McNealy-Minor v. Bourne

Background

Susan McNealy-Minor sued Stephen Bourne for alleged breach of contract. According to the complaint, the parties had been engaged and attended couples therapy in Palo Alto, California. McNealy-Minor alleged that they entered an oral agreement under which Bourne would pay her $110,000 per year for every year they were together if either party ended the relationship, as compensation for services she performed. The relationship ended in 2019, and she alleged that Bourne had not paid the compensation she believed was owed.

Before McNealy-Minor filed this California action, Bourne filed a declaratory-relief lawsuit in North Carolina state court seeking a judgment that he was not indebted, obligated, or liable to her. McNealy-Minor removed that case to the federal court in the Eastern District of North Carolina and moved to dismiss it for lack of personal jurisdiction or transfer it to California. That court denied her motion. She then answered Bourne’s complaint and asserted counterclaims for breach of express contract, breach of implied contract, promissory fraud, and quantum meruit. The North Carolina court set a case schedule.

Motion and arguments

Bourne invoked the first-to-file rule and asked the California court to dismiss this action in favor of the earlier North Carolina case. Alternatively, he asked the court to stay the California case or transfer it to North Carolina. The first-to-file rule is a discretionary doctrine that allows a court to decline jurisdiction when another court already has a case involving the same parties and issues.

The parties did not dispute that the rule applied because Bourne’s North Carolina action was filed several months earlier and involved the same parties and issues. McNealy-Minor argued that the rule should not apply because Bourne’s lawsuit was anticipatory and intended to obtain a preferred forum. She also argued that convenience and fairness favored California, including because she contended California law applied and because the parties’ therapist was located there and might provide important testimony.

Court’s analysis

The court rejected the argument that Bourne’s case was an anticipatory lawsuit. An anticipatory lawsuit, in this context, is one filed after receiving specific and concrete indications that the opposing party is about to sue. The court considered an email from McNealy-Minor’s brother stating that the situation might proceed through formal legal proceedings and a later letter from her counsel. It found that neither communication gave Bourne a specific, concrete indication that a lawsuit was imminent. The court noted that the email was followed by several months without legal proceedings and that the letter expressed a desire to resolve the dispute without litigation.

The court also rejected the convenience and fairness arguments. It stated that, even if California law applied, a federal court in North Carolina could apply that law. The court found that McNealy-Minor had not shown why the therapist’s testimony had to be given live in California, particularly because she acknowledged that the testimony could be obtained through audiovisual methods. The court also noted that McNealy-Minor had asserted counterclaims in the North Carolina action and acknowledged at the hearing that there was no reason to stay or transfer the California case to North Carolina.

Disposition

The court found no basis to depart from the first-to-file rule. It dismissed the California action, granted Bourne’s motion to dismiss, directed the clerk to enter judgment, and ordered the file closed. The opinion did not decide whether McNealy-Minor was entitled to compensation under the alleged agreement.

Judge

The order was entered by United States Magistrate Judge Virginia Demarchi.