Opinion
Civil Action No. 01-2555-GTV
February 27, 2003.
MEMORANDUM AND ORDER
Plaintiff, Michael P. Crow, filed suit in state court alleging various state law claims arising out of injuries suffered by Nicholas Kyle, a minor child for whom Plaintiff serves as Guardian and Conservator. Defendants removed the case to this court. This matter is presently before the court on Plaintiff's motion to remand (Doc. 10), Defendant Kansas Gas Service Company's first and second motions to dismiss (Docs. 6, 24), and Plaintiff's motion for leave to file a second amended complaint (Doc. 30). For the reasons set forth below, Plaintiff's motion to remand is granted and Defendant Kansas Gas Service Company's first and second motions to dismiss and Plaintiff's motion for leave to amend are denied without prejudice as moot.
I. BACKGROUND
Plaintiff originally filed this suit in the District Court of Wyandotte County, Kansas, on behalf of Nicholas Kyle. In the original petition, Plaintiff alleged that Nicholas, a Kansas resident, suffered severe injuries as a result of a natural gas explosion that occurred at his home on May 30, 2001. Plaintiff asserted negligence, strict liability design defect, strict liability failure to warn, and breach of implied warranty claims against State Industries, a Tennessee corporation. Plaintiff also advanced negligence and strict liability failure to warn claims against "Kansas Gas Service," a company that Plaintiff alleged in his petition was a Kansas corporation providing natural gas to Nicholas's home at the time of the explosion.
On the day Plaintiff filed his original petition, the Clerk of the Wyandotte County District Court issued a summons to be served on "Kansas Gas Service" at Corporation Service Company ("CSC") in Topeka, Kansas. A notice of service of process dated October 31, 2001, indicates that CSC received service of the summons and petition that day as the registered agent in Kansas for "Kansas Gas Service Company." The discrepancy between the names "Kansas Gas Service," which was listed on the summons, and "Kansas Gas Service Company," which was listed on the notice, is acknowledged on the notice. The notice indicates that Carrie Jahnke, the contact with whom CSC had been corresponding about the summons and petition, was informed of the discrepancy and instructed that the documents be forwarded to Sue Griffin of ONEOK in Tulsa, Oklahoma.
After receiving the summons and petition, ONEOK, Inc., d/b/a Kansas Gas Service and Kansas Gas Service Company removed the case from Wyandotte County District Court to this court. As grounds for removal, ONEOK and Kansas Gas Service Company argued that, although Kansas Gas Service Company had been served with the summons and petition in this case, ONEOK, an Oklahoma corporation with its principal place of business in Oklahoma, was the proper party to the lawsuit. Specifically, ONEOK and Kansas Gas Service Company argued that Plaintiff either did not intend to sue Kansas Gas Service Company or that Kansas Gas Service Company was fraudulently joined and/or an improper and nominal party to the lawsuit. ONEOK and Kansas Gas Service Company supported their notice of removal with an affidavit from Ms. Griffin, who represented herself to be the Assistant Secretary and Vice President of Kansas Gas Service Company. Ms. Griffin stated in her affidavit that ONEOK, not Kansas Gas Service Company, sold and distributed the natural gas involved in the explosion that injured Nicholas, and that Kansas Gas Service Company engaged in no business activities other than licensing the name "Kansas Gas Service," along with other names and trademarks, to ONEOK and its subsidiaries. Thus, according to ONEOK and Kansas Gas Service Company, this court has diversity jurisdiction over the case pursuant to 28 U.S.C. § 1332 because the proper parties — i.e., Nicholas, a Kansas citizen, ONEOK, an Oklahoma citizen, and State Industries, a Tennessee citizen — are diverse, and the amount in controversy exceeds $75,000.
Although Defendant State Industries had yet to be served in the Wyandotte County action, it joined and consented to ONEOK and Kansas Gas Service Company's notice of removal to federal court.
Shortly after removing the case, Kansas Gas Service Company filed its first motion to dismiss (Doc. 6). Kansas Gas Service Company argues in its motion that Plaintiff's claims against it should be dismissed for the same reasons ONEOK and Kansas Gas Service Company removed the case to federal court — i.e., that Plaintiff either did not intend to sue Kansas Gas Service Company or that Kansas Gas Service Company was fraudulently joined and/or an improper or nominal party to the lawsuit.
Plaintiff thereafter filed an amended complaint (Doc. 9) in which State Industries, ONEOK, and Kansas Gas Service Company are all named as defendants. In the amended complaint, Plaintiff advances negligence and strict liability failure to warn claims against both ONEOK and Kansas Gas Service Company. Plaintiff alleges that ONEOK, doing business under the names "Kansas Gas Service" and "Kansas Gas Service Company," as licensed by Kansas Gas Service Company, is liable to Plaintiff as the seller and distributor of the natural gas that caused the explosion which injured Nicholas. Plaintiff's claims against Kansas Gas Service Company are based on the theory that Kansas Gas Service Company, as licensor of the trademarks used by ONEOK, is liable for Nicholas's injuries as an "apparent manufacturer."
Because Plaintiff filed his amended complaint without requesting prior leave from the court to do so, Defendants moved to strike it (Doc. 16). Magistrate Judge O'Hara denied Defendants' motion by Order dated March 8, 2002 (Doc. 23).
Plaintiff also filed a motion to remand (Doc. 10) contemporaneously with his amended complaint. Plaintiff argues in his motion to remand that Kansas Gas Service Company was a proper party in Plaintiff's original complaint and remains a proper party as an "apparent manufacturer" in his amended complaint. Because Plaintiff and Kansas Gas Service Company are both Kansas citizens, Plaintiff contends that this court lacks diversity jurisdiction and that remand is appropriate.
Kansas Gas Service Company later filed a second motion to dismiss (Doc. 24) in which it argues that even under the "apparent manufacturer" theory, it remains a fraudulently joined and/or improper or nominal party to the lawsuit and should, therefore, be dismissed.
Finally, Plaintiff moved to file a second amended complaint (Doc. 30) in which he seeks to clarify that, through its licensing agreements with ONEOK, Kansas Gas Service Company held itself out as the actual supplier and provider of the natural gas at issue in this case and can, therefore, be held liable as an "apparent manufacturer."
II. DISCUSSION
A defendant may remove a case filed in state court only if the plaintiff could have filed suit in federal court originally. 28 U.S.C. § 1441(a). "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." Id. § 1447(c). As the party invoking the federal court's jurisdiction, the defendant carries the burden of demonstrating that the requirements for exercising jurisdiction are present. Martin v. Franklin Capital Corp., 251 F.3d 1284, 1290 (10th Cir. 2001) (citation omitted). "Because the courts of the United States are courts of limited jurisdiction, there is a presumption against federal jurisdiction." Frederick Warinner v. Lundgren, 962 F. Supp. 1580, 1582 (D.Kan. 1997) (citing Basso v. Utah Power Light Co., 495 F.2d 906, 909 (10th Cir. 1974)). "Doubtful cases must be resolved in favor of remand." Thurkill v. Menninger Clinic, Inc., 72 F. Supp.2d 1232, 1234 (D.Kan. 1999) (citing Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir. 1995) (further citations omitted)).
Subject matter jurisdiction based on diversity requires that no plaintiff be a resident of the same state as any defendant and that the amount in controversy exceed $75,000. 28 U.S.C. § 1332(a). In addition, removal jurisdiction over diversity cases is more limited than jurisdiction over diversity cases originally brought in federal court because removal based on diversity is available only if none of the defendants is a citizen of the state in which the action is brought. Id. § 1441(b).
Here, ONEOK and Kansas Gas Service Company jointly noticed removal of the case from state to federal court. In their notice, ONEOK and Kansas Gas Service Company admit that Kansas Gas Service Company was the entity served with the summons and petition. They contend, however, that ONEOK is actually the proper party to the lawsuit, while Kansas Gas Service Company is a fraudulently joined and improper and/or nominal party to the suit. Because it is undisputed that Kansas Gas Service Company is a Kansas resident whose inclusion in this case would destroy diversity subject matter jurisdiction, the court begins by focusing on the fraudulent joinder issue to determine whether remand is necessary. See Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998) ("Fraudulent joinder is a judicially created doctrine that provides an exception to the requirement of complete diversity.").
The court questions whether ONEOK, having never been specifically named as a defendant in the original petition and having admitted in the notice of removal that it was not the entity served with the summons and petition, had any authority to file the notice of removal. See Am. Home Assurance Co. v. RJR Nabisco Holdings Corp., 70 F. Supp.2d 296, 298-99 (S.D.N.Y. 1999) (citations omitted) ("[A] non-party — even one that, like Nabisco, claims to be a real party in interest — has no authority to notice removal under the statutes here utilized, 28 U.S.C. § 1441 and § 1446(a), which speak only of removal `by the defendant or defendants.'"). However, the court's ultimate conclusion in this case negates the need to address this issue in any detail.
In a recent unpublished decision, the Tenth Circuit outlined the heavy burden placed on defendants to show that a plaintiff has fraudulently joined a party for the purpose of destroying diversity jurisdiction:
To prove their allegation of fraudulent joinder [the removing parties] must demonstrate that there is no possibility that [plaintiff] would be able to establish a cause of action against the joined party in state court. In evaluating fraudulent joinder claims, we must initially resolve all disputed questions of fact and all ambiguities in the controlling law in favor of the non-removing party. We are then to determine whether that party has any possibility of recovery against the party whose joinder is questioned.
Montano v. Allstate Indem., No. 99-2225, 2000 WL 525592, at **1-2 (10th Cir. Apr. 14, 2000) (quotation and citations omitted); see also Roe v. Gen. Am. Life Ins. Co., 712 F.2d 450, 452 n.* (10th Cir. 1983) (citation omitted) ("[T]he joinder of a resident defendant against whom no cause of action is pled, or against whom there is in fact no cause of action, will not defeat removal.").
In this case, Defendants argue that Kansas Gas Service Company has been fraudulently joined because there is no possibility that Plaintiff can recover against it. The court disagrees. Whether reviewing the facts alleged in the original petition or the first amended complaint, Defendants have simply not carried their heavy burden of showing that there is no possibility of Plaintiff recovering against Kansas Gas Service Company. Thus, Kansas Gas Service Company was not fraudulently joined and is neither an improper or nominal party to this lawsuit.
The court has also reviewed Defendants' argument that Plaintiff did not "intend" to sue Kansas Gas Service Company in its original petition. Again, Defendants have simply failed to carry their burden with respect to this issue. Because doubtful cases must be resolved in favor of remand, the court rejects Defendants' argument.
Because Kansas Gas Service Company was and remains a non-diverse party properly in this lawsuit, the court remands this case to the District Court of Wyandotte County, Kansas for further proceedings. Because this case is to be remanded to the state court, the court necessarily denies without prejudice as moot Defendant Kansas Gas Service Company's two motions to dismiss and Plaintiff's motion for leave to file a second amended complaint. See In re Bear River Drainage Dist., 267 F.2d 849, 851 (10th Cir. 1959) (holding that district court is without jurisdiction to decide remaining motions once remand is ordered).
IT IS, THEREFORE, BY THE COURT ORDERED that Plaintiff's motion to remand (Doc. 10) is granted. The case is remanded to the District Court of Wyandotte County, Kansas.
IT IS FURTHER ORDERED THAT Defendant Kansas Gas Service Company's first and second motions to dismiss (Docs. 6, 24), and Plaintiff's motion for leave to file a second amended complaint (Doc. 30) are denied without prejudice as moot.
The case is closed.
Copies of this order shall be transmitted to counsel of record for the parties.