Arrow Drilling Company, Inc. v. Hankook Tire Manufacturing Company, Ltd. et al

Filing 17

ORDER ON MOTION TO REMAND granting 6 Motion to Remand. The Court ORDERS this action REMANDED to the 229th District Court of Duval County(Signed by Judge Nelva Gonzales Ramos) Parties notified.(amireles, 2)

United States District Court
Southern District of Texas

ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
ARROW DRILLING COMPANY, INC.,
Plaintiff,
VS.
HANKOOK TIRE MANUFACTURING
COMPANY, LTD., et al,
Defendants.

September 19, 2018
David J. Bradley, Clerk

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§ CIVIL ACTION NO. 2:18-CV-141
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ORDER ON MOTION TO REMAND
Before the Court is Intervenor Jo Dan Carbajal’s motion to remand. D.E. 6. For
the reasons that follow, his motion to remand is GRANTED and this action is
REMANDED to the 229th District Court of Duval County.
BACKGROUND
On May 31, 2017, the right front tire on a tractor-trailer owned by Plaintiff Arrow
Drilling Company, Inc. (Arrow) de-treaded, causing the truck to roll over. On February
16, 2018, Arrow commenced an action in state court against the tire’s manufacturers,
Hankook Tire Manufacturing Company, Ltd. and Hankook Tire America Corp., alleging
fraud, breach of warranty, and products liability claims. Arrow’s petition represented
that its damages, including actual and consequential damages, lost time and wages, costs
and reasonable attorney’s fees, were less than $75,000. D.E. 1-5.

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For jurisdictional purposes, Hankook Tire America Corp. (Hankook1) is a citizen
of New Jersey and Tennessee, and Arrow is a citizen of Texas. The $75,000 amount in
controversy requirement, then, was the only obstacle to removal to federal court under 28
U.S.C. § 1441 and 28 U.S.C. § 1332.
On April 16, 2018, the driver of the truck, Intervenor Jo Dan Carbajal, filed a plea
in intervention in the state court action.

Carbajal’s plea asserted similar claims as

Arrow’s petition, along with a claim arising under the Texas Deceptive Trade Practices
Act. Carbajal, who is a citizen of Texas, alleged damages in excess of $1,000,000.
Within 30 days, Hankook removed the case to this Court. Hankook presents two
theories as to why federal jurisdiction exists. First, Hankook asserts that the Court may
exercise its diversity jurisdiction over Carbajal’s claims, as there is complete diversity
and the amount in controversy requirement from § 1332 is satisfied. If so, the argument
continues, the Court’s supplemental jurisdiction as conferred by 28 U.S.C. § 1367 would
extend to allow the Court to hear Arrow’s claims, as they share a common nucleus of
operative fact with Carbajal’s claims.
Hankook’s second theory of federal jurisdiction contends that Arrow’s claims
independently satisfy the amount in controversy requirement, notwithstanding Arrow’s
averment in its state petition. Specifically, Hankook argues that Texas law permits
recovery beyond what a plaintiff claims in its petition, and thus there is no need to take at
face value Arrow’s assertion that its damages are under $75,000.
1

Hankook Tire Manufacturing Company, Ltd. is allegedly domiciled in the Republic of Korea and has yet to appear
in this action. It was therefore unnecessary to obtain its consent to removal. See 28 U.S.C. § 1446(b)(2)(A)
(consent required only from “defendants who have been properly joined and served”).

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STANDARD OF REVIEW
“Federal courts are courts of limited jurisdiction. They possess only that power
authorized by Constitution and statute, which is not to be expanded by judicial decree.”
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted).
Courts must therefore “scrupulously confine their own jurisdiction to the precise limits
which (a federal) statute has defined.” Victory Carriers, Inc. v. Law, 404 U.S. 202, 212
(1971) (citations and internal quotation marks omitted).
On a motion to remand, “[t]he removing party bears the burden of showing that
federal jurisdiction exists and that removal was proper.” Manguno v. Prudential Prop. &
Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). “Any ambiguities are construed against
removal because the removal statute should be strictly construed in favor of remand.” Id.
This strict construction rule arises because of federalism concerns and “‘due regard for
the rightful independence of state governments.’” Shamrock Oil & Gas Corp. v. Sheets,
313 U.S. 100, 109 (1941) (quoting Healy v. Ratta, 292 U.S. 263, 270 (1934)).
DISCUSSION
A. Removal Based on Carbajal’s Intervention
Hankook’s first theory of removal posits that the case was not removable as filed,
but became removable after Carbajal intervened. As a preliminary matter, the Court
notes that Carbajal, who solely asserts claims against Hankook, does not contest that he is
properly aligned as a plaintiff or that complete diversity exists because two Texasresident plaintiffs have asserted claims against a non-Texas resident defendant. See
Griffin v. Lee, 621 F.3d 380, 388 (5th Cir. 2010) (“In ascertaining the proper alignment of
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parties for jurisdictional purposes, courts have a duty to look beyond the pleadings, and
arrange the parties according to their sides in the dispute.”) (citation and quotation marks
omitted).
Carbajal’s argument in favor of remand bypasses the text of the removal statutes
and focuses instead on the voluntary-involuntary rule. The voluntary-involuntary rule is
a “judicially-created . . . rule whereby ‘an action nonremovable when commenced may
become removable thereafter only by the voluntary act of the plaintiff.’” Crockett v. R.J.
Reynolds Tobacco Co., 436 F.3d 529, 532 (5th Cir. 2006) (quoting Weems v. Louis
Dreyfus Corp., 380 F.2d 545, 547 (5th Cir. 1967)). The voluntary-involuntary rule has a
long history, as it predates the 1949 amendment to 28 U.S.C. § 1446(b) that first
addressed the removal of cases that were not removable when commenced. See Weems,
380 F.2d at 547–48 (holding that voluntary-involuntary rule survived the 1949
amendment to § 1446(b)); see also Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 761
(11th Cir. 2010) (“The traditional rule is that only a voluntary act by the plaintiff may
convert a non-removable case into a removable one.”).

Carbajal argues that his

intervention was not the voluntary act of Arrow, and thus the action remains
nonremovable.
As an offshoot of the voluntary-involuntary rule, Carbajal relies on a number of
district court opinions to argue as a categorical matter that removal may not be predicated
upon an intervenor’s complaint.2 He suggests that Schexnayder v. Entergy Louisiana,
2

See, e.g., Brown v. Tax Ease Lien Invs., LLC, 77 F. Supp. 3d 598, 602 (W.D. Ky. 2015) (“Intervening
complaints—even when they would have been removable if filed first—do not support removal.”); Benson v.
Benson, No. 5:15-cv-202, 2015 WL 3622335, at *4 (W.D. Tex. June 9, 2015) (“The intervention of the Co-receivers

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Inc., 394 F.3d 280 (5th Cir. 2004), affirmed one such case. However, Schexnayder noted
that the district court had premised its remand order on two alternate holdings, one of
which was that removal could not be based on an intervening complaint asserting a
federal cause of action. Id. at 283. The Fifth Circuit dismissed for lack of appellate
jurisdiction and so did not address the question of whether the district court had erred in
that holding. Id. at 285.
For its part, Hankook relies on Balog v. Jeff Bryan Transport LTD, No. CIV-10505-D, 2010 WL 3075288 (W.D. Okla. Aug. 5, 2010), a case with conceded factual
similarities to the one at hand. In Balog, John Balog sued a number of non-resident
defendants in state court for injuries arising out of an automobile accident. Teresa Balog,
individually and on behalf of her minor children, intervened as a party plaintiff to assert
her own claims arising out of the same accident. Although John claimed to seek less than
the amount in controversy threshold, the district court held that the action was properly
removable because Teresa’s claims sought more than $75,000 in damages. 3 The court
then exercised its supplemental jurisdiction over John’s claims and denied the Balogs’
joint motion to remand.

was not a voluntary act by Plaintiff and thus cannot provide a basis for Defendant’s removal.”); Murphy v. Joshua
Fin. Servs., Inc., No. CIV.A.3:06CV1253-K, 2006 WL 3299999, at *1 (N.D. Tex. Oct. 24, 2006) (“[R]emoval may
not be based on an intervening petition or complaint.”); Scott v. Perma-Pipe, Inc., No. CIV.A. 15-01715, 2015 WL
4661623, at *3 (W.D. La. July 30, 2015) (“The intervention of Advantage was not a voluntary act by Plaintiffs, and
cannot provide a basis for Perma’s removal.”).
3

Complete diversity was not at issue.

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Balog is a nonbinding, unpublished district court opinion, and its persuasive
weight is counterbalanced by the nonbinding, unpublished district court opinions that
Carbajal marshals in support of remand. Balog also does not seem to have confronted the
voluntary-involuntary rule.
Beyond analogizing to Balog, Hankook accuses Arrow and Carbajal of colluding
to avoid federal court. As evidence, Hankook points to the similarity of Arrow’s and
Carbajal’s pleadings, down to the identical wording used to describe the accident.
Neither Arrow nor Carbajal has asserted any claims against the other, and Hankook
represents that Arrow has not yet served process upon it. Arrow also supplied Carbajal
with an affidavit of the type that few litigants would volunteer; in it, Arrow’s president
swears that Arrow will not seek or accept $75,000 or more in damages. D.E. 6-1.
Hankook argues that the obvious collusion between Arrow and Carbajal should constitute
an exception to the voluntary-involuntary rule, as it “effectively renders the Plea in
Intervention a voluntary act of” Arrow. D.E. 9, p. 2.
Hankook cites no authority for its proposed collusion exception, however, and the
Court is mindful both that Hankook bears the burden of establishing federal jurisdiction
and that “[a]ny ‘doubts regarding whether removal jurisdiction is proper should be
resolved against federal jurisdiction.’” African Methodist Episcopal Church v. Lucien,
756 F.3d 788, 793 (5th Cir. 2014) (quoting Acuna v. Brown & Root Inc., 200 F.3d 335,
339 (5th Cir. 2000)). In light of the applicable standard of review, the Court holds that
Hankook has not met its burden of showing that the case is removable as a result of

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Carbajal’s intervention.

The Court need not address whether it may exercise

supplemental jurisdiction over Arrow’s claims.
B. Removal Based on Arrow’s Petition
Hankook’s second theory of federal jurisdiction asserts that the case is removable
because a full and fair reading of Arrow’s petition shows that Arrow’s claims
independently meet the amount in controversy requirement. D.E. 1, p. 6. This argument
also fails.
Ordinarily, “the sum demanded in good faith in the initial pleading shall be
deemed to be the amount in controversy” for purposes of determining removability. 28
U.S.C. § 1446(c)(2). There is an exception, however, where state law allows a plaintiff
to recover greater damages than stated in the initial pleading.

Section 1446(c)(2)

provides:
If removal of a civil action is sought on the basis of
jurisdiction conferred by section 1332(a), the sum demanded
in good faith in the initial pleading shall be deemed to be the
amount in controversy, except that—
(A)

The notice of removal may assert the amount in
controversy if the initial pleading seeks—
(i)

nonmonetary relief; or

(ii)
a money judgment, but the State practice either
does not permit demand for a specific sum or permits
recovery of damages in excess of the amount
demanded; and
(B) Removal of the action is proper on the basis of an amount in
controversy asserted under subparagraph (A) if the district
court finds, by the preponderance of the evidence, that the
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amount in controversy exceeds the amount specified in
section 1332(a).
Id. (emphasis added). Hankook argues that Texas law permits recovery of damages
beyond those alleged in the petition and thus Arrow’s pled damages do not control.
The Supreme Court recently discussed the procedure that applies in removed cases
where the parties dispute whether the amount in controversy requirement is met. First,
the defendant’s notice of removal need contain “only a plausible allegation that the
amount in controversy exceeds the jurisdictional threshold.”

Dart Cherokee Basin

Operating Co., LLC v. Owens, 135 S. Ct. 547, 554 (2014). If the plaintiff challenges the
defendant’s allegation regarding amount in controversy, then “both sides submit proof
and the court decides, by a preponderance of the evidence, whether the amount-incontroversy requirement has been satisfied.” Id. This formulation does not appear to
upset prior Fifth Circuit practice, although the Fifth Circuit has also traditionally allowed
a removing defendant to discharge the preponderance-of-the-evidence burden by showing
that it is apparent from the face of the plaintiff’s pleading that the amount in controversy
exceeds $75,000.4 See Manguno, 276 F.3d at 723 (removing defendant may establish
amount in controversy requirement by a preponderance of the evidence “if (1) it is
apparent from the face of the petition that the claims are likely to exceed $75,000, or,

4

Cf. Mason v. Danza, No. 1:17-CV-00744, 2017 WL 7048525, at *2 n.2 (W.D. La. Dec. 28, 2017) (“Prior to Dart
Cherokee, a removing defendant could satisfy its burden of supporting federal jurisdiction by establishing that it was
‘facially apparent’ from the petition that the claims probably exceed $75,000. It is unclear, however, whether this
alternative method of proof survives Dart Cherokee.” (citations omitted)), report and recommendation adopted, No.
1:17-CV-00744, 2018 WL 522732 (W.D. La. Jan. 23, 2018).

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alternatively, (2) the defendant sets forth ‘summary judgment type evidence’ of facts in
controversy that support a finding of the requisite amount”) (citation omitted).
It is not apparent from the face of Arrow’s pleading that the amount in controversy
exceeds $75,000, and only Carbajal has submitted evidence (the affidavit from Arrow’s
president) regarding the amount in controversy. 5 Hankook attempts to meet its burden by
pointing to Arrow’s demand for attorney’s fees, but “[c]onclusory statements about
potential attorney’s fees . . . are not sufficient to confer federal jurisdiction.” Findley v.
Allied Fin. Adjusters Conference, Inc., No. CV H-15-2699, 2015 WL 7738077, at *4
(S.D. Tex. Dec. 1, 2015). Hankook also claims that it gained a new appreciation for
Arrow’s plea for lost wages after seeing that Carbajal’s claimed damages, which included
a claim for lost wages, exceeded $1,000,000. See D.E. 1, p. 7 (“If Intervenor’s alleged
damages, including lost wages, exceed $1,000,000.00, then Plaintiff’s damages, including
lost wages, should exceed $75,000.00.”). The Court is puzzled why Arrow has made a
claim for lost wages, but in any event that claim does not appear to have anything to do
with Carbajal’s lost wages claim.
CONCLUSION
Hankook has not met its burden of showing that the Court has jurisdiction. For the
reasons set out above, the Court GRANTS Plaintiff’s motion to remand (D.E. 6). The
Court ORDERS this action REMANDED to the 229th District Court of Duval County,

5

Hankook argues the post-removal affidavit should be disregarded. Even if the Court disregards the affidavit, the
burden is still on Hankook to show by a preponderance that Arrow’s claims exceed the amount in controversy.

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the court from which it was removed. The Court instructs the Clerk to terminate this
federal action.
ORDERED this 19th day of September, 2018.
___________________________________
NELVA GONZALES RAMOS
UNITED STATES DISTRICT JUDGE

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