Neubrand et al v. Andreson Lands Limited LP et al

Filing 16

ORDER granting 8 Plaintiffs' Motion to Remand to State Probate Court, directing the Clerk to remand back to the Pinal County Superior Court. Signed by Judge G Murray Snow on 12/3/13. (Attachments: # 1 Remand Letter). (LSP)

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WO

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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William Neubrand, co-personal
representative of Estate of William H.
Andreson; Dolores Neubrand, co-personal
representative of Estate of William H.
Andreson,

No. CV-13-01338-PHX-GMS
ORDER

Plaintiffs,

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v.

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Andreson Lands Limited LP, a Kansas
limited partnership; Joseph A. Hambright,
husband; Jane Doe Hambright, wife;
Wilbur Andreson, Dr./husband; and Jane
Doe Andreson, wife,

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Defendants.

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Pending before the Court is Plaintiffs’ Motion to Remand to State Probate Court.
(Doc. 8.) For the following reasons, the Motion is granted.

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BACKGROUND

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This matter arises out of a partnership interest in Defendant Andreson Lands

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Limited, LP (“Andreson Lands”). Through his estate, representatives of decedent

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William H. Andreson attempted to convey his partnership interest in Andreson Lands to a

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trust. (Doc. 1-1 at 5.) That attempted transfer triggered a right of first refusal by the other

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Andreson Lands partners, Defendants Joseph A. Hambright and Wilbur Andreson. (Id. at

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4–5.) They attempted to exercise their right to purchase the partnership interest, but

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Plaintiffs allege that the attempt was untimely and the offered payment was inadequate.

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(Id. at 4–6.)

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William H. Andreson was a resident of Arizona and his probate proceedings are

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pending in Arizona. (Doc. 1 at 3.) Plaintiffs William and Dolores Neubrand are residents

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of Texas but appear in this matter as co-personal representatives of the Estate of William

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H. Andreson. (Id.) Defendants Joseph A. Hambright and Wilbur Andreson are residents

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of Colorado and Oregon respectively. (Id.) Defendant Andreson Lands is a Kansas

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limited partnership. (Id.)

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On May 31, 2013, Plaintiffs William and Dolores Neubrand filed a Petition for

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Declaratory Judgment in Pinal County Superior Court. (Doc. 1-1.) On July 3, 2013,

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Defendants filed a Notice of Removal to this Court. (Doc. 1.) Plaintiffs now bring this

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Motion to Remand, arguing that diversity jurisdiction in this Court is not proper because

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inter alia there is not complete diversity between the parties nor has the amount in

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controversy been shown to exceed $75,000. (Doc. 8.)
DISCUSSION

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I.

Remand

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“[A]ny civil action brought in a State court of which the district courts of the

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United States have original jurisdiction, may be removed by the defendant or the

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defendants, to the district court of the United States for the district and division

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embracing the place where such action is pending.” 28 U.S.C. § 1441(a). A party may

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remove an action from state court only if the action could have been brought in the

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district court originally. Ramirez v. Fox Television Station, Inc., 998 F.2d 743, 747 (9th

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Cir. 1993). The Court has diversity jurisdiction over an action in which the parties are not

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citizens of the same state and “the matter in controversy exceeds the sum or value of

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$75,000, exclusive of interest and costs.” 28 U.S.C. § 1332(a).

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The party asserting federal jurisdiction has the burden of proof on a motion to

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remand to state court. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The

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removal statute is strictly construed against removal jurisdiction. Id. (citing Emrich v.

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Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988)). There is a “strong

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presumption” against removal jurisdiction, and “[f]ederal jurisdiction must be rejected if

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there is any doubt as to the right of removal in the first instance.” Id.

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For purposes of diversity jurisdiction, Plaintiffs William and Delores Neubrand

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are citizens of Arizona. 28 U.S.C. § 1332(c)(2) provides that “the legal representative of

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the estate of a decedent shall be deemed to be a citizen only of the same State as the

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decedent.” The Neubrands are the legal representatives of William H. Andreson, and he

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was a citizen of Arizona at the time of his death. Neither side disputes that both Plaintiffs

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are only citizens of Arizona for purposes of diversity of citizenship.

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Defendant Andreson Lands is also a citizen of Arizona for diversity-jurisdiction

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purposes, and that is also not in dispute. Unincorporated associations or entities are

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citizens of each of the states in which their constituent members or partners are citizens.

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Carden v. Arkoma Assocs., 494 U.S. 185 (1990). William H. Andreson was a partner in

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Andreson Lands and a citizen of Arizona at the time of his death.

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Defendant Andreson Lands shares Arizona citizenship in common with the

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Plaintiffs and diversity jurisdiction does not exist if both are properly joined parties.

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Recognizing this, Defendants Joseph A. Hambright and Wilbur Andreson argue that the

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citizenship of Andreson Lands should be ignored because it is only a party as a result of a

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fraudulent or collusive joinder.

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A court may ignore the presence of a non-diverse defendant if that defendant has

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been fraudulently or improperly joined. Hunter v. Philip Morris USA, 582 F.3d 1039,

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1043 (9th Cir. 2009). “Joinder is fraudulent ‘[i]f the plaintiff fails to state a cause of

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action against a resident defendant, and the failure is obvious according to the settled

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rules of the state.’” Id. (quoting Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d

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1203, 1206 (9th Cir. 2007)). The removing party bears the heavy burden of proof, and “if

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there is any possibility that the state law might impose liability on a resident defendant

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under the circumstances alleged in the complaint, the federal court cannot find that

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joinder of the resident defendant was fraudulent, and remand is necessary.” Id. at 1044

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(quoting Florence v. Crescent Res., LLC, 484 F.3d 1293, 1299 (11th Cir. 2007)). A court

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need only make a summary inquiry to “identify the presence of discrete and undisputed

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facts” and the inability to make a decision in a summary manner may indicate that the

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removing party has not met its burden. Id.

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The issue here is whether the Defendants have carried their burden to show that

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the Plaintiffs failed to state a cause of action against Andreson Lands and that the failure

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is obvious based on settled law. There are two causes of action that are alleged to involve

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Andreson Lands. First, the Plaintiffs argue that the relief sought in count one, a

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declaratory judgment or the dissolution of Andreson Lands, requires the joinder of

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Andreson Lands. Defendants argue that a court could order the dissolution of Andreson

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Lands without the joinder of Andreson Lands because all of its partners are parties, but

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Plaintiffs presented evidence that there are two other limited partners who are not joined.

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The second cause of action at issue, count three of the Petition for Declaratory

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Judgment, alleges a Breach of Contract. Plaintiffs allege that Defendant Hambright

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breached the Partnership Agreement when he caused a manager to cease making

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distributions to Plaintiffs and ignored Plaintiffs’ requests for information about the

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Partnership and its books and records. (Doc. 1-1 at 11.) Plaintiffs further allege that

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Defendant Hambright did so both on his own behalf and on behalf of both Defendant

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Wilbur Andreson and Defendant Andreson Lands. (Id.)

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Defendants repeatedly characterize this alleged conduct as being solely the

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misconduct of one individual partner and not as conduct involving the business of

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Andreson Lands. In fact, that one individual partner is alleged to be the managing partner

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and his alleged misconduct was ordering the farm operations manager to cease

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disbursements to the Plaintiffs and not allowing anyone from Andreson Lands to respond

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to the Plaintiffs’ requests for access to its books and records. The disbursement of profits

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from Andreson Lands to its partners and denial of access to its books appears to be a part

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of the business of Andreson Lands.

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Defendants have not met their burden to show that the causes of action against

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Andreson Lands will obviously fail as a matter of settled law. It is clear from a summary

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inquiry into the facts of this case that the Plaintiffs stopped receiving payments from

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Andreson Lands and were not granted access to its books or records. Defendants argue

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that it was the managing partner, Defendant Hambright, and not Andreson Lands that

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committed these acts, but they have not shown that such a conclusion is obvious. The

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parties disagree about whether agency law or partnership law should govern the

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attribution of Defendant Hambright’s conduct to Andreson Lands.

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This Court does not need to resolve the question of applicable law or whether

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Hambright’s conduct was his own or on behalf of Andreson Lands. Similarly, this Court

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does not need to determine whether a court could order the dissolution of Andreson

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Lands if it was not a party. The strong presumption against removal jurisdiction and the

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doubts raised by the issues just discussed is sufficient to show that Defendants have not

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met their burden to demonstrate that Andreson Lands was improperly joined.

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This matter was improperly removed to this Court because there is not complete

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diversity between Plaintiffs and Defendant Andreson Lands. The remand is granted on

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that basis and Plaintiffs’ other grounds for granting remand are therefore moot.

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II.

Costs and Fees

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In the event that their motion is granted, Plaintiffs request an award of costs and

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expenses, including attorney’s fees. Under 28 U.S.C. § 1447(c), a court may award

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attorneys’ fees and costs against the party who sought improper removal. The decision to

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award costs is within the discretion of the trial court, and the Supreme Court held that

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“absent unusual circumstances, attorney’s fees should not be awarded when the removing

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party has an objectively reasonable basis for removal.” In Martin v. Franklin Capital

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Corp., 546 U.S. 132, 136 (2005). Plaintiffs argue “there was no objectively reasonable

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basis for the removal” because the lack of diversity was evident at the time of filing for

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removal. (Doc. 8 at 12.) Although ultimately unsuccessful, the Defendants’ arguments

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were objectively reasonable and the Court declines to award costs and fees in this matter.

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IT IS HEREBY ORDERED that Plaintiffs Motion to Remand to State Probate
Court (Doc. 8) is granted.

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IT IS FURTHER ORDERED directing the Clerk of Court to remand back to
the Pinal County Superior Court.
Dated this 3rd day of December, 2013.

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