UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 98-20177
In Re: DIANNE THOMPSON; ZURICH INSURANCE CO.
Petitioners.
Petition for Writ of Mandamus to the United States District
Court for the Southern district of Texas
(H-96-CV-3762)
June 2, 1998
Before DUHÉ, DEMOSS and DENNIS, Circuit Judges.
PER CURIAM:1
We are asked to mandamus the district court and thereby
require it to remand this case to the State court from which it was
removed. We reverse the district court’s decision and vacate her
order denying remand; deny mandamus without prejudice to it being
reurged; and remand this case to the district court to consider the
issue of diversity jurisdiction.
BACKGROUND
In a damage suit in federal court in Texas, tenants of Fondren
Green Apartments sued the apartment management company, various
1
Pursuant to 5th Cir. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5th Circuit R. 47.5.4.
insurance companies, and other defendants for injuries allegedly
caused when chlordane was sprayed inside their apartments. A
settlement was reached and the presiding district judge entered an
order which determined that a minor and an incompetent, who were
among the plaintiffs, were properly before the court; he then
granted the joint motion to dismiss the case with prejudice because
it had been settled. His order did not adopt nor approve the terms
of the settlement.
The present suit, originally brought in state court, arises
from the settlement and is brought on behalf of the same plaintiffs
who now claim that they were induced to settle for less than the
true value of their claim because of fraud practiced on them by the
present defendants. Plaintiffs allege that the management company
disclosed in the first suit that there were potentially three
insurance policies applicable to the claimed losses with limits of
$300,000, $10,000,000 and $15,000,000 respectively. Attorneys for
the management company and the insurers allegedly indicated to
plaintiffs’ counsel that coverage under the $15,000,000 policy had
been denied and that the $300,000 policy had been exhausted by
earlier settlements. The only remaining policy, they represented,
had less than $10,000,000 in remaining benefits available. The
case settled for $10,000,000.
Later, it is presently alleged, plaintiffs learned that the
information concerning the availability of insurance benefits was
not accurate, and that coverage under the $15,000,000 policy had
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not been denied and was available. Plaintiffs then brought the
present suit in state court seeking damages for fraudulent
inducement in making the settlement.
Defendants removed the present suit to the southern district
of Texas, and plaintiffs moved to remand. The district court
determined that the present action was simply an artfully pled
attempt to attack the prior federal judgment of dismissal and thus
gave rise to federal question jurisdiction. She therefore denied
remand. Plaintiffs then sought mandamus. We retained jurisdiction
and remanded to the district court to consider the effect, if any,
of the intervening opinion of the Supreme Court in Rivet v. Regions
Bank, U.S. , 118 S. Ct. 921 (Feb. 24, 1998). She did so,
correctly concluding that Regions was not dispositive of this case.
The matter is now before us again.
DISCUSSION
We hold that the district court erred in holding that the
present fraud suit is an attack upon the initial federal judgment
dismissing the original tort case. Therefore, we hold that the
district court does not have subject matter jurisdiction.
The present suit is one for damages for fraud. It does not
seek to reopen the dismissed case nor does it question the validity
of the judgment dismissing that case. It claims that the fraud was
practiced upon the parties, not upon the court. Thus, our decision
in Villarreal v. Brown Express, Inc., 529 F.2d 1219 (5th Cir. 1976)
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is not applicable. There we upheld removal because plaintiff was
using the second state court suit to increase his personal injury
recovery and to circumvent two orders of the federal court. Here
plaintiffs are not trying to circumvent the order of dismissal.
Rather, they allege a separate state law cause of action for which
they seek damages. The issue of the first suit (whether spraying
the chemical caused injury) is not at issue in the present suit for
fraud. For these reasons we reverse and vacate the district
court’s judgment denying the motion to remand. We deny mandamus,
however, because the issue of diversity jurisdiction raised by the
parties has not been dealt with by the district court. She had no
need to consider it once she disposed of the remand issue on the
ground of federal question jurisdiction. We express no opinion as
to the allegations of fraudulent joinder of parties, nor as to the
presence or absence of diversity jurisdiction, but remand to the
district court to consider those issues. We do not retain
jurisdiction of the matter pending her decision.
REVERSED AND REMANDED; MANDAMUS DENIED.
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