Opinion
No. 4:04-CV-377-A.
August 31, 2004
MEMORANDUM OPINION and ORDER
Came on for consideration the motion of plaintiff, Rick Wessel, to remand The court, having considered the motion, the response of defendants Blake Miraglia ("Miraglia") and Gary Vanier ("Vanier"), the response of defendant Mark Goldowitz ("Goldowitz"), the record, and applicable authorities, finds that the motion should be granted.
The court notes that Miraglia, Vanier, and Goldowitz currently have pending motions to dismiss for lack of personal jurisdiction. As the United States Supreme Court has noted, subject matter jurisdiction is "fundamentally preliminary."Leroy v. Great Western United Corp., 443 U.S. 173, 180 (1979). And, because subject matter jurisdiction in this case, like most others, can be determined without arduous inquiry, Ruhrgas A.G. v. Marathon Oil Co., 526 U.S. 574, 587-88 (1999), the court is proceeding with the motion to remand first.
I. Proceedings and Claims
On December 31, 2003, plaintiff filed his original petition in the 48th Judicial District Court of Tarrant County, Texas. Plaintiff named only Miraglia as a defendant at that time. On April 21, 2004, plaintiff filed his first amended original petition in state court, adding claims against Randall York ("York"), Vanier, Goldowitz, and "The California Anti-Slapp Project."
The parties now appear to agree that "The California Anti-Slapp Project" is an assumed named used by Goldowitz.
Plaintiff alleges: Plaintiff is employed by First Cash Financial Services, Inc., ("FCFS") as president, secretary, treasurer, and member of the board of directors. FCFS is a public company listed on the NASDAQ national market system. Miraglia and York are disgruntled former employees of FCFS. Vanier and Miraglia were the owners of Miraglia, Inc., which FCFS purchased in a transaction in which the financial condition of Miraglia, Inc., was grossly overstated. Miraglia, York, and Vanier have posted statements on an internet message board that are defamatory. The content of one of York's messages was prepared by Goldowitz and/or Goldowitz directed and required York to post the message. Through their messages, defendants have impeached plaintiff's honesty, integrity, virtue, and reputation, and have falsely accused him with commission of a crime and injured plaintiff in his office, profession, or occupation. Plaintiff sues defendants for defamation, seeking to recover actual damages, interest, attorneys' fees, costs, statutory penalties, and punitive damages.
On May 17, 2004, Miraglia and Vanier filed a notice of removal, in which Goldowitz joined, bringing the action before this court. They allege that the removal was timely, because it was filed within thirty days of the filing of the first amended petition and because plaintiff had made no attempt to serve the original petition on Miraglia. They further allege the fraudulent misjoinder of defendant York to defeat diversity of citizenship.
On May 21, 2004, a supplemental notice of removal was filed. It appears that the only difference between the original and supplemental notice was the addition of a sentence at the end of page 5 of the supplemental notice stating that Goldowitz had consented to the removal in writing. Ironically, the supplemental notice did not bear the signature of Goldowitz's attorney, as did the original.
Defendants state that, disregarding the citizenship of York, diversity jurisdiction exists, because the action is wholly between citizens of different states and because plaintiff has pleaded that the matter in controversy exceeds the sum or value of $75,000.00, exclusive of interest and costs. Notice of Removal at 5, ¶ 10. The sole basis for the allegation regarding the jurisdictional amount is plaintiff's allegation in the first amended petition that "the amount in controversy exceeds the minimum jurisdictional limits of this [the state] court." Id. at ¶ 9. The state district court's minimum amount in controversy is $200.01, Arnold v. West Bend Co., 983 S.W.2d 365, 366 n. 1 (Tex.App.-Houston [1st Dist.] 1998, no writ), a far cry from the $75,000.00 required for jurisdiction of this court. The removing parties have offered no proof that the amount in controversy is greater than the jurisdictional amount. The case could be remanded for that reason alone. See St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998).
II. Grounds of the Motion
Plaintiff urges two grounds in support of his motion to remand First, the removal is procedurally defective, because York did not join in or consent to the removal despite having been served with citation at the time of removal. Second, there has been no fraudulent misjoinder of York.III. Removal Jurisdiction
The burden of establishing federal jurisdiction is on the party seeking removal. Jernigan v. Ashland Oil, Inc., 989 F.2d 812, 815 (5th Cir. 1993). Interests of federalism and comity require that removal jurisdiction be strictly construed. Bosky v. Kroger Tex., L.P., 288 F.3d 208, 211 (5th Cir. 2002); Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988). Jurisdiction is determined as of the time of removal. Bank One Tex., N.A. v. Morrison, 26 F.3d 544, 547 (5th Cir. 1994). The court considers only the citizenship of real and substantial parties to the controversy and disregards nominal or formal parties who have no real interest in the dispute before the court. Navarro Savs. Ass'n v. Lee, 446 U.S. 458, 460-61 (1980); Wolff v. Wolff, 768 F.2d 642, 645 (5th Cir. 1985).
A removing party alleging jurisdiction on the basis of fraudulent joinder must prove the existence of fraud. B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981). He may do so by showing either (1) actual fraud in the pleading of jurisdictional facts, or (2) the inability of the plaintiff to establish a cause of action against the non-diverse party in state court. Travis v. Irby, 326 F.3d 644, 647 (5th Cir. 2003). To prove the latter, the party must establish that there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court. B., Inc., 663 F.2d at 549. If there is arguably a reasonable basis for predicting that state law might impose liability on the facts involved, then there is no fraudulent joinder. Travis, 326 F.3d at 648.
Some district courts in the Fifth Circuit have now recognized a third means of proving the existence of jurisdiction based on fraud by the plaintiff. See, e.g., Jackson v. Truly, 307 F. Supp. 2d 818 (N.D. Miss. 2004); Burrell v. Ford Motor Co., 304 F. Supp. 2d 883 (S.D. Miss. 2004). They are persuaded that the Fifth Circuit has adopted the doctrine of fraudulent misjoinder first articulated in the Eleventh Circuit decision of Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1360 (11th Cir. 2000).See In re Benjamin Moore Co., 318 F.3d 626, 630-31 (5th Cir. 2002), and In re Benjamin Moore Co., 309 F.3d 296 (5th Cir. 2002) (recognizing the force of the Tapscott principle that fraudulent misjoinder should not be allowed to circumvent diversity jurisdiction). This court has previously determined that it would not decide the propriety of state court joinder in the context of fraudulent joinder. See Crenshaw v. Southerland, 1993 WL 610763 (N.D. Tex. 1993). In any event, to constitute fraudulent misjoinder, the misjoinder must represent totally unsupported or egregious misjoinder. Tapscott, 77 F.3d at 1360; Burrell, 304 F. Supp. 2d at 888.
IV. Analysis
Movants first urge that York is only a nominal defendant, because he has filed for bankruptcy protection under Chapter 7 of the United States Bankruptcy Code. They contend that his role in the lawsuit is only that of a depositary or stakeholder, see Tri-Cities Newspapers, Inc. v. Tri-Cities Printing Pressmen Assocs. Local 349, 427 F.2d 325, 327 (5th Cir. 1970), since the only recovery would be of insurance proceeds. See In re Edgeworth, 993 F.2d 51, 54 (5th Cir. 1993). Movants have not shown, however, that York will not bear any burden, such as costs of defense, if plaintiff pursues his action against York. See id. at 54. More importantly, York had not filed his bankruptcy petition at the time of the filing of the notice of removal. Thus, even if it could now be said that he is a nominal party, he was not a nominal party as of the time of removal.
That York might have been judgment-proof is immaterial.Parks v. The New York Times Co., 308 F.2d 474, 478 (5th Cir. 1962).
Movants next urge that diversity jurisdiction exists because York was fraudulently joined as a defendant. In their notice of removal, movants relied on the theory of fraudulent misjoinder, citing Wakeland v. Brown Williamson Tobacco Corp., 996 F. Supp. 1213 (S.D. Ala. 1998), and Triggs v. John Crump Toyota, Inc., 154 F.3d 1284 (11th Cir. 1998). The cases discussing fraudulent misjoinder make clear that for the doctrine to apply, the plaintiff's claims against the diverse and non-diverse defendants must be wholly unrelated. That is, joinder of the different groups of defendants by plaintiff must have been improper and fraudulent, "bordering on sham." Tapscott, 77 F.3d at 1360. Here, as the removing parties recognize, Miraglia Vanier Resp. at 3, plaintiff's claims against defendants arise out of defendants' postings of anonymous comments about the management of FCFS on the same internet message board during approximately the same period of time. It could hardly be said that the claims are wholly unrelated.
Perhaps having feared that the court would not followTapscott, in light of the Crenshaw case cited by plaintiff, defendants now urge the traditional fraudulent joinder theory of inability of plaintiff to establish a cause of action against York in state court. The court is not persuaded, however, that removal may be sustained on grounds not stated in the notice of removal. See Hinojosa v. Perez, 214 F. Supp. 2d 703, 707 (S.D. Tex. 2002) ("It would be a substantial injustice to allow Defendants to remove a case on one ground and then, when faced with a serous challenge to that ground, attempt to justify removal on an entirely different, and untimely, ground.").
Even were the court to consider the new fraudulent joinder theory, movants' argument in support of it is not persuasive. First, movants maintain that plaintiff has not alleged any facts to support joint liability of the defendants. Miraglia Vanier's Resp. at 3. Plaintiff alleged in his first amended petition that Goldowitz had contracted with York, Pl.'s First Am. Pet. at ¶¶ 5 6, that York contracted with Goldowitz to enlist a California court's assistance in protecting his identity, and that Goldowitz directed and required York to post his defamatory statements about plaintiff on the internet, id. at ¶ 20. One could also infer from the amended petition that Miraglia and York, allegedly disgruntled former employees of FCFS, acted together. See id. at ¶ 11. And, plaintiff alleges that Miraglia and Vanier acted together. Id. at ¶ 21. More importantly, whether all defendants acted together, because the injuries arising from their defamatory comments could not be apportioned with reasonable certainty, plaintiff's injuries are indivisible and the defendants are jointly and severally liable for the whole. Amstadt v. United States Brass Corp., 919 S.W.2d 644, 654 (Tex. 1996).
V. Order
For the reasons discussed herein,
The court ORDERS that plaintiff's motion to remand be, and is hereby, granted, and that this action be, and is hereby, remanded to the 48th Judicial District Court of Tarrant County, Texas, from which it was removed.