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Partners Healthcare Solutions Holdings, LP v. Universal American Corp.

United States District Court, D. Delaware

February 11, 2014



MARY PAT THYNGE, Magistrate Judge.


Presently before the court is plaintiff's motion to remand this case to the Delaware Court of Chancery pursuant to 28 U.S.C. § 1447(c)[1] and defendant's motion to dismiss plaintiff's complaint pursuant to Federal Rules of Civil Procedure 12(b)(6) & (1).[2]


A. Procedural History

On October 21, 2013, Partners Healthcare Solutions Holdings, L.P. ("APSLP") filed eighteen counts of exclusively declaratory relief against Universal American Corp. ("Universal") in the Delaware Court of Chancery.[3] Universal removed the declaratory relief action to this court on October 28, 2013.[4] Universal's causes of action against APSLP are federal securities fraud (Counts I and II), common-law fraud (Counts III-VI and VIII), breach of the Merger Agreement (Count VII), and unjust enrichment (Count IX).[5] On November 27, 2013, APSLP filed a motion to remand to the Delaware Court of Chancery under 28 U.S.C. § 1447(c).[6] In its motion, APSLP moves for payment of just costs and actual expenses, including attorneys' fees, incurred as a result of the removal.[7] On November 11, 2013, Universal filed a motion to dismiss APSLP's complaint under Rules 12(b)(1) and (6).[8]

B. Factual History

Partners Healthcare Solutions, Inc. ("APS") is a specialty healthcare company.[9] On March 2, 2012, Universal bought APS from APSLP, which is a holding company controlled by the private equity firm GTCR Golder Rauner II, L.L.C. ("GTCR").[10] In March 2013, Universal expressed dissatisfaction with APS's first-year performance and alleged misrepresentation by APSLP, GTCR, and the other participants during the merger negotiations.[11] On March 1, 2013, Universal sent its first letter threatening litigation which began seven months of good faith negotiations.[12] These talks lead to a two-day mediation beginning September 16, 2013.[13] Universal now seeks over $150 million in compensatory damages, the imposition of a constructive trust, punitive damages, and other affirmative relief from APSLP, GTCR, and four individual defendants.[14]


A. Universal's Contentions

Universal contends APSLP's declaratory action should be dismissed, because "[v]irtually all of the issues that APSLP seeks to resolve through its Declaratory Action will be adjudicated in the course of determining Universal's claims for damages and other affirmative relief in the Securities Fraud Action."[15] Universal argues APSLP's complaint subverts the purpose of the Declaratory Judgment Act, noting the action was filed "in an attempt to secure its preferred forum for the claims it knew Universal would assert."[16] Universal further contends this court has original jurisdiction because the subject of the dispute is securities fraud, and APSLP seeks declaration of non-liability "under any legal theory" which includes securities fraud.[17] Universal maintains the court has jurisdiction under the coercive action doctrine, because it could and eventually did file its own federal claim.[18]

Lastly, Universal points out APSLP's race to the courthouse to file its declaratory claims is itself reason for dismissal.[19] According to Universal, while the parties were engaged in settlement negotiations, on October 8, 2013, it conveyed a settlement demand to APSLP.[20] On October 17, 2013, Universal told APSLP it would file a securities fraud action if APSLP failed to respond on or before October 21.[21] On October 21, 2013, APSLP requested a conference for the following morning, and minutes thereafter filed its declaratory action in the Delaware Court of Chancery.[22]

B. APSLP's Contentions

APSLP contends the motion to remand must be decided before addressing Universal's motion to dismiss because its claim is jurisdictional in nature.[23] APSLP argues Universal has taken the "any legal theory" language out of context, and insists it focused on, and was limited to, Universal's threatened claims that APSLP breached the Merger Agreement.[24] APSLP further notes, "[n]one of the counts refer to or encompass any federal securities ...

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