City of St. Louis v. Bindan Corporation et al

Filing 46

MEMORANDUM OPINION re: 8 First MOTION to Remand Case to State Court to Circuit Court City of St. Louis filed by Plaintiff City of St. Louis. Signed by District Judge Stephen N. Limbaugh, Jr on 10/25/13. (CSG)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
SOUTHEASTERN DIVISION
CITY OF ST. LOUIS,
Plaintiff,
v.
BINDAN CORPORATION, et al.,
Defendants.

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Case No. 4:13CV1025 SNLJ

MEMORANDUM
Plaintiff filed an action in state court alleging claims of breach of contract and breach of
express and implied warranties under state law. The case was removed to this Court based on
diversity jurisdiction. This matter is before the Court on the plaintiff’s motion to remand (#8)
based on the presence of a Missouri defendant joined by a first amended complaint. The
removing defendants oppose remand alleging that the plaintiff fraudulently joined the Missouri
defendant for the sole purpose of defeating diversity jurisdiction. Responsive pleadings have
been filed, and this matter is now ripe for disposition.
I.

Background
Plaintiff originally filed this state law cause of action in the Circuit Court of the City of

St. Louis on April 15, 2013, against defendants Bindan Corporation, Detec Tile Corporation, and
Thomas Lally (collectively, “Illinois defendants”). The Illinois defendants were served on May
1, 2013. A notice of removal was filed by the Illinois defendants in this Court on May 28, 2013,
based on diversity jurisdiction under 28 U.S.C. § 1332. Prior to the filing of the notice of
removal and before the Illinois defendants’ responsive pleadings were due, on May 24, 2013,
plaintiff filed a first amended complaint in state court adding defendant R.V. Wagner, Inc.

(“Missouri defendant”).1 The Illinois defendants had not been served with the first amended
complaint at the time they filed their notice of removal. There is no dispute as to the citizenship
of the plaintiff or the defendants, or that the amount in controversy exceeds $75,000.
Plaintiff filed its motion to remand on June 14, 2013, requesting that this Court remand
this matter to the Circuit Court of the City of St. Louis pursuant to 28 U.S.C. § 1447(c) because
there is not diversity jurisdiction with the Missouri defendant in the case. The Illinois defendants
oppose remand arguing that the Missouri defendant was fraudulently joined and its presence
should be disregarded in determining jurisdiction. Additionally, in opposing remand, the Illinois
defendants contend that there may be separate federal question jurisdiction.
II.

Legal Standard
The Eight Circuit has admonished district courts to “be attentive to a satisfaction of

jurisdictional requirements in all cases.” Sanders v. Clemco Industries, 823 F.2d 214, 216 (8th
Cir. 1987). “Only state court actions that originally could have been filed in federal court may be
removed to federal court by the defendant.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392
(1987). The party invoking federal jurisdiction bears the burden of showing that all prerequisites
to jurisdiction are satisfied. Hatridge v. Aetna Cas. & Sur. Co., 415 F.2d 809, 814 (8th Cir.
1969). Any doubts about the propriety of removal are resolved in favor of state court jurisdiction
and remand. Wilkinson v. Shackelford, 478 F.3d 957, 963 (8th Cir. 2007); Transit Cas. Co. v.
Certain Underwriters at Lloyd’s of London, 119 F.3d 619, 625 (8th Cir. 1997).
28 U.S.C. §§ 1441 and 1446 govern removal of a state court action to federal court.
Pursuant to § 1446(b), “[t]he notice of removal of a civil action or proceeding shall be filed
within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the
1

Under Missouri Rule of Civil Procedure 55.33(a), “[a] pleading may be amended once as a
matter of course at any time before a responsive pleading is served . . . .”

initial pleading setting forth the claim for relief upon which such action or proceeding is based . .
. .” A notice of removal may be amended during the 30 day period during which the removal
may be filed. Whitehead v. The Nautilus Group, Inc., 428 F.Supp.2d 923, 928-29 (W.D. Ark.
2006); Lindsey v. Dillard’s, Inc., 306 F.3d 596, 600 (8th Cir. 2002). Although a notice may be
amended after the 30 day period, the notice can only be amended to add specific facts supporting
the originally stated grounds for removal or to clarify the grounds for removal as stated in the
original notice. Id. The amendment cannot add new grounds for removal once the 30 day period
has expired. Id.
Where a defendant is joined solely to deprive federal courts of jurisdiction, such joinder
is fraudulent and will not prevent removal. Anderson v. Home Ins. Co., 724 F.2d 82, 84 (8th Cir.
1983). The removing party alleging fraudulent joinder bears the burden of proving the alleged
fraud. Manning v. Wal-Mart Stores East, Inc., 304 F.Supp.2d 1146, 1148 (E.D. Mo. 2004). In
determining whether a resident has been fraudulently joined to defeat diversity, a Court may look
to materials in the record, including affidavits, to determine whether they establish facts
supporting claims against the defendant. Dumas v. Patel, 317 F.Supp.2d 1111, 1114 (W.D. Mo.
2004); Reeb v. Wal-Mart Stores, Inc., 902 F.Supp. 185, 187-88 (E.D. Mo. 1995). In this analysis,
we do not focus on the artfulness of the plaintiff's pleadings. Wilkinson, 478 F.3d at 964. “If
there is no reasonable basis in fact or law supporting the claim against the resident defendant, or
the reviewing court finds that the plaintiff has no real intention of prosecuting the action against
the resident defendant, joinder is fraudulent and removal is proper.” Reeb, 902 F.Supp. at 187.
The proper test to decide whether to remand to state court is the fraudulent joinder
standard set forth in Filla v. Norfolk Southern Ry. Co., 336 F.3d 806 (8th Cir. 2003) as opposed
to the Rule 12(b)(6) dismissal standard. Knudson v. Systems Painters, Inc., 634 F.3d 968, 979-80

(8th Cir. 2011) citing Junk v. Terminix Intern. Co., 628 F.3d 439, 445 (8th Cir. 2010) (noting that
the Rule 12(b)(6) standard is “more demanding” than the Filla standard). The district court is not
required to ascertain and apply state law, but instead the court determines “whether there is
arguably a reasonable basis for predicting that the state law might impose liability based upon
the facts involved.” Filla, 336 F.3d at 811. The court resolves all facts and ambiguities in the
controlling substantive law in the plaintiff’s favor, and may not proceed to the merits of the
matter in deciding whether it has jurisdiction. Id. “[I]n situations where the sufficiency of the
complaint against the non-diverse defendant is questionable, ‘the better practice is for the federal
court not to decide the doubtful question in connection with a motion to remand but simply to
remand the case and leave the question for the state courts to decide.’” Id. (quoting Iowa Public
Service Co. v. Medicine Bow Coal Co., 556 F.2d 400, 406 n.6 (8th Cir. 1977).
With these principles in mind, the Court turns to the discussion.
III.

Discussion
Plaintiff moved for remand on the grounds that there is not complete diversity between

plaintiff and defendants. The Illinois defendants argue that the plaintiff fraudulently joined the
Missouri defendant for the sole purpose of defeating diversity jurisdiction and its presence
should be disregarded in determining jurisdiction. The Missouri defendant, however, has not
joined in this argument and has not filed a motion to dismiss for failure to state a claim against it.
Instead, the Missouri defendant has also filed a motion to remand.
Plaintiff’s first amended complaint arises out of a contract with the Illinois defendants
and the Missouri defendant for the purchase and installation of warning tiles on platforms
operated by Amtrak at Gateway Transportation Center in the City of St. Louis. The platforms
serve as train boarding areas for train passengers. In order to meet federal guidelines and Amtrak

specifications, the warning tiles had to be colored federal yellow to provide a visual warning to
passengers, with raised dimples on the tiles to provide a tactile warning to visually impaired
passengers, alerting passengers of the edge of the platforms. The tiles were purchased from the
Illinois defendants and installed by the Missouri defendant. Plaintiff alleges that only 18 months
after the installation, the tiles had substantially faded from the required federal yellow and
appeared gray in color. Plaintiff’s first amended complaint includes claims for breach of contract
and breach of express and implied warranties.
Under Missouri law, the elements of breach of contract include: “(1) the making and
existence of a valid and enforceable contract between plaintiff and defendant; (2) the right of
plaintiff and the obligation of defendant thereunder; (3) a violation thereof by defendant; and (4)
damage resulting to plaintiff from the breach.” Mac-Fab Products, Inc. v. Bi-State Development
Agency of Missouri-Illinois Metropolitan Dist., 726 S.W.2d 815, 819 (Mo.App. E.D. 1987).
Even though plaintiff’s first amended complaint is a bare bones pleading, it pleads the elements
of a breach of contract claim. It alleges that the defendants failed to perform their obligations
under the contract simply by “failing to provide plaintiff with federal yellow tiles which retained
their yellow color. Consequently, defendants have failed to perform their obligations under the
contract.” In light of the low hurdle required for stating a colorable claim under a fraudulent
joinder inquiry, plaintiff has alleged a cause of action for breach of contract against all
defendants.
The Illinois defendants argue that the plaintiff’s breach of contract claim is not viable
because it is subsumed by its breach of warranty claims under the warranty provisions of the
UCC. However, the cited UCC provisions are the remedies available to a buyer with regard to
the sale of goods. Their argument assumes, though, that the breach of contract claim is based

solely on the purchase of the tiles as opposed to a breach on other grounds. As such, it goes
beyond the fraudulent joinder determination and is an issue for the state court after remand.
As to the plaintiff’s breach of warranty claims, the Illinois defendants contend that the
plaintiff does not allege that the Missouri defendant made any warranty concerning the tiles or
adopted any warranty made by the Illinois defendants. Additionally, they argue that as the
general contractor and the party installing the tiles, logic dictates that the Missouri defendant
“would not have warranted the color of such tiles against fading, regardless of any allegations to
the contrary.” (Doc. #20). In fact, however, the first amended complaint alleges the breach of
express and implied warranties claims against all defendants. In suggesting that this Court
disregard such allegations, the Illinois defendants ignore the law on the issue of fraudulent
joinder and improperly seek to have this Court review the merits of plaintiff’s claims. On the
face of plaintiff’s first amended complaint, there is a reasonable basis to find that it states a
breach of warranty claim against all defendants.
Finally, in their response to the motion to remand, the Illinois defendants contend that
there may be federal question jurisdiction as a separate basis for jurisdiction in this Court. They
acknowledge that federal question jurisdiction was not raised in the notice of removal.
Additionally, the Illinois defendants have never sought to amend their original notice of removal.
Instead, the issue was first raised in their opposition to the plaintiff’s motion to remand that was
filed after the expiration of the 30 day period during which a petition for removal may be filed.
As a result, the Illinois defendants are barred under § 1446(b) from asserting federal question as
a ground for removal. Whitehead v. The Nautilus Group, Inc., 428 F.Supp.2d 923, 928-29 (W.D.
Ark.2006); Blankenship v. Philadelphia Indem. Ins. Co., No. 4:12CV293SNLJ, 2012 WL
3765107, at *2 (E.D. Mo. Aug. 30, 2012).

IV.

All Other Pending Motions
There are a number of other pending motions in this case that can be summarily ruled on

in light of this Court’s decision to grant plaintiff’s motion to remand.
The Illinois defendants requested limited discovery on the issue of whether there is
federal question subject matter jurisdiction as an independent basis for removal. Because the
issue of federal question jurisdiction was not raised in the notice of removal and is barred under
the time limitations of § 1446(b), the motion for limited discovery (#21) is denied.
The motions to dismiss, including the motions to dismiss the claims against the Illinois
defendants (#5) and the motion to dismiss a cross-claim (#39), are not related to the motion to
remand and are deferred to the state court for ruling.
Counsel for defendant R.V. Wagner, Inc. filed a motion to withdraw. As new counsel has
entered into the case on behalf of defendant R.V. Wagner, Inc., the motion to withdraw (#38) is
granted.
Finally, because plaintiff’s motion to remand is granted and the case is being remanded to
state court, the Missouri defendant’s motion to dismiss or to remand (#41), which challenged this
Court’s jurisdiction due to lack of diversity between plaintiff and defendants, is moot.
V.

Conclusion
Because there is a reasonable basis to find that plaintiff’s first amended petition states a

cause of action against the Missouri defendant, the Missouri defendant has not been fraudulently
joined, this Court does not have subject matter jurisdiction over this cause of action, and remand
is required. Accordingly, plaintiff’s motion to remand is granted (#8).

Dated this 25th day of October, 2013.

STEPHEN N. LIMBAUGH, JR.
UNITED STATES DISTRICT JUDGE