Johnson v. Heublein Inc.
| Decision Date | 07 September 2000 |
| Docket Number | No. 99-60316,99-60316 |
| Citation | 227 F.3d 236 |
| Parties | (5th Cir. 2000) LOUIS JOHNSON; ET AL Plaintiff LOUIS JOHNSON; CAROLYN NEWELL JOHNSON; GULF MACHINERY SALES AND ENGINEERING CORP.; DAVID R. WALKER Plaintiffs-Appellants v. HEUBLEIN INC.; CANANDAIGUA WINE COMPANY, INC.; WALTER MASLOWSKI, doing business as SETC and/or SETC, Inc., doing business as Salisbury, ETC. Defendants-Appellees |
| Court | U.S. Court of Appeals — Fifth Circuit |
[Copyrighted Material Omitted] Appeal from the United States District Court For the Southern District of Mississippi
Before POLITZ, SMITH and DENNIS, Circuit Judges.
Plaintiffs-Appellants appeal from the district court's judgment denying their motion to remand the case to state court on the grounds that it was untimely removed under 28 U.S.C. § 1446(b). We AFFIRM.
In December 1992, Gulf Machinery Sales and Engineering Corp. ("GSE"), a Florida corporation, entered into a contract with Heublein, Inc.,("Heublein"), a Connecticut corporation, to construct a specialty machine evaporator to be shipped to Heublein's Mission Bell Winery in Madera, California. Beginning the same month, Louis and Carolyn Newell Johnson, domiciliaries of Mississippi, made a series of loans to GSE to finance the costs of manufacturing the evaporator. In exchange GSE gave the Johnsons promissory notes, personally guaranteed by its officer, David R. Walker ("Walker"), a Florida domiciliary. GSE granted both Heublein and the Johnsons security interests in the evaporator. Heublein registered its security interest by filing a UCC financing statement with the Florida Secretary of State on or about December 14, 1992; the Johnsons registered their security interest in like manner on June 10, 1994.
The written contract between GSE and Heublein provided that GSE's failure to deliver the operational evaporator by the stipulated date prior to the California grape harvest season would entitle Heublein to liquidated damages by deducting from the price of the evaporator $2,500 for each day of GSE's default in timely performance. The written contract also provided that it could be modified only by another agreement in writing. GSE failed to meet the deadline. On September 28, 1993, Heublein notified GSE of an assessment of liquidated damages against it of $165,000 for 66 days delay in delivery from July 26, 1993 through October 31, 1993. In early October, however, representatives of Heublein and GSE allegedly entered an oral compromise agreement that GSE would pay only for the "actual costs" of the delay then estimated to be between $30,000 and $40,000. GSE completed its performance on October 15, 1993. Nevertheless, on October 20, 1993, Heublein assessed GSE with an additional $35,000 in damages for the delay between October 1 and October 15, 1993. Despite GSE's protest based on the alleged oral compromise agreement, Heublein deducted all of the assessed liquidated damages from the amount of its final payment to GSE for the evaporator. Sometime after the delivery of the evaporator, Heublein sold the Mission Bell Winery, including the evaporator, to Canandaigua Wine Company, Inc. ("Canandaigua"), a Delaware corporation.
In October 1995, the Johnsons filed a complaint in Mississippi state court naming as defendants GSE, Heublein, Canandaigua, Walker, and Walter Maslowski, a Florida domiciliary. As plaintiffs, the Johnsons alleged that GSE and Walker had defaulted on promissory notes in the amount of $198,726.37 secured by the Johnsons' registered UCC financing statement on the evaporator, Heublein and Canandaigua had wrongfully converted the evaporator, and Maslowski, as agent and alter-ego of GSE and Walker, was personally liable jointly and severally with them for the relief requested in the complaint. Although there was complete diversity between the plaintiffs and defendants, the state court action was not removed to federal court within the delay provided therefor because Heublein and Canandaigua were unable to obtain the consent of the other defendants. Subsequently, Heublein, Canandaigua, Walker, and GSE each filed a motion to dismiss the Johnsons' complaint. However, after GSE and Walker abandoned their motions to dismiss, the state court summarily denied the motions of Heublein and Canandaigua. Subsequently, Heublein moved for summary judgment as to the claim asserted against it by the Johnsons.
Before the state court ruled on Heublein's motion for summary judgment, on March 6, 1997, the Johnsons, GSE, and Walker jointly filed a "confession of judgment and assignment of claims" in the state court. In the instrument, GSE and Walker confessed to a judgment in favor of the Johnsons in the amount of $367,508.99 and assigned to the Johnsons any and all claims they might have against Heublein and/or Canandaigua. On April 11, 1997 the Johnsons, GSE, and Walker, as co-plaintiffs (hereinafter "Co-plaintiffs"), filed an amended complaint in the state suit naming as co-defendants Heublein, Canandaigua, and Maslowski, (hereinafter "Co-defendants"), and (1) reasserting the Johnsons' original claim of conversion against the Co-defendants, and (2) asserting for the first time against the Co-defendants GSE's previously unfiled claims against Heublein and Canandaigua for breach of contract, bad faith breach of contract, unjust enrichment, and fraud, which the Johnsons had acquired from GSE and Walker by the confession of judgment and assignment.
Heublein and Canandaigua removed the case to federal court on May 1, 1997, alleging diversity jurisdiction, and filed a motion to dismiss under Rule 12(b)(6) for failure to state a claim upon which relief can be granted. The Johnsons, GSE, and Walker filed a motion to remand claiming (1) lack of complete diversity because co-plaintiffs GSE and Walker and co-defendant Maslowski were all domiciliaries of Florida, and (2) untimely removal. After considering the motion, the Co-defendants' response, and the other filings of record, the district court denied the motion to remand, holding that the Co-defendants had timely exercised their revived right to remove the case within 30 days of their receipt of the amended complaint. The district court assigned its reasons in a well written opinion, which, in summary, stated: The courts have read into 28 U.S.C. § 1446(b) an exception to the initial thirty-day time limit for the case where the plaintiff files an amended complaint that so changes the nature of his action as to constitute substantially a new suit which revives the defendant's right to remove; the exception was not abrogated by the 1988 amendment to § 1446(b); the Co-plaintiffs' amended complaint stated an entirely new cause of action different from that stated by the original complaint falling within the exception; co-defendant Maslowski's Florida domicile does not destroy diversity but is disregarded under the theory of fraudulent joinder because the Florida co-plaintiffs, GSE and Walker, could not prevail in a suit against Maslowski, their own alter-ego; and, therefore, the Co-defendants timely exercised their revived right by removing the case within thirty days of receipt of the Co-plaintiffs' amended complaint. In a separate opinion and order the district court concluded that the Co-plaintiffs' claims of breach of written contract, bad faith breach of contract, unjust enrichment, breach of oral contract, and fraud are barred by the statute of limitations and must be dismissed, leaving the Co-plaintiffs' suit against Heublein and Canandaigua for conversion of the evaporator as the only claim remaining in the case. The Co-plaintiffs appealed only the district court's denial of their motion to remand. We affirm essentially for the reasons assigned by the district court.
We review the district court's denial of a motion to remand to state court de novo. See, e.g., Luckett v. Delta Airlines Inc., 171 F.3d 295, 298 (5th Cir. 1999).
The district court correctly decided that, under the fraudulent joinder doctrine, Maslowski cannot be regarded as a genuine party for determining diversity jurisdiction. The removing party must prove fraudulent joinder by demonstrating that there is no possibility that the non-removing party could successfully prosecute a cause of action under state law against the defendant whose joinder is questioned. See Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42-43 (5th Cir. 1992). In the present case, the Co-plaintiffs have not alleged any facts which reasonably demonstrate that they have an independent or a derivative cause of action against Maslowski. Even if we assume arguendo that the Johnsons in their original complaint alleged facts showing that Maslowski could be held responsible as the alter ego of GSE and Walker for the claims stated against GSE and Walker, the amended complaint failed to reallege grounds for the primary liability of GSE and Walker.1 The pleadings and record before us thus establish conclusively that the Co-plaintiffs have failed to state any cause of action against Maslowski under which they possibly could prevail.
The procedure for removal is set forth by 28 U.S.C. § 1446. The pertinent part governing timeliness of removal is § 1446(b), which states:
(b) The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.
If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant,...
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Appendix A
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