Opinion
No. 1:99CV103-D-D
June 14, 2000
OPINION
Presently before the court is the Plaintiffs' motion to remand this matter to the Circuit Court of Chickasaw County, Mississippi. Upon due consideration, the court finds the motion should be granted and this cause remanded to state court for ultimate resolution.
Also before the court is the Defendants' motion for summary judgment. Because the court is remanding this action due to a lack of subject matter jurisdiction, the court is precluded from ruling on the Defendants' summary judgment motion.
A. Factual Background
In March of 1992, the Plaintiffs, who owned Flex One, Inc., a health club located in Oxford, Mississippi, obtained business financing from Sunburst Bank (now Union Planters). In 1996, Flex One, which also had an automatic funds transfer checking account with Union Planters, began running into financial difficulty and making delinquent loan payments to Union Planters. Then, on February 24, 1998, Union Planters closed Flex One's checking account and prepared to foreclose on Flex One's business property due to the delinquent loan payments. On March 6, 1998, Curtis Collums committed suicide, allegedly as a result of Union Planters' conduct in dealing with Flex One.
The Plaintiffs filed the current action in state court on March 8, 1999, asserting that Union Planters, and Jim McNeely individually and as an officer of Union Planters, proximately caused the wrongful death of Curtis Collums and destroyed the business and income of Curtis and Julia Collums through, inter alia, the intentional infliction of emotional distress, the negligent infliction of emotional distress, conversion, interference with business relations and abuse of process. The Defendants subsequently removed the action to this court asserting that diversity of citizenship exists because Jim McNeely is not a proper party and has been fraudulently joined in order to defeat diversity. On May 9, 2000, the Plaintiffs motioned the court to remand this matter to state court.
B. Standard for Remand
The Judiciary Act of 1789 provides that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). Original federal jurisdiction exists "where the matter in controversy exceeds the sum or value of $75,000.00, exclusive of interest and costs, and is between . . . citizens of different states . . ." 28 U.S.C. § 1332 (a). The phrase "citizens of different states" requires complete diversity; should any plaintiff be a Mississippi resident, no defendant can be a Mississippi resident. Sid Richardson Carbon Gasoline Co. v. Interenergy Resources, Ltd., 99 F.3d 746, 751 (5th Cir. 1996).
In the case sub judice, the Plaintiffs and one Defendant, Jim McNeely, are Mississippi residents. This fact, however, will not destroy federal diversity jurisdiction if the Plaintiffs fraudulently joined McNeely in order to defeat diversity. Rodriguez v. Sabatino, 120 F.3d 589, 591 (5th Cir. 1997).
The party alleging fraudulent joinder bears the burden of persuasion and that burden is quite stringent. See Hart v. Bayer Corp., 199 F.3d 239, 246 (5th Cir. 2000) ("The burden of persuasion placed upon those who cry `fraudulent joinder' is indeed a heavy one."). In order to prove that a non-diverse party has been fraudulently joined by a plaintiff hoping to defeat diversity, the removing party must demonstrate either "outright fraud in the plaintiff's recitation of jurisdictional facts," or that there is "absolutely no possibility that the plaintiff will be able to establish a cause of action against the in-state defendant in state court." Id.
The Defendants here do not allege outright fraud, so only the second prong of the above stated test is at issue. In any event, the court must evaluate all of the factual allegations in the Plaintiff's state court pleadings in the light most favorable to the Plaintiff, and the court must examine relevant state law and resolve all uncertainties in favor of the Plaintiff. Id. Further, in evaluating a claim of fraudulent joinder, the court does not focus on whether the plaintiff will prevail on the merits of the claim. Instead, the court determines whether there is a possibility that the plaintiff will be able to state a claim against the allegedly fraudulently joined defendant. Rodriguez, 120 F.3d at 591.
C. Discussion 1. Possibility of Recovery Against Jim McNeely
Whether a case states a cognizable claim against a defendant is determined by reference to the allegations made in the original pleadings. Wheeler v. Frito Lay, Inc., 743 F. Supp. 483, 485 (S.D.Miss. 1990). In the case at bar, the Plaintiffs allege, inter alia, that McNeely committed the torts of intentional infliction of emotional distress, negligent infliction of emotional distress, conversion, interference with business relations and abuse of process.
It is undisputed that McNeely was acting as an agent for his disclosed principal, Union Planters. The Defendants argue that McNeely cannot be held liable for his acts because, under Mississippi law, an agent for a disclosed principal does not incur personal liability for any breach of duty or contract committed on behalf of the principal. McFarland v. Utica Fire Ins. Co., 814 F. Supp. 518, 521 (S.D.Miss. 1992). However, in this case, the Plaintiffs do not allege that the agent McNeely breached a duty or contract on behalf of Union Planters; instead, they allege that he committed several torts. As such, the McFarland line of cases does not apply. Rather, the court must refer to a separate line of cases dealing with the tortious conduct of agents for disclosed principals.
Under Mississippi law, an agent for a disclosed principal can be held personally liable for his own tortious acts committed within the scope of his employment, and a tort claim can be maintained against that agent. Hart v. Bayer Corp., 199 F.3d 239, 247 (5th Cir. 2000). The agent is subject to personal liability when he "directly participates in or authorizes the commission of a tort." Hart, 199 F.3d at 247 (quoting Mississippi Printing Co., Inc. v. Maris, West Baker, Inc., 492 So.2d 977, 978 (Miss. 1986)).
The Plaintiffs have alleged, in their complaint, that McNeely directly participated in the commission of one or more torts. See Complaint ¶¶ 6, 8. And, the court finds that the scenario set forth in the Plaintiffs' pleadings, if true, could result in liability being imposed on McNeely for his alleged tortious acts. See, e.g., Adams v. U.S. Homecrafters, Inc., 744 So.2d 736, 741-44 (Miss. 1999) (setting forth elements of intentional and negligent infliction of emotional distress under Mississippi law). In other words, the Plaintiffs have sufficiently set forth allegations demonstrating that McNeely participated in the commission of at least one tort. As such, McNeely faces potential tort liability for his actions and the court finds that the Defendants have not demonstrated that there is absolutely no possibility that the Plaintiffs will be able to establish a cause of action against McNeely in state court.
In sum, the Plaintiffs' complaint, taking all allegations set forth as true, at least raises the possibility that they could succeed in establishing a tort claim against McNeely under Mississippi law. Accordingly, McNeely's citizenship cannot be ignored for the purposes of determining subject matter jurisdiction. His presence in this civil action means that there is not the complete diversity of citizenship necessary to maintain federal jurisdiction over this case. As such, this cause shall be remanded to the Circuit Court of Chickasaw County.
A separate order in accordance with this opinion shall issue this day.
ORDER
Pursuant to an opinion issued this day, it is hereby ORDERED that(1) the Plaintiffs' motion to remand (docket entry 24) is GRANTED; and
(2) this cause is hereby REMANDED to the Circuit Court of Chickasaw County, Mississippi.