Lee Cnty., Ala. Comm'n v. CreekWood Res.
| Decision Date | 14 February 2022 |
| Docket Number | 3:21-cv-669-ECM (WO) |
| Court | U.S. District Court — Middle District of Alabama |
| Parties | LEE COUNTY, ALABAMA COMMISSION, Plaintiff, v. CREEKWOOD RESOURCES LLC, et al., Defendants. |
Lee County, Alabama Commission (“County”) filed suit against CreekWood Resources, LLC (“CreekWood”) Highway 29, LLC (“Highway 29”), and Michael and Wanda Teel (“Teels”), in the Circuit Court of Lee County, Alabama. (Doc. 5-6). The Defendants subsequently removed the case to this Court, (doc. 5-1), arguing that jurisdiction is proper under 28 U.S.C. § 1332 because the amount in controversy requirement is met, and because though the parties are not completely diverse, the in-state defendants are fraudulently joined and should not be considered for diversity purposes.
Unsurprisingly the County disagrees and now seeks a remand to state court, arguing that this Court lacks jurisdiction over the dispute because the Defendants are wrong on both points.
(Doc. 9). Because the Court finds the Teels are not fraudulently joined, and thus that complete diversity does not exist, the County's motion to remand is due to be GRANTED.[1]
The land of Lee County, Alabama is verdant and lush, with flowing streams, still lakes, and rare species. The area is cut through by Halawakee Creek, a “[f]ree-flowing accessible stream of significant historic value” that feeds Lake Harding and the Chattahoochee River at its end. (Doc. 2, para. 21). The creek's watershed supplies the region with surface water, groundwater, and easy sites for recreation and relaxation.
The land of Lee County is also, perhaps to the County's chagrin, rich with granite. Millions of tons of granite lie below, abutting the aquifers on which Lee County residents rely. That the land brims with water and stone pits these litigants against one another: CreekWood and Highway 29 seek to develop the land into a granite quarry; the County seeks to stop them. To that end, the County asserted claims of unreasonable water use, nuisance, and threatened interference and degradation of property subject to a public trust against CreekWood, Highway 29, and, of key importance here, the Teels in Lee County Circuit Court. The County asked the court to declare that the quarry violated various Alabama code provisions and to enjoin all quarry-related activities. Shortly after the case began, all four defendants removed the case to this Court.
The Defendants come here from a variety of states. The Plaintiff Lee County, Alabama Commission is a governmental entity established under Ala. Code § 11-1-2 and is a citizen of Alabama. CreekWood is a limited liability company with a single member domiciled in Kentucky. See Rolling Greens MHP, L.P. v. Comcast SCH Holdings L.L.C., 374 F.3d 1020, 1022 (11th Cir. 2004) (). Highway 29 is an LLC “composed of members domiciled in Kentucky, Georgia, and Louisiana.” (Doc. 4, para. 17). The Teels are a married couple living in Alabama.
More importantly, the Teels are or were-their status is not yet clear-owners of a plot of land in Lee County that is adjacent to the proposed quarry site. In January 2021, the Teels “purported to sell” this property to Highway 29 by statutory warranty deed. (Doc. 5-6, para. 51). That deed was delivered to Highway 29.
However, the Teels did not and do not reside on that property. Instead, the property is occupied by Summer Lewis and Jerome Owsley, a separate couple who claim they have a valid Lease Purchase Agreement with Michael Teel. Before Michael Teel completed the purported sale to Highway 29, Lewis and Owsley sued Teel in Lee County Circuit Court, asking the court to stop Teel from re-taking the property and to transfer it to them instead. Lewis and Owsley later asserted added claims of breach of contract and tortious interference against CreekWood and Highway 29. That suit remands pending and is set for trial in September of 2022.
Back in this Court, the County now moves to remand the case to Lee County Circuit Court. It argues that the lack of complete diversity here is obvious: both it and the Teels are citizens of Alabama, and so this Court lacks jurisdiction over these state claims. The Defendants argue instead that the County can assert no real claim against the Teels and so the couple is fraudulently joined and must be ignored for purposes of diversity jurisdiction.
Dudley v. Eli Lilly & Co., 778 F.3d 909, 911 (11th Cir. 2014) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). A federal court may hear a case if the amount in controversy exceeds $75, 000, and the parties to that case are citizens of different States. 28 U.S.C. § 1332(a)(1). If these two requirements are met, but the case was nevertheless filed in a state court, federal law gives defendants the right to remove the case to federal court. 28 U.S.C. § 1446. When removal jurisdiction is contested, “federal courts are directed to construe removal statutes strictly” and “all doubts about jurisdiction should be resolved in favor of remand to state court.” Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999). Moreover, “in evaluating a motion to remand, the removing party bears the burden of demonstrating federal jurisdiction.” Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998) (citing Pacheco de Perez v. AT&T Co., 139 F.3d 1368, 1373 (11th Cir. 1998)).
For diversity jurisdiction under § 1332 to be proper, there must be complete diversity: every plaintiff must be diverse from every defendant. See Legg v. Wyeth, 428 F.3d 1317, 1320 n.2 (11th Cir. 2005). Ostensibly, that is not the case here-the County and the Teels are residents of the state of Alabama. However, the Defendants urge the Court to ignore the Teels' citizenship in evaluating complete diversity. Because, the Defendants argue, the Teels have been named “solely in order to defeat federal diversity jurisdiction, the district court must ignore the presence of the non-diverse defendant[s] and deny any motion to remand the matter back to state court.” Henderson v. Wash. Nat'l Ins. Co., 454 F.3d 1278, 1281 (11th Cir. 2006).
A defendant added solely to defeat federal diversity jurisdiction is fraudulently joined. “Fraudulent joinder is a judicially created doctrine that provides an exception to the requirement of complete diversity.” Triggs, 154 F.3d at 1287. A defendant is fraudulently joined when (1) there is “no possibility that the plaintiff can prove a cause of action against the resident (non-diverse) defendant[;]” (2) “when there is outright fraud in the plaintiff's pleading of jurisdictional facts[;]” or (3) “where a diverse defendant is joined with a nondiverse defendant as to whom there is no joint, several or alternative liability and where the claim against the diverse defendant has no real connection to the claim against the nondiverse defendant.” Id. The Defendants assert the first: that there is no possibility the County can prove a cause of action against the Teels.
In doing so, the Defendants shoulder a “heavy” burden. Pacheco de Perez, 139 F.3d at 1380. The County “need not have a winning case against the [Teels]; [it] need only have a possibility of stating a valid cause of action in order for the joinder to be legitimate.” Triggs, 154 F.3d at 1287 (emphasis in original). The Defendants must therefore prove, by clear and convincing evidence, that no such possibility exists. Henderson, 454 F.3d at 1281 (citation omitted). To determine if the Defendants met this burden, the Court must look to “the plaintiff's pleadings at the time of removal, supplemented by any affidavits and deposition transcripts submitted by the parties[, ] . . . must evaluate factual allegations in the light most favorable to the plaintiff and [must] resolve any uncertainties about the applicable law in the plaintiff's favor.” Pacheco de Perez, 139 F.3d at 1380 (citations omitted). The Court is “not to weigh the merits of a plaintiff's claim beyond determining whether it is an arguable one under state law.” Crowe, 113 F.3d at 1538 (quotations and citations omitted).
The Defendants believe they have met their burden. They argue that the County has not, and cannot possibly, assert a cause of action against the Teels because the Teels have no property interest in the quarry's land and are not otherwise quarry developers associated with this project. They also argue that the suit pending in Lee County is of no consequence. They submit evidence that shows that the parcel at issue in that suit “is undisputedly an adjacent piece of property outside the bounds of the [quarry] permit.” (Doc. 12 at 9). The land thus “does not involve the quarry or land leased for the quarry, ” (id.), and so no action by this Court affects the Teels or their rights, (id. at 12). And besides, say the Defendants, the Teels have already transferred the deed to their land to Highway 29, irreversibly completing the transaction and extinguishing any possible interest the Teels might have had even if their land was related to the quarry.
The County disagrees. It argues that it “asserts nuisance claims against all defendants to enjoin all quarry-related activities.” (Doc. 10 at 18 (emphasis added)). The County argues that because it is not clear that the Teels could properly transfer their land to Highway 29, the Teels still own it, and so can still undertake some action that would further the quarry's development. The County maintains that...
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