Davis et al v. The Hillman Group, Inc.

Filing 14

ORDER ADOPTING 12 REPORT AND RECOMMENDATION w/amendments as set out & GRANTING Plfs' 5 MOTION to Remand this action to the Circuit Court of Conecuh County, Alabama. 13 OBJECTIONS by non-diverse dft are are OVERRULED. Signed by Senior Judge Callie V. S. Granade on 8/2/2017. (tot)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
LARRY K. DAVIS and BRENDA
DAVIS,
Plaintiffs,
vs.
THE HILLMAN GROUP, INC.,
SALTER HARDWARE, INC., and
DO IT BEST CORPORATION,
Defendants.

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) CIVIL ACTION NO. 17–0068–CG–B
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ORDER
This matter is before the Court on the Report and Recommendation of
the Magistrate Judge (Doc. 12), dated June 28, 2017, and Defendant The
Hillman Group, Inc.’s objections (Doc. 13) thereto. After due and proper
consideration of all portions of this file deemed relevant to the issues raised,
and a de novo determination of those portions of the recommendation to
which objection is made, the Court overrules Defendant’s objections and
adopts the Report and Recommendation, as modified in this Order and
Opinion.
I. Background
Plaintiffs Larry and Brenda Davis, both Alabama citizens, brought this
laswsuit in state court, alleging nine causes of action relating to the failure of

wooden screws in a ladder the Davises’ son built. Plaintiffs purchased the
allegedly defective screws from Defendant Salter Hardware, Inc. (“Salter
Hardware”), which in turn had obtained the screws from Defendant Do It
Best Corporation (“DIB Corp.”) and Defendant The Hillman Group, Inc.
(“THG”). (See Doc. 1-1, p. 16). THG removed the action to this Court on the
basis of diversity jurisdiction and has requested this Court to disregard
Salter Hardware’s Alabama citizenship because it has been improperly
joined. (See Doc. 12, pp. 2–3). To support removal, THG submitted two
affidavits from the other Defendants. In the first, Gerald Salter of Salter
Hardware stated Salter Hardware sells the screws in the store and thus acts
as a “mere conduit” because Salter Hardware receives them in a sealed box
and sells them in the same state; he further asserted Salter Hardware does
not manufacture, inspect, or test the screws. (Doc. 1-1, pp. 1–2). In the second
affidavit, Steve Markley, the Vice President of Merchandising for DIB Corp.,
testified that DIB Corp. purchases screws from various vendors, including
THG, and resells them to “independently owned and operated members like
Salter Hardware.” Id. at p. 8. He further confirmed DIB Corp. receives the
screws in sealed packaging and distributes them to hardware stores, like
Salter Hardware, in that same packaging. Id.
Plaintiffs aver Salter Hardware is not an “innocent seller” protected by
Alabama Code § 6–5–521(b) and contend they have alleged sufficient facts to
state a plausible claim against Salter Hardware on the basis of its

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independent conduct. THG disagrees, arguing Plaintiffs have not provided
specific allegations against Salter Hardware and are thus unable to state a
valid claim.
In the Report and Recommendation, the Magistrate Judge concluded
Plaintiffs have leveled sufficient allegations against Salter Hardware in the
sixth cause of action for fraudulent misrepresentation. The Magistrate Judge
found Salter Hardware is not immune to suit, despite the protections of
Alabama Code § 6–5–521(b):
Although Plaintiffs’ fraudulent misrepresentation claim is
disjointed, a fair reading of the entire complaint includes
allegations that around the time the screws were
purchased from Salter [Hardware], Defendants, including
Salter, made false representations to Plaintiffs which
Plaintiffs relied on to their detriment.[ ] According to
Plaintiffs, Defendants, including Salter, knew or had
reason to know that Plaintiffs were acquiring the subject
wood screws for outdoor construction projects utilizing
wood framing, that Plaintiffs were replying on Defendants’
superior skill, judgment, and experience in selecting the
proper wood screws for their projects, that Defendants
represented to Plaintiffs that the wood screws had been
tested and were appropriate for their intended use, that
the representations were false, misleading or made with
reckless disregard for the truth, and that Plaintiffs
reasonably relied upon said misrepresentation in
purchasing and using the screws to their detriment. These
allegations focus on alleged conduct by Salter and the
other Defendants that is arguably separate and apart from
the design, manufacture and marketing of the wood
screws. In the absence of guidance by an Alabama court as
to what conduct falls outside the protection afforded by the
Innocent Seller Act, the undersigned cannot conclude that
[THG] has met its heavy burden of showing that there is
no possibility Plaintiffs can establish a cause of action
against Salter.

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(Doc. 12, pp. 16–17). In finding the possibility of a cause of action against
Salter Hardware, the Magistrate Judge recommended the Plaintiffs’ motion
to remand (Doc. 5) be granted on the basis that complete diversity does not
exist.
II. THG’s Objections
THG objects to the Magistrate Judge’s recommendation on the basis
that Count Six (fraudulent misrepresentation) fails to comply with the
heightened pleading standards of Alabama Rule of Civil Procedure 9(b).
Specifically, THG contends Plaintiffs failed to identify the individual(s) who
made the misleading statements, which violates the pleading requirements.
See generally Doc. 13, pp. 10–13.
III. Analysis
This Court may exercise federal diversity jurisdiction when the
amount in controversy exceeds $75,000 and when the action is between
citizens of different states. See 28 U.S.C. § 1332(a)(1). The Court must
simultaneously guard against improper removal and protect a defendant’s
right to remove, when properly invoked. In doing so, ‘“federal courts are
directed to construe removal cases strictly’” such that “all doubts about
jurisdiction should be resolved in favor of remand to state court.” Dalraida
Props., Inc. v. ElastiKote, LLC, No. 2:14cv1213–MHT (WO), 2015 WL
4393158, at *2 (M.D. Ala. July 15, 2015) (quoting Univ. of S. Ala. v. Am.
Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999)). THG carries a “heavy”

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burden to prove Salter Hardware is an improperly joined party. Id. (citing
Pacheco de Perez v. AT & T Co., 139 F.3d 1368, 1380 (11th Cir. 1998)). To do
so, THG must prove, by clear and convincing evidence, that: “(1) there is no
possibility the plaintiff can establish a cause of action against the [nondiverse or] resident defendant; or (2) the plaintiff has fraudulently pled
jurisdictional facts to bring the resident defendant into state court.” Id.
(internal marks and citations omitted). To engage in this analysis, the Court
must look to the pleadings at the time of removal. Id. Because the review of
the Report and Recommendation is de novo, the Court will assess all the
counts as they currently stand.
A. Plaintiffs’ Causes of Action against Salter Hardware
Plaintiffs have alleged the following causes of action against the
various Defendants, including Salter Hardware: (1) negligence or gross
negligence, (2) the Alabama Extended Manufacturer’s Liability Doctrine, (3)
implied warranty of fitness for a particular purpose, (4) implied warranty of
merchantability, (5) express warranty, (6) fraudulent misrepresentation, (7)
Magnuson-Moss Warranty Act, (8) vicarious liability or respondeat superior,
and (9) loss of consortium. (See Doc. 1-1). An analysis of the impact of Ala.
Code § 6–5–521 informs the question of whether Plaintiffs state a cause of
action against Salter Hardware for either negligence or misrepresentation.
Section 6–5–521 codifies who may bring a product liability action:
A “product liability action” means any action brought by a
natural person for personal injury, death, or property

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damage caused by the manufacture, construction, design,
formula, preparation, assembly, installation, testing,
warnings, instructions, marketing, packaging, or labeling
of a manufactured product when such action is based up
(1) negligence, (2) innocent or negligent
misrepresentation, (2) the manufacturer’s liability
doctrine, (4) the Alabama extended manufacturer’s
liability doctrine as it exists or is hereafter construed or
modified, (5) breach or any implied warranty, or (6)
breach of any oral express warranty and no other.
Ala. Code § 6–5–521(1). In 2011, the Alabama Legislature amended this
section to “significantly limit[ ] a consumer’s ability to bring such actions
against a ‘distributor.’” Dalraida Props., Inc., 2015 WL 4393158 at *6. The
“Innocent Sellers” statute provides,
No product liability action may be asserted or may be
provided a claim for relief against any distributor,
wholesaler, dealer, retailer, or seller of a product, or
against an individual or business entity using a product
in the production or delivery of its services (collectively
referred to as the distributor) unless any of the following
apply:
(1) The distributor is also the manufacturer or assembler
of the final product and such act is causally related to
the product’s defective condition.
(2) The distributor exercised substantial control over the
design, testing, manufacture, packaging, or labeling of
the product and such act is causally related to the
product’s condition.
(3) The distributor altered or modified the product, and
the alteration or modification was a substantial factor
in causing the harm for which recovery of damages is
sought.
(4) It is the intent of this subsection to protect distributors
who are merely conduits of a product. This subsection
is not intended to protect distributors from
independent acts unrelated to the product design or
manufacture, such as independent acts of negligence,
wantonness, warranty violations, or fraud.

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Ala. Code § 6–5–521(b). The question before the Court is “whether
[Plaintiffs’] claim[s] plausibly rise[ ] to the level of an independent act
unrelated to the product design or manufacture.” Lazenby v. Exmark Manuf.
Co., Inc., No. 3:12–CV–82–WKW [WO], 2012 WL 3231331, at *3 (M.D. Ala.
Aug. 6, 2012). As other Alabama courts have noted, “while § 6–5–521(b) is
clearly meant to protect sellers who unknowingly sell products that later
prove to be defective, it is plausible that the drafters of legislation entitled
the Innocent Sellers Act did not intend for it to immunize sellers who
deliberately choose to sell dangerous products to unwary consumers.” Barnes
v. General Motors, LLC, No. 2:14–cv–719–AKK, 2014 WL 2999188, at *5
(N.D. Ala. July 1, 2014) (internal citations omitted). Only two of Plaintiffs’
claims might survive the analysis of “independent acts”: Count One
(negligence) and Count Six (fraudulent misrepresentation).
1. Plaintiffs’ Negligence Claim
In the first cause of action, Plaintiffs allege Defendants collectively
breached their duty of “reasonable and ordinary care in the manufacture,
formulation, deign, distribution, delivery, supplying, inspection, warning,
testing, marketing, sale, warranting, advertising, and/or application of the
wood screws.” (Doc. 1-1, p. 18). A thorough review of the language throughout
the first cause of action indicates Plaintiffs do not allege any “independent
acts” of negligence that are “unrelated to the product design or manufacture.”
See Dalraida Props, Inc., 2015 WL 4393158 at *7. As such, the Court must

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conclude the Innocent Sellers Act protects Salter Hardware as a “mere
conduit” of the product and precludes this particular negligence claim against
it.
2. Plaintiffs’ Fraudulent Misrepresentation Claim
The Court agrees with the Magistrate Judge’s assessment that the
allegations of Count Six “focus on alleged conduct by Salter and the other
Defendants that is arguably separate and apart from the design,
manufacture and marketing of the wood screws.” (Doc. 12, pp. 16–17). “A
fraudulent-misrepresentation action is governed by § 6–5–101, Ala. Code
1975, which provides that ‘[m]isrepresentation of a material fact made
willfully to deceive, or recklessly without knowledge, and acted on by the
opposite party, or if made by mistake and innocently and acted on by the
opposite party, constitute legal fraud.’” Wyeth, Inc. v. Weeks, 159 So. 3d 649,
656 (Ala. 2014). “A claim of fraudulent misrepresentation comprises the
following elements: ‘(1) a false representation (2) concerning a material fact
(3) relied upon by the plaintiff (4) who was damaged as a proximate result.’”
Id. (quoting Fisher v. Comer Plantation, 772 So. 2d 455, 463 (Ala. 2000)).
Further, “an essential element of fraudulent-misrepresentation and
fraudulent-suppression claims is a duty to disclose.” Nesbitt v. Frederick, 941
So. 2d 950, 955 (Ala. 2006).
Defendant THG acerbically criticizes this Court for lacking awareness
of Alabama Rule of Civil Procedure 9(b) in its haste to “posture [itself] as

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sentries guarding the Holy Grail” of federal jurisdiction. (See Doc. 13, pp. 1–4,
10–13). Although the Magistrate Judge did not fully explain the relationship
between pleading standards and judicial review of improper joinder, readily
available case law demonstrates THG’s assessment of this Court’s “‘thumbon-the-scale’ presumption against removal” is undeniably inaccurate and—it
should go without saying—insolent. In fact, this very Court has addressed
the matter at hand thoroughly1:
In making this fraudulent joinder argument, however,
[Defendants] overlook, as GMAC did in Grady Brothers
Investments, LLC v. General Motors Acceptance Corp.,
2007 WL 4577701 (S.D. Ala. Dec. 27, 2007), “Eleventh
Circuit precedent counseling district courts that ‘[o]ur
task is not to gauge the sufficiency of the pleadings,’ in
the fraudulent joinder context, inasmuch as ‘the decision
as to the sufficiency of the pleadings is for the state
courts, and for a federal court to interpose its judgment
would fall short of the scrupulous respect for the
institutional equilibrium between the federal and state
judiciaries that our federal system demands.’” Id. at *6
(quoting Henderson v. Washington National Ins. Co., 454
F.3d 1278, 1284 (11th Cir. 2006)).
Besides, it has generally been held that the
remedy for failure to satisfy Rule 9(b) is not
dismissal on the merits, but rather is an
opportunity for the plaintiff to replead. To be
sure, “[f]ailure to satisfy Rule 9(b) is a
ground for dismissal of a complaint.”
Nonetheless, it has been recognized that a
court should not dismiss a claim for
Rule 9(b) of the Alabama Rules of Civil Procedure provides that “[i]n all
averments of fraud or mistake, the circumstances constituting fraud or
mistake shall be stated with particularity,” as does Rule 9(b) of the Federal
Rules of Civil Procedure. Compare ALA. R. CIV. P. 9(b) with FED. R. CIV. P.
9(b) (“In alleging fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake.”).
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noncompliance with Rule 9(b) “without
granting leave to amend, unless the defect is
simply incurable or the plaintiff has failed to
plead with particularity after being afforded
repeated opportunities to do so.” Thus,
whether the First Amended Complaint
satisfies Rule 9(b) is an ancillary procedural
question divorced from the legal question
animating the fraudulent joinder inquiry, towit: whether there is any possibility that
plaintiff’s claims against the non-diverse
defendant are cognizable under state law.
Regardless of the outcome of the Rule 9(b)
inquiry, there is at least a possibility that
(with or without repleading) Grady could
state a viable misrepresentation claim
against MMSI under Alabama law.[ ] No
further examination of the Rule 9(b) issue is
necessary at this juncture.
Mattox v. State Farm Fire and Cas. Co., No. --, 2012 WL 3870392, at *20
(S.D. Ala. Aug. 15, 2012) (quoting Grady Bros. Investments, LLC, 2007 WL
4577701 at * 6 n. 15) (internal citations omitted); see also Hosea v. Jones, No.
14–414–CG–B, 2014 WL 5846395, at *3 (S.D. Ala. Nov. 12, 2014) (“Further,
while the Alabama Supreme Court has explained that Alabama’s Rule 9(b)
particularity requirement means that ‘[t]he pleader must state the place, the
time, the contents of the false misrepresentations, the fact misrepresented,
and an identification of what has been obtained,’ it has generally been held
that the remedy for failure to satisfy Rule 9(b) is not dismissal on the merits,
but rather is an opportunity for the plaintiff to replead.”) (internal citations
omitted).

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In consideration of the fact that Plaintiffs have not yet had an
opportunity to amend their complaint to comply with the Alabama Rule of
Civil Procedure 9(b) pleading requirements, this Court will not usurp the
Alabama court’s rights to grant both Plaintiffs and Defendants the “equal
dignity” THG so deeply craves. Further, this Court will not evaluate the
sufficiency of Plaintiffs’ pleading of their misrepresentation claim and defers
to the sound judgment of the Circuit Court of Conecuh County.
IV. Conclusion
For the reasons stated above, the Court declines THG’s invitation to
open the sentry-guarded gates of federal jurisdiction. The Court finds THG
has failed to meet its “heavy” burden to prove improper joinder of a nondiverse defendant and, as such, OVERRULES its objections (Doc. 13) to the
Magistrate Judge’s Report and Recommendation (Doc. 12). The Court further
ADOPTS the Report and Recommendation with the amendments set forth
herein and thus GRANTS Plaintiffs’ motion to remand this action to the
Circuit Court of Conecuh County, Alabama.
DONE and ORDERED this 2nd day of August, 2017.
/s/ Callie V. S. Granade
SENIOR UNITED STATES DISTRICT JUDGE

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