United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
November 15, 2005
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 04-30137
HAWTHORNE LAND COMPANY; HUGH A. HAWTHORNE FAMILY CLASS TRUST,
BANK ONE TRUST COMPANY, NA,
Plaintiffs-Appellants,
versus
OCCIDENTAL CHEMICAL CORPORATION; ET AL,
Defendants,
OCCIDENTAL CHEMICAL CORPORATION; TEXAS BRINE COMPANY, LLC,
Successor in Interest to Texas Brine Corporation; PAUL LANE,
d/b/a Paul Lane’s Construction Company; MARSH BUGGAGE EQUIPMENT
COMPANY; WOODSON CONSTRUCTION COMPANY; TASSIN INTERNATIONAL
LIMITED,
Defendants-Appellees.
______________________
Appeals from the United States District Court
for the Eastern District of Louisiana
______________________
Before REAVLEY, HIGGINBOTHAM, and GARZA, Circuit Judges.
PER CURIAM:
Plaintiffs appeal orders of the district court denying
remand and joinder of a party and an order granting summary
judgment for defendants. We affirm.
I
In 1965, Hugh Hawthorne purchased a tract of land in St.
James Parish, Louisiana. Soon after buying the land, Hawthorne
conveyed a servitude to defendant Texas Brine so that it could
construct, operate, and maintain a pipeline (called the Oxy-Taft
pipeline) on the property. The pipeline is currently operated by
Texas Brine and owned by defendant Occidental pursuant to an
operating agreement between the two. It is used to transport
highly concentrated sodium chloride solution, or brine.
Through various transactions in 1986 and 1987, Hawthorne
Land Company (“Hawthorne Land”), Hawthorne Trust (Bank One Trust
Company as trustee), and Nire, Inc. acquired ownership in the
land, with Nire owning a 5% undivided interest. From 1985 to
1987, the pipeline experienced seven leaks on the property which
resulted in the discharge of significant amounts of brine.
Occidental hired independent contractors to weld repairs for some
of the leaks. Some of the welds were allegedly performed
improperly and the leaks continued.
A subsequent site assessment by the plaintiffs’ experts
showed that the brine had migrated both vertically and
horizontally through the ground water, requiring extensive
remediation. The pipeline was replaced in 1988.
In February of 2001, plaintiff Hawthorne Land, a Louisiana
corporation, sued eight defendants in state court under tort and
contract theories for property damage arising from the leaks.
When the suit was filed, six of the eight original defendants
2
were Louisiana citizens. Occidental and Texas Brine (the two
non-Louisiana defendants) timely removed to federal court,
claiming diversity jurisdiction existed because the non-diverse
defendants were improperly joined. They also alleged bankruptcy
jurisdiction because one defendant, Woodson Construction Company,
had filed for bankruptcy. They answered the complaint with
various defenses, including the failure of Hawthorne Land to join
all co-owners of its property as plaintiffs.
Hawthorne Land dismissed the alleged bankrupt defendant,
filed a motion for leave to amend its complaint to join co-owner
Hawthorne Trust as co-plaintiff, and filed a motion to remand.
The court granted leave to Hawthorne Land to amend its complaint.
Both Occidental and Texas Brine filed oppositions to the motion
to remand, and the motion was denied.
Almost a year later, plaintiffs moved to join Nire, Inc.,
the third co-owner of the land, as a defendant. The district
court denied the motion, noting that Nire had recently settled
its potential claims with defendants. Plaintiffs moved to join
Nire as a defendant, which the district court denied for the same
reasons as its denial of the first motion to join Nire.
After extensive discovery, defendants filed a motion for
summary judgment on the basis of prescription, and the motion was
granted.
II
Plaintiffs first contend that the district court erred in
3
refusing to remand the case to state court. They argue that two
of the in-state defendants - the welders Cain’s Hydrostatic
Tester, Inc. (“Cain’s”) and Diamond Fabricators, Inc. (“Diamond”)
- were properly joined because they performed inadequate welds on
the pipeline which later leaked, exposing them to liability. We
review the denial of the motion to remand de novo.1
Joinder is improper if “there is no reasonable basis for the
district court to predict that the plaintiff might be able to
recover against an in-state defendant,” so that a plaintiff must
be able to survive a hypothetical Rule 12(b)(6) challenge to the
claim to effect remand.2 The summary inquiry into facts “is
appropriate only to identify the presence of discrete and
undisputed facts that would preclude plaintiff’s recovery against
the in-state defendant.”3 Plaintiffs cannot survive such a
challenge here.
First, plaintiffs’ petition does not state that Cain’s and
Diamond were welders; it states, improperly, that they were
excavators. Plaintiffs appear to concede this. Moreover, the
paragraph in the petition mentioning Cain’s and Diamond states
that their actions “did not result in the discharge of [brine].”
1
Luckett v. Delta Airlines, Inc., 171 F.3d 295, 295 (5th Cir.
1999).
2
Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir.
2004) (en banc).
3
Id.
4
Plaintiffs appear to concede this as well. The petition does not
state a claim against Cain’s and Diamond.
Second, even if we were to construe the petition liberally
to allege negligent welding by Cain’s and Diamond, a summary
inquiry into the facts reveals that such claims could not survive
a motion to dismiss. As defendants point out, without rebuttal
by plaintiffs, there is no documentary connection between Cain’s
and Diamond and the failed welds. The petition does not allege
any connection, and the defendants convincingly show that the
leak reports relied upon by plaintiffs in the motion to remand do
not reveal a connection, either. In addition, the defendants
offered the affidavit of Jim Kleinpeter, a plant manager at Texas
Brine, which stated that none of the welds by Cain’s or Diamond
failed; this affidavit may be “selfserving [sic],” as plaintiffs
contend, but it is evidence which plaintiffs have not
contradicted on even a superficial level.
Because there was no reasonable basis for the district court
to predict that plaintiffs could recover against Cain’s and
Diamond, its denial of the motion to remand was proper.
III
Plaintiffs next contend that the district court erred in not
allowing the joinder of Nire, a co-owner of the land and non-
diverse party which, if joined as a defendant, would have
destroyed diversity jurisdiction. We review this conclusion for
5
abuse of discretion.4
When Occidental and Texas Brine answered Hawthorne Land’s
petition, they raised as a defense Hawthorne Land’s failure to
join all of the co-owners of the land. Plaintiffs claim that
Hawthorne Land then contacted both Hawthorne Trust and Nire, but
that Nire refused to join as a plaintiff. Hawthorne Land was
granted leave to amend its complaint to join co-owner Hawthorne
Trust.
Six months later - almost a year after Hawthorne Land filed
the petition - plaintiffs filed a second proposed amended
complaint, seeking to join Nire as a defendant or involuntary
plaintiff5 and apparently arguing that Nire was a necessary party
under Federal Rule of Civil Procedure 19.6 Plaintiffs stated
that during those six months they “exhaust[ed] their efforts to
convince Nire to join [the case].” Defendants objected to the
second proposed amended complaint because they had settled with
Nire for $40,000 not long after the second proposed amended
4
Quintanilla v. Tex. Television, Inc., 139 F.3d 494, 499 (5th
Cir. 1998).
5
It is not clear from the motion whether the Hawthornes wanted
Nire joined as an involuntary plaintiff or defendant.
6
It is not clear from the motion that plaintiffs were arguing
necessity under Rule 19 because they never cited the rule. (The
actual motion for leave to amend was filed under Rule 15(a)). And
it is not clear from the district court’s order denying the motion
that it considered the plaintiffs to be arguing necessity under
Rule 19. But we are persuaded that the Rule 15(a) motion to amend
was based on alleged necessity under Rule 19, as the parties assume
on appeal, and that the district court considered it as such.
6
complaint was filed, arguing that joinder was no longer required.
The settlement released the defendants from all liability and
required Nire to cooperate in the defendants’ efforts against
plaintiffs. Defendants also argued that, if joinder were
required, Nire be joined as a plaintiff. Plaintiffs argued in
reply that Nire should be joined as a defendant because it might
be liable to them for contribution and its contribution might be
larger than the proceeds it received in the settlement. The
magistrate judge denied the motion and the district court denied
review of that order.
Later, plaintiffs filed a third motion for leave to amend to
add as defendants various owners of adjacent land, defendants who
would have defeated diversity. Plaintiffs alleged that brine
from defendants’ pipeline leaked onto the property of these
landowners and later migrated to plaintiffs’ property.
Plaintiffs do not appeal this order.
Finally, plaintiffs filed a fourth motion7 for leave to
amend to add Nire as a defendant. Although the underlying facts
were the same as that for the second motion, plaintiffs relied on
a new theory - that Nire “aligned” itself with the defendants
because the settlement required it to assist the defendants in
their case against plaintiffs. Specifically, plaintiffs argued
7
Plaintiffs in their brief do not distinguish between the
second and fourth motions, but they are different and entail
different analyses.
7
that the settlement was an unfair attempt to “manipulate”
evidence because, after plaintiffs’ environmental analysis found
excavation necessary, the defendants argued that Louisiana law
forbade plaintiffs to excavate without Nire’s consent.
Plaintiffs argued that, had the lack of Nire’s consent caused an
inadequate award at trial, they could have held Nire liable under
Louisiana law which holds one co-owner liable to the other for
damages caused to the common property, including damages from
juridical acts. The court denied the motion.
The district court did not abuse its discretion in denying
the second motion to amend. The court held that Nire was not a
necessary party under Rule 198 because it had settled with
defendants and could not affect any potential recovery by
plaintiffs, which was and remained 95% of the total damages. It
rejected as speculative and premature plaintiffs’ argument that
they could sue Nire if it refused to contribute for costs to
analyze or repair the land and that they could presently seek
declaratory relief against Nire to establish its obligations to
plaintiffs. Plaintiffs have not explained why these conclusions
8
A party is necessary under Rule 19(a) if: “(1) in the
person's absence complete relief cannot be accorded among those
already parties, or (2) the person claims an interest relating to
the subject of the action and is so situated that the disposition
of the action in the person's absence may (i) as a practical matter
impair or impede the person's ability to protect that interest or
(ii) leave any of the persons already parties subject to a
substantial risk of incurring double, multiple, or otherwise
inconsistent obligations by reason of the claimed interest.”
8
were improper. Nire’s presence in the suit could not affect
plaintiffs’ recovery from defendants; furthermore, there is no
evidence that Nire has any intention of not contributing to costs
related to the land if need be.9 It may be true that plaintiffs
had a currently viable declaratory relief claim against Nire,10
but such a claim so tangential to the main issue in the case is
insufficient to make a party necessary under Rule 19. The
district court did not abuse its discretion in concluding that
Nire was not a necessary party to the litigation.
Plaintiffs argue that even if Nire was not a necessary
party, the court should have granted its motion under Hensgens v.
Deere & Co.11 This court in Hensgens held that “the district
court, when confronted with an amendment to add a nondiverse
9
Plaintiffs argue that Nire’s presence would be needed somehow
if its share of the final costs exceeded the amount it received in
settlement. However, even if its share was less than the amount it
received in settlement, Nire currently possesses the settlement
money and would have to contribute it towards the reclamation.
Thus, the possibility of Nire not contributing exists regardless of
the settlement amount.
10
For this proposition, plaintiffs cite Miller v. Seven C’s
Properties, LLC, 800 So.2d 406, 408-11 (La. App. 2001). Defendants
argue that Miller is distinguishable because in that case the
plaintiff brought a declaratory judgment action against his co-
owner seeking contribution for repairs, and, after the co-owner
denied the necessity of the repairs, the court found a sufficiently
justiciable controversy to proceed. Here, the defendants argue,
Nire does not deny the necessity of the proposed repairs and has
not refused to contribute any repairs. We do not decide this
issue.
11
833 F.2d 1179, 1182 (5th Cir. 1979).
9
nonindispensable party, should use its discretion in deciding
whether to allow that party to be added.”12 It articulated four
factors to consider when exercising this discretion: 1) the
extent to which the purpose of the amendment is to defeat federal
jurisdiction; 2) whether the plaintiff has been dilatory in
asking for an amendment; 3) whether the plaintiff will be
significantly injured if the amendment is not allowed; and 4) any
other factors bearing on the equities.13
We cannot hold that the district court’s analysis of these
factors was an abuse of discretion. As the court held,14 the
manifest purpose of plaintiffs’ actions was to defeat federal
jurisdiction, the federal forum could provide complete relief to
the parties, and, years after the petition was originally filed,
the equities favored federal resolution of the case.
In addition, the district court did not abuse its discretion
in denying the fourth motion to amend. Under S&W Enterprises,
12
Id.
13
Id.
14
The court did not analyze the Hensgens factors in ruling on
the second motion to amend, only the fourth motion to amend.
Nonetheless, the parties on appeal argue the Hensgens factors in
relation to the second motion to amend - at least insofar as far as
they distinguish the two motions, which they often do not. In
addition, the two motions are similar in nature, and the Hensgens
factors are more properly applied to the second motion because the
fourth motion, as explained later, is analyzed under a stricter
standard since it was filed after a scheduling deadline. Thus, we
analyze the Hensgens factors as applied to the second motion.
10
L.L.C. v. Southtrust Bank of Alabama, NA, Rule 16(b) governs the
amendment of pleadings after a deadline in a scheduling order has
expired: “Only upon the movant’s demonstration of good cause to
modify the scheduling order will the more liberal standard of
Rule 15(a) apply to the district court’s decision to grant or
deny leave.”15 Courts should consider four factors: 1) the
explanation for the failure to move timely for leave to amend; 2)
the importance of the amendment; 3) potential prejudice in
allowing the amendment; and 4) the availability of a continuance
to cure such prejudice.16
In denying the motion, the district court recited its ruling
on the second motion and stated that the S&W Enterprises factors
favored denial here: the “second attempt to add Nire is based on
the same key fact, the settlement agreement, and the same
fundamental principles of co-ownership....The plaintiffs have not
demonstrated why this legal theory was not available [during the
second motion] or why it could not have been anticipated at that
time....An analysis of the [S&W Enterprises] factors reveals that
the plaintiffs have not demonstrated good cause for filing their
amended complaint.”
Plaintiffs do not explain why this was an abuse of
discretion. Their only new argument on appeal seems to be that
15
315 F.3d 533, 536 (5th Cir. 2003).
16
Id.
11
they did not foresee the defendants’ alleged “manipulation” of
evidence using the settlement agreement. Plaintiffs do not
explain why they could not have foreseen this alleged
manipulation17 and made this argument initially. Moreover,
plaintiffs do not address the district court’s finding of obvious
prejudice to defendants (a change of venue) and the inability of
a continuance to cure that prejudice.
For these reasons, the district court did not abuse its
discretion in denying plaintiffs’ two attempts to join Nire.
IV
Plaintiffs next challenge the district court’s grant of
summary judgment for defendants following its conclusion that all
of their claims were prescribed and that the doctrines of contra
non valentem and continuous tort did not apply.
Plaintiffs brought claims of tortious damage to land and
breach of contract. In Louisiana, the prescriptive period is one
year for damage to land and ten years for breach of contract,
running from the date of breach.18 The leaks here occurred
17
In addition, we do not see how evidence was “manipulated” -
the defendants stated merely that “[plaintiffs] have not provided
any indication that [Nire] consents to the plaintiffs’ proposes
(sic) excavation....” Concluding from this statement that
defendants “bought” Nire’s aid, resulting in plaintiffs’ ability to
sue Nire, is speculation.
18
LA. REV. STAT. ANN. art. 3492-93 (West 2005) (damage to land);
id. art. 3499 (breach of contract).
12
between 1985 and 1987, and the suit was filed in 2001. Because
the acts complained of occurred more than ten years ago,
plaintiffs relied on the contra non valentem exception, which
states that the period for any claim runs from when the plaintiff
knew or should have known of the damage or breach.19 Plaintiffs
claimed that they had no actual or constructive knowledge of the
leaks until October 24, 2000, less than a year before they filed
suit. The district court disagreed, finding that they knew or
should have known of the leaks by late 1988 or early 1989.20 It
also found that there was no continuous tort because there was no
evidence of unlawful acts by defendants after 1987. We review de
novo.21
Regarding actual or constructive knowledge, the record is
replete with references to pipeline leaks on the Hawthorne
property in various letters, affidavits, and depositions. These
references were made by multiple people who worked for Hawthorne
19
Eldredge v. Martin Marietta Corp., 207 F.3d 737, 743 (5th
Cir. 2000).
20
Plaintiffs argue on appeal that the district court should
have considered affidavits by two witnesses “clarifying” their
earlier affidavits and denied a motion to strike those later
affidavits. Defendants disagree. The district court held that,
“[r]egardless of the admissibility of the second affidavits,”
summary judgment should be granted. Like the district court, we do
not decide whether the affidavits should be considered because we
affirm that court’s judgment that even if they are considered,
summary judgment for the defendants is proper.
21
Luckett v. Delta Airlines, Inc., 171 F.3d 295, 295 (5th Cir.
1999).
13
Land and Hawthorne Trust or who were familiar with the Hawthorne
property. On appeal, plaintiffs make two arguments: that these
references were to unrelated brine spills resulting from the
installation of two valve sites and replacement of the pipeline
in 1988, and that the district court erroneously lumped Hawthorne
Land and Hawthorne Trust together, imputing each’s knowledge to
the other.
There is no genuine issue of material fact that, at a
minimum, plaintiffs should have known of the leaks at issue.
Even if plaintiffs are correct that most of the references to
“leaks” pertained to leaks resulting from installation of the
valves and replacement of the pipeline, plaintiffs still should
have known why the pipeline was replaced - because it had the
leaks at issue.
Taylor Caffery, a lawyer employed by Nire,22 wrote in a
letter that he had “positive testimony of one eyewitness who says
that a great deal of brine had been spilled when [Texas Brine]
[was] changing the pipe that became full of holes because of
brine erosion (emphasis added).” In that same letter, Caffery
stated that he told Peggy Scott, a representative of Hawthorne
Trust, about the alleged leak during the pipeline replacement.
22
Caffery previously had worked for Hawthorne Land and
Hawthorne Trust, and it is highly likely that he was in contact
with both during this period. But, for purposes of appeal, we
construe the facts favorably to plaintiffs and consider him to have
been employed only by Nire.
14
And in another letter, that Scott received, Caffery wrote:
[T]he changing of the pipes was necessitated because
brine had corroded the pipe and was leaking out of
it....23
Scott, and thus Hawthorne Trust, were or should have been aware
that the pipeline was being replaced, and that it was being
replaced because it had eroded and was leaking.24
Furthermore, Hawthorne Land should have known why the
pipeline on its land was replaced. Plaintiffs argue that
Hawthorne Trust’s knowledge cannot be imputed to Hawthorne Land.
No such imputation is necessary. Plaintiffs concede that
Clifford LeBlanc, property manager for Hawthorne Trust, knew that
the pipeline was replaced and told Hawthorne Land about its
replacement. Although plaintiffs argue that LeBlanc and
23
Caffery also prepared an affidavit, signed by a former Texas
Brine employee in 1989, stating the following:
[T]here are lots of leaks in the pipeline going through
the Hawthorne property in St. James Parish. I think we
found around twenty holes in the pipe. We would find a
leak by seeing dead trees around it and knew what had
happened. The brine had escaped into the area and killed
the trees and we would go and repair that section of the
pipe. The leaks must have occurred over a period of four
or five years . . . . The acreage where the biggest spill
occurred is where the pipeline was replaced.
24
We recognize that Scott seems to state in her second
affidavit that the only leaks she was aware of were those relating
to the pipeline replacement. In light of the information she
received from Caffery that the pipeline was being replaced because
it was being eroded, at the very least she should have known of the
leaks at issue here. Her second affidavit is insufficient to cast
doubt on that conclusion.
15
Hawthorne Land never knew about the leaks at issue,25 at the very
least they should have known that the pipeline was replaced for a
reason - brine leaks caused by erosion.
Thus, we agree with the district court’s conclusion that
plaintiffs knew or should have known of the leaks at issue by
late 1988 or early 1989. We also reject plaintiffs’ argument
that the prescriptive period should be tolled because defendants
intentionally hid knowledge of the leaks at issue;26 there is
insufficient evidence to support this claim.
Finally, we agree with the district court that the
continuous tort doctrine does not apply. For that doctrine to
apply, the conduct, and not just the damage, must be
continuous.27 Their argument that the brine itself has
25
Plaintiffs contend that Texas Brine told LeBlanc it needed
to perform routine “maintenance” on the pipeline, which is why
LeBlanc stated in a letter to Hawthorne Land that the pipeline was
“faulty” while informing it of the arrangements for that
maintenance. They argue that instead of performing maintenance on
the pipeline, Texas Brine replaced it, which LeBlanc and plaintiffs
discovered shortly thereafter. Thus, they argue, LeBlanc’s
reference to the pipeline being “faulty” did not refer to the leaks
at issue. Defendants assert that LeBlanc stated that he learned of
a number of leaks on the property from Lawrence Ordoyne, a
neighbor, that he personally observed those leaks, and that he
discussed them with Scott, Caffery, and Hawthorne Land. Plaintiffs
counter by pointing to LeBlanc’s second affidavit, in which he
stated that those leaks were not the leaks at issue here.
26
Corsey v. Louisiana, 375 So. 2d 1319, 1319-21 (La. 1979)
(describing the doctrine that the prescriptive period does not run
where the defendants intentionally hide knowledge from the
plaintiffs or otherwise impede their ability to file suit).
27
Boudreaux v. Jefferson Island Storage & Hub, 255 F.3d 271,
273-74 (5th Cir. 2001).
16
continually trespassed on the land is foreclosed by this court’s
opinion in the perfectly analogous case of Boudreaux v. Jefferson
Island Storage & Hub.28
V
For the foregoing reasons, the judgment of the district
court is AFFIRMED.
28
Id. (holding that the continued presence of saltwater under
a landowner’s property was not a continuing tort for prescriptive
purposes).
17