Dalraida Properties, Inc. v. Elastikote, LLC, 062315 ALMDC, 2:14-cv-1213-MHT-PWG

Docket Nº2:14-cv-1213-MHT-PWG
Opinion JudgePAUL W. GREENE, Magistrate Judge.
Party NameDALRAIDA PROPERTIES, INC., et al., Plaintiffs, v. ELASTIKOTE, LLC, et al., Defendants.
Case DateJune 23, 2015
CourtUnited States District Courts, 11th Circuit, Middle District of Alabama

DALRAIDA PROPERTIES, INC., et al., Plaintiffs,

v.

ELASTIKOTE, LLC, et al., Defendants.

No. 2:14-cv-1213-MHT-PWG

United States District Court, M.D. Alabama, Northern Division.

June 23, 2015

REPORT AND RECOMMENDATION

PAUL W. GREENE, Magistrate Judge.

On December 22, 2014, the above-styled matter was referred to the undersigned for review by United States District Judge Myron H. Thompson. (Doc. 10); see also 28 U.S.C. § 636(b); Rule 72, Fed. R. Civ. P.; United States v. Raddatz, 447 U.S. 667 (1980); Jeffrey S. v. State Board of Education of State of Georgia, 896 F.2d 507 (11th Cir. 1990). On November 6, 2014, Plaintiffs Dalraida Properties, Inc. ("Dalraida Properties"), and Pilkerton Building Company, LLC ("Pilkerton"), filed this lawsuit in state court asserting claims sounding generally in fraud, negligence and breach of warranty against Defendants ElastiKote, LLC ("ElastiKote"), The Sherwin-Williams Company ("Sherman-Williams"), and Ty Simmons. (Docs. 1 & 1-1). Plaintiffs also seek punitive damages under Ala. Code § 6-11-20 (1975). (Doc. 1-1 at p. 16). Twelve days prior to the order of reference, Defendant Sherwin-Williams Company, with the consent of its co-defendants, removed this lawsuit from the Circuit Court of Montgomery County, Alabama, to this court and asserts subject matter jurisdiction pursuant to 28 U.S.C. § 1332. (Doc. 1). Before the court is Plaintiff's motion to remand. (Doc. 13). The motion is briefed and deemed under submission.

Dalraida Properties and Pilkerton are Alabama residents because they are Alabama corporations with their principal places of business in that state. ElastiKote and Sherwin-Williams are formed and have their principal places of business in Ohio. (Doc. 1 at pp. 5-6). Defendant Simmons is a resident of Alabama. (Docs. 1, 1-1, and 1-3). Defendants argue, however, that Mr. Simmons is fraudulently joined.

Upon consideration and for the reasons discussed herein, the Magistrate Judge RECOMMENDS that the motion to remand be GRANTED and that this matter be remanded to the Circuit Court of Montgomery County, Alabama.

I. DIVERSITY JURISDICTION AND FRAUDULENT JOINDER

"Any civil case filed in state court may be removed by the defendant to federal court if the case could have been brought originally in federal court." Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1356 (11th Cir. 1996) (citing 28 U.S.C. § 1441(a)), abrogated on other grounds by Cohen v. Office Depot, Inc., 204 F.3d 1069 (11th Cir. 2000); accord City of Vestavia Hills v. General Fid. Ins. Co., 676 F.3d 1310, 1313 n.1 (11th Cir. 2012). A federal court may exercise diversity jurisdiction over all civil actions where the amount in controversy exceeds $75, 000, exclusive of interest and costs, and the action is between citizens of different states. 28 U.S.C. § 1332(a)(1).

Nevertheless, "[b]ecause removal jurisdiction raises significant federalism concerns, federal courts are directed to construe removal statutes strictly.... Indeed, all doubts about jurisdiction should be resolved in favor of remand to state court." University of S. Ala. v. American Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999); Diaz v. Sheppard, 85 F.3d 1502, 1505 (11th Cir. 1996); White v. Wells Fargo Home Mortgage, Civil Action No. 1:11-cv-408-MHT, 2011 WL 3666613, at *3 (M.D. Ala. Aug. 22, 2011) (a federal court is "obligat[ed] to narrowly construe removal statutes"; this obligation necessarily "requires that uncertainties be resolved in favor of remand'") (quoting Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994)). A removing defendants' burden to establish federal jurisdiction is "a heavy one." Pacheco de Perez v. AT&T Co., 139 F.3d 1368, 1380 (11th Cir. 1998). "When a defendant removes a case to federal court on diversity grounds, a court must remand the matter back to state court if any of the properly joined parties in interest are citizens of the state in which the suit was filed." Henderson v. Washington National Ins. Co., 454 F.3d 1278, 1281 (11th Cir. 2006).

A defendant seeking to prove that a co-defendant was fraudulently joined must demonstrate either that: "(1) there is no possibility the plaintiff can establish a cause of action against the [non-diverse or] resident defendant; or (2) the plaintiff has fraudulently pled jurisdictional facts to bring the resident defendant into state court." Id. The defendant must make such a showing by clear and convincing evidence. See Parks v. N.Y. Times Co., 308 F.2d 474, 478 (5th Cir. 1962) (emphasis added).1

In the context of fraudulent joinder, the court is required to both evaluate the parties' factual allegations and submissions in the light most favorable to the plaintiff and resolve all uncertainties about state substantive law in favor of the plaintiff. See Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997). "However, if a defendant shows that there is no possibility the plaintiff can establish [any of the alleged] cause[s] of action against the resident defendant, then the plaintiff is said to have fraudulently joined the non-diverse defendant." Florence v. Crescent Res., LLC, 484 F.3d 1293, 1297 (11th Cir. 2007) (quotation marks and citation omitted). "Fraudulent joinder is a judicially created doctrine that provides an exception to the requirement of complete diversity." Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998). "In that situation the federal court must dismiss the non-diverse defendant and deny any motion to remand the matter back to state court." Florence, 484 F.3d at 1297.

Although the determination of whether a non-diverse defendant has been fraudulently joined "should be made based upon the plaintiff's pleadings at the time of removal, " Cabalceta v. Standard Fruit Co., 883 F.2d 1553, 1561 (11th Cir. 1989) (citing Pullman Co. v. Jenkins, 305 U.S. 534, 537 (1939)), a district court "can consider any submitted affidavits and/or deposition transcripts, " id. (citing Coker v. Amoco Oil Co., 709 F.2d 1433, 1440 (11th Cir. 1983) ("Both parties may submit affidavits and deposition transcripts." (citing, in turn, B., Inc. v. Miller Brewing Co., 663 F.2d 545, 550 (5th Cir. Unit A Dec. 1981))), superseded by statute on other grounds as stated in Georgetown Manor, Inc. v. Ethan Allen, Inc., 991 F.2d 1533 (11th Cir.1993)). The fraudulent joinder analysis, then, is not confined to the pleadings, but may also encompass "any affidavits and deposition transcripts submitted by the parties." Legg v. Wyeth, 428 F.3d 1317, 1322 (11th Cir. 2005).

II. BACKGROUND AND STATEMENT OF FACTS2

Plaintiff Dalraida Properties owns and operates a shopping center in Montgomery, Alabama, and it leases space to a Winn-Dixie grocery store. Since 2009, Pilkerton has conducted "general maintenance" for Dalraida Properties at the Winn-Dixie market. (Doc. 1-1 at p. 7). By late-2011, Winn-Dixie was experiencing problems with leaks as a result of standing water or "ponding" on its roof. (Doc. 1-1 at p. 7). Plaintiffs decided to repair the roof.

Defendant Simmons is currently a store manager for a Sherwin-Williams retail store in Montgomery, Alabama, and he has been employed by Sherwin-Williams since 2007. (Docs. 1-3 & 16-1; Declarations of Ty Williams). From January 2, 2011 until May 6, 2013, and during the time relevant to his participation in the events forming the basis of this lawsuit, Simmons was a sales representative for Sherwin-Williams. (Doc. 1-3 at p. 2). While working with Pilkerton on another project, Simmons learned that Pilkerton was planning to repair the Winn-Dixie roof. He "recommended that Pilkerton purchase and use ElastiKote, a [brand of products] sold by his employer, Sherwin-Williams" to repair the roof. (Doc. 1-1 at p. 7). On a separate occasion, Simmons called and "assured" Pilkerton that ElastiKote products would "withstand the ponding water" on the Winn-Dixie roof, and he also "encouraged" Pilkerton to purchase a "GRACO spray machine" from Sherwin-Williams, which is a necessary tool for applying ElastiKote. (Doc. 1-1 at p.7).

In March 2012, Josh Brandyberry, who was the "Technical Support Manager and Director of Technical Sales for ElastiKote flew to Montgomery" from Ohio at the behest of Simmons and Sherwin-Williams. (Doc. 1-1 at p. 8). Brandyberry and Simmons met with Pilkerton, took measurements of the roof, and recommended the use of "ElastiKote 100." ( Id. ). Simmons testifies, through a declaration filed in opposition to the motion to remand, that he "did not possess Brandyberry's qualifications for sophisticated explanations and/or recommendations with respect to the ElastiKote products.... All of the oral assurances or recommendations [he] made about the ElastiKote products were general statements about the use of the product and based on ElastiKote materials provided to [him] and on the positive experiences of other persons who used the same products." (Doc. 16-1 at pp. 2-3, ¶¶ 9-10).

Brandyberry later provided Pilkerton with literature regarding ElastiKote containing information on warranties and product use, supplied a letter that set out purported money saving benefits of ElastiKote products versus a traditional roof replacement, and promised to train Pilkerton on the proper application of ElastiKote products. After the meeting, Sherwin-Williams provided Pilkerton with an estimate for all costs associated with using ElastiKote for the roofing repair. Brandyberry supplied Pilkerton with an estimate of the number of drums of ElastiKote 100 and "Labor Sav'R, " another ElastiKote product, that would be needed for the Winn-Dixie repair project.

In October 2012, Plaintiffs decided to use ElastiKote products to repair the roof on the shopping center, and they made that decision in reliance on the...

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