Global Oil Tools, Inc. v. Barnhill et al
Filing
173
ORDER & REASONS: ORDERED that Counts III and IV of case No. 12-3041 are SEVERED and REMANDED back to the 32nd Judicial District for the Parish of Terrebonne, Louisiana. Signed by Judge Carl Barbier on 6/14/13.(Reference: 12-3041)(sek, ) Modified on 6/17/2013 - (cc order & remand letter to 32nd JDC) (sek, ).
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
GLOBAL OIL TOOLS, INC.
CIVIL ACTION
VERSUS
NO: 12-1507
REF: 12-3041
BARNHILL, ET AL.
SECTION: "J” (4)
ORDER AND REASONS
Before the Court are Defendants’ Notice of Removal (No. 123041,
Rec.
Doc.
1),
Plaintiffs’
court-ordered
brief
on
jurisdiction (No. 12-1507, Rec. Doc. 170), and Defendants’ courtordered reply brief thereto (No. 12-1507, Rec. Doc. 171). The
Court, having considered the memoranda of counsel, the record,
and the applicable law, finds that Defendant Global Oil Tools,
Inc. was improperly joined to Plaintiffs’ state court petition
and, consequently, that this Court has diversity jurisdiction
over the claims brought against Lyamec Corp. and Global Oil Tools
Libya, Inc.
PROCEDURAL HISTORY AND BACKGROUND FACTS
This action arises out of breach of contract, return of
1
stock, and unpaid wages claims brought under Louisiana law. On
November 28, 2012, Wilfred Barnhill, Diane Barnhill, and Brian
Barnhill (collectively, “the Barnhills”) filed suit in the 32nd
Judicial District Court for the Parish of Terrebonne, naming
Global Oil Tools, Inc. (“Global Oil”), Lyamec Corp. (“Laymec”),
and Global Oil Tools Libya, Inc. (“Global Libya”) as Defendants.
On December 27, 2012, Defendants removed the state action to this
Court on the basis of diversity jurisdiction. Once removed, the
case became Civil Action No. 12-3041 and was then consolidated
with
a
previously
filed
suit,
Civil
Action
No.
12-1507,
on
January 4, 2013. Civil Action No. 12-1507 is a RICO/Lanham Act
case involving the Barnhills and Global Oil.
In their state court petition, the Barnhills allege that in
2005, Global Oil was purchased by Grifco International, Inc.
(“Grifco”)
pursuant
Agreement.
At
the
to
time
a
of
Definitive
the
Acquisition
purchase,
James
and
Dial
Purchase
was
the
president of Grifco and Wilfred Barnhill was the president of
Global Oil. The Barnhills report that as part of the agreement,
Wilfred
Barnhill
was
to
receive
consideration
valued
at
$4,300,000 in cash and stock. If he did not receive the full
consideration, then Global Oil was to be returned to him in full
ownership. The Barnhills assert that Wilfred Barnhill was paid $1
2
million of the consideration. Wilfred Barnhill, Brian Barnhill,
and Diane Barnhill remained employees of Global Oil after the
sale.
At some point after Global Oil was sold to Grifco, the
Barnhills assert that Lyamec acquired
Global Oil’s stock from
Grifco and/or, in the alternative, Lyamec acquired Grifco stock
and
Global
Libya
stock.1
The
Barnhills
remained
in
their
respective employee positions following the acquisition. In 2006,
the Barnhills report that Grifco refused to close the deal to
purchase Global Oil and reduced its offer to $2.2 million plus
$3.7 million shares in Grifco stock. Therefore, on May 31, 2006,
Wilfred Barnhill and Grifco entered into an “Addendum” to the
Definitive
Addendum,
Acquisition
half
of
the
and
Purchase
Grifco
stock
Agreement.
that
had
Under
been
issued
the
to
Wilfred Barnhill for purchase of Global Oil “became free and
clear to exchange at a guaranteed strike price of a minimum of
0.35 cents per share and the remaining half became free and clear
to exchange on the same terms on the second anniversary date.”2
The
Barnhills
report
that
“[t]hereafter,
Grifco
and
Lyamec,
through Ghariani, through various misrepresentations, convinced
1
At the time that Lyamec allegedly acquired Global Oil’s stock, Ray
Ghariani was the reported owner of Lyamec as well as Global Libya.
2
Petition, No. 12-3041, Rec. Doc. 1-1, pp. 3-4 ¶ 22.
3
[Wilfred] Barnhill to exchange his Grifco stock for shares in
Global Libya.”3
Subsequently, on December 14, 2006, Wilfred Barnhill entered
into a Voluntary Stock Assignment Agreement with Global Libya,
becoming the owner of 901,000 shares of Global Libya’s stock. In
2007, due to James Dial’s resignation, Ray Ghariani became Global
Oil’s Director and President.4
The Barnhills report that they resigned from their positions
at
Global
Oil
in
2012.
They
assert
that
at
the
time
of
resignation, Global Oil owed all three of them thousands of
dollars of unpaid wages and unused vacation time. They contend
that despite repeated demands, Global Oil has refused to pay them
the amounts owed. Likewise, Wilfred Barnhill asserts that on
September 13, 2012, he sent a written request to Global Libya to
redeem his shares of Global Libya stock pursuant to the Voluntary
Stock
Assignment
Agreement.
He
contends
that
he
has
never
received a response. He further asserts that he never received
full consideration for the sale of his original Global Oil stock
to Grifco. As such, he seeks damages from Global Libya and/or
3
Petition, No. 12-3041, Rec. Doc. 1-1, p. 4 ¶ 23.
4
The Barnhills note that James Dial resigned from his position due to
fraud charges on which he was later convicted. Petition, No. 12-3041, Rec. Doc.
1-1, pp. 4-5 ¶¶ 27 -31.
4
Lyamec.
He
alleges
that
they
are
the
lawful
successors
in
interest to Grifco and each other, and/or they are Grifco and
each others’ alter egos, and/or they all operate as a single
business enterprise.
Count
I
of
the
Barnhills’
petition
seeks
specific
performance for a breach of contract claim against Global Libya.
Specifically, it seeks specific performance of the redemption of
Wilfred Barnhills’ Global Libya stock under the Voluntary Stock
Assignment Agreement. Likewise, the Barnhills’ also assert that
Lyamec is the alter ego and/or
successor in interest of Global
Libya and, therefore, is liable to Wilfred Barnhill as well for
the return of Global Libya stock.
Count II of the Barnhills’ petition asserts a claim for the
return of Global Oil stock to Wilfred Barnhill from Lyamec.
Specifically, it asserts that the Definitive Acquisition Purchase
Agreement is a binding contract that was entered into between
Wilfred Barnhill and Grifco as well as Grifco’s successors and
assigns. The Barnhills’ state that “[o]n information and belief,
Lyamec is the assignee and/or successor in interest to Grifco
and/or Grifco is the alter ego of Lyamec and/or Lyamec and Grifco
constitute a single business enterprise.”5 Thus, the Barnhills
5
Petition, No. 12-3041, Rec. Doc. 1-1, p. 7 ¶ 54.
5
assert
that
Agreement
under
Wilfred
the
Definitive
Barnhill
has
Acquisition
never
and
received
Purchase
the
full
compensation owed to him for the sale of stock and, as such,
Lyamec must return the stock to him.
Count III of the Barnhills’ petition asserts various claims
for unpaid wages and vacation pay on behalf of Wilfred, Brian,
and Diane Barnhill against Global Oil. Count IV asserts a claim
for statutory penalties and attorney’s fees based on those same
unpaid wages claims.
As noted, the Defendants’ removed this case to federal court
on December 27, 2012, on the basis of diversity jurisdiction. In
their Notice of Removal, Defendants assert that Global Oil was
improperly joined to the state court action in order to defeat
federal subject matter jurisdiction. Therefore, they contend that
because
Global
Oil,
a
nondiverse
defendant,
was
improperly
joined, and because all other Defendants are diverse from the
Plaintiffs, jurisdiction is proper in this Court.
On May 21, 2013, the Court, sua sponte, ordered the parties
to brief the question of subject matter jurisdiction over case
No. 12-3041.
The Barnhills complied with the Court’s order on
May 30, 2013, filing their brief and asserting that Global Oil
was properly joined in this action. On June 3, 2013, Defendants
6
filed their opposition brief.
THE PARTIES’ ARGUMENTS
Defendants argue that a party is improperly joined where “a
diverse defendant is joined with a nondiverse defendant as to
whom there is no joint, several or alternative liability, and
when
the
claims
against
the
diverse
defendant
have
no
real
connection to the claims against the nondiverse defendant.”6 They
contend that state law governs the joinder analysis under this
standard, as it was the law applicable at the time of joinder.
Defendants assert that Louisiana law provides that, “[t]wo
or
more
parties
may
be
joined
in
the
same
suit,
either
as
plaintiff or as defendants, if . . . there is a community of
interest
between
the
parties
joined.”7
Defendants
aver
that
“community of interest” has been defined as “the parties’ causes
of actions (or defenses) ‘arising out of the same facts, or
presenting
the
same
factual
and
legal
issues.”8
Thus,
the
Defendants argue that Counts I and II of the Barnhills’ petition
do not arise out of or assert the same facts as Counts III and IV
6
Defs.’ Brief, Rec. Doc. 171, p. 3 (citing Davis v. Cassidy, No. 11-1563,
2011 WL 6180054, at *2 (E.D. La. Dec. 3, 2011)).
7
Defs.’ Brief, Rec. Doc. 171, p. 4 (quoting La. Code of Civ. Proc. art.
8
Defs.’ Brief, Rec. Doc. 171, p. 5 (citing Davis, 2011 WL 6180054, at *4).
463).
7
of the petition. Specifically, they note that Counts I and II
both involve the initial sale of Global Oil’s stock and various
transactions allegedly related to that sale, which took place
afterwards. Furthermore, they note that those two counts include
the same parties. In contrast, Defendants argue that Counts III
and IV do not involve any of the Defendants implicated in the
previous counts and, more importantly,
do not concern the same
contracts and transactions. Defendants contend that there is no
relation between the unpaid wages claims, which revolve around
the Barnhills’ employment contracts with Global Oil, and the
earlier
contractual
claims.
As
such,
Defendants
contend
that
Global Oil was improperly joined and, consequently, that this
Court has diversity jurisdiction.
In response, the Barnhills assert that the correct standard
for
determining
improper
joinder
is
Federal
Rule
of
Civil
Procedure 20, which states that parties may be joined where
“[a]ny
right
to
relief
is
asserted
against
them
jointly,
severely, or in the alternative with respect to or arising out of
the same transaction, occurrence or series of transactions or
occurrences.”9 They contend that their petition clearly shows a
9
Barnhills’ Brief, Rec. Doc. 170, p. 3 (quoting Fed. R. of Civ. Proc.
20(a)).
8
“series of transactions or occurrences” involving all of the
named Defendants, thereby indicating that Global Oil was properly
joined. In particular, they assert that Global Oil is/was under
the direction of Ray Ghariani, who is also the president of
Lyamec and Global Libya. Furthermore, the Barnhills argue that
even if Louisiana law applies, they have still demonstrated a
sufficient nexus between the various counts and underlying events
such that it is “‘commonsensical to litigate them together.’”10
DISCUSSION
A.
Subject Matter Jurisdiction
In deciding a motion to dismiss for lack of subject matter
jurisdiction under Federal Rule of Civil Procedure 12(b)(1), “the
district court is ‘free to weigh the evidence and resolve factual
disputes in order to satisfy itself that it has the power to hear
the case.’”
Krim v. pcOrder.com, Inc., 402 F.3d 489, 494 (5th
Cir. 2005).
The party asserting jurisdiction must carry the
burden of proof for a Rule 12(b)(1) motion to dismiss.
Randall
D. Wolcott, M.D., P.A. v. Sebelius, 635 F.3d 757, 762 (5th Cir.
2011).
The standard of review for a motion to dismiss under Rule
12(b)(1) is the same as that for a motion to dismiss pursuant to
10
Barhills’ Brief, Rec. Doc. 170, p. 6 (quoting Mauberret - Lavie v.
Lavie, Nos. 03-99, 03-100 (La. App. 4 Cir. 6/11/03); 850 So.2d 1, 2).
9
Rule 12(b)(6).
United States v. City of New Orleans, No. 02-
3618, 2003 WL 22208578, at *1 (E.D. La. Sept. 19, 2003).
To survive a Rule 12(b)(6) motion to dismiss, the plaintiff
must plead enough facts to “state a claim to relief that is
plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547
(2007)).
A claim is facially plausible when the plaintiff pleads
facts that allow the court to “draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Id.
A
court must accept all well-pleaded facts as true and must draw
all reasonable inferences in favor of the plaintiff.
Lormand v.
U.S. Unwired, Inc., 565 F.3d 228, 232-33 (5th Cir. 2009); Baker
v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996).
The court is not,
however, bound to accept as true legal conclusions couched as
factual allegations.
B.
Iqbal, 556 U.S. at 678.
Removal
Generally, a defendant may remove a civil action filed in
state
court
if
jurisdiction.
jurisdiction
a
See
exists
federal
court
would
have
28 U.S.C. § 1441(a).
where
the
matter
in
had
Original diversity
controversy
$75,000 and is between citizens of different states.
1332(a)(1).
A
defendant
bears
10
the
original
burden
of
exceeds
28 U.S.C. §
proving
by
a
preponderance
of
the
evidence
that
jurisdiction
exists.
De
Aguilar v. Boeing Co., 47 F.3d 1404, 1412 (5th Cir. 1995).
The
jurisdictional facts supporting removal are examined as of the
time of removal.
Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880,
883 (5th Cir. 2000). Ambiguities are construed against removal
and
in
favor
of
remand
because
removal
statutes
are
to
be
strictly construed. Manguno v. Prudential Prop. & Cas. Ins., 276
F.3d 720, 723 (5th Cir. 2002).When a nondiverse party is properly
joined as a defendant, no defendant may remove the case under 28
U.S.C. § 1332.
that
However, a defendant may remove where he shows
the nondiverse party was improperly joined. Smallwood v.
Ill. Cent. R.R. Co., 352 F.3d 220, 222 (5th Cir. 2003).
C.
Analysis
In the instant case, the applicable improper joinder rule
was established in Tapscott v. MSDealer Service Corp., 77 F.3d
1353 (11th Cir. 1996), abrogated on other grounds by Cohen v.
Office Depot, Inc., 204 F.3d 1069 (11th Cir. 2000). Although this
rule
was
established
subsequently
in
recognized
the
by
Eleventh
the
Fifth
Circuit,
it
Circuit
in
has
Ross
been
v.
Citifinancial, Inc., 344 F.3d 458, 461 (5th Cir. 2003), and has
been applied in this District as well. See, e.g., Davis,
2011 WL
6180054 at *2 (explaining the Fifth Circuit’s recognition of the
11
Tapscott
rule
and
applying
it
to
the
case
before
it).
The
Tapscott rule holds that improper joinder may have occurred where
a diverse defendant is joined with a nondiverse defendant with
whom it does not have joint, several or alternative liability,
and the claims brought against the nondiverse defendant have no
real connection to claims brought against the diverse defendant.
See
Tapscott,
77
F.3d
at
1359-60.
“Under
Tapscott,
only
‘egregious’ misjoinder of parties with no real connection to each
other, and not ‘mere’ misjoinder, constitutes improper joinder
under
federal
law.”
Davis,
2011
WL
6180054
at
*2
(quoting
Tapscott, 77 F.3d at 1360). Furthermore, courts in this District
have determined that when applying Tapscott, the joinder analysis
should proceed under state law, as it is the procedural law that
governed the parties’ at the time that the suit was originally
filed. Davis, 2011 WL 6180054 at *3 - 4; Accardo v. LaFayette
Ins. Co., No. 06-8568, 2007 WL 325368, at *4 - 5 (E.D. La. Jan.
20,
2007).
As
such,
this
Court
applies
Louisiana
law
in
determining whether Global Oil was improperly joined.
Under Louisiana law, “[c]umulation of actions is the joinder
of separate actions in the same judicial demand, whether by a
single plaintiff against a single defendant, or by one or more
plaintiffs against one or more defendants.” La. Code Civ. Proc.
12
art. 461. Article 463 provides a three part test for joinder
which states that,
Two or more parties may be joined in the same suit,
either as plaintiffs or as defendants, if:
(1)
There
is
a
community
the
actions
of
interest
between
the
within
the
parties joined;
(2)
Each
of
cumulated
is
jurisdiction of the court and is brought in the proper
venue; and
(3)
All
of
the
actions
cumulated
are
mutually
consistent and employ the same form of procedure.
La. Code Civ. Proc. art. 463. In the instant case, the parties do
not argue that prongs two and three have not been met. Rather,
they contend that this case turns on the community of interest
prong.
A “community of interest” is defined as “the parties’ causes
of actions (or defenses) ‘arising out of the same facts, or
presenting the same factual and legal issues.’” Stevens v. Bd. of
Trustees of Police Pension Fund of City of Shreveport, 309 So.2d
144, 147 (La. 1975). It is generally deemed to be present where
13
there is “enough factual overlap . . .
between [] cases to make
it commonsensical to litigate them together.” Mauberret-Lavie v.
Lavie, 850 So.2d at 2. The community of interest requirement
“reflects
a
policy-value
.
.
.
to
avoid
where
possible
multiplicity of actions in the interests of judicial efficiency,
providing
it
can
be
done
without
unfairness
to
the
parties
affected.” La. Code Civ. Proc. art. 463, Comment (c).
Defendants argue that there is no community of interest
between Counts I and II and Counts III and IV and, therefore,
that Global Oil was improperly joined. This Court agrees. In
making this determination, the Court finds the reasoning of the
court
in
Laborde
v.
American
National
Property
&
Casualty
Companies, No. 00-01091 (La. App. 3 Cir. 1/31/01); 780 So.2d 501,
persuasive. In Laborde, the court considered whether a plaintiff
had improperly joined defendants with whom she had been in three
separate car accidents. 780 So.2d at 502-03. The plaintiff argued
that her claims were related because the second two accidents
necessarily aggravated the injury that she had obtained in the
first accident. Id. The court reasoned that there were no common
facts among the three tortfeasors relating to liability, and that
the
plaintiff
would
need
to
prove
liability
and
injuries
separately as to each party. Id. Thus, it found that there was no
14
community of interest. Id.
In the instant case, while Global Oil was the subject of the
sale that led to the Barnhills’ claims in Counts I and II, it has
no
other
involvement
with
those
claims
and
cannot
face
any
liability for the transactions at issue in the claims. Likewise,
the claims in Counts III and IV, which arose approximately five
to six years after the claims in Counts I and II, have no
relation to Lyamec or Global Libya and, as alleged, do not arise
out of any of the previous transactions involving the sale of
Global Oil. Rather, the claims in Counts III and IV are wholly
separate both legally and factually and will stand or fail on an
independent determination of liability.11 As such, they do not
constitute a community of interest and were improperly joined.
In addition, the Court also finds that two Eastern District
cases support this determination.12 In Savoie v. Safeco Insurance
Co. of America, No. 06-7808, 2007 WL 675304 (E.D. La. Feb. 27,
11
To the extent that it may be argued that there is overlapping liability
because Lyamec owns Global Oil, the Court notes that Global Oil is a separate
legal entity from Lyamec and Global Libya. Furthermore, the Barnhills’ do not
allege that either of these two organizations are responsible for the alleged
unpaid wages.
12
The Court notes that the Eastern District cases discuss joinder under
Federal Rule of Civil Procedure 20, rather than the Louisiana rule for joinder.
However, because the standards are similar, the Court finds them persuasive.
Furthermore, the Court notes that the Barnhills have actually argued for the
application of Federal Rule of Civil Procedure 20 and have asserted that the
analysis comes out the same under both standards. Accordingly, the Court does not
find that its review of cases under Rule 20 prejudice the Barnhills in anyway.
15
2007),
the
court
considered
whether
plaintiff
had
improperly
joined claims against a home insurer for hurricane coverage and a
contractor for improper post-hurricane repair. Id. at *1. In that
case, the court found that claims were independent because they
did
not
involve
common
questions
of
law
or
fact.
Id.
In
particular, the court noted that the claims against the insurance
company were contract claims, whereas the claims against the
contractor were negligence claims. Id. As such, the court found
that they were not dependent upon one another and should be
determined separately. Id. at *1-2.
Likewise, in Berthelot v. Boh Brothers Construction Co., No.
05-4182, 2006 WL 1984661 (E.D. La. June 1, 2006), the court
considered whether claims against the Board of Commissioners for
the
Orleans
Levee
District
were
properly
joined
with
claims
brought against insurers that arose out of damage cause by the
failure of the 17th Street Canal after Hurricane Katrina. 2006 WL
1984661 at *1. The court found that the alleged tortuous actions
of the Orleans Levee District were separate from the contractual
claims lodged against the insurers and, therefore, the joinder of
the two was improper. Id. at *11 - 12.
In
the
instant
case,
like
the
claims
in
Savoie
and
Berthelot, the claims lodged against Global Libya and Lyamec are
16
separate and distinct from the claims lodged against Global Oil.
In particular, the Court notes that the common thread in all
three of the aforementioned cases is the court’s recognition that
the potential liability of one defendant was wholly independent
of the other. See Hospitality Enter., Inc. v. Westchester Surplus
Lines Ins. Co., No. 11-234, 2011 WL 1303954, at *5 (E.D. La.
March
31,
2011)
(evaluating
joinder
under
Louisiana
law
and
noting that a key factor in cases finding improper joinder is the
independent nature of the liability that the defendants face).
That is true in the instant case as well, neither Global Libya or
Lyamec face any liability for the claims lodged against Global
Oil in Counts III and IV and vice versa. As such, the Court finds
that Global Oil was improperly joined and, as these actions are
wholly separate and independent of each other, that such joinder
was egregious. Consequently, the Court finds that it has subject
matter jurisdiction over Counts I and II because the Defendants
in those claims are diverse from the Plaintiffs and the amount in
controversy exceeds $75,000. Accordingly,
IT IS ORDERED that Counts III and IV of case No. 12-3041
are SEVERED and REMANDED back to the 32nd Judicial District for
the Parish of Terrebonne, Louisiana.
17
New Orleans, Louisiana this 14th day of June, 2013.
____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
18
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