Hawthorne Land Co. v. Occidental Chemical Corp.
| Decision Date | 15 November 2005 |
| Docket Number | No. 04-30137.,04-30137. |
| Citation | 431 F.3d 221 |
| Parties | HAWTHORNE LAND COMPANY; Hugh A. Hawthorne Family Class Trust, Bank One Trust Company, NA, Plaintiffs-Appellants, v. OCCIDENTAL CHEMICAL CORPORATION; et al., Defendants, Occidental Chemical Corporation; Texas Brine Company, LLC, Successor in Interest to Texas Brine Corporation; Paul Lane, d/b/a Paul Lane's Construction Company; Marsh Buggage Equipment Company; Woodson Construction Company; Tassin International Limited, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Victor L. Marcello, Donald T. Carmouche, John H. Carmouche. Talbot, Carmouche & Marcello, Gonzales, LA, for Plaintiffs-Appellants.
René Andrew Curry, Jr., Terese M. Bennett, Christopher C. Friend, Curry & Friend. New Orleans, LA, for Occidental Chemical Corp. and Texas Brine Co., LLC.
Amy Collier Lambert, Robert N. Markle, Adams & Reese, Baton Rouge, LA, for Tassin Intern. Ltd.
Appeals from the United States District Court for the Eastern District of Louisiana.
Before REAVLEY, HIGGINBOTHAM and GARZA, Circuit Judges.
Plaintiffs appeal orders of the district court denying remand and joinder of a party and an order granting summary judgment for defendants. We affirm.
In 1965, Hugh Hawthorne purchased a tract of land in St. James Parish, Louisiana. Soon after buying the land, Hawthorne conveyed a servitude to defendant Texas Brine so that it could construct, operate, and maintain a pipeline (called the Oxy-Taft pipeline) on the property. The pipeline is currently operated by Texas Brine and owned by defendant Occidental pursuant to an operating agreement between the two. It is used to transport highly concentrated sodium chloride solution, or brine.
Through various transactions in 1986 and 1987, Hawthorne Land Company ("Hawthorne Land"), Hawthorne Trust (Bank One Trust Company as trustee), and Nire, Inc. acquired ownership in the land, with Nire owning a 5% undivided interest. From 1985 to 1987, the pipeline experienced seven leaks on the property which resulted in the discharge of significant amounts of brine. Occidental hired independent contractors to weld repairs for some of the leaks. Some of the welds were allegedly performed improperly and the leaks continued.
A subsequent site assessment by the plaintiffs' experts showed that the brine had migrated both vertically and horizontally through the ground water, requiring extensive remediation. The pipeline was replaced in 1988.
In February of 2001, plaintiff Hawthorne Land, a Louisiana corporation, sued eight defendants in state court under tort and contract theories for property damage arising from the leaks. When the suit was filed, six of the eight original defendants were Louisiana citizens. Occidental and Texas Brine (the two non-Louisiana defendants) timely removed to federal court, claiming diversity jurisdiction existed because the non-diverse defendants were improperly joined. They also alleged bankruptcy jurisdiction because one defendant, Woodson Construction Company, had filed for bankruptcy. They answered the complaint with various defenses, including the failure of Hawthorne Land to join all co-owners of its property as plaintiffs.
Hawthorne Land dismissed the alleged bankrupt defendant, filed a motion for leave to amend its complaint to join co-owner Hawthorne Trust as co-plaintiff, and filed a motion to remand. The court granted leave to Hawthorne Land to amend its complaint. Both Occidental and Texas Brine filed oppositions to the motion to remand, and the motion was denied.
Almost a year later, plaintiffs moved to join Nire, Inc., the third co-owner of the land, as a defendant. The district court denied the motion, noting that Nire had recently settled its potential claims with defendants. Plaintiffs moved to join Nire as a defendant, which the district court denied for the same reasons as its denial of the first motion to join Nire.
After extensive discovery, defendants filed a motion for summary judgment on the basis of prescription, and the motion was granted.
Plaintiffs first contend that the district court erred in refusing to remand the case to state court. They argue that two of the in-state defendants — the welders Cain's Hydrostatic Tester, Inc. ("Cain's") and Diamond Fabricators, Inc. ("Diamond") — were properly joined because they performed inadequate welds on the pipeline which later leaked, exposing them to liability. We review the denial of the motion to remand de novo.1
Joinder is improper if "there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant," so that a plaintiff must be able to survive a hypothetical Rule 12(b)(6) challenge to the claim to effect remand.2 The summary inquiry into facts "is appropriate only to identify the presence of discrete and undisputed facts that would preclude plaintiff's recovery against the in-state defendant."3 Plaintiffs cannot survive such a challenge here.
First, plaintiffs' petition does not state that Cain's and Diamond were welders; it states, improperly, that they were excavators. Plaintiffs appear to concede this. Moreover, the paragraph in the petition mentioning Cain's and Diamond states that their actions "did not result in the discharge of [brine]." Plaintiffs appear to concede this as well. The petition does not state a claim against Cain's and Diamond.
Second, even if we were to construe the petition liberally to allege negligent welding by Cain's and Diamond, a summary inquiry into the facts reveals that such claims could not survive a motion to dismiss. As defendants point out, without rebuttal by plaintiffs, there is no documentary connection between Cain's and Diamond and the failed welds. The petition does not allege any connection, and the defendants convincingly show that the leak reports relied upon by plaintiffs in the motion to remand do not reveal a connection, either. In addition, the defendants offered the affidavit of Jim Kleinpeter, a plant manager at Texas Brine, which stated that none of the welds by Cain's or Diamond failed; this affidavit may be "selfserving [sic]," as plaintiffs contend, but it is evidence which plaintiffs have not contradicted on even a superficial level.
Because there was no reasonable basis for the district court to predict that plaintiffs could recover against Cain's and Diamond, its denial of the motion to remand was proper.
Plaintiffs next contend that the district court erred in not allowing the joinder of Nire, a co-owner of the land and non-diverse party which, if joined as a defendant, would have destroyed diversity jurisdiction. We review this conclusion for abuse of discretion.4
When Occidental and Texas Brine answered Hawthorne Land's petition, they raised as a defense Hawthorne Land's failure to join all of the co-owners of the land. Plaintiffs claim that Hawthorne Land then contacted both Hawthorne Trust and Nire, but that Nire refused to join as a plaintiff. Hawthorne Land was granted leave to amend its complaint to join co-owner Hawthorne Trust.
Six months later — almost a year after Hawthorne Land filed the petition — plaintiffs filed a second proposed amended complaint, seeking to join Nire as a defendant or involuntary plaintiff5 and apparently arguing that Nire was a necessary party under Federal Rule of Civil Procedure 19.6 Plaintiffs stated that during those six months they "exhaust[ed] their efforts to convince Nire to join [the case]." Defendants objected to the second proposed amended complaint because they had settled with Nire for $40,000 not long after the second proposed amended complaint was filed, arguing that joinder was no longer required. The settlement released the defendants from all liability and required Nire to cooperate in the defendants' efforts against plaintiffs. Defendants also argued that, if joinder were required, Nire be joined as a plaintiff. Plaintiffs argued in reply that Nire should be joined as a defendant because it might be liable to them for contribution and its contribution might be larger than the proceeds it received in the settlement. The magistrate judge denied the motion and the district court denied review of that order.
Later, plaintiffs filed a third motion for leave to amend to add as defendants various owners of adjacent land, defendants who would have defeated diversity. Plaintiffs alleged that brine from defendants' pipeline leaked onto the property of these landowners and later migrated to plaintiffs' property. Plaintiffs do not appeal this order.
Finally, plaintiffs filed a fourth motion7 for leave to amend to add Nire as a defendant. Although the underlying facts were the same as that for the second motion, plaintiffs relied on a new theory — that Nire "aligned" itself with the defendants because the settlement required it to assist the defendants in their case against plaintiffs. Specifically, plaintiffs argued that the settlement was an unfair attempt to "manipulate" evidence because, after plaintiffs' environmental analysis found excavation necessary, the defendants argued that Louisiana law forbade plaintiffs to excavate without Nire's consent. Plaintiffs argued that, had the lack of Nire's consent caused an inadequate award at trial, they could have held Nire liable under Louisiana law which holds one co-owner liable to the other for damages caused to the common property, including damages from juridical acts. The court denied the motion.
The district court did not abuse its discretion in denying the second motion to amend. The court held that Nire was not a necessary party under Rule 198 because it had settled with defendants and could not affect any potential recovery by plaintiffs, which was and remained 95% of the total damages. It rejected as speculative and premature plaintiffs' argument that they could sue Nire if it refused to contribute for costs to analyze or repair the...
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