Cline et al v. Blackmon Mooring of Oklahoma City Inc et al

Filing 34

ORDER granting 18 Motion to Remand; The case is remanded to the District Court of Oklahoma County, Oklahoma. Defendant Blackmon's motion to Compel arbitration document 22 remains for adjudication in that court. See order for specifics. Signed by Honorable Joe Heaton on 1/27/12. (pw )

IN THE UNITED STATES DISTRICT COURT FOR

THE WESTERN DISTRICT OF OKLAHOMA

JOHN CLINE, ET AL.,
Plaintiffs,
vs.
BLACKMON MOORING OF
OKLAHOMA CITY, INC., ET AL.,
Defendants.

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NO. CIV-II-1136-HE

ORDER
Plaintiffs originally filed this action in state court and the defendants removed it to this
court. Pending before the court is plaintiffs' motion to remand [Doc. # 18] and defendant
Blackmon Mooring of Oklahoma City, Inc.'s ("Blackmon") motion to compel arbitration
[Doc. #22]. The court concludes it does not have subject matter jurisdiction over the action
because the plaintiffs and defendants are not completely diverse. The case must therefore
be remanded, leaving the motion to compel arbitration for resolution by the state court.

It is undisputed that plaintiffs and defendant Blackmon are citizens of Oklahoma.
Thus, Blackmon's presence in the suit would ordinarily bar defendants from removing the
action to federal court. See 28 U.S.c. § 1441(b)(2) (prohibiting removal when there is a
forum-state defendant); McPhail v. Deere & Co., 529 F.3d 947,951 (lOth Cir. 2008) (noting
the complete diversity requirement).

Nevertheless, Allstate Indemnity Company

("Allstate")-an Illinois domiciliary-asks the court to sever plaintiffs' claims against

Blackmon and remand them to state court while retaining jurisdiction over the claims against
it. Allstate contends the court has discretion to do this under Fed. R. Civ. P. 21 or,
alternatively, the "procedural misjoinder" doctrine.
Fed. R. Civ. P. 21 vests the court with broad discretion to "sever any claim against any
party" in the interest of justice. Allstate argues the court should exercise this discretion
because ofthe arbitration agreement between plaintiffs and Blackmon. However, neither of
the cases cited by Allstate support the proposition that the existence ofan alleged agreement
to arbitrate, applicable to one of mUltiple defendants, is a basis for ignoring diversity which
would otherwise exist or for creating that diversity by severing claims. The court declines
to so apply Rule 21 on the present showing.
Alternatively, Allstate urges the court to adopt the doctrine ofprocedural misjoinder,
also referred to as fraudulent misjoinder, and dismiss plaintiffs' claims against defendant
Blackmon on that basis. I Generally speaking, procedural misjoinder occurs when a state
court plaintiffasserts claims against a diverse defendant and joins an unrelated claim against
a non-diverse or forum-state defendant, thus precluding removal. See generally Lafailier v.
State Farm Fire & Cas. Co., 391 Fed. Appx. 732, 739 (lOth Cir. 2010) (unpublished order

I This

concept is different from the more familiar "fraudulent joinder, " which is
ordinarily understood to refer to situations where a plaintiffasserts a claim against a defendant
when no reasonable basisfor the claim exists. See Doddv. Fawcett Publications. Inc .. 329 F2d
82, 85 (10th Cir. 1964). In such circumstances, the fraudulently joined party is ignored in
determining diversity jurisdiction.

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andjudgment).2 The Eleventh Circuit has recognized this, at least where the misjoinder is
"egregious," as a type of fraudulent joinder. It affirmed the district court's order severing
the claims against the non-diverse defendants from the claims against the diverse defendants
and remanding the former while exercising jurisdiction over the latter. See Tapscott v. MS
Dealer Servo Corp., 77 F.3d 1353, 1360 (lIth Cir. 1996) (abrogated on other grounds by
Cohen v. Office Depot. Inc., 204 F.3d 1069, 1072 (lIth Cir. 2000». The Tenth Circuit, per
Lafailier, supra, has discussed but not adopted the doctrine. The ultimate resolution of
questions as to its validity and application will necessarily require determination ofa variety
of difficult issues of statutory construction, policy concerns, and otherwise. 3 The court
concludes it need not undertake that task here, however, as the doctrine would not save
jurisdiction in this case even if it applied.
Parties may be joined as defendants if the claims against them arise out ofthe same
transaction or occurrence and share a common question oflaw or fact. See Fed. R. Civ. P.
20(a)(2); 12 Okla. Stat. § 2020(A)(2).4 Plaintiffs' claims in this lawsuit arise out ofa fire that
2The same principle applies when diverse plaintiffs join unrelated claims against a
defendant who is domiciled in the same state as one ofthe plaintiffs. In either situation,
complete diversity is destroyed by the joinder ofunrelated claims.
generally Laura J Hines & Steven S. Gensler, Driving Misjoinder: The Improper
Party Problem in Removal Jurisdiction, 57 Ala. L. Rev. 779 (2006). The fact that Congress has
specifically addressed these issues over the years, sometimes providing that a "separable
controversy" may exist in the removal context and at other times limiting or eliminating the
concept, see id. at 785-88, would seem to counsel caution infashioningjudge-made doctrines in
this area.
3See

4The court concludes the outcome would be the same under either the Federal Rules of
Civil Procedure or the Oklahoma Pleading Code. It is therefore unnecessary to determine which

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allegedly occurred on October 4, 2009. Petition [Doc. # 1-1]. According to the petition, the
plaintiffs' house was damaged 'in a fire while they were out of town. After learning ofthis,
plaintiffs contacted their insurer, Allstate, and reported the fire.

Allstate allegedly

recommended that plaintiffs hire Blackmon to retrieve some of plaintiffs , personal property
from the house and store or restore it. Id.

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12. Thereafter, plaintiffs allege Blackmon's

employees either lost or stole personal property they retrieved. See generally id.

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32-35.

Additionally, the petition alleges that Allstate was not diligent in investigating the claim, that
it unreasonably delayed payment of the claim, and that it was negligent in recommending
Blackmon to the plaintiffs. See generally id.

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17-22.

At least some ofplaintiffs' claims against Allstate and Blackmon arise out ofthe same
transaction. In order to hold Allstate liable for recommending Blackmon, plaintiffs will have
to prove that it suffered injury- as a result of the recommendation. This will necessarily
involve proof of plaintiffs' claims against Blackmon. Other common factual disputes, such
as whether particular property even existed, may be present as welL s
As plaintiffs claims do not appear to have been improperly joined, Blackmon is a
proper party and diversity is lacking. Plaintiffs' motion to remand [Doc. # 18] is therefore

set ofrules might apply if the circumstances were otherwise.
SThe petition alleges that plaintiffs lost property for which neither Allstate, per the
insurance policy, nor Blackmon compensated them. As Allstate suggests in the removal petition
[Doc. #1] that the cause ofthe fire was arson (and, oddly, paid the claim anyway), a common
factual dispute may exist as to whether plaintiffs even owned or possessed the particular
property claimed to have been destroyed or stolen.

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GRANTED. The case is remanded to the District Court of Oklahoma County, Oklahoma.
Defendant Blackmon's motion to compel arbitration [Doc. #22] remains for adjudication in
that court.

IT IS SO ORDERED.
Dated this;?7&day of January, 2012.

ON
STATES DISTRICT JUDGE

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