United States Court of Appeals

For the Eighth Circuit

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No. 12-1892

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Bradley Timberland Resources

lllllllllllllllllllll Plaintiff - Appellant

v.

Bradley Lumber Company; Webster Business Credit Corp.

lllllllllllllllllllll Defendants - Appellees

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 Appeal from United States District Court 

for the Western District of Arkansas - El Dorado

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 Submitted: March 14, 2013

 Filed: April 8, 2013

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Before MURPHY, SMITH, and GRUENDER, Circuit Judges.

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MURPHY, Circuit Judge.

Webster Business Credit Corporation extended a loan to Bradley Lumber

Company which was secured in part by the assets of its affiliate Bradley Timberland

Resources. After Bradley Lumber defaulted on the loan, Bradley Timberland sued

Webster and Bradley Lumber in state court for fraud and interference with business

expectancy, claiming that both parties were liable for Webster's alleged

misrepresentations related to the loan. The action was removed to federal court, and
Bradley Timberland moved to remand. The district court concluded that Bradley

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Timberland had fraudulently joined its affiliate Bradley Lumber as a defendant in

order to defeat diversity jurisdiction, and it denied the motion to remand. After

determining that Bradley Timberland's claims were time barred, the district court

granted Webster's motion to dismiss. Bradley Timberland appeals. We affirm.

I.

David Chambers owns and operates companies engaged in various aspects of

the lumber industry in southern Arkansas. Chambersisthe president and 90% owner

of Bradley Lumber, which mills oak and pine lumber. He is also the chairman and

70% owner of Bradley Timberland, which until recently owned approximately 25

square miles of Arkansas woodland from which Bradley Lumber's materials were

harvested.

In October 2006 Chamberssought a revolving credit line from Webster, a New

York bank, to finance Bradley Lumber's operations. Webster agreed to establish a $6

million credit line for Bradley Lumber to be secured by assets including Bradley

Timberland's woodlands. During the fall of 2007 Webster became concerned about

Bradley Lumber's liquidity. Bradley Timberland alleges that Webster "demanded"

that Bradley Lumber "recapitalize by selling off [Bradley Timberland's] assets and

taking the money." Bradley Timberland asserts that it complied with the request by

selling its woodlands "at a loss from $700 to $800 per acre."

Webster did not renew the revolving loan after Bradley Timberland sold its

woodlands. In August 2008 Webster instead wrote to Bradley Lumber that it had

permanently discontinued any possibility of financing. The next month Bradley

The Honorable Robert T. Dawson, United States District Judge for the

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Western District of Arkansas.

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Lumber ceased making payments on the loan, and in October Webster sued Bradley

Lumber for default. After three years of litigation, the district court entered judgment

in favor of Webster for approximately $2 million in December 2011.

In August 2011, while Webster's suit against Bradley Lumber was still

ongoing, Bradley Timberland filed a complaint against Webster and Bradley Lumber

in Arkansas state court. Bradley Timberland alleged that Webster had fraudulently

induced it to sell its assets with a false promise that Webster would then renew

Bradley Lumber's revolving credit line. Bradley Timberland also claimed that

Webster had interfered with its business expectancy because otherwise it "could have

stood to gain millions more through the continued development and sale of" its land. 

Bradley Timberland finally alleged a constructive fraud claim against Bradley

Lumber for its "repeated mistakes" in relying on Webster's false promises.

Webster removed the action to federal district court in September, and the case

was assigned to the same district court judge who was presiding over Webster's

lawsuit for default. Webster moved to dismiss Bradley Timberland's complaint,

arguing that its claims were barred by the applicable three year statute of limitations. 

Bradley Timberland moved to remand the action to state court, contending that

remand wasrequired because named defendant Bradley Lumber had not joined in the

removal action. See 28 U.S.C. § 1446(b)(2)(A). Bradley Timberland also insisted

that the "joinder of [Bradley Lumber] as a defendant was not fraudulent, but rather

a legitimate and good faith claim against a separate defendant that asserts a viable

claim under Arkansas law."

The district court denied BradleyTimberland's motion for remand, concluding

that Bradley Lumber had been fraudulently joined to defeat diversity jurisdiction. It

reasoned that "the relationship between [Bradley Timberland] and [Bradley Lumber]

precludes even the possibility of constructive fraud" because the companies were

"owned, financed, and operated" by the same person. The district court also granted

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Webster's motion to dismiss after concluding that Bradley Timberland's claims were

time barred. BradleyTimberland's own complaint alleged that the fraud had occurred

when Webster "made several false representations" to Bradley Lumber in the fall of

2007. Since Bradley Timberland did not file suit until August 2011, the district court

determined that the action was barred by the three year statute of limitations for tort

claims under Arkansas law. Bradley Timberland filed a motion for reconsideration

which was denied. 

BradleyTimberland appeals, contending that the district court erred in denying

its motion for remand to state court and in granting Webster's motion to dismiss. It

also argues that the district court abused its discretion in denying its motion for

reconsideration.

II.

Bradley Timberland first argues that the district court should have granted its

motion to remand because removal to federal court was improper without Bradley

Lumber's consent. While all defendants must typically join in a removal action, see

28 U.S.C. § 1446(b)(2)(A), the district court concluded thatBradleyLumber had been

fraudulently joined to defeat diversity jurisdiction and that its consent to removal was

therefore not required. We review whether Bradley Lumber was fraudulently joined

de novo, resolving "all doubts about federal jurisdiction in favor of remand."

Wilkinson v. Shackelford, 478 F.3d 957, 963 (8th Cir. 2007) (citation omitted)

(quotation marks omitted). A party has been fraudulently joined if there is no

"reasonable basis for predicting that the state law might impose liability based upon

the facts involved." Id. (citation omitted) (quotation marks omitted).

Bradley Timberland brought a constructive fraud claim against Bradley

Lumber, which the parties agree is governed by Arkansas law. Under Arkansas law,

actual fraud requires "a false representation (usually of a material fact), knowledge

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or belief by the defendant that the representation is false, intent to induce the

plaintiff's reliance, justifiable reliance by the plaintiff, and resulting damage to the

plaintiff." Yarborough v. DeVilbiss Air Power, Inc., 321 F.3d 728, 730 (8th Cir.

2003) (applying Arkansas law). Constructive fraud has the same elements except that

it arises from a confidential relationship and does not require proof of scienter. Id.

As pleaded in its complaint, Bradley Timberland's constructive fraud claim

alleges that

Bradley Lumber, specifically their representatives, maintained a legal

duty to Bradley Timberland. While they were not dishonest in their

dealings with Bradley Timberland, their repeated mistakes in relying on

the assertions made by Webster and subsequent role in bringing about

the liquidation of Bradley Timberland assets is enough to constitute

constructive fraud.

The district court concluded that Bradley Lumber had been fraudulently joined

because there was no reasonable basis for imposing liability on Bradley Lumber for

constructive fraud based on Bradley Timberland's pleadings. It therefore denied

remand and dismissed the claim against Bradley Lumber.

We agree that Bradley Lumber was fraudulently joined in this case. Bradley

Timberland's complaint fails to allege any false representation made by Bradley

Lumber. The facts pleaded in the complaint only allege that Bradley Timberland

"justifiably relied on the representations made by Webster" (emphasis added) and that

Webster's misrepresentations "ultimately induced the actions of Bradley Lumber and

BradleyTimberland" (emphasis added). BradleyTimberland also failed to plead facts

demonstrating Bradley Lumber's intent to induce reliance on a misrepresentation or

its own justified reliance. As the district court observed, intentional deceit was

impossible becauseBradleyLumber and BradleyTimberland "were owned,financed,

and operated by the same person, Chambers." Bradley Timberland's contention that

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Bradley Lumber faced a legitimate risk of liability for constructive fraud is also

contradicted by the fact that Bradley Lumber did not appear before the district court

or submit a brief on appeal. Since there is no "reasonable basis for predicting that the

state law might impose liability based upon the facts involved," the district court did

not err in concluding that Bradley Lumber wasfraudulently joined to defeat diversity

jurisdiction. See Wilkinson, 478 F.3d at 963.

There is also no merit to Bradley Timberland's argument that the district court

improperly pierced the corporate veil by considering the ownership structures of

Bradley Lumber and Bradley Timberland. A court pierces a corporate veil when it

disregards a corporate entity to impose individual liability on its shareholders. See

Anderson v. Stewart, 234 S.W.3d 295, 296 (Ark. 2006). The district court here did

not disregard Bradley Lumber or Bradley Timberland's corporate form but rather

considered their ownership structures in determining whether Bradley Lumber had

been fraudulently joined.

Bradley Timberland next argues that the district court erred in granting

Webster's motion to dismiss. We review the grant of a motion to dismiss de novo,

taking the facts alleged in the complaint as true. Zutz v. Nelson, 601 F.3d 842, 848

(8th Cir. 2010). To survive a motion to dismiss, a complaint "need not include

detailed factual allegations," C.N. v. Willmar Pub. Schs., Indep. Sch. Dist. No. 347,

591 F.3d 624, 629 (8th Cir. 2010), but it must contain "enough facts to state a claim

to relief that is plausible on its face," Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570

(2007). The plausibility standard requires a plaintiff to "plead[] factual content that

allows the court to draw the reasonable inference that the defendant is liable for the

misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

A "motion to dismiss may be granted when a claim is barred under a statute of

limitations." Varner v. Peterson Farms, 371 F.3d 1011, 1016 (8th Cir. 2004) (citation

omitted) (quotation marks omitted). Under Arkansas law, the statute of limitations

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for all tort actions "not otherwise limited by law" is three years. O'Mara v. Dykema,

942 S.W.2d 854, 858 (Ark. 1997). The limitations period begins to run when the

wrong occurs, regardless of when it is discovered. Id.

The district court dismissed BradleyTimberland's claims against Webster after

concluding that its own pleadings alleged that the claimed wrong had been committed

in the fall of 2007 and that the action had therefore accrued approximately four years

before suit wasfiled against Webster on August 12, 2011. The district court also took

judicial notice of the facts presented in the previous lawsuit between Webster and

Bradley Lumber, citing portions of that record which revealed that Bradley

Timberland had known that Webster had discontinued financing the revolving loan

during the fall of 2007. Bradley Timberland contends on appeal that its claim did not

accrue until it received a letter from Webster's law firm on August 13, 2008 which

indicated that the financing arrangement was being "permanently discontinu[ed]." 

Bradley Timberland claims that it thus filed its complaint one day before the statute

of limitations ran.

We conclude that Bradley Timberland's claims are time barred. In support of

its fraud claim, Bradley Timberland pled that "[s]tarting in the Fall (late August or

early September) of 2007 Webster made several false representations." From "the

face of the complaint itself" it is therefore apparent that Bradley Timberland's action

against Webster accrued during the fall of 2007, see Varner, 371 F.3d at 1016, and

hence the statute of limitationsran during the fall of 2010. Since Bradley Timberland

did not file suit against Webster until August 2011, its claims against Webster are

barred by Arkansas' three year statute of limitations for fraud and interference with

business expectancy. See O'Mara, 942 S.W.2d at 858.

Bradley Timberland finally challenges the district court's denial of its motion

for reconsideration, which we review for abuse of discretion. Elder-Keep v. Aksamit,

460 F.3d 979, 985–86 (8th Cir. 2006). A motion for reconsideration "serve[s] the

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limited function of correcting manifest errors of law or fact or . . . present[ing] newly

discovered evidence" after a final judgment. United States v. Metro. St. Louis Sewer

Dist., 440 F.3d 930, 933 (8th Cir. 2006) (citation omitted) (quotation marks omitted). 

It cannot be used to introduce new evidence which could have been offered before

judgment. Id. 

In its motion for reconsideration, Bradley Timberland attempted once more to

establish that Webster's false representations did not occur until the fall of 2008. It

provided an affidavit froma BradleyLumber finance manager, email correspondence

between BradleyLumber and Webster representatives, and bank records showing that

Webster had continued to lend money to Bradley Lumber in 2008. Bradley

Timberland argued that the court's "factual misunderstanding" about the timing of

misrepresentations and default were evidence of disputed facts warranting trial.

Bradley Timberland's proffered evidence is irrelevant to this case. Its cause of

action accrued when the alleged misrepresentations were made, see O'Mara, 942

S.W.2d at 858, which according to Bradley Timberland's complaint occurred in the

fall of 2007. Evidence of a continuing loan arrangement has no bearing on the

accrual of Bradley Timberland's fraud claims. Moreover, Bradley Timberland's new

evidence was improperly presented as part of the motion for reconsideration because

it could have been offered prior to the district court's judgment. See Metro. St. Louis

Sewer Dist., 440 F.3d at 933. The district court did not abuse its discretion in

denying the motion for reconsideration.

III.

We accordingly affirm the district court's denial of Bradley Timberland's

motion for remand, its grant of Webster's motion to dismiss, and its denial of Bradley

Timberland's motion for reconsideration.

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