CMGRP, Inc. v. Agency for the Performing Arts, Inc.

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 ELECTRONIC 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
26th 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. Rigrish, Bodker, Ramsey, Andrews, Winograd &
Wildstein, P.C., Atlanta, GA.

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

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

Defendants-Appellants Agency for the Performing Arts, Inc. (“APA”), Maggie Gallant,
Sheila Munguia, and Jenna Hudson (collectively, “Defendants”) appeal the July 8, 2016 order of
the United States District Court for the Southern 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 CMGRP’s request for costs and attorneys’ fees
pursuant to 28 U.S.C. § 1447(c). Appellants challenge the order’s award 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 fees 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 remanding the case [to state court] may require
payment of just costs and any actual expenses, including attorney fees, incurred 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 where 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 manner, . . . its reasons for departing from the general rule should
be faithful to the purposes of awarding fees under [Section] 1447(c),” which include
disincentivizing actions that “delay[] 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 had diversity jurisdiction over an action with
non-diverse parties because CMGRP had “fraudulently joined” an improper party, Munguia, to
the case simply to eliminate diversity. It is well settled that “[a] plaintiff may not defeat a federal
court’s diversity jurisdiction and a defendant’s right of removal by merely joining as defendants
parties with no real connection 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 there is no possibility, based on the pleadings, 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 did not abuse its discretion in concluding that
Defendants had no “objectively reasonable” basis on which to argue that CMGRP could not
possibly state a breach-of-contract claim against Munguia. “Under New York law, a breach of
contract claim requires proof of (1) an agreement, (2) adequate performance by the plaintiff,
(3) breach by the defendant, and (4) damages.” Fischer & Mandell, LLP v. Citibank, N.A., 632
F.3d 793, 799 (2d Cir. 2011). “Accept[ing] facts alleged as true and interpret[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 Code of Conduct Non-

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Solicitation Agreement with CMGRP; (2) CMGRP did not violate the agreement; (3) Munguia
violated the agreement by beginning to work for APA “in direct competition with” CMGRP,
including by “directly or indirectly solicit[ing] CMGRP clients and prospects,” less than a year
after she left CMGRP; and (4) CMGRP suffered 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 impossible 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 affidavits 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 overbroad restrictive covenant could still be partially enforced).

In addition, the district court’s award served the purposes of Section 1447(c). Defendants
argue that CMGRP’s filing of the New York state case was itself abusive behavior. But in the
context of wasteful litigation, as elsewhere in life and the law, “[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 both parties, and wasted federal and state
resources. See Martin, 546 U.S. at 140-41.

CMGRP also seeks attorneys’ fees and costs 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 “empower[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 properly before us, [however,] not pursuant to Section
1447(c), but under Rule 39 of the Federal 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 Defendants’ 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

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