United States District Court, E.D. Texas, Sherman Division
NEWPORT CLASSIC HOMES, L.P., and WESTERN RIM INVESTORS 2014-3, L.P., Plaintiffs,
(1) LOUISIANA-PACIFIC CORPORATION, (2) BRIDGEWELL RESOURCES, LLC, (3) RICHMOND INTERNATIONAL FOREST PRODUCTS, LLC, (4) MARTINEZ DORA d/b/a RNJ FRAMING SYSTEMS, and (5) GENESIS WORLDWIDE LOGISTICS, LLC, Defendants.
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS'
MOTION TO REMAND
RICHARD A. SCHELL UNITED STATES DISTRICT JUDGE.
following are pending before the court:
Plaintiffs' motion to remand (docket entry #9);
Defendant Louisiana-Pacific Corporation's response to
Plaintiffs' motion to remand (docket entry #10); and
Plaintiffs' reply in support of their motion to remand
(docket entry #12). Having considered the Plaintiffs'
motion and the responsive briefing thereto, the court finds
that the motion should be GRANTED.
HISTORY AND FACTUAL BACKGROUND
11, 2016, the Plaintiffs filed the instant action in the
199th Judicial District Court of Collin County, Texas. The
Plaintiffs (Texas limited partnerships) sued (1)
Louisiana-Pacific Corporation (an Oregon corporation), (2)
Bridgewell Resources, LLC (an Oregon limited liability
company), (3) Richmond International Forest Products, LLC (a
Delaware limited liability company), (4) Martinez Dora d/b/a
RNJ Framing Systems (a Texas organization), and (5) Genesis
Worldwide Logistics, LLC (a Texas limited liability company).
The Plaintiffs allege that the Defendants manufactured,
supplied and installed Oriented Strand Board
(“OSB”) flooring in two of the Plaintiffs'
properties. The Plaintiffs further allege that over
600, 000 square feet of the flooring was defective. The
Plaintiffs additionally allege that the Texas Defendants who
installed the flooring knew or should have known that the
flooring was defective prior to installing the same. The
Plaintiffs assert the following causes of action against all
of the Defendants: violations of the Texas Deceptive Trade
Practices Act; breach of the implied warranty of fitness for
a particular purpose; breach of the implied warranty of
merchantability; fraud; and fraud by non-disclosure.
Additionally, the Plaintiffs assert a breach of contract
cause of action against Defendant Martinez Dora d/b/a RNJ
Framing Systems. All Defendants were served with process;
however, only the diverse Defendants filed answers.
24, 2016, Defendant Louisiana-Pacific Corporation filed its
notice of removal. Defendants Bridgewell Resources, LLC and
Richmond International Forest Products, LLC consented to the
removal of this case to federal court. In the notice of
removal, the Defendant stated that removal was proper because
there was complete diversity among the properly joined
parties and the amount in controversy exceeded $75, 000. The
Defendant further stated that the non-diverse Defendants were
fraudulently joined pursuant to Rule 20 of the Federal Rules
of Civil Procedure.
on July 22, 2016, the Plaintiffs filed their motion to
remand. In their motion to remand, the Plaintiffs contend
that the Texas Defendants were not fraudulently joined.
Accordingly, the Plaintiffs argue that the case should be
remanded to state court, and they are entitled to their
reasonable and necessary attorneys' fees.
August 5, 2016, Defendant Louisiana-Pacific Corporation
(“LP”) filed its response, arguing that the
Plaintiffs' claims against the Texas Defendants are
barred by Tex. Civ. Prac. & Rem. Code §82.003.
Further, the Defendants contend that Defendant Martinez Dora
d/b/a RNJ Framing Systems was misjoined. On August 15, 2016,
the Plaintiffs filed a reply.
the federal removal statute, a civil action may be removed
from a state court to a federal court on the basis of
diversity.” Int'l Energy Ventures Mgmt., L.L.C.
v. United Energy Grp., Ltd., 818 F.3d 193, 199 (5th Cir.
2016). “This is so because the federal court has
original subject matter jurisdiction over such cases.”
Id. “The only caveat is that, when a properly
joined defendant is a resident of the same state as the
plaintiff, removal is improper.” Id.
defendant is improperly joined if the moving party
establishes that (1) the plaintiff has stated a
claim against a diverse defendant that he fraudulently
alleges is nondiverse, or (2) the plaintiff has not
stated a claim against a defendant that he properly alleges
is nondiverse.” Id. Because Martinez Dora
d/b/a RNJ Framing Systems and Genesis Worldwide Logistics,
LLC are, in fact, nondiverse, only the latter option is
relevant. See id. As the parties attempting to
remove the Plaintiffs' action, the Defendants have the
burden of establishing that the Plaintiffs have failed to
state a claim against Martinez Dora d/b/a RNJ Framing Systems
and Genesis Worldwide Logistics, Inc. See id. In
doing so, the Defendants must demonstrate “‘that
there is no possibility of recovery by the plaintiff against
[a nondiverse] defendant, which stated differently means that
there is no reasonable basis for the district court to
predict that the plaintiff might be able to recover against
[a nondiverse] defendant.'” Id. at 199-200
deciding whether a nondiverse defendant has been improperly
joined because the plaintiff has failed to state a claim
against him, the court must apply the analysis articulated in
our en banc opinion in Smallwood v. Illinois
Central Railroad Co.: ‘[W]hether the defendant has
demonstrated that there is no possibility of recovery by the
plaintiff against an in-state defendant....'”
Id. at 200, quoting Smallwood v. Ill. Cent. R.R.
Co., 385 F.3d 568, 573 (5th Cir. 2004)(en banc).
“In Smallwood, [the Fifth Circuit] recognized
that ‘[t]here ha[d] been some uncertainty over the
proper means for predicting whether a plaintiff ha[d] a
reasonable basis of recovery under state law.'”
Id., quoting Smallwood, supra. “The
Smallwood opinion declared that ‘[a] court may
resolve the issue in one of two ways, ' the first of
which is at issue here: ‘The court may conduct a Rule
12(b)(6) - type analysis, looking initially at the
allegations of the complaint to determine whether the
complaint states a claim under state law against the in-state
defendant, ' elaborating ...