Ronald Lane, Inc. et al v. Antero Resources Appalachian Corporation et al
Filing
72
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS' MOTION TO REMAND to State Court 20 AND DENYING AS MOOT DEFENDANT'S MOTION TO DISMISS 10 . Signed by District Judge Irene M. Keeley on 7/25/2011. (Copy Circuit Court of Harrison County, WV via US Mail)(kd)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
RONALD LANE, INC., a West
Virginia Corporation, and
RONALD O. LANE, individually,
Plaintiffs,
v.
//
CIVIL ACTION NO. 1:10CV137
(Judge Keeley)
ANTERO RESOURCES APPALACHIAN CORPORATION,
a Delaware Corporation, ALLIANCE WOOD
GROUP ENGINEERING, L.P., a Texas limited
partnership, REBECCA L. SMITH CONSULTING,
LLC, a West Virginia limited liability
company, SELECT ENERGY SERVICES, LLC,
d/b/a Arvilla Oilfield Services, a
Delaware limited liability company, and
STEVE BURLESON, individually,
Defendants.
ANTERO RESOURCES APPALACHIAN CORPORATION,
a Delaware Corporation,
Cross-Claimant,
v.
ALLIANCE WOOD GROUP ENGINEERING, L.P.,
a Texas limited partnership, STEVE
BURLESON, individually, REBECCA L. SMITH CONSULTING,
LLC, a West Virginia limited liability
company, SELECT ENERGY SERVICES, LLC,
d/b/a Arvilla Oilfield Services, a
Delaware limited liability company
Cross-Defendants.
ANTERO RESOURCES APPALACHIAN CORPORATION,
a Delaware Corporation,
Counter Claimant,
v.
RONALD LANE, INC., a West Virginia
Corporation,
Counter Defendant.
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
I.
INTRODUCTION
Pending before the Court is the motion of the plaintiffs,
Ronald Lane, Inc. (“RLI”) and Ronald O. Lane, the president of RLI
(“Lane”) (collectively, “the plaintiffs”), to remand this case to
the Circuit Court of Harrison County, West Virginia.
For the
reasons discussed below, the Court GRANTS the plaintiffs’ motion to
remand (dkt. no. 20), and DENIES AS MOOT the motion to dismiss of
the defendant, Antero Resources Appalachian Corporation (“Antero”)
(dkt. no. 10).
II.
FACTUAL BACKGROUND
This case arises out of Antero’s termination of RLI as an oil
and gas pipeline contractor for a Marcellus shale project in
Harrison County, West Virginia.
RLI is incorporated in West
Virginia, and has its principal place of business in Arnoldsburg,
Calhoun County, West Virginia.
Lane is the president of RLI and
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MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
resides in Calhoun County, West Virginia.
citizenship
purposes,
both
plaintiffs
Thus, for diversity of
are
citizens
of
West
Virginia.
On September 2, 2009, RLI and Antero entered a Technical
Services Agreement (“TSA”), under which the parties agreed that RLI
would provide Antero with oil and gas pipeline contracting services
for a term of three years, with an option to renew.
Pursuant to
this agreement, on February 18, 2010, Antero hired RLI to construct
the “Williams/Moss gathering system” in Harrison County, West
Virginia.
That project was divided into northern and southern
sections.
RLI asserts that it was more of a challenge to install
a pipeline in the southern section because of the difficult terrain
in that area, and that it relied on this factor when bidding its
work on the Williams/Moss project.
In other words, it anticipated
earning an overall profit on the job through its work on the
northern section of the project.
Pursuant to the TSA, the deadline for RLI’s completion of the
project was May 21, 2010.
Alliance
Wood
Group
During the project, the defendant,
Engineering,
Antero’s site inspector.
LP
(“Alliance”),
served
as
On April 29, 2010, as RLI was nearing
completion of the southern section of the project, Alliance’s
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MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
construction manager, Steve Burleson (“Burleson”), ordered RLI to
halt further work and the next day Antero’s Vice-President, Mark
Mauz (“Mauz”), ratified Burleson’s decision and formally terminated
RLI as the contractor on the project.
RLI asserts that, on April
29, 2010, it was one week ahead of schedule and that, immediately
following its termination, Antero hired Arvilla Oilfield Services,
LLC (“Arvilla Oilfield”), as a replacement contractor.
According to the plaintiffs, Burleson was the instigator of
RLI’s termination. They allege that, on October 24, 2009, Burleson
became angry and displeased when Lane auctioned off a bulldozer and
refused to sell it to Burleson at a discounted price.
Burleson
apparently wanted to acquire the bulldozer at a discount as part of
his retirement plans. Lane, however, refused to sell the bulldozer
to Burleson at a discount because RLI’s TSA with Antero forbade
such an insider arrangement.
The plaintiffs allege that, following Lane’s refusal to grant
Burleson
a
defendants,
favorable
insider
Burleson
deal,
conducted
a
in
concert
campaign
to
with
his
co-
disparage
the
reputations of RLI and Lane, and to sabotage their business
relationships with Antero.
Burleson’s disparagement, and the
defendants’ concerted actions, ultimately led to RLI’s termination,
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MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
which caused the plaintiffs various economic and psychological
injuries.
III.
PROCEDURAL HISTORY
Based on the events leading to RLI’s termination from the
Williams/Moss project, the plaintiffs filed a seven-count complaint
against the defendants in the Circuit Court of Harrison County,
West Virginia, on August 2, 2010.
Antero,
Alliance,
and
Burleson
Pursuant to 28 U.S.C. § 1332,
(collectively,
“the
removing
defendants”), removed the case to this Court on September 2, 2010.
They argued that the Court’s subject matter jurisdiction was proper
because the parties were completely diverse.
More specifically,
they asserted that the plaintiffs had incorrectly listed Burleson
as a citizen of West Virginia, when, in fact, he is a citizen of
Texas, and that a former defendant, Arvilla Pipeline Construction
Co., Inc. (“Arvila Pipeline”), had been fraudulently joined and was
a stranger to the case.
On September 29, 2010, the plaintiffs moved to remand this
case to state court, arguing that the parties are not completely
diverse, that “Arvilla Pipeline” was not fraudulently joined and is
incorporated in West Virginia, and that Burleson is a citizen of
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MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
West Virginia.1
Since that time, the parties have settled Count
One of the complaint, see Agreed Partial Dismissal Order (dkt. no.
27), and the plaintiffs have acknowledged that they erroneously
named “Arvilla Pipeline” as a defendant and have filed an agreed
order dismissing it from the case.
Order (dkt. no. 41).
See Agreed Partial Dismissal
They continue to maintain, however, that
Burleson is a citizen of West Virginia.
After they filed their motion to remand, and when they filed
their voluntary dismissal of Arvilla Pipeline on November 19, 2010,
the plaintiffs also moved for leave to file an amended complaint
adding Rebecca L. Smith Consulting, LLC (“RLS Consulting”), and
Select
Energy
Services,
LLC,
d/b/a
Arvilla
Oilfield
Services
(“SES”), as successors in interest to Arvilla Oilfield, the proper
“Arvilla” entity. Other than seeking to replace “Arvilla Pipeline”
with these defendants, the amended complaint did not materially add
to or alter the substantive allegations in the original complaint.
The plaintiffs’ motion to amend, however, did not address any
jurisdictional implications that adding a non-diverse defendant,
RLS Consulting, to the case post-removal might raise.
1
The parties do not dispute that the amount in controversy
meets the jurisdictional threshold as the plaintiffs’ breach of
contract claim alone seeks $3,117,111.70 in damages.
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RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
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MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
On November 22, 2010, the Court granted the plaintiffs’ motion
for leave to file their amended complaint (dkt. no. 38), but did
not address whether the addition of RLS Consulting, a West Virginia
corporate
citizen,
would
destroy
complete
diversity.
The
plaintiffs’ claims against RLS Consulting are solely state law
claims,
including
1)
tortious
interference
with
a
business
relationship, 2) joint venture, 3) conspiracy, 4) intentional
infliction or reckless infliction of emotional distress, and 5)
business disparagement or injurious falsehood.
In order to resolve the jurisdictional implications raised by
the
plaintiffs’
amended
complaint,
the
Court
later
ordered
supplemental briefing from the parties concerning whether the postremoval addition of RLS Consulting divests it of subject matter
jurisdiction.
IV.
LEGAL STANDARD
Federal district courts have original jurisdiction over “all
civil actions arising under the Constitution, laws, or treaties of
the
United
States,”
28
U.S.C.
§§
1331
(federal
question
jurisdiction), as well as all actions in which the amount in
controversy exceeds $75,000.00 and all plaintiffs are diverse from
all
defendants,
28
U.S.C.
§
1332
7
(diversity
of
citizenship
RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
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MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
jurisdiction).
(2005)
See Lincoln Property Co. v. Roche, 546 U.S. 81, 89
(interpreting
28
U.S.C.
§
1332
to
“require
complete
diversity between all plaintiffs and all defendants.”).
When a federal district court’s original jurisdiction is
premised on diversity of citizenship, a defendant who is not a
citizen of the state in which an action is filed may remove that
action to a federal district court if the federal court would have
had original jurisdiction over the case when it was first filed.
28 U.S.C. §§ 1441(a) and (b).
When more than one defendant is
named in the complaint, “all the defendants must join in removal.”
Chicago, R. I.&P. Ry. Co. v. Martin, 178 U.S. 245, 248 (1900); see
also Barbour v. International Union, 640 F.3d 599, 611-25 (4th Cir.
2011) (recognizing the rule of unanimity); Ryan Environmental, Inc.
v. Hess Oil Co., Inc., 718 F. Supp.2d 719, 722 (N.D.W. Va. 2010)
(same). Removal statutes, however, are strictly construed, and the
burden
of
establishing
jurisdiction
is
on
the
party
seeking
removal. Mulcahey v. Columbia Organic Chemicals Co., Inc., 29 F.3d
148, 151 (4th Cir. 1994).
Despite these general rules, when a court ascertains the
diversity of the parties for jurisdictional purposes, it is not
bound to give blind deference to the pleadings, but instead will
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MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
determine whether diversity jurisdiction is proper by looking to
the real parties in interest.
See 17th Street Associates, LLP v.
Markel Intern. Ins. Co. Ltd., 373 F. Supp.2d 584, 594-95 (E.D. Va.
2005) (quoting Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 460-61
(1980)). In conducting such inquiries, several exceptions to the
removal statutes have developed, including the fraudulent joinder
doctrine, which permits courts to disregard the citizenship of a
party named in an action when the party is fraudulently joined.
See
Mayes
v.
Rapoport,
198
F.3d
457,
464
(4th
Cir.
1999)
(recognizing fraudulent joinder as an exception to the general rule
of complete diversity).
V.
A.
DISCUSSION
Burleson is a Citizen of Texas
Here, the plaintiffs argue that Burleson is a non-diverse
citizen of West Virginia.
The defendants contend he is a citizen
of Texas.
“Citizenship . . . presents a preliminary question of fact to
be determined by the trial court.”
Sligh v. Doe, 596 F.2d 1169,
1171 (4th Cir. 1979) (citations and footnotes omitted).
“To be a
citizen of a State, a person must be both a citizen of the United
States and a domiciliary of that State.”
9
Johnson v. Advance
RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
1:10CV137
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
America, 549 F.3d 932, 937 n.2 (4th Cir. 2008) (citing NewmanGreen, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828 (1989)); see also
Stine v. Moore, 213 F.2d 446, 448 (5th Cir. 1954) (recognizing
that, “[w]ith respect to the diversity jurisdiction of the federal
courts, citizenship has the same meaning as domicile.”).
“Domicile” and “residence,” however, are not synonymous terms
as “one can reside in one place but be domiciled in another.”
Mississippi Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 48
(1989)
(citations
omitted).
While
a
person’s
“domicile”
and
“residence” may share the common aspect of physical presence in a
place, the place where he intends to remain is his “domicile.” Id.
A person acquires a domicile at birth and will retain that domicile
until he obtains a new one.
Id.
Once a person establishes his
domicile, the law presumes that it continues there until subsequent
facts establish otherwise. Mitchell v. United States, 88 U.S. 350,
352-53 (1874) (citations and footnotes omitted).
A party alleging
a change in domicile bears the burden of proving the change by
clear and convincing evidence.
See Hakkila v. Consolidated Edison
Co. of New York, Inc., 745 F. Supp. 988, 990 (S.D.N.Y. 1990).
When a party’s domicile is in dispute, a court may consider
the following factors:
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MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
“current residence; voting registration and
voting practices; location of personal and
real property; location of brokerage and bank
accounts; memberships in unions, fraternal
organizations, churches, clubs, and other
associations; place of employment or business;
driver’s license and automobile registration;
payment of taxes[.]”
Dyer v. Robinson, 853 F. Supp. 169, 172 (D. Md. 1994) (quoting 13B
Charles A. Wright, Arthur R. Miller and Edward H. Cooper, Federal
Practice and Procedure § 3612 (2d ed. 1984)).
Here, the plaintiffs argue that Burleson had his domicile in
West Virginia at the time they sued him because he had been living
in Gypsy, West Virginia, for over one year.
Alternatively, they
seek an opportunity to conduct discovery on this matter before the
Court decides the motion to remand.
In
their
response
to
these
arguments,
the
defendants
convincingly establish that Burleson, in fact, is domiciled in
Texas, and that he never intended to remain in West Virginia.
Burleson was born in Texas in 1956, graduated from high school
there, and earned a Bachelor of Science degree from East Texas
State University in Commerce, Texas.
He owns a home in Port
Lavaca, Texas, and several other real properties in the same
county, pays real estate taxes on those properties, possesses a
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MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
Texas driver’s license, has his vehicles, including a travel
trailer, registered in Texas, and is registered to vote in Texas.
He has bank accounts at Texas branches of two banks, and asserts
that he has always used his Texas address on checks issued from any
bank with which he has had an account.
Burleson asserts further
that, when he lived in West Virginia from April 13, 2009, until
September 29, 2010, he lived in a trailer and brought only minimal
possessions with him from his home in Texas. Finally, although his
wife accompanied him to West Virginia, Burleson claims that she did
so for her own work purposes. It is undisputed that, upon the
conclusion of his work assignment in West Virginia, Burleson and
his wife returned to their home in Port Lavaca, Texas.
Given these circumstances, there can be no doubt that Burleson
is domiciled in Texas.
Although he may have “resided” in West
Virginia while working on the Williams/Moss project, no evidence
suggests, let alone clearly and convincingly establishes, that he
intended to remain in West Virginia. The Court therefore concludes
that Burleson is a citizen of Texas, and that additional discovery
regarding this matter is unnecessary.
990.
12
Hakkila, 745 F. Supp. at
RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
1:10CV137
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
B.
The Post-Removal Joinder of RLS Consulting
As noted earlier in this opinion, the Court must determine
whether the post-removal addition of RLS Consulting divested the
Court of subject matter jurisdiction. The plaintiffs argue that 28
U.S.C. § 1447(e) requires remand. The defendants, however, contend
that it is
the diversity of the parties at the time of removal
that controls whether the Court has subject matter jurisdiction.
They further urge the Court to reconsider its decision granting the
plaintiffs leave to add RLS Consulting as a defendant, arguing it
is neither a necessary nor indispensable party.
The defendants
also argue that the plaintiffs fraudulently joined RLS Consulting,
and
that
its
citizenship
jurisdictional purposes.
therefore
may
be
disregarded
for
Alternatively, they urge the Court to
sever RLS Consulting as a defendant and dismiss it from this action
pursuant to Fed. R. Civ. P. 21.
1.
28 U.S.C. § 1447(e) Requires Remand
As the plaintiffs correctly observe, the plain text of 28
U.S.C. § 1447(e) and the Fourth Circuit’s holding in Mayes v.
Rapoport, 198 F.3d at 461-62, compel remand in this case. Section
1447(e) provides:
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RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
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MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
If after removal the plaintiff seeks to join
additional defendants whose joinder would
destroy subject matter jurisdiction, the court
may [1] deny joinder, or [2] permit joinder
and remand the action to the State court.
28 U.S.C. § 1447(e) (alterations added).
In Mayes, the Fourth
Circuit recognized that, under § 1447(e), if a district court
permits a plaintiff to join a non-diverse defendant, it may not
“retain jurisdiction once it permits a non-diverse defendant to be
joined in the case.”
Id. at 462.
Whether to allow a plaintiff to join a non-diverse defendant
“is committed to the sound discretion of the district court . . .
and is not controlled by a Rule 19 analysis.”
Id. (citing 14C
Charles A. Wright, Arthur R. Miller, & Edward H. Cooper, Federal
Practice and Procedure § 3739, at 445 (3d ed. 1998)).
When
exercising such discretion, a district court may consider the
following factors:
“[1] ‘the extent to which the purpose of the
amendment is to defeat federal jurisdiction,
[2] whether the plaintiff has been dilatory in
asking
for
amendment,
[3]
whether
the
plaintiff will be significantly injured if
amendment is not allowed, and [4] any other
factors bearing on the equities.’”
Id. (quoting Gum v. General Electric Co., 5 F. Supp.2d 412, 414
(S.D.W. Va. 1998) (internal citation omitted) (alterations added)).
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RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
1:10CV137
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
Although the fraudulent joinder doctrine “does not directly
apply after removal because the district court already possesses
jurisdiction,” a district court nevertheless may consider the
doctrine as part of its analysis. Id.
When making such inquiries,
a court must carefully scrutinize whether the plaintiff seeks to
join a non-diverse defendant solely to evade federal jurisdiction.
Id. (citing AIDS Counseling and Testing Centers, 903 F.2d 1000,
1003 (4th Cir. 1990)).
If, as here, a district court did not
conduct this analysis at the time it permitted a plaintiff to join
a non-diverse defendant, it may retroactively do so under these
standards.
Id.; see also Schur v. L.A. Weight Loss Centers, Inc.,
577 F.3d 752, 761-62 (7th Cir. 2009).
Nothing in this case suggests that the plaintiffs named RLS
Consulting as a defendant to avoid the federal forum.
Their first
complaint alleged that “Arvilla Pipeline” stepped in to replace RLI
as
a
contractor
at
the
Williams/Moss
terminated RLI on April 29, 2010.
project
after
Antero
The complaint further alleged
that, in connection with their termination, “Arvilla Pipeline”
tortiously interfered with their business relationship with Antero,
and that all the defendants acted in concert to harm RLI and Lane.
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RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
1:10CV137
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
After the defendants removed the case, the plaintiffs received
a CD from Antero on October 29, 2010, containing several documents.
Among
those,
the
plaintiffs
discovered
a
Technical
Services
Agreement between Antero and “Arvilla Oilfield” dated April 29,
2010, and payment invoices submitted by Arvilla Oilfield to Antero.
These documents clarified that “Arvilla Oilfield,” not “Arvilla
Pipeline,” had performed work at the Williams/Moss project site.
Moreover, from the CDs, the plaintiffs also learned that RLS
Consulting, a West Virginia company, and SES, are successors in
interest to Arvilla Oilfield. It was only after learning this
information that, on November 19, 2010, the plaintiffs moved to
amend their complaint, to add these defendants.
The plaintiffs’
allegations against RLS Consulting and SES are substantially the
same as those against “Arillva Oilfield” contained in the first
complaint.
The fact that a plaintiff does not attempt to expand
the scope or tenor of its claims when seeking to add a non-diverse
defendant post-removal may weigh in favor of a finding that it did
not
join
the
non-diverse
defendant
merely
to
avoid
federal
jurisdiction. See O’Neal v. Speed Mining, LLC, No. 5:10CV446, 2010
U.S. Dist. LEXIS 105847, at *13-*14 (S.D.W. Va. Oct. 10, 2010)
(unpublished).
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RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
1:10CV137
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
Moreover, the plaintiffs were not dilatory in seeking to join
RLS Consulting and SES. They moved to file their amended complaint
adding these defendants approximately twenty days after receipt of
Antero’s CD.
Finally, while the actions of “Arvilla Oilfield,”
and, by extension, RLS Consulting and SES, are not the primary
focus
of
the
nevertheless
plaintiffs’
is
alleged
amended
to
be
complaint,
a
key
Arvilla
player
in
Oilfield
tortiously
disparaging the reputations of RLI and Lane, and also in working to
terminate RLI from the Williams/Moss project.
2.
The Defendants’ Opposition to Remand
In their opposition to the motion to remand, the defendants
argue that the Court must assess diversity jurisdiction based on
the status of the parties at the time of removal, and deny joinder
of
RLS
Consulting
indispensable
party.
because
Further,
it
is
they
fraudulently joined RLS Consulting.
neither
argue
a
that
necessary
the
nor
plaintiffs
Alternatively, the defendants
argue that the Court should dismiss RLS Consulting pursuant to Fed.
R. Civ. P. 21.
After careful analysis, the Court concludes that
none of these arguments is persuasive.
17
RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
1:10CV137
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
a.
The Post-Removal Assessment of Complete Diversity
To support their contention that the Court must limit its
assessment of diversity jurisdiction to the status of the parties
at the time of removal, the defendants rely on Freeport-McMoRan,
Inc. v. K N Energy, Inc., 498 U.S. 426, 428 (1991), in which the
Supreme Court of the United States broadly declared that “diversity
of citizenship is assessed at the time the action is filed.” Since
Freeport was decided, however, courts of appeals, including the
Fourth Circuit, have uniformly recognized that the holding in
Freeport is limited to whether the substitution of a party pursuant
to Fed. R. Civ. P. 25(c) divests a district court of subject matter
jurisdiction, and that the broad language of that case is not
intended to override the clear congressional intent set forth in 28
U.S.C. § 1447(e). See Doleac ex rel. Doleac v. Michalson, 264 F.3d
470, 475-77 (5th Cir. 2001) (recognizing that 28 U.S.C. § 1447(e),
not the holding of Freeport, governs the remand of an action
involving the post-removal joinder of a non-diverse defendant);
Cobb v. Delta Exports, Inc., 186 F.3d 675, 679-81 (5th Cir. 1999)
(holding that the holding of Freeport is limited to substitutions
of parties under Fed. R. Civ. P. 25(c), and that remand of a case
involving the post-removal joinder of a non-diverse party is
18
RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
1:10CV137
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
governed by 28 U.S.C. § 1447(e)); Burka v. Aeta Life Ins. Co., 87
F.3d 478, 483-84 (D.C. Cir. 1996) (recognizing that the holding of
Freeport is limited to the substitution of a party under Fed. R.
Civ. P. 25(c), not a plaintiff’s joinder of a party); Casas Office
Machines, Inc. v. Mita Copystar America, Inc., 42 F.3d 668, 673-75
(1st Cir. 1994) (distinguishing Freeport, and holding that the
post-removal joinder of a non-diverse party divests a district
court of jurisdiction pursuant to 28 U.S.C. § 1447(e)); Martinez v.
Duke Energy Corporation, 130 F. App’x. 629, 634-35, 2005 WL
1009648, at *3 (4th Cir. 2005) (unpublished) (limiting Freeport to
the substitution of a party under Fed. R. Civ. P. 25(c)).
These collected cases stand for the proposition that the postremoval joinder of a non-diverse defendant does destroy complete
diversity, 28 U.S.C. § 1447(e), and thus strips the Court of
subject matter jurisdiction in this case.
See Washington Suburban
Sanitary Com'n v. CRS/Sirrine, Inc., 917 F.2d 834, 835-36 (4th Cir.
1990) (citing 28 U.S.C. § 1447(e), and rejecting a defendant’s
appeal of a district court’s remand following the plaintiff’s postremoval joinder of a non-diverse defendant).
19
RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
1:10CV137
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
b.
The
Analysis Under Fed. R. Civ. P. 19 Does Not Apply to
a Joinder Implicating 28 U.S.C. § 1447(e)
Fourth
Circuit
has
held
that
a
district
court’s
determination whether to permit the post-removal joinder of a nondiverse defendant involves a flexible factors-based approach and is
not controlled by an analysis under Fed. R. Civ. P. 19.
Mayes, 198
F.3d at 462 (citing 14C Charles A. Wright, Arthur R. Miller, &
Edward H. Cooper, Federal Practice and Procedure § 3739, at 445 (3d
ed. 1998)).
Thus, the Court need not determine whether RLS
Consulting is an indispensable or necessary party under Fed. R.
Civ. P. 19.
c.
The Defendants Fail to Establish that
Plaintiffs Fraudulently Joined RLS Consulting
the
The defendants argue that the plaintiffs fraudulently joined
RLS Consulting in order to defeat diversity.
argument,
they
contend
the
Court
should
In support of their
analyze
whether
the
plaintiffs’ claims against RLS Consulting satisfy the pleading
standards of Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009); and Bell
Atlantic v. Twombly, 550 U.S. 544 (2007).
As support, they cite
Crawford v. Charles Schwab & Co., Inc., No. 3:09CV666, 2009 WL
3573658 (N.D. Tex. Oct. 30, 2009) (unpublished), which held that a
district court must conduct an analysis under Fed. R. Civ. P.
20
RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
1:10CV137
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
12(b)(6) in order to determine whether a plaintiff fraudulently
joined a defendant.
They also rely on Roland-Warren v. Sunrise
Senior Living, Inc., No. 09CV1199, 2009 WL 2406356 (S.D. Cal. Aug.
4,
2009)
(unpublished),
which
recognized
that
the
fraudulent
joinder standard in the Ninth Circuit “parallels that used in
deciding motions to dismiss under [Fed. R. Civ. P.] 12(b)(6).”
The approach advanced in these two cases, however, conflicts
with that adopted by the Fourth Circuit. In Mayes, our Circuit
Court expressly recognized that courts must review “claims of
fraudulent joinder under a standard more lenient than that for a
motion to dismiss.”
198 F.3d at 466 n.15.
Under that more lenient
standard, a defendant may establish fraudulent joinder by showing:
“[t]hat there is no possibility that the
plaintiff would be able to establish a cause
of action against the in-state defendant in
state court; or [t]hat there has been outright
fraud
in
the
plaintiff's
pleading
of
jurisdictional facts.”
Mayes, 198 F.3d at 464 (quoting Marshall v. Manville Sales Corp.,
6 F.3d 229, 232 (4th Cir. 1993)).
Courts have sometimes described
this standard as requiring a plaintiff to show only that he has a
“glimmer of hope” for obtaining relief against a defendant in order
to defeat a fraudulent joinder challenge.
21
Mayes, 198 F.3d at 464
RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
1:10CV137
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
(citing Hartley v. CSX Transp., Inc., 187 F.3d 422, 424 (4th Cir.
1999)).
Here, because there are no allegations of outright fraud in
the pleadings, the only question is whether the plaintiffs have any
possibility
of
Consulting.
establishing
a
cause
of
action
against
RLS
While the plaintiffs’ amended complaint admittedly
contains few details concerning Arvilla Oilfield’s involvement in
the
case,
the
plaintiffs
have
sufficiently
pled
that
RLS
Consulting, acting in concert with its co-defendants, tortiously
interfered with the plaintiffs’ business relationship with Antero.
See Hatfield v. Health Management Associates of West Virginia, 672
S.E.2d 395, 403 (W. Va. 2008) (quoting Syl. Pt. 2, Torbett v.
Wheeling
Dollar
Sav.
&
Trust
Co.,
314
S.E.2d
166
(1983))
(recognizing that to establish a prima facie case of tortious
interference with a business relationship a plaintiff must show
“‘(1) existence of a contractual or business relationship or
expectancy; (2) an intentional act of interference by a party
outside
that
interference
relationship
caused
the
or
expectancy;
(3)
proof
harm
sustained;
and
(4)
(emphasis removed from original)).
alleged
that
RLS
Consulting
was
22
that
the
damages.’”
The plaintiffs also have
previously
named
“Arvilla
RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
1:10CV137
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
Oilfield,” and that it changed its name on July 1, 2010, becoming
RLC Consulting.
In
their
attempt
to
establish
fraudulent
joinder,
the
defendants do no more than argue that the plaintiffs’ allegations
fail to satisfy the pleading standards of Iqbal and Twombly.
Ultimately, however, it is of no moment whether these allegations
satisfy the pleading standards of Fed. R. Civ. P. 8(a). As already
discussed, to establish that the plaintiffs fraudulently joined RLS
Consulting, the defendants must show that the plaintiffs have no
possibility of obtaining relief under West Virginia law.
Here,
having pled a claim of tortious interference with a business
relationship under West Virginia law, the plaintiffs have clearly
demonstrated at least a “possibility of establishing a cause of
action” against RLS Consulting.
The defendants therefore have
failed to establish that RLS Consulting was fraudulently joined
post-removal by the plaintiffs.
d.
See Mayes, 198 F.3d at 464.
The Severance and Dismissal of RLS Consulting
Pursuant to Fed. R. Civ. P. 21 is Unwarranted
Finally, the defendants urge that, even if the plaintiffs can
properly join RLS Consulting and assert claims against it, pursuant
23
RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
1:10CV137
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
to Fed. R. Civ. P. 21, the Court should sever RLS Consulting and
dismiss it from the case.
Rule 21 provides:
Misjoinder of parties is not a ground for
dismissing an action. On motion or on its own,
the court may at any time, on just terms, add
or drop a party. The court may also sever any
claim against a party.
Fed. R. Civ. P. 21.
Whether to join or dismiss a non-diverse, dispensable party
under Fed. R. Civ. P. 21 when misjoinder is alleged is subject to
a district court’s discretion.
Corp.
v.
Burke,
55
F.R.D.
See Fair Housing Development Fund
414,
Martinez, 130 F. App’x. at 637.
419
(E.D.N.Y.
1972);
accord
When determining whether to
dismiss a non-diverse party, a court may “consider whether the
dismissal of a non-diverse party will prejudice any of the parties
in the litigation.”
Newman-Green, 490 U.S. at 837-38.
RLS Consulting is not subject to dismissal pursuant to Fed. R.
Civ. P. 21.
While arguably it is neither a “necessary” nor
“indispensable” party under Fed. R.
Civ. P. 19, to sever it as a
party and dismiss it from the case would require the plaintiffs to
refile their claims against it in state court and litigate those
claims separately from this case. Remand, by contrast, will permit
the entire case to proceed in a single forum.
24
RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
1:10CV137
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
This
fact,
alone,
distinguishes
the
instant
case
from
Martinez, where the Fourth Circuit held that a district court erred
when it declined to dismiss a dispensable and non-diverse defendant
under Fed. R. Civ. P. 21.
130 F. App’x. at 637-41.
There, the
plaintiffs had filed their complaint in federal court, and the
district court’s refusal to dismiss a non-diverse party added by
the
plaintiffs
after
the
commencement
of
the
case
required
dismissal of the case for want of subject matter jurisdiction. Id.
Here, in contrast, post-removal joinder of a non-diverse defendant
results in remand, not dismissal.
Where
the
plaintiffs
Id.
have
sufficiently
alleged
that
RLS
Consulting was a key player in disparaging the plaintiffs’ business
reputations and relationships, to require them to litigate their
claims
against
RLS
Consulting
duplicative and wasteful.
in
a
separate
forum
would
be
The Court therefore declines to sever
and dismiss RLS Consulting pursuant to Fed. R. Civ. P. 21.
At bottom, the defendants have failed to establish that the
plaintiffs improperly joined RLS Consulting, or that remand is
otherwise improper.
Although Burleson is a citizen of Texas,
because the plaintiffs are citizens of West Virginia, their postremoval
joinder
of
RLS
Consulting,
25
a
West
Virginia
company,
RONALD LANE, INC., ET AL. V. ANTERO RESOURCES, ET AL.
1:10CV137
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND [DKT. NO. 20], AND
DENYING AS MOOT DEFENDANT’S MOTION TO DISMISS [DKT. NO. 10]
destroys complete diversity and requires remand to the Circuit
Court of Harrison County, West Virginia. See 28 U.S.C. § 1447(e).
VI.
CONCLUSION
The Court GRANTS the plaintiffs’ motion to remand (dkt. no.
20), and DENIES AS MOOT Antero’s motion to dismiss (dkt. no. 10).
It is so ORDERED.
The Court directs the Clerk to transmit copies of this Order
to all counsel of record and to mail a copy to the Circuit Court of
Harrison County, West Virginia.
DATED: July 25, 2011.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE
26
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