Heck Yea! Quarter Horses, LLC v. Renfrow Supply, LLC et al
Filing
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ORDER denying 6 Motion to Remand to State Court. Signed by District Judge Henry T. Wingate on 5/2/2012 (SM)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
JACKSON DIVISION
HECK YEA! QUARTER HORSES, LLC
PLAINTIFF
VS.
Civil Action No. 3:10-CV-873-HTW-LRA
RENFROW SUPPLY, LLC; FI-FOIL
COMPANY, INC.; and ABC COMPANIES 1-10
DEFENDANTS
ORDER DENYING REMAND
This matter comes before the court on the plaintiff’s motion to remand [docket no.
6]. The plaintiff, Heck Yea! Quarter Horses, LLC, filed suit in the First Judicial District of
the Circuit Court of Hinds County, Mississippi, charging the defendants with negligence,
breach of warranty and breach of implied warranty for manufacturing, selling and
installing a defective product, namely installation in the plaintiff’s buildings on plaintiff’s
property.
Defendant Fi-Foil Company, Inc. filed a notice of removal, later joined by
defendant Renfrow Supply, LLC, asserting that the parties are completely diverse under
Title 28 U.S.C. § 13321 in that plaintiff Heck Yea! Quarter Horses, LLC, is a Louisiana
limited liability company; defendant Renfrow Supply, LLC, is a Virginia limited liability
1
Title 28 U.S.C. § 1332 states in pertinent part, “(a) The district courts shall have original
jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of
$75,000, exclusive of interest and costs, and is between -- (1) Citizens of different States. . .”
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company; and Fi-Foil Company, Inc., is a Florida corporation. Plaintiff Heck Yea!
Quarter Horses, LLC, on the other hand, argues that defendant Renfrow Supply, LLC,
has citizenship in Mississippi, and that the “forum defendant rule,” Title 28 U.S.C.
§ 1441(b),2 bars this court from exercising jurisdiction. For this reason, plaintiff asks this
court to remand this lawsuit to state court. This court, however, finds that removal was
proper for the reasons stated herein.
I. Facts and Background
The facts here are as provided in the second amended complaint. On March 14,
2005, Heck Yea! Quarter Horses, LLC (“Heck Yea”) purchased property, which included
a preexisting building, in Terry, Mississippi, containing insulation manufactured by FiFoil Company, Inc. (“Fi-Foil”). This insulation had been installed between August 18,
2004, and November 4, 2004. Second Amended Complaint at ¶6. Between April 2006
and September 2006, the plaintiff built a new structure on the property and purchased
additional Fi-Foil insulation from Renfrow Supply, LLC (“Renfrow”), a distributor. Id. at
¶7. Plaintiff claims that the insulation materials produced by Fi-Foil and sold by Renfrow
deteriorated in 2008 and 2009, ultimately requiring replacement. Id. at ¶8.
Heck Yea filed its original complaint on August 13, 2010, in the First Judicial
District of Hinds County, Mississippi. On October 11, 2010, Heck Yea filed its first
amended complaint, and on November 15, 2010, Heck Yea filed its second amended
complaint. Therein, Heck Yea alleges that Fi-Foil negligently manufactured the
insulation such that it did not properly function as insulation when it was sold. Id. at ¶10.
2
Title 28 U.S.C. § 1441(b) states in pertinent part, “[a]ny other such action shall be removable
only if none of the parties in interest properly joined and served as defendants is a citizen of the
State in which such action is brought.”
2
Heck Yea charges Renfrow and the unnamed defendants with negligently selling to the
plaintiff and the previous owner of the property improper or defective insulation. Id. at ¶
11. Heck Yea also charges defendants with breach of express and implied warranties.
Id. at ¶¶13-16. Heck Yea says the defendants gave Heck Yea an express and implied
warranty that the insulation would be fit for its intended use and “would last for more
than two to four years,” but the insulation did not function in the manner or for the length
guaranteed. Id. at ¶¶ 14, 20. Heck Yea requests actual, compensatory, consequential
and incidental damages in an amount in excess of the jurisdictional threshold,
$200,000.00.3
Heck Yea served Fi-Foil on November 23, 2010, and Renfrow on November 29,
2010. Fi-Foil filed a notice of removal, pursuant to Title 28 U.S.C. §§ 1332,4 14415 and
1446,6 on December 23, 2010 [docket no. 1]. Renfrow joined in the notice of removal
on December 27, 2010 [docket no. 2]. Heck Yea filed its motion to remand pursuant to
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The circuit courts of Mississippi have jurisdiction in “all actions when the principal of the
amount in controversy exceeds two hundred dollars, and of all other actions and causes,
matters and things arising under the constitution and laws of this state which are not exclusively
cognizable in some other court, and such appellate jurisdiction as prescribed by law.” Miss.
Code Ann. § 9-7-81.
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See footnote 1.
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Title 28 U.S.C. § 1441(a) provides that, “[e]xcept as otherwise expressly provided by Act of
Congress, any civil action brought in a State court of which the district courts of the United
States have original jurisdiction, may be removed by the defendant or the defendants, to the
district court of the United States for the district and division embracing the place where such
action is pending.”
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Title 28 U.S.C. § 1446(a) states in pertinent part that, “[a] defendant or defendants desiring to
remove any civil action from a State court shall file in the district court of the United States for
the district and division within which such action is pending a notice of removal. . .”
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Title 28 U.S.C. § 14477 on January 10, 2011 [docket no. 6]. Renfrow responded and
submitted an affidavit attesting that its citizenship was not in Mississippi [docket no.
13].8 This court granted Renfrow’s request to file a surreply [docket no. 17] in
association with Heck Yea’s motion to remand with an additional affidavit claiming it is
not a citizen of Mississippi.
The dispute over Renfrow’s citizenship continued. This court held a hearing in
this matter on December 7, 2011, in which this court stated that it would allow the
parties to conduct a deposition for the purpose of establishing Renfrow’s citizenship.
The parties shortly thereafter, on December 16, 2011, took the deposition of Peter A.
Metters, Esquire, employed with Masco Corporation as associate corporate counsel
from January 1, 1999, to November 2008, and associated with Masco Corporation as
an independent contractor from April 2009 through at least the date of the deposition.
Metters Deposition at pp.6-7. Metters' responsibilities upon returning to Masco
Corporation in 2009 included managing litigation against Renfrow and Service Partners.
Id. at pp.8-9. Masco Corporation owns Masco Services Group Corporation (“Masco
Services”). Id. at p.22. Masco Services owns Service Partners. Id. at p.9. Service
Partners owns Renfrow. Id. at p.8.
II. Jurisprudence
A case may only be removed from a state court to a federal district court if the
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Title 28 U.S.C. § 1447(c) provides in pertinent part that, “[a] motion to remand the case on the
basis of any defect other than lack of subject matter jurisdiction must be made within 30 days
after the filing of the notice of removal under section 1446(a) [28 USCS § 1446(a)]. If at any time
before final judgment it appears that the district court lacks subject matter jurisdiction, the case
shall be remanded.”
8
Fi-Foil joined Renfrow’s response to Heck Yea’s motion to remand [docket no. 15].
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district court would have had original jurisdiction. § 1441(a). District courts have
original jurisdiction of matters in which the parties are diverse and the amount in
controversy is greater than $75,000, exclusive of costs and interest. § 1332(a).
Complete diversity "requires that all persons on one side of the controversy be citizens
of different states than all persons on the other side.” Harvey v. Grey Wolf Drilling Co.,
542 F.3d 1077, 1079 (5th Cir. 2008) (citation omitted). No party disputes that the
amount in controversy is met in the case sub judice. The parties dispute whether
complete diversity exists. The entire conflict now centers around whether Renfrow has
provided sufficient and competent evidence to prove diversity jurisdiction under § 1332
exists.
As a court of limited jurisdiction, this court must ascertain subject matter
jurisdiction under the presumption that a lawsuit lies outside its jurisdiction. Howery v.
Allstate Ins. Co., 243 F.3d 912 (5th Cir. 2001). When jurisdiction rests on diversity of
the parties, the party asserting federal court jurisdiction must “distinctly and
affirmatively” allege the parties’ citizenship. Getty Oil Corp. v. Ins. Co. of North
America, 841 F.2d 1254, 1259 (5th Cir. 1988) (emphasis in original) (citations omitted).
Renfrow is a limited liability company, and its citizenship is determined by the citizenship
of all of its members. Harvey, 542 F.3d at 1080.
Renfrow initially filed an affidavit from Sharon A. Werner, a corporate paralegal
with Masco Corporation. Her affidavit outlines the membership of Renfrow, stating:
3. Renfrow Supply, LLC is a Limited Liability Company formed in the
State of Virginia. It has one member, Service Partners, LLC.
4. Service Partners, LLC is a Limited Liability Company formed in the
State of Virginia. It has one member, Masco Services Group Corp.
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5. Masco Services Group Corp. (Masco Services) is a Delaware
Corporation, whose principal place of business is not located in the
State of Mississippi. Masco Services was previously known as Masco
Contractor Services, Inc. Masco Services is wholly owned by Masco
Corporation.
6. Masco Corporation is a Delaware Corporation whose principal place of
business is not located in the State of Mississippi.
7. The high level officers of Masco Services direct, control and coordinate
the corporation’s activities from a State other than Mississippi.
Werner Affidavit [docket no. 13-1].
In response to Heck Yea’s assertions of insufficiency, Renfrow has filed a second
affidavit of Werner which states:
3. Renfrow Supply, LLC is a Limited Liability Company formed in the
State of Virginia. It has one member, Service Partners, LLC.
4. Service Partners, LLC is a Limited Liability Company formed in the
State of Virginia. It has one member, Masco Services Group Corp.
5. Masco Services Group Corp. (Masco Services) is a Delaware
Corporation.
6. Masco Services’ high level officers direct, control, and coordinate the
corporation’s activities from within the State of Florida.
7. Masco Services’ corporate headquarters is located in the State of
Florida.
8. Masco Services’ principal place of business is located in the State of
Florida.
Second Werner Affidavit [docket no. 17-2].
Heck Yea argues that the affidavit simply stating that the principal place of
business of Masco Services is in Florida is a conclusory and insufficient allegation as
opposed to the distinct and affirmative allegation required by Getty Oil. 841 F.2d at
1259. This court agrees.
6
“In cases involving corporations, allegations of citizenship must set forth the state
of incorporation as well as the principal place of business of each corporation.” Getty
Oil, 841 F.2d at 1259. Merely alleging that a corporation is a citizen of one place and
not a citizen of another is insufficient for jurisdictional purposes. Id. at 1259. The issue
of incorporation is a fact which can be determined conclusively by reviewing the
corporation’s registration with the secretary of state. Determining a corporation’s
principal place of business, however, is a more intensive inquiry. Hertz explicitly rejects
the notion that jurisdiction of a corporation is determined according to where general
business activities occur. Id. at 1193. Hertz requires that the party asserting jurisdiction
establish the location of a corporation’s “nerve center,” the place “where a corporation's
officers direct, control, and coordinate the corporation's activities.” Hertz Corp. v.
Friend, ____ U.S. _____, 130 S. Ct. 1181, 1192, 175 L. Ed. 2d 1029 (2010). The nerve
center is ordinarily considered the corporation’s headquarters. Id. at 1193. When
challenged on this issue, as in this case, the parties asserting jurisdiction must support
their allegations by competent proof. Id. at 1994-95. A mere statement of citizenship or
listing of offices is insufficient to establish a corporation’s nerve center. Id. at 1995.
By providing an affidavit stating that the corporation’s “high level officers direct,
control, and coordinate the corporation’s activities from within the State of Florida” and
its “principal place of business is located in the State of Florida,” the defendant has
applied the nerve center test and offered its conclusions to the court. This court prefers
to make its own determination. Accordingly, this court allowed the parties to gather
more information, and the parties did so, submitting to the court the testimony of
Metters, counsel of Masco Corporation.
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Renfrow, as a limited liability company, adopts the citizenship of its members.
Metters testified, consistent with Werner’s affidavits, that Renfrow has one member,
Service Partners. Metters Deposition at p.9. The citizenship of Service Partners, also a
limited liability company, is determined by its members. Werner’s affidavits state
Service Partners has one member, Masco Services. Metters’ testimony does not
identify the members of Service Partners but does state that Service Partners has a
relationship with Masco Services. Metters Deposition at p.9. Metters’ testimony does
not refute Werner’s affidavit concerning the membership of Service Partners. This
court, then, concludes that Service Partners has one member, Masco Services.
Masco Services is a corporation. In order to establish the citizenship of Masco
Services, Renfrow must establish Masco Services’ state of incorporation and principal
place of business. Metters testified, consistent with Werner’s affidavits, that Masco
Services’ state of incorporation is Delaware. Metters Deposition at p.12.
As to Masco Services’ principal place of business, Metters and Werner differ.
Metters testified that Taylor, Michigan, is the location of Masco Services’ only office as
well as the location from which the three officers - the president and two vice-presidents
– that direct, control and coordinate Masco Services perform their duties. Id. at pp.1214. Metters said Masco Services’ principal place of business had been in Taylor,
Michigan, at least since December 2010. Id. at p.12. Metters said Masco Services
previously had its primary office in Daytona Beach, Florida, from 2000 until the point at
which, or some time after, the office moved to Taylor, Michigan. Id. at pp.12-13. At the
time of Metters’ deposition testimony, Masco Services had no office in Daytona Beach,
Florida. Daytona Beach, Florida, and Taylor, Michigan, are the only two cities where
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Masco had an office from 2000 through 2011. Id. at p.13. Metters says while it is
possible for a time that Masco had offices in both cities, in February 2011, at the time
Werner made the declarations in her affidavit, the officers executing direction, control
and coordination of Masco Services were doing so exclusively in Michigan and not in
Florida as Werner’s affidavit states. Metters Deposition at pp.23-24. This case consists
of alleged wrongful activity committed around 2004 to 2006. It is unclear when Masco
Services closed its office and operations in Florida and began to operate solely in
Michigan. It is clear, however, that at no pertinent time was Masco Services’ principal
place of business located in Mississippi.
Masco Services is incorporated in Delaware and at all pertinent times had its
principal place of business in either Florida or Michigan. Masco Services was not,
during the time in question, a citizen of Mississippi. Masco Services’ citizenship, as the
only member of Service Partners, constitutes Service Partners’ citizenship, and Service
Partners’ citizenship determines Renfrow’s citizenship. This court is persuaded that, for
jurisdictional purposes, Renfrow is not a citizen of Mississippi; thus, diversity jurisdiction
exists.
IV. Conclusion
By establishing the citizenship of the entities in its chain of membership, Renfrow
has shown that it is not a Mississippi citizen. This court finds, then, that the parties sub
judice are completely diverse under § 1332(a). Having concluded that diversity
jurisdiction exists, this court denies Heck Yea’s motion to remand [docket no. 6]. The
parties are directed to contact the Magistrate Judge within the next ten days for entry of
a scheduling order.
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SO ORDERED AND ADJUDGED, this the 2nd day of May, 2012.
s/ HENRY T. WINGATE
UNITED STATES DISTRICT COURT
Civil Action No. 3:01-CV-873-HTW-LRA
Order Denying Remand
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