[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
APR 18, 2007
No. 06-13587
THOMAS K. KAHN
________________________
CLERK
D.C. Docket No. 06-00422 CV-ORL-31-JGG
ANNETTE FLORENCE,
Plaintiff-Appellant,
versus
CRESCENT RESOURCES, LLC, a foreign corporation,
RINEHART DEVELOPMENT & INVESTMENT GROUP, LLC,
a Florida corporation,
Defendants-Appellees.
________________________
No. 06-13588
________________________
D.C. Docket No. 06-00424 CV-ORL-31-JGG
WILLIAM BURKE,
Plaintiff-Appellant,
versus
CRESCENT RESOURCES, LLC, a foreign corporation,
RINEHART DEVELOPMENT & INVESTMENT GROUP, LLC,
a Florida corporation,
Defendants-Appellees.
________________________
No. 06-13589
________________________
D.C. Docket No. 06-00426 CV-ORL-31-JGG
LETHESA RELIFORD, as Personal Representative
for the Estate of Ceola Reliford,
Plaintiff-Appellant,
versus
CRESCENT RESOURCES, LLC, a foreign corporation,
RINEHART DEVELOPMENT & INVESTMENT GROUP, LLC,
a Florida corporation,
Defendants-Appellees.
________________________
No. 06-14206
________________________
D.C. Docket No. 06-00423 CV-ORL-31-JGG
ROBERT BURNS,
Plaintiff-Appellant,
versus
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CRESCENT RESOURCES, LLC, a foreign corporation,
RINEHART DEVELOPMENT & INVESTMENT GROUP, LLC,
a Florida corporation,
Defendants-Appellees.
________________________
Appeals from the United States District Court
for the Middle District of Florida
________________________
(April 18, 2007)
Before DUBINA and COX, Circuit Judges, and SCHLESINGER,* District Judge.
COX, Circuit Judge:
We address in these appeals the question of fraudulent joinder of a resident
defendant in the context of removal jurisdiction. Applying the rule that any
ambiguity or doubt about whether state law might impose liability on a resident
defendant favors remand, we conclude that the district court should have remanded
these cases to state court.
I. PROCEDURAL HISTORY
Plaintiffs Annette Florence, William Burke, Robert Burns, and Lethesa
Reliford as personal representative of the estate of Ceola Reliford filed individual
lawsuits against Crescent Resources, LLC (“Crescent”) and Rinehart Development
*
Honorable Harvey E. Schlesinger, United States District Judge for the Middle District of
Florida, sitting by designation.
3
& Investment Group, LLC (“Rinehart”) in Florida state court. The complaint in each
case alleged that: (1) land owned by Crescent and Rinehart at the time the lawsuits
were filed had been used by its previous owners as a manufacturing facility and waste
water treatment plant; (2) each Plaintiff had sustained personal injury or death caused
by exposure to hazardous substances that were stored on the land prior to Crescent’s
and Rinehart’s ownership of it; and (3) Crescent and Rinehart were liable pursuant
to § 376.313 Florida Statutes, a statute that creates a strict liability cause of action
against owners of real property in Florida for damages caused by surface or ground
water contaminants on the property.
Crescent removed the cases to federal court, alleging that jurisdiction existed
over each case, pursuant to 28 U.S.C. § 1441, as the amount in controversy exceeded
$75,000; Crescent was diverse from each Plaintiff; and Rinehart, a citizen of Florida,
had been fraudulently joined in the lawsuits. In its notices of removal, Crescent
stated (and Rinehart joined the argument) that Plaintiffs could not state causes of
action under the Florida statute against Rinehart because, as a matter of law, Plaintiffs
could prove no causal connection between Plaintiffs’ exposure to hazardous
substances, pollutants, and chemicals and Rinehart’s use of the land, which it
acquired years later.
4
Each Plaintiff moved to remand to state court, arguing that § 376.313, Fla. Stat.
imposes strict liability on the owners of contaminated land and does not require
Plaintiffs to prove any causal connection between their exposure to hazardous
substances and the current owners’ use of the land. At the very least, Plaintiffs
argued, there was a possibility that their complaints stated causes of action under
Florida law. Therefore, Plaintiffs concluded, Rinehart had not been fraudulently
joined, its Florida citizenship destroyed diversity jurisdiction, and remand was proper.
Crescent opposed Plaintiffs’ motions to remand. While the motions to remand
were pending, Crescent filed motions to dismiss Plaintiffs’ complaints with prejudice
or, in the alternative, for summary judgment. In these filings, Crescent again argued
that the Florida statute does not impose liability on property owners who acquire the
property after a plaintiff’s exposure to pollution on the property. It also argued that
the Florida statute: (1) does not create a cause of action for personal injury, and (2)
provides an affirmative defense – the Third Party Defense – that applied to bar
Plaintiffs’ claims against both Rinehart and Crescent. According to Crescent, the
Third Party Defense, found at § 376.308(2)(d), Fla. Stat., required dismissal of
Rinehart (as a fraudulently joined non-diverse Defendant) and judgment in favor of
Crescent.
5
The district court denied Plaintiffs’ motions to remand, dismissed Rinehart, and
entered judgment for Crescent in each of the cases. In its orders, the district court
adopted by reference the reasoning it expressed in a related case that alleged the same
cause of action against Defendants, Brottem v. Crescent Resources, LLC, No.
6:06-cv-306-Orl-31KRS, 2006 WL 1529327 (M.D. Fla. May 24, 2006). In Brottem,
the district court said that there was a “distinct possibility that a Florida court could
find that a private cause of action exists under Florida law for the personal injury
damages suffered by the Plaintiffs.” Id. at *4. And, the court rejected Defendants’
argument that Plaintiffs must prove that the pollution that caused their injuries was
created by Defendants. Id. However, in Brottem and the cases now on appeal, the
district court found that the statutory Third Party Defense barred the claims against
Defendants.1
1
In Brottem, the court stated that because Rinehart and Crescent acquired ownership of the
land in question after the pollution occurred, they could not prove two elements of the statutory
defense, namely that they: (1) exercised due care with respect to the pollutant in question; and (2)
took precautions against foreseeable acts or omissions of the third party responsible for the
discharge. See § 376.308(2)(d), Fla. Stat.; Brottem, 2006 WL 1529327, at *6 n.14. However, the
district court decided that the consequence of subjecting innocent subsequent purchasers to liability
could not have been intended by the Florida legislature. Brottem, 2006 WL 1529327, at *6. The
district court concluded that it should interpret the Third Party Defense such that it nevertheless bars
the actions against Rinehart. Id. Because there was no possibility that the Plaintiffs could state a
valid claim against Rinehart, the court said, Rinehart was fraudulently joined and must be dismissed.
Id.
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Plaintiffs appeal the denial of their motions to remand and the judgments in
favor of Crescent. We consolidated the four cases on appeal.
II. ISSUES ON APPEAL & CONTENTIONS OF THE PARTIES
Plaintiffs argue that their complaints state viable claims under the Florida
statute against both Rinehart and Crescent, claims that are not barred by the statutory
Third Party Defense. At the very least, they argue, the complaints present colorable
claims under Florida law. Thus, they argue that their cases should have been
remanded to state court because Rinehart (the non-diverse Defendant) was not
fraudulently joined, there was not complete diversity between the parties, and the
district court lacked subject matter jurisdiction. For the same reasons, Plaintiffs also
argue that the district court erred in granting summary judgment to Crescent.
Rinehart and Crescent argue that the district court properly concluded that
Plaintiffs could not maintain a cause of action against them pursuant to § 376.313,
Fla. Stat. They argue that the Florida statute does not impose liability on owners of
real property for personal injuries caused by a plaintiff’s exposure to hazardous waste
or toxic chemicals prior to the defendant’s ownership of the property. And, they
argue that the statutory Third Party Defense bars the Plaintiffs’ claims against them.
Therefore, they conclude, the district court did not err in dismissing Rinehart, denying
the motions to remand, and granting summary judgment for Crescent.
7
Concluding that the court erred in denying Plaintiffs’ motions to remand, we
address only the jurisdictional issues in this case.
III. STANDARD OF REVIEW
We review denial of a plaintiff’s motion to remand de novo. See Henderson
v. Washington Nat. Ins. Co., 454 F.3d 1278, 1281 (11th Cir. 2006) (citing Pacheco
de Perez v. AT&T Corp., 139 F.3d 1368, 1373 (11th Cir. 1998)).
IV. DISCUSSION
“When a defendant removes a case to federal court on diversity grounds, a
court must remand the matter back to state court if any of the properly joined parties
in interest are citizens of the state in which the suit was filed. Such a remand is the
necessary corollary of a federal district court’s diversity jurisdiction, which requires
complete diversity of citizenship.” Henderson, 454 F.3d at 1281 (citing Lincoln
Prop. Co. v. Roche, 546 U.S. 81, __, 126 S. Ct. 606, 613 (2005); 28 U.S.C. §
1441(b)). However, if a defendant shows that “there is no possibility the plaintiff can
establish a cause of action against the resident defendant,” then the plaintiff is said
to have fraudulently joined the non-diverse defendant. Id. (quoting Crowe v.
Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997)).2 In that situation, the federal court
2
A defendant may also demonstrate fraudulent joinder by showing, by clear and convincing
evidence, that “the plaintiff has fraudulently pled jurisdictional facts to bring the resident defendant
into state court.” Henderson, 454 F.3d at 1281. Crescent has not argued that Plaintiffs fraudulently
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must dismiss the non-diverse defendant and deny any motion to remand the matter
back to state court. Id.
Crescent removed these cases to federal court based solely on its allegation that
diversity jurisdiction exists in the federal court. Thus, in the face of Plaintiffs’
motions to remand, Crescent had to demonstrate that Rinehart (a citizen of Florida)
was fraudulently joined in the cases. As we stated in Henderson, “the district court
was correct to deny the motion to remand only if there was no possibility that [the
Plaintiffs] could have maintained a cause of action against [the resident defendant]
in . . . state court.” 454 F.3d at 1281-82.
We turn now to consideration of the cause of action asserted in Plaintiffs’
complaints. Section 376.313, Fla. Stat. states, in pertinent part:
(3) . . . [N]othing contained in [sections] 376.30-376.319
prohibits any person from bringing a cause of action in a
court of competent jurisdiction for all damages resulting
from a discharge or other condition of pollution covered by
[sections] 376.30-376.319. Nothing in this chapter shall
prohibit or diminish a party’s right to contribution from
other parties jointly or severally liable for a prohibited
discharge of pollutants or hazardous substances or other
pollution conditions. Except as otherwise provided in
subsection (4) or subsection (5), in any such suit, it is not
necessary for such person to plead or prove negligence in
any form or manner. Such person need only plead and
pled jurisdictional facts; rather, it has pursued only the argument that there is no possibility Plaintiffs
could establish a cause of action against Rinehart under the Florida law.
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prove the fact of the prohibited discharge or other pollutive
condition and that it has occurred. The only defenses to
such cause of action shall be those specified in [section]
376.308.
The plain language of the statute does not indicate whether a plaintiff can
maintain a personal injury cause of action against a defendant that acquires polluted
property after the plaintiff’s exposure. To support their contention that they can
maintain such an action, Plaintiffs cite Aramark Uniform and Career Apparel, Inc.
v. Easton, 894 So. 2d 20 (Fla. 2004), which holds that the statute creates a strict
liability cause of action. In Aramark, the Florida Supreme Court stated that section
376.313 “creat[es] a damages remedy for the non-negligent discharge of pollution
without proof that the defendant caused it.” Id. at 24 (emphasis added). However,
Aramark does not state that a personal injury plaintiff can maintain the statutory
cause of action against a defendant who not only did not cause the pollution but also
did not own the contaminated property at the time the plaintiff was exposed to the
pollution. On the other hand, Aramark does not eliminate the possibility that such a
claim is viable. And, Defendants cite no other Florida statute or case that does so.
As the district court said, there is a “distinct possibility that a Florida court could find
that a private cause of action exists under Florida law for the personal injury damages
suffered by the Plaintiffs.” Brottem, 2006 WL 1529327, at *4. But, it is also possible
10
that a Florida court could find otherwise, holding that, in order to be held liable, a
defendant must have owned the property at the time of plaintiff’s exposure to the
pollution. Florida law is unclear on this point.
Defendants argue, and the district court found, that Plaintiffs cannot maintain
a cause of action against them because the statutory Third Party Defense acts as a
total bar to Plaintiffs’ claims against both Rinehart and Crescent.3 That affirmative
defense allows a defendant to escape liability by proving that: (1) the pollution was
solely the result of an act or omission of a third party unrelated to the defendant, (2)
the defendant “exercised due care with respect to the pollutant concerned, taking into
consideration the characteristics of such pollutant, in light of all relevant facts and
circumstances,” and (3) the defendant “took precautions against any foreseeable acts
or omissions of any such third party and against the consequences that could
foreseeably result from such acts or omissions.” § 376.308(2)(d), Fla. Stat. The
district court acknowledged that owners like Rinehart, who later acquire
contaminated property, cannot prove the last two elements of the Third Party Defense
as enumerated in the statute. Brottem, 2006 WL 1529327, at *6 n.14. In finding that
the defense should nonetheless apply to bar actions against those defendants, the
3
We have acknowledged that, under some circumstances, application of an affirmative
defense can support a finding of fraudulent joinder. See Henderson, 454 F.3d at 1283-84.
11
district court posited an answer to the question that we find remains unanswered in
Florida law: whether a cause of action for personal injury caused by environmental
contamination can be maintained against property owners who did not own the
property at the time of the plaintiff’s exposure to the contamination.
As we have previously cautioned, on a motion for remand, the federal court’s
analysis “must be limited to determining whether Plaintiffs have even an arguable
claim. So, any ambiguity or doubt about the substantive state law favors remand to
state court.” Crowe v. Coleman, 113 F.3d 1536, 1539 (11th Cir. 1997). We hold that,
if there is any possibility that the state law might impose liability on a resident
defendant under the circumstances alleged in the complaint, the federal court cannot
find that joinder of the resident defendant was fraudulent, and remand is necessary.
Henderson, 454 F.3d at 1284; Crowe, 113 F.3d at 1540; see also Parks v. The New
York Times Co., 308 F.2d 474, 477 (5th Cir. 1962) (“[D]etermination of fraudulent
joinder is to be based on whether there was a real intention on colorable grounds to
procure a joint judgment. Doubt as to whether under the state law a case of joint
liability is stated . . . will not render the joinder fraudulent.”).4
4
In Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc), we adopted
as binding precedent all decisions of the former Fifth Circuit rendered prior to October 1, 1981.
12
Because we conclude that Florida law is unclear as to whether Rinehart and
Crescent could, as a matter of law, be held liable for personal injury damages suffered
by Plaintiffs as a result of their exposure to environmental contaminants prior to the
Defendants’ ownership of the contaminated land, the district court erred in
concluding that Rinehart was fraudulently joined.5 Because Rinehart is a citizen of
Florida, complete diversity does not exist, and the district court lacked subject matter
jurisdiction to adjudicate the cases. The motions to remand should have been
granted.
V. CONCLUSION
For the foregoing reasons, the dismissals and judgments are vacated, and the
cases are remanded to the district court with instructions to remand them to the state
court for further proceedings.
VACATED AND REMANDED.
5
The district court may have reached the correct conclusion in holding that Florida law does
not impose liability on a defendant that did not own the contaminated property at the time of a
plaintiff’s exposure to the contamination. We express no opinion as to whether that conclusion is
correct; we simply observe that it is not mandated by existing Florida law.
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