Bobby Jones Garden Apartments, Inc. v. Suleski

Decision Date26 February 1968
Docket NumberNo. 24402.,24402.
Citation391 F.2d 172
PartiesBOBBY JONES GARDEN APARTMENTS, INC., Appellant, v. F. R. SULESKI, Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

Henry P. Trawick, Jr., Millican & Trawick, Sarasota, Fla., for appellant.

Vernon W. Evans, Jr., Thomas C. MacDonald, Jr., Tampa, Fla., Shackleford, Farrior, Stallings & Evans, Tampa, Fla., of counsel, for appellee.

Before BROWN, Chief Judge, and COLEMAN and SIMPSON, Circuit Judges.

JOHN R. BROWN, Chief Judge:

Although the new wrinkle, Mike Hooks, Inc. v. Pena, 5 Cir., 1963, 313 F. 2d 696, 1963 AMC 355, is that it sneaks in the back way on removal, this Court is once more confronted with the highly precarious action of dismissal of a complaint on the bare bones pleadings for failure to state a claim upon which relief could be granted. Without expressing any opinion whatsoever on its ultimate provability as a Florida claim, we hold here only that this case, like so many already, is now added to the casualty list to worsen the mortality rate. Cf. Barber v. Motor Vessel "Blue Cat," 5 Cir., 1967, 372 F.2d 626, and cases cited at 627 n. 1. For to the usual looseness must be added the further factor that in testing fraudulent joinder it is enough to show a good faith expectation, not a legal certainty, that the attacked claim is good under state law. We reverse.

Plaintiff sued Whirlpool, the Manufacturer,1 and its Agent Suleski2 in the Florida State Courts. The Manufacturer removed the case to the Federal Court on the ground that the Agent was joined as a party for the fraudulent purpose of defeating removal. No motion to remand was filed, nor did the Court on its own raise the question of removability — in reality the Court's jurisdiction. But the Agent filed and the Trial Court granted a motion to dismiss for failure to state a claim. F.R.Civ.P. 12(b). This was done, and is here defended, on the Florida merits, or more accurately the lack of them. After a like fate to the amended complaint which eliminated any possible formal defects to a good claim and the plaintiff declining to amend further, the District Court dismissed the claim against the Agent.

The plaintiff appeals from this dismissal which is both `final" for appeal3 and res judicata in any future suit in the Florida Courts. The parties by brief continued to wage battle on the Florida merits with scarcely a deferential genuflection toward the spectre of removability. Not so the Court. For to this Court, calling for supplemental briefs, Florida substantive liability, although a significant issue, is tangential to removability and hence jurisdiction.

It rounds out this prologue to point up this little irony. On Manufacturer's thesis of removability, at the hands of a Court which acquired jurisdiction over him because he ought never to have been in the case at all so that had he not formally been a party, the corporate nonresident could have removed on simple diversity, the Agent is adjudged finally to have no liability. Federal jurisdiction rests on the fiction that the resident defendant is not really a party, not really "present," yet the Court below adjudicated finally the rights of the one not `there."4

The complaint charged both defendants — Manufacturer and Agent — with making misrepresentations about the heating ability of air heating-conditioning units sold to plaintiff for installation in a multi-unit apartment construction project, and with being negligent in making the representations. In considerable factual detail it set out the transaction. Plaintiff, then constructing the apartment project, made a written contract (attached) with Manufacturer for the air units. After examination of the building plans, both Manufacturer and Agent represented by the attached writings that the units would adequately heat the apartments.5 The plaintiff relied on the representations as Manufacturer and Agent, experts in the field, knew it would. But the units did not heat.6 As a result plaintif sustained damages ($450,000.00) for removal, renewal costs plus consequential loss of tenants, revenues and ability to amortize the mortgage. By Count II it was specifically alleged that "defendants were negligent in making recommendations to plaintiff to use said air conditioning units."

Unlike the parties who joust for victory on who wins or loses our sole concern is: Who tries the case? State or Federal Court? For to us we cannot escape the problem of removability. The Agent-appellee makes the initial contention that plaintiff cannot contest the jurisdiction of the Federal Court since it failed to contest the petition for removal and has never moved to have the cause remanded. The result of plaintiff's inaction, says the Agent, is to admit all the allegations in the Manufacturer's petition for removal.7 As a general rule this is true when the allegations concern questions of fact, O'Campo v. Hardisty, 9 Cir., 1959, 262 F.2d 621, but Manufacturer's petition asserts only that as a matter of law plaintiff has not stated a cause of action against Agent which makes the joinder fraudulent. That legal contention is controverted, plaintiff says, not by facts touching on motive for removal but by plaintiff's demonstration that the Florida law is different from what they think it to be. See Smith v. Southern Pac. Co., 9 Cir., 1951, 187 F.2d 397.8 To this may be added the now considerable doubt whether under Finn (note 7 supra) the right to challenge removability is ever lost.

To the Court's expressed concern that Finn (note 7 supra) and its reading of "separate and independent claim" in section 1441(c)9 could sustain removal, the parties quickly join in a disavowal. Manufacturer is first to acknowledge that removal rests on sections 1441(a)10 and (b)11 and the still viable Judge-imported concept of fraudulent joinder. Wilson v. Republic Iron & Steel Co., 1921, 257 U.S. 92, 42 S.Ct. 35, 66 L.Ed. 144. We have held this to be unaffected by revisions of the 1948 Judicial Code.12 Covington v. Indemnity Ins. Co., 5 Cir., 1958, 251 F. 2d 930; Bentley v. Halliburton Oil Well Cementing Co., 5 Cir., 1949, 174 F.2d 788.

We have stated the standard for determining this in Parks v. New York Times Co., 5 Cir., 1962, 308 F.2d 474, at 478:

"There can be no fraudulent joinder unless it be clear that there can be no recovery under the law of the state on the cause alleged, or on the facts in view of the law * * *. One or the other at least would be required before it could be said that there was no real intention to get a joint judgment, and that there was no colorable ground for so claiming."

This is an Erie problem in part, but only part. In the usual diversity situation a Federal Court, no matter how difficult the task, must ascertain (and then apply) what the state law is. Cf. United Services Life Ins. Co. v. Delaney, 5 Cir., 1962, 308 F.2d 484, reheard en banc, 1964, 328 F.2d 483, on receipt of answer to certification, 1966, 358 F.2d 714, cert. denied, 385 U.S. 846, 87 S.Ct. 39, 17 L. Ed.2d 77. But here the question is whether there is arguably a reasonable basis for predicting that the state law might impose liability on the facts involved. If that possibility exists, a good faith assertion of such an expectancy in a state court is not a sham, is not colorable and is not fraudulent in fact or in law. Albi v. Street & Smith Pub., Inc., 9 Cir., 1944, 140 F.2d 310; Gillette v. Koss Const. Co., W.D.Mo., 1957, 149 F. Supp. 353; Richardson v. Southern Idaho Water Power Co., 9 Cir., 1913, 209 F. 949.13

Thus we get to the question: Is there a reasonably good chance that Florida today will hold the Agent to some liability? In answering it, we assume without deciding that we must look to the original state court pleading,14 not the amended complaint filed after removal. We may readily do this if we read it through the Federal, not Florida, lenses. Barber v. Motor Vessel "Blue Cat," 5 Cir., 1967, 372 F.2d 626, of Conley v. Gibson, 1957, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80:

"The accepted rule is that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."

Id. at 45-46, 78 S.Ct. at 102, 2 L.Ed.2d at 84.15 This is especially true since the Erie lights, of significant, but not decisive, importance are, for a change, rather bright.16

The Florida law of actionable misrepresentation was recently capsulated into the following elements in Kutner v. Kalish, Fla.Dist.Ct.App., 1965, 173 So.2d 763, 765:

"(1) a misrepresentation of material fact.
(2) a knowledge of the representor of the misrepresentation, or, b representations made by the representator without knowledge as to either truth or falsity, or, c representations made under circumstances in which the representor ought to have known, if he did not know, of the falsity thereof,
(3) an intention that the representation induce another to act on it, and
(4) resulting injury to the party acting in justifiable reliance on the representation."

See Joiner v. McCullers, 1947, 158 Fla. 562, 28 So.2d 823; Watson v. Jones, 1899, 41 Fla. 241, 25 So. 678; Wheeler v. Baars, 1894, 33 Fla. 696, 15 So. 584. We have set out the Florida elements of fraud in full above because its law is different from most jurisdictions in that the representor does not have to have knowledge of the falsity of his statement to be held liable.17 Instead, negligent misstatement is enough. See Watson v. Jones, 1899, 41 Fla. 241, 25 So. 678, where the Court said that "when it is shown that the statement was material and false, and that the defendant's situation or means of knowledge were such as to make it incumbent upon him as a matter of duty to know whether the statement was true or false, the conclusion is almost irresistible that he did know that which his duty required him to know." Id. at 254, 25 So. at 682. Of course we realize, as do the Florida...

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