Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_05-cv-00435/USCOURTS-caed-1_05-cv-00435-3/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Contract Dispute

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

BIG-D CONSTRUCTION CORP. - )

CALIFORNIA, )

)

)

)

Plaintiff, )

)

vs. )

)

)

RSCO, INC., et al., )

)

)

Defendant. )

)

)

No. CV-F-05-435 REC/LJO

ORDER GRANTING BIG-D'S

MOTION TO REMAND AND

REMANDING ACTION TO THE

TULARE COUNTY SUPERIOR COURT 

On July 11, 2005, the court heard the Motion to Remand filed

by Big-D Construction Corp. - California (hereinafter referred to

as Big D).

Upon due consideration of the record and the arguments of

the parties, the court grants the motion to remand and remands

this action to the Tulare County Superior Court for the reasons

set forth herein..

On October 29, 2004, Big-D Construction Corp. - California

(hereinafter referred to as Big D) filed a “Complaint for Breach

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of Written Contract; Action Against Mechanics’ Lien Release Bond;

and For Declaratory Relief” in the Tulare County Superior Court. 

Named as defendants are (1) RSCO, Inc. dba Rising Sun Company,

alleged to be a California corporation doing business in

California (hereinafter referred to as Rising Sun); (2)

Accredited Surety and Casualty Company, Inc., alleged to be a

Florida Corporation transacting surety business in California

(hereinafter referred to as ASCC); (3) Leprino Foods Company,

alleged to be a Colorado corporation doing business in California

and alleged to be the owner of the property on which the Project

described in the Complaint is being constructed (hereinafter

referred to as Leprino); and (4) Does 1-100. The First Cause of

Action is for breach of written contract against Rising Sun and

Does 1-50 and alleges in pertinent part:

9. On ... September 1, 2000, Defendant

LEPRINO, as the owner, and Plaintiff, as the

general contractor, entered into a written

prime contract, Contract Agreement No. 3357

(hereinafter referred to as the ‘Prime

Contract’) for the construction of a work of

improvement consisting of an approximately

475,000 gross square foot new dairy and

related products (including cheese and whey

products) manufacturing, processing and

storage facility to be known as the ‘LeMooreWest plant’ (hereinafter referred to as the

‘Project’) located at the Property.

10. On ... February 12, 2001, Plaintiff

entered into a subcontract agreement with

Defendant RISING SUN (hereinafter the

‘Subcontract’) to perform a portion of the

Project consisting generally of the

installation of Concrete Footings and

Foundations.

11. Plaintiff also entered into other

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subcontract agreements with DOES 1 through 50

to perform other various portions of the

Project (hereinafter the ‘DOE Agreements’).

12. Pursuant to the terms of the

Subcontract, RISING SUN was obligated to

perform its scope of work in a timely manner

and to coordinate its work with all of the

Project’s other subcontractors to ensure the

uninterrupted progress of the Project and to

enable Plaintiff, in its role as general

contractor, to complete the Project as

scheduled.

13. Pursuant to the terms of the DOE

Agreements, DOES 1 through 50 ... were

obligated to perform their respective scopes

of work in a timely manner and to coordinate

their work with the Project’s other

subcontractors to ensure the uninterrupted

progress of the Project and to enable BIG-D

to complete the Project as scheduled.

14. Plaintiff is informed and believes, and

on that basis alleges, that RISING SUN and

DOES 1 through 50 ... breached the terms of

their respective subcontract agreements by

failing to complete their work in a timely

fashion and adequately coordinating their

work among themselves.

15. As a result of RISING SUN’s and DOES 1

through 50's ... breaches, Plaintiff has been

damaged in that these Defendants’ failures

caused at least several days of delay to the

overall completion of the Project resulting

in Plaintiff incurring, and continuing to

incur, substantial damages in an amount to be

later ascertained but which exceeds

$25,000.00.

Big-D prays for damages against Rising Sun in an amount which

exceeds $25,000. The Second Cause of Action is against ASCC as

surety and Leprino as principal for action against mechanics’

lien release bond. After realleging the preceding allegations,

the Second Cause of Action alleges that plaintiff fully performed

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the Prime Contract and

18. After Plaintiff ceased furnishing labor,

services, materials, and equipment to the

Project, Plaintiff duly recorded on June 24,

2003, its Mechanics’ Lien in the amount of

$10,185,025.43 in the Kings County Recorder’s

Office as Document No. 0316560 to secure

payment of the Prime Contract balance owed. 

This claim of lien was timely recorded

pursuant to Civil Code § 3116.

19. In the Mechanics’ Lien, Plaintiff

claimed a lien on the work of improvement and

real property in the amount which it

believed, at the time that said Mechanics’

Line was recorded, to equal the reasonable

value for all labor, materials, services,

and/or equipment Plaintiff had furnished for

the Project for which it had not been paid.

20. Subsequent to recording its Mechanics’

Lien, Plaintiff has recorded several partial

mechanics’ lien releases, to reflect payments

made by LEPRINO, as owner, to various Project

Subcontractors. These partial lien releases

reduced the amount of the Mechanics’ Lien to

$6,503,037.70.

21. In October, 2003, Plaintiff brought suit

against LEPRINO and various subcontractors in

California Superior Court for the County of

Kings for breach of contract and to foreclose

its mechanics’ lien. LEPRINO removed this

action to the United States District Court

for the Eastern District of California, Case

No. CIV.F-03-6354 REC LJO, based upon

diversity jurisdiction grounds. From there,

LEPRINO brought a motion to dismiss it from

the action, claiming that, pursuant to a

forum selection clause contained in the Prime

Contract, BIG-D had agreed to litigate all

disputes stemming from the Prime Contract in

Colorado. The Eastern District granted

LEPRINO’s motion to dismiss with one caveat:

LEPRINO was required to post a mechanics’

lien release bond with the Eastern District.

22. Plaintiff is informed and believes, and

thereon alleges, that on ... April 29, 2004,

LEPRINO, as principal, and ASCC and DOES 51

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through 70 ... as sureties, duly made and

executed a Mechanics’ Lien Release Bond, No.

10020440 in the amount of $9,755,000.000

[sic], so as to enable the Property to be

freed from the effect of Plaintiff’s claim of

lien and any action to foreclose said lien.

23. Plaintiff is informed and believes, and

thereon alleges, that the mechanics’ lien

release bond was posted with the United

States District Court for the Eastern

District of California, per the District

Court of Fresno’s order. Plaintiff is

further informed and believes, and on that

basis alleges that this Mechanics’ Lien

Release Bond was made, issued and executed as

aforesaid in accordance with §3143 of the

Civil Code of the State of California.

Big-D prays for damages against ASCC and Leprino in an amount in

excess of $6,503,037.70 plus interest at the rate of 10% per

annum. The Third Cause of Action is for declaratory relief

against Rising Sun and Does 1-50. After realleging the preceding

allegations, the Third Cause of Action alleges:

25. Pursuant to Section 3.8 [Duty to

Indemnify and Hold Harmless] of the

Subcontract and DOE Agreements, Defendant

RISING SUN and DOES 1 through 50 ...

expressly agreed to indemnify, defend and

hold harmless BIG-D from any and all claims,

damages, liability, expenses and attorneys

fees arising out of the performance of, or

failure to perform, their respective works on

the Project.

26. BIG-D has performed all the conditions

and obligations to be performed on its part

under the terms of the Subcontract and DOE

Agreements ....

27. LEPRINO has filed suit against BIG-D in

the United States District Court for the

District of Colorado, Case No. 03-mk-2669

(PAC) for damages stemming from Project

delays (the ‘LEPRINO’ Action). Additionally,

University Marelich Mechanical (hereinafter

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‘UMM’) and BIG-D remain parties to the

Eastern District of California action, Case

No. CIV.F-03-6354 REC LJO. UMM, which

performed the Projects [sic] mechanical

engineering installations, has sued BIG-D

for, among other things, damages it claims to

have sustained as a result of the Project

delays (the ‘UMM Action’).

28. An actual controversy has now arisen

between BIG-D and RISING SUN on the one hand

and BIG-D and DOES 1 through 50 ... on the

other, concerning their rights and duties

under the Subcontract and DOE Agreements,

respectively. Specifically, BIG-D contends

and RISING SUN and DOES 1 through 50 ...

dispute, that, if BIG-D is adjudged to have

delayed the Project in either the LEPRINO

Action or the UMM Action, then to the extent

that RISING SUN and DOES 1 through 50 ... are

found to have actually caused all or a

portion of the Project delays, then RISING

SUN and DOES 1 through 50 ... shall indemnify

BIG-D proportionally for attorneys fees and

costs incurred in defending both the LEPRINO

and UMM Actions as well as for the

proportionate amounts of any judgment entered

against BIG-D in the LEPRINO and/or UMM

Actions.

29. Plaintiff therefore desires a judicial

determination as to what extent or proportion

RISING SUN and DOES 1 through 50 are

obligated to indemnify BID-D for any of its

attorneys fees and costs incurred in

defending both the Leprino [sic] and UMM

Actions and for any judgments entered against

BIG-D in the LEPRINO and/or UMM Actions.

30. Such a declaration is necessary and

appropriate at this time in order that BIG-D,

RISING SUN, and DOES 1 through 50 ... may

ascertain their rights and duties under their

respective subcontract agreements. 

On March 30, 2005, Leprino and ASCC filed a Notice of

Removal of this action. The removal was joined by Rising Sun on

the same date. The Notice of Removal asserts in pertinent part:

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2. The first date upon which defendant

LEPRINO FOODS COMPANY (‘LFC’) received a copy

of the complaint was on LFC on March 24,

2005. It was improperly served by mail at

that time on counsel for LFC. It was served

thereafter on defendants [sic] ACCREDITED.

3. This action is a civil action of which

this Court has original jurisdiction under 28

U.S.C. § 1332, and is one which may be

removed to this Court by defendant pursuant

to the provisions of 28 U.S.C. § 1441(b) in

that it is a civil action between citizens of

different states and the matter in

controversy exceeds the sum of $75,000,

exclusive of interest and costs as alleged in

the Complaint.

4. Defendant is informed and believes that

plaintiff BIG-D CONSTRUCTION CORP. -

CALIFORNIA, a Utah corporation, was, and

still is, a resident of the State of Utah. 

Defendant LFC is informed and believes codefendant RSCO, INC. dba RISING SUN COMPANY,

a California corporation was, and still is, a

resident of the State of California. 

Defendant LFC is informed and believes codefendant ACCREDITED SURETY AND CASUALTY

COMPANY, INC., a Florida corporation was, and

still is, a resident of the State of Florida. 

Defendant LEPRINO FOODS COMPANY was, and

still is, a resident of the State of

Colorado.

5. LFC is informed and believes that all

other defendants who have been served with

Summons and Complaint have joined in this

Notice of Removal ... LFC also is informed

and believes BIG D [sic] delayed service on

LFC and ACCREDITED and joined RSCO INC. as a

sham defendant in order to avoid this

removal.

A. Background.

In Big-D Construction Corp. - California v. Leprino Foods

Company, et al., No. CV-F-03-6354 REC/LJO, Big-D filed a

Complaint against Leprino and numerous subcontractors. The

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Complaint did not name Rising Sun and leave to amend has not been 

sought to include Rising Sun even though the Complaint named Doe

Defendants. The Complaint seeks a declaratory judgment

concerning indemnification rights between Big-D, Leprino, UMM and

other subcontractors, alleges a claim for damages against Leprino

for breach of the Prime Contract, alleges a claim for foreclosure

of mechanics’ liens, and alleges claims for quatum meruit and

indebtitatus assumpsit, statutory penalties and attorneys’ fees

against Leprino. By Order filed on January 22, 2004, the court

granted Leprino’s Motion to Dismiss Complaint for Improper Venue

and dismissed the action as against Leprino subject to the

posting of a bond to secure the priority of Big-D’s mechanics’

lien. In so ruling, the court relied on the following provision

in the Prime Contract between Big-D and Leprino:

15.8 Colorado Law. The Contract shall be

governed by and construed in accordance with

the laws of the State of Colorado. Further,

the parties expressly consent to the

exclusive (subject to the terms of this

paragraph 15.8) jurisdiction and venue in the

Federal courts for the District of Colorado

or the State courts of the Second Judicial

District of Denver, Colorado. Accordingly,

any action or proceeding brought by either

party which is based on, or derives from,

this Agreement will be brought in such

courts. Notwithstanding the foregoing, if

jurisdiction in such courts cannot be

obtained with respect to an indispensable

party to such an action, the Owner and

Contractor agree that the forum for such

action will be in the state where

jurisdiction is proper as to all

indispensable parties.

In enforcing the forum selection clause in favor of Leprino, the

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court rejected Big-D’s arguments that Leprino had waived

enforcement of the forum selection clause, that the

subcontractors named in the action are indispensable parties,

that the forum selection clause should not be enforced because

litigation in Colorado is not convenient under 28 U.S.C. §

1404(a), that the “local action doctrine” requires that the

action against Leprino be heard in California notwithstanding the

forum selection clause, and that the forum selection clause

should not be enforced because enforcement will contravene

California’s public policy. After Leprino posted the required

bond and after motions concerning the entry of judgment and

allowance of an immediate appeal, the court entered judgment for

Leprino pursuant to Rule 54(b), Federal Rules of Civil Procedure,

thereby allowing an immediate appeal to the Ninth Circuit. 

B. Motion to Remand.

In a motion to remand to state court, the party asserting

federal jurisdiction has the burden of proof. “The burden of

establishing federal jurisdiction is upon the party seeking

removal, and the removal statute is strictly construed against

removal jurisdiction.” Emrich v. Touche Ross & Co., 846 F.2d

1190, 1195 (9 Cir. 1988). “The strong presumption against th

removal jurisdiction means that the defendant always has the

burden of establishing that removal is proper.” Gaus v. Miles,

Inc., 980 F.2d 564, 566 (9 Cir. 1992). th

1. Lack of Complete Diversity.

Big-D moves to remand this action because Rising Sun is

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alleged in the Complaint to be a California corporation doing

business in California.

The district courts have original jurisdiction of a civil

action where the matter in controversy exceeds the sum or value

of $75,000 and is between citizens of different states. 28

U.S.C. § 1331(a)(1). Section 1331(c)(1) provides in pertinent

part:

(c) For the purposes of this section and

section 1441 of this title -

(1) a corporation shall be 

deemed to be a citizen of any State by which

it has been incorporated and of the State

where it has its principal place of business

....

28 U.S.C. § 1441(b) provides in pertinent part that any action

based on diversity of citizenship “shall be removable only if

none of the parties in interest properly joined and served as

defendants is a citizen of the State in which such action is

brought.” As explained in Wright, Miller & Cooper, 14B Federal

Practice and Procedure, § 3723, pp. 564-568 (1998):

Despite the applicability of the general

rules governing diversity of citizenship

jurisdiction to cases removed to federal

court, removal jurisdiction over diversity

actions is more limited that jurisdiction

over diversity of citizenship cases

originally brought in federal court. This is

because Section 1441(b) explicitly provides,

and the cases uniformly hold, that removal to

federal court based on diversity of

citizenship is available only if none of the

parties in interest properly joined and

served as a defendant is a citizen of the

state in which the action is brought; that

limitation is not to the removal of federal

question cases or the federal courts’

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original subject matter jurisdiction over

diversity cases.

The requirement of Section 1441(b) is commonly called the “no

local defendant” rule.

Defendants argue that remand on this ground should be denied

because Rising Sun is sham defendant fraudulently joined as a

defendant in the Complaint for the purpose of avoiding removal.

In so arguing, defendants refer the court to Triggs v. John

Crump Toyota, Inc., 154 F.3d 1284 (11 Cir. 1998). In Triggs, th

the Eleventh Circuit noted that fraudulent joinder, a judicially

created doctrine that provides an exception to the requirement of

complete diversity, has been found in two situations, first, when

there is no possibility that the plaintiff can prove a cause of

action against the resident (non-diverse) defendant, and, second,

where there is outright fraud in the plaintiff’s pleading of

jurisdictional facts. Id. at 1287. Triggs cites Tapscott v. MS

Dealer Service Corp., 77 F.3d 1353 (11 Cir. 1996), abrogated on th

other grounds, Cohen v. Office Depot, Inc., 204 F.3d 1069 (11th

Cir. 2000), as authority for a third situation in which

fraudulent joinder has been found: “where a diverse defendant is

joined with a nondiverse defendant as to whom there is no joint,

several or alternative liability and where the claim against the

diverse defendant has no real connection to the claim against the

nondiverse defendant. Id.

In Tapscott, a putative class action was removed to a

district court. There were numerous classes of defendants, all

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of whom were joined under Federal Rule 20. Tapscott held in

pertinent part:

The joinder of defendants in this action has

been accomplished solely through Rule 20. 

The district court, finding no allegation of

joint liability between Lowe’s and any other

defendant and no allegation of conspiracy,

held there was an ‘improper and fraudulent

joinder, bordering on a sham.’ The court

rejected Appellants’ argument that ‘a mere

allegation of a common business practice

subjects all defendants to joinder.’ ...

Disregarding the citizenship of the

improperly joined parties, the district court

asserted jurisdiction and severed and

remanded the remainder of the action to state

court.

It is important to note that Appellants have

not contended that Lowe’s was properly joined

with any other non-diverse defendants. 

Rather, they contend that while a court may

disregard the citizenship of fraudulently

joined parties, a misjoinder, no matter how

egregious, is not fraudulent joinder. We

disagree.

Joinder of the defendants under Rule 20

requires: (1) a claim for relief asserting

joint, several, or alternative liability and

arising from the same transaction,

occurrence, or series of transactions or

occurrences, and (2) a common question of law

or fact ... The district court correctly

found no allegation of joint liability or any

allegation of conspiracy. Further, the

alleged transactions involved in the

‘automobile’ class are wholly distinct from

the alleged transactions in the ‘merchant’

class. The only similarity between the

allegations in the ‘automobile’ class and the

‘merchant’ class are allegations of

violations of Alabama Code §§ 5-19-1, 5-19-

19, and 5-19-20. Such commonality on its

face is insufficient for joinder.

Misjoinder may be just as fraudulent as the

joinder of a resident defendant against whom

a plaintiff has no possibility of a cause of

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action. A defendant’s ‘right of removal

cannot be defeated by a fraudulent joinder of

a resident defendant having no real

connection with the controversy.’ ...

Although certain putative class

representatives may have colorable claims

against resident defendants in the putative

‘automobile’ class, these resident defendants

have no real connection with the controversy

involving Appellants Davis and West and

Appellee Lowe’s in the putative ‘merchant’

class action. We hold that the district

court did not err in finding an attempt to

defeat diversity jurisdiction by fraudulent

joinder. We do not hold that mere misjoinder

is fraudulent joinder, but we do agree with

the district court that Appellants’ attempt

to join these parties is so egregious as to

constitute fraudulent joinder.

Tapscott, 77 F.3d at 1360. 

Defendants that the court should follow Tapscott in

resolving this motion:

There is no contractual relationship between

Leprino, the owner, and Rising Sun, the

subcontractor. There is no potential claim

between those parties. The indemnity action

does not even accrue until and unless there

is a judgment by Leprino against Big-D and

Big-D pays money. This court has already

determined that the indemnity theory does not

create an indispensable party. The timing of

service was the first suggestion that Big-D

was attempting to use Rising Sun to have the

state court review the forum selection clause

already ruled upon by Judge Coyle. Counsel

for Big-D, Dan Nevis, claims it [sic] filed

the action against Leprino in October

(presumably with a good faith belief in the

merits), but it waited for 5 months to serve

the complaint because it could not determine

if the bond was recorded. A search of the

county records takes a day, not 5 months.

Nevis then argues Rising Sun was not named in

the original action where it named

approximately 18 subcontractor defendants

because it did not know if indemnity would be

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An unpublished decision by the Ninth Circuit discussed the 1

fraudulent joinder articulated in Tapscott. See California Dump

Truck Owners Association v. Cummins Engine Company, Inc., 2001 WL

1563913 (2001). However, this case cannot stand as authority that

the Ninth Circuit will follow Tapscott because the decision is

unpublished and because the decision expressly states that “[f]or

purposes of discussion we will assume, without deciding, that this

circuit would accept the doctrines of fraudulent and egregious

joinder as applied to plaintiffs.”

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needed. However, Big-D argued extensively

about its right to indemnity in opposition to

Leprino’s motion to dismiss. Big-D was aware

of Leprino’s potential claim. Counsel for

Rising Sun notes he asked Big-D’s counsel for

the reasons his client was named in this

action. He served form interrogatories and

received no response, and to date, was not

told how his client allegedly breached a

subcontract. There will never be an action

between Rising Sun and Leprino due to the

lack of privity of contract. Any indemnity

claim will not accrue, if at all, until after

a judgment by Leprino against Big-D. The

failure to name Rising Sun originally, the

timing of the present action, the delayed

service of the present action, naming

essentially a nominal defendant first, all

suggest Rising Sun is a sham defendant.

The Eleventh Circuit’s articulation of a third basis for a

finding of fraudulent joinder has not been adopted by the Ninth

Circuit or discussed by the Ninth Circuit in a published

decision. Furthermore, it has not been adopted by any other 1

Courts of Appeal other than possibly the Fifth Circuit. See In

re: Benjamin Moore & Co., 318 F.3d 626, 630-631 (5 Cir. th

2002)(“[W]ithout detracting from the force of the Tapscott

principle that fraudulent misjoinder of plaintiffs is no more

permissible than fraudulent misjoinder of defendants to

circumvent diversity jurisdiction, we do not reach its

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application in this case.”) The Tapscott rationale, called

“procedural misjoinder” or “fraudulent misjoinder” has been

criticized. See Osborn v. Metropolitan Life Insurance Comany,

341 F.Supp.2d 1123 (E.D.Cal. 2004): 

Professors Wright, Miller, and Cooper have

characterized the Tapscott ‘fraudulent

misjoinder’ theory as a ‘new concept’ that

‘appears to be part of the doctrine of

fraudulent joinder.’ Wright, Miller &

Cooper, Federal Practice and Procedure:

Jurisdiction 3d § 3723 at 656. They observe

that the doctrine adds to the complexity of a

federal court’s decision as to removal, and

note that even in the Eleventh Circuit not

all procedural misjoinder rises to the level

of fraudulent joinder. They posit that

‘numerous additional decisions will be needed

to clarify’ the distinction between which

misjoinder claims rise to the level of

‘egregiousness’ justifying a refusal to

remand ... They further suggest that an

aggrieved defendant could avoid the confusion

and complexity created by this standard by

seeking relief from the misjoinder in state

court and then removing to federal court ....

My own judgment is that the last thing the

federal courts need is more procedural

complexity. I thus conclude that the better

rule would require Met Life to resolve the

claimed misjoinder in state court, and then,

if that court severed the case and diversity

then existed, it could seek removal of the

cause to federal court.

Moreover, application of Tapscott raises

other unnecessary difficulties. Since the

decision, those following it have questioned

how to apply the doctrine and whether, when

considering the joinder of parties, a court

should rely on Rule 20 of the Federal Rules

of Civil Procedure or its state law

counterpart. In some cases, where the

federal rule of procedure on joinder tracks

the corresponding state rule, the question

would not have a practical import. In states

such as California, however, the state’s rule

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permitting joinder is broader than the

federal rule.

In sum, because there appears to be no reason

to develop a fraudulent misjoinder theory,

and because of the uncertainty as to how such

a theory should be applied, I respectfully

decline to apply it. This conclusion is

supported by the well-recognized doctrine

that a removing party bears a heavy burden of

persuasion and that if there is any doubt as

to whether removal was proper, remand is

required.

341 F.Supp.2d at 1127-1128. See also Brazina, M.D. v. Paul

Revere Life Insurance Company, 271 F.Supp.2d 1163 (N.D.Cal.

2003):

Defendants argue vociferously that Brazina’s

claims against the DOI are completely

unrelated to his claims against defendants,

and thus Brazina does not meet the

requirements for permissive joinder under

Rule 20. Defendants try to bootstrap this

unconvincing argument into a fraudulent

joinder claim. Essentially, they allege that

DOI and defendants are not jointly,

severally, or alternatively liable to

Brazina, liability does not arise from the

same transaction or occurrence, and there is

no ‘common question of law or fact’ between

the claims, and thus this court should find

fraudulent joinder.

Defendants seem to be relying on the theory

that emerged from Tapscott ... in which the

Eleventh Circuit ruled that claims could be

considered fraudulently joined when they are

misjoined ... However, Tapscott concerned two

groups of plaintiffs that sued separate

groups of defendants on almost entirely

separate legal grounds ... The Tapscott court

found joinder of these two groups of

plaintiffs, which was accomplished through

Rule 20, ‘so egregious as to constitute

fraudulent joinder.’ ... The Ninth Circuit

has not found occasion to address Tapscott

and no other circuit has adopted its

rationale. 

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In the action at bar, one plaintiff brought

different causes of action against separate

defendants without resort to Rule 20. Even

if this court were to extend Tapscott to such

an action, there is no evidence that the

claims are so unrelated as to constitute

‘egregious’ misjoinder. ....

271 F.Supp.2d at 1171-1172. 

The court follows the weight of authority and declines to 

adopt the Tapscott standard as a basis for defeating a motion to

remand based on incomplete diversity. As the cases have noted,

Tapscott involved unique facts and limited the standard set forth

in the case to egregious circumstances, a standard difficult to

apply. As noted by the district court in Osborn, defendants

could seek dismissal of the allegedly misjoined defendant in

state court and then seek removal to the federal court. This is

the better practice given the standard applicable in the Ninth

Circuit for determining fraudulent joinder for purposes of

removal jurisdiction. See Ritchey v. Upjohn Drug Co., 139 F.3d

1313, 1318 (9 Cir.), cert. denied, 525 U.S. 963 (1998): th

It is a commonplace that fraudulently joined

defendants will not defeat removal on

diversity grounds ... But, ‘[f]raudulent

joinder is a term of art. If the plaintiff

fails to state a cause of action against a

resident defendant, and the failure is

obvious according to the settled rules of the

state, the joinder of the resident defendant

is fraudulent.’ ... In deciding whether a

cause of action is stated we have declared

that we will ‘look only to a plaintiff’s

pleadings to determine removability.’ ...

And, we have commented that we will determine

the ‘existence of federal jurisdiction ...

solely by an examination of the plaintiff’s

case, without recourse to the defendant’s

pleadings.’ At least that is true when there

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Because of this conclusion, the court does not address the 2

other grounds for remand argued by Big-D. 

Defendants’ argument that Big-D has waived the lack of

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has not been a fraudulent joinder ... Where

fraudulent joinder is an issue, we will go

somewhat further. ‘The defendant seeking

removal to the federal court is entitled to

present the facts showing the joinder to be

fraudulent.’ 

The approach is reasonable and necessary. 

For example, a defendant must have the

opportunity to show that the individuals

joined in the action cannot be liable on any

theory.

There is no question that Big-D has alleged a viable claim

against Rising Sun for breach of contract based on untimely

performance as a subcontractor, as well as for declaratory relief

on an indemnity theory arising out of the Colorado and existing

federal actions. 

With regard to defendants’ contention that Rising Sun is

fraudulently joined in an effort by Big-D to avoid the prior

venue determination made by this court, an action is not

removable simply because it involves claims related to or even

parallel to those already filed or dismissed in federal court. 

See Rivet v. Regions Bank of La., 522 U.S. 479, 476 (1998), or

because removal is appropriate or necessary to protect a prior

federal court ruling. See Syngenta Crop Protection v. Henson,

537 U.S. 28, 34 (2002).

Consequently, the court concludes that removal of this

action was improper because of the absence of complete

diversity.2

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diversity “when this court already assumed diversity jurisdiction

in the matter between these parties” in No. CV-F-03-6354 REC/LJO.

The fact that diversity of citizenship was not contested in another

action does not allow imposition of federal subject matter

jurisdiction. Subject matter jurisdiction cannot be waived or

stipulated to by the parties. 

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ACCORDINGLY:

1. Big-D’s Motion to Remand is granted.

2. This action is remanded to the Tulare County Superior

Court.

IT IS SO ORDERED.

Dated: August 15, 2005 /s/ Robert E. Coyle 

668554 UNITED STATES DISTRICT JUDGE

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