Williams v. Williams
| Decision Date | 10 March 2011 |
| Docket Number | CIVIL ACTION NO. 1:10-CV-783 |
| Court | U.S. District Court — Eastern District of Texas |
| Parties | STEPHEN N. WILLIAMS; THE WILLIAMS FIRM; MITCHELL A. TOUPS; and WELLER, GREEN, TOUPS & TERRELL, L.L.P., Plaintiffs, v. MONICA ANN WILLIAMS; ESTATE OF LARRY M. JOHNSTON; LOIS JOHNSTON; MIKI KAY WRIGHT; MICHELLE LYNN STROUD; LACY MESHAWN JOHNSTON; 1699 INVESTMENTS, INC.; BIELAU OAKS; CENTRAL ASIA TRADING; WINDMILL RIDGE ENTERPRISES, INC.; A.J. HAULING-TEXAS, LLC; A.J. CRANE- TEXAS, INC.; A.J. CRANE, LTD.; and A.J. CRANE, Defendants. |
Pending before the court is Plaintiffs Stephen N. Williams, the Williams Firm ("TWF"), Mitchell A. Toups, and Weller, Green, Toups & Terrell, LLP's ("WGTT") (collectively, "Plaintiffs") Motion to Remand (#4). Plaintiffs seek remand to state court of the instant action against Monica Ann Williams ("Monica"), Lois Johnston ("Lois"), Lacy Meshawn Johnston ("Lacy"), Miki Kay Wright ("Miki"), Michelle Lynn Stroud ("Michelle"), 1699 Investments, Inc. ("1699 Investments"), Bielau Oaks, Central Asia Trading ("Central Asia"), Windmill Ridge Enterprises, Inc. ("Windmill Ridge"), A.J. Hauling-Texas, LLC ("A.J. Hauling"), and A.J.Crane, Ltd. ("AJC") (collectively, "Defendants").1 Having reviewed the motion, the submissions of the parties, the pleadings, and the applicable law, the court is of the opinion that remand is warranted.
On or about October 28, 2010, Plaintiffs filed their original petition in the 58th Judicial District Court of Jefferson County, Texas, asserting claims for breach of contract, common law fraud, fraudulent transfer, tortious interference, conversion, and gross negligence. It is undisputed that Plaintiffs and Defendants Monica, Lois, Lacy, Miki, Michelle, 1699 Investments, Bielau Oaks, Windmill Ridge, and A.J. Hauling are all citizens and residents of Texas. Central Asia and AJC are Gibraltar companies with their principal places of business in Gibraltar and Azerbaijan.2
Between 2006 and 2009, AJC was hired to provide cranes and related services to various entities operating in Azerbaijan. Plaintiffs allege that Larry M. Johnston ("Mr. Johnston") was the president and/or representative of AJC during this time period. At some point, a contractualdispute arose between AJC, British Petroleum ("BP"), McDermott Caspian Contractors, Inc. ("MCCI"), and BOS Shelf, LLC ("BOSS") concerning AJC's work in Azerbaijan. In 2007, Mr. Johnston purportedly retained TWF and WGTT to represent both himself and AJC in the dispute.
Plaintiffs allege that, in consideration of these legal services, Mr. Johnston, individually and on behalf of AJC, signed a contingency fee agreement (the "Agreement") with WGTT. The Agreement granted WGTT a certain percentage of any settlements achieved in the Azerbaijan dispute.3 The Agreement further provided that "[i]n the event that [Mr. Johnston and/or AJC] desire(s) to terminate the relationship with [WGTT], said attorneys will be legally entitled to maintain the above referenced percentages... unless good cause can be shown for said dismissal or termination of these attorneys."
Plaintiffs claim that, in 2008, TWF and WGTT successfully negotiated a settlement agreement with BP, which Mr. Johnston approved later that year. Plaintiffs also maintain that they made substantial progress in reaching settlements with MCCI and BOSS. On August 18, 2009, however, Mr. Johnston and AJC purportedly terminated their contract with TWF and WGTT and repudiated any potential settlements with BP, MCCI, and BOSS. Plaintiffs were never paid for their legal services. Mr. Johnston died on May 14, 2010, leaving Monica, Lois, Lacy, Miki, and Michelle as his heirs.
In their petition, Plaintiffs contend that Mr. Johnston and AJC breached the Agreement by terminating their contract with TWF and WGTT without notice or cause and by refusing to payfor the legal services rendered. Plaintiffs seek to recover their share of any settlements negotiated with BP, MCCI, and BOSS from AJC and Mr. Johnston's heirs. Plaintiffs further maintain that they are entitled to their share of any BP, MCCI, and BOSS settlement funds that AJC and/or Mr. Johnston may have distributed to other persons or entities, including Monica, 1699 Investments, Bielau Oaks, Windmill Ridge, and A.J. Hauling.
On December 3, 2010, Defendants removed the case to federal court on the basis of diversity of citizenship, claiming that complete diversity exists among the real parties in interest and that the amount in controversy exceeds $75,000.00, exclusive of interest and costs. Defendants assert that Monica, Lois, Lacy, Miki, Michelle, 1699 Investments, Bielau Oaks, Windmill Ridge, and A.J. Hauling (the "Texas Defendants") were fraudulently joined to defeat diversity and, as a consequence, should be dismissed as parties to this action. On December 17, 2009, Plaintiffs filed the instant motion to remand the case to state court, contending that the Texas Defendants were properly joined, and, therefore, federal jurisdiction is lacking.
"'Federal courts are courts of limited jurisdiction.'" Rasul v. Bush, 542 U.S. 466, 489 (2004) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)); accord Johnson v. United States, 460 F.3d 616, 621 n.6 (5th Cir. 2006); McKee v. Kan. City S. Ry. Co., 358 F.3d 329, 337 (5th Cir. 2004); Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir.), cert. denied, 534 U.S. 993 (2001). "'They possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree.'" Rasul, 542 U.S. at 489 (quoting Kokkonen, 511 U.S. at 377 (citations omitted)). The court "must presume that a suit lies outside this limited jurisdiction, and the burden of establishing federal jurisdiction rests on the partyseeking the federal forum." Howery, 243 F.3d at 916 (citing Kokkonen, 511 U.S. at 377); see also Hertz Corp. v. Friend, _ U.S.__, _, 130 S. Ct. 1181, 1194 (2010); Boone v. Citigroup, Inc., 416 F.3d 382, 388 (5th Cir. 2005). In an action that has been removed to federal court, a district court is required to remand the case to state court if, at any time before final judgment, it determines that it lacks subject matter jurisdiction. See 28 U.S.C. § 1447(c); Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 571 (2004); McDonal v. Abbott Labs., 408 F.3d 177, 182 (5th Cir. 2005).
When considering a motion to remand, "[t]he removing party bears the burden of showing that federal jurisdiction exists and that removal was proper." Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002); accord DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n.3 (2006); Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008); In re Hot-Hed Inc., 477 F.3d 320, 323 (5th Cir. 2007); Guillory v. PPG Indus., Inc., 434 F.3d 303, 308 (5th Cir. 2005); Boone, 416 F.3d at 388. "'This extends not only to demonstrating a jurisdictional basis for removal, but also necessary compliance with the requirements of the removal statute.'" Roth v. Kiewit Offshore Servs., Ltd., 625 F. Supp. 2d 376, 382 (S.D. Tex. 2008) (quoting Albonetti v. GAF Corp. Chem. Grp., 520 F. Supp. 825, 827 (S.D. Tex. 1981)); accord Crossroads of Tex., L.L.C. v. Great-West Life & Annuity Ins. Co., 467 F. Supp. 2d 705, 708 (S.D. Tex. 2006); Smith v. Baker Hughes Int'l Branches, Inc., 131 F. Supp. 2d 920, 921 (S.D. Tex. 2001). "Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (citing 28 U.S.C. § 1441(a)); see Aetna Health Inc. v. Davila, 542 U.S. 200, 207 (2004); Halmekangas v. State Farm Fire & Cas. Co., 603 F.3d 290, 294 (5th Cir. 2010); Gutierrez, 543 F.3d at 251. "The removal statute ties the propriety of removal to the original jurisdiction of thefederal district courts." Frank v. Bear Stearns & Co., 128 F.3d 919, 922 (5th Cir. 1997); see 28 U.S.C. § 1441(a). Because removal raises significant federalism concerns, the removal statutes are strictly and narrowly construed, with any doubt resolved against removal and in favor of remand. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); Gutierrez, 543 F.3d at 251; Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281-82 (5th Cir. 2007); In re Hot-Hed Inc., 477 F.3d at 323; Bosky v. Kroger Tex., LP, 288 F.3d 208, 211 (5th Cir. 2002)).
Federal courts have subject matter jurisdiction and are authorized to entertain causes of action only where a question of federal law is involved or where there is diversity of citizenship between the parties and the amount in controversy exceeds $75,000.00, exclusive of interest and costs. See 28 U.S.C. §§ 1331, 1332; Arbaugh v. Y & H Corp., 546 U.S. 500, 513 (2006); Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005); Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005); Halmekangas, 603 F.3d at 294; McDonal, 408 F.3d at 181; Howery, 243 F.3d at 914-15; Hart v. Bayer Corp., 199 F.3d 239, 246 (5th Cir. 2000). In order to determine whether jurisdiction is present in a removed action, the claims set forth in the state court petition are considered as of the date of removal. See Wis. Dep't of Corr. v. Schacht, 524 U.S. 381, 391 (1998); Campbell v. Stone Ins., Inc., 509 F.3d 665, 669 n.2 (5th Cir. 2007); McGowin v. ManPower Int'l, Inc., 363 F.3d 556, 558 n.1 (5th Cir. 2004); Manguno, 276 F.3d at 723; Howery, 243 F.3d at 916. In cases where, as here, there is no federal question involved, subject matter jurisdiction exists only if there is complete diversity among the parties and the amount in controversy exceeds $75,000.00. See 28 U.S.C. § 1332; Lincoln Prop. Co., 546 U.S. at 89; Exxon Mobil Corp., 545 U.S. at 552; Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996); Halmekangas, 603 F.3d at 294; Heritage Bank v. Redcom Labs., Inc., 250 F.3d 319, 323 (5thCir.), cert. denied, 534 U.S. 997 (2001)....
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