Resurrection Coal Company v. James C. Justice Companies et al

Filing 16

MEMORANDUM OPINION AND ORDER: Plaintiff's 5 MOTION to Remand is hereby GRANTED to the extent it seeks remand; DENIED to the extent it seeks attorney fees and costs. The court REMANDS this action to the Circuit Court of McDowell County, and D IRECTS the Clerk to remove this matter from the court's active docket; to send a copy of this Memorandum Opinion to counsel of record and to forward a certified copy of the same to the Clerk of the Circuit Court of McDowell County. Signed by Senior Judge David A. Faber on 11/21/2017. (cc: attys; Circuit Court of McDowell County) (mk) Modified document title on 11/21/2017 (slr).

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
AT BLUEFIELD
RESURRECTION COAL COMPANY, INC.,
Plaintiff,
v.

CIVIL ACTION NO. 1:17-02853

JAMES C. JUSTICE COMPANIES, INC.,
and
CHESTNUT LAND HOLDINGS, LLC,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the court is plaintiff’s Motion to Remand.
(ECF No. 5).

On November 14, 2017, the court held a hearing on

plaintiff’s motion.

For the reasons set forth below, the motion

to remand is GRANTED.
I.

Background

This civil action, a breach of contract dispute, was
originally filed in the Circuit Court of McDowell County, West
Virginia, on or about March 30, 2017, against defendants James C.
Justice Companies, Inc. (“JCJC”) and Chestnut Land Holdings, LLC
(“CLH”).

Plaintiff Resurrection Coal Company, Inc.

(“Resurrection”) asserts that defendants entered into a contract
“to buy coal mined by Plaintiff” and that “[d]efendants owe
Plaintiff [ ] $143,992.93 for the said coal sold and delivered by
Plaintiff to Defendants between March 16, 2012 and March 31,
2012, and invoiced to Defendants on April 5, 2012.”
4 and 7.

Complaint ¶¶

Attached to the complaint is a handwritten invoice,

dated April 5, 2012, stating that “Resurrection Coal Co.” was due
the “total amount $143,992.93" from “James C. Justice Co.”

ECF

No. 1-1 at p. 21.
On May 10, 2017, defendants removed the case to this court
on the basis of diversity of citizenship.

Defendants contend

that CLH was fraudulently joined in this action for the sole
purpose of defeating diversity jurisdiction.
10.

See ECF No. 1 at ¶

According to defendants “the Complaint merely lists Chestnut

Land Holdings, LLC as a party Defendant without asserting any
substantive or founded claims against it. . . .”

Id.

To that

end, defendants direct the court’s attention to the handwritten
invoice attached to the complaint which does not mention CLH.
See id. at ¶ 11.

Also attached to the Notice of Removal are

documents exchanged by the parties and their counsel prior to the
filing of the lawsuit.

In support of its claim for payment of

the invoice dated April 5, 2012, counsel for Resurrection
tendered to Dustin Deane, Associate General Counsel for JCJC, an
Agreement between JCJC and Darvin Rowe, Betty Coal Company, Inc.,
dated January 11, 2012.

See ECF No. 1-3.

was not a party to this Agreement.

Chestnut Land Holdings

See id.

In its Motion to Remand, plaintiff maintains that “CLH was
joined and named as a defendant in this suit because it was a
party to the agreement with plaintiff. . . .”

ECF No. 5 at p. 2.

Resurrection moved to remand this action and for an award of

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costs and attorney fees incurred as a result of defendants’
removal.

Because of the inconsistencies between plaintiff’s

assertions in the complaint that CLH was a party to the agreement
and the written agreement and invoice which did not mention CLH,
the court set the motion for a hearing.

At that hearing, counsel

for Resurrection informed the court that the written agreement
discussed above was a “red herring” and that the basis for the
breach of contract action was not the written agreement but,
rather, an oral agreement between the three parties named in the
complaint.
II.

Standard of Review

Federal district courts may exercise diversity jurisdiction
over civil actions in which the matter in controversy exceeds the
sum or value of $75,000.00 and is between citizens of different
states.

See 28 U.S.C. § 1332(a)(1).

Title 28 United States Code

Section 1441, known as the “removal statute,” provides that a
case filed in state court may be removed to federal court when it
is shown by the defendant that the federal court has original
jurisdiction.

See Mulcahey v. Columbia Organic Chems. Co., 29

F.3d 148, 151 (4th Cir. 1994).
Because removal raises federalism concerns, the court must
carefully scrutinize the facts to ensure that removal is
appropriate.

Mulcahey, 29 F.3d at 151 (citing Shamrock Oil & Gas

Corp. v. Sheets, 313 U.S. 100 (1941)).

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The removing defendant

bears the burden of establishing that removal is appropriate.
Landmark Corp. v. Apogee Coal Co., 945 F. Supp. 932, 935 (S.D.W.
Va. 1996) (Copenhaver, J.).

“If federal jurisdiction is

doubtful, a remand is necessary.”

Mulcahey, 29 F.3d at 151.

Fraudulent joinder is an exception to the complete diversity
requirement of Section 1332.

The fraudulent joinder doctrine

allows a district court to disregard, for jurisdictional
purposes, the citizenship of a diversity-destroying defendant,
assume jurisdiction over a case, dismiss the diversity-destroying
defendant, and thereby retain jurisdiction.

Mayes v. Rapoport,

198 F.3d 457, 461 (4th Cir. 1999). A defendant is fraudulently
joined if the plaintiff commits outright fraud in his pleadings
or if there is no possibility of stating a claim against the
resident defendant.

Mayes, 198 F.3d at 464.

fraudulent joinder is particularly heavy.

The burden to show

Defendants must show

that plaintiff cannot establish a claim against the non-diverse
defendant even after resolving all issues of fact and law in
plaintiff’s favor.

Id.

The standard to be applied by the court

is even more favorable to the plaintiff than the standard for
granting motions to dismiss under Federal Rule of Civil Procedure
12(b)(6).

Id. at 464, 466 (stating that a “glimmer of hope” for

relief against the non-diverse defendant is sufficient to defeat
removal jurisdiction).

In making this determination, the court

is not limited to the allegations of the pleadings, but may

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consider the entire record and determine the basis of the joinder
“by any means available.”

Id.
III. Analysis

“It is fundamental contract law that one cannot be liable
for a breach of contract unless one is a party to that contract.”
Electron Energy Corp. v. Short, 408 Pa. Super. 563, 597 A.2d 175,
177 (2005); cf. Desco Corp. v. Harry W. Trushel Constr. Co., 413
S.E.2d 85, 89 (W. Va. 1991) (“Our rule for damages as a result of
a breach of contract is that recovery may be obtained for those
damages which either arise naturally from the breach or may
reasonably have been within the contemplation of the parties at
the time they made the contract.”).

CLH was not a party to the

written agreement attached to the notice of removal and, were
that the operative agreement underlying this breach of contract
action, CLH would have been fraudulently joined and removal would
be proper.

However, at the hearing on the remand motion, counsel

for Resurrection assured this court that the basis of its breach
of contract action was an oral agreement between Resurrection,
JCJC, and CHL -- not the written agreement.

For this reason and

on the record before it, the court cannot conclude that
Resurrection has “no possibility” of establishing its breach of
contract claim against CLH.

See Mayes, 198 F.3d at 464.

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IV.Conclusion
Because defendants have not carried the onerous burden of
demonstrating fraudulent joinder, the court concludes that it
lacks jurisdiction over this matter.

Accordingly, plaintiff’s

motion to remand is hereby GRANTED to the extent it seeks remand.
Because the court concludes that the propriety of removal of this
action was subject to a fair dispute, see Landmark Corp. v.
Apogee Coal Co., 945 F. Supp. 932, 939-40 (S.D.W. Va. 1996), the
motion is DENIED to the extent it seeks attorney fees and costs.
The court REMANDS this action to the Circuit Court of McDowell
County, and DIRECTS the Clerk to remove this matter from the
court’s active docket.
The Clerk is further directed to send a copy of this
Memorandum Opinion to all counsel of record, and to forward a
certified copy of the same to the Clerk of the Circuit Court of
McDowell County.
It is SO ORDERED this 21st day of November, 2017.
ENTER:

David A. Faber
Senior United States District Judge

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