1400 FM 1417 LLC v. Certainteed Corp.

• Decision Date: 28 March 2022
• Docket Number: Civil Action 4:21-cv-00847
• Court: U.S. District Court — Eastern District of Texas
• Parties: 1400 FM 1417 LLC, Plaintiff, v. CERTAINTEED CORPORATION, Defendant.

1400 FM 1417 LLC, Plaintiff,
v.
CERTAINTEED CORPORATION, Defendant.

Civil Action No. 4:21-cv-00847

United States District Court, E.D. Texas, Sherman Division

March 28, 2022

MEMORANDUM OPINION AND ORDER

AMOS L. MAZZANT UNITED STATES DISTRICT JUDGE

Pending before the Court are Plaintiff 1400 FM 1417 LLC's Motion to Remand to State Court (Dkt. #4) and Supplemental Motion to Remand (Dkt. #13). The Court, having reviewed the motions and the responses, finds that both motions should be GRANTED.

BACKGROUND

On December 18, 2003, CertainTeed Corporation entered into a long-term lease agreement (the “Lease Agreement”) with the State of Texas to lease the commercial property at issue in this lawsuit, 1400 F.M. Rd. 1417, Sherman, Texas 75092 (the “Property”). Following a sale of the Property and assignment of rights, Plaintiff became the owner and lessor of the Property on April 19, 2021.

On September 24, 2021, Plaintiff served Defendant with an eviction notice, claiming that Defendant was in default and in breach of the Lease Agreement. When Defendant refused to vacate, Plaintiff filed a forcible detainer suit (Dkt. #2) (the “Petition”) in the Justice of the Peace Court, Precinct 1, Grayson County, Texas, on September 30, 2021. On October 22, 2021, Defendant removed the case to the undersigned Court pursuant to 28 U.S.C. §§ 1332, 1441, and 1446 (Dkt. #1). Defendant asserts that removal was proper because there is complete diversity

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between the parties and the amount in controversy exceeds $75, 000.

On November 19, 2021, Plaintiff filed a motion to remand (Dkt. #4), arguing the removal did not properly establish subject matter jurisdiction based on either diversity or a federal question. On December 3, 2021, Defendant filed a response (Dkt. #5). On December 10, 2021, Plaintiff filed a reply (Dkt. #7). On December 17, 2021, Defendant filed a sur-reply (Dkt. #11).

On December 15, 2021, Defendant filed an amended notice of removal to clarify the citizenship of its member entity (Dkt. #10). On December 13, 2021, Plaintiff filed a supplemental motion to remand to address the amended notice of removal (Dkt. #13). On January 4, 2022, Defendant filed a response (Dkt. #14).^[1]

LEGAL STANDARD

“Federal courts are courts of limited jurisdiction, possessing only that power authorized by Constitution and statute.” Gunn v. Minton, 568 U.S. 251, 256 (2013) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). “Only state court actions that originally could have been filed in federal court may be removed to federal court by the defendant.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (citing 28 U.S.C. § 1441(a)). “In an action that has been removed to federal court, a district court is required to remand the case to state court if, at any time before final judgment, it determines that it lacks subject matter jurisdiction.” Humphrey v. Tex. Gas Serv., No. 1:14-CV-485, 2014 WL 12687831, at *2 (E.D. Tex. Dec. 11, 2014) (citations omitted). The Court “must presume that a suit lies outside [its] limited jurisdiction, ” Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001), and “[a]ny ambiguities are construed against removal and in favor of remand to state court.” Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392, 397 (5th Cir. 2013) (citing Manguno v. Prudential Prop. & Cas. Ins. Co.,

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276 F.3d 720, 723 (5th Cir. 2002)). “When considering a motion to remand, the removing party bears the burden of showing that federal jurisdiction exists and that removal was proper.” Humphrey, 2014 WL 12687831, at *2 (quoting Manguno, 276 F.3d at 723).

ANALYSIS

Defendant asserts that removal was proper because there is complete diversity between the parties and the amount in controversy exceeds $75, 000. Accordingly, the Court examines whether removal was proper under 28 U.S.C § 1332.

I. Complete Diversity

Plaintiff contends Defendant has failed to establish complete diversity of citizenship, making removal improper (Dkt. #4 at p. 20).

Subject matter jurisdiction exists under 28 U.S.C. § 1332 only when there is complete diversity of citizenship between the parties. Vantage Drilling Co. v. Hsin-Chi Su, 741 F.3d 535, 537 (5th Cir. 2014). For diversity purposes, an individual is a citizen of the state where he is domiciled. MidCap Media Fin., L.L.C. v. Pathway Data, Inc., 929 F.3d 310, 313-314 (5th Cir. 2019). A corporation is a citizen of the state, or states, of its incorporation and the state where its principal place of business is located. Id. The citizenship of a limited liability company is determined by considering the citizenship of all of its members or managers. Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1080 (5th Cir. 2008); Temple Drilling Co. v. La. Ins. Guar. Ass'n, 946 F.2d 390, 393 (5th Cir. 1991). The party invoking jurisdiction under § 1332 is responsible for showing that the parties are completely diverse. See Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir. 1980).

A. Plaintiff's Citizenship

Defendant alleges that Plaintiff is a citizen of Texas. Plaintiff argues that Defendant

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“assumes without evidence” that Plaintiff “is a citizen of Texas for diversity purposes” without “meet[ing] its burden . . . [to] first identify all of [Plaintiff's] members” (Dkt. #4 at p. 21).

The Fifth Circuit requires a removing party to “affirmatively and distinctly allege” the citizenship of the parties in the notice of removal. Getty Oil Corp. v. Ins. Co. of N.A., 841 F.2d 1254, 1259 (5th Cir. 1988). Here, Defendant's notice of removal (Dkt. #1; Dkt. #10) states simply that “Plaintiff . . . is a citizen of Texas.” The notice does not identify Plaintiff as a limited liability company, nor identify the citizenship of Plaintiff's members or managers. Thus, Plaintiff is correct that Defendant did not properly allege Plaintiff's citizenship in its notice of removal.

However, while the notice of removal contains a technical defect, Defendant has provided competent evidence in responsive pleadings to support its allegation that Plaintiff is a Texas citizen. See Hertz Corp. v. Friend, 559 U.S. 77, 96-97 (2010) (“When challenged on allegations of jurisdictional facts, the parties must support their allegations by competent proof.”). Defendant's responsive pleadings fully assess the citizenship of Plaintiff as a limited liability company, supported by evidence in the form of business records and state filings.^[2] “Statements in a responsive pleading to a motion to remand may [ ] cure jurisdictional defects in the removal petition.” Smith v. Wal-Mart Stores, Inc., No. EP-08-CV-085, 2008 WL 11333885, at *2 (W.D. Tex. June 23, 2008); see also Willingham v. Morgan, 395 U.S. 402, 408 n.3 (1969) (“This material should have appeared in the petition for removal. However, for purposes of this review it is proper to treat the removal petition as if it had been amended to include the relevant information contained in the later-filed affidavits”), abrogated on other grounds by Osborn v. Haley, 549 U.S. 225 (2007); Vane v. Safety-Kleen Sys., Inc., No. 3:21-CV-2171, 2021 WL 6063619, at *3 n.2 (N.D. Tex. Dec. 20, 2021)

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(collecting cases). Thus, contrary to Plaintiff's argument, Defendant's subsequent filings contain competent evidence to remedy the defect in the notice of removal.

Further, “the Fifth Circuit [has] approved removal where defendants ‘asserted on information and belief that all [ ] plaintiffs were citizens of Texas' and where the plaintiffs ‘failed to demonstrate that this was incorrect.'” Hise Real Est. Invs., LP v. Great Lakes Ins. SE, No. 4:20-CV-820, 2021 WL 217264, at *2 (E.D. Tex. Jan 21, 2021) (quoting Volentine v. Bechtel, Inc., 209 F.3d 719, 2000 WL 284022, at *2 (5th Cir. Feb. 9, 2000) (unpub. op.)). Plaintiff does not challenge that it is a Texas citizen or demonstrate that it has members Defendant failed to identify; in fact, Plaintiff “admits it is a citizen of Texas” for diversity purposes (Dkt. #7 at p. 4).

Consequently, the Court finds Defendant has met its burden to allege Plaintiff's citizenship for diversity purposes. Defendant has alleged that Plaintiff is a citizen of Texas. Plaintiff is a limited liability company, so its citizenship is based on the citizenship of its members. Harvey, 542 F.3d at 1080. Defendant submitted records from the Texas Secretary of State indicating that Plaintiff's sole manager-member is PF-NTX Industrial I LLC (see Dkt. #5, Exhibit 6). PF-NTX Industrial I LLC has three individual managers, all alleged to be domiciliaries of Texas. Thus, PF-NTX Industrial I LLC is a citizen of Texas. Because Plaintiff's sole manager-member is a citizen of Texas, Plaintiff is also a citizen of Texas for diversity purposes.

Having determined the citizenship of Plaintiff, the Court will now assess the citizenship of Defendant.

B. Defendant's Citizenship

1. CertainTeed's Entity Status

Before determining Defendant's citizenship, the Court must resolve a dispute between the parties regarding Defendant's correct name and entity form. The company named in the Petition

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and sued as the defendant in this case is “CertainTeed Corporation” (see Dkt. #2). Defendant answered as “CertainTeed LLC, ” insisting that it was improperly named in this suit. Defendant contends that because of a divisive merger, “CertainTeed Corporation no longer exists” (Dkt. #1 at p. 1 n.1), and CertainTeed LLC is the correct real party in interest as the successor to CertainTeed Corporation. Defendant's counsel “informed Plaintiff of its mistake in naming CertainTeed and asked that Plaintiff amend [its] Petition. Plaintiff has implicitly refused to amend and properly name” Defendant as CertainTeed LLC (Dkt. #1 at p. 1 n.1). In response, Plaintiff states that “CertainTeed Corporation is the signatory and lessee to the subject lease and Defendant has failed to produce any evidence of an assignment or transfer...