Bolivar v. R & H Oil and Gas Co., Inc., Civ. A. No. E90-0094(L)

CourtUnited States District Courts. 5th Circuit. Southern District of Mississippi
Citation789 F. Supp. 1374
Docket NumberE90-0093(L) and E90-0092(L).,Civ. A. No. E90-0094(L)
PartiesTamela Gayle Ward BOLIVAR, Administratrix of the Estate of Donnie Ray Bolivar, Deceased, Tamela Gayle Ward Bolivar, and Cathy Gayle Bolivar, Brandy Nichole Bolivar and Justin Allen Bolivar, Minors, by Tamela Gayle Ward Bolivar, Mother and Next Friend, Plaintiffs, v. R & H OIL AND GAS COMPANY, INC., Allen Keith Robertson and H.D. Burns, Sr., Defendants. Charles WINDHAM, Plaintiff, v. R & H OIL AND GAS, INC., Allen Keith Robertson, and H.D. Burns, Sr., Defendants. Rosie Jean KENNEDY, Individually and Administratrix of the Estate of Dewayne Kennedy, Deceased and as Next Friend of Alvin Corneilous Wilson and Joseph Dewayne Wilson, Minors, and Katherine Vickers as Next Friend of Christopher Alexander Vickers, a Minor, Individually, Plaintiffs, v. R & H OIL AND GAS COMPANY, INC., Henry David Burns, Sr., a/k/a H.D. Burns, Sr., Jointly and Severally, Defendants.
Decision Date26 March 1991

Thomas A. Cook, Charles G. Copeland, Lee Howell, III, Copeland, Cook, Taylor & Bush, Jackson, Miss., H. Alex Brinkley, Hattiesburg, Miss., for plaintiffs.

Walker W. Jones, III, William C. Brabec, Joseph A. Ziemianski, Phelps, Dunbar, Marks, Claverie & Sims, Jackson, Miss., for R & H Oil.

MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

Plaintiffs in the above styled actions, Tamela Gayle Bolivar, Administratrix of the Estate of Donnie Ray Bolivar, deceased, and Rosie Jean Kennedy, individually and as Administratrix of the Estate of Dewayne Kennedy, deceased, brought wrongful death actions, and Charles Windham brought a personal injury action against R & H Oil and Gas, Inc. (R & H), a non-resident of Mississippi, and Henry D. Burns, Sr., a Mississippi resident, following a May 29, 1990 explosion of methane and hydrogen sulfide gases that occurred when the Travis No. 3 Well near Heidelberg, Mississippi blew out during a workover operation. At the time of the blowout, R & H was operator and part-owner of the well; Burns owned a working interest in the well. Allen Keith Robertson, a Louisiana resident and R & H's vice-president and "company man" at the well site, was also named as a defendant in the Bolivar action. Plaintiffs initiated their lawsuits in the Circuit Court of the First Judicial District of Jasper County, Mississippi,1 purporting to state claims against defendants based on negligence in the operation and maintenance of the well and well site and strict liability for the performance of an abnormally dangerous activity. Defendants removed the cases to this court, asserting that defendant Burns was a nonconsenting working interest owner in the well who had no personal involvement in the actual operation or control of the well and who therefore, as a matter of law, could have no liability to plaintiffs for the acts complained of. Defendants charged that Burns had been fraudulently joined for the sole purpose of defeating diversity jurisdiction under 28 U.S.C. § 1332.

Following removal, Burns moved in each of the three actions for summary judgment advancing in support of his motion the same grounds set forth in the petition for removal, i.e., that he had no liability to plaintiffs since he was merely a nonconsenting working interest owner in the well and had never in any manner participated in or attempted to control the performance of any work at the well. The plaintiffs in the respective cases moved for remand to state court, contending that Burns was properly joined as a defendant since plaintiffs' complaints stated viable claims for recovery against Burns; consequently, according to plaintiffs, the court lacks subject matter jurisdiction over these cases.

Facts

R & H acquired its interest in the Travis No. 3 Well from Shell Western E & P, Inc. (SWEPI) pursuant to an assignment and bill of sale which was executed on March 2, 1990, with an effective date of January 1, 1990. R & H took its interest subject to the terms of an operating agreement dated April 1, 1969 between Shell Oil Co., Central Oil Co. and Chesley Pruett, and R & H agreed to assume all obligations of SWEPI under the operating agreement. Burns, who had in 1970 contributed his lease to the unit when SWEPI was the well operator, was not a signatory to the operating agreement. When it took over the well, R & H was provided by SWEPI with a list of non-operating working interest owners who had participated in Shell's operations at the well prior to R & H's acquisition. Only 1.38% of the leasehold estate was owned by Mississippi residents; of this amount, Burns owned .38% and various relatives of his owned the remaining 1%. The out-of-state nonoperators included Louis Robertson, the brother of R & H's president who owned 37.51%; Cairn Energy U.S.A., Inc. in Dallas, Texas owned 12.34%; and Chesley Pruett in Arkansas owned 9.68%.

It is undisputed that R & H intended to purchase all non-operators' interests in the leasehold estate, except that owned by Louis Robertson, and toward that end, R & H sent letters to all nonoperators offering to purchase their interests. Attached to the letter from R & H offering to purchase Burns' interest was an authorization for expenditure (AFE) which apprised Burns that R & H proposed to perform a workover operation on the Travis No. 3 Well to attempt to reestablish production from the well. These documents were mailed to Burns on April 24, 1990, and on the same date, R & H began the workover operation described in the AFE. Burns had not responded to the offer to purchase his interest, nor had he returned the AFE prior to the blowout which occurred on May 29, 1990.2

It is further undisputed that in connection with the reworking operation, Allen Keith Robertson, on behalf of R & H, contracted with Farrar Oilfield Services, Inc. to perform the workover operation. Either during the workover itself, or during the process of placing the well back on production, the blowout occurred.3 Each of the plaintiffs, from what the court is able to discern, was employed by Farrar when the blowout occurred.4

Standard for Consideration of Remand

Because the motion to remand calls into question this court's jurisdiction to act in these cases, it will be first considered, since "a trial court must be certain of its jurisdiction before embarking upon a safari in search of a judgment on the merits." B., Inc. v. Miller Brewing Co., 663 F.2d 545, 548-49 (5th Cir.1981). The defendants bear the "heavy" burden of demonstrating fraudulent joinder. Carriere v. Sears, Roebuck and Co., 893 F.2d 98, 101 (5th Cir.) (citing Laughlin v. Prudential Ins. Co., 882 F.2d 187, 190 (5th Cir.1989)), cert. denied, ___ U.S. ___, 111 S.Ct. 60, 112 L.Ed.2d 35 (1990). To sustain their burden, it is incumbent on defendants to establish that the plaintiffs have no possibility of recovery against Burns:

Where the removing party grounds its allegations of "fraudulent joinder" upon a theory that the plaintiff cannot recover from the in-state defendant as a matter of law, the trial court should resolve all disputed questions of fact in favor of the plaintiff and then determine whether there could possibly be a valid cause of action set forth under state law.

B., Inc. v. Miller, 663 F.2d at 551; see also Carriere, 893 F.2d at 100. In Parks v. New York Times Company, 308 F.2d 474, 477 (5th Cir.1962), cert. denied, 376 U.S. 949, 84 S.Ct. 964, 11 L.Ed.2d 969 (1964), the court explained as follows:

The joinder is fraudulent if it is clear that, under the law of the state in which the action is brought, the facts asserted by the plaintiff as the basis of liability of the resident defendant could not possibly create such liability so that the assertion of the cause of action is as a matter of local law plainly a sham and frivolous. And a joinder is fraudulent if the facts asserted with respect to the resident defendant are shown to be so clearly false as to demonstrate that no factual basis existed for any honest belief on the part of plaintiff that there was joint liability.

The Fifth Circuit has consistently advised that in making determinations of fraudulent joinder, the trial court should avoid pretrying substantive issues of fact:

A district court need not and should not conduct a full scale evidentiary hearing on questions of fact affecting ultimate issues of substantive liability in a case in order to make a preliminary determination as to the existence of subject matter jurisdiction. The question of whether the plaintiff has set forth a valid claim against the in-state defendant(s) should be capable of summary determination.

B., Inc., 663 F.2d at 551. At the same time, however, the district court may pierce a plaintiff's pleadings to determine whether there exists, in fact, a basis for imposing liability against the resident defendant.

While we have frequently cautioned the district courts against pretrying a case to determine removal jurisdiction, we have also endorsed a summary judgment-like procedure for disposing of fraudulent joinder claims. In B., Inc., we carefully discussed the procedures for assessing fraudulent joinder claims and noted that "the proceeding appropriate for resolving a claim of fraudulent joinder is similar to that used for ruling on a motion for summary judgment...." Id. at 549 n. 9. The B., Inc., court expressly authorized consideration of evidence outside of the pleadings:
In support of their removal petition, the defendants may submit affidavits and deposition transcripts; and in support of their motion for remand, the plaintiff may submit affidavits and deposition transcripts along with the factual allegations contained in the verified complaint.
Id. at 549. Similarly, in Keating v. Shell Chemical Co., 610 F.2d 328 (5th Cir. 1980), we approved "piercing the pleadings" to determine controlling state law for purposes of resolving fraudulent joinder questions. We remanded that case for a determination "by summary judgment
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