Opinion
Civil Action No. 3:01-CV-1034-D
July 26, 2001
ORDER
The June 7, 2001 motion to remand of plaintiff Raytheon E-Systems, Inc. ("Raytheon") principally presents the question whether the voluntary-involuntary rule precludes removal of a case that became removable due to a state-court severance that had the effect of creating complete diversity of citizenship, but that was entered over the plaintiff's objection. Because the court holds that it does, it remands this case to the 196th Judicial District Court of Hunt County, Texas.
Prior to transferring this case to the undersigned's docket, Judge Lynn set plaintiff's motion for a hearing. The court is deciding the motion without oral argument. See N.D. Tex. Civ. R. 7.1(g).
I
Raytheon sued Bombardier Inc. ("Bombardier") and Learjet, Inc. ("Learjet") in state court. Bombardier (joined by Learjet and with its consent) removed the case to this court, and Raytheon moved to remand. In an order filed February 16, 2001, the court granted the motion. See Raytheon E-Systems, Inc. v. Bombardier Inc., Civil Action No. 3:00-CV-1419-D (N.D. Tex. Feb. 16, 2001) (Fitzwater, J.) ( "Raytheon I"). Although the court in its order primarily addressed fraudulent joinder, not misjoinder, it made the following statement in the course of remanding the case:Rather than recognize a third method for proving fraudulent joinder, the court finds it more consistent with removal jurisprudence and the presumption of limited federal court jurisdiction to require that Bombardier establish misjoinder in state court under the state misjoinder rule. See Tex. R. Civ. P. 41. If it does so, it is entitled to a severance from Raytheon's action against Learjet. See id ("[A]ctions which have been improperly joined may be severed . . . by order of the court on motion of any party or on its own initiative at any stage of the action, before the time of submission to the jury or to the court if trial is without a jury, on such terms as are just. Any claim against a party may be severed and proceeded with separately."). And provided Bombardier does not wait to seek and obtain a severance "more than 1 year after commencement of the action," see 28 U.S.C. § 1446(b), it may then remove Raytheon's action against it based on complete diversity, see id. ("If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an . . . order . . . from which it may first be ascertained that the case is one which . . . has become removable[.]").Raytheon I, order at 2. Following remand, Bombardier and Learjet followed this procedural roadmap and jointly moved for and obtained from the Texas state court a severance of Raytheon's actions against them. Bombardier then removed Raytheon's suit against it to this court based on complete diversity. Raytheon moves to remand.
II
Despite Bombardier's reasonable reliance on the plain language of Raytheon I, there is an issue presented in the instant remand motion that the parties did not brief and that the court did not address in Raytheon I: the voluntary-involuntary rule.
The Fifth Circuit held in Weems v. Louis Dreyfus Corp., 380 F.2d 545, 546 (5th Cir. 1967), that the judicially-created voluntary-involuntary rule avoids the removal of a case in which the dismissal of a defendant on an appealable ground has not been finally adjudicated by the state courts. The underlying concern of the rule is finality and the prevention of "duplication and expense which would result if a resident defendant was dismissed on an appealable ground, the nonresident was permitted to remove, and the plaintiff then obtained a reversal of the dismissal in the state appellate courts." Id.Schachar v. Home Depot of Tex., Inc., Civil Action No. 3:94-CV-1717-D, slip op. at 2 (N.D. Tex. Oct. 21, 1994) (Fitzwater, J.). Although the Fifth Circuit indicated in dicta in Phillips v. Unijax, Inc., 625 F.2d 54 (5th Cir. 1980), that a severance might be treated differently from an involuntary dismissal, id at 56 ("If the state trial court had severed plaintiffs' claims, Ala. R. Civ. P. 21, thereby creating two separate lawsuits, Unijax's argument might have merit. But that is not what happened."), it has never explicitly decided whether the voluntary-involuntary rule applies to a state-court severance entered over the plaintiff's objection. Cf. Johnson v. Snapper Div. of Fuqua Indus., Inc., 825 F. Supp. 127, 129 (E.D. Tex. 1993) ("the Fifth Circuit has not yet found the correct circumstances for the removal of a case based upon the severance of a lawsuit in state court"). District courts in this circuit, however, have held that the rule does apply. See Miller v. Fulton, 113 F. Supp.2d 1035, 1039 (S.D. Miss. 2000) ("Moreover, even were the court persuaded that the state court had severed the claims, given that [plaintiff] opposed the severance, the court would nonetheless remand the case based on the voluntary-involuntary rule." (citing Weems, 380 F.2d 545)); Cont'l Oil Co. v. PPG Indus., Inc., 355 F. Supp. 1183, 1186 (S.D. Tex. 1973) (holding that "severance is analogous to an involuntary dismissal and comes within the Weems doctrine" and applying voluntary-involuntary rule despite plaintiff's failure to obtain writ of mandamus from Texas Supreme Court overturning state court severance order). And a district court that did not apply the voluntary-involuntary rule in a severance case did so where the plaintiff's voluntarily severed the non-diverse defendant from the state-court case. See Johnson, 825 F. Supp. at 128-29.
The court has reviewed Raytheon's December 28, 2000 brief in support of its motion to remand in Raytheon I, Bombardier's January 18, 2001 brief in response, and Raytheon's January 30, 2001 reply brief and found no indication that either side explicitly raised or briefed the voluntary-involuntary rule.
Bombardier maintains that the court in Raytheon I recognized that "this case falls within the exception to the `voluntary-involuntary rule,' and that rule cannot support remand of the case." D. Br. at 19. The court did not explicitly address the voluntary-involuntary rule in Raytheon I and did not consider whether this case falls within an exception to the rule.
The court's analysis of Texas severance jurisprudence leads it to conclude that the voluntary-involuntary rule also applies where a severance is obtained over the plaintiff's objection. To be sure, a Texas trial court is vested with broad discretion in its decision whether to grant a severance under Tex. R. Civ. P. 41. See Guar. Fed Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 658 (Tex. 1990). "The trial court's decision to grant a severance will not be reversed unless it has abused its discretion." Id. The standard of review, moreover, appears to be quite narrow. "The test for abuse of discretion is not whether, in the opinion of the reviewing court, the facts present an appropriate case for the trial court's action. Rather, it is a question of whether the court acted without reference to any guiding rules and principles." Downer v. Aquamarine Operators, Inc., 70 1 S.W.2d 238, 241-42 (Tex. 1985). Nevertheless, the trial court's discretion "is not unlimited," Goins v. League Bank Trust, 857 S.W.2d 628, 630 (Tex.App. 1993, no writ), and severance orders are subject to appellate review and can be reversed. See, e.g., Mathis v. Bill De La Garza Assocs., P.C., 778 S.W.2d 105, 106-07 (Tex.App. 1989, no writ) (reversing severance of compulsory counterclaim). And because, as even Bombardier recognizes, this court cannot conduct appellate review of the state court's severance order, it is powerless at the removal-remand stage to assess whether the order is likely to be disturbed on appeal. The guiding principle is this: because the severance order can be reversed, removal is unavailable because the same problems (duplication and expense) identified in Weems can arise. See Weems, 380 F.2d at 546.
In the instant case, the state court severed Raytheon's actions against Bombardier and Learjet over Raytheon's objection. Raytheon intends to appeal the severance order. Because a Texas appellate court could reverse the severance order, Raytheon and Bombardier are subjected to the risk of lack of finality (since complete diversity would then be absent) and to unnecessary duplication and expense (if this court is divested of subject matter jurisdiction and the case must be relitigated in state court). The court therefore concludes, having been squarely required to decide the question, that the voluntary-involuntary rule precludes removal where diversity is created by an appealable severance order granted over the plaintiff's objection.
To the extent that Bombardier relies again on fraudulent joinder, the court holds that it has failed to carry its heavy burden under the controlling Fifth Circuit standard.