Riverdale Baptist Church v. Certainteed Corp.

• Decision Date: 23 December 2004
• Docket Number: No. CIV.A. DKC 2004-2057.,CIV.A. DKC 2004-2057.
• Citation: 349 F.Supp.2d 943
• Parties: RIVERDALE BAPTIST CHURCH, et al. v. CERTAINTEED CORPORATION, et al.
• Court: U.S. District Court — District of Maryland

349 F.Supp.2d 943

RIVERDALE BAPTIST CHURCH, et al. v. CERTAINTEED CORPORATION, et al.

No. CIV.A. DKC 2004-2057.

United States District Court, D. Maryland.

December 23, 2004.

B. Darren Burns, Reese and Carney, Annapolis, MD, for Plaintiffs.

Jody Maier, Towson, MD, Edward C. Bacon, Bacon Thornton and Palmer LLP, Greenbelt, MD, for Defendants.

MEMORANDUM OPINION

CHASANOW, District Judge.

Presently pending and ready for resolution is the motion of Plaintiffs to remand this case to state court. The issues are fully briefed and the court now rules pursuant to Local Rule 105.6, no hearing being deemed necessary. For the reasons that follow, the court grants Plaintiffs' motion.

I. Background

In September of 2003, Plaintiffs Riverdale Baptist Church, Inc. and Riverdale Baptist School, Inc. (collectively "Riverdale") filed a complaint in the Circuit Court for Prince George's County against Defendant CertainTeed Corp. ("CertainTeed") and Academy Roof Maintenance, Inc. ("Academy"), alleging breach of express and implied warranty, breach of contract, negligent construction, negligent inspection, detrimental reliance, and negligent and intentional misrepresentation regarding its roof, installed by Academy and later repaired by Defendant. See paper no. 2. On or about March 5, 2004, Academy moved for summary judgment, arguing that Plaintiffs' complaint against it was barred by the applicable three year statute of limitations because Plaintiffs were aware of the problem as early as 1994 but did not file suit until 2003. Paper no. 13, at 4. The state court initially denied Academy's motion. Paper no. 16. In a deposition on March 17, 2004, however, Riverdale's Director of Operations admitted that Plaintiffs were aware that the problem was attributable to defective installation by Academy no later than early 1998. See paper no. 18 and accompanying deposition excerpts.

On April 2, Academy filed a motion for reconsideration, citing the new evidence from that deposition. Paper no. 17. On June 4, Defendant filed its own motion for summary judgment, also asserting the statute of limitations defense. Paper no. 21. On June 11, the state court granted Academy's motion for summary judgment. Paper no. 23. On June 25, Plaintiffs filed their own motion for reconsideration and to alter or amend the state court's June 11 judgment in favor of Academy. Paper no. 25. Both Plaintiffs' motion for reconsideration and Defendant's motion for summary judgment remain pending.

On July 2, Defendant removed the action to this court, asserting diversity jurisdiction. Paper no. 1. 28 U.S.C. § 1332(a) reads, in pertinent part: "The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between (1) citizens of different States...." It is not disputed that the amount in controversy exceeds $75,000 in this case, but until June 11, the matter was not "between citizens of different States," because both Plaintiffs and Academy are citizens of Maryland. On that date, however, Academy was awarded summary judgment as to all claims, leaving only Plaintiffs and Defendant, a citizen of Pennsylvania and Delaware. Noting that diversity was no longer blocked by the presence of Academy in the case, Defendant removed, pursuant to 28 U.S.C. § 1446(b), which states, in pertinent part:

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 ... of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable....

Because diversity existed between the remaining parties, and because the amount in controversy exceeded $75,000, it would seem that Defendant timely and properly filed notice of removal. When, however, the dismissal of all non-diverse defendants results from something other than the voluntary action of the plaintiff, a federal court cannot exercise diversity jurisdiction under the so-called "voluntary-involuntary rule," and removal is not proper. Grubb v. Donegal Mut. Ins. Co., 935 F.2d 57, 60 (4th Cir.1991); see Higgins v. E.I. DuPont de Nemours & Co., 863 F.2d 1162, 1166 (4th Cir.1988) (same); Skevofilax ex rel. Skevofilax v. Aventis Pasteur, Inc., 304 F.Supp.2d 691, 693 (D.Md.2003) (case not removable "when complete diversity exists ... as a result of an interlocutory order by a state trial judge [dismissing] the non-diverse defendant"); Cox-Stewart v. Best Buy Stores, L.P., 295 F.Supp.2d 566, 568 (D.Md.2003) ("an action may not be removable despite apparently complete diversity of the parties where, as here, `the non-diverse party has been involuntarily dismissed by order of the state judge.'") (quoting Higgins, 863 F.2d at 1166, and citing Grubb).

After Defendant removed, this court ordered Defendant to show cause why, in light of the voluntary-involuntary rule, this case should not be remanded. Paper no. 32. In its response, Defendant argued that, in the original complaint, Plaintiffs fraudulently joined Academy for the sole and improper purpose of defeating diversity jurisdiction, and that fraudulent joinder constituted an exception to the voluntary-involuntary rule, rendering removal proper here. See paper no. 33. Fraudulent joinder is, in fact, a well established exception to the voluntary/involuntary rule. Mayes v. Rapoport, 198 F.3d 457, 461 n. 9 (4th Cir.1999) (quoting Insinga v. LaBella, 845 F.2d 249, 254 (11th Cir.1988)).

In a second order to show cause, this court stated:

CertainTeed's notice of removal does not refer to the fraudulent joinder doctrine. Instead, it asserts that the case became removable when the claims against [Academy] were dismissed. If [Academy] was "fraudulently joined" in the original complaint, the complaint would have been removable when initially filed in the Circuit Court on September 16, 2003. CertainTeed was served October 22, 2003, but did not remove the case within thirty days asserting diversity jurisdiction with a motion to dismiss the claim against [Academy] in this court. Instead, CertainTeed waited until the state court granted summary judgment in favor of [Academy] and then removed the case asserting that it had become removable within the prior 30 days.

Accordingly, if Plaintiff seeks to challenge removal either based on timeliness or whether [Academy] was fraudulently joined, it should file a motion to remand promptly.

Paper no. 35, at 1-2. Plaintiffs, on that cue, now move to remand, arguing that because their motion to reconsider is still pending in state court, and because the result of that motion could be to rejoin Academy as a party to the case, Defendant's removal was premature. See paper no. 37, at 1-2. Plaintiffs further argue that Defendant lacks evidence to support its invocation of the fraudulent joinder exception. Id. at 2-3.

Defendant, in its response to Plaintiffs' motion for remand and to the second order to show cause, reasserts that Plaintiffs engaged in fraudulent joinder by naming Academy as a defendant. See paper no. 39. Defendant also contends that removal was, in fact, timely, because Defendant could not have asserted fraudulent joinder before it knew "as a matter of fact and law[] that Academy was fraudulently joined." Id. at 4. Defendant complains it was thus forced to straddle "a very murky `bright line'" when considering the timing of its removal. Id.

II. Standard of Review

It is well-settled that the removing party bears the burden of proving proper removal. Greer v. Crown Title Corp., 216 F.Supp.2d 519 (D.Md.2002) (citing Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir.1994)). On a motion to remand, the court must "strictly construe the removal statute and resolve all doubts in favor of remanding the case to state court," indicative of the reluctance of federal courts "to interfere with matters properly before a state court." Richardson v. Phillip Morris Inc., 950 F.Supp. 700, 701-2 (D.Md.1997) (internal quotation omitted); see also Mulcahey, 29 F.3d at 151.

III. Analysis

For the reasons that follow, the court concludes that (1) Plaintiffs' joinder of Academy was not fraudulent, and that therefore the voluntary-involuntary rule clearly applies and the court must remand, Skevofilax, 304 F.Supp.2d at 693; and (2) even if that joinder were fraudulent, Defendant did not timely remove.

A. Joinder of Academy Was Not Fraudulent

The Fourth Circuit has held that to establish that a non-diverse defendant has been fraudulently joined, the removing party must establish that either (1) there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court; or (2) there has been outright fraud in the plaintiff's pleading of jurisdictional facts. Mayes, 198 F.3d at 464 (quoting Marshall v. Manville Sales Corp., 6 F.3d 229, 232 (4th Cir.1993)). The burden on the defendant claiming fraudulent joinder is heavy: The defendant must show that the plaintiff cannot establish a claim against the non-diverse defendant even after resolving all issues of fact and law in the plaintiff's favor. Marshall, 6 F.3d at 232-33 (quoting Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir.1992)). In determining whether joinder is fraudulent, the court is "not bound by the allegations of the pleadings, but may instead `consider the entire record, and determine the basis of joinder by any means available.'" Mayes, 198 F.3d at 464 (quoting AIDS Counseling and Testing Ctrs. v. Group W. Television, Inc., 903 F.2d 1000, 1004 (4th Cir.1990)).

Defendant does not allege outright fraud in Plaintiffs' pleadings. Paper no. 33, at 1. The court therefore considers only Defendant's argument that, because Plaintiffs' claim against Academy has been found by the state court to be barred by the applicable statute of limitations, there...