Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_11-cv-01050/USCOURTS-almd-2_11-cv-01050-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

CHARLES O. WALL, II, and )

AUTAUGA AUTOMOTIVE, LLC, )

an Alabama Limited Liability )

Company, )

 )

Plaintiffs, )

 )

v. ) CASE NO. 2:11-CV-1050-WKW [WO]

 )

FRANK A. MOULTRIE, )

 )

Defendant. )

ORDER

Before the court is Plaintiffs’ Motion for Sanctions against Defendant Frank

Moultrie. (Doc. # 7.) Plaintiffs have submitted a brief supporting the imposition of

sanctions under 28 U.S.C. § 1447(c). (Doc. # 15.) Defendant has responded. (Doc.

# 16.) Upon careful consideration of the briefs and arguments of the parties, the court

concludes that Plaintiffs’ Motion for Sanctionsis due to be granted in part and denied

in part. 

Plaintiffs argue that Mr. Moultrie lacked any objectively reasonable basis for

removing this action and, thus, he should be assessed with costs and expenses

pursuant to § 1447(c). This section providesthat “[a]n order remanding the case may

require payment of just costs and any actual expenses, including attorney fees,

Case 2:11-cv-01050-WKW-WC Document 27 Filed 09/10/12 Page 1 of 6
incurred as a result of the removal.” § 1447(c). The decision to award costs and

expensesis within the sole discretion of the trial court. The standard that governs the

award of costs and fees is whether “the defendants in this action acted reasonably on

the basis of the information available at the time of removal.” Howard Griggs

Trucking Inc. v. Am. Cent. Ins. Co., 894 F. Supp. 1503, 1510 (M.D. Ala. 1995). 

Sanctions under § 1447 apply “only where the removing party lacked an objectively

reasonable basis for seeking removal.” Taylor Newman Cabinetry, Inc. v. Classic

Soft Trim, Inc., 436 F. App’x 888, 890 (11th Cir. 2011).

Removal from state court was premised on diversity jurisdiction under 28

U.S.C. § 1332. (Doc. # 1.) Mr. Moultrie argued that there was complete diversity

between him and both Plaintiffs, who were Alabama citizens. However, Plaintiff

Autauga Automotive, LLC, is a limited liability company. The removal papers

claimed Mr. Moultrie was a member of Autauga Automotive, LLC, and a limited

liability company “is a citizen of any state of which a member of the company is a

citizen.” Mallory & Evans Contractors & Eng’r, LLC v. Tuskegee Univ., 663 F.3d

1304, 1305 (11th Cir. 2011). Complete diversity was absent on the initial pleading

because Autauga Automotive, LLC, would be a citizen of any state where Mr.

Moultrie could claim citizenship. Accordingly, this court found that it lacked subject

matter jurisdiction over the removed action and remanded this case sua sponte when

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considering Plaintiffs’ motion for a temporary restraining order (“TRO”). (Doc. # 3.) 

Mr. Moultrie moved for reconsideration of the remand order (Doc. # 5), arguing for

the first time that Autauga Automotive, LLC, wasfraudulently joined, but this motion

was procedurally foreclosed. (See Doc. # 13.) 

The extensive and zealous arguments put forward by Mr. Moultrie have been

carefully considered. Mr. Moultrie’s position is that sanctions are not warranted

because diversity jurisdiction actually existed but for the fraudulent joinder of

Autauga Automotive, LLC, and the court should have allowed Mr. Moultrie to amend

the removal petition to add this new ground within the thirty-day period provided by

28 U.S.C. § 1446(b) or pursuant to 28 U.S.C. § 1653. To this end, Mr. Moultrie cites

Corporate Management Advisors, Inc. v.ArtjenComplexus, Inc., 561 F.3d 1294 (11th

Cir. 2009). He argues that the sua sponte remand was in error in this case and that,

therefore, removal was not incorrect or sanctionable. Artjen is distinguishable,

however. Artjen concerned a sua sponte remand based upon a procedural defect

pertaining to an omission of the citizenship of a party. Id. at 1295–96. Here, the

removal petition, which alleged solely that diversity of citizenship of all named

parties was the basis for federal removal jurisdiction, was followed by Plaintiffs’

TRO motion, because the state court TRO was set to expire. The ruling on the TRO

that the court lacked subject matter jurisdiction led to the sua sponte remand. This

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ruling was not based upon the mere omission of a party’s citizenship or deficient

allegations with respect to a party’s citizenship, but rather upon affirmative

allegations that a limited liability company was suing one of its members. Those

affirmative allegations facially destroyed diversity of citizenship. See Mallory, 663

F.3d at 1305. The sua sponte remand was for lack of subject matter jurisdiction,

pursuant to 28 U.S.C. § 1447(c), and the law is well established that the district court

is required to “remand a removed case sua sponte ‘[i]f at any time before final

judgment it appears that the district court lacks subject matter jurisdiction.’” Taylor

v. Phillips, 442 F. App’x 441, 443 n.3 (11th Cir. 2011) (quoting § 1447(c)). Mr.

Moultrie presents no authority that the failure to allege fraudulent joinder (that one

of the plaintiffs, Autauga Automotive, LLC, was an improper party) is merely a

procedural defect in the removal petition, such as was at issue in Artjan, and the court

is aware of no authority. 

1

Accordingly, there was no objectively reasonable basis for removal. Therefore,

it is ORDERED that the Motion for Sanctions (Doc. # 7) is GRANTED in part and

 Even if Mr. Moultrie had raised his argument for fraudulent joinder in his removal 1

petition, it is dubious whether there would have been a reasonably objective basis for that

ground. See generally Stillwell v. Allstate Ins. Co., 663 F.3d 1329, 1332 (11th Cir. 2011)

(Removing defendants bear a heavy burden of establishing fraudulent joinder.). Namely,

Plaintiffs present persuasive reasons to reject Mr. Moultrie’s argument that Plaintiff Wall did not

have the right to sue for the LCC (Doc. # 7 at 13) and note that the operating agreement allows

the sole manager of the business, Mr. Wall, to manage the business affairs of the company, i.e.,

to sue on its behalf.

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DENIED in part. The motion is GRANTED to the extent that the court finds that an

award of attorneys’ fees is appropriate for services rendered through December 20,

2011, the date of the filing of the request for sanctions. In reaching this conclusion,

the court has considered the attorney affidavits provided by both sides, as well as the

billing documents. 

Having carefully reviewed the legal tasks performed, the rates charged and the

time expended in light of the guidelines set out in Norman v. Housing Authority, 836

F.2d 1292, 1299–1304 (11th Cir. 1988), the court concludes that the hourly rates and

expended hours through December 20, 2011, are reasonable and that Plaintiffs’

counsel has sufficiently borne the burden ofsupplying specific and detailed evidence

that justifies the necessity of the time expended and the reasonableness of the

attorneys’ fees and costs incurred through that date. This determination is made in

light of the legal work required to respond to the numerous motions and filingsin this

case. (See Doc. # 15, Ex. A.) Plaintiffs’ attorneys were required to review and

respond to Defendant’s Notice of Removal (Doc. #1) and Defendant’s Motion to

Reconsider (Doc. # 5). Counsel was also required to address the implications for the

state court TRO, and had to research, draft, and file a new motion for a TRO (Doc.

# 2). Additionally, counsel had to file responses to Defendant’s Motion to

Reconsider (Doc. # 7). These reasonable fees were necessarily incurred by William

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R. Cunningham, Ann Kaufmann, Lee M. Russell Jr., W. Allen Sheehan and Barbara

J. Wells. In conjunction with research costs ($178.60), a total amount of $11,841.60

is due to be awarded to Plaintiffs. It is ORDERED, however, that Plaintiffs’ motion

for fees incurred after December 20, 2011, is DENIED. 

Accordingly, it is ORDERED that counsel for Plaintiffs shall HAVE and

RECOVER from Mr. Moultrie $11,841.60 in attorney’s fees and expenses, for which

let execution issue. 

DONE this 10th day of September, 2012.

 /s/ W. Keith Watkins 

CHIEF UNITED STATES DISTRICT JUDGE

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