Schuchmann v. Miraglia

Full title: TARA SCHUCHMANN, Plaintiff, v. BLAKE MIRAGLIA, RANDALL YORK, GARY VANIER…

Court: United States District Court, N.D. Texas, Dallas Division

Date published: Nov 16, 2004

Civil Action No. 3: 04-CV-1057-B (N.D. Tex. Nov. 16, 2004)

Opinion

Civil Action No. 3: 04-CV-1057-B.

November 16, 2004

MEMORANDUM ORDER

JANE J. BOYLE, District Judge

Before the Court is Plaintiff's Motion to Remand,¹ filed June 16, 2004. Having considered the relevant motion papers, pleadings, and the record in this case, the Court finds that Plaintiff's motion should be GRANTED for the reasons that follow.

1 The Court is mindful that Defendants Miraglia, Vanier, Goldowitz and Anti-SLAPP have filed motions to dismiss for lack of personal jurisdiction, which remain pending. By order on July 6, 2004, Judge Lynn, to whom this case was originally assigned, indicated that Plaintiff's Motion to Remand would be decided first. This course of proceeding makes sense given that subject matter jurisdiction is a "fundamentally preliminary" determination and can be decided in this case without "arduous inquiry." Ruhrgas A.G. v. Marathon Oil Co., 526 U.S. 574, 587-88 (1999); Leroy v. Great W. United Corp., 443 U.S. 173, 180 (1979); Wessel v. Miraglia, 2004 WL 1943776 (N.D. Tex. Aug. 31, 2004).

I. Factual and Procedural Background

On December 31, 2003, Plaintiff filed an original petition against Defendant Randall York² in the 134^th Judicial District of Dallas County, Texas. (Notice Removal, at Tab A.2). She filed an amended petition on April 21, 2004, adding Defendants Miraglia, Vanier, Goldowitz, and the California Anti-SLAPP Project³ ("Anti-SLAPP"). ( Id. at Tab A.3). Plaintiff is a member of the board of directors of First Cash Financial Services, Inc. ("FCFS"), a public company listed on the NASDAQ National Market System. (Pl.'s 1^st Am. Pet. ¶¶ 9-10). Plaintiff alleges that Miraglia and York are disgruntled former FCFS employees. ( Id. at ¶ 11). York resigned from the company in September 2000, and Miraglia did the same in October 2002. ( Id.). Plaintiff alleges that both Miraglia and York engaged in a cyber-smear campaign against FCFS and its officers and directors, including Plaintiff, by posting false, misleading, and defamatory information about FCFS and its management on an internet message board. The content of one of York's messages was allegedly prepared by Goldowitz and/or Anti-SLAPP and posted by York at Goldowitz's direction. ( Id. at ¶ 20). According to Plaintiff, Vanier cooperated with Miraglia in casting defamatory remarks on the internet. ( Id. at 21). Plaintiff sues all Defendants for defamation. ( Id. at 24-26).

2 The Court notes that, in their Notice of Removal, Defendants mistakenly state that Plaintiff originally filed her state court case (cause no. 03-13611) against Miraglia, rather than York.

3 It appears that Anti-SLAPP is an assumed name by Goldowitz. (Pl.'s 1^st Am. Pet ¶).

Defendants Miraglia and Vanier (collectively, "Defendants") removed the case to federal court on May 17, 2004.⁴ Two days later, on May 19, 2004, Defendant York filed for Chapter 7 bankruptcy protection. (Defs.' Opp. to Mot. Remand ["Defs.' Opp."] at 6). On July 14, 2004, Judge Lynn stayed this case due to York's bankruptcy, but directed Plaintiff to notify the Court if the bankruptcy court granted Plaintiff's motion for relief from the automatic stay. On September 28, 2004, the bankruptcy court entered an agreed order granting Plaintiff's motion for relief from the automatic stay, and Plaintiff so notified this Court on October 5, 2004. (Pl.'s Reply, at Tab B; Notice of Agreed Order Granting Tara Schuchmann's Mot. for Relief From Auto. Stay, Oct. 5, 2004). Defendants contend that the allegations asserted against York have no connection to the alleged conduct of Miraglia and Vanier and that Plaintiff joined York as a defendant solely to deprive the other Defendants of their removal rights. Plaintiff challenges the removal, arguing that it is procedurally defective because York did not join in or consent to the removal and that in any case, York was not fraudulently joined and/or misjoined.

4 As noted by Judge McBryde in two orders of remand involving similar issues and the very same defendants as here, Defendants have failed to adequately establish that the jurisdictional amount threshold has been passed in this case. Wessel v. Miraglia, 2004 WL 1943776 (N.D. Tex. Aug. 31, 2004); Barron v. Miraglia, 2004 WL 1933225 (N.D. Tex. Aug. 30, 2004). Defendants state that Plaintiff does not specifically plead a damages amount in her amended state court petition, but merely alleges that "the amount in controversy exceeds the minimal jurisdictional limits of this court." (Pl.'s 1^st Am. Pet. ¶ 7). The minimum amount in controversy in state district court is only $200.01, however, well below the $75,000.00 required for diversity jurisdiction. Arnold v. West Bend Co., 983 S.W.2d 365, 366 n. 1 (Tex.App.-Houston [1^st Dist.] 1998, no writ).
In such cases where a plaintiff fails to plead a specific dollar amount in its original state court petition, the removing defendant must demonstrate by a preponderance of the evidence that the plaintiff seeks relief in excess of $75,000. See De Aguilar v. Boeing Co., 47 F.3d 1404, 1409 (5^th Cir. 1995). To make this showing, the defendant must either demonstrate that it is "facially apparent" from the plaintiff's state petition that the claims will likely surpass $75,000, or it must provide facts that support the amount-in-controversy requirement. See Luckett v. Delta Airlines, Inc., 171 F.3d 295, 298 (5^th Cir. 1999). The Court finds that it is not facially apparent from Plaintiff's petition whether her claims will reach the $75,000 threshold, and Defendants have not provided any proof that Plaintiff's damages will likely exceed $75,000. As pointed out by Judge McBryde, this case could be remanded on Defendants' deficient jurisdictional allegations alone. Wessel, 2004 WL 1943776, at *1, n. 4. (citing St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5^th Cir. 1998)).

II. Analysis

A. Legal Standard

The removing party shoulders the burden of establishing federal jurisdiction. De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5^th Cir. 1995). Jurisdiction is determined at the time the case is removed. Bank One Texas., Nat'l Ass'n v. Morrison, 26 F.3d 544, 547 (5^th Cir. 1994). In determining jurisdiction, the Court considers only the citizenship of real and substantial parties to the controversy and disregards nominal or formal parties who have no real interest in the dispute. Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 460-61(1980).

Defendants urge the Court to disregard York's citizenship because, they say, Plaintiff has fraudulently joined York simply to destroy diversity jurisdiction. See Burden v. Gen. Dynamics Corp., 60 F.3d 213, 217-18 (5^th Cir. 1995). To meet their burden of establishing improper joinder,⁵ Defendants must show that (1) Plaintiff engaged in actual fraud in the pleading of the jurisdictional facts, or (2) that he is unable to state a cognizable claim against York. Travis v. Irby, 326 F.3d 644, 647 (5^th Cir. 2003). If there is an arguably reasonable basis for predicting that state law might impose liability on York under the facts involved, then York has not been fraudulently joined. Smallwood, 385 F.3d at 573.

5 The Court notes that the Fifth Circuit has recently adopted the term "improper joinder" in lieu of the familiar term "fraudulent joinder." Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568, 571 n. 1 (5^th Cir. 2004). No substantive difference exists between the two terms. Id.

B. York is Not a Nominal Defendant for Diversity Purposes

Defendants contend that the grounds asserted in Plaintiff's motion to lift the automatic stay in York's bankruptcy proceedings demonstrate that York is merely a nominal defendant in this suit who should be ignored for diversity purposes. In Plaintiff's motion to lift the stay, Plaintiff indicated her desire to proceed to final judgment against York in this lawsuit, but stated that the judgment would be collected against persons and entities other than York, including York's insurance carriers. (Defs.' Opp. 8).

Defendants are correct in stating that a nominal defendant must be disregarded in the determination of diversity jurisdiction. Navarro Savings, 446 U.S. at 461. Defendants contend that York is "nominal" because Plaintiff's true target is York's insurance carriers, from whom any judgment obtained against York would be collected. The defendants in Hunt v. Ring made a similar argument — that a non-diverse defendant (Ring) was fraudulently joined because recovery could not be had against the estate for which Ring was the personal representative. 946 F.Supp. 503, 504 (E.D. Mich. 1996). Even if a viable cause of action could be asserted against Ring, defendants contended, Ring's presence would not destroy diversity because she was only a nominal party, with the real party in interest being the estate's insurance carrier. Id. The court disagreed with defendants' position because Michigan law forbids insurers from being made or joined as defendants in actions brought by injured persons. Id. at 505. Ring was therefore a real party in interest. Id.

"Under Texas law, a tort plaintiff generally has no standing to join a tortfeasor's liability insurer directly in the tort action." Jones v. CGU Ins. Co., 78 S.W.3d 626, 629 (Tex.App.-Austin 2002, no pet.). Therefore, to reach York's insurance proceeds, Plaintiff must sue York directly. And because Plaintiff intends to obtain a judgment against York, it is irrelevant whether she will be able to collect upon that judgment from him.⁶ Parks v. New York Times Co., 308 F.2d 474, 478 (5^th Cir. 1962); Storr Office Supply Div. v. Radar Bus. Sys. — Raleigh, Inc., 832 F.Supp. 154, 157 (E.D.N.C. 1993); Nosonowitz v. Allegheny Beverage Corp., 463 F.Supp. 162, 163-64 (S.D.N.Y. 1978). The Court thus finds that York, simply by virtue of his being in bankruptcy, is not a nominal defendant that can be disregarded in determining the citizenship of the parties for purposes of diversity jurisdiction.

6 Defendants misplace their reliance upon In re Edgeworth as support for their argument that York is a nominal defendant for diversity purposes because he will likely not be the source for Plaintiff's recovery, if any, in this suit. 993 F.2d 51 (5^th Cir. 1993). Edgeworth simply held that 11 U.S.C. § 524(a), which protects a debtor from subsequent actions by creditors whose claims have been discharged in a bankruptcy case, does not preclude a suit brought against the debtor for the purpose of establishing the debtor's nominal liability in order to collect on the debtor's insurance. Id. at 53-54. The fact that the Edgeworth Court used the label "nominal" to describe the debtor under the circumstances of that case does not mean that debtors in bankruptcy are ipso facto nominal parties having no interest in diversity disputes.

C. Fraudulent Joinder/Misjoinder

In their removal notice, Defendants rely on the theory of "fraudulent misjoinder" and urge that diversity jurisdiction exists because the allegations against York are unconnected to the allegations lodged against Miraglia and Vanier.⁷ See Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11^th Cir. 1998); Wakeland v. Brown Williamson Tobacco Corp., 996 F.Supp. 1213, 1217 n. 4 (S.D. Ala. 1998). The Eleventh Circuit originated the doctrine of fraudulent misjoinder in Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353 (11^th Cir. 1996), abrogated on other grounds, Cohen v. Office Depot, 204 F.3d 1069 (11^th Cir. 2000). The Tapscott Court held that a defendant's right of removal cannot be defeated by the joinder of a non-diverse defendant against whom there is no allegation of joint, several, or alternative liability and where claims against non-diverse defendants "have no real connection with the controversy." Id. at 1360 (citing Wilson v. Republic Iron Steel Co., 257 U.S. 92, 97 (1921). The Court did not hold, however, that mere misjoinder equates to fraudulent joinder; the question instead is whether the joinder of non-diverse parties is "so egregious as to constitute fraudulent joinder." Id. at 1360.

7 In their opposition to Plaintiff's motion to remand, Defendants recast their fraudulent misjoinder argument in terms of fraudulent joinder. However, Defendants do not contend that Plaintiff engaged in actual fraud in pleading jurisdictional facts or that she is unable to establish a cause of action against York in state court, the two ways to establish improper joinder according to the Fifth Circuit's most recent articulation of the standard. See Smallwood, 385 F.3d at 573. Instead, Defendants contend that the joinder of York is fraudulent because the facts pleaded by Plaintiff could not possibly create joint liability in state court. (Defs.' Opp. 10-11). Even if this were the correct standard, the Court finds, for the reasons discussed in this section, that the facts asserted by Plaintiff could create joint liability against Defendants in state court. See also 50 TEX. JUR. 3D Libel and Slander § 91 (2004) ("Libel . . . may be a joint act without regard to a conspiracy or agreement.") (citing Woods v. Haefer, 63 S.W.2d 891, 893 (Tex.Civ.App.-Dallas 1933, writ dism'd).

Even if this Court were to apply the fraudulent misjoinder theory, the Court cannot say that the joinder of York is so egregious as to border on a sham. According to one court, "the relevant inquiry is whether the connection between the joined claims and parties is so tenuous so as to justify disregarding the citizenship of the joined parties upon removal." Bright v. No Cuts, Inc., 2003 WL 22434232, at *5 (E.D.La. October 27, 2003). Plaintiff's claims in this suit all arise out of Defendants' allegedly defamatory postings on an internet message board. Specifically, Plaintiff alleges that:

• Both York and Miraglia were former FCFS employees. York resigned from the company in September 2000 and Miraglia did the same just a month later, in October 2000. (Pl.'s 1^st Am. Pet. ¶ 11);

• Both York and Miraglia chose the Yahoo! Financial Message Board as the forum in which to wage their "smear campaign" against Plaintiff and FCFS. ( Id. at ¶ 12);

• Miraglia posted his defamatory statements from April 21 — July 2, 2003, and York posted his from July 3, 2002 — September 8, 2003. ( Id. at ¶ 13);

• Vanier cooperated with Miraglia in perpetrating defamatory remarks on the Yahoo! Message Board from October 2002 to at least June 2003. ( Id. at ¶ 21);

• York enlisted the services of Goldowitz/Anti-SLAPP to protect his anonymity on the message board. ( Id. at ¶ 20);

• On September 8, 2003 Goldowitz prepared and directed York to post a defamatory message containing all of York's previously-posted defamatory remarks. ( Id. at ¶ 20);

• As a result of the actions of Miraglia, York, and Vanier, Plaintiff suffered injuries to her character, reputation, and feelings, and suffered personal humiliation and mental anguish. ( Id. at ¶ 22);

• Miraglia, York, Vanier, Goldowitz, and Anti-SLAPP published, caused or conspired to be published, or participated in the publication of defamatory statements of fact. ( Id. at ¶ 25).

Further, Defendants admit that York exchanged anonymous e-mail messages with both Miraglia and Vanier. (Defs.' Opp. 12).⁸ Given these allegations, there appears to be at least a reasonable connection between Plaintiff's defamation claims and some or all of the Defendants. And even if the Defendants did not act in concert, Plaintiff's petition clearly suggests that Defendants' activities could have resulted in an indivisible injury to Plaintiff, for which Defendants could be held jointly and severally liable. Amstadt v. United States Brass Corp., 919 S.W.2d 644, 654 (Tex. 1996); Hoenig v. Texas Commerce Bank, N.A., 939 S.W.2d 656, 662 (Tex.App.-San Antonio 1996, no writ); Terrebonne Parish Sch. Bd. v. Texaco, Inc., 1998 WL 160919, at *3 (E.D. La. April 3, 1998) (finding no fraudulent misjoinder where plaintiff's petition suggested that defendants' activities could have jointly and severally caused damage to plaintiff, even where joint and several liability was not alleged and where no single transaction joined defendants).

8 Defendants seem to imply that, because York was unaware of either Miraglia's or Vanier's identity at the time of their communications, Plaintiff cannot show that the Defendants acted in concert. The Court, however, is aware of no authority holding that two or more individuals cannot conspire by pseudonym. Civil conspiracy is established in Texas when: (1) two or more persons; (2) with an object to be accomplished; (3) with a meeting of the minds in the object or course of action; (4) commit one or more unlawful overt acts; and (5) there are damages as the proximate result. Heden v. Hill, 937 F.Supp. 1230, 1239-40 (S.D. Tex. 1996) (citing Triplex Communications, Inc. v. Riley, 900 S.W.2d 716, 719-21 (Tex. 1995)).

D. Attorney's Fees

Under 28 U.S.C. § 1447(c), Plaintiff asks the Court to order Defendants to pay her attorney's fees incurred as a result of the improper removal. The Court finds that the removal of this action was not so implausible as to justify an award of attorney's fees. See Erlandson v. Liberty Life Assur. Co. of Boston, 320 F.Supp.2d 501, 511 (N.D. Tex. 2004).

III. Conclusion

For the reasons discussed in this order, the Court finds that York is not a nominal defendant for diversity purposes, nor has he been improperly joined. Because York, like Plaintiff, is a Texas citizen, there is no diversity of citizenship, and this Court lacks subject matter jurisdiction to hear the cause. It is therefore ORDERED that the stay previously entered in this case is LIFTED. It is further ORDERED that Plaintiff's Motion to Remand is GRANTED and that this cause should be, and it is hereby, REMANDED to the 134^th Judicial District of Dallas County, Texas. The Clerk of Court is directed to transmit the file to the District Clerk of Dallas County, Texas.

SO ORDERED.