Miller v. Kansas City Southern Railroad Company et al

Filing 27

ORDER granting plaintiff's 16 Motion to Remand and remanding case to the Circuit Court of Polk County, Arkansas. Signed by Honorable Jimm Larry Hendren on October 23, 2009. (rw)

IN THE UNITED STATES DISTRICT COURT W E S T E R N DISTRICT OF ARKANSAS F O R T SMITH DIVISION D A N N Y MILLER, SPECIAL ADMINISTRATOR O F THE ESTATE OF LUTHER HAROLD BRAZEEL v. C i v i l No. 09-2107

PLAINTIFF

K A N S A S CITY SOUTHERN RAILWAY COMPANY; C A R L C. MYLES; STEVE NEWCOMER; and THE C I T Y OF MENA ORDER Now on this 23rd day of October, 2009,

DEFENDANTS

comes

on

for

c o n s i d e r a t i o n plaintiff's Motion To Remand (document #16), and from s a i d motion, and the responses thereto, the Court finds and orders a s follows: 1. P l a i n t i f f filed this wrongful death suit in the Circuit

C o u r t of Polk County, Arkansas, alleging that defendants Kansas C i t y Southern Railway Company ("KCS"), Carl C. Myles, and Steve N e w c o m e r were negligent in various respects proximately relating to t h e death of Luther Harold Brazeel ("Brazeel"). Plaintiff further alleged claims sounding in both contract and t o r t as against the City of Mena. 2. T h e City of Mena moved for judgment on the pleadings,

c o n t e n d i n g that plaintiff cannot recover from it on either a tort o r a contract theory. Before that motion was resolved, plaintiff

m o v e d for remand, contending that the removal -- which was based on t h e theory that the City of Mena was fraudulently joined to defeat d i v e r s i t y -- was improper.

While both motions place before the Court the issue of whether p l a i n t i f f has stated a claim as against the City of Mena, the M o t i o n To Remand takes precedence, as it implicates the Court's s u b j e c t matter jurisdiction. 3. A s explained by the Eighth Circuit, fraudulent joinder

i s "the filing of a frivolous or otherwise illegitimate claim a g a i n s t a non-diverse defendant solely to prevent removal." o r d e r to determine whether joinder is fraudulent, a proper review should give paramount consideration to t h e reasonableness of the basis underlying the state c l a i m . Where applicable state precedent precludes the e x i s t e n c e of a cause of action against a defendant, j o i n d e r is fraudulent. "[I]t is well established that i f it is clear under governing state law that the c o m p l a i n t does not state a cause of action against the n o n - d i v e r s e defendant, the joinder is fraudulent and f e d e r a l jurisdiction of the case should be retained." However, if there is a "colorable" cause of action -t h a t is, if the state law might impose liability on the r e s i d e n t defendant under the facts alleged -- then there i s no fraudulent joinder. F i l l a v. Norfolk Southern Railway Co., 336 F.3d 806, 810 (8th Cir. 2 0 0 3 ) (internal citations omitted, emphasis in original). F i l l a noted that "colorable" was used as a euphemism "to described an alleged Id. fraudulent joinder challenges "to determine cause of action that is reasonable, but In

speculative." Courts

review

' w h e t h e r there is arguably a reasonable basis for predicting that the state law might impose liability based upon the facts

involved'."

Wilkinson v. Shackelford, 478 F.3d 957, 963 (8th Cir.

-2-

2007). remand. 4. claim

Any doubts about the issue must be resolved in favor of Id. P l a i n t i f f ' s initial argument is that he has stated a for breach and of that contract on behalf are of a third-party for suit

beneficiary,

municipalities

not

immune

s o u n d i n g in contract.

On this basis, he alleges that he has pled

a colorable claim against the City of Mena -- and thus, that the C i t y of Mena was not improperly joined to defeat diversity. B e f o r e addressing the merits of this first argument, the Court c o n s i d e r s whether it can take cognizance of the three documents u p o n which plaintiff bases his contract claim. These documents are

n o t attached to the Complaint, but rather are brought into the r e c o r d as exhibits to plaintiff's Memorandum Brief In Support Of M o t i o n To Remand. No party and has suggested are no or that the Court by of not any the consider party to the the In

documents,

there

objections competency

authenticity,

relevancy,

documents.

d e c i d i n g whether it has subject matter jurisdiction, the Court is n o t constrained by F.R.C.P. 12(d), which requires conversion of c e r t a i n types of motions to motions for summary judgment when matters suggest outside that the pleadings might are well considered. consider the These factors in

the

Court

documents

question. In addition, while there is no definitive Eighth Circuit

-3-

precedent for the proposition that a court may consider evidence o u t s i d e the pleadings in determining whether a defendant has been f r a u d u l e n t l y joined, at least one District Court has held that it i s proper to do so. See Peterson v. Rusch, Inc., 2006 WL 83492 (E.D. Mo. 2006) (unreported). Under the circumstances here

p r e s e n t e d , the Court concludes that it is proper to consider the Lease Agreement and the Quitclaim Deeds in connection with

p l a i n t i f f ' s Motion To Remand. 5. T h e relevant portions of the documents in question are

a s follows: * A Lease Agreement between KCS and the City of Mena, dated

F e b r u a r y 5, 1986, requires the City of Mena to e r e c t and maintain a chain link fence on the south b o u n d a r y of the premises herein leased; said fence to be l o c a t e d twenty-three feet from the center line of L e s s o r ' s trackage.

*

A Corporation Quit-Claim Deed from KCS to the City of states, in relevant part, that the City of

M e n a dated May 4, 1987, Mena

h e r e b y agrees to erect and maintain, at its sole cost and e x p e n s e , a fence or barricade on the south boundary of t h e premises herein conveyed; said fence is to be located n i n e t e e n (19) feet from the center line of THE KANSAS C I T Y SOUTHERN RAILWAY COMPANY'S adjacent trackage. * A Corporation Quit-Claim Deed from KCS to the City of

M e n a dated March 17, 1989, states that s a i d Party of the Second Part hereby agrees to erect and m a i n t a i n , at its sole cost and expense, a fence of

-4-

barricade on the west boundary of the premises herein c o n v e y e d . Said fence shall be located nineteen (19) feet f r o m the center line of the said Party of the First P a r t ' s adjacent trackage. 6. U n d e r Arkansas law, [a] contract is actionable by a third party when there i s substantial evidence of a clear intention to benefit t h a t third party. It is not necessary that the person b e named in the contract if he is a member of a class of p e r s o n s sufficiently described or designated in the co nt r a c t. Generally, the status of a third-party b e n e f i c i a r y is a matter of law; however, when a contract i s ambiguous as to the intent of the parties, and the m e a n i n g of the language depends on disputed extrinsic e v i d e n c e , the issue is a question of fact for the jury. P e r r y v. Baptist Health, 358 Ark. 238, 245, 189 S.W.3d 54, 58 (Ark. 2 0 0 4 ) (internal citations omitted). Setting aside the issue of whether the Quitclaim Deeds are c o n t r a c t s , the Court finds no basis in law to conclude that Brazeel w a s a third-party beneficiary of any of the three instruments. P l a i n t i f f ' s theory is that the only reasonable explanation that plaintiff's counsel c a n determine as to why KCS would obligate the City of M e n a to erect and maintain said fence was to incur a b e n e f i t to the pedestrian public, i.e., those visiting o r congregating in and around the Mena Depot in the form o f a barrier that would protect said persons from the d a n g e r s of trains traveling past the Mena Depot at 40 mph. P l a i n t i f f ' s Memorandum Brief in Support Of Response To Motion For J u d g m e n t On The Pleadings, document #21, page 2. Having, in his

o w n mind, eliminated all other possible beneficiaries, plaintiff c o n c l u d e s that Brazeel was a third-party beneficiary of the three instruments. T h e problem with this argument is that it is so easily shown

-5-

to be susceptible to error.

It is entirely possible -- indeed

p r o b a b l e -- that KCS thought it would benefit from the fence, by k e e p i n g the public off its track (and avoiding lawsuits such as the o n e at bar). While there is no evidence to this effect, such It makes no difference to the legal What matters is that a which means that the

e v i d e n c e is not necessary.

a n a l y s i s why KCS required the fencing. benefit to KCS can easily be

perceived,

f e n c i n g provisions in the instruments is not "substantial evidence o f a clear intention" to benefit Brazeel. c a n n o t be a third-party beneficiary. P l a i n t i f f also contends that he is entitled to have a jury r e s o l v e an ambiguity in the instruments. s h o w n the existence of any ambiguity. m e a n i n g or intention." There is no showing of He has not, however, Without that, Brazeel

Ambiguity is "uncertainty of

Black's Law Dictionary, Ninth Edition. such uncertainty here, the creative

s p e c u l a t i o n s of plaintiff's counsel notwithstanding.

The language

o f the Lease Agreement and the Quitclaim Deeds is clear on what was i n t e n d e d by the parties, even though their reasons for so intending b e not shown by the evidence. 7. A s the briefing developed on the Motion To Remand and the

C i t y of Mena's Motion For Judgment On The Pleadings, the issues r a i s e d by the two motions became intertwined, and a new focus e m e r g e d for plaintiff's Motion To Remand -- the tort claims, which h a d not been addressed in plaintiff's motion.

-6-

Under Arkansas law, municipalities have immunity from suit in t o r t , except to the extent that they have liability insurance coverage. A.C.A. § 21-9-301. The City of Mena offered the

A f f i d a v i t of George McKee, Mayor of the City of Mena, to the effect t h a t "the City of Mena was not covered by liability insurance or g e n e r a l liability coverage for the claims raised in this lawsuit."

Plaintiff evidence on

points

out

that issue,

while he

this not

Affidavit been

is

some the

the

coverage

has

afforded

o p p o r t u n i t y take discovery as to insurance coverage, thus leaving s o m e doubt as to whether the City of Mena has such coverage, and s o m e doubt as to whether his tort claims are viable. If there is

i n s u r a n c e coverage, plaintiff can pursue his tort claims against t h e City of Mena. Because, in resolving a fraudulent joinder issue, all doubts m u s t be resolved in favor of remand, the Court finds that the M o t i o n To Remand should be granted, and the matter returned to the C i r c u i t Court of Polk County, Arkansas, for further proceedings. I T IS THEREFORE ORDERED that plaintiff's Motion To Remand ( d o c u m e n t #16) is granted, and this case is remanded to the Circuit C o u r t of Polk County, Arkansas. I T IS SO ORDERED. /s/ Jimm Larry Hendren JIMM LARRY HENDREN U N I T E D STATES DISTRICT JUDGE

-7-