Montgomery & Larmoyeux v. Philip Morris, Inc.

• Decision Date: 14 January 1998
• Docket Number: No. 97-8959-CIV.,97-8959-CIV.
• Citation: 992 F.Supp. 1372
• Court: U.S. District Court — Southern District of Florida
• Parties: MONTGOMERY & LARMOYEUX, a Florida General Partnership, by Robert M. Montgomery, Jr., General Partner, Plaintiff, v. PHILIP MORRIS, INC., R.J. Reynolds Tobacco Company, and Michael Maher, Defendants.

992 F.Supp. 1372

MONTGOMERY & LARMOYEUX, a Florida General Partnership, by Robert M. Montgomery, Jr., General Partner, Plaintiff, v. PHILIP MORRIS, INC., R.J. Reynolds Tobacco Company, and Michael Maher, Defendants.

No. 97-8959-CIV.

United States District Court, S.D. Florida.

January 14, 1998.

James Beasley, Jr., West Palm Beach, FL, for plaintiffs.

John Romano, Michael Eriksen, West Palm Beach, FL, for defendant Michael Maher.

Joseph Ianno, West Palm Beach, FL, for R.J. Reynolds.

Stephen Susman, Houston, TX, for Philip Morris.

Parker Thomson, Miami, FL, for Lawton Chiles, Jr., and Robert Butterworth.

ORDER OF REMAND

GOLD, District Judge.

Montgomery & Larmoyeux, a Florida law firm, asks the Court to deny removal, and remand this case to the Fifteenth Judicial Circuit, in and for Palm Beach County, Florida, for lack of subject matter jurisdiction. The issue before the Court is whether plaintiff's claim against defendant Michael Maher, a citizen of Florida, is so utterly devoid of merit as to be considered frivolous.

I. FACTS

In February, 1995, the State of Florida and thirteen private law firms entered into an agreement to prosecute a claim against several tobacco companies to recover medicaid funds expended by the State for the treatment of alleged smoking-related illnesses suffered by Florida medicaid recipients. The thirteen law firms and the State executed a contingency-fee agreement entitled "Standard contract — State of Florida, Agency for Health Care Administration." The introductory paragraph states that the Contract is entered into by the State of Florida and the "independent law firms" identified on the signature pages, hereinafter referred to as the "Provider or Providers." Section II, paragraph B, provides "This contract may be terminated by the State of Florida or Provider, or individual Providers may unilaterally withdraw, upon no less than thirty (30) calendar days notice. ..." The law firm of Montgomery & Larmoyeux, as well as the law firm of defendant, Michael Maher, signed the contingency-fee agreement. Defendant Maher and the plaintiff, Montgomery & Larmoyeux, (hereinafter Montgomery) are both Florida citizens.

On August 25, 1997, the State and some of the tobacco companies entered into a settlement agreement. Subsequently, a dispute arose between the State and some of the independent law firms, including Montgomery, over the amount of attorneys' fees owed to the law firms. As a result of the fee dispute, there are several lawsuits and at least six appeals related to the attorney-fee issue presently pending in state court. Montgomery filed this lawsuit against Mahler, Philip Morris Inc., and RJ Reynolds Tobacco Company in state court alleging claims for tortious interference with a contract and/or business relationship. Philip Morris Inc. and RJ Reynolds Tobacco Company removed the case to federal court. Removal is grounded on diversity jurisdiction.

Plaintiff claims the case should be remanded to state court because defendant Mahler and the plaintiff are Florida citizens, thus there is no diversity jurisdiction. Philip Morris Inc. and RJ Reynolds Tobacco Company argue that Maher's citizenship should not deprive them of diversity jurisdiction. Relying on the doctrine of fraudulent joinder, defendants argue that the case should not be remanded to state court because there is no possibility that plaintiff can establish a cause of action against Maher for tortious interference with a contract or advantageous business relationship because Mahler was a party to the contract allegedly interfered with. Under Florida law, the general rule is that no such action may be maintained against a party to the contract. See Ethyl Corp. v. Balter, 386 So.2d 1220 (Fla. 3d DCA 1980). But the burden on the party asserting fraudulent joinder is a heavy one. Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir.1997). If there is even a possibility that a state court would find that the complaint states a cause of action against the resident defendant, the federal court must find that joinder was proper and remand the case to state court. Id. Thus the issue before the Court is a narrow one: whether state law might recognize a cause of action for tortious interference in light of the factual circumstances of the case. Crowe, 113 F.3d at 1541-42.

II. STANDARD FOR REMOVAL

Philip Morris Inc. and RJ Reynolds Tobacco Company's right to remove this case to federal court is conferred by statute. Gould v. Mutual Life Ins. Co., 790 F.2d 769 (9th Cir.1986). Construction of removal statutes is governed by federal law. Brown v. Demco, Inc., 792 F.2d 478 (5th Cir.1986). Federal courts have uniformly held that removal statutes must be strictly construed against removal in order to "prevent encroachment on the state court's right to decide cases properly brought before it." Harris v. Huffco Petroleum Corp., 633 F.Supp. 250, 253 (S.D.Ala.1986). Strict construction is particularly important in cases removed on diversity grounds. Id.

In accordance with the law respecting the rights of state courts, a party seeking to remove a case from state court on the basis of fraudulent joinder must show: (1) that there is no possibility that plaintiff could prove a cause of action against the resident defendant; or (2) that the plaintiff fraudulently plead jurisdictional facts in order to subject that resident defendant to the jurisdiction of the state court.¹ Crowe, 113 F.3d at 1538 (citing Cabalceta v. Standard Fruit Co., 883 F.2d 1553, 1561 (11th Cir. 1989)). In this case, defendants rely on the first theory. To determine whether the case should be remanded, the district court must evaluate the factual allegations in the light most favorable to the plaintiff and must resolve any uncertainties about state substantive law in favor of the plaintiff. Crowe, 113 F.3d at 1538. The court must be certain it has jurisdiction before it can consider a case on its merits. Therefore, a plaintiff need not show that he can survive a motion for summary judgment; the standard is much lighter. In deciding whether a case should be remanded for improper joinder the Court's role is "limited to checking for obviously fraudulent or frivolous claims." Crowe, 113 F.3d at 1542. If there is even a possibility that a state court would find that plaintiff has stated a cause of action, the federal court must find that joinder was proper and remand the case to state court. Id. at 1538.

III. PLAINTIFF'S ACTION AGAINST MAHLER IS NOT FRIVOLOUS

In this case, the Court cannot say that plaintiff's claim is obviously fraudulent or frivolous. "Frivolous pleas are those which are so clearly and palpably bad as to require no argument to convince the court thereof, and which would be pronounced by the court indicative of bad faith in the pleader on mere inspection." Black's Law Dictionary, 796 (4th ed.1968). Under Florida law, a lawsuit is frivolous only if there is a complete lack of justiciable issue which renders the action completely untenable. Bronson v. Bronson, 685 So.2d 994, 995 (Fla. 5th DCA 1997); section 57.105 Fla.Stat. The Court also recognizes that the Florida Rules of Professional Conduct provide that it is not "frivolous" for an attorney to seek in good faith an extension, reversal or modification of existing law. Rule 4-3.1.

Philip Morris Inc. and RJ Reynolds Tobacco Company argue that it is clear under Florida law that a claim for tortious interference with a contract or advantageous business relationship cannot be maintained against Maher because he is a party to the contract and the business relationship with which he is accused of interfering.² In support of this proposition, defendants cite a number of Florida cases from the intermediate appellate courts which stand for the general proposition that a cause of action for tortious interference cannot exist against one who is himself a party to the contract. Cedar Hills Props. v. Eastern Fed. Corp., 575 So.2d 673 (Fla. 1st DCA 1991); Genet Co. v. Annheuser-Busch, 498 So.2d 683, 684 (Fla. 3d DCA 1986); United of Omaha Life Ins. Co. v. Nob Hill Assoc., 450 So.2d 536, 539 (Fla. 3d DCA 1984); Buckner v. Lower Florida Keys Hosp. Distr., 403 So.2d 1025, 1028 (Fla. 3d DCA 1981); Ethyl Corp. v. Balter, 386 So.2d 1220, 1224 (Fla. 3d DCA 1980); Mitchell v. Dade County School Board, 566 So.2d 2 (Fla. 3d DCA 1980).

But Montgomery argues, persuasively, that the cases cited by defendants are factually distinguishable from this case. Each of those cases involved a plaintiff who was suing the party on the opposite side of the contract or business relationship. In contrast, Montgomery and Maher signed the contingency-fee contract as independent law firms. Montgomery and Maher were on the same side of the contingency-fee agreement. Significantly, plaintiff argues that as parties on the same side of the contract, neither law firm was the source of the other's business opportunity and neither law firm was liable for the other's breach. Cf. Hall v. Burger King Corp., 912 F.Supp. 1509, 1538 (S.D.Fla. 1995) (finding that Hall had no claim against Burger King because Burger King itself was "the source of the business opportunity [it] allegedly interfered with.") According to plaintiff, a different rule applies where, as here, the party alleging interference with the contract is on the same side as the party it is suing.

At the hearing on Plaintiff's Motion for Remand, the defendants conceded that they could find only one Florida case dealing with tortious interference in which the parties were apparently on the same side of the contract, citing Schramek v. Jones, 161 F.R.D. 119 (M.D.Fla.1995). In Schramek the plaintiffs sued Paula Jones alleging that she "maliciously and tortiously interfered with an alleged contract between the President and the citizens of the United States for effective governance." Id. at 121. The issue in Schramek was whether Rule 11 sanctions should be imposed against the pro se plaintiffs where...