Smith v. Willis Insurance Services of Georgia, Inc.
1:11-cv-00756
N.D. Ga.Jul 13, 2011Background
- This is a breach of contract action involving restrictive covenants in employment and option agreements between Smith, Moody, Willis GA, Marsh, and WGH.
- Smith and Moody left Willis GA to work for Marsh, and are Georgia residents; Willis GA is a Georgia subsidiary of Irish parent WGH.
- Plaintiffs allege violations of nonsolicitation and nondisclosure covenants in 1994, 2009 Employment Agreements and related Option Agreements; New York Action filed by WGH and Moody/Smith was previously commenced.
- Willis GA promised not to enforce the covenants in letters; Willis GA's President promised non-enforcement; promise challenged as possibly unenforceable for lack of consideration.
- Defendants removed the case to federal court; plaintiffs moved to remand arguing no complete diversity and lack of jurisdictional amount.
- The court remands, finding no complete diversity because Willis GA is Georgia, and there is a possibility of state-law claims against Willis GA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complete diversity exists | Smith/Moody/Willis GA are Georgia residents | Willis GA is fraudulently joined or should be disregarded | Diversity does not exist; remand required |
| Whether Willis GA was fraudulently joined | Plaintiffs may have colorable claims against Willis GA on employment agreements | There is no viable claim against Willis GA under the Option Agreements | Willis GA not fraudulently joined |
| Whether the declaratory-judgment action against Willis GA is justiciable given prior promises not to enforce | There remains uncertainty and enforceability of promises; state-law issues apply | Repudiated contracts and relief sought are improper where rights have accrued | Not foreclosed; potential state-law remedy exists |
| Whether removal was proper given jurisdictional facts | No complete diversity; removal improper | Fraudulent joinder allows removal | Removal improper; remand granted |
| Whether attorney's fees should be awarded | Fees allowed for improper removal | No fees given due to reasonable basis for removal | Fees denied |
Key Cases Cited
- Crowe v. Coleman, 113 F.3d 1536 (11th Cir. 1997) (fraudulent joinder standard; colorable claim suffices to defeat remand)
- Pacheco de Perez v. AT&T Co., 139 F.3d 1368 (11th Cir. 1998) (burden on removal; evaluate plaintiff's pleadings in light to favor)
- Chattahoochee Bancorp., Inc. v. Roberts, 203 Ga. App. 405 (Ga. App. 1992) (declaratory action improper where rights already repudiated)
- Powers v. Chesapeake & O. Ry. Co., 169 U.S. 92 (1898) (jurisdiction at time of removal controls; diversity need not exist at initial filing)