Zerbersky & Payne v. Golomb & Honik, P.C.
ORDER granting 19 Motion to Remand. This case is REMANDED to the Seventeenth Circuit Court in and for Broward County, Florida. Signed by Judge Robin L. Rosenberg on 8/8/2017. (ail)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 0:17-CV-61170-ROSENBERG
ZERBERSKY PAYNE, LLP,
AUGHTMAN LAW FIRM, LLC, et al.,
ORDER GRANTING BOTH PLAINTIFF’S MOTION TO REMAND AND
DEFENDANT BURLINGTON & ROCKENBACH P.A.’S MOTION TO REMAND
Plaintiff Zerbersky Payne, LLP pursued a class action lawsuit together with several other
law firms. After the cases resolved, Plaintiff filed suit in state court, seeking declaratory relief
clarifying the appropriate distribution of fees. Plaintiff named four defendants: Aughtman Law
Firm, LLC; Golomb & Honik, P.C.; Hemmings & Stevens, PLLC; and Burlington &
Rockenbach, P.A. Only three removed the case to federal court. The Notice of Removal alleges
that the fourth defendant, Burlington & Rockenbach, P.A. (“Burlington”), was fraudulently
joined to defeat diversity jurisdiction. Plaintiff and Burlington both move to remand. In response,
the three removing defendants reiterate the fraudulent joinder argument and, alternatively, argue
Burlington should be aligned as a party plaintiff, restoring diversity of citizenship. The motions
to remand are now ripe. Having reviewed the record, the Court finds Burlington was not
fraudulently joined and declines to realign Burlington as a party-plaintiff. Diversity having been
destroyed, this Court is without subject-matter jurisdiction. Therefore, Plaintiff’s Motion to
Remand and Defendant Burlington’s Motion to Remand are both GRANTED.
Several law firms jointly provided representation in a series of lawsuits involving the
HealthExtras Insurance Product. A fee dispute arose among them. Plaintiff Zerbersky Payne,
LLP filed suit in state court, seeking declaratory relief to clarify the appropriate fee distribution.
The requested declarations revolve around three agreements: JPA, JPA II, and JPA III.
Plaintiff (“Plaintiff”) entered a Joint Prosecution Agreement (“JPA”) with Defendants
Aughtman Law Firm, LLC; Golomb & Honik, P.C.; and Hemmings & Stevens, PLLC
(collectively “Removing Defendants”). The JPA relates to a nationwide class action over the
HaealthExtras Insurance Product.
Plaintiff also entered a second Joint Prosecution Agreement (“JPA II”) with Defendant
Aughtman Law Firm, LLC and Defendant Hemmings & Stevens, PLLC. JPA II is specific to a
class action lawsuit based in Florida. Ultimately, three class action lawsuits were filed in Florida.
Two of the cases filed in Florida were dismissed. Plaintiff and Removing Defendants
hired Burlington & Rochenbach, P.A. (“Burlington”), an appellate specialist, to appeal those
dismissals. Plaintiff and the Removing Defendants entered a third agreement (“JPA III”), which
entitled Burlington to a percentage of the total fees allocated under JPA II.
Plaintiff brought its state court against the Removing Defendants and against Burlington.
It seeks declarations to determine: (i) whether the JPA is binding on all parties, (ii) whether JPA
II is binding on Plaintiff in part or in total; (iii) whether JPA II is binding on the relationship
between Plaintiff and Defendant Golomb & Honik, P.C.; (iv) what amount is owing to
Burlington; and (iii) if the matter is not arbitrable, a determination of the amount owed under the
JPA (or any other agreement) by each of the Defendants.
The Removing Defendants removed the case to this Court, alleging Burlington had been
fraudulently joined. Both Plaintiff and Burlington moved to remand the case to state court.
Those motions are now before the Court.
ANALYSIS AND RELEVANT LEGAL STANDARDS
a. Burlington & Rockenbach P.A. was not Fraudulently Joined.
“A civil case filed in state court may be removed by the defendant to federal court if the
case could have been brought originally in federal court.” 28 U.S.C. § 1441(a). The federal
district courts have original jurisdiction over “all civil actions where the matter in controversy
exceeds the sum or value of $75,000 . . . and is between . . . citizens of different states.” 28
U.S.C. § 1332(a)(1). Typically, the district court must remand a case removed based on diversity
jurisdiction if there is not complete diversity between the parties. See Strawbridge v. Curtiss, 7
U.S. 267 (1806).
If, however, a non-diverse defendant is named solely to defeat federal diversity
jurisdiction, the fraudulent joinder doctrine requires the district court to ignore the presence of
the non-diverse defendant. The removing party bears the heavy burden of establishing fraudulent
joinder. To shoulder its burden, the removing party must show by clear and convincing evidence
that: (i) there is no possibility plaintiff can establish a cause of action against the resident
defendant; or (2) plaintiff has fraudulently pled jurisdictional facts to bring the resident
defendant into state court. Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997).
Defendants’ argument seizes on the first of these two grounds.
The applicable standard for determining whether a plaintiff can possibly establish a cause
of action is “a lax one.” Stillwell v. Allstate Ins. Co., 663 F.3d 1329, 1333 (11th Cir. 2011). In
determining whether remand is proper the Court must evaluate the factual allegations in the light
most favorable to Plaintiff and resolve any uncertainties about state substantive law in Plaintiff’s
favor. Crowe, 113 F.3d at 1538. “If there is even a possibility that a state court would find that
the complaint states a cause of action against [a] resident defendant, the federal court must find
that joinder was proper and remand the case to state court.” Coker v. Amoco Oil Co., 709 F.2d
1433, 1440-41 (11th Cir. 1983) (emphasis added). Less specificity is required to defeat
fraudulent joinder than to survive a motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6). Whereas the 12(b)(6) standard requires more than a sheer possibility
defendant acted unlawfully, the “possibility of stating a valid cause of action” will defeat a
fraudulent joinder claim. Stillwell, 663 F.3d at 1333 (internal citations and quotations omitted).
The Court turns, therefore, to Florida’s pleading requirements. Florida law requires “a
short and plain statement of the ultimate facts showing that the pleader is entitled to relief . . .”
Fla. R. Civ. P. 1.110(b). “Florida’s pleading rule forces counsel to recognize the elements of
their cause of action and determine whether they have or can develop the facts necessary to
support it . . .” Continental Baking Co. v. Vincent, 634 So.2d 242, 244 (Fla. Dist. Ct. App. 1994).
The Court must assess whether, under Florida’s fact-pleading standard, “there is even a
possibility that a state court would find that the complaint” states a cause of action for
declaratory relief against Burlington. There is such a possibility.
The Declaratory Judgments Act exists “to settle and to afford relief from insecurity and
uncertainty with respect to rights, status, and other equitable or legal relations.” Lutz v.
Protective Life Ins. Co., 951 So. 2d 884, 889 (Fla. Dist. Ct. App. 2007) (citing Hialeah Race
Course, Inc. v. Gulfstream Park Racing Ass’n, 210 So. 2d 750, 752-73 (Fla. Dist. Ct. App.
1968)). A party “seeking declaratory relief must allege ultimate facts showing that there is ‘a
bona fide adverse interest between the parties concerning a power, privilege, immunity or right
of the plaintiff; the plaintiff’s doubt about the existence or non-existence of his rights or
privileges; that he is entitled to have the doubt removed.’” Conley v. Morley Realty Corp., 575
So. 2d 253, 255 (Fla. Dist. Ct. App. 1991)).
The Complaint is extremely brief; however, a state court could possibly find that it states
a claim for declaratory relief. Plaintiff alleges it entered into JPA III with Aughtman, Hemmings,
and Burlington. DE 1-3 at ¶ 14. Plaintiff further alleges the existence of a dispute about how
much is owed to Burlington and whether or not that dispute must be arbitrated. Id. Plaintiff seeks
declaratory relief to determine the amount owed Burlington and whether the matter must be
Defendants make two arguments attacking the sufficiency of those allegations. First,
Defendants argue Plaintiff’s allegations regarding the existence of a dispute are not factual
allegations. The Court disagrees. Although setting forth the parties’ positions more particularly
would have been clarifying, it is not required. Plaintiff alleges the existence of an agreement to
which Burlington is a party and the existence of a dispute about “how much is owed to
Burlington for its involvement” in the litigation and “whether the matter with Burlington must be
arbitrated.” These are factual allegations about the existence and nature of a dispute. The
existence of those facts is an element of a declaratory judgment action—but, given the context
provided, that does not transform the underlying factual allegations into bare legal conclusions.
Next, Defendants argue that Plaintiff is attempting to improperly assert Burlington’s
claims on its behalf. Not so. The Amended Complaint states Plaintiff is a party to a contract with
Burlington. Plaintiff also alleges the existence of a dispute about the amount owed to Burlington
and whether the matter must be arbitrated. Under Florida law, “any person claiming to be
interested or who may be in doubt as to his or her rights under a . . . contract . . . [may] obtain a
declaration of rights, status, or other equitable or legal relations thereunder.” Florida Statute §
86.021. Thus, a state court could possibly find Plaintiff has stated a claim for declaratory relief
clarifying its obligations vis-à-vis Burlington. No more is required. Burlington was not
b. Realignment of Burlington & Rockenbach P.A. is not Appropriate.
Even if joinder was not fraudulent, Defendants contend Burlington should be aligned as a
plaintiff, restoring diversity of citizenship. The Court must realign the parties to reflect their
interests in the litigation. City of Vestavia Hills v. Gen. Fidelity Ins. Co., 676 F.3d 1310, 1313
(11th Cir. 2012). Just as parties cannot use their own designation of plaintiffs and defendants to
confer diversity jurisdiction, such designations cannot be used to avoid it either. Id. The Court
must look to “the principal purpose of the suit” and “the primary and controlling matter in
dispute,” when assessing whether realignment is appropriate. Id.
Defendants urge realignment is proper if Plaintiff and Burlington agree on the “primary
issue” in dispute. See DE 31 at 5. Plaintiff cites a variety of cases for the proposition that
realignment is improper if there is substantial disagreement about any issue in the case, even if it
is not the “primary” issue. See, e.g., DE 29 at 5 (citing Texas Pac. Coal & Oil Co. v. Mayfield,
152 F.2d 956, 957 (5th Cir. 1946) (“parties defendant will not be realigned if there remains in the
case any issue as to which plaintiff needs some relief against such parties.”). However, the Court
need not decide whether the cases cited by Plaintiff bear that interpretation or whether the legal
test Plaintiff urges is correct. Even assuming the “primary issue” test applies, Defendants’
Distilling a case to its essence is a difficult task at this early stage of the litigation, when
the factual record is relatively undeveloped. That said, neither Burlington nor Plaintiff appear to
dispute Defendants’ characterization of “the amount of fees to which both [Plaintiff] and
Burlington are entitled” as the “primary issue in the case.” DE 26 at 12. The Court agrees with
Defendants’ characterization—most of the declarations Plaintiff seeks are aimed at clarifying the
fees owed to Plaintiff and to Burlington.
Defendants argue realignment is proper because “if [Plaintiff] wins, Burlington
proportionally wins on the primary issue in the case—the amount of fees to which both
[Plaintiff] and Burlington are entitled.” DE 26 at 12. But Burlington’s interests and Plaintiff’s
interests collide. Defendants’ argument that “Burlington’s recovery is directly tied to [Plaintiff]’s
potential recovery, with Burlington simply receiving a percentage of whatever [Plaintiff] may
receive” is over-simple. DE 35 at 3.
As Burlington and Plaintiff both assert, their views on the “primary issue” identified
above will only align if the Court determines JPA II applies to Plaintiff’s dispute with
Defendants and if the Court determines Plaintiff’s award should not be based on the nationwide
recovery. Plaintiff and Burlington disagree about the appropriateness of that outcome. Plaintiff
seeks a declaration that JPA—not JPA II—applies to its dispute with Defendants. DE 29 at 6, n
7. Burlington disagrees, arguing JPA II applies to Plaintiff’s dispute with Defendants. DE 53 at
5. According to Plaintiff, it would receive a more limited fee under JPA II than under JPA. DE
29 at 2, n. 1. Thus, Plaintiff and Burlington do not appear to agree about how much Plaintiff
And, even assuming Plaintiff and Burlington did agree that JPA II applies to Plaintiff’s
dispute with Defendants, there would be a disagreement between Plaintiff and Burlington about
the fees owing to Burlington. Plaintiff asserts its fees under JPA II should be determined by
reference to the nationwide recovery; however, it asserts Burlington’s share should be
determined by reference to a more limited amount. See DE 29 at 7. Burlington, obviously,
disagrees. It argues that if Plaintiff’s fee is determined by reference to the nationwide recovery
its fee, too, should be determined by reference to the total amount recovered by Plaintiff. These
are disagreements between Plaintiff and Burlington that go directly to what Defendants
characterize as the “primary issue” in the case. Accordingly, the Court declines to realign
Burlington as a party-plaintiff.
Because Burlington was not fraudulently joined and because the Court does not find
realignment is appropriate, subject matter jurisdiction is lacking. Accordingly, Plaintiff’s Motion
to Remand and Burlington’s Motion to Remand are both GRANTED. This case is
REMANDED to the Seventeenth Circuit Court in and for Broward County, Florida. All pending
motions are DENIED AS MOOT, all deadlines TERMINATED, and all hearings
CANCELLED. The Clerk of Court is directed to CLOSE THIS CASE.
DONE AND ORDERED in Chambers, Fort Pierce, Florida, this 8th day of August,
ROBIN L. ROSENBERG
UNITED STATES DISTRICT JUDGE
Copies furnished to:
Counsel of Record
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