Constance et al v. Austral Oil Exploration Co Inc et al

Filing 45

MEMORANDUM RULING denying 21 Motion to Remand; granting 33 Motion to Amend/Correct Notice of Removal. Signed by Magistrate Judge Kathleen Kay on 2/6/2013. (crt,Dauterive, C)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAKE CHARLES DIVISION

RUBY MAE SIMON CONSTANCE,
ET AL

:

CIVIL ACTION NO. 12-cv-01252

VERSUS

:

JUDGE MINALDI

AUSTRAL OIL EXPLORATION
CO., INC., ET AL

:

MAGISTRATE JUDGE KAY

MEMORANDUM RULING

Before the court is plaintiffs’ Motion to Remand and removing defendants’ Motion to
Amend Notice of Removal. Docs. 21, 31. For the reasons that follow, the Motion to Amend is
GRANTED, and the Motion to Remand is DENIED.
Background
Plaintiffs filed this suit in the 38th Judicial District Court, Cameron Parish, Louisiana, on
April 11, 2012. The petition alleges that various tracts of property owned by plaintiffs were
damaged as a result of defendants’ oil and gas exploration and production activities. Doc. 3, Att.
2.
Defendants Williams Exploration Company, ExxonMobil Oil Corporation, and Diasu Oil
& Gas Company, Inc. removed the action to this court on May 16, 2012. They allege that this
court has subject matter jurisdiction based on diversity. Doc. 1, p. 2. Defendants recognize that
there is an absence of complete diversity between plaintiffs and at least one defendant; however,
they ask this court to find that removal was nonetheless proper because the non-diverse
defendant is nonexistent, arguing the court should ignore the citizenship of any nonexistent
defendants for jurisdictional purposes. Doc. 1, p. 4.
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Plaintiffs filed a Motion to Remand with this court on June 15, 2012, claiming the
removal process was defective. Doc. 21. Plaintiffs submit that the removing defendants failed to
allege that there was diversity both at the time the case was removed and at the time the case was
filed. They argue that this failure mandates remand. Doc. 21, Att. 1, pp. 10–13; Doc. 38, pp. 11–
12.
Defendants defend their removal process as sufficient.

Docs. 30, 31, 34.

In the

alternative, defendants filed a Motion to Amend [the] Notice of Removal on July 20, 2012,
asking the court to permit defendants to cure any deficiencies by amendment. Doc. 33.
Law and Analysis
Any civil action brought in a state court of which the district courts have original
jurisdiction may be removed to the proper district court. 28 U.S.C. § 1441(a). Removing parties
bear the burden of showing that removal was proper and that federal jurisdiction exists. See De
Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995).
Defendants’ Notice of Removal must satisfy the procedural requirements for removal.
See 28 U.S.C. § 1446(a). Any procedural defects may provide a basis for remand provided the
defects cannot be cured by amendment. See 28 U.S.C. §§ 1447(c), 1653.
Defendants assert that this court has jurisdiction based on diversity of citizenship.
District courts have original jurisdiction over all civil actions where the amount in controversy
exceeds $75,000, exclusive of interest and costs, and is between citizens of different states. 28
U.S.C. § 1332(a)(1). Remand is appropriate if either of these requirements is not satisfied.
The court will address the procedural and jurisdiction considerations in turn.
(1) Procedural Analysis
Defendants must comply with a number of procedural requirements in order to properly
removal a case to federal court. See 28 U.S.C. § 1446. A non-removing party may object to any
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procedural defects within thirty days of the defective removal. 28 U.S.C. § 1447(c). The Fifth
Circuit has held that a “procedural defect” is “any defect that does not go to the question of
whether the case originally could have been brought in federal district court.” In re Allstate Co.,
8 F.3d 219, 221 (5th Cir. 1993) (quoting Baris v. Sulpicio Lines, 932 F.2d 1540, 1540 (5th Cir.
1991).
Plaintiffs submit that the removing defendants failed to allege in the Notice of Removal
that there was diversity both at the time the case was removed and at the time the case was filed.
They maintain that it was not enough for defendants to speak in the present tense about corporate
citizenship; defendants were also required to speak in the past tense as well.
When a case is removed to federal court on the basis of diversity jurisdiction, “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). As such, defendants were
required to “allege diversity both at the time of the filing of the suit in state court and at the time
of removal.” In re Allstate Co., 8 F.3d at 221 (citations and internal quotation marks omitted).
The Fifth Circuit in In re Allstate Co. held that a removing defendant’s “failure to allege,
in its notice of removal, the plaintiff’s citizenship at the time the original petition was filed
constitutes a procedural, rather than jurisdictional, defect[.]” Id. The court agrees with plaintiffs
that the Notice of Removal was procedurally defective insofar as it failed to allege the domicile
of the defendants at both the time of removal and the time of filing.
This procedural defect alone, however, does not mandate a remand of the case.
Defendants have moved that this court permit an amendment to the Notice of Removal. Doc. 31.
Remand is proper only to the extent that an amendment is not permitted or an amendment is
inappropriate given the circumstances of the case.

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Defendants argue that 28 U.S.C. § 1653 allows them to amend their pleading to cure the
pleading defect. Section 1653 provides: “Defective allegations of jurisdiction may be amended,
upon terms, in the trial or appellate courts.” This provision “is to be broadly construed to avoid
dismissals of actions on purely ‘technical’ or ‘formal’ grounds.” Whitmire v. Victus Ltd., 212
F.3d 885, 887 (5th Cir. 2000). An amendment is permissible where an “original petition for
removal . . . fail[s] to specifically allege the citizenship of the parties at the time the suit was
brought and at the time the removal petition was filed.”1 D.J. McDuffie, Inc. v. Old Reliable Fire
Ins. Co., 608 F.2d 145, 146 (5th Cir. 1979).

Section 1653, however, “is not to be used to create

jurisdiction retroactively where it did not previously exist.” Aetna Casualty & Surety Co. v.
Hillman, 796 F.2d 770, 775 (5th Cir. 1986) (citations omitted).
Plaintiffs contend that defendants’ proposed amendment is improper in this case because
allegations of complete diversity at the time suit was filed were nonexistent rather than defective.
Doc. 39, pp. 4–5. This contention is without merit insofar as this court is permitted to review the
entirety of the record when determining whether subject matter jurisdiction exists. Baccus v.
Parrish, 45 F.3d 958, 960–61 (5th Cir. 1995); Villarreal v. Brown Exp., Inc., 529 F.2d 1219,
1221 (5th Cir. 1976); 14C Fed. Prac. & Proc. Juris. § 3734 (4th ed.).
Plaintiffs’ state court petition is attached as an exhibit to the Notice of Removal. Doc. 1,
Att. 18. Plaintiffs allege therein that each of the defendants, except for Austral, is a foreign
corporation doing business in the State of Louisiana. Doc. 1, Att. 18, pp. 3–4. These are clearly
allegations regarding the existence of diversity at the time suit was filed.

1

Plaintiffs maintain that the McDuffie decision is not the “panacea” defendants suggest. Doc. 38, p. 12. However,
the most reasonable interpretation of the decision is that plaintiffs failed to double-plead jurisdiction. Plaintiffs
suggest that McDuffie is limited to situations where the matter has already been adjudicated on its merits. However,
such a limitation is unfounded as the McDuffie district court—not the appellate court—originally denied the motion
to remand and permitted an amendment. 608 F.2d at 146.

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Plaintiffs counter that the state court petition fails to mention defendants’ principal places
of business. Doc. 21, Att. 1, p. 13. However, the petition unquestionably contains jurisdictional
allegations insofar as it expresses where defendants are not domiciled because they are foreign to
the State of Louisiana. While these allegations are phrased in the negative and are defective in
their own right, they too are curable by the amendments defendants have proposed. See Am.
Motorists Ins. Co. v. Am. Employers’ Ins. Co., 600 F.2d 15, 16 (5th Cir. 1979) (per curiam)
(amendment permissible on remand where “the plaintiffs’ complaint simply alleged that [the
defendants] were ‘foreign corporations’ which were ‘licensed to do business and doing business
in Louisiana’”).
Plaintiffs also argue that any amendment to the notice of removal should be denied as
untimely and they cite a number of cases in support of this proposition. Doc. 21, Att. 1, pp. 13–
17; Doc. 39, pp. 5–8. The cases relied upon by plaintiffs are clearly distinguishable from the
instant case in that, in each case, the court specifically noted that neither the petition of removal
nor the record revealed the required domiciliary information of the defendants at the time the
case was filed.2

2

Browne v. Hartford Fire Ins. Co., 168 F.Supp. 796, 799 (D.C. Ill. 1959) (“Here, since the principal place of
business of the defendant corporations is not set out in the petition or the pleadings, there is no allegation of
diversity of citizenship as required. . . .”); Garza v. Midland Nat. Ins. Co., 256 F.Supp. 12, 14 (S.D. Fla. 1966)
(“Thus, the principal issue is: Can a petition for removal be amended, with permission of the Court after the thirty
days for removal have passed, to allege that diversity existed at the time of the suit when no such allegation was in
the original petition and the supporting papers.”); Hubbard v. Tripp, 611 F.Supp. 895, 896 (E.D. Va. 1985)
(“Neither the complaint filed in State court nor the petition filed in this Court specifies the citizenship of either
defendant or plaintiff as of the time of filing of the complaint (motion for judgment) in the State court.”); Burns v.
G.S. Nelson Elec., Civ. A. No. 91-2335, 1991 WL 77588, *1 (E.D. Pa., May 6, 1991) (“Satisfaction of this dual
requirement must appear in the record. Here, the notice of removal does not state the citizenship of the parties at the
time the action was filed, and it is not disclosed in the complaint.” (internal citations omitted)); Barnhill v. Ins. Co.
of N.A., 130 F.R.D. 46, 49 (D. S.C. 1990) (“In short, neither the complaint, the notice of removal, nor any other
material in the record alleges INA’s state of incorporation. Perhaps most important, the record also fails to
adequately demonstrate the diversity of INA’s principal place of business.”).

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The court finds that removing defendants’ Notice of Removal was procedurally defective
because it failed to allege the domicile of defendants at the time the case was filed in the
affirmative; however, the court grants removing defendants’ Motion to Amend Notice of
Removal to cure the procedural defects.
(2) Jurisdictional Analysis
Defendants assert in their Notice of Removal that this court has jurisdiction on the basis
of diversity. District courts have original jurisdiction over all civil actions where the amount in
controversy exceeds $75,000, exclusive of interest and costs, and is between citizens of different
states. 28 U.S.C. § 1332(a)(1). This court finds that it has subject matter jurisdiction as both
complete diversity and the amount in controversy requirements are satisfied.3
The removing defendants must demonstrate by a preponderance of the evidence that the
amount in controversy exceeds $75,000, exclusive of interest and costs. Gebbia v. Wal-Mart
Stores, Inc., 233 F.3d 880, 882 (5th Cir. 2000). There is no apparent dispute between the parties
as to whether the jurisdictional amount in controversy is satisfied. In any event, it is facially
obvious from plaintiffs’ original petition that the claim for damages satisfies the requisite
jurisdictional amount. See Doc. 1, Att. 18, pp. 17–18; see also Lucket v. Delta Airlines, 171 F.3d
295, 298 (5th Cir. 1999).
The diversity provisions of 28 U.S.C. § 1332(a)(1) requires complete diversity among the
parties. Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). The court finds that complete
diversity exists.

3

Plaintiffs did not allege in their Motion to Remand that this court lacks subject matter jurisdiction. However, we
raise the issue sua sponte. See e.g. Chaisson v. Karl Storz Endoscopy-America, Inc., 68 F.3d 472 (5th Cir. 1995).  

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Named as plaintiffs are thirteen (13) individuals and a trust which are collectively
domiciled in Louisiana and North Carolina.4 Named as defendants are eight (8) corporations.
For purposes of diversity jurisdiction, a corporation is domiciled where it is incorporated and
where the company maintains its principal place of business. 28 U.S.C. § 1332(c)(1) Seven (7)
of the defendants are collectively domiciled in Delaware, Texas, Oklahoma, and New York.5
Plaintiffs’ state court petition identifies defendant Austral Oil Exploration Company, Inc.
as a Louisiana corporation. Doc. 1, Att. 18, p. 3. The existence of a Louisiana defendant would
destroy complete diversity; however, Austral Oil Exploration Company, Inc., was a Delaware
corporation that was dissolved effective April 12, 1978. Doc. 1, Att. 7, p. 2. Plaintiffs served or
attempted to serve process on “Austral Oil & Exploration Company, Inc.,” a Louisiana
corporation formed in 1992 but this company is not the same entity that operated the wells
identified by plaintiffs in their petition.6 Thus, the domicile of defendant Austral Oil Exploration
Company, Inc. is ignored for purposes of determining diversity. Moreover, the court will issue a

4

Plaintiffs Ruby Mae Simon Constance, Robert Joseph Constance, Sheila Constance Miller, Chad Constance,
Georgia Authement Constance, Roxanne Constance Stelly, Gene Allen Constance, Benji Constance Duhon, Jackson
Constance, John Theodore Constance, Rose Ann Constance Burch, and Mae Doris Constance Little are all citizens
of the State of Louisiana. Doc. 1, p. 2; Doc. 1, Att. 18, pp. 1–2. Plaintiff Debora Constance Dixon is a citizen of the
State of North Carolina. Doc. 1, p. 3; Doc. 1, Att. 18, p. 1. Plaintiff “The Georgia Authement Constance Revocable
Living Trust” is a Louisiana inter vivos trust in which Georgia Authement Constance is the settlor, trustee, and
beneficiary. She is a citizen of the State of Louisiana. Doc. 1, p. 2–3; Doc. 1, Att. 18, p. 1.
5

Defendant Tidewater Oil Company was succeeded by merger with TMR Company which is a Delaware corporation
with its principal place of business in Texas. Doc. 1, p. 3. Defendant Williams Exploration Company is a Delaware
corporation with its principal place of business in Oklahoma. Doc. 1, p. 3. Defendant BEEM Oil and Gas Company
is a Texas corporation with its principal place of business in Texas. Doc. 1, p. 3. Defendant Magnolia Petroleum
Company was succeeded by merger with ExxonMobil Corporation which is a New York corporation with its
principal place of business in Texas. Doc. 1, p. 3. Defendant Wainoco Oil & Gas Company is a Delaware
corporation with its principal place of business in Texas. Doc. 1, p. 3. Defendant Diasu Oil & Gas Company, Inc. is
a Texas corporation with its principal place of business in Texas. Doc. 1, p. 3. McCormick Operating Company
was a Delaware corporation with its principal place of business in the state of Texas. Doc. 1, Att. 4, p. 10. The
court notes, however, that the company was dissolved effective December 3, 1984. Doc. 1, Att. 5, p. 2.  
6

Compare “Austral Oil & Exploration, Inc..,” Louisiana Secretary of State, Search Corporations Database,
http://coraweb.sos.la.gov/commercialsearch/CommercialSearchDetails_Print.aspx?CharterID=389469_KHH62 (last
visited February 6, 2013), with Doc. 1, Atts. 8–13.  

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concurrent Report and Recommendation that defendant Austral Oil Exploration Company, Inc.
be dismissed from the case.
Conclusion
This court has jurisdiction over the case in accordance with 28 U.S.C. § 1332(a)(1).
Moreover, the court concludes that the alleged deficiencies in the Notice of Removal were
procedural defects to the removal process, but that these deficiencies were curable by
amendment.

Thus, Plaintiffs’ Motion to Remand is DENIED, and Defendants’ Motion to

Amend is GRANTED.
THUS DONE this 6th day of February, 2013.

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