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Hellas Construction, Inc. v. Beynon Sports Surfaces, Inc.

United States District Court, W.D. Texas, Austin Division

September 6, 2019

HELLAS CONSTRUCTION, INC., Plaintiff
v.
BEYNON SPORTS SURFACES, INC., AND JEFFREY DIXON, Defendants

          REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

          SUSAN HIGHTOWER, UNITED STATES MAGISTRATE JUDGE.

         TO: THE HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE

         Before this Court are Plaintiff's Motion to Remand, filed on May 3, 2019 (Dkt. No. 7); Beynon Sports Surfaces, Inc.'s Response, filed on May 10, 2019 (Dkt No. 9); and Plaintiff's Reply, filed on May 17, 2019 (Dkt. No. 12). On July 18, 2019, the District Court referred the above motion and related filings to the undersigned Magistrate Judge for Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1), Federal Rule of Civil Procedure 72, and Rule 1 of Appendix C of the Local Rules of the United States District Court for the Western District of Texas (“Local Rules”).

         I. BACKGROUND

         Plaintiff Hellas Construction, Inc. (“Hellas”), a Texas corporation based in Austin, Texas, specializes in the design and installation of sports surfaces and athletic facilities. Defendant Beynon Sports Services, Inc. (“Beynon”), a Maryland corporation, is in the same business as Hellas and is thus a competitor of Hellas. Defendant Jeffrey Dixon (“Dixon”), a Texas resident, entered into an employment agreement with Beynon (the “Beynon Agreement”) in January 2016. Dkt. No. 2-4 at ¶ 7. Dixon worked for Beynon for three years and was responsible for “management oversight for all phases of the construction project . . . in connection with track surfacing in the states of Texas, Oklahoma, Kansas, Louisiana, Alabama, Mississippi, Florida, Georgia, Nebraska, Arkansas and Missouri (the ‘Restricted Territory').” Id. at ¶ 11.

         On February 21, 2019, Dixon resigned his employment with Beynon and signed an employment contract with Hellas (the “Hellas Agreement”). Id. at ¶ 9. Hellas alleges that Beynon has sent notices to Dixon that “put into question whether Dixon is (or will be) in violation of the Beynon Agreement due to his employment with Hellas.” Id. at ¶ 10.

         On February 25, 2019, Hellas filed this lawsuit in state court against Beynon and Dixon. See Hellas v. Beynon, D-1-GN-19-000999 (261st Dist. Ct., Travis County, Tex. Feb. 25, 2019). Hellas' lawsuit seeks a declaratory judgment under Chapter 37.004 of the Uniform Declaratory Judgment Act “as to whether Dixon may comply with the Hellas Agreement without violating the terms of the Beynon Agreement, and whether Dixon may perform any services requested by Hellas in states that are not within the Restricted Territory.” Dkt. No. 2-4 at ¶ 15. Hellas contends that “[i]f Dixon's duties with Hellas are in violation of the Beynon Agreement, Dixon will be unable to fulfill his duties and comply with the Hellas Agreement, and will be in breach of the Hellas Agreement.” Id. at ¶ 12. Hellas seeks attorneys' fees and costs.

         On April 3, 2019, Beynon removed this lawsuit to federal court on the basis of diversity jurisdiction under 28 U.S.C. § 1332. Beynon argues that Hellas has improperly joined Dixon as a defendant in this case for the purpose of destroying diversity jurisdiction. In response, Hellas filed the instant Motion to Remand.

         II. LEGAL STANDARDS

         “Under 28 U.S.C. § 1441(a), any state court civil action over which the federal courts would have original jurisdiction may be removed from state to federal court.” Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281 (5th Cir. 2007). A case may be removed pursuant to 28 U.S.C. § 1332 if there is complete diversity of citizenship and the amount in controversy is greater than $75, 000 exclusive of interests and costs. “If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). If a party is improperly joined, a court may disregard the party's citizenship for purposes of determining subject matter jurisdiction. Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 572-73 (5th Cir. 2004) (en banc)).

         On 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). “Any ambiguities are construed against removal because the removal statute should be strictly construed in favor of remand.” Id. To determine whether jurisdiction is present for removal, courts consider the claims in the state court petition as they existed at the time of removal. Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 264 (5th Cir. 1995).

         III. ANALYSIS

         Hellas argues that this case should be remanded to state court because (1) there is not complete diversity of citizenship, and (2) Beynon has not established that the amount in controversy exceeds $75, 000. Beynon argues that Hellas has improperly joined Dixon as a defendant in this case for the sole purpose of destroying diversity jurisdiction. Accordingly, Beynon argues that the Court should ignore Dixon's citizenship in this case and dismiss him from this lawsuit, or in the alternative to realign him as a plaintiff in the case. Beynon also argues that it has established the required minimum amount in controversy in this case.

         A. Diversity Jurisdiction ...


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