[DO NOT PUBLISH]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
employee to leave the warehouse before the fire. Given Valencia’s role in
8
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.
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
9
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,
“the motive of the plaintiff, taken by itself, does not affect the right to remove.”
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
defendant.
10
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
timely notice of removal and attached supporting affidavits from its sales
representatives, who the company claimed were fraudulently joined.
428 F.3d at
11
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.
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.”).
12
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
submissions by the parties to establish a more precise amount, the cost of which
would likely exceed any benefit to be achieved.”
13
“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
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).
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.1995).
14
For all of these reasons, we affirm the district court’s award of attorneys’
fees to TNC and ALS.
AFFIRMED.
15
