Housel v. The Home Depot U.S.A., Inc. et al
Filing
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ORDER denying 8 motion for judgment on the pleadings; denying 10 motion to remand; denying 12 motion for extension of time as moot. Defendant CASCO is dismissed without prejudice. Signed on 9/9/2014 by District Judge M. Douglas Harpool. (Hance, Breanna)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
SOUTHWESTERN DIVISION
EDIE HOUSEL,
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Plaintiff,
vs.
THE HOME DEPOT U.S.A. INC. et al.,
Defendants.
Case No. 3:14-cv-05084-MDH
ORDER
Before the Court is Defendant CASCO’s Motion for Judgment on the Pleadings (Doc. 8)
and Plaintiff’s Motion for Remand (Doc. 10). The Court, after full and careful consideration of
the issues raised by the motions and analysis of the legal arguments and suggestions provided by
the parties, hereby DENIES Plaintiff’s motion for remand and DENIES Defendant CASCO’s
motion for judgment on the pleadings.
Plaintiff’s claims against Defendant CASCO are
DISMISSED WITHOUT PREJUDICE.
BACKGROUND
Plaintiff filed a negligence petition on May 23, 2014 in the Circuit Court of Jasper
County, Missouri. The facts giving rise to Plaintiff’s action surround the tornado that touched
down in Joplin, Missouri on May 22, 2011. On that date, Plaintiff’s husband and two children
were killed when they sought refuge inside a Home Depot store. The petition alleges that the
store’s structural defects caused or contributed to causing the decedents’ injuries and deaths.
Plaintiff seeks recovery from the architect and builder of the store, CASCO Diversified
Corporation (“CASCO”), and the owner/operator of the store, Home Depot U.S.A., Inc. / HD
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Development of Maryland, Inc. (“Home Depot”). 1
Plaintiff and CASCO are citizens of
Missouri. Home Depot is a citizen of Delaware and Georgia.
On June 28, 2014, Defendants removed the case to federal court on the basis of diversity
jurisdiction, alleging that Defendant CASCO was fraudulently joined. According to Defendants,
the petition states no viable claim against CASCO because tort actions arising from the
company’s purported wrongdoing are barred from litigation as a matter of law by Missouri’s
statute of repose; therefore, CASCO is entitled to judgment on the pleadings and Home Depot
properly invokes diversity jurisdiction. Plaintiff’s motion for remand counters that the statute of
repose is an affirmative defense that must be pleaded and proved in state court before Defendant
CASCO is dismissed and the case can be removed on the basis of diversity. Plaintiff further
asserts that CASCO was not fraudulently joined.
STANDARD
An action may be removed from state court to federal district court if the case falls within
the original jurisdiction of the district court. 28 U.S.C. § 1441(a). If the case is not within the
original jurisdiction of the district court, the court must remand the case to the state court from
which it was removed. 28 U.S.C. § 1447(c). A removing defendant “bears the burden of
establishing that the district court ha[s] original jurisdiction by a preponderance of the evidence.”
Knudson v. Sys. Painters, Inc., 634 F.3d 968, 975 (8th Cir. 2011). “All doubts about federal
jurisdiction should be resolved in favor of remand to state court.” Junk v. Terminix Int’l Co., 628
F.3d 439, 446 (8th Cir. 2010).
A defendant can remove a civil action from state court to federal court on the basis of
diversity of citizenship. 28 U.S.C. § 1441(b). While such removal requires complete diversity,
“a federal court will not allow removal to be defeated by the collusive or fraudulent joinder of a
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It is uncontested that the petition seeks damages in excess of $75,000.
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resident defendant.” Reeb v. Wal-Mart Stores, Inc., 902 F.Supp. 185, 187 (E.D. Mo. 1995). To
establish fraudulent joinder, the defendant must “prove that the plaintiff’s claim against the
diversity-destroying defendant has ‘no reasonable basis in fact and law.’” Knudson, 634 F.3d at
980 (quoting Filla v. Norfolk S. Ry Co., 336 F.3d 806, 810 (8th Cir. 2003)). The plaintiff’s
motive is immaterial; rather, courts focus on whether the petition states a legal and factual basis
to recover against the non-diverse defendant. See Gillette v. Koss Const. Co., 149 F.Supp. 353,
355 (W.D. Mo. 1957). Courts pierce the pleadings in order to determine the issue of fraudulent
joinder. Parnas v. General Motors Corp., 879 F.Supp. 91, 93 (E.D. Mo. 1995).
Unlike the Erie analysis for most diversity cases, in a fraudulent joinder scenario, “the
district court’s task is limited to determining 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. “If it is clear under governing state law that the complaint does not state a cause of
action against the non-diverse defendant, the joinder is fraudulent and federal jurisdiction of the
case should be retained.” Id. at 810 (quoting Iowa Public Service Co. v. Medicine Bow Coal Co.,
556 F.2d 400, 406 (8th Cir. 1977)). Alternatively, “[w]here 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. at 811.
A removal based on fraudulent joinder grants the district court only temporary
jurisdiction to determine whether the non-diverse defendant was fraudulently joined. Wivell v.
Wells Fargo Bank, N.A., 756 F.3d 609, 616 (8th Cir. 2014). The district court’s subject matter
jurisdiction does not arise until after a non-diverse defendant is dismissed. Id. Accordingly,
where fraudulent joinder exists, the Court should dismiss the claims against the non-diverse
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defendant without prejudice because the Court has no jurisdiction to reach the merits of such
claims. Id. at 617.
DECISION
Plaintiff’s petition asserts that Defendant CASCO was negligent in designing and
constructing the Home Depot store wherein her husband and children were killed. In Missouri,
design professionals, architects, engineers, and builders can be held liable in tort for defective or
unsafe conditions in their improvements to real property that cause injury. See Mo. Rev. Stat. §
516.097; Thompson v. Higginbothom, 187 S.W.3d 3 (Mo. App. W.D. 2006). Missouri law
places a ten year statute of repose 2 on such actions where the defendant’s “sole connection with
the improvement is performing or furnishing, in whole or in part, the design, planning or
construction.” Id. at § 516.097.1-2. The ten-year period to bring a cause of action typically
commences “on the date on which such improvement is completed.” Id. § 516.097.1. However,
where an occupancy permit is issued, the ten-year period starts to run on the date the permit is
issued. Id. at § 516.097.6 (“Notwithstanding subsection 1 of this section, if an occupancy permit
is issued, the ten-year period shall commence on the date the occupancy permit is issued.”).
Here, the statute of repose is applicable and bars Plaintiff’s cause of action against
Defendant CASCO. It is clear that Plaintiff’s cause of action against CASCO is based solely
upon the design and construction of the Home Depot store and, therefore, falls within the scope
of section 516.097. Even Plaintiff’s Brief acknowledges that “[t]aking all Plaintiff’s allegations
as true, Defendant CASCO Corporation will have liability as a design and engineering company
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The Missouri Supreme Court explained the difference between a statute of limitations and a statute of repose in
Blaske v. Smith & Entzeroth, Inc., 821 S.W.2d 822, 834 (Mo. 1991). “A statute of limitations allows the cause of
action to accrue and then cuts off the claim if suit is not filed within a certain period of time. A statute of repose
eliminates the cause of action altogether after a certain period of time following a specified event; in this instance,
the completion of construction. More importantly, the cause of action is eliminated before the plaintiffs’ injury and
thus before plaintiffs’ cause of action accrues.” Id.
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who designed and engineered a building that caused or contributed to cause harm to Plaintiff’s
decedents because of negligent design.” (emphasis added). Because an occupancy permit was
issued for the relevant Home Depot store, subsection (6) of section 516.097 governs these facts.
Defendant supplied a copy of the permit, which was issued on November 13, 2000. Because
Plaintiff filed suit on May 23, 2014, more than ten years after the date the occupancy permit was
issued, Plaintiff’s cause of action against CASCO is barred as untimely under Missouri’s statute
of repose.
Plaintiff does not dispute that her cause of action against CASCO falls within the ambit
of section 516.097, but instead argues that: (1) discovery is necessary to determine when the
improvement was “completed” such that the time limit under subsection (1) began accruing, and
(2) the statute of repose may be inapplicable based on an exception listed in the statute such that
is a finding of fraudulent joinder is precluded. The Court can easily dispose of Plaintiff’s first
argument. Because an occupancy permit was issued in this case, subsection (1) of section
516.097, which states that commencement of the ten-year repose period begins on the date
improvement was completed, does not apply. Instead, subsection (6) applies “notwithstanding”
the any commencement under subsection (1).
Therefore, the ten-year period at issue
conclusively commenced on the date the occupancy permit was issued. 3
Plaintiff’s second argument is also unavailing. The statute of repose states that it does
not apply to actions where: (1) the action is barred by another provision of law, (2) the defendant
conceals any defect or deficiency in the design, planning or construction of an improvement that
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The Supreme Court of Missouri upheld the constitutionality of the statute of repose and explained the reasoning
behind it in Blaske v. Smith & Entzeroth, Inc., 821 S.W.2d 822, 830 (Mo. 1991). As compared to materialmen,
those who are architects, engineers, and builders have less of an opportunity to perfect their product because each
product involves different projects and different real estate. Id. As compared to owners and occupiers, who
continue in control of the improvement during its useful life, those who are architects, engineers, and builders cease
to be connected with such improvements. Id. Further, owners and occupiers maintain the property, search out and
correct problems, and pass occupancies policies that become more important with time; conversely, construction
decisions and design decrease in importance over time. Id.
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results in the defective or unsafe condition at issue, or (3) the plaintiff is an owner/possessor of
real estate or the improvements on real estate. Id. at § 516.097.4. Plaintiff asserts it is possible
that, here, Defendant CASCO concealed a defect or deficiency in design, planning or
construction that resulted in the unsafe condition. If this were the case, the time limitation
contained in the statute of repose would not govern Plaintiff’s claims and the complaint would
provide “a reasonable basis in law and fact,” thereby precluding fraudulent joinder.
Plaintiff, however, failed to present a reasonable factual basis to conclude that active
concealment occurred. See Block v. Toyota Motor Corp., 665 F.3d 944, 948 (8th Cir. 2011)
(finding that a potential exception to a statute providing for the mandatory dismissal of products
liability claims against sellers did not preclude finding for fraudulent joinder where plaintiff
failed to show any reasonable basis for finding that exception applied). Furthermore, Defendant
Home Depot judicially admits within its Brief that CASCO did not conceal anything regarding
the design of the store. It is worth noting that all of Plaintiff’s claims against CASCO are
duplicative of those alleged against Home Depot; therefore, Plaintiff will not be prevented from
recovering for the purported violations if proven, especially where Home Depot admitted that the
architect of the store did not conceal any structural defects.
Because “it is clear under governing state law that the complaint does not state a cause of
action against the non-diverse defendant,” the Court concludes that CASCO was fraudulently
joined. Other courts have similarly held that time-barred claims support a finding of fraudulent
joinder.
See In re Briscoe, 448 F.3d 201, 225 (3d Cir. 2006) (“The presence of a clear
limitations bar is one way to identify a fraudulent joinder”); Smallwood v. Illinois Cent. R. Co.,
342 F.3d 400, 407 reh’g en banc granted, opinion vacated, 355 F.3d 357, n.49 (5th Cir. 2003)
(dicta unaddressed at rehearing noting that a statute of limitations argument would successfully
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support an argument for fraudulent joinder); LeBlang Motors, Ltd. v. Subaru of Am., Inc., 148
F.3d 680, 690 (7th Cir. 1998) (“If the time to bring the cause of action had expired, then the
district court was correct in dismissing [non-diverse defendants] as fraudulently joined.”);
Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1319 (9th Cir. 1998) (“We recognize that if [nondiverse defendants] had not asserted the statute of limitations, [plaintiff’s] cause of action against
them might well be viable. . . . Nevertheless . . . his failure to state that cause of action against
[non-diverse defendants] demonstrates beyond peradventure that they were sham defendants for
purposes of removal.”).
Furthermore, a district court in the Eighth Circuit recently addressed the issue of time
barred claims and fraudulent joinder. In Wages v. Johnson Reg’l Med. Ctr., the plaintiff brought
causes of action against defendants American Medical Systems (“AMS”) and Johnson Regional
Medical Center (“JRMC”) in Arkansas state court alleging negligence, marketing defects, and
products liability related to a medical device implanted into her body. 916 F. Supp. 2d 900, 902
(W.D. Ark. 2013). Defendant AMS removed the case to federal court on the grounds that
JRMC, a non-diverse defendant, was fraudulently joined to defeat diversity jurisdiction. Id.
AMS argued that all claims against JRMC were governed by the Arkansas Medical Malpractice
Act, which had a two-year statute of limitations that had expired prior to plaintiff filing suit. Id.
The district court agreed with JRMC’s analysis and concluded:
Considering that the wrongful act complained of by Plaintiffs took place on
December 27, 2005, and a lawsuit was not filed until September 11, 2012,
Plaintiffs’ claims against JRMC have no reasonable basis for success due to the
running of the statute of limitations period. Therefore, the Court finds that JRMC
was fraudulently joined in this action and is hereby dismissed with prejudice. Id.
at 903-04.
In sum, the Court finds that Defendant CASCO was fraudulently joined because
Plaintiff’s claims against that defendant are barred by the applicable statute of repose. Therefore,
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under clear Eighth Circuit precedent, it is appropriate for the Court to retain jurisdiction over
Plaintiff’s claims against Home Depot and dismiss those claims asserted against CASCO without
prejudice. Accordingly, Defendant CASCO’s motion for judgment on the pleadings is denied
because the Court is without subject matter jurisdiction to consider the motion.
CONCLUSION
For the above stated reasons, the Court DENIES Plaintiff’s Motion for Remand (Doc.
10) and DENIES Defendant CASCO’s Motion for Judgment on the Pleadings (Doc. 8). Because
Defendant’s motion is denied, Plaintiff’s Motion for Extension of Time to Respond to Defendant
CASCO’s Motion for Judgment on the Pleadings (Doc. 12) is also DENIED as moot. Defendant
CASCO is DISMISSED WITHOUT PREJUDICE and the Court retains the remainder of the
case.
IT IS SO ORDERED.
DATED:
September 9, 2014
/s/ Douglas Harpool
DOUGLAS HARPOOL
UNITED STATES DISTRICT JUDGE
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