Court Opinion

ID: 15709
Source: CourtListenerOpinion
Date Created: 2010-04-25 06:47:40+00
Date Added: 2024-06-11T12:07:46.213925
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                          FOR THE FIFTH CIRCUIT

                     Nos. 97-20179 & 97-20610

     LUPE VALDES,

                                              Plaintiff-Appellant,

          versus

     WAL-MART STORES, INC.;
     TERRY WILLIAM; PETSMART INCORPORATED,

                                              Defendants-Appellees.

      Appeal from the United States District Court for the
               Southern District of Texas, Houston
                             (H-94-CV-1388)

                            September 4, 1998

Before GARWOOD, JONES and WIENER, Circuit Judges.*

GARWOOD, Circuit Judge:

     Plaintiff-appellant Lupe Valdes (Valdes) appeals the district

court’s grant of summary judgment in favor of defendant-appellee

Wal-Mart, Inc. (Wal-Mart), contending that the district court erred

in denying her motion to remand the case to state court and in

subsequently   granting    summary   judgment   in   favor   of   Wal-Mart.

*
     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opinion should not be published and is not precedent except under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.
Valdes also appeals the district court’s denial of her motion to

vacate the judgment in favor of Wal-Mart.1           We reverse and remand.

                         Facts and Proceedings Below

       On the afternoon of August 2, 1993, Valdes parked her car in

the parking lot of a Wal-Mart store located in Humble, Texas,

intending to shop there.         She went shopping in the Wal-Mart store

and then, when in the store’s parking lot returning to her car, was

confronted by a sixteen-year-old male——not a Wal-Mart employee or

customer——brandishing a knife.        After forcing Valdes into her car,

the abductor ordered her to drive to the rear of a nearby shopping

mall.    Once there, Valdes’ abductor directed her to park the car

behind a Petsmart store, where they would be partially hidden from

sight by several trash dumpsters.           He then raped her and fled.

       On February 24, 1994, Valdes brought this suit in Texas state

court, alleging that Wal-Mart had breached the Texas law duty of

care    it   owed   to   its   customers,   and   specifically   to   her,   by

negligently failing to provide adequate security in its parking

lot, taking little or no action to implement security measures

despite its awareness that a number of crimes had occurred in the

lot.    In addition to Wal-Mart, Valdes named as defendants Terry

Williams, the general manager of the store from which she was

abducted, and Petsmart, Inc., the business on whose property the

1
      Valdes’ appeal of the district court’s denial of her motion
to vacate was originally filed as a separate appeal, but her two
appeals were subsequently consolidated.

                                       2
rape occurred. As to Petsmart, Valdes claimed that the area behind

the store was hidden from public view and not adequately monitored

by employees or security guards, thus constituting an unreasonably

dangerous condition.

     With regard to Williams, Valdes alleged that, by virtue of his

position as general manager, he owed a separate Texas law duty to

store patrons to exercise ordinary care in recognizing, and in

taking steps to remedy, those situations and conditions on the

store   premises——including    the       parking     lot——that   posed   an

unreasonable risk of harm to customers.            Valdes further asserted

that, although he had been aware that a number of crimes had been

committed in the Wal-Mart parking lot, Williams had failed to take

any action either to warn or to provide adequate security for store

patrons.

     Neither Wal-Mart nor Petsmart is or was a citizen of Texas,

each being a citizen of another state; both Williams and Valdes are

and were citizens of Texas.

     On April 22, 1994, defendants removed the case to federal

court pursuant to 28 U.S.C. § 1441(b), alleging diversity of

citizenship and that Williams had been fraudulently joined as a

defendant    "solely   for   the   purpose    of     defeating   diversity

jurisdiction" and that Valdes’ original petition contained "no

allegations" that "would result in personal liability of Mr.

Williams."    In reply, on May 13, 1994, Valdes moved to remand,

arguing that she had stated a valid cause of action against

                                     3
Williams, that he was a proper defendant in the suit, and therefore

that the federal district court lacked diversity jurisdiction over

the case.   Williams subsequently also filed a formal motion under

Fed. R. Civ. P. 12(b)(6) to be dismissed as a defendant, again

asserting, in a somewhat brief and conclusory manner, that no

viable cause of action had been pleaded against him.                   Valdes

replied with a memorandum of law citing S.H. Kress & Co. v. Selph,

250 S.W.2d 883 (Tex. Civ. App.--Beaumont 1952, writ ref’d n.r.e.),

for the proposition that "[a] store manager in Texas does have a

duty to take steps to inspect and make the premises safe, and can

be held liable for harm caused to others by his failure to exercise

reasonable care."        Valdes also relied on Leyendecker & Assocs.,

Inc. v. Wechter, 683 S.W.2d 369 (Tex. 1984), as establishing that

joint and several liability may be imposed on an employee who

commits or participates in committing a tort in the course of his

employment.

     Petsmart filed a motion for summary judgement, contending that

because   Valdes   had    technically    been   a   trespasser,   albeit   an

unwilling one, Petsmart did not owe her a duty of due care under

Texas law and was therefore entitled to summary judgment.

     On August 26, 1994, the district court ruled on all three

motions, denying Valdes’ motion to remand, granting the motion to

dismiss   Williams,   and    granting    Petsmart’s    motion   for   summary

judgment.   Williams was thus then dismissed from the case.            Valdes

                                     4
subsequently attempted to appeal the district court’s ruling, but

this Court, on November 17, 1994, dismissed the appeal for lack of

jurisdiction.         Valdes also requested that the district court

certify its order for interlocutory appeal, which the district

court declined to do.

     On March 15, 1995, Wal-Mart, the only remaining defendant,

filed its first and only motion for summary judgment.            On January

30, 1997, the district court granted summary judgment in favor of

Wal-Mart.    Valdes filed notice of appeal from this final judgment

on February 28, 1997, challenging the grant of the motion to

dismiss Williams, the denial of her motion to remand, and the grant

of summary judgment in favor of Wal-Mart.2

     On May 23, 1997, Valdes moved to vacate under Rule 60,

alleging    that   Wal-Mart   had   failed    to   produce   internal    memos

regarding safety in parking lots.             The district court denied

Valdes’ Rule 60 motion on July 19, 1997.              Contending that the

district court abused its discretion in refusing to vacate the

judgment, Valdes filed a second notice of appeal.3           The two appeals

have been consolidated before this Court.

                                 Discussion

     On     appeal,    Valdes,   among    other    things,   reasserts     her

contention that removal was improper due to lack of complete

2
     This first appeal was docketed under case number 97-20179.
3
         Valdes’ second appeal was docketed under case number 97-
20610.

                                      5
diversity, in that she and Williams were each Texas citizens and

Williams was not fraudulently joined, and consequently that the

district court lacked subject matter jurisdiction over this case

and erred in overruling her motion to remand.                        In response, Wal-

Mart argues that, pursuant to the doctrine of "fraudulent joinder,"

the district court properly excluded Williams from consideration

for purposes of determining complete diversity, and, accordingly,

did not err in denying Valdes’ motion to remand.

      The denial of a motion to remand an action removed from state

to   federal    court     is    a    question      of     federal      subject     matter

jurisdiction, which we review de novo.                  Burden v. General Dynamics

Corp., 60 F.3d 213, 216 (1995).                 As the party invoking federal

jurisdiction     in     this    case,      Wal-Mart          bears    the    burden    of

demonstrating     that    the       case   is    properly      before       the   federal

tribunal.      Sid Richardson Carbon & Gasoline Co. v. Interenergy

Resources, Ltd., 99 F.3d 746, 751 (5th Cir. 1996); Carpenter v.

Wichita Falls Indep. School Dist., 44 F.3d 362, 365 (5th Cir.

1995). Additionally, because removal was premised on an allegation

of "fraudulent joinder," Wal-Mart bears the particularly "heavy

burden" of establishing either outright fraud in Valdes’ recitation

of jurisdictional facts or that there is no reasonable possibility

of   establishing       the    liability        of,     or   recovering      from,    the

nondiverse defendant.          Burden, 60 F.3d at 217; B., Inc. v. Miller

Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981); Parks v. New York

                                           6
Times Co., 308 F.2d 474, 477 (5th Cir. 1962).

I.   Fraudulent Joinder Analysis

     A. Analytical Framework

     An   allegation   of   fraudulent   joinder    raises   the   "single

threshold question" of jurisdiction.        B., Inc., 663 F.2d at 548.

Consequently, "[u]nlike the parties who joust for victory on who

wins or loses our sole concern is:        Who tries the case? State or

Federal Court?"   Bobby Jones Garden Apartments, Inc. v. Suleski,

391 F.2d 172, 175 (5th Cir. 1968).       "In order to establish that an

in-state defendant has been fraudulently joined, the removing party

must show either that there is no possibility that the plaintiff

would 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 pleadings of jurisdictional facts."          B., Inc., 663
F.2d at 549 (footnote and internal citations omitted).             See also

Sid Richardson, 99 F.3d at 751.     (The case sub judice involves the

former of these two alternatives.)4

     "We have consistently held that claims of fraudulent joinder

should be resolved by a summary judgment-like procedure whenever

possible."   Sid Richardson, 99 F.3d at 751.       See also B., Inc., 663
F.2d at 549 n.9; Carriere v. Sears, Roebuck and Co., 893 F.2d 98,

4
      As there has been no allegation of "outright fraud" in the
case sub judice, Wal-Mart must prove that there is no possibility
Valdes could establish a cause of action in state court against
Williams.

                                   7
100   (5th   Cir.   1990).   This   summary    determination   "does   not

anticipate a judgment on the merits, but merely considers whether

there is any possibility that the plaintiff might prevail."            Sid

Richardson, 99 F.3d at 751 (emphasis added).           In conducting this

analysis, the district court must "evaluate all of the factual

allegations in the light most favorable to the plaintiff, resolving

all contested issues of fact in favor of the plaintiff."        B., Inc.,
663 F.2d at 549 (citations omitted). Next, the district court must

ascertain    the    applicable   substantive    law,    "resolv[ing]   any

uncertainties as to the current state of controlling substantive

law in favor of the plaintiff."     Id. (citations omitted).     See also

Parks v. New York Times Co., 308 F.2d 474, 479-80 (5th Cir. 1962)

("We need only decide whether there was a reasonable basis in law

and fact for such a contention in the state court suits.").

Finally, the court must determine whether there is "’arguably a

reasonable basis for predicting that the state law might impose

liability on the facts involved.’"      Jernigan v. Ashland Oil Inc.,

989 F.2d 812, 816 (5th Cir. 1993) (quoting Bobby Jones Garden

Apartments v. Suleski, 391 F.2d 172, 177 (5th Cir. 1968)).

      If, at the end of this inquiry, the district court "should

find that there is no possibility of a valid cause of action being

set forth against the in-state [defendant], only then can it be

said that there has been a ‘fraudulent joinder.’"           B., Inc., 663
F.2d at 550.    Conversely, "[i]f there is any possibility that the

                                    8
plaintiff has stated a cause of action against any non-diverse

defendant, the federal court must conclude that joinder is proper,

thereby     defeating    complete   diversity,     and   the    case   must   be

remanded."     Sid Richardson, 99 F.3d at 751 (citing Burden, 60 F.3d

at 216; and B., Inc., 663 F.2d at 550).

       B.   Valdes’ Claim

       Texas recognizes a cause of action based on the failure of a

land owner or occupier to exercise reasonable care to protect

individuals coming onto the premises against intentional injuries

caused by third persons if the land owner or occupier has reason to

know that such acts are likely to occur there, either generally or

at   some   particular    time.     See,   e.g.,   Nixon   v.    Mr.   Property

Management Co., 690 S.W.2d 546 (Tex. 1985).              Claims under such a

cause of action are evaluated using a basic negligence analysis,

requiring the showing of duty, breach, and causation.             Id. at 549-

551.

       Valdes contends that "[u]nder Texas law, a local store manager

of a national chain can be held liable for harm caused to invitees

by [such manager’s] failure to exercise reasonable care."

       Whether Valdes has pleaded a fraudulent claim against Williams

turns largely on whether there is no reasonable possibility under

Texas law that Williams, by virtue of his position as store

manager, owed Valdes a duty of care which, if breached, could give

rise to personal liability.         In arguing that Williams did owe her

                                       9
such a duty, Valdes relies principally on a single forty-five-year-

old case, S.H. Kress & Co. v. Selph, 250 S.W.2d 883 (Tex. Civ.

App.--Beaumont 1952, writ ref’d n.r.e.), which held that a general

store manager owed an independent duty of care toward business

invitees based on his right, as manager of the store, to exercise

control over the premises.         Wal-Mart replies that recent cases

indicate the Texas Supreme Court would not hold Selph to be good

law and that Selph is essentially limited to its facts and has

"little or no" applicability to the case at bar.

      In Selph, a store patron who had sustained injuries when she

slipped on a piece of candy and fell to the floor brought suit

against both the company that owned the store and a Mr. H. Howe,

the store’s general manager.           In the court of appeals, it was

specifically argued that under Texas law Howe did not owe a duty of

care to business invitees based on his position as manager of the

store. 250 S.W.2d at 891.        The court of appeals rejected this

argument, holding that, by virtue of the control that he exercised

as manager of the store, Howe had a partially nondelegable duty of

due   care,   separate   from   that    of   the   owner,   toward     business

invitees.5     Concluding   that   Howe      was   the   "custodian"    of   the

5
      Id. at 893. In reaching this holding, the court relied on
cases from other jurisdictions as well as section 355 of the
Restatement (First) of Agency, which states the view that:

      "An agent who has the custody of land or chattels and who
      should realize that there is an undue risk that their
      condition will cause harm to the person, land, or

                                       10
premises, and that he had both charge and control of the store, the

court held that Howe personally owed business invitees a separate

duty    of   due   care   and   consequently    that     he    could    be     held

individually liable for negligently failing to remedy a condition

on the store premises that he knew or should have known posed an

unreasonable risk to store patrons.          Id. at 893-94.

       Valdes argues that the holding in Selph is directly applicable

to the case sub judice, claiming that the facts of Selph closely

parallel those of the case at bar.        It is uncontested that Williams

was the general manager of the Wal-Mart from the parking lot of

which Valdes was abducted, and Valdes has alleged that Williams had

reason to know that criminal activity on the Wal-Mart premises

posed an unreasonable risk to business invitees.                     Valdes thus

contends that Selph establishes that, as store manager, Williams

owed her a duty of due care requiring him to remedy or repair any

unreasonably dangerous conditions on the premises of which he knew

or should have known, and that he breached this duty by not taking

steps to provide adequate security in the parking lot.

       Wal-Mart    strongly     disagrees,     arguing        that     Selph    is

inapplicable to the facts of this         case and, in all likelihood, is

no longer good law.       Wal-Mart asserts that Selph is a simple "slip

       chattels of others is subject to liability for such harm
       caused during the continuance of his custody, by his
       failure to use care to take such reasonable precautions
       as he is authorized to take."

                                     11
and fall" case and "speaks [only] to the duties of a store manager

with regard to that which he or she could reasonably expect to

encounter in the course of day-to-day operations, namely foreign

substances on the floor," and consequently is entirely inapplicable

to the facts of the case at bar.6     Neither the holding nor the

6
      In asserting both that Selph is no longer good law and that
Williams did not owe Valdes an individual duty of care, Wal-Mart
relies on Leitch v. Hornsby, 935 S.W.2d 114 (Tex. 1996); Centeq
Realty Inc. v. Siegler, 899 S.W.2d 195 (Tex. 1995); Holloway v.
Skinner, 898 S.W.2d 793 (Tex. 1995), and Natividad v. Alexis, Inc.,
875 S.W.2d 695 (Tex. 1994).
     If read broadly, the principles of Leitch might well undermine
Selph. It is unclear why Williams personally would not owe a duty
to Valdes if she had been a Wal-Mart employee, but would owe such
a duty to her as a Wal-Mart customer, though Wal-Mart itself would
owe the duty——and presumably could not delegate it to Williams——in
either case. But Leitch was not a premises case and we cannot say
with full confidence that it will be applied outside of the
employer-employee context. Nothing in it expressly reflects that
it would be so extended.
     As explained below, a Texas court of appeals has recently held
that neither Centeq nor Natividad undermines the holding of Self.
We cannot say that that conclusion is so clearly wrong as to be
unreasonable.
     With regard to Holloway, the court declined to hold a
corporate agent liable for tortious interference with contractual
rights unless the plaintiff could show that "the alleged act of
interference [was] performed in furtherance of the defendant’s
personal interests so as to preserve the logically necessary rule
that a party cannot tortiously interfere with its own contract."
898 S.W.2d at 796. Thus, it is reasonably arguable that Holloway
does not stand for the general proposition that an agent cannot be
held liable for tortious conduct incident to his employment, but
rather avoids "convert[ing] every [corporate] breach of contract
claim into a tort claim" by holding that unless an agent is clearly
acting in his personal capacity (and motivated solely by personal
interest) he cannot be held liable in tort for causing a
corporation to violate its contractual obligations. Id. at 795.

                                12
reasoning of Selph clearly mandates such a limitation.7

     We are aided in assessing the continuing validity of Selph,

and guided in our assessment of whether there is a reasonable

possibility that Texas courts would view the law as Valdes contends

it is, by the decision of a Texas court of appeals in a premises

liability case presenting issues similar to those in the case sub

judice.     In Wal-Mart Stores, Inc. v. Deggs, 971 S.W.2d 72 (Tex.

App.--Beaumont 1996), rev’d on other grounds, 968 S.W.2d 354 (Tex.

1998), the court of appeals cited Selph as good law, stating that

as "general manager, we know of no reason why [defendant] should

not be considered as the operator of the premises in question."
971 S.W.2d at 75.      The court went on to hold that the Sam’s

Wholesale Club store manager, "as the operator of the premises in

question, had the duty to maintain the premises in a condition that

would not pose an unreasonable risk of harm."       Id. (citations

omitted).     As Selph has never been explicitly overruled, and

considering that a Texas court of appeals has recently cited it as

precedent for the proposition in question, we cannot agree with

Wal-Mart’s assertion that there is no reasonable possibility that

7
       In discussing section 355 of the Restatement (First) of
Agency, the court appeared to equate the scope of the agent’s duty
with that of the owner’s, being limited only to the extent that the
agent lacked full control over the premises. See Selph, 250 S.W.2d
at 893 ("’One who is in complete control over either land or
chattels is under the same duty to protect others from the
condition of such things as is the possessor of land or
chattels.’") (citation omitted).

                                 13
Selph would be considered valid law by Texas courts.8                  Thus, we

hold that Valdes’ allegation that Williams, by virtue of his

position as store manager, had a duty to maintain the premises in

a condition that would not pose an unreasonable risk of harm to

business    invitees   is    sufficient       to   demonstrate    a   reasonable

possibility that a Texas court would recognize this duty.

     We are left with the issues of breach and proximate cause.

Valdes alleged that Williams knew or should have known about

various crimes that had been committed in the Wal-Mart parking lot,

thus putting him on notice of an unreasonably dangerous situation

on the premises, and that he negligently had failed to take

measures to minimize the risk to customers which a similarly

situated    reasonable      retail    store     manager   would   have    taken,

including   failing    to    have    adequate      security   personnel   and/or

patrols and other security measures. Valdes also alleged that such

minimal security precautions would have prevented her abduction.

Viewing these allegations in the light most favorable to Valdes,

"we cannot predict with absolute certainty that a Texas court would

summarily dismiss the cause[] of action asserted against defendant

[Williams]."   B., Inc., 663 F.2d at 554.            We are unable to conclude

8
     In Deggs, the court of appeals rejected Wal-Mart’s arguments
that Centeq and Natividad had undermined the holding in Selph
regarding the manager’s individual duty. The Deggs court found
Natividad "irrelevant to the question of whether the general
manager of a store has a duty to the general public to maintain the
store in a reasonably safe condition." Deggs, 971 S.W.2d at 75.
The Deggs court also found Centeq to be inapposite. Id. at 75-76.

                                       14
that there is no reasonable possibility that Valdes’ allegations,

if accepted as true, would be sufficient to state a valid Texas law

cause of action.      See, e.g., Holder v. Mellon Mortgage Co., 954
S.W.2d 786 (Tex. App.--Houston 1997, writ pending); Kendrick v.

Allright Parking, 846 S.W.2d 453 (Tex. App.--San Antonio 1992, writ

denied); Midkiff v. Hines, 866 S.W.2d 328 (Tex. App.--Houston 1993,

no writ).

                                   Conclusion

     In sum, "having assumed all of the facts set forth by [Valdes]

to be true and having resolved all uncertainties as to state

substantive law against the defendants," B., Inc., 663 F.2d at 550,

we find that there is a        reasonable possibility that Valdes has

stated   a   valid   Texas   law    cause   of   action   against   Williams.

Accordingly, we hold that the district court erred in finding that

Williams was fraudulently joined and consequently erred in denying

Valdes’ motion to remand this case to state court.             This holding

renders all other issues presented on appeal moot.             We therefore

reverse and remand with instructions that the district court remand

this case to the state court from which it was removed.

                                            REVERSED and REMANDED9

9
     All pending motions are hereby DENIED.

                                       15