Court Opinion

ID: 33173
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:01:50+00
Date Added: 2024-06-11T14:57:01.519751
License: Public Domain

United States Court of Appeals
                                                                 Fifth Circuit
                                                              F I L E D
                IN THE UNITED STATES COURT OF APPEALS         October 15, 2003
                        FOR THE FIFTH CIRCUIT
                                                          Charles R. Fulbruge III
                        _____________________                     Clerk

                             No. 03-60217
                           Summary Calendar
                        _____________________

           Great Atlantic and Pacific Tea Company Inc.,

              Plaintiff - Counter Defendant - Appellee,

                               versus

      Norman B. Gillis, Jr.; Norman Gillis Jr. & Associates,

           Defendants - Counter Claimants - Appellants.

_________________________________________________________________

          Appeals from the United States District Court
        for the Southern District of Mississippi, Jackson
                District Court No. 3:00-CV-740-WS
_________________________________________________________________

Before HIGGINBOTHAM, DAVIS and PRADO, Circuit Judges.1

PER CURIAM.

     Norman B. Gillis and Norman Gillis Jr. and Associates, Inc.

(Gillis) appeal from a judgment of the district court in favor of

Great Atlantic and Pacific Tea Company (A&P).   The parties are

involved in two lawsuits regarding a commercial property in

McComb, Mississippi that was leased by A&P from Gillis.        The

     1
     Pursuant to 5th Cir. R. 47.5, this Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5th Cir. R.
47.5.4.

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first suit was filed in Mississippi state court by Gillis against

A&P and its sub-lessee, R&M Foods, Inc. (R&M).   In that suit

Gillis sought a declaratory judgment that he had lawfully

cancelled his lease with A&P and was therefore entitled to

possession of the property and monetary damages.   R&M is a

Mississippi corporation.

     The second suit, which gave rise to this appeal, was filed

in federal district court by A&P against Gillis.   In that suit,

A&P sought a declaratory judgment under The Declaratory Judgment

Act that its lease with Gillis remained in effect and that Gillis

was barred from cancelling its lease.   See 28 U.S.C. § 2201 (West

1994).   A&P also requested damages it alleged resulted when

Gillis attempted to cancel its lease.   Gillis unsuccessfully

moved to join R&M as an involuntary plaintiff in the suit.

Gillis then filed a motion for “Administrative Dismissal or in

the Alternative Abstention,” arguing the district court should

abstain from hearing A&P’s lawsuit because Gillis’ lawsuit was

pending in state court.

     The district court instead held a bench trial.   At the end

of the trial, the district court determined Gillis was not

authorized to cancel his lease with A&P and that A&P had timely

cured its initial default by paying to Gillis the required annual

percentage rent.   Gillis challenges that judgment in this appeal.

In particular, Gillis maintains the district court lacked subject

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matter jurisdiction and erred in its findings of fact.

                 The District Court’s Jurisdiction

     This Court reviews the district court’s decision to issue a

declaratory judgment for an abuse of discretion.     See Agora

Syndicate v. Robinson Janitorial Specialists, 149 F.3d 371, 372

(5th Cir. 1998); Wilton v. Seven Falls Co., 515 U.S. 277, 289-290

(1995) (holding that “district courts’ decisions about the

propriety of hearing declaratory judgment actions . . . should be

reviewed for abuse of discretion.”).    A reviewing court finds an

abuse of discretion, if after examining the evidence, it is left

with “[a] ‘definite and firm’ conviction that the court below

committed [a] clear error of judgment in the conclusion it

reached upon a weighing of the relevant factors." See Conkling v.

Turner, 18 F.3d 1285, 1293 (5th Cir.1994) (quoting Hoffman v.

Merrell Dow Pharmaceuticals, Inc. (In re Benedictin Litig.), 857
F.2d 290, 370 (6th Cir. 1988)).

     Gillis argues the district court should not have exercised

jurisdiction over the instant case because R&M was a necessary

party and because his state lawsuit against A&P and R&M was still

pending.   In the instant case, the district court had discretion,

based on general principles of practicality and wise judicial

administration, to decide whether to exercise its jurisdiction.

See Wilton, 515 U.S. at 288 (holding “[i]n the declaratory

judgment context, the normal principle that federal courts should

                                  -3-
adjudicate claims within their jurisdiction yields to

considerations of practicality and wise judicial

administration.”).   The district court also considered the

following factors set forth by this Court in Travelers Insurance

Co. v. Louisiana Farm Bureau Federation, Inc., 996 F.2d 774, 778

(5th Cir. 1993)2: 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, and 6) whether

retaining the lawsuit in federal court would serve the purposes

of judicial economy.

     The district court concluded that practicality, wise

     2
      The Travelers standard is intended for pure declaratory
judgment cases and therefore may not have been appropriate in the
instant case, which included a counterclaim for monetary damages.
See Diamond Offshore Co. v. A&B Builders, Inc., 302 F.3d 531, 539
(5th Cir. 2002) (holding that inclusion of timely and non-
frivolous monetary damages removed a suit “from the realm of a
declaratory judgment action” for purposes of determining exercise
of jurisdiction). Yet even if the Travelers standard was
inappropriate, federal jurisdiction was proper because the
alternative standard applied to the facts of this case leads to
the same result. See Colorado River Water Conservation Dist. v.
United States, 424 U.S. 800, 817 (1976) (holding that federal
courts have a “virtually unflagging obligation” to exercise their
subject matter jurisdiction, despite the pendency of state court
proceedings).

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judicial administration, convenience to the parties and judicial

economy weighed in favor of federal jurisdiction.    After

reviewing the record, this Court finds ample support for that

conclusion: the alternative state forum was less than ninety

miles from the district court, the state court proceedings were

not yet near resolution, and the instant case was ready for

adjudication.    Based on these facts, and considering the district

court’s opportunity to examine the testimony of the witnesses, we

find no abuse of discretion in the district court’s exercise of

jurisdiction.

     Part of Gillis’ argument against the district court’s

jurisdiction is that R&M, whose presence would have destroyed

diversity jurisdiction, was a necessary party to the instant

case.    Gillis argues that because R&M was properly joined as a

defendant with an interest in the property in the state court

suit, it should have been joined as an involuntary plaintiff in

the instant suit.    The joinder of an involuntary plaintiff,

however, is reserved for certain narrowly defined situations.

These situations are not implicated in the present case.3    This

     3
      A party may be joined as an involuntary plaintiff if the
party is an exclusive licensee or the equitable owner of a
copyright. See Caprio v. Wilson, 513 F.2d 837, 839 (9th Cir.
1975). Additionally, a party may be joined as an involuntary
plaintiff if the party has a duty to allow the use of his name in
the action or an obligation to join in the action. See
Independent Wireless Telegraph Co. v. Radio Corporation of
America, 269 U.S. 459 (1926).

                                 -5-
Court finds no error in the district court’s refusal to join R&M

as an involuntary plaintiff.

     To the extent that Gillis alleges the district court erred

by failing to consider his motion for administrative dismissal,

this Court finds no error.   In his motion, Gillis maintained the

district court should abstain from exercising its jurisdiction

based on convenience to the parties and avoidance of “useless

piecemeal litigation.”   He argued if he were to succeed in the

instant case he would have to bring a second suit to obtain

possession of the property from the current tenant, R&M.   This is

presumably the piecemeal litigation to which Gillis refers.    This

Court has held that abstaining from the exercise of jurisdiction

is proper to avoid multiple lawsuits on the same issue with

conflicting results, but not to avoid following the normal legal

procedures Gillis describes.   See Travelers, 996 F.2d at 779.

Regarding Gillis’ motion, the district court explained that

unless a hearing was necessary the suit would proceed to trial.

     The district court ultimately considered Gillis’ motion, and

clearly determined not to stay the case when it proceeded to

trial.   Moreover, the district court delineated its rationale for

exercising jurisdiction over the parties in its March 12, 2003

order.   By addressing the question of jurisdiction in its order

and having previously explained why R&M would not be joined as an

involuntary plaintiff, the district court addressed each of

                                -6-
Gillis’ arguments.    This Court finds no error in the district

court’s handling of Gillis’ motion.

                      Interpreting the Contract

        The sole dispute between the parties is whether A&P’s

manner of curing its acknowledged rent default entitled Gillis to

cancel A&P’s lease.    Both parties agree that the governing lease

provision required that defaults be cured “as soon as may be

reasonably possible.”    Gillis alleges the district court erred in

finding that A&P complied with this provision.

       This Court reviews the district court’s findings of fact

using a clearly erroneous standard.    See FED. R. CIV. P. 52 (a);

Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 573

(1985); and N.A.A.C.P. v. Fordice, 252 F.3d 361, 365 (5th Cir.

2001).    A finding is clearly erroneous if, after examining the

entire record, the reviewing court “is left with the definite and

firm conviction that a mistake has been committed.” Anderson, 470
U.S. at 573.    Under this standard an appellate court must defer

to a trial court’s plausible account of the evidence considered

against the entirety of the record, and may not merely substitute

its opinion for that of the trial court.    N.A.A.C.P., 252 F.3d at

364.

       In the instant case, the district court properly applied

Mississippi law to the contract in question.      See Amica Mut. Ins.

Co. v. Moak, 55 F.3d 1093, 1095 (5th Cir. 1995).     Under

                                 -7-
Mississippi law, contracts are read in their entirety so as to

give effect to all clauses.    Brown v. Hartford Ins. Co., 606
So. 2d 122, 126 (Miss. 1992).    Contract provisions are also

reasonably construed, and read so as to avoid giving one party an

unfair or unreasonable advantage over the other.    Robinson v.

Martel Enterprises, Inc., 337 So. 2d 698, 701 (Miss. 1976).

Additionally under Mississippi law, an implied covenant of good

faith and fair dealing is read into every contract.    Cenac v.

Murry, 609 So. 2d 1257, 1272 (Miss. 1992).

     Under the terms of the lease between the parties, A&P is

required to pay Gillis the lesser of $12,000 or 1% of its gross

sales.    Because R&M subleases the property from A&P, A&P used

R&M’s sales figures to calculate the percentage rent due.      A&P is

required to pay the percentage rent to Gillis by May 31 of each

year.    In 1999 and 2000, A&P neglected to make this payment.      On

August 31, 2000, Gillis sent A&P a default notice informing A&P

that he would cancel the lease unless it cured the default within

ten days.    A&P received this notice on September 5, 2000.    On

September 6, 2000, A&P’s Director of Real Estate Law, Robert E.

David, called Gillis to ask for an extension and to explain that

he needed to obtain the annual sales reports from R&M before A&P

could pay Gillis.

     At trial, David testified he thought Gillis understood that

R&M was entitled to ten days to provide the reports and that

                                 -8-
David would forward the funds as soon as A&P received them from

R&M and the funds had cleared A&P’s account.    Gillis, however,

testified he understood David would send the funds as soon as A&P

received the reports from R&M.    By the time A&P paid Gillis,

after waiting for the funds from R&M to clear, Gillis had

cancelled the lease with A&P.    As a result, the district court

had to determine whether A&P’s decision to wait for the funds to

clear was reasonable and whether Gillis’ cancellation of the

lease was made in good faith.

     The district court had strong evidence to support its

finding that A&P’s actions were reasonable after considering the

contract as a whole, construing the lease provisions reasonably

and fairly to each party, and evaluating the good faith each

party owed the other.   After David and Gillis spoke on September

6, 2000, David sent Gillis a letter confirming his understanding

of their conversation, explaining R&M was entitled to ten days to

pay A&P under its sub-lease, and citing the over-lease provision

that required cure “as soon as may be reasonably possible.”

Receiving no response, David left a phone message and sent a

letter on September 8, 2000.    In that letter, David wrote “I will

be forwarding payment to you as soon as I receive [R&M’s] check

and it clears our account.”    A&P tendered a check for $24,000.00

on Friday September 15, 2000, payable the following Monday,

September 18, 2000.   The check was made conditional on Gillis’

reinstatement of the lease and acceptance of it as a complete

                                 -9-
cure.    David’s actions, including his explanations to Gillis,

indicate A&P was acting in good faith and working quickly to cure

its default.    In addition, A&P’s conditions on the check were

reasonable safeguards to protects A&P’s interests in the

property.

     In examining Gillis’ conduct, the district court had

evidence that Gillis violated his duty of good faith to A&P.      The

district court also properly determined Gillis’ conduct could not

be sanctioned under a fair reading of the lease provisions.

Throughout the proceedings, Gillis has argued that the arbitrary

period of ten days set out in the default notice was to begin the

date he mailed the letter (August 31, 2000) and not on the date

A&P received the letter (September 5, 2000).    This position

means, however, that Gillis only allowed A&P six days from

receiving notice to cure its default before he cancelled the

lease.    Although Gillis contends A&P’s manner of curing was

unreasonably protracted, he failed to respond to David’s letters

that spelled out exactly how A&P planned to cure.

     As a result, this Court is not left with a definite or firm

conviction that a mistake has been committed.    Consequently, the

district court did not err.    Because this Court finds neither

clear error in the district court’s findings of fact nor abuse of

discretion in the its exercise of jurisdiction, this Court

affirms the district court’s judgment.

AFFIRMED.

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