Opinion
Civil Action No. 3:04-CV-0653-D.
May 26, 2004
MEMORANDUM OPINION AND ORDER
Plaintiffs' motion to remand this removed case presents the question whether the non-diverse defendant was fraudulently joined. Concluding that it was not, the court grants the motion, remands this case to state court, and awards plaintiffs their attorney's fees and expenses under 28 U.S.C. § 1447(c).
I
Plaintiffs (collectively, "Skinner"), all Texas citizens, filed suit in Texas state court against defendants Cooper Tire Rubber Company ("Cooper Tire"), a Delaware corporation, and J J Llantas Inc. ("JJL"), a Texas corporation, arising from the deaths of Jessica Lynette Harrell ("Harrell") and Francisco Gonzalez and personal injuries to Keli Dyan White following a tread separation on a tire of the vehicle that Harrell was driving. Cooper Tire manufactured the tire, and JJL sold it to Harrell. Skinner alleges that JJL is liable for violating the Texas Deceptive Trade Practices-Consumer Protection Act ("DTPA"), Tex. Bus. Com. Code Ann. §§ 17.41-17.826 (Vernon 2004), breach of warranty under Tex. Bus. Com. Code Ann. § 2.314(b)(1)-(6) (Vernon 1994), and breach of implied warranty of fitness. Cooper Tire does not dispute that plaintiffs and JJL are Texas citizens, but it contends that JJL was fraudulently joined and that its citizenship can be disregarded. Skinner moves to remand the case to state court.
Skinner also alleges claims against Cooper Tire, but these are immaterial to the court's fraudulent joinder analysis and need not be discussed.
Cooper Tire moves the court to abate the case under the DTPA. The court leaves that motion to the state court to decide on remand
II
For this court to have diversity jurisdiction, there must be complete diversity of citizenship between all plaintiffs and all defendants. Owen Equip. Erection Co. v. Kroger, 437 U.S. 365, 373-74 (1978); Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806). This means that no plaintiff can be a citizen of the same state as even one defendant. Moreover, under 28 U.S.C. § 1441(b), a case cannot be removed based on diversity jurisdiction by a citizen of the state in which the action is brought. If a defendant has been fraudulently joined, however, the citizenship of that party is disregarded for purposes of determining diversity and applying § 1441(b). Fraudulent joinder is established by showing that there was either actual fraud in the pleading of jurisdictional facts or that the plaintiffs are unable to establish a cause of action against the non-diverse defendant in state court. See Travis v. Irby, 326 F.3d 644, 698 (5th Cir. 2003) (citing Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999)). Cooper Tire maintains on the second basis that JJL has been fraudulently joined.The jurisprudence of, and procedure for determining, fraudulent joinder are well settled.
The removing party carries a heavy burden when attempting to prove fraudulent joinder. The removing party must prove 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, or that there has been outright fraud in the plaintiff's pleading of jurisdictional facts. After all disputed questions of fact and all ambiguities in the controlling state law are resolved in favor of the nonmoving party, the court determines whether that party has any possibility of recovery against the party whose joinder is questioned. If there is arguably a reasonable basis for predicting that the state law might impose liability on the facts involved, then there is no fraudulent joinder. This possibility, however, must be reasonable, not merely theoretical.Great Plains Trust Co. v. Morgan Stanley Dean Witter Co., 313 F.3d 305, 312 (5th Cir. 2002) (Fitzwater, J.) (citations and internal quotation marks omitted). The court may consider "summary judgment-type evidence such as affidavits and deposition testimony." Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 263 (5th Cir. 1995).
III
Cooper Tire argues that Skinner cannot recover against JJL and that it has been fraudulently joined. It focuses on whether Tex. Civ. Prac. Rem. Code Ann. § 82.003 (Vernon Supp. 2004) precludes Skinner from recovering against JJL. Neither side clearly addresses in the briefing the potential for Skinner to establish a DTPA claim. The court raises the issue sua sponte because it is the most direct avenue to demonstrate that JJL has not been fraudulently joined. Additionally, this court is obligated, sua sponte if necessary, to note a lack of subject matter jurisdiction. See, e.g., In re Bowman, 821 F.2d 245, 246 (5th Cir. 1987).
Cooper Tire refers to Skinner's DTPA cause of action, but it does not contend that he cannot recover under it. See D. Br. at 6-7. For example, Cooper Tire contests whether the generic 30-day warranty is sufficient to establish liability under § 82.003, but it does not argue that a DTPA cause of action is unavailable. See id. at 7.
Skinner asserts a DTPA claim against JJL based on Harrell's purchase of the tire from JJL. See Ps. Pet. ¶ 17. To recover against JJL on this basis, Skinner must prove that Harrell was a consumer under the DTPA with respect to the tire purchase; that JJL committed a false, misleading, or deceptive act under § 17.46(b) of the DTPA, breached an express or implied warranty, or engaged in an unconscionable action or course of action, and that the act in question was a producing cause of damages. See Tex. Bus. Com. Code Ann. § 17.50(a) (Vernon 2002); Brown v. Bank of Galveston, Nat'l Ass'n, 963 S.W.2d 511, 513 (Tex. 1998).
The receipt for Harrell's purchase of tires from JJL states that there is a "30-day warranty on . . . tread separation[.]" Ps. Br. Ex. A. This could constitute a warranty that the tread on the tires would not separate. Harrell appears to fall within the definition of a DTPA consumer. Because the breach of warranty need only be a producing cause of the harm, see, e.g., Townsend v. Catalina Ambulance Co., 857 S.W.2d 791, 795 (Tex.App. 1993, no writ), this element also appears to be satisfied.
Cooper Tire contends that evidence and assertions that Skinner makes in his remand motion cannot be considered, because they were not included in his state court petition. See D. Br. at 6. When reviewing a claim for fraudulent joinder, however, the court may consider post-removal "summary judgment-type" evidence and assertions, so long as they do not present new claims or theories. Travis, 326 F.3d at 648-49; Griggs, 181 F.3d at 700. The contentions that Skinner makes in his brief and the attached evidence serve to buttress and clarify pleaded claims, not to assert new causes of action, and the court may consider them.
Even if the warranty could be deemed to remain in effect only for 30 days, the accident in question occurred within 30 days of the tire purchase.
To demonstrate fraudulent joinder, Cooper Tire has the heavy burden of establishing "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." Great Plains, 313 F.3d at 312 (quoting Green v. Amerada Hess Corp., 707 F.2d 201, 205 (5th Cir. 1983)). It has failed to do so, and Skinner's motion to remand must be granted on this basis alone.
III
Skinner requests an award of attorney's fees under § 1447(c), which provides that "[a]n order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." 28 U.S.C. § 1447(c). The decision to award fees is a matter of discretion. Avitts v. Amoco Prod. Co., 111 F.3d 30, 32 (5th Cir. 1997); Miranti v. Lee, 3 F.3d 925, 928 (5th Cir. 1993). The ultimate question considered by the court when applying § 1447(c) is "whether the defendant had objectively reasonable grounds to believe the removal was legally proper" at the time of removal. Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290, 292-93 (5th Cir. 2000). In this case, it did not. Skinner is therefore entitled recover his attorney's fees and expenses, limited to "fees and costs incurred in federal court that would not have been incurred had the case remained in state court." Avitts, 111 F.3d at 32. Skinner may apply for an award no later than 30 days from the date this memorandum opinion and order is filed if the parties cannot agree on the amount.