Vintage Assets, Inc. v. Tennessee Gas Pipeline Company, LLC et al
Filing
331
ORDER AND REASONS - IT IS ORDERED that Plaintiffs' Motion for Costs and Fees Related to Remand (Rec. Doc. 317 ) is DENIED, as set forth in document. Signed by Judge Jane Triche Milazzo on 4/11/2019. (sa)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
VINTAGE ASSETS, INC.
CIVIL ACTION
VERSUS
NO: 16-713
TENNESSEE GAS PIPELINE
COMPANY, L.L.C. ET AL.
SECTION: “H”
ORDER AND REASONS
Before the Court is Plaintiffs’ Motion for Costs and Fees Related to
Remand (Doc. 317). For the following reasons, the Motion is DENIED.
BACKGROUND
The motion before the Court arises out of an unexpected conclusion to a
heavily litigated dispute. After pending before this Court for nearly 2-and-onehalf years, ten summary judgment motions, and a six-day bench trial, all
rulings made by this Court were vacated on appeal for want of diversity subject
matter jurisdiction. The Fifth Circuit ordered this removed action to be
remanded back to state court. Understandably disgruntled by this turn of
events, Plaintiffs have filed the instant motion seeking all reasonable costs and
attorneys’ fees related to and arising from the remand. Plaintiffs allege that
Defendants High Point Gas Transmission, LLC and High Point Gas Gathering,
1
LLC (collectively “High Point entities”) possessed knowledge of their
citizenship and failed to disclose such.
The timeline of events is as follows. On December 18, 2015, Plaintiffs
filed this action against Tennessee Gas Pipeline Company, LLC (TGP) and
Southern Natural Gas Company, LLC (SNG) in the 25th Judicial District
Court for the Parish of Plaquemines. On January 27, 2016, TGP and SNG
removed the matter to this Court on the basis of diversity of citizenship. On
October 24, 2016, Plaintiffs amended their Complaint to add the High Point
entities, improperly pleading the citizenships of the LLCs as if they were
corporations. The High Point entities did not challenge the representation of
their citizenships or the jurisdiction of this Court.
Plaintiffs allege that thereafter they propounded discovery requests on
each of the High Point entities, seeking detailed descriptions of their corporate
history. The entities responded revealing that each entity is owned by a string
of parent LLCs, ending with American Midstream, LLC. The High Point
entities did not provide information in their discovery responses regarding the
members of American Midstream, LLC.
At the prompting of the Fifth Circuit on appeal, the High Point entities
revealed for the first time that the sole owner of American Midstream, LLC is
American Midstream Partners, LP. American Midstream Partners, LP has a
class of limited partners that are holders of “common units,” which are publicly
traded on the New York Stock Exchange. The High Point entities then
represented that on the date they were added to this action, “an individual”
who resided in Louisiana held shares in a common unit. Based on this
representation, the Fifth Circuit vacated the judgment of this Court and
remanded this matter back to this Court to be remanded to state court.
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Plaintiffs now seek all reasonable attorney’s fees and costs arising out of the
remand of this action.
LAW AND ANALYSIS
Plaintiffs seek an award of attorney’s fees and costs under 28 U.S.C. §
1447(c), Federal Rule of Civil Procedure 37, 28 U.S.C. § 1927, and the Court’s
inherent power. This Court finds that none of these authorizes the award
requested by Plaintiffs.
A. 28 U.S.C. § 1447(c)
Pursuant to 28 U.S.C. § 1447(c), “[a]n order remanding the case may
require payment of just costs and any actual expenses, including attorney fees,
incurred as a result of the removal.” “[A] district court is not divested of
jurisdiction to award attorney fees and costs pursuant to § 1447(c) after a
remand has been certified.” 1 The High Point entities correctly point out that §
1447(c) entitles plaintiffs to an award of attorney’s fees and costs “incurred as
a result of the removal.” The High Point entities did not remove this case to
federal court and indeed were not parties at the time of removal. Accordingly,
this Court is not authorized under 28 U.S.C. § 1447 to award attorney’s fees
against them. Section 1447(c) is intended to deter baseless attempts at removal
and an award against the High Point entities would be inconsistent with this
intent. 2
Coward v. AC & S., Inc., 91 F. App’x 919, 922 (5th Cir. 2004).
See Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005) (“[C]ourts may award
attorney’s fees under § 1447(c) only where the removing party lacked an objectively
reasonable basis for seeking removal.”).
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B. Federal Rule of Civil Procedure 37
Federal Rule of Civil Procedure 37(d)(3) allows an award of expenses for
the failure to respond to discovery. Plaintiffs argue that they are entitled to an
award under Federal Rule of Civil Procedure 37 because the High Point
entities failed to completely answer Plaintiffs’ interrogatories seeking
jurisdictional facts.
The discovery request at issue asked the High Point entities to describe
their corporate histories “including
without
limitation, its state of
incorporation; all name changes, merger or other business combinations; the
surviving entity or entities resulting from any such name changes, mergers, or
other business combinations’ all parent companies, subsidiaries, predecessor,
and successor in interest.” 3 The High Point entities argue that this request was
not intended to confirm jurisdiction, but rather, to ensure the proper entity
was named. They point out that Plaintiffs did not request information
regarding the members of the High Point entities.
High Point Gas Transmission, LLC responded:
High Point Gas Transmission, L.L.C. was incorporated as a
Delaware limited liability company on September 8, 2011. HPGT
is a subsidiary of High Point Gas Transmission Holdings, LLC, a
Delaware limited liability company, which is itself a subsidiary of
American Midstream, LLC, a Delaware limited liability company. 4
High Point Gas Gathering, LLC responded:
High Point Gas Gathering, L.P. was established as a Texas
limited partnership on January 27, 2010. High Point Gas
Gathering, L.P. was converted to a Texas limited liability company
on June 23, 2010, with the resulting name High Point Gas
Gathering, L.L.C. HPGG is a subsidiary of High Point Gas
Gathering Holdings, LLC, a Delaware limited liability company,
3
4
Doc. 317-2, p. 44; Doc. 317-3, p. 41.
Doc. 317-2, p. 44.
4
which is itself a subsidiary of American Midstream, LLC, a
Delaware limited liability company. 5
Plaintiffs argue that the request intended to seek information regarding
citizenship. They contend that the High Point entities’ responses were
incomplete when they stopped the chain of ownership after two layers and
before reaching the information relevant to diversity. They allege that this
failure to provide a complete response warrants an award of expenses under
Federal Rule 37.
This Court disagrees. Plaintiffs’ interrogatory is most logically read to
request the corporate information of the High Point entities to ensure the
appropriate party has been named. The requests do not specifically ask for the
citizenship of the members of the High Point entities, and the High Point
entities should therefore not be sanctioned for failing to provide that
information in their responses.
C. 28 U.S.C. § 1927
Next, 28 U.S.C. § 1927 states, “Any attorney or other person admitted to
conduct cases in any court of the United States or any Territory thereof who so
multiplies the proceedings in any case unreasonably and vexatiously may be
required by the court to satisfy personally the excess costs, expenses, and
attorneys’ fees reasonably incurred because of such conduct.” “Section 1927
sanctions are not to be awarded lightly. They require evidence of bad faith,
improper motive, or reckless disregard of the duty owed to the court.” 6 The
High Point entities argue that § 1927 is inapplicable here where they did not
act in bad faith and, like Plaintiffs, were unaware that jurisdiction was lacking
in this case until the Fifth Circuit required briefing on such. Plaintiffs argue
5
Doc. 317-3, p. 41.
Gonzalez v. Fresenius Med. Care N. Am., 689 F.3d 470, 479 (5th Cir. 2012) (internal
quotations omitted).
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that the High Point entities showed a reckless disregard by failing to inquire
into the jurisdictional facts that they had represented to the Court. This Court
finds that any failure of the High Point entities to further investigate their
citizenship does not rise to the level of bad faith. In addition, it was Plaintiffs’
burden—as the party invoking federal jurisdiction—to plead the citizenship of
the High Point entities. 7 There is no evidence that the High Point entities
withheld information regarding their citizenship vexatiously or with improper
motive.
D. Inherent Power
Finally, Plaintiffs ask this Court to award fees and costs using its
inherent powers. “Federal courts have the inherent power to assess sanctions
under certain circumstances, such as when a party has acted in bad faith,
vexatiously, wantonly, or for oppressive reasons, or has defiled the very temple
of justice.” 8 “In order to impose sanctions against an attorney under its
inherent power, a court must make a specific finding that the attorney acted
in bad faith.” 9 This Court has already held that Plaintiffs have failed to show
that the High Point entities acted in bad faith. Accordingly, an award of
expenses under the Court’s inherent powers would be inappropriate.
“[I]t is well established throughout the federal judicial system that the burden of pleading
the citizenship of each and every party to the action is on the party seeking to invoke the
federal forum on the basis of diversity jurisdiction.” 13E ALAN WRIGHT & ARTHUR MILLER,
FED. PRAC. & PROC. JURIS. § 3611 (3d ed.). The cases cited by Plaintiffs in support of their
argument that the High Point entities carried the burden of establishing federal jurisdiction
stand only for the proposition that a removing party bears the burden of establishing federal
jurisdiction in the context of fraudulent joinder. See Matherne Instrumentation Specialists,
Inc. v. Mighty Enterprises, Inc., No. 15-1159, 2015 WL 3505032, at *5 (E.D. La. June 3, 2015)
(“[T]he removing party, here Defendant Tsai, bears at all times the burden of establishing
federal jurisdiction and thus the fraudulent nature of the joinder of any non-diverse
defendant.”). In addition, it cannot be disputed that the High Point entities were not the
“removing parties.”
8 Matter of Dallas Roadster, Ltd., 846 F.3d 112, 134 (5th Cir. 2017) (internal quotations
omitted).
9 Sandifer v. Gusman, 637 F. App’x 117, 121 (5th Cir. 2015)
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CONCLUSION
For the foregoing reasons, the Motion is DENIED.
New Orleans, Louisiana this 11th day of April, 2019.
__________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE
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