NEWTON et al v. CORRY MOTOR SPORTS, INC. et al

Filing 13

MEMORANDUM ORDER: IT IS THEREFORE ORDERED THAT THE MOTION TO REMAND IS GRANTED AND THIS CASE SHALL BE REMANDED TO THE PHILADELPHIA COURT OF COMMON PLEAS. SIGNED BY HONORABLE GERALD A. MCHUGH ON 8/4/2016. 8/4/2016 ENTERED AND COPIES E-MAILED.(sg, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

DAYLE KEVIN NEWTON and
PAMELA NEWTON,
Plaintiffs,
v.
CORRY MOTOR SPORTS, INC.,
CORRY MOTOR SPORTS, INC. d/b/a/
LEISURE TIME POWERSPORTS,
LEISURE TIME POWERSPORTS, and
POLARIS INDUSTRIES, INC.,
Defendants.

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CIVIL ACTION
No. 16-2389

MEMORANDUM ORDER
This 4th day of August, 2016, upon review of Plaintiffs’ Motion to Remand and the
responses thereto, I find that none of the Defendants was fraudulently joined, with the result that
this Court does not have subject matter jurisdiction over Plaintiffs’ claims. It is therefore
ORDERED that the Motion is GRANTED and this case shall be REMANDED to the
Philadelphia Court of Common Pleas.
Plaintiffs’ Complaint alleges that they were injured in April 2014 when the brakes on
their all-terrain vehicle (ATV) failed. Compl. at ¶ 1. They filed suit in the Philadelphia Court of
Common Pleas against Defendant Polaris, claiming that it manufactured a defective ATV, and
against a set of three defendants—Corry Motor Sports, Inc., Corry Motor Sports, Inc. d/b/a
Leisure Time Powersports, and Leisure Time Powersports—collectively referred to as the “Corry
Defendants,” claiming that they negligently serviced the ATV. Compl. at ¶¶ 2–3.
Defendants removed this case on the basis of this Court’s diversity jurisdiction.
Although they admit that the Corry Defendants are domiciled in Pennsylvania and are therefore

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not diverse from Plaintiffs, Defendants argue that these Defendants were fraudulently joined and
should therefore be disregarded in assessing federal jurisdiction. Notice of Removal at ¶ 28.
Essentially, Defendants argue that the caption is inaccurate in that Corry Motor Sports is not
“doing business as” Leisure Time Powersports, and they have no responsibility for the entity that
serviced Plaintiffs’ vehicle. Notice of Removal at ¶¶ 30–31. Instead, they point to a corporation
called Leisure Time Powersports Southern Tier, Inc. which does business as “Leisure Time
Powersports” in Limestone, New York, and they hint that Plaintiffs perhaps should have named
that entity rather than the Corry Defendants.
“As a general proposition, plaintiffs have the option of naming those parties whom they
choose to sue, subject only to the rules of joinder of necessary parties.” Boyer v. Snap-on Tools
Corp., 913 F.2d 108, 110 (3d Cir. 1990). “While the plaintiffs' decision in this regard may have
repercussions for purposes of diversity jurisdiction, there is no reason for a court to interfere with
this inevitable consequence of a plaintiff's election unless the plaintiff had impermissibly
manufactured diversity or used an unacceptable device to defeat diversity.” Id. Therefore,
“[w]hen a non-diverse party has been joined as a defendant, then in the absence of a substantial
federal question the removing defendant may avoid remand only by demonstrating that the nondiverse party was fraudulently joined.” Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir.
1992). The removing party has a heavy burden of persuasion in this regard, since the law is to be
“strictly construed against removal and all doubts should be resolved in favor of remand.”
Boyer, 913 F.2d at 111(quotations and citations omitted).
“[J]oinder is fraudulent ‘where there is no reasonable basis in fact or colorable ground
supporting the claim against the joined defendant, or no real intention in good faith to prosecute
the action against the defendant or seek a joint judgment.’ ” Id. (citing Abels v. State Farm Fire

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& Cas. Co., 770 F.2d 26, 32 (3d Cir. 1985)). Although the Third Circuit allows some review
beyond the complaint in determining whether there is a “colorable” ground supporting the claim,
that inquiry is not as searching as the one conducted when reviewing a motion to dismiss or a
motion for summary judgment. Id. at 112; Batoff, 977 F.2d at 852. Instead, a “district court
must resolve all contested issues of substantive fact in favor of the plaintiff and must resolve any
uncertainties as to the current state of controlling substantive law in favor of the plaintiff,” and
“[i]f there is even a possibility that a state court would find that the complaint states a cause of
action against any one of the resident defendants, the federal court must find that joinder was
proper and remand the case to state court.” Boyer, 913 F.2d at 111(quotations and citations
omitted).
Defendants do not appear to question that a servicer of an ATV could be liable in tort for
injuries to a rider caused by that servicer’s negligence. To that degree, Plaintiffs have certainly
pleaded sufficient facts to state a colorable claim against the servicer. Defendants argue however
that the Corry Defendants did not, in fact, service the subject vehicle, nor can they be held
vicariously liable for the actions of the entity that did service that vehicle, such that their
inclusion has no reasonable basis.
Both Plaintiff and the Corry Defendants submit copies of a repair invoice reflecting that
the subject ATV was serviced by an entity called “Leisure Time Powersports” located in
Limestone, New York. Ex. A to Motion to Remand, Ex. B to Notice of Removal at 8–9. To
support their claim that they are not this entity, the Corry Defendants submit two affidavits. The
first is from Jay P. Davids, who identifies himself as the President of a corporation called Leisure
Time Powersports Southern Tier, Inc. (Southern Tier). Ex. B to Notice of Removal at ¶ 1. In it,
he asserts that Southern Tier does business as “Leisure Time Powersports” in Limestone, New

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York, and he admits that a vehicle fitting the description of the subject ATV was serviced by
Southern Tier in Limestone in December 2013. Ex B to Notice of Removal at ¶¶ 5, 26. The
second affidavit is also by Jay P. Davids, but in this one he identifies himself as the Vice
President of Corry Motor Sports, Inc. Ex. C to Notice of Removal at ¶ 1. He asserts that Corry
Motor Sports, Inc. does business in Corry, Pennsylvania under the fictitious name of Leisure
Time Honda-Suzuki, but it does not do business under the name “Leisure Time Powersports.”
Ex. C to Notice of Removal at ¶ ¶ 5, 21. Both affidavits claim that Southern Tier and Corry
Motor Sports, Inc. are separate and distinct legal entities. Ex. B to Notice of Removal at ¶ 24; C
to Notice of Removal at ¶ 24.
Plaintiffs counter with information showing that these entities have a closer relationship
than the affidavits would indicate. Plaintiffs submit a copy of a document entitled “Application
for Registration of Fictitious Name” submitted to the Pennsylvania Department of State, which
reflects that Corry Motor Sports, Inc. registered “Leisure Time Powersports” as a fictitious name
under which it does business. Ex. B to Motion to Remand. Plaintiff also submits evidence of a
webpage at www.leisuretimepowersports.com that lists two entities in the header: “Leisure Time
Honda-Suzuki” in Corry, Pennsylvania, and “Leisure Time Powersports” in Limsetone, New
York. Ex. H to Motion to Remand. Plaintiff also submit other evidence that an entity called
Leisure Time Powersports has presented itself on social media platforms as being located in
Pennsylvania. Ex. J, L, K.
There is clearly a factual dispute, and Plaintiffs had a reasonable basis for concluding that
the named Corry Defendants may be liable for the negligent actions of the employees that
performed work on Plaintiffs’ ATV in New York. Sorting out the factual question of the
relationship between the entities in Corry, Pennsylvania and Limestone, New York, requires

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litigation of the merits. Certain basic facts are in dispute, and the various legal theories that
might give rise to liability, such as joint venture or ostensible agency, require consideration of
complicated issues, and likely under the laws of two different states. I must resolve all
contested issues of substantive fact in favor of Plaintiffs, and my inquiry into state law may not
be so searching that it transforms into a decision on the merits of the claim. Batoff, 977 F.2d at
853 (“A claim which can be dismissed only after an intricate analysis of state law is not so
wholly insubstantial and frivolous that it may be disregarded for purposes of diversity
jurisdiction.”)
Because the inclusion of the Corry Defendants destroys the complete diversity between
Plaintiffs and Defendant Polaris, I am without jurisdiction over these claims and therefore I must
remand. 1
/s/ Gerald Austin McHugh
United States District Judge

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If the Corry Defendants can prove they have no legal responsibility for the work performed by the entity
that serviced Plaintiffs’ vehicle, then the claims against them will surely be dismissed. But ultimate success on the
merits is not the test. “It is possible that a party is not fraudulently joined, but that the claim against that party
ultimately is dismissed for failure to state a claim upon which relief may be granted.” Id. at 852.

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