Florence, Town of v. Florence Copper Incorporated et al

Filing 21

ORDER AND OPINION the motion at docket 14 is GRANTED in part and DENIED in part as follows: This case is hereby REMANDED to the Superior Court for the State of Arizona in and for the County of Pinal; and Plaintiff's request for an award of costs, expenses, and fees is DENIED. Signed by Judge John W Sedwick on 3/10/2014. (Attachments: # 1 Remand Letter)(KMG)

UNITED STATES DISTRICT COURT
DISTRICT OF ARIZONA

Town of Florence,
Plaintiff,
vs.
Florence Copper, Inc., et al.,
Defendants.

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2:13-cv-2473 JWS
ORDER AND OPINION
(Motion at docket 14)

I. MOTION PRESENTED
At docket 14, plaintiff Town of Florence (“Town”) moves to remand this action to
state court. At docket 16, defendant Florence Copper, Inc. (“Copper”) opposes the
motion. Town’s reply is at docket 20. Oral argument is not requested and would not
aid the court.
II. BACKGROUND
The focal point of the case at bar is a 1,187 acre parcel of real property located
within the boundaries of Town (“the Property”). The Property became subject to a PreAnnexation Development Agreement in 2003 which incorporated a Planned Unit

Development by reference (“the PADA”). In 2007 the Property’s zoning was changed
from Light Industrial to Residential. Copper is the present owner of the Property.1
Town filed this action against Copper, RK Mine Finance Trust 1 (“RK”), and Pinal
County in the Superior Court for the State of Arizona In and For Pinal County on
October 14, 2013. Town is an Arizona municipal corporation located within Pinal
County. Copper is a Nevada Corporation which alleges that its principal place of
business is in Canada. RK is an Australian trust. Pinal County is an Arizona municipal
corporation. Copper contends that joinder of Pinal County is fraudulent. Town’s
complaint advances two claims for relief. The first is for a declaration of the parties’
rights under various documents that apply to the Property. The second is a claim to
acquire all nonconforming uses and structures on the Property through exercise of the
Town’s power of eminent domain.
Copper removed the litigation from state court pursuant to 28 U.S.C. § 1441(a)
on December 3, 2013. The Notice of Removal indicates that there is diversity of
citizenship jurisdiction under 28 U.S.C. § 1332(a)(3) and that Pinal County has no
interest in the Property which could support its inclusion as a defendant.
III. STANDARD OF REVIEW
A lawsuit may be removed to federal court under 28 U.S.C. § 1441 if the suit
could have been brought in federal court originally. Removal statutes are strictly
construed against removal and any doubts regarding removal must be resolved against

1

The facts recited in this paragraph are among those alleged in the complaint, which
have been admitted in the answer.

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removal and in favor of remand.2 The Ninth Circuit has explicitly recognized a “strong
presumption against removal jurisdiction.”3 The Ninth Circuit has also recognized a
“general presumption against fraudulent joinder.”4 This presumption may be overcome
where the plaintiff has failed to state a claim against a resident defendant which is
obvious under the settled rules of the state.5 However, where “there is a possibility that
a state court would find that the complaint states a cause of action against any of the
resident defendants, the federal court must find that the joinder was proper and remand
the case to the state court.”6 The removing party bears the burden of establishing
federal jurisdiction.7
IV. DISCUSSION
A. Remand
Town’s first argument in support of its motion to remand is that the presence of
Pinal County as a defendant defeats diversity jurisdiction. There is, of course, no doubt
that Pinal County is a citizen of Arizona, as is Town. However, Copper contends that
Pinal County has been fraudulently joined. Copper argues that Pinal County is merely

2

Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

3

Hunter v. Phillip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009).

4

Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007).

5

Id.

6

Hunter, 582 F.3d at 1046 (quoting Tillman v. R.J. Reynolds Tobacco, 340 F.3d 1277,
1279 (11th Cir. 2003)).
7

Prize Frize, Inc. v. Matrix (U.S.) Inc., 167 F.3d, 1261, 1265 (9th Cir. 1999) superseded
by statute on other grounds as explained in Abrego Abrego v. Dow Chem. Co., 443 F.3d 676,
681 (9th Cir. 2006).

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a “nominal party” and therefore should be disregarded citing Navarro Savings Ass’n v.
Lee.8
The question presented in Navarro was “whether the trustees of a business trust
may invoke the diversity jurisdiction of the federal courts on the basis of their own
citizenship, rather than that of the trust’s beneficial shareholders.”9 The trial court had
dismissed the action on the basis that the trust was a citizen of every state wherein any
of its beneficial shareholders was a resident. That decision was reversed by the Fifth
Circuit, and its decision was affirmed by the Supreme Court. Navarro is not instructive
with respect to the case at bar. Pinal County is not a trust, and it has no beneficial
shareholders.
Copper goes on to argue that Pinal County’s only interest in the Property arises
from the fact that the Property is subject to Pinal County tax levies so that a tax lien in
its favor is imposed by state statute.10 This it submits is an insufficient interest, because
“any tax lien held by the County will remain in place regardless of which side prevails in
this case.”11 That does not alter the fact that Pinal County has a continuing interest in
the Property, even if its interest appears to be well secured.

8

446 U.S. 458, 460 (1980).

9

Id. at 458.

10

A.R.S. § 42-1753.

11

Doc. 16 at p. 4.

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Copper also points out that the taxes for 2013 were paid.12 While the 2013 taxes
had been paid at the time of removal, the underlying statutory right to a lien was not
eliminated. It was in place at the time of the removal and will remain in place. That
statutory right means that Pinal County has an interest in the proper disbursal of funds
paid in the exercise of Town’s power of eminent domain. The exercise of that power
was ongoing at the time of removal and payment of the 2013 taxes could not eliminate
the County’s right to recover taxes owed at whatever time the Town’s exercise of its
eminent domain power might be concluded.
Copper also asserts that Town’s complaint sets out no “cause of action” against
Pinal County. With respect to Pinal County, the complaint alleges that it has a lien for
any taxes it may levy against the Property and that the County “is entitled to any unpaid
real property taxes that have been levied, including penalties and interest, from the
proceeds of the eminent domain action.”13 Copper cites Ritchey v. Upjohn Drug Co.14
for the propositions that a party is fraudulently joined where the complaint states no
cause of action against it and for the removing party’s right to show the facts which
establish there is no cause of action. With those propositions, this court agrees.
However, the complaint in this case includes a claim to condemn the Property. It
follows that any party with an interest in the Property is a viable defendant even if the
plaintiff does not allege a claim of wrongful conduct against that party. This is so

12

Copper even asked to prepay the 2014 taxes hoping to establish that Pinal County has
no interest in the Property, but its effort to prepay was rebuffed.
13

Doc. 6-5 at ¶ 94.

14

139 F.3d 1313, 1318 (9th Cir. 1987)

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because the operative cause of action is a claim to exercise the Town’s power of
eminent domain and that cause of action necessarily is directed at anyone with an
interest in the Property.
This court is guided by Ninth Circuit jurisprudence which instructs that so long as
there is a possibility that a state court would find that a complaint advances a cause of
action against a resident defendant, the federal court must remand the case.15 Here,
there is no doubt that a state court would consider Pinal County a proper defendant in
the eminent domain action, because of its continuing statutory right to a tax lien on the
Property. In light of the appellate court’s instruction, this case must be remanded.
It may be added that while there are some differences, this court also finds
Judge Snow’s recent decision in Salt River Project v. Frito- Lay, Inc.16 instructive.
There, Judge Snow remanded an eminent domain case removed by a defendant,
because of Pinal County’s interest in the payment of taxes on the property which was
the subject of the eminent domain action. This court sees no reason to reach a
different result in the case at bar.
Having decided that there is no diversity jurisdiction by virtue of Pinal County’s
presence as a defendant, it is unnecessary to consider Town’s other arguments.
B. Costs
Town asks the court to award it reasonable fees, costs, and expenses in
connection with the proceedings in this court. An order remanding a case to state court

15

See Hunter, 582 F.3d at 1046.

16

Case No. 2:12-cv-2336-GMS at doc. 29.

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may require the removing party to pay just costs and expenses including attorneys’
fees.17 Generally, such an award is appropriate “only where the removing party lacked
an objectively reasonable basis for seeking removal.”18 Here, it is true that the removal
failed. However, given the unusual nature of Pinal County’s interest in the litigation and
the absence of a separately stated cause of action against it in the complaint, the court
concludes that while wrong, Copper’s removal was objectively reasonable. The court
notes that Judge Snow reached the same conclusion in the Frito-Lay case.19
V. CONCLUSION
For the reasons above, the motion at docket 14 is GRANTED in part and
DENIED in part as follows:
1. This case is hereby REMANDED to the Superior Court for the State of
Arizona in and for the County of Pinal; and
2. Plaintiff’s request for an award of costs, expenses, and fees is DENIED.
DATED this 10th day of March 2014.

/S/
JOHN W. SEDWICK
UNITED STATES DISTRICT JUDGE

17

28 U.S.C. § 1447(c).

18

Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005).

19

Case No. 2:12-cv-2336-GMS at doc. 29, pp. 3-4.

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