Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Inc. v. Hegna

United States District Court, E.D. Louisiana

May 5, 2017

SMITTY'S SUPPLY, INC.
v.
LINDSAY BAKER HEGNA

         SECTION "S" (3)

          ORDER

          MARY ANN VIAL LEMMON, UNITED STATES DISTRICT JUDGE

         ORDER AND REASONS IT IS HEREBY ORDERED that Defendant's Motion for Summary Judgment, or in the alternative, Motion to Stay Smitty's Supply Inc.'s Petition for Declaratory Judgement (Doc. #19) is DENIED.[1]

         IT IS FURTHER ORDERED that Plaintiff's Motion to Strike Inadmissible Summary Judgment Evidence and Objection Thereto (Doc. #21) is DENIED.

         BACKGROUND

         This matter is before the court on a motion for summary judgment, or alternatively, motion to stay filed by defendant, Lindsay Baker Hegna. Hegna argues that this court should dismiss or stay this action in favor of a nearly identical action she filed against plaintiff herein, Smitty's Supply Inc., in the United States District Court for the Eastern District of Pennsylvania.

         Smitty's Supply manufactures and distributes lubricant products. It is incorporated in Louisiana and maintains its principal place of business in Roseland, Louisiana. In October 2014, Smitty's Supply hired Hegna as an Executive Vice President. Hegna also served as President of CAM2 International, L.L.C., a company affiliated with Smitty's Supply. Hegna was a citizen of Pennsylvania at the time she accepted employment with Smitty's Supply. Hegna claims that she performed some of her work from her home in Pennsylvania. Hegna's father purchased two homes in Louisiana and Hegna used one when she was in Louisiana to work for Smitty's Supply. Hegna claims that she never changed her residence to Louisiana, that she commuted back and forth and that her husband always remained in the family home in Pennsylvania. In March 2016, while she was working from her home in Pennsylvania, Hegna's employment with Smitty's Supply and CAM2 International, L.L.C. was terminated over the telephone.

         On June 16, 2016, Hegna's attorney sent correspondence to Smitty's Supply seeking settlement of Hegna's demand for payment of her alleged vested stock interest. In the letter, Hegna alleged that, in July 2014, three Smitty's Supply executives discussed a company incentive plan and vested stock in a company deferred compensation plan. Also in July 2014, Edgar Smith, the owner of Smitty's Supply, informed Hegna that she would receive 5% in the company's Phantom Stock Plan and 5% in the company's SARs Stock Plan that would be fully vested as of January 2014. Hegna further alleged that Smitty's Board of Directors adopted and approved the company stock plans at the December 2014 Board meeting and that Smith “signed off” on the deferred compensation company stock plans. Hegna claimed that her vested interest in the stock plans was included in a list of documents and information about the company's executive compensation plan that was produced during a due diligence process associated with the proposed sale of Smitty's Supply to a foreign company. Hegna claimed that after she was terminated, Chad Tate, a company executive, told her that neither the Phantom Stock Plan nor the SARs Stock Plan were executed. However, Hegna alleged that Smitty's Supply provided documents to the United States Department of Labor Employee Benefits Security Administration demonstrating that the plans were adopted. Hegna claimed that the value of her vested stock in the Phantom Stock Plan and the SARs Stock Plan is $27, 500, 000.00, and threatened to sue Smitty's Supply if no resolution was reached concerning payment for her alleged interest in the stock plans.

         On July 28, 2016, Smitty's Supply filed the instant suit against Hegna, in the Twenty-First Judicial District Court, Parish of Tangipahoa, State of Louisiana seeking a declaratory judgment regarding the issues surrounding Hegna's claim that she has a vested stock interest. Specifically, Smitty's Supply seeks a judgment declaring that no Phantom Stock Plan or SARs Stock Plan was executed, adopted or implemented by Smitty's Supply during Hegna's employment; nobody was ever identified as a plan participant or in any way included in any Phantom Stock Plan or SARs Stock Plan at any time during Hegna's employment; and, Hegna is not entitled to and has no valid claim for any value of any stock in any Phantom Stock Plan or SARs Stock Plan.

         Hegna removed the suit to the United States District Court for the Eastern District of Louisiana alleging diversity subject matter jurisdiction under 28 U.S.C. § 1332. She alleged that Smitty's Supply is a citizen of Louisiana, she is a citizen of Pennsylvania, and that the amount in controversy is $27, 500, 000, which is the value she places on the alleged vested stock interest. Thereafter, Smitty's Supply filed a motion to remand arguing that this court did not have diversity subject matter jurisdiction. However, that motion was denied.

         Also on July 28, 2016, Hegna sued Smitty's Supply in the United States District Court for the Eastern District of Pennsylvania seeking $27, 500, 000 for her allegedly vested interest in the Phantom Stock Plan and SARs Stock Plan. Hegna alleges theories of breach of contract and fraudulent and negligent misrepresentation. Smitty's Supply filed a motion to dismiss arguing that it is not subject to personal jurisdiction in Pennsylvania and that the Eastern District of Pennsylvania is an improper venue. Alternatively, Smitty's Supply argued that the Pennsylvania action should be transferred to the United States District Court for the Eastern District of Louisiana. The Pennsylvania action has been stayed until this court rules on Hegna's motion for summary judgment.

         On October 17, 2016, Hegna filed the instant motion for summary judgment, or alternative, motion to stay. Hegna argues that this court should decline to exercise jurisdiction over Smitty's Supply's declaratory judgment action in favor of the action she filed in Pennsylvania. Smitty's Supply argues that this action should proceed because the Pennsylvania action will be dismissed for lack of personal jurisdiction or improper venue and that this court has discretion to consider its declaratory judgment action which can resolve all of the issues between the parties.

         ANALYSIS

         I. A District Court's Discretion to Decide Declaratory Judgment Actions

         The federal Declaratory Judgment Act states: “[i]n a case of actual controversy within its jurisdiction, . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201. It gives federal courts the competence to declare rights, but it does not impose a duty to do so. Sherwin-Williams Co. v. Holmes Cnty., 343 F.3d 383, 389 (5th Cir. 2003) When analyzing whether to decide or dismiss a declaration judgment action, the district court must determine: “(1) whether the declaratory judgment action is justiciable; (2) whether the court has authority to grant declaratory relief; and (3) whether to exercise discretion to decide or dismiss the action.” Sherwin-Williams, 343 F.3d at 388 (citing Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000)).

         A. Justiciability

         A declaratory judgment action is justiciable, or “ripe for adjudication only where an ‘actual controversy' exists.” Orix, 212 F.3d at 896. Generally, there is an actual controversy when “‘a substantial controversy of sufficient immediacy and reality [exists] between parties having adverse legal interest.'” Id. (quoting Middle S. Energy, Inc. v. City of New Orleans, 800 F.2d 488, 490 (5th Cir. 1986)). A district court must address on a case-by-case basis whether the facts are sufficiently immediate to establish an actual controversy. Id. (citations omitted).

         In this case, there is an actual controversy regarding the existence of the alleged stock plans, and Hegna's right to participate therein if they do exist. The competing complaints establish that the parties have competing interest in this respect. Therefore, the declaratory judgment action is justiciable.

         B. Authority ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.