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Banks v. Hiab USA, Inc.

United States District Court, M.D. Louisiana

March 24, 2017

MILTON BANKS, JR.
v.
HIAB USA, INC., ET AL.

          RULING AND ORDER

          BRIAN A. JACKSON, CHIEF JUDGE

         Before the Court is a Motion for Summary Judgment (Doc. 23) and a Motion for Sanctions and Attorneys Fees (Doc. 24) filed by Deep South Equipment Company ("Deep South"). In its motions, Deep South alleges that Plaintiff is unable to produce sufficient evidence to prove its claims against Deep South and asks that the Court impose sanctions because of Plaintiffs failure to dismiss the "frivolous factually unsupportable claims" it asserted against Deep South. Oral argument is not necessary.

         I. BACKGROUND

         On or about March 14, 2014, Milton Banks, Jr. ("Plaintiff") was delivering lumber on his employer's behalf to a residential construction site in Zachary, Louisiana, when he was seriously injured while operating a Moffett M5500 Truck-Mounted Lift, Model No. G190258 ("the Lift"). (Doc. 1-2 at p. 1). The accident rendered Plaintiff a paraplegic. Plaintiff filed this action in the Nineteenth Judicial District Court for the Parish of East Baton Rouge, State of Louisiana, on March 13, 2015. (Doc. 1-2). In his Petition, Plaintiff alleges that HIAB USA, Inc., the manufacturer of the Lift, and Deep South, which Plaintiff identifies as the "seller" of the Lift (collectively "Defendants"), are responsible for the physical injuries sustained by Plaintiff while he was operating the Lift. (Id. at p. 1).

         Defendants filed a timely notice of removal with the Court on April 24, 2015, asserting that this Court has subject-matter jurisdiction based on diversity of citizenship pursuant to 28 U.S.C. § 1332. (Doc. 1 at p. 2). In their Notice of Removal, Defendants assert that Deep South Equipment Company ("Deep South"), "a domestic corporation organized and existing under the law of the state of Louisiana, " has been improperly joined in this matter to defeat diversity jurisdiction and that consequently its presence in this suit should be disregarded. (Id. at pp. 4-7).

         Deep South thereafter filed a motion for summary judgment and a motion for sanctions on June 24, 2016, arguing that Plaintiff is unable to produce sufficient evidence to prove its claims against Deep South and asking that the Court impose sanctions because of Plaintiff's failure to dismiss the "frivolous factually unsupportable claims" it asserted against Deep South. (See Doc. 24-2 at p. 3). On January 18, 2017, before ruling on the pending substantive motions, the Court initiated a sua sponte inquiry into this Court's subject-matter jurisdiction and ordered the parties to submit briefs specifically addressing the fraudulent joinder allegations and potential jurisdictional issues flagged by Defendants in their Notice of Removal. (See Doc. 39). Pursuant to the Court's Order, Defendants filed a joint brief, in which they reasserted many of the arguments contained in their Notice of Removal and Deep South's motion for summary judgment.

         Because federal courts are courts of limited jurisdiction, the Court is required to inquire into the potential jurisdictional defect and must first determine whether it has subject-matter jurisdiction over this action before turning to Deep South's motion for summary judgment and motion for sanctions. See Mclin v. H & H Lure Co., 102 F.Supp.2d 341, 343 n. 2 (M.D. La. June 2, 2000) ("Before the Court can rule on the motion..., the Court must first determine if the Court has subject-matter jurisdiction. To determine if the Court has subject-matter jurisdiction, the Court must first determine if there was a fraudulent joinder. If the Court finds there was a fraudulent joinder, it is in effect finding that the plaintiffs have no cause of action against the non-diverse defendant.").

         II. DISCUSSION

         A. FRAUDULENT JOINDER

         A defendant may generally remove a civil action filed in state court if the federal court has original jurisdiction over the action. See 28 U.S.C. § 1441(a). The removing party bears the burden of showing that federal jurisdiction exists. See Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995). In assessing whether removal was appropriate, the Court is guided by the principle, grounded in notions of comity and the recognition that federal courts are courts of limited jurisdiction, that removal statutes should be strictly construed. See, e.g., Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002); Neal v. Kawasaki Motors Corp., No. 95-668, 1995 WL 419901, at *4 (E.D. La. July 13, 1995). Although the Court must remand to state court if at any time before final judgment it appears that it lacks subject-matter jurisdiction, the Court's jurisdiction is fixed at of the time of removal. 28 U.S.C. § 1447(c); Doddy v. Oxy USA, Inc., 101 F.3d 448, 456 (5th Cir. 1996).

         For diversity jurisdiction to exist, the amount in controversy must exceed $75, 000, and there must be complete diversity between plaintiffs and defendants. See 28 U.S.C. § 1332(a); Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978). Here, the parties do not dispute that the amount-in-controversy-requirement is met, but they disagree about whether the complete diversity requirement is satisfied. Plaintiff and Deep South both have Louisiana citizenship, which would ordinarily destroy complete diversity. See McLaughlin v. Miss. Power Co., 376 F.3d 344, 353 (5th Cir. 2004). And when a non-diverse party is properly joined as a defendant, no defendant may remove the case under 28 U.S.C. § 1332. But a defendant may remove by showing that the non-diverse party was joined improperly. Smallwood v. III. Cent, R. Co., 352 F.3d 220, 222 (5th Cir. 2003) (Smallwood I).

         The burden of demonstrating improper joinder is a heavy one, as the doctrine is a narrow exception to the rule of complete diversity. Id. A defendant may establish improper joinder by showing either (1) actual fraud in pleading jurisdictional facts, or (2) the inability of the plaintiff to establish a cause of action against the non-diverse defendant. Defendants do not contend that Plaintiffs inclusion of Deep South in this litigation was the result of actual fraud. As such, the Court will focus its inquiry on Deep South's ability to satisfy the latter showing, the test for which is "whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant, which stated differently means that there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant." Smallwood v. Illinois Cent. R. Co., 385 F.3d 568, 574 (5th Cir. 2004) (Smallwood II). The possibility must be reasonable, not merely theoretical. Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir. 2002).

         In analyzing whether a plaintiff has demonstrated a reasonable possibility of recovery, the district court may "'conduct a Rule 12(b)(6)-type analysis, looking initially at the allegations of the complaint to determine whether the complaint states a claim under state law against the in-state defendant.'" Menedez v. Wal-Mart Stores, Inc., 364 Fed.App'x. 62, 69 (5th Cir. 2010) (per curiam) (quoting Smallwood II, 385 F.3d at 573).

         The scope of the inquiry for improper joinder, however, is even broader than that for Rule 12(b)(6) because the Court may "pierce the pleadings" and consider summary judgment-type evidence to determine whether the plaintiff has a basis in fact for his or her claim. Smallwood I, 352 F.3d at 223 n.8 (citing Travis v. Irby, 326 F.3d 644, 648-49 (5th Cir. 2003)). See also Hornbuckle v. State Farm Lloyds,385 F.3d 538, 542 (5th Cir. 2004). In conducting this inquiry, the Court must "take into account all unchallenged factual allegations, including those alleged in the complaint, in the light most favorable to the plaintiff." Travis, 326 F.3d at 649. So, too, must the Court resolve all ambiguities of state law in favor of ...


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