Superior Labor Services, Inc. v. Folse Oilfield Services, LLC et al

Filing 29

ORDER AND REASONS denying 8 Motion to Remand to State Court. Signed by Judge Lance M Africk on 2/25/2014. (blg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

SUPERIOR LABOR SERVICES, INC.

CIVIL ACTION

VERSUS

No. 13-6609

FOLSE OILFIELD SERVICES, LLC ET AL.

SECTION I

ORDER AND REASONS
Before the Court is a motion1 filed by plaintiff to remand the above-captioned matter and
for costs and attorney’s fees pursuant to 28 U.S.C. § 1447(c), as well as a later-filed
supplemental memorandum2 in support of the motion. Defendants filed an opposition3 and a sur
reply.4 For the following reasons, the motion is DENIED.
BACKGROUND
On October 25, 2013, plaintiff initiated the above-captioned litigation against defendants
for allegedly breaching two leases5 that were both signed on February 15, 2012.6 Defendants
removed the case on December 9, 2013, alleging complete diversity between plaintiff and
defendants. Defendants assert that plaintiff is a Louisiana corporation with its principal place of
business in Terrebone Parish and that defendant Stephen Folse (“Mr. Folse”) is a citizen of
Texas.7

1

R. Doc. No. 8.
R. Doc. No. 18.
3
R. Doc. No. 10.
4
R. Doc. No. 19.
5
R. Doc. No. 1-1, at 1-3.
6
R. Doc. No. 8-4, at 7, 14.
7
R. Doc. No. 1, at 2.
2

Plaintiff filed a motion to remand on January 6, 2014.8 Plaintiff contends that removal
was improper because the leases at issue contain a mandatory forum selection clause9 and that
complete diversity does not exist because “the Leases contain a declaration that Folse is a
domiciliary of Louisiana.”10 Plaintiff also seeks costs and attorney’s fees “because Defendants’
removal of this case was not objectively reasonable.”11 Defendants oppose the motion on the
grounds that the forum selection clauses are merely permissive, not mandatory,12 and that Mr.
Folse, the allegedly non-diverse defendant,13 has actually resided in Texas for 17 years,
notwithstanding the “passing” language of the lease.14
The provisions in both leases that are relevant to plaintiff’s motion to remand are
identical.15
STANDARD OF LAW
A district court must remand a case to state court if, at any time before final judgment, it
appears that the court lacks subject matter jurisdiction. 28 U.S.C. § 1447(c). The removal statute
is strictly construed. See Robin Pipeline Co. v. New Medico Head Clinic Facility, No. 94-1450,
1995 U.S. Dist. LEXIS 12013, at *2 (E.D. La. Aug. 14, 1995) (Clement, J.) (quoting York v.
Horizon Fed. Sav. & Loan Ass’n, 712 F.Supp. 85, 87 (E.D. La. 1989) (Feldman, J.)). When
challenged by a plaintiff seeking remand, the defendant attempting to establish removal bears the
burden of proof. Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921); Sid Richardson
8

R. Doc. No. 8.
R. Doc. No. 8-1, at 2-3.
10
R. Doc. No. 8-1, at 4.
11
R. Doc. No. 8-1, at 4.
12
R. Doc. No. 10, at 2-4.
13
The complaint states that Mr. Folse’s company, Folse Oilfield Services, LLC, which is also
named as a co-defendant, is a Pennsylvania LLC with an office in Fort Worth, Texas. R. Doc.
No. 1-1, at 2. Plaintiff does not contest that Folse Oilfield Services, LLC is diverse.
14
R. Doc. No. 10, at 5.
15
Compare R. Doc. No. 8-4, at 1-7, with R. Doc. No. 8-4, at 8-14.
9

2

Carbon & Gasoline Co. v. Interenergy Res., 99 F.3d 746, 751 (5th Cir. 1996). Doubts
concerning removal are to be construed against removal and in favor of remand to state court.
Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002).
DISCUSSION
A.

Diversity

Before addressing the meaning of the forum selection clause, the Court must satisfy itself
that it has a basis for doing so—that is, that diversity jurisdiction is present. Plaintiff points to
paragraph 15 of the leases, which state, “And now comes and intervenes, Stephen Folse, a person
of the full age of majority, and a resident of and domiciled in State of Louisiana . . . .”16 Plaintiff
argues, without citation to authority, that “[t]his creates a presumption that he is indeed a
Louisiana domiciliary. . . . Therefore, this Court should remand the case to state court unless
Folse can show evidence of Texas domicile that contradicts the presumption created by the
declarations in the Leases.”
“In cases removed from state court, diversity of citizenship must exist both at the time of
filing in state court and at the time of removal to federal court.” Coury v. Prot, 85 F.3d 244, 249
(5th Cir. 1996); see also Durel v. Howard, No. 13-5991, 2013 WL 6499723, at *1 (E.D. La. Dec.
11, 2013) (Engelhardt, J.). “Domicile requires residence in the state and an intent to remain in the
state.” Preston v. Tenet Healthsystem Mem’l Med. Ctr., Inc., 485 F.3d 793, 798 (5th Cir. 2007)
(citing Miss. Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989)).
In the notice of removal, defendants and their counsel represented to the Court, subject to
Rule 11 of the Federal Rules of Civil Procedure, that “[a]t the time of commencement of the
Civil Action, and continuing through to the date of filing of this Notice of Removal, [Mr.] Folse

16

R. Doc. No. 8-4, at 6, 13.
3

resided in Texas, maintained his domicile in Texas and is a citizen of the State of Texas.”17
Furthermore, Mr. Folse provided a sworn affidavit describing his residency and activities in
Texas and stating that the leases “incorrectly state that I am and/or was on February 13, 2012 ‘a
resident of and domiciled in State of Louisiana’” and that “[b]oth Lease Agreements were
drafted by [plaintiff].”18 Plaintiff’s supplemental memorandum does not controvert the affidavit
or offer any evidence to the contrary. Furthermore, to the extent that the leases provide any
evidence of domicile, they could only address Mr. Folse’s domicile on February 15, 2012, the
date that they were signed.19
From the evidence presented to the Court, the Court concludes that Mr. Folse is
domiciled in Texas20 and that complete diversity existed at all relevant times.21 Accordingly, this
Court has jurisdiction pursuant to 28 U.S.C. § 1332.
B.

Forum Selection Clause

Having found that complete diversity exists between plaintiff and defendants, the Court
now considers the effect of the forum selection clause. Federal law determines the enforceability
of forum selection clauses in diversity cases. Alliance Health Grp., LLC v. Bridging Health
Options, LLC, 553 F.3d 397, 399 (5th Cir. 2008). If certain conditions are met, an enforceable
forum selection clause can prevent a defendant from removing a case to federal court even
though federal subject matter jurisdiction otherwise exists. See, e.g., Collin County, Texas v.
Siemens Bus. Serv., Inc., 250 F. App’x 45 (5th Cir. 2007). A permissive forum selection clause
merely indicates “[a] party’s consent to jurisdiction” in a particular forum and “does not

17

R. Doc. No. 1, at 2.
R. Doc. No. 10-1, at 2.
19
R. Doc. No. 8-4, at 7, 14.
20
See Preston, 485 F.3d at 798.
21
See Coury, 85 F.3d at 249.
18

4

necessarily waive its right to have an action heard in another.” City of New Orleans v. Mun.
Admin. Serv., Inc., 376 F.3d 501, 504 (5th Cir. 2004). “Mandatory forum-selection clauses . . .
require all litigation to be conducted in a specified forum . . . .” UNC Lear Servs., Inc. v.
Kingdom of Saudi Arabia, 581 F.3d 210, 219 (5th Cir. 2009).
A mandatory forum selection clause will “prevent a party from exercising its right to
removal” only if “the clause [gives] a ‘clear and unequivocal’ waiver of that right.” New
Orleans, 376 F.3d at 504 (citations omitted). Further, “[a] party may waive its rights . . . by
establishing an exclusive venue within the contract.” Id. Nevertheless, Fifth Circuit precedent
requires courts faced with “two reasonable, but conflicting interpretations of a contract
provision” to adopt the interpretation least favorable to the drafter. Alliance Health Grp., 553
F.3d at 402. The Fifth Circuit has applied this principle in the specific context of forum selection
clauses. See, e.g., id.
Defendants contend, and plaintiff does not contest, that plaintiff drafted the leases at
issue.22 Accordingly, any conflicting interpretations are to be resolved against plaintiff. See id.
The parties disagree, however, as to whether the clauses are mandatory or permissive. The
clauses at issue read:
9.1
This agreement shall be subject to and governed by the laws of the State of
Louisiana.
9.2
Should it be necessary to file any suit to enforce any provisions of this
lease agreement, the parties stipulate that proper forum for such proceedings shall
be by the 17th Judicial District Court, Lafourche Parish, Louisiana.23
Plaintiff argues that “[t]he usage of the words ‘the proper forum’ and ‘shall be’ indicate
that these are mandatory venue forum selection clauses that waive the right to remove,”24 but

22

See R. Doc. No. 10, at 1.
R. Doc. No. 8-4, at 5, 12.
24
R. Doc. No. 11, at 1; see also R. Doc. No. 8-1 at 2-3.
23

5

plaintiff misquotes the leases: the word “the” does not appear before “proper forum” in either
lease. Defendants make the same mistake in their opposition.25 If the word “the” did appear in
the leases, the Court would have a different argument to consider.26 As it is written, however, it
would be reasonable to interpret paragraph 9.2 of the lease as being either mandatory (“the
parties stipulate that [the] proper forum”) or permissive (“the parties stipulate that [a] proper
forum”). Accordingly, the clause must be interpreted against plaintiff and in favor of defendants’
right to remove. See id.
The Court is likewise concerned with the use of the word “by,” which can be defined as
“in proximity to,” “through or through the medium of,” and “through the agency of
instrumentality of.” by, Merriam-Webster, http://www.merriam-webster.com/dictionary/the (last
visited February 24, 2014); see also by, Black’s Law Dictionary (6th ed. 1990) (“Before a certain
time; beside; close to; in close proximity; in consequence of; . . . with the witness or sanction of;
into the vicinity of and beyond. Through the means, act, agency or instrumentality of.”). To the
extent that the word “by” refers to physical proximity, the Court can only wonder whether it is
sufficiently close to Lafourche Parish for it to be “proper forum.” However, to the extent that
“by” is synonymous with “through,” “via,” or “by way of,” the clause may be satisfied: the
above-captioned matter is before the Court “via” and “by way of” the 17th Judicial District

25

R. Doc. No. 10, at 3.
The word “the” is “used as a function word to indicate that a following noun or noun
equivalent is a unique or a particular member of its class.” the, Merriam-Webster,
http://www.merriam-webster.com/dictionary/the (last visited February 24, 2014) (emphasis
added); see also the, Black’s Law Dictionary (6th ed. 1990) (“An article which particularizes the
subject spoken of. In construing statute, definite article ‘the’ particularizes the subject which it
precedes and is word of limitation as opposed to indefinite or generalizing force ‘a’ or ‘an.’”).

26

6

Court, Lafourche Parish, Louisiana, where the case was initially filed and from which it was
removed.27
The ambiguity with respect to the use of the word “by” is also sufficient to defeat the
motion to remand. The nonsensical use of the word “by” robs the clause of any enforceable
meaning, and the clause is certainly well short of a “clear and unequivocal” waiver of the right of
removal. City of New Orleans, 376 F.3d at 504. At the very least, the clause is ambiguous and
must be construed against plaintiff. See Alliance Health Grp., 553 F.3d at 402. Accordingly, the
Court finds that remand is not proper.
C.

Costs and Attorney’s Fees

28 U.S.C. 1447(c) states, in pertinent part, “An order remanding the case may require
payment of just costs and any actual expenses, including attorney fees, incurred as a result of the
removal.” Because remand is not warranted, plaintiff is not entitled to any award.
CONCLUSION
For the foregoing reasons,
IT IS ORDERED that the motion is DENIED.

New Orleans, Louisiana, February 25, 2014.

_______________________________________
LANCE M. AFRICK
UNITED STATES DISTRICT JUDGE

27

R. Doc. No. 1.
7