Court Opinion

ID: 9917344
Source: CourtListenerOpinion
Date Created: 2024-01-12 01:01:06.494745+00
Date Added: 2024-06-11T08:02:24.485325
License: Public Domain

Case: 23-30800         Document: 00517030999             Page: 1      Date Filed: 01/11/2024

              United States Court of Appeals
                   for the Fifth Circuit                                         United States Court of Appeals
                                                                                          Fifth Circuit
                                      ____________
                                                                                        FILED
                                                                                 January 11, 2024
                                       No. 23-30800
                                      ____________                                    Lyle W. Cayce
                                                                                           Clerk
   Alicia R. Dixon; West J. Dixon,

                                                                     Plaintiffs—Appellees,

                                             versus

   D.R. Horton, Incorporated - Gulf Coast,

                                               Defendant—Appellant.
                      ______________________________

                      Appeal from the United States District Court
                          for the Middle District of Louisiana
                               USDC No. 3:22-CV-1005
                      ______________________________

   Before Elrod, Southwick, and Haynes, Circuit Judges.
   Per Curiam: *
          Plaintiffs and putative class representatives Alicia R. Dixon and West
   J. Dixon filed a class action petition for damages in Louisiana state court
   against D.R. Horton, Inc. and two other defendants. Horton removed the
   action to federal court, invoking jurisdiction under the Class Action Fairness
   Act. Plaintiffs then moved to remand the action back to state court, which
   the district court granted. Horton now requests that the district court’s

          _____________________
          *
              This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 23-30800      Document: 00517030999          Page: 2   Date Filed: 01/11/2024

                                    No. 23-30800

   remand order be reversed.       We hold that CAFA’s local controversy
   exception applies, and accordingly, we AFFIRM the district court’s remand
   order.
                                         I
            Horton allegedly constructed the Dixons’ Louisiana Home. Horton’s
   co-defendants, Bell Mechanical Services, LLC and Bell Mechanical
   Holdings, LLC (collectively Bell Mechanical), allegedly installed the home’s
   HVAC system. The Dixons allege that after moving into the home, they
   experienced numerous problems including water intrusion, mold, and
   mildew caused by a combination of poor attic ventilation and a defective
   HVAC system. They initiated this putative class action against both Horton
   and Bell Mechanical in March 2022, proposing a class consisting of
   purchasers of Horton-built homes who experienced similar moisture- and
   HVAC-related damage. Plaintiffs filed an amended petition in December of
   that year, expanding the putative class.
            Three days after Plaintiffs filed their amended petition, Horton
   removed the action to federal district court, invoking jurisdiction under
   CAFA. Plaintiffs then moved to remand the action back to state court. The
   district court granted the motion in part and ordered that the action be
   remanded, holding that: (1) Horton’s removal was untimely under 28 U.S.C.
   § 1446(b); and (2) CAFA’s local controversy exception independently
   mandated remand.
            Horton petitioned this court for permission to appeal the remand
   order under 28 U.S.C. § 1453(c), which we granted. Horton has separately
   appealed under 28 U.S.C. § 1291, and that appeal is pending under Case No.
   23-30714.

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                                    No. 23-30800

                                         II
          We review the district court’s remand order de novo. Preston v. Tenet
   Healthsystem Mem’l Med. Ctr., Inc., 485 F.3d 793, 796 (5th Cir. 2007)
   (Preston I). We review the district court’s factual findings regarding the
   citizenship of the parties under the local controversy exception to CAFA
   jurisdiction for clear error. Stewart v. Entergy Corp., 35 F.4th 930, 932 (5th
   Cir. 2022). “A finding of fact is clearly erroneous only when although there
   may be evidence to support it, the reviewing court on the entire [record] is
   left with the definite and firm conviction that a mistake has been committed.”
   Preston I, 485 F.3d at 796–97 (citation and internal quotation marks omitted).
          At the threshold, Plaintiffs argue that we lack jurisdiction to review
   the district court’s remand order under 28 U.S.C. § 1447(d), which provides
   that a remand order is “not reviewable on appeal” unless the action was
   removed to federal court “pursuant to section 1442 or 1443.” We reject this
   argument. Horton appeals the remand order under 28 U.S.C. § 1453(c),
   which explicitly states that we may accept such an appeal, “section 1447(d)
   notwithstanding,” so long as an application for leave to appeal is made no
   more than 10 days after the district court’s order is entered (which Horton
   did). 28 U.S.C. § 1453(c)(1); Stewart, 35 F.4th at 931. We have jurisdiction
   to review the remand order.
          Under CAFA, federal courts may exercise jurisdiction over large class
   action lawsuits where “the proposed class is at least 100 members, minimal
   diversity exists between the parties, the amount in controversy is greater than
   $5,000,000, and the primary defendants are not states, state officials, or
   other government entities.” Arbuckle Mountain Ranch of Texas, Inc. v.
   Chesapeake Energy Corp., 810 F.3d 335, 337 (5th Cir. 2016); see Mississippi ex
   rel. Hood v. AU Optronics Corp., 571 U.S. 161, 165 (2014) (“[In enacting
   CAFA, Congress] was concerned [] that certain requirements of federal

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                                    No. 23-30800

   diversity jurisdiction, 28 U.S.C. § 1332, had functioned to kee[p] cases of
   national importance in state courts rather than federal courts.” (citation and
   internal quotation marks omitted)). The district court held that these
   requirements for CAFA jurisdiction were met, and Plaintiffs do not contest
   that determination.
          However, even where CAFA’s threshold requirements are met, there
   are exceptions to CAFA jurisdiction that require remand. Notably, CAFA’s
   local controversy exception mandates remand for class actions of a
   sufficiently in-state character. See 28 U.S.C. § 1332(d)(4). Because we find
   that the local controversy exception applies, we do not address the district
   court’s separate and independent holding that Horton’s removal was
   untimely.
          As relevant here, the local controversy exception applies where: (1)
   “greater than two-thirds of the members of all proposed plaintiff classes in
   the aggregate are citizens of the State in which the action was originally
   filed;” and (2) there is at least one defendant from that same state from whom
   “significant relief” is sought and “whose alleged conduct forms a significant
   basis” of the plaintiffs’ claims. Id. § 1332(d)(4)(A). Horton contests only
   these two requirements, conceding that the exception’s other requirements,
   which we do not recite here, are met. Plaintiffs need only prove that the local
   controversy exception applies by a preponderance of the evidence. Stewart,
   35 F.4th at 932.
          Both above requirements are met.           First, the district court’s
   determination that greater than two-thirds of the putative class were more
   likely than not Louisiana citizens was not clearly erroneous. See Stewart, 35
   F.4th at 932. Plaintiffs’ amended petition, as explained by the district court,
   presents the putative class as “[a]ll persons who purchased a home that was
   constructed by D.R. Horton . . . in Louisiana between January 1, 2007 and the

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                                         No. 23-30800

   present day,” and whose homes “suffer[ed] from the same design and
   construction defects [causing] mold, moisture, humidity, and HVAC
   problems.” 1
           “[A] district court may make a reasonable assumption of CAFA’s
   citizenship requirement from evidence that indicates the probable citizenship
   of the proposed class.” Id. at 933 (citation and internal quotation marks
   omitted). Here, as the district court noted, “owning a home is an indicium
   of a person’s domicile,” Hollinger v. Home State Mut. Ins. Co., 654 F.3d 564,
   573 (5th Cir. 2011), and all the homes in question were in Louisiana. In
   addition, Plaintiffs presented evidence from one Louisiana parish
   demonstrating that over 80 percent of Horton-built homes in the parish
   claimed a Louisiana homestead exemption—available only for a person’s
   principal residence. And finally, the district court regarded as relevant the
   “presumption” of continuing domicile, “which requires the party seeking to
   show a change in domicile to come forward with enough evidence to that
   effect.” Preston v. Tenet Healthsystem Mem’l Med. Ctr., Inc., 485 F.3d 804,
   819 (5th Cir. 2007) (citation and internal quotation marks omitted). The
   district court, relying on this evidence, did not clearly err in holding that the
   two-thirds citizenship requirement was met.
           Second, Bell Mechanical is a “significant” Louisiana defendant. Bell
   Mechanical’s conduct forms a “significant basis” of Plaintiffs’ claims
   because, as the district court noted, Plaintiffs allege that Bell Mechanical’s
   HVAC systems “created negative air pressure in the[] homes, . . . result[ing]

           _____________________
           1
            Horton argues that the district court’s reading of the putative class as defined by
   the amended petition was incorrect, because the district court “redrafted” Plaintiffs’
   amended class definition by limiting it to persons who purchased homes that included a
   Bell Mechanical HVAC system and that suffered moisture-related damage. But as we
   explain below, we agree with the district court and reject this argument.

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                                      No. 23-30800

   in excess moisture and humidity levels, causing significant damage.” See also
   Opelousas Gen. Hosp. Auth. v. FairPay Sols., Inc., 655 F.3d 358, 362 (5th Cir.
   2011) (plaintiffs’ complaint should “distinguish the conduct” of the in-state
   defendant “from the conduct of other defendants”); State of Louisiana, ex
   rel. Div. of Admin. v. i3 Verticals Inc., 81 F.4th 483, 490 (5th Cir. 2023). And
   Plaintiffs seek “significant relief” from Bell Mechanical because, again as the
   district court noted, “Plaintiffs’ [sic] contend that Horton and Bell
   Mechanical are jointly, severally, and solidarily liable to all potential class
   members for all damages.” See also i3 Verticals, 81 F.4th at 492 (“[A]ll the
   text [of 28 U.S.C. § 1332(d)(4)(A)] requires is that ‘significant relief is
   sought’ from an in-state defendant.”); Phillips v. Severn Trent Env’t Servs.,
   Inc., No. 07-3889, 2007 WL 2757131, at *3 (E.D. La. Sept. 19, 2007) (relief
   not significant when it is “just small change in comparison to what the class
   is seeking from the other co-defendants” (citation and internal quotation
   marks omitted)).
          In response, Horton argues that the amended petition expanded the
   putative class beyond those persons whose Horton-constructed homes
   contained a Bell Mechanical HVAC system and suffered moisture-related
   damage. Therefore, Bell Mechanical is no longer a significant defendant.
   However, we agree with the district court that, reading the amended petition
   “as a whole,” see Stewart, 35 F.4th at 933, the putative class is still sufficiently
   limited. See also id. at 932 (“[To] define the class. . . . [w]e review the
   allegations set out in Plaintiffs’ petition at the time of removal.”). This is
   because the amended petition, when alleging typicality of the putative class,
   states that “each home suffers from the same design and construction defects
   and has caused mold, moisture, humidity, and HVAC problems in and with
   the home.” The amended petition does not expand the putative class so
   much as to render Bell Mechanical no longer a significant defendant.

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                                  No. 23-30800

                              *        *         *
         We AFFIRM the district court’s remand order.

                                       7