Harris v. Huffco Petroleum Corp.

• Decision Date: 11 March 1986
• Docket Number: Civ. A. No. 85-1538-H.
• Citation: 633 F. Supp. 250
• Parties: Jay D. HARRIS, et al., Plaintiffs, v. HUFFCO PETROLEUM CORPORATION, et al., Defendants.
• Court: U.S. District Court — Southern District of Alabama

633 F. Supp. 250

Jay D. HARRIS, et al., Plaintiffs, v. HUFFCO PETROLEUM CORPORATION, et al., Defendants.

Civ. A. No. 85-1538-H.

United States District Court, S.D. Alabama, S.D.

March 11, 1986.

COPYRIGHT MATERIAL OMITTED

James E. Hart, Jr., Brewton, Ala., for plaintiffs.

Rae M. Crowe, David A. Bagwell, Armbrecht, Jackson, DeMouy, Crowe, Holmes & Reeves, Mobile, Ala., for defendants.

ORDER

HAND, Chief Judge.

In this case this Court is confronted yet again with an ingenious attempt to manipulate the removal statutes to the advantage of a foreign corporation displeased by the prospect of defending a lawsuit in the Alabama state court system at the side of a resident ally. This particular action was filed in the Circuit Court for Escambia County, Alabama, on November 20, 1985. An amended complaint was filed on December 13, 1985, and the removal petition was filed in this Court on December 19, 1985.

The plaintiff's state court complaint, which was not significantly altered by the amendment, alleged five causes of action against two defendants. Plaintiff Jay D. Harris sued Huffco Petroleum Corporation (Huffco) for malicious prosecution, malicious harassment, and breach of contract. Plaintiff Jay D. Harris sued both Huffco and defendant Woodrow Hobson, Jr., for slander. Plaintiff Gertrude E. Harris sued both defendants for loss of consortium.

Huffco's removal petition alleged diversity of citizenship as the basis for jurisdiction. The complaint alleged that Huffco is a corporation with its principal place of business in Texas, and that Hobson is a citizen of Tuscaloosa County, Alabama. The removal petition agrees that Huffco's principal place of business is Texas, and alleges that it is organized under the laws of Delaware. Defendant Hobson, however, does not exactly allege his own citizenship. Basically, defendants contend that Hobson is a citizen of Florida if plaintiff Jay D. Harris is a citizen of Alabama. They also contend that plaintiff is actually a citizen of California, thus creating diversity of citizenship between him and Hobson whether Hobson is a citizen of Alabama or Florida. Alternatively, defendants contend that Hobson was fraudulently joined as a party defendant to defeat removal, and that his presence may be disregarded for purposes of determining diversity of citizenship. Thus, according to defendants, only Huffco's citizenship is relevant, and Huffco is clearly diverse from Harris, whether Harris is a citizen of Alabama or California. The Court will deal with each of these contentions in turn.

Initially, however, the Court notes that removal is a purely statutory remedy, authorized by 28 U.S.C. § 1441. Section 1441(a) authorizes defendants alone to effect removal, while subsection b authorizes the removal of cases based on complete diversity,¹ if none of the defendants is a citizen of the state in which the action is brought. 28 U.S.C. § 1441(b); Martin v. Snyder, 148 U.S. 663, 13 S.Ct. 706, 37 L.Ed. 602 (1893). As the right of removal is statutory, the statute must be strictly construed to limit federal jurisdiction² and prevent encroachment on the state court's right to decide cases properly brought before it,³ especially in diversity cases.⁴ The removing defendant or defendants bear the burden of establishing the right to invoke federal jurisdiction.⁵

I

Turning first to the question of whether there exists diversity of citizenship, the Court observes that the defendant has not alleged that he is a citizen of Alabama, but only that if the plaintiff is allowed to maintain a domicile in Alabama but a residence in California, then defendant should be allowed to maintain a domicile in Florida and a residence in Alabama. These contentions stem from the fact that the plaintiff, while answering certain deposition questions in July of 1985, stated that he lived in California. The defendant contends that plaintiff Jay Harris and defendant Hobson are each engaged in the business acquisition of mineral leasehold interests, requiring continual movement about the country while maintaining a constant domicile. Thus, according to defendants, plaintiffs' assertion of California residence in July, but Alabama domicile in November, obliges the Court to find that Hobson, in November, was a citizen of Florida, or that plaintiff is a citizen of California.⁶ This is fallacious. First, this argument attempts to justify diversity now on the basis of a situation allegedly existing in July of 1985. The relevant inquiry is where Hobson's domicile⁷ was at the time the complaint was filed in November of 1985. As this fact was fully available to defendants at the time removal was filed, and keeping in mind that the defendants bear the burden of demonstrating removability,⁸ the defendants' allegations have failed to demonstrate, or even allege, that Hobson was a citizen of a state other than Alabama. Second, the plaintiff's citizenship is quite irrelevant. Even if plaintiff is a citizen of California, (and plaintiff has presented substantial evidence of Alabama citizenship that defendants have not rebutted),⁹ if Hobson is a citizen of Alabama, removal is barred by section 1441(b). 28 U.S.C. § 1441(b); Martin v. Snyder, supra. Finally, plaintiff presented a copy of testimony of Hobson taken in February of 1985 in which Hobson stated that he lived in Tuscaloosa, Alabama, and had lived there since 1979. While this circumstance, like plaintiffs' citizenship between July and November, might have changed in the intervening time, defendants have flatly failed to dispute the continuing validity of the statements. Defendants have thus failed to carry the burden of showing either diversity or the non-Alabama citizenship of Hobson.¹⁰ This ground for jurisdiction must be rejected, and removal was improper, at least on this basis.

II

The defendants' alternative reason for claiming proper removal is that Hobson was fraudulently joined for purposes of defeating federal diversity jurisdiction and preventing removal. Impressed upon the removal statutes by various court decisions,¹¹ the fraudulent pleading theory prevents wily plaintiffs' attorneys from circumventing removal by joining citizens of the forum state whose only guilt is having associated with the real defendant, who for some reason invariably dislike litigating in the plaintiff's backyard as much as plaintiffs' attorneys seem to dislike federal court.¹²

Defendants in this action, faced with the Hobson's choice of litigating the admittedly ersatz claims presented in several counts of the complaint in Escambia County Circuit Court, or attempting to invoke this Court's jurisdiction via removal, chose to try and show that the slander claim is so specious that no Alabama court would ever entertain it. For this is essentially the burden on removing defendants seeking to prove fraudulent joinder.

In order to establish that a ... resident defendant has been fraudulently joined, the removing party must show either that there is no possibility that the plaintiff would be able to establish a cause of action against the resident defendant in state court or that there has been outright fraud in the plaintiff's pleading of jurisdictional facts.

Coker v. Amoco Oil Co., 709 F.2d 1433, 1440 (11th Cir.1983). See also B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir.1981);¹³ Keating v. Shell Chem. Co., 610 F.2d 328, 332 (5th Cir.1980); Bobby Jones Garden Apts., Inc. v. Suleski, 391 F.2d 172, 177 (5th Cir.1968). While Coker dealt with the specific fact of whether fictitious parties were fraudulently joined, the essential analysis of such cases is the same. In this action, defendants mount a dual attack on the viability of plaintiff's slander claim, which is all that involves Hobson in this case.¹⁴

Defendants first contend that the allegations in the complaint only make out a claim of slander per quod under Alabama law, thus requiring the pleading of special damages. According to defendants, the complaint does not plead special damages with sufficient particularity¹⁵ and thus no Alabama court would do anything but dismiss plaintiff's slander claim. Thus, this Court can dismiss the claim and get on with the now diverse lawsuit between plaintiffs and Huffco. For the proposition that the complaint is deficient in pleading specials the defendants rely on Harrison v. Burger, 212 Ala. 670, 103 So. 842 (1925). The Court finds that Harrison is, in truth, controlling, albeit not in the manner defendants thought. The plaintiff's slander claim is stated as follows:

Plaintiff claims of the Defendants damages for false and malicious statements concerning the Plaintiff, made in the presence of third persons, in substance as follows: Defendants, in July of 1984, made statements that the Plaintiff was not a "reputable person" and a "shady character".

2. That as a result of the aforesaid statements made by the Defendants, the Plaintiff's character and reputation has been severely damaged and his ability to earn a livelihood has been severely and permanently impaired and he has been caused extreme mental suffering and anguish, and has otherwise been severely and permanently damaged as a result of the conduct of the Defendants.

Plaintiff's Complaint, Count Two, page 2.

In Harrison, supra, the plaintiff alleged slander per quod, and the following damage allegation was found sufficient: "plaintiff was caused to suffer great mental pain and anguish, was caused to be embarrassed and chagrined, and her credit and financial standing in the city of Birmingham was greatly impaired, all to her damage." 212 Ala. at 672, 103 So. at 843. This language is virtually identical to the language used by plaintiff in his complaint. This Court would be hard pressed to rule that language held sufficient by the Supreme Court of Alabama is yet so blatantly ineffective that no Alabama court would do ought more than dismiss it for failure to state a claim. To so hold would be to poach upon the territory of a...