOTT CORPORATION, formerly
known as Marriott Corporation,
Plaintiffs-Appellants,

and

MARRIOTT INTERNATIONAL,
INCORPORATED, formerly known as      No. 95-3043
Marriott Hotels, Incorporated,
Plaintiff,

v.

JOHN S. TUSCHMAN, Individually and
as class representative,
Defendant-Appellee.

MARRIOTT INTERNATIONAL,
INCORPORATED, formerly known as
Marriott Hotels, Incorporated,
Plaintiff-Appellant,

and

MARRIOTT PLP CORPORATION; HOST
MARRIOTT CORPORATION, formerly              No. 95-3061
known as Marriott Corporation,
Plaintiffs,

v.

JOHN S. TUSCHMAN, Individually and
as class representative,
Defendant-Appellee.
MARRIOTT PLP CORPORATION; HOST
MARRIOTT CORPORATION, formerly
known as Marriott Corporation,
Plaintiffs-Appellants,

and

MARRIOTT INTERNATIONAL,
INCORPORATED, formerly known as                 No. 96-1658
Marriott Hotels, Incorporated,
Plaintiff,

v.

JOHN S. TUSCHMAN, Individually and
as class representative,
Defendant-Appellee.

MARRIOTT INTERNATIONAL,
INCORPORATED, formerly known as
Marriott Hotels, Incorporated,
Plaintiff-Appellant,

and

MARRIOTT PLP CORPORATION; HOST
MARRIOTT CORPORATION, formerly                         No. 96-1659
known as Marriott Corporation,
Plaintiffs,

v.

JOHN S. TUSCHMAN, Individually and
as class representative,
Defendant-Appellee.

Appeals from the United States District Court
for the District of Maryland, at Greenbelt.
Peter J. Messitte, District Judge.
(CA-94-3492-PJM)

                   2
Argued: June 3, 1996

Decided: September 19, 1996

Before ERVIN and MOTZ, Circuit Judges, and SPENCER,
United States District Judge for the Eastern District
of Virginia, sitting by designation.

_________________________________________________________________

Affirmed by unpublished opinion. Judge Ervin wrote the opinion, in
which Judge Motz and Judge Spencer joined.

_________________________________________________________________

COUNSEL

ARGUED: Tom Alan Cunningham, FULBRIGHT & JAWORSKI,
L.L.P., Houston, Texas, for Appellants. David J. Healey, ARNOLD,
WHITE & DURKEE, Houston, Texas, for Appellee. ON BRIEF:
Debbie C. Darlow, FULBRIGHT & JAWORSKI, L.L.P., Houston,
Texas; David G. Lane, VENABLE, BAETJER & HOWARD, L.L.P.,
McLean, Virginia; Roger W. Titus, VENABLE, BAETJER &
HOWARD, L.L.P., Rockville, Maryland; Frederick Robinson, Jac-
queline R. Depew, FULBRIGHT & JAWORSKI, L.L.P., Washing-
ton, D.C., for Appellants. Robert B. Lytle, Gary J. Fischman,
ARNOLD, WHITE & DURKEE, Houston, Texas; David H. Berg,
BERG & ANDROPHY, Houston, Texas; Daniel A. Ball, LEWIS,
GOLDBERG & BALL, Rockville, Maryland, for Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

                    3
OPINION

ERVIN, Circuit Judge:

Marriott PLP Corp., Host Marriott Corp. (formerly Marriott Corp.),
and Marriott International, Inc. (formerly Marriott Hotels, Inc.),*
sought a declaratory judgment against John S. Tuschman in the Dis-
trict of Maryland. The district court dismissed Marriott's complaint,
citing its discretion whether to hear such cases under the Declaratory
Judgment Act, 28 U.S.C. § 2201. In accord with the Supreme Court's
recent opinion in Wilton v. Seven Falls Co., 115 S. Ct. 2137 (1995),
and this court's decision earlier this year in Centennial Life Ins. Co.
v. Poston, 88 F.3d 255 (1996), we defer to the district court's discre-
tion. Thus, we affirm.

I

John S. Tuschman is a limited partner in the Chesapeake Hotel
Limited Partnership ("CHLP"). CHLP purchased nine hotels from
Marriott Corp., to be managed by Marriott Hotels, Inc. In early 1994,
Tuschman led a group of CHLP limited partners in an effort to obtain
compensation from Marriott for alleged fraud, breaches of fiduciary
duty, and breaches of contract. They voiced their demands in a letter
sent to Marriott by their Texas counsel, and Tuschman continued to
recruit other limited partners to his cause. In response, Marriott simul-
taneously sued in Maryland state court and filed this action in federal
district court for declaratory judgments that it had not committed the
breaches alleged by Tuschman and the limited partners. Tuschman,
joined by more than 100 of the limited partners, then filed suit in
Texas state court seeking damages for those breaches.

Tuschman sought to remove the Maryland action to federal court,
but Marriott eliminated any basis for federal jurisdiction by dropping
the complaint's reference to "federal security laws"--to which Tusch-
man's letter had referred vaguely but which were not cited in the
Texas complaint--and by adding a Maryland resident as a defendant.
Additionally, Tuschman sought to dismiss the federal suit because of
the pending Texas suit. The district court denied the motion.
_________________________________________________________________

* We refer to the plaintiffs collectively as "Marriott."

                    4
Tuschman then moved again to dismiss, this time based on absence
of personal jurisdiction. The court granted the second motion on the
jurisdictional ground. Alternatively, it reconsidered Tuschman's first
motion to dismiss, and exercised its discretion not to hear a petition
for declaratory judgment. Marriott appeals, arguing that personal
jurisdiction over Tuschman exists under the Securities Act of 1933
and the Maryland Long-Arm Statute, and that the district court erred
in refusing to consider Marriott's declaratory judgment action.

II

The Declaratory Judgment Act grants federal courts authority to
hear pleas for declaratory relief:

        In a case of actual controversy within its jurisdiction, . . .
        any court of the United States, upon the filing of an appro-
        priate pleading, may declare the rights and other legal rela-
        tions of any interested party seeking such declaration,
        whether or not further relief is or could be sought.

28 U.S.C. § 2201. Last year, in Wilton v. Seven Falls Co., 115 S. Ct.
2137 (1995), the Supreme Court reaffirmed its longstanding interpre-
tation of the Act, holding that whether to consider a claim for declara-
tory relief lies within the discretion of the district court:

        Brillhart v. Excess Ins. Co., 316 U.S. 491, 62 S. Ct. 1173,
        86 L.Ed. 1620 (1942), governs this declaratory judgment
        action[, and] district courts' decisions about the propriety of
        hearing declaratory judgment actions, which are necessarily
        bound up with their decisions about the propriety of grant-
        ing declaratory relief, should be reviewed for abuse of dis-
        cretion.

Wilton, 115 S. Ct. at 2144. Moreover, as Tuschman's counsel noted
in a submission of supplemental authority under Fed. R. App. P. 28(j)
and Local Rule 28(f), we recently followed Wilton in Centennial Life
Ins. Co. v. Poston, 88 F.3d 255 (1996), a decision issued after the
argument in this case.

                    5
In Poston, we noted that the dispositive question for a district court
is "whether the controversy `can better be settled in the proceeding
pending in the state court.'" Id. at 257 (quoting Brillhart, 316 U.S. at
495). That question, in turn, is controlled by several factors:

        (i) the strength of the state's interest in having the issues
        raised in the federal declaratory action decided in the state
        courts; (ii) whether the issues raised in the federal action can
        more efficiently be resolved in the court in which the state
        action is pending; (iii) whether permitting the federal action
        to go forward would result in unnecessary "entanglement"
        between the federal and state court systems, because of the
        presence of "overlapping issues of fact or law" [; and (iv)]
        whether the declaratory judgment action is being used
        merely as a device for "procedural fencing"--that is, "to
        provide another forum in a race for res judicata" or "to
        achiev[e] a federal hearing in a case otherwise not remov-
        able."

Id. (quoting Nautilus Ins. Co. v. Winchester Homes, Inc., 15 F.3d 371,
377 (4th Cir. 1994)).

The district court relied on the fourth of those factors, and con-
cluded that Marriott's federal action--which contained only a general
reference to federal securities law--was an effort at forum-shopping:

        At the time the Marriott parties filed this suit in Maryland,
        they were aware that substantially identical litigation was
        imminent and that, in all probability, it would be filed in
        Texas state court. The present suit is unquestionably a result
        of the proverbial race to the courtroom door. Seizing on its
        own possible federal securities law violation, a potential
        cause of action mentioned in the February, 1994 correspon-
        dence from Tuschman's Texas attorney but one that Tusch-
        man himself did not ultimately pursue in Texas state court
        and one that he has expressly disavowed before this Court,
        Marriott attempts to establish federal question jurisdiction in
        this Court. . . .

                     6
         [T]his is fundamentally a suit that looks backward to
        adjudicate past actions rather than forward to settle future
        actions.

District Court Opinion at 15-16.

Marriott complains that the district court did not address the other
requisite factors in reversing its course and dismissing the action:

        It clearly ignored everything it previously had said as to why
        this action should go forward, including (1) the insignificant
        interest of Texas in providing a forum for the resolution of
        this dispute and the (2) inability of the Texas action to pro-
        vide complete relief to the affected parties.

Brief of Appellants at 13 (emphasis added). But Marriott's argument
only emphasizes that the district court did, in fact, account for the
other factors. That it did not mention those factors expressly in its
final opinion is of no import; the court simply determined that the
ground on which it did rely outweighed those that it had considered
previously.

"[F]acts bearing on the usefulness of the declaratory judgment rem-
edy, and the fitness of the case for resolution, are particularly within
[the district courts'] grasp." Wilton, 115 S. Ct. at 2144. Consequently,
we will not second-guess the district court's appraisal of the determi-
native considerations under the Declaratory Judgment Act.

III

We affirm the district court's decision not to entertain Marriott's
action for a declaratory judgment. We need not consider, therefore,
whether Tuschman is subject to personal jurisdiction in Maryland.

AFFIRMED

                    7