Court Opinion

ID: 24338
Source: CourtListenerOpinion
Date Created: 2010-04-25 08:20:38+00
Date Added: 2024-06-11T08:17:17.110439
License: Public Domain

UNITED STATES COURT OF APPEALS

                                   FOR THE FIFTH CIRCUIT

                                   _______________________

                                          No. 00-41107

                                   _______________________

                                    CHRISTOPHER LEWIS,

                                         Plaintiff-Appellee

                                                 v

                       DENISON INDUSTRIES OF CALIFORNIA INC.;

                           JEFF MILLER; AND CHARLIE FOSTER,

                                      Defendants-Appellants

                                   ______________________

                           Appeal from the United States District Court

                                 for the Eastern District of Texas

                                        (Civ. No. 4:00-33)

                                   ______________________

                                           June 4, 2001

Before POLITZ and EMILIO M. GARZA, Circuit Judges, and KAZEN, District Judge.1

       1
         District Judge of the Southern District of Texas, sitting by designation.
        *Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.

                                                 1
KAZEN, District Judge:*

        This is an interlocutory appeal from an order of the district court denying a motion by the

defendants to compel the plaintiff to submit his claims to arbitration. We dismiss this appeal for

lack of federal jurisdiction.

                                                  I.

                                        Procedural History

        Plaintiff Christopher Lewis filed a petition in the 15th Judicial District Court of Grayson

County, Texas, naming as defendants Denison Industries of California, Inc. (“Denison

Industries”), Jeff Miller, and Charlie Foster. Lewis alleged that in August 1999 he was on the

premises of Denison Industries operating a machine that he had been “taught to use” by

defendants Miller and Foster. His arm was caught in the machine and crushed. Plaintiff alleged in

conclusory fashion that he suffered damages “caused by the negligence of the Defendants.” The

state court pleadings alleged that plaintiff Lewis was “a resident of Texas” and that Denison

Industries was a California corporation which had “a principal place of business in Grayson

County, Texas.” The pleadings also alleged that defendants Miller and Foster were Texas

citizens.

        The three defendants filed a notice of removal to the United States District Court for the

Eastern District of Texas in February 2000. They invoked diversity jurisdiction, alleging that the

plaintiff was a citizen of Texas and that Denison Industries was a citizen of California.2 The

notice of removal did not dispute that defendants Miller and Foster were Texas citizens but

        2
        The notice of removal did not comment on the allegation that Denison Industries had “a
principal place of business” in Texas. If that allegation is true, Denison Industries would be
considered a citizen of Texas. 28 U.S.C. §1332(c)(1).

                                                  2
instead alleged that they were fraudulently joined.

        There is no indication that plaintiff filed a motion to remand. Instead, two months after

removal, defendants filed a motion to dismiss and to compel arbitration. Plaintiff responded,

opposing arbitration. After further briefing on both sides, the district court filed a memorandum

opinion and order on August 22, 2000, denying defendants’ motion. Defendants then gave notice

of an interlocutory appeal, pursuant to 9 U.S.C. §16(a)(1)(A). Defendants sought a stay of the

proceedings below pending appeal, but that request was denied by both the district court and by

this court.

        In the Statement of Jurisdiction in their appellate brief, the appellants simply state that the

district court had jurisdiction “pursuant to 28 U.S.C. §1332.” The plaintiff-appellee’s brief, in its

Statement of Jurisdiction, contains this observation:

        “In the District Court Defendants asserted diversity jurisdiction under 28 U.S.C. §1332,
        although two (2) of the Defendants, and Plaintiff, are citizens of Texas. Defendants’
        Motion to Stay was denied, and this appeal was filed, before Plaintiff filed a Motion to
        Remand. Defendants’ Notice of Appeal was timely.”

Apart from that statement, neither party discussed the jurisdictional issue in briefs or oral

argument. However, this court must consider an apparent lack of federal jurisdiction sua sponte.

See Howery v. Allstate Ins. Co., 243 F.3d 912, 919 (5th Cir. 2001).

                                                  II.

                                         Complete Diversity

        Ever since the decision by the United States Supreme Court in Strawbridge v. Curtiss, 7

U.S. 267 (1806), it has been settled law that federal diversity requires “complete diversity,” that

is, citizens of the same state may not be on opposing sides of the same lawsuit. See Caterpillar,

                                                   3
Inc. v. Lewis, 117 S.Ct. 467, 472 (1996); Powell v. Offshore Navigation, Inc., 644 F.2d 1063,

1066 (5th Cir. 1981). Here, the plaintiff and at least two defendants are citizens of Texas. While

the defendants alleged that Miller and Foster were fraudulently joined, there is nothing in the

record to indicate that the district court made any finding on this allegation. As far as the record

indicates, Miller and Foster are still parties to this case. Indeed, they appear before us as

appellants, along with Denison Industries.

       Plaintiff’s suggestion in his Statement of Jurisdiction that the interlocutory appeal

somehow deterred him from filing a motion to remand is belied by the record. As previously

indicated, this case was removed to federal court in early February 2000, and the notice of

interlocutory appeal was not given by the defendants until mid-September of 2000, almost seven

months later. Nevertheless, the lack of federal subject-matter jurisdiction cannot be waived. See

Coury v. Prot, 85 F.3d 244, 248 (5th Cir. 1996). In its present state, there is clearly not complete

diversity of citizenship between the parties and, therefore, jurisdiction cannot be sustained under

28 U.S.C. §1332(a). The defendants claim no other basis for federal court jurisdiction. While the

interlocutory appeal was allowed under the Federal Arbitration Act, that legislation does not

create any independent federal subject-matter jurisdiction. See United Offshore Co. v. Southern

Deepwater Pipeline Co., 899 F.2d 405, 406 (5th Cir. 1990).

                                                 III.

                                             Conclusion

       Because the district court lacks federal subject-matter jurisdiction on the present state of

the record, we must dismiss this appeal. Rather than dismiss the case outright, however, we

remand to the district court. See Getty Oil Corp. v. Ins. Co. of North America, 841 F.2d 1254,

                                                  4
1264 (5th Cir. 1998)(“Because it is not clear whether the district court had jurisdiction of this

case,” case remanded for determination of “relevant jurisdictional and removal issues”). Since

this was an interlocutory appeal and the district court proceedings were not stayed, the parties are

still before that court. That court has never ruled on whether Miller and Foster have been

fraudulently joined, nor has it ruled on the citizenship of Denison Industries. See footnote 2. It is

possible that once those rulings are made, complete diversity between the remaining parties could

exist. At that point, an interlocutory appeal on the arbitration issue can again be taken. It is also

possible that if the district court finds fraudulent jurisdiction and dismisses two defendants, that

ruling could also be appealed prior to final disposition of the entire case. See B. Inc. v. Miller

Brewing Co., 663 F.2d 545, 548 (5th Cir. 1981). Obviously, if the district court concludes that

there is no fraudulent joinder, it should remand the case to state court.

APPEAL DISMISSED; CASE REMANDED TO DISTRICT COURT

                                                   5