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Hoyt v. The Lane Construction Corp.

United States Court of Appeals, Fifth Circuit

June 10, 2019

LINDSEY HOYT, Individually, and Independently as Administrator of the Estate of Jeffery Hoyt and as Next Friend of Joel Hoyt, Evan Hoyt, and Katie Hoyt; PATRICK HOYT, Plaintiffs-Appellants,

          Appeals from the United States District Court for the Northern District of Texas

          Before JONES, HAYNES, and OLDHAM, Circuit Judges.


         We must decide whether the district court erred by refusing to remand this case to state court. It did not. Next, we must decide whether the district court erred by granting summary judgment to the defendant. It did.


         On December 29, 2015, Jeffery Hoyt hit a patch of ice while driving on FM 2264 in Wise County, Texas. Jeffery slid off the road. His car landed upside down in an adjacent body of water. Tragically, Jeffery drowned. Less than an hour later, a second driver hit the same patch of ice. The second driver likewise slid off the road. And the second driver landed directly on top of Jeffery's submerged vehicle. That apparently saved the second driver from drowning. First responders rescued him and, in the process, discovered Jeffery's vehicle and body.

         On September 20, 2016, members of Jeffery's family ("the Hoyts") filed suit in Texas state court. They sued C.E.N. Concrete Construction Co., Storm Water Management, Inc., and the Lane Construction Corporation. The Hoyts, C.E.N., and Storm are citizens of Texas. Lane is not. The Hoyts contended all three companies had performed construction work on FM 2264 and caused ice to form at the crash site. The defendants moved for summary judgment. The state district court granted C.E.N.'s motion and entered a "take nothing" judgment in its favor.

         The Hoyts and Storm engaged in settlement discussions. They never reached agreement. Yet on September 22, 2017-one year and two days after the suit began-the Hoyts voluntarily dismissed their claims against Storm. The Hoyts received no compensation from Storm.

         Five days later, Lane removed the case to federal court on the theory that it now fit within federal diversity jurisdiction. See 28 U.S.C. § 1332(a)(1); Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005) (requiring "complete diversity"). The next day, the Hoyts filed an emergency motion to remand. They argued Lane's notice of removal was untimely. The federal district court denied that motion. In a second motion to remand filed about a month later, the Hoyts argued the voluntary-involuntary rule prohibited removal because C.E.N. had been dismissed against their wishes. The district court denied that motion too.

         Lane moved for summary judgment on the Hoyts' claims for premises liability and gross negligence. The federal district court granted the motion.

         It dismissed the claims against Lane with prejudice. The Hoyts timely appealed.


         The Hoyts argue we must remand the case to state court. We disagree. The district court properly rejected both remand motions.


         The Hoyts' first motion for remand turns on timeliness. Under 28 U.S.C. § 1446(c), the defendant in a diversity case has one year following the commencement of an action to remove it. But Congress created an exception to this time bar where "the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action." Id. § 1446(c)(1). Here, the district court found the Hoyts acted in bad faith by improperly joining Storm (which prevented complete diversity and hence precluded removal).[1] The district court therefore denied the Hoyts' motion to remand under § 1446(c)'s time bar.

         Although we review the denial of a motion to remand de novo, we review the underlying finding of bad faith for clear error. Spear Mktg., Inc. v. BancorpSouth Bank, 791 F.3d 586, 591 (5th Cir. 2015). We hold (1) the district court's bad-faith finding was not clearly erroneous, and (2) the Hoyts cannot avoid that result by relying on cases that predate Congress's enactment of the bad-faith exception to § 1446(c)(1)'s time bar.


         Exercising its role as factfinder, the district court found the Hoyts "knew months beforehand that the evidence would not support the claims against Storm." That was not clear error. The Hoyts dismissed Storm a mere two days after the one-year deadline expired. They did so without receiving any consideration from Storm. Before that dismissal, the Hoyts seem to have pursued their claim against Storm only half-heartedly. Their witness list for trial did not include any fact witnesses from Storm. And the Hoyts' expert witnesses made no serious efforts to establish Storm's liability. All of this suggests the Hoyts kept Storm in the case for one purpose and one purpose only-to prevent removal during § 1446(c)'s one-year removal period. Two days after accomplishing that purpose, the Hoyts dismissed Storm for free.

         The Hoyts' response is unpersuasive. In the district court, the Hoyts submitted an affidavit from their attorney to describe allegedly strategic reasons for their decision to dismiss Storm. But these explanations relate to why the Hoyts were reluctant to go to trial against Storm or accept Storm's (apparently low) settlement offer. They do not explain why the Hoyts waited until just two days after the one-year deadline to dismiss Storm. And while the Hoyts claim they dismissed Storm after their settlement discussions came to naught, the district court found it "suspicious[]" the Hoyts did not clarify when "the alleged discussions with Storm" took place. We agree.

         Nor can the Hoyts win a remand by raising "fact issues" regarding their good faith. True, "we resolve all contested factual issues . . . in favor of the plaintiff" when determining whether it improperly joined a non-diverse defendant. Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281 (5th Cir. 2007). That makes sense because, when considering whether "the plaintiff [is able] to establish a cause of action against the non-diverse party in state court," the question is what the plaintiff might prove in the future. Ibid.; see Guillory v. PPG Indus., Inc., 434 F.3d 303, 308 (5th Cir. 2005); Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc). When it comes to bad faith, by contrast, the question is what motivated the plaintiff in the past-that is, whether the plaintiff's litigation conduct meant "to prevent a defendant from removing the action." 28 U.S.C. § 1446(c)(1). The district court found as a matter of fact the Hoyts acted in bad faith. The Hoyts failed to carry their burden to prove that finding was clearly erroneous.


         The Hoyts also argue we must reverse because their litigation conduct does not satisfy the exception we created in Tedford v. Warner-Lambert Co., 327 F.3d 423 (5th Cir. 2003). But Tedford pre-dates Congress's enactment of the bad-faith exception in § 1446(c)(1), and it therefore does not control.

         Before 2011, § 1446 prohibited defendants like Lane from removing a case "more than 1 year after commencement of the action"-full stop. 28 U.S.C. § 1446(b) (2006). The statutory text contained no exceptions. Believing this old version of § 1446(b) was "not inflexible," however, Tedford ruled "the conduct of the parties may affect whether it is equitable to strictly apply the one-year limit." 327 F.3d at 426. In light of the plaintiff's "efforts to manipulate statutory rules," the Tedford Court concluded, "[e]quity demands [the plaintiff] be estopped from seeking to remand the case on the basis of the one-year limit in § 1446(b)." Id. at 428 & n.13.

         Other courts disagreed. They held that § 1446 did not allow for equitable tolling or estoppel. See, e.g., Brock v. Syntex Labs., Inc., No. 92-5740, 1993 WL 389946, at *1 (6th Cir. Oct. 1, 1993); Kinabrew v. Emco-Wheaton, Inc., 936 F.Supp. 351, 352 n.1 (M.D. La. 1996) (collecting cases). This split persisted until 2011, when Congress amended § 1446. See Federal Courts Jurisdiction and Venue Clarification Act of 2011, Pub. L. No. 112-63, § 103(b), 125 Stat. 758, 760 (2011). By adding the bad-faith exception to the one-year deadline, Congress resolved the conflict.

         If Congress wanted to resolve the conflict by adopting the Tedford standard, it could have done so. Cf. 42 U.S.C. § 2000bb(b)(1) (listing the restoration of "the compelling interest test as set forth in Sherbert v. Verner, 374 U.S. 398 (1963) and Wisconsin v. Yoder, 406 U.S. 205 (1972)" as a purpose of the Religious Freedom Restoration Act). But it did not. Congress instead chose to replace Tedford's equitable-estoppel principle with a "bad faith" standard. See 28 U.S.C. § 1446(c)(1). And we presume that choice of different text carries with it a choice of different meaning. Cf. Henson v. Santander Consumer USA Inc., 137 S.Ct. 1718, 1723 (2017) ("[W]hen we're engaged in the business of interpreting statutes we presume differences in language . . . convey differences in meaning."). We therefore no longer apply the old § 1446 and the Tedford exception we created. We now apply the new § 1446 and the bad-faith exception Congress created. See Thompson v. Deutsche Bank Nat'l Tr. Co., 775 F.3d 298, 303 (5th Cir. 2014).

         Our holding is consistent with the principle that "Congress is vested with the power to prescribe the basic procedural scheme under which claims may be heard in federal courts." Patsy v. Bd. of Regents, 457 U.S. 496, 501 (1982). Once Congress has prescribed those procedures, we cannot add to them. See, e.g., Ross v. Blake, 136 S.Ct. 1850, 1857 (2016) (holding the Prison Litigation Reform Act does not admit of judge-made exceptions). We do not exalt judge-made doctrines over valid laws. See Am. Express Co. v. Italian Colors Rest., 570 U.S. 228, 235-39 (2013) (refusing to apply "a judge-made exception to the FAA" broadly because "[t]he FAA does not sanction such a judicially created superstructure"); CLS Bank Int'l v. Alice Corp. Pty., 717 F.3d 1269, 1303 (Fed. Cir. 2013) (en banc) (Rader, C.J., concurring in part and dissenting in part) ("[J]udge-made exceptions to properly enacted statutes are to be narrowly construed.").

         It does not matter the House Report accompanying the 2011 statute cites Tedford. That's for two reasons. First, when "a statute's text is clear, courts should not resort to legislative history." Adkins v. Silverman, 899 F.3d 395, 403 (5th Cir. 2018). And we think the new § 1446(c)(1) is clear. But second, in all events, the report cites Tedford only once, and only then to explain the conflict the amendment would resolve. See H.R. Rep. 112-10, at 15 (2011), as reprinted in 2011 U.S.C.C.A.N. 576, 580. The report does not say the bill would adopt the Tedford standard. Instead, it refers to the statutory bad-faith exception as a "new standard." Ibid. Relying on a single reference to Tedford- without accounting for the author's description of the bad-faith standard as "new"-would be "akin to 'looking over a crowd and picking out your friends.'" Patricia M. Wald, Some Observations on the Use of Legislative History in the 1981 Supreme Court Term, 68 Iowa L. Rev. 195, 214 (1983) (quoting Harold Leventhal's description of problems with citing legislative history).

         Thus, even if the Hoyts' litigation conduct would not satisfy the old Tedford standard (an issue we need not decide), that is no reason to reverse the district court's finding ...

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