Court Opinion

ID: 217715
Source: CourtListenerOpinion
Date Created: 2011-05-31 15:39:25+00
Date Added: 2024-06-11T17:28:33.614233
License: Public Domain

[DO NOT PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                       FOR THE ELEVENTH CIRCUIT
                        ________________________           FILED
                                                  U.S. COURT OF APPEALS
                               No. 10-15892         ELEVENTH CIRCUIT
                           Non-Argument Calendar        MAY 31, 2011
                         ________________________        JOHN LEY
                                                          CLERK
                  D.C. Docket No. 6:10-cv-01445-ACC-DAB

TAYLOR NEWMAN CABINETRY, INC.,
a Florida corporation,
ALLSTAR LIGHTING & SOUND, INC.,
a Florida corporation,
d.b.a. Advanced Powder Coating of Florida,

                                                          Plaintiffs - Appellees,

                                    versus

CLASSIC SOFT TRIM, INC.,
a foreign corporation,
DANIEL VALENCIA,
an individual,

                                                       Defendants - Appellants.

                         ________________________

                  Appeal from the United States District Court
                      for the Middle District of Florida
                        ________________________

                                (May 31, 2011)
Before WILSON, MARTIN, and BLACK, Circuit Judges.

PER CURIAM:

      Plaintiffs Taylor Newman Cabinetry, Inc. (“TNC”) and Allstar Lighting &

Sound, Inc. (“ALS”) sued Defendants Classic Soft Trim, Inc. (“CST”) and Daniel

Valencia in state court in Florida, asserting that Defendants’ negligence resulted in

a fire at a warehouse space leased by CST and damaged Plaintiffs’ property

located in the warehouse. Defendants filed a Notice of Removal which alleged

that Valencia was fraudulently joined to defeat federal diversity jurisdiction. The

district court granted Plaintiffs’ Motion for Remand and, upon finding that there

was no objectively reasonable basis for removal, awarded Plaintiffs $2,500.00 in

attorneys’ fees. Defendants now appeal the district court’s award of attorneys’

fees. They argue (1) that Plaintiffs were not entitled to attorneys’ fees under 28

U.S.C. § 1447(c), and (2) that there was no factual basis for the amount of the

award. After careful review of the record and the parties’ briefs, we affirm.

                                          I.

      Defendants argue that Plaintiffs were not entitled to attorneys’ fees upon

remand to the state court. “The denial of costs and fees under 28 U.S.C. § 1447(c)

is reviewed for abuse of discretion.” Bauknight v. Monroe Cnty., Fla., 446 F.3d

1327, 1329 (11th Cir. 2006). Although a defendant may generally remove to

                                          2
federal district court an action filed in state court if the action could have been

brought originally in the federal court, 28 U.S.C. § 1441, “the case shall be

remanded” to the state court “[i]f at any time before final judgment it appears that

the district court lacks subject matter jurisdiction.” § 1447(c). An order

remanding a removed case back to state court “may require payment of just costs

and any actual expenses, including attorney fees, incurred as a result of the

removal.’” Id. “Absent unusual circumstances, courts may award attorney’s fees

under § 1447(c) only where the removing party lacked an objectively reasonable

basis for seeking removal.” Martin v. Franklin Capital Corp., 546 U.S. 132, 141,

126 S. Ct. 704, 711 (2005). But an award of fees under § 1447(c) does not require

a showing that the defendant’s position was “frivolous, unreasonable, or without

foundation.” See id. at 138–39, 126 S. Ct. at 710.

      As an initial matter, we observe that we have jurisdiction over the appeal

from the award of attorneys’ fees, but lack jurisdiction to review the district

court’s underlying decision to remand the case to the state court pursuant to

§ 1447(c). See 28 U.S.C. § 1447(d); see also Legg v. Wyeth, 428 F.3d 1317,

1319–20 (11 th Cir. 2005). Although § 1447(d) bars us from reviewing the district

court’s decision to remand itself, “we must, as part of our examination of the

award of fees, consider the objective validity of the removing party’s efforts, at the

                                           3
time that party attempted to remove the case.” Legg, 428 F.3d at 1320 (quotation

marks omitted). “[A]n award of attorneys’ fees based on a legally erroneous

remand order constitutes an abuse of discretion.” Id.

      Defendants argue that they had an objectively reasonable basis to seek

removal to federal court because Valencia—CST’s operations manager—was

fraudulently joined to defeat federal diversity jurisdiction. When “alleging

fraudulent joinder, the removing party has the burden of proving that either: (1)

there is no possibility the plaintiff can establish a cause of action against the

resident defendant; or (2) the plaintiff has fraudulently pled jurisdictional facts to

bring the resident defendant into state court.” Crowe v. Coleman, 113 F.3d 1536,

1538 (11th Cir. 1997). We have emphasized that “[t]he burden on the removing

party is a heavy one.” Id. (quotation marks omitted). “The determination of

whether a resident defendant has been fraudulently joined must be based upon the

plaintiff’s pleadings at the time of removal, supplemented by any affidavits and

deposition transcripts submitted by the parties.” Pacheco de Perez v. AT&T Co.,

139 F.3d 1368, 1380 (11th Cir. 1998). “[T]he district court must evaluate the

factual allegations in the light most favorable to the plaintiff and must resolve any

uncertainties in the substantive law in favor of the plaintiff.” Crowe, 113 F.3d at

1538. “If there is even a possibility that a state court would find that the complaint

                                           4
states a cause of action against any one of the resident defendants, the federal

court must find that joinder was proper and remand the case to the state court.” Id.

(quotation marks omitted). Thus, “[w]hen considering a motion for remand,

federal courts are not to weigh the merits of a plaintiff’s claim beyond determining

whether it is an arguable one under state law.” Id.

      Under Florida law, “officers or agents of corporations may be individually

liable in tort if they commit or participate in a tort, even if their acts are within the

course and scope of their employment,” so long as “the agent or officer personally

participated in the tort.” Vesta Constr. & Design, LLC v. Lotspeich & Assocs.,

Inc., 974 So. 2d 1176, 1180 (Fla. 4th DCA 2008) (quotation marks omitted).

Defendants argue that Valencia did not personally participate in the tort. In their

Complaint, Plaintiffs allege that

      Valencia breached his duty of care owed to Plaintiffs in one or more of
      the following ways:

             i)     Authorizing or allowing the improper use and storage of
                    electrical equipment, tools and power strips, resulting in an
                    overloaded electrical circuit;

             ii)    Undertaking, authorizing or otherwise supervising
                    negligent and improper modifications or changes to the
                    building’s electrical wiring and/or circuit breakers;

                                            5
             iii)   Authorizing or allowing the improper use and storage of
                    flammable and combustible materials, including solvents
                    and adhesives;

             iv)    Failing to implement, follow or enforce end-of-day safety
                    shutdown procedures, including procedures for shutting
                    down electrical equipment and tools;

             v)     Failing to implement, follow or enforce the directions and
                    warnings on the Material Safety Data Sheets (MSDS)
                    regarding the chemical used in CST’s business operations;

             vi)    Failing to advise and/or properly instruct CST’s employees
                    regarding the proper storage of the chemicals used in its
                    business operations, in accordance with the [MSDS;]

             vii)   Failing to inform and/or instruct CST’s employees
                    regarding the potential hazards outlined in the [MSDS] for
                    the chemicals used in CST’s business operations[.]

      In his deposition, Valencia testified that he was the last CST employee to

leave the warehouse before the fire, and that all of the hazardous materials were

stored and all of the electrical appliances were shut down or unplugged when he

left. He also testified that CST did not install any of the electrical systems at the

warehouse. Defendants argue that Valencia’s deposition testimony, given the

absence of any admissible evidence to the contrary, conclusively disproves the

allegations in the Complaint and forecloses the possibility that Plaintiffs could

state a cause of action against Valencia. As an initial matter, it is not clear that the

                                           6
portion of the deposition cited by Defendants squarely contradicts the allegations

in the complaint. For example, the fact that CST did not “install any of the

electrical systems” does not foreclose the possibility that CST modified or

changed the electrical wiring or circuit breakers. Nevertheless, even accepting

Defendants’ characterization of Valencia’s testimony, the district court rejected

this argument and instead adopted the magistrate judge’s conclusion that “whether

Valencia properly did his job, followed safety procedure, and/or other of his

actions contributed to the fire depends completely on the credibility of his

testimony.”

       We agree with the district court: Valencia’s deposition testimony did not

foreclose the possibility that Plaintiffs could state a cause of action against him for

negligence under Florida law. As the former Fifth Circuit explained, “[d]oubt as

to whether under the state law a case of joint liability is stated, or doubt with

respect to the allegations concerning the resident defendants being false as when

the question depends upon the credibility of witnesses or the weight of evidence

will not render the joinder fraudulent.” Parks v. New York Times Co., 308 F.2d

474, 477 (5th Cir. 1962) (emphasis added).1

       1
          In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), this
Court adopted as binding precedent all decisions of the former Fifth Circuit handed down before
the close of business on September 30, 1981.

                                               7
      Our decision in Legg is not to the contrary. In that case, we concluded that

removal was not improvident where the defendant pharmaceutical company

supported its claim of fraudulent joinder of three of its sales representatives by

submitting affidavits by those representatives establishing undisputed facts that

made it impossible to establish liability against a resident defendant. Legg, 428

F.3d at 1322. Specifically, the affidavits showed that one representative was not a

resident or citizen of the forum state, that another did not market the drug at issue

in the case, and that the third did not know or have reason to know of the health

risks of the drug until they were publicized. Id. at 1321. We observed that the

plaintiffs did not contest these facts and explained that “[w]hen the Defendants’

affidavits are undisputed by the Plaintiffs, the court cannot then resolve the facts

in the Plaintiffs’ favor based solely on the unsupported allegations in the

Plaintiffs’ complaint.” Id. at 1323. But the issues in Legg did not depend upon

the credibility of the testimony in the same manner as in this case, because

Plaintiffs here have contested the deposition evidence. Certainly Plaintiffs have

not yet offered evidence rebutting the specific statements Valencia made in his

deposition, but they have generally contested his version of events by pointing to

his testimony that he served as operations manager for CST and was the last CST

                                          8
employee to leave the warehouse before the fire. Given Valencia’s role in

overseeing the safety procedures, the question of whether he personally

participated in the alleged tort depends on the credibility of his testimony.

Fraudulent joinder was therefore not a proper basis for removal to federal court.

See Parks, 308 F.2d at 477.

      We recognize that more might be required for Plaintiffs to survive a motion

for summary judgment as to its claim against Valencia. But we have explained

that “to present an arguable claim against an in-state defendant and, therefore, to

require a case removed to federal court to be remanded to state court, the plaintiff

need not show that he could survive in the district court a motion for summary

judgment filed by that in-state defendant.” Crowe, 113 F.3d at 1541. This is

because “the plaintiff’s burden is much lighter than that.” Id. “[T]here need only

be a reasonable basis for predicting that the state law might impose liability on the

facts involved.” Id. (quotation marks omitted). Even though they did not offer

evidence directly rebutting Valencia’s deposition testimony, Plaintiffs have

satisfied this lighter burden here by showing that Valencia’s responsibilities

together with the circumstances of the fire might be sufficient to demonstrate his

personal participation in the tort despite his testimony to the contrary.

                                          9
       In support of their claim of fraudulent joinder, Defendants also point to the

affidavit of Jay D. O’Sullivan, the attorney for Defendants, in which O’Sullivan

stated that before Defendants filed their Notice of Removal, counsel for Plaintiffs

informed him in a telephone conversation that Valencia had been joined as a

defendant “only to prevent the Defendants from removing this case to federal

court.” But this statement is not material evidence of fraudulent joinder.2 The

affidavit if taken as true merely explains why Plaintiffs chose to join Valencia,

rather than pursue their claims only against CST. The relevant question, however,

is not why Plaintiffs chose to join Valencia, but whether they could state a cause

of action against him under Florida law.3 As the Supreme Court has explained,

       2
          Defendants contend that the opposing affidavit of Plaintiffs’ counsel “did not
specifically deny the quotation.” We do not read it that way. In that opposing affidavit,
Plaintiffs’ counsel states: “I do not recall ever ‘informing’ Mr. O’Sullivan that Daniel Valencia
was named as a defendant in this case ‘only to prevent the Defendants from removing this case to
federal court, and that [I] had no other reason for doing so.’” We therefore reject Defendants’
assertion that the district court erred by failing to recognize undisputed record evidence. See
Legg, 428 F.3d at 1323. In any event, the contents of O’Sullivan’s affidavit were not material to
the issue of fraudulent joinder, and we need not consider whether the district court erred in
resolving any factual disputes arising from the affidavit.
       3
          We recognize that we have previously stated that “[w]hen a plaintiff names a
non-diverse defendant solely in order to defeat federal diversity jurisdiction, the district court
must ignore the presence of the non-diverse defendant and deny any motion to remand the matter
back to state court.” Henderson v. Washington Nat’l Ins. Co., 454 F.3d 1278, 1281 (11th Cir.
2006). But Henderson makes clear that fraudulent joinder requires a showing, by clear and
convincing evidence, that either: “(1) there is no possibility the plaintiff can establish a cause of
action against the resident defendant; or (2) the plaintiff has fraudulently pled jurisdictional facts
to bring the residence defendant into state court.” Id. (quotation marks omitted). Thus, the
fraudulent joinder analysis turns on the objective validity of the plaintiff’s theories of jurisdiction
and liability as to the non-diverse defendant, not on its subjective motivations for joining that

                                                  10
“the motive of the plaintiff, taken by itself, does not affect the right to remove.”

Chi., Rock Island, & Pac. Ry. Co. v. Schwyhart, 227 U.S. 184, 193, 33 S. Ct. 250,

251 (1913).

       We also find persuasive Plaintiffs’ argument that Defendants lacked an

objectively reasonable basis for remand because their Notice of Removal was not

timely. If a case is not removable on the face of the complaint, “a notice of

removal may be filed within thirty days after receipt by the defendant, through

service or otherwise, of a copy of an amended pleading, motion, order or other

paper from which it may first be ascertained that the case is one which is or has

become removable.” 28 U.S.C. § 1446(b). Defendants argue that their Notice of

Removal was timely because, even though it was filed almost six months after the

action was commenced, it was filed within thirty days of Valencia’s deposition.

Even assuming that Valencia’s deposition qualifies as “other paper” within the

meaning of § 1446(b), we cannot agree that the deposition was the first time that

Defendants could ascertain that the case was removable on the basis of fraudulent

joinder. As Valencia is a defendant in this case, and remains an employee of CST,

there is no reason Defendants should not have been able to obtain this information

earlier. In Legg, for example, the pharmaceutical company defendant filed a

defendant.

                                          11
timely notice of removal and attached supporting affidavits from its sales

representatives, who the company claimed were fraudulently joined. 428 F.3d at

1322. Defendants could have done the same here, but instead they chose to wait

until the information was discovered through Valencia’s deposition. Defendants

were not obligated to wait for the deposition before removing the case to federal

court, nor were they permitted to do so insofar as this delay violated § 1446(b).

The untimeliness of Defendants’ Notice of Removal makes the removal even more

unreasonable and therefore further supports the district court’s conclusion that an

award of attorneys’ fees was appropriate in this case.

      Finally, we reject Defendants’ argument that Plaintiffs, “by participating in

discovery five times while their motion to remand was pending, waived any

objection to removal.” Defendants’ rely on the Fifth Circuit’s decision in Getty

Oil Corp. v. Insurance Co. of North America, 841 F.2d 1254 (5th Cir. 1988). In

that case, the Fifth Circuit explained that “if a defendant fails to comply with [the

thirty-day time limit for removal under § 1446(b)], the plaintiff can waive its right

to object to the untimely joinder.” Id. at 1263. The court reasoned that because

the limitation of § 1446(b) is not jurisdictional, “a plaintiff who delays in seeking

a remand, or otherwise participates in the proceedings in the district court, may be

precluded from objecting” to the untimely removal. Id.; see also Moore v. N. Am.

                                          12
Sports, Inc., 623 F.3d 1325, 1329 (11th Cir. 2010) (“It is undisputed in this case

that the timeliness of removal is a procedural defect—not a jurisdictional one.”).

But Plaintiffs’ objection to the remand in this case was based not only on the

untimeliness of the removal under § 1446(b), but also on the lack of subject matter

jurisdiction under § 1447, which can never be waived. See, e.g., Fitzgerald v.

Seaboard Sys. R.R., Inc., 760 F.2d 1249, 1251 (11th Cir. 1985). To the extent that

Plaintiffs also object to the untimely removal, their participation in discovery after

filing their Motion for Remand does not constitute a waiver. Crucially, Plaintiffs

did not delay in seeking remand. To the contrary, they filed their Motion for

Remand five days after Defendants’ filed the Notice of Removal.

      For these reasons, we conclude that the district court did not abuse its

discretion in awarding attorneys’ fees under § 1447(c).

                                          II.

      Defendants also argue that the district court erred in setting the amount of

the award of attorneys’ fees at $2,500.00 without any factual basis in the record to

support that amount, which Defendants argue was pulled “out of thin air.”

Defendants are correct that the $2,500.00 was determined without consideration of

affidavits or other evidence submitted by the parties, but the district court

explained that this was a “fair measure of recompense to avoid the need for further

                                          13
submissions by the parties to establish a more precise amount, the cost of which

would likely exceed any benefit to be achieved.”

       “The fee applicant bears the burden of establishing entitlement and

documenting the appropriate hours and hourly rates.” Norman v. Hous. Auth. of

City of Montgomery, 836 F.2d 1292, 1303 (11th Cir. 1988). But we have

explained that

       [f]or decades, the law in this circuit has been that . . . [t]he court, either
       trial or appellate, is itself an expert on the question [of fees] and may
       consider its own knowledge and experience concerning reasonable and
       proper fees and may form an independent judgment either with or
       without the aid of witnesses as to value.

Id. (quotation marks omitted). Thus, “[w]here documentation is inadequate, the

district court is not relieved of its obligation to award a reasonable fee, but the

district court traditionally has had the power to make such an award without the

need of further pleadings or an evidentiary hearing.” Id. We therefore conclude

that the district court did not abuse its discretion by relying on its own expertise to

fashion a pragmatic and reasonable remedy to save Defendants from unnecessarily

incurring additional fees.4 As the Supreme Court has explained, “[a] request for

       4
          Indeed, Plaintiffs, recognizing that the fee amount to be calculated upon remand would
now far exceed $2,500.00, explain that they “do not oppose [Defendants’] request that the district
court reconsider the amount of fees that should be awarded, after each party has an opportunity to
submit affidavits or other evidence on this issue.” But the question of whether the fee award is
too low is not before this Court because Plaintiffs have not cross-appealed the amount of the
award. See Aerospace Servs. Intern. v. LPA Group, Inc., 57 F.3d 1002, 1004 n.3 (11th Cir.

                                               14
attorney’s fees should not result in a second major litigation.” Hensley v.

Eckerhart, 461 U.S. 424, 437, 103 S. Ct. 1933, 1941 (1983).

         For all of these reasons, we affirm the district court’s award of attorneys’

fees to TNC and ALS.

         AFFIRMED.

1995).

                                            15