Opinion ID: 1755861
Heading Depth: 2
Heading Rank: 1

Heading: whether the federal district court's refusal to remand and subsequent dismissal of chandler-sampson as an improperly joined party constituted a final adjudication on the merits?

Text: ¶ 12. The Harrisons' threshold argument is that the federal district court's denial of their motion to remand was not an adjudication on the merits. They predicate this argument on their interpretation of Fed.R.Civ.P. 41(b). The Harrisons assert that a Rule 41(b) involuntary dismissal is strictly reserved for a failure to prosecute, a failure to comply with the rules of civil procedure or a failure to comply with a court order. In applying this interpretation to the federal district court's final order finding inter alia that Chandler-Sampson was an improperly joined party to the suit and that diversity of citizenship jurisdiction was preserved in accordance with 28 U.S.C. § 1332, the Harrisons argue that the federal district court dismissal was not one envisioned by Fed.R.Civ.P. 41(b) and thus was not an adjudication on the merits. The Harrisons assert that a § 1332 diversity inquiry, for purposes of removal under 28 U.S.C. § 1441, requires only that the federal judge review the case in order to determine whether complete diversity exists. ¶ 13. Conversely, Chandler-Sampson argues that the Harrisons' interpretation is contrary to the plain language of Rule 41(b). It argues that a court need not specify a dismissal to be either with prejudice or without prejudice and to undergird this argument, Chandler-Sampson cites a case from the Fifth Circuit to assert that a failure to specify whether the dismissal is with prejudice or without prejudice should be interpreted as an adjudication on the merits. Nagle v. Lee, 807 F.2d 435, 442 (5th Cir.1987). ¶ 14. Fed.R.Civ.P. 41(b) states: For failure of the plaintiff to prosecute or to comply with these rules or any order of court, a defendant may move for dismissal of an action or of any claim against the defendant. Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party under Rule 19 operates as an adjudication upon the merits. ¶ 15. Rule 41(b) distinguishes between claims which are adjudicated on their merits and claims that are disposed of due to the non-occurrence of a procedural technicality. While Rule 41(b) enumerates three specific instances where a case may be dismissed before reaching its substance, the rule contemplates more within its implicit exception. The United States Supreme Court has previously addressed Rule 41(b)'s exception: We regard the exception as encompassing those dismissals which are based on a plaintiff's failure to comply with a precondition requisite to the Court's going forward to determine the merits of his substantive claim ... [T]here must have been a right adjudicated or released in the first suit to make it a bar, and this fact must appear affirmatively ... [I]f the first suit was dismissed for defect of pleadings, or parties, or a misconception of the form of proceeding, or the want of jurisdiction, or was disposed of on any ground which did not go to the merits of the action, the judgment rendered will prove no bar to another suit. Costello v. United States, 365 U.S. 265, 285, 81 S.Ct. 534, 544, 5 L.Ed.2d 551(1961). Recently, in Semtek Int'l Inc. v. Lockheed Martin Corp. 531 U.S. 497, 501-02, 121 S.Ct. 1021, 1025, 149 L.Ed.2d 32 (2001), the United States Supreme Court stated: [t]he original connotation of an `on the merits' adjudication is one that actually `pass[es] directly on the substance of a [particular] claim' before the court. That connotation remains common to every jurisdiction of which we are aware. [6] Id. at 501-02, 121 S.Ct at 1025. ¶ 16. In Hall v. Tower Land & Invest. Co., 512 F.2d 481 (5th Cir.1975) the Fifth Circuit reasoned that a trial court's dismissal under Fed.R.Civ.P. 12(b) falls directly under the wording of Rule 41(b), and cases have held that such decisions operate as adjudications on the merits. Id. at 483. In its conclusion, the Hall Court stated that granting defendant's motion to dismiss for plaintiff's failure to state a claim upon which relief can be granted operates as an adjudication on the merits ... Id. ¶ 17. Fifth Circuit precedent regarding a district court's review of fraudulent joinder and removal-type proceedings is categorical. Moreover, the burden of proving fraudulent joinder is a heavy one. Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 259 (5th Cir.1995). The removing party must prove that there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the in-state defendant in state court, or that there has been outright fraud in the plaintiff's pleading of jurisdictional facts. Id., 44 F.3d at 259 (citing Green v. Amerada Hess Corp., 707 F.2d 201, 205 (5th Cir.1983)). A district court is mandated to employ a summary judgment-like procedure for disposing of these claims. Carriere v. Sears, Roebuck & Co., 893 F.2d 98, 100 (5th Cir.1990). In Carriere, the Fifth Circuit explained: While we have frequently cautioned the district courts against [pre-trying] a case to determine removal jurisdiction, we have also endorsed a summary judgment-like procedure for disposing of fraudulent joinder claims. In B., Inc. v. Miller Brewing Co. , we carefully discussed the procedures for assessing fraudulent joinder claims and noted that the proceeding appropriate for resolving a claim of fraudulent joinder is similar to that used for ruling on a motion for summary judgment.... 663 F.2d 545 (5th Cir.1981) The B., Inc. court expressly authorized consideration of evidence outside of the pleadings: In support of their removal petition, the defendants may submit affidavits and deposition transcripts; and in support of their motion for remand, the plaintiff may submit affidavits and deposition transcripts along with the factual allegations contained in the verified complaint ... In short, the Fifth Circuit treats fraudulent joinder claims as capable of summary determination. 893 F.2d at 100. Furthermore, under Fifth Circuit precedent a district court must resolve all questions of fact and conclude all ambiguities in the controlling state law in favor of the non-removing parties. Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42 (5th Cir.1992). The Fifth Circuit's analysis ultimately requires the district court to pierce the pleadings and determine whether the non-removing party has any possible claim under applicable state law. Carriere, 893 F.2d at 100 (citing Keating v. Shell Chem. Co., 610 F.2d 328, 331 (5th Cir.1980)). ¶ 18. In today's case, the Honorable Henry T. Wingate, Chief Judge for the United States District Court for the Southern District of Mississippi, in a thorough opinion, reiterated Fifth Circuit analysis and determined that it was clear Chandler-Sampson, in its capacity as an agent, was not a party to the insurance contracts in question. Judge Wingate reasoned that the Harrisons failed to provide the court with any authority which substantiated the proposition that an insurance agent, who is not a party to the contract, owed a duty to defend under that contract. Judge Wingate further stated that he was not persuaded by the Harrisons' argument that Chandler-Sampson's decision to disclaim liability was made prior to any notice to the insurance carriers. Judge Wingate concluded: [T]he plaintiffs' [Harrisons'] conclusory allegations are simply not substantiated by any factual evidence ... [i]t is clear that plaintiffs' [Harrisons'] complaint does not state a cause of action against Chandler-Sampson for which Mississippi law can remedy. Importantly, in rendering its decision, the federal district court took note of the Harrisons' failure to assert their negligence theory against Chandler-Sampson in their complaint as originally filed with the circuit court. In line with Fifth Circuit precedent, a district court is required to take the complaint as it existed at the time of the petition for removal. Cavallini, 44 F.3d at 265. The federal district court concluded that the Harrisons' legal theories could not succeed against Chandler-Sampson and it accordingly dismissed Chandler-Sampson from the suit. This interlocutory determination became final when it subsequently merged into the final judgment dismissing the remaining case against the insurance carriers. ¶ 19. The requisite criteria for a judgment to be given effect as an adjudication on the merits has been previously addressed by the United States Supreme Court and the Fifth Circuit. The Supreme Court has drawn a line of demarcation in regards to Rule 41(b) and distinguishes between cases that are decided on their merits and those which fail due to the existence of a procedural defect. In Costello, the United States Supreme Court clearly reasoned that the exception contained within Rule 41(b) encompasses dismissals which are based on a failure to comply with a precondition requisite to a court's deciding the case on its merits. 365 U.S. at 285, 81 S.Ct. at 544. ¶ 20. In ruling on the motion to remand, the federal district court was mandated by precedent to employ a summary judgment-like procedure in order to assess the viability and substance of the Harrisons' claims. It determined that the Harrisons' complaint did not state a cause of action against Chandler-Sampson for which Mississippi law could provide a remedy. The federal district court's final analysis recognized that the Harrisons were procedurally barred from raising their only cognizable claim, that being one for negligence. It is clear that the federal district court applied the proper legal standard, gleaned the record for any possibility of recovery, and ultimately determined that the Harrisons had failed to state a claim against Chandler-Sampson upon which relief could be granted. Accordingly, the federal district court judge issued a final adjudication on the merits.