• Volkman v. Hanover Investments, Inc.
  • January 6, 2016 | Author: S. Joseph Cardile
  • Law Firm: Thomas, Thomas & Hafer LLP - Baltimore Office
  • Maryland Court of Special Appeals

    No. 1595, September Term, 2014.

    Decided: November 25, 2015

    Courts generally will not entertain a declaratory judgment action if another action is concurrently pending involving the same issues and parties.

    Background


    Susan Volkman was vice president for OCC in its Minnesota office, a Maryland corporation that served utility companies and processed telephone calls from individuals intending to take on excavation projects. Thomas Hoff owned OCC. Volkman was hired under an employment contract that stated she could only be fired for good cause. In 2007, Hoff wanted to divest himself of his interest in OCC, so he created Hanover Investments, Inc. as a holding company to acquire its shares. Hoff sold OCC’s shares to longtime OCC employees, including Volkman. In consideration for her shares, Volkman entered into a shareholder’s agreement, whereby shareholders’ common stock could be redeemed if a shareholder was terminated for good cause. On January 8, 2010, OCC terminated Volkman. The parties disagreed over whether good cause existed.

    On April 17, 2012, Volkman filed an employment action against OCC and Hoff in Montgomery County, Maryland. While the employment action was pending, Volkman filed a breach of contract action in Minesota alleging Hanover violated the shareholders’ agreement by redeeming her stock at a discounted rate. Hanover filed a motion to dismiss for lack of jurisdiction in the breach of contract action, which the Minnesota trial court denied. Hanover appealed. On March 3, 2014, the Minnesota Court of Appeals affirmed the denial and remanded the case back to the trial court. While Hanover’s Minnesota appeal was pending, it filed a declaratory judgment action in the Circuit Court for Montgomery County, seeking a finding that it satisfied its obligations regarding the redemption of Volkman’s shares. Prior to the Minnesota appeal being heard by the trial court on remand, the Circuit Court for Montgomery County entered judgment in favor of Hanover, that Volkman was properly terminated for cause. Volkman filed an appeal contending the Circuit Court erred by rendering a declaratory judgment, while an action involving the same parties and issues was before a court in Minnesota.

    Holding

    The Court reversed and remanded the Circuit Court’s judgment and remanded with instructions to vacate the declaratory judgment. It explained that courts generally will not, absent very unusual and compelling circumstances, entertain a declaratory judgment action if another action is concurrently pending involving the same issues and parties. Only considerations of judicial economy, comity, and control of the litigation will factor to overtake a court’s jurisdiction. Here, the Court explained that the circumstances under which the declaratory judgment was granted were not sufficiently unusual and compelling to permit overtaking the jurisdiction of the Minnesota trial court, since Hanover burdened both courts by filing two concurrent actions that involved the same issues and parties, and used a declaratory judgment action in an attempt to deprive Volkman of the right to select her forum.