JPH Foods Inc v. 13 Associates LLC et al
MEMORANDUM OPINION. Signed by Judge Virginia Emerson Hopkins on 4/9/2014. (JLC)
2014 Apr-09 AM 09:56
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
JPH FOODS, INC.,
13 ASSOCIATES, LLC, et al,
) Case No.: 4:13-CV-2342-VEH
This civil action was originally filed on November 22, 2013, in the Circuit
Court of Cherokee County, Alabama, against the defendants 13 Associates, LLC (“13
Associates”) and Real Estate Southeast, LLC (“RES”). (Doc. 1-1). The action arises
out of a commercial lease agreement between the plaintiff and 13 Associates.
According to the complaint, RES, the property manager for 13 Associates, negotiated
the lease agreement on behalf of 13 Associates. The complaint first seeks a
declaration that the lease agreement is void (Count One). Then, against 13 Associates
alone, it alleges breach of contract (Count Two), and breach of the covenant of quiet
enjoyment (Count Six).
Against both defendants, the complaint alleges
misrepresentation (Count Three), suppression (Count Four), fraudulent inducement
(Count Five), and conspiracy “to accomplish the acts set forth [in the complaint]”
13 Associates removed the case to this court on December 30, 2013.1 (Doc. 1).
It is before the court on the plaintiff’s January 3, 2014, motion to remand. (Doc. 6).
For the reasons stated herein, the motion will be GRANTED.
STANDARD FOR REMAND
“Federal courts are courts of limited jurisdiction. They possess only that power
authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of
America, 511 U.S. 375, 377 (1994). For removal to be proper, the court must have
subject-matter jurisdiction in the case. “Only state-court actions that originally could
have been filed in federal court may be removed to federal court by the Defendant.”
Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). In addition, the removal
statute must be strictly construed against removal, and any doubts should be resolved
in favor of remand. See, City of Vestavia Hills v. Gen. Fid. Ins. Co., 676 F.3d 1310,
1313 (11th Cir. 2012) (“[b]ecause removal jurisdiction raises significant federalism
“The unanimity rule requires that all defendants consent to and join a notice of removal
in order for it to be effective.” Bailey v. Janssen Pharmaceutica, Inc., 536 F .3d 1202, 1207 (11th
Cir.2008). The unanimity requirement only applies to defendants which have been “properly
joined and served.” 28 U.S.C. § 1446 (b)(2)(A) (emphasis added). Although RES has not joined
in the removal, it has yet to be served with the summons and complaint.
concerns, federal courts are directed to construe removal statutes strictly. Indeed, all
doubts about jurisdiction should be resolved in favor of remand to state court.”)
“In removal cases, the burden is on the party who sought removal to
demonstrate that federal jurisdiction exists.” Friedman v. New York Life Ins. Co., 410
F.3d 1350, 1353 (11th Cir. 2005) (citation omitted); Williams v. Best Buy Co., 269
F.3d 1316, 1319 (11th Cir.2001).
That burden goes not only to the issue of federal jurisdiction, but also to
questions of compliance with statutes governing the exercise of the right
of removal. Albonetti v. GAF Corporation-Chemical Group, 520
F.Supp. 825, 827 (S.D. Texas 1981); Jennings Clothiers of Ft. Dodge,
Inc. v. U.S. Fidelity & Guaranty Co., 496 F.Supp. 1254, 1255 (D.Iowa
1980); Fort v. Ralston Purina Company, 452 F.Supp. 241, 242
Parker v. Brown, 570 F.Supp. 640, 642 (D.C. Ohio, 1983)
While it is undoubtedly best to include all relevant evidence in the
petition for removal and motion to remand, there is no good reason to
keep a district court from eliciting or reviewing evidence outside the
removal petition. We align ourselves with our sister circuits in adopting
a more flexible approach, allowing the district court when necessary to
consider post-removal evidence in assessing removal jurisdiction. We
emphasize, as did the court in Allen, that “under any manner of proof,
the jurisdictional facts that support removal must be judged at the time
of the removal, and any post-petition affidavits are allowable only if
relevant to that period of time.” Allen, 63 F.3d at 1335.
Sierminski v. Transouth Financial Corp., 216 F.3d 945, 949 (11th Cir. 2000).
The defendant claims that this court has jurisdiction over this matter pursuant
to 28 U.S.C. § 1332, which provides, in pertinent part: “[t]he district courts shall have
original jurisdiction of all civil actions where the matter in controversy exceeds the
sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens
of different States.” The statute requires “complete diversity between all named
plaintiffs and all named defendants, and no defendant [may be] a citizen of the forum
State.” Lincoln Prop. Co. v. Roche, 546 U.S. 81, 84, 126 S. Ct. 606, 609, 163 L. Ed.
2d 415 (2005).
The parties agree that the plaintiff was incorporated in the State of Alabama,
and thus is a citizen of this state. 28 U.S.C. § 1332(c)(1) (“[A] corporation shall be
deemed to be a citizen of every State . . . by which it has been incorporated.”); (Doc.
1-1 at 1; doc. 1 at 5). The parties also agree that RES “is a domestic limited liability
company.” (Doc. 1-1 at 1; doc. 1 at 5).2 Accordingly, there is not complete diversity
The defendant argues that “[RES’s] citizenship . . . should not be considered
“[A] limited liability company is a citizen of any state of which a member of the
company is a citizen.” Rolling Greens MHP, L.P. v. Comcast SCH Holdings L.L.C., 374 F.3d
1020, 1022 (11th Cir. 2004). The sole member of RES, Louise Jennings, describes herself as a
“resident of the State of Alabama.” (Doc. 1-4 at 1).
in determining whether diversity exists because [RES] has been improperly added
solely to preclude removal to federal court.” (Doc. 1 at 5). The practice to which the
defendant refers is so-called “fraudulent joinder.” Henderson v. Washington Nat. Ins.
Co., 454 F.3d 1278, 1281 (11th Cir. 2006). The Eleventh Circuit has noted that when
fraudulent joinder occurs “the district court must ignore the presence of the nondiverse defendant and deny any motion to remand the matter back to state court . . .
and a federal court may appropriately assert its removal diversity jurisdiction over the
case.”Henderson, 454 F.3d 1281 (citation omitted). However, in order for the
defendant “to prove that a co-defendant was fraudulently joined [it] must demonstrate
either that: ‘(1) there is no possibility the plaintiff can establish a cause of action
against the resident defendant; or (2) the plaintiff has fraudulently pled jurisdictional
facts to bring the resident defendant into state court.’” Id. (quoting Crowe v.
Coleman, 113 F.3d 1536, 1538 (11th Cir.1997)). In this case, 13 Associates argues
only the former grounds. (Doc. 1 at 7).
As noted above, in addition to the claim for declaratory judgment, the
complaint alleges, against 13 Associates alone, claims for breach of contract (Count
Two) and breach of the covenant of quiet enjoyment (Count Six). Against both
defendants, the complaint alleges misrepresentation (Count Three), suppression
(Count Four), fraudulent inducement (Count Five), and conspiracy “to accomplish the
acts set forth [in the complaint]” (Count Seven). However, the notice of removal
argues only that the plaintiff has no claim against RES for misrepresentation,
suppression, and fraudulent inducement. (Doc. 1 at 6-10). It then states: “[p]laintiff’s
last claim is that of conspiracy. However, because [p]laintiff cannot prevail on any
other claims in the [c]omplaint against [RES], then the conspiracy claim fails as
well.” (Doc. 1 at 10). Similarly, the defendant’s brief in response to the motion to
remand attacks the “fraud” claims, and then, in a footnote, states that the conspiracy
claim is due to be dismissed “if the underlying tort claims fail.” (Doc. 11 at 5, n. 3).
The plaintiff notes that:
Defendant, in its Notice of Removal and its Response to Plaintiff’s
Motion to Remand, did not contest that [p]laintiff’s [c]omplaint states
a cause of action against [RES] for conspiracy to breach the contract and
conspiracy to breach the covenant of quiet enjoyment.
(Doc. 12 at 2). In other words, the plaintiff argues that, even though RES did not
breach the contract or the covenant of quiet enjoyment, and even though no claim is
made against RES for that alleged conduct, RES could still be liable for engaging in
a conspiracy to cause the alleged breaches. “The defendant must make [its] showing
by clear and convincing evidence.” Id. “The burden of the removing party is a
‘heavy one.’” Crowe, 113 F.2d at 549 (quoting B, Inc. v. Miller Brewing Co., 663
F.2d 545, 549 (5th Cir. Unit A, December 10, 1981)).3 Because 13 Associates does
not even address this issue, it has failed to carry its “heavy burden.”
Further, the Alabama Supreme court has held that a conspiracy claim can exist
under such circumstances. Borrowing from case law on criminal conspiracy, the
court has noted:
It is not an essential element of the claim that a particular
conspirator commit an overt act in furtherance of the conspiracy. As
stated in Stokley v. State, 254 Ala. 534, 542, 49 So.2d 284 (1950):
“This rests on the principle that one who is present,
encouraging, aiding, abetting, or assisting, or who is ready
to aid, abet, or assist the other in the perpetration or
commission of the offense, is a guilty participant, and in
the eye of the law is equally guilty with the one who does
the act. Such community of purpose or conspiracy need not
be proved by positive testimony. It rarely is so proved. The
jury is to determine whether it exists, and the extent of it,
from the conduct of the parties and all the testimony in the
case. Morris v. State, 146 Ala. 66, 41 So. 274 [ (1906) ],
and cases cited; Jones v. State, 174 Ala. 53, 57 So. 31 [
(1911) ]; Teague v. State, 245 Ala. 339, 16 So.2d 877 [
Huckleberry v. M.C. Dixon Lumber Co., Inc., 503 So. 2d 1209, 1210-11 (Ala. 1987).
Judge Watkins in the Middle District of Alabama persuasively applied this
Big B, is not binding precedent in the Eleventh Circuit. The Eleventh Circuit has
adopted as binding precedent all Fifth Circuit decisions issued before October 1, 1981, as well as
all decisions issued after that date by a Unit B panel of the former Fifth Circuit. Stein v.
Reynolds Sec., Inc., 667 F.2d 33, 34 (11th Cir. 1982); see also United States v. Schultz, 565 F.3d
1353, 1361 n.4 (11th Cir. 2009). Still, while Big B is not binding, Crowe, which relies on Big
B’s analysis, is.
principle in Camp v. Corr. Med. Servs., Inc., 668 F. Supp. 2d 1338, 1367 (M.D. Ala.
2009) (Watkins, J.) aff'd in part sub nom. Camp v. Corr. Med. Servs., Inc., 400 F.
App'x 519 (11th Cir. 2010). In Camp, the plaintiffs Dr. Larry Camp and Sabrina
Martindale sued Correctional Medical Services, Inc. (“CMS”), Richard F. Allen, Ruth
Naglich, and Laura Ferrell. Camp, 668 F. Supp. 2d at 1344. Among other claims, the
amended complaint alleged a 42 U.S.C. § 1983 First Amendment retaliation claim
against all defendants, and civil conspiracy against CMS, Ferrell, and Naglich. Id.
at 1348. The court determined that Martindale’s section 1983 claim against Ferrell
was due to be dismissed. Id. at 1358. However, despite the fact that Martingale had
no viable section 1983 claim against Ferrell, the court did not dismiss Martingale’s
claim against Ferrell for conspiracy to violate section 1983, writing:
Plaintiffs allege civil conspiracy against CMS, Naglich, and
Ferrell. Civil conspiracy requires “a combination of two or more persons
to accomplish an unlawful end or to accomplish a lawful end by
unlawful means.” Keith v. Witt Auto Sales, Inc., 578 So.2d 1269, 1274
(Ala.1991). “The gist of the action is not the conspiracy alleged, but the
wrong committed.” Sadie v. Martin, 468 So.2d 162, 165 (Ala.1985).
Thus, if the underlying wrong provides no cause of action, then neither
does the conspiracy. A violation of § 1983 can serve as the underlying
wrong in a civil conspiracy claim. See Boone v. Mingus, 697 F.Supp.
1577, 1582 (S.D.Ala.1988).
Plaintiffs have . . . presented sufficient evidence to survive
summary judgment on their civil conspiracy claim against Naglich and
Ferrell. According to the Alabama Supreme Court, “The existence of the
conspiracy must often be inferentially and circumstantially derived from
the character of the acts done, the relation of the parties, and other facts
and circumstances suggestive of concerted action.” O'Dell v. State of
Alabama ex rel. John Patterson, 270 Ala. 236, 117 So.2d 164, 168
(1960). Here, Plaintiffs present evidence that both Ferrell and Naglich
worked for the ADOC at the time of the alleged retaliatory action and
that both Ferrell and Naglich were aware of Camp's and Martindale's
protected speech at the time their applications with CMS were denied.
Although Ferrell did not expressly instruct Linton not to pursue
Martindale, “[i]t is not an essential element of the claim that a particular
conspirator commit an overt act in furtherance of the conspiracy.”
Huckleberry v. M.C. Dixon Lumber Co., 503 So.2d 1209, 1210–11
Id. at 1367.
For the foregoing reasons, the court concludes that a civil conspiracy claim
against RES is possible. Accordingly, the court must consider the citizenship of RES
in determining jurisdiction. Because there is not complete diversity, this case must
be REMANDED to the Circuit Court of Cherokee County, Alabama. A separate
order will be entered.
DONE and ORDERED this 9th day of April, 2014.
VIRGINIA EMERSON HOPKINS
United States District Judge
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