Bellfort Enterprises Inc. v. Petrotex Fuels Inc. , 339 F. App'x 416 ( 2009 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 30, 2009
No. 08-20231 Charles R. Fulbruge III
Clerk
BELLFORT ENTERPRISES INC
Plaintiff - Appellant
v.
PETROTEX FUELS INC
Defendant - Third Party Plaintiff - Appellee
v.
SOON H YIM
Third Party Defendant - Appellant
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:06-CV-257
Before HIGGINBOTHAM, SMITH, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
The district court refused to remand this action to state court. Bellfort
Enterprises Inc. and Soon Yim appeal that ruling, arguing that federal question
jurisdiction is lacking, and thus PetroTex Fuel Inc.’s removal was improper. We
agree. Therefore, we REVERSE and REMAND.
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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.
No. 08-20231
This action commenced when Bellfort filed suit against PetroTex in Texas
state court. Bellfort, a facility that sells motor fuel and conducts automotive
repairs, brought state law claims of breach of contract, fraud, negligent
misrepresentation, and unilateral rescission. The damages sought arose out of
the execution of a dealer marketing contract with PetroTex, in which PetroTex
agreed to supply Bellfort with motor fuel. Neither party disputes that the
executed contract constitutes a franchise agreement for purposes of the
Petroleum Marketing Practices Act (“PMPA”). See 15 U.S.C. § 2801. Instead,
Bellfort claims that PetroTex failed to deliver on several financial incentives that
had been promised prior to the execution of the franchise agreement and that,
during performance of the terms of the franchise agreement, PetroTex charged
for more fuel than was actually delivered.
PetroTex removed the suit to federal district court and also filed
counterclaims against both Bellfort and its owner, Soon Yim. Bellfort and Yim
moved for a remand to state court on the basis that the case did not present a
federal question. The district court granted that motion. On rehearing, though,
the district court vacated its previous order and concluded that jurisdiction was
proper because the PMPA preempted Bellfort’s state law claims. Later,
summary judgment was entered in PetroTex’s favor. Bellfort and Yim have
appealed.1
The dispositive question in this appeal is whether federal subject matter
jurisdiction exists. “Jurisdiction is a question of law which we review de novo.”
Groome Res. Ltd., L.L.C. v. Parish of Jefferson, 234 F.3d 192, 198 (5th Cir. 2000).
Two concepts are important to the resolution of our jurisdictional question:
the “well-pleaded complaint rule” and the “artful pleading doctrine.” The well-
pleaded complaint rule provides that “a federal court has original or removal
1
Throughout the remainder of this opinion, we will refer to Bellfort and Yim
collectively as “Bellfort.”
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No. 08-20231
jurisdiction only if a federal question appears on the face of the plaintiff’s well-
pleaded complaint” and that “there is no federal jurisdiction if the plaintiff
properly pleads only a state law cause of action.” Gutierrez v. Flores, 543 F.3d
248, 251-52 (5th Cir. 2008) (internal quotation marks omitted). The artful
pleading doctrine, on the other hand, exists as an independent corollary to the
well-pleaded complaint rule. Bernhard v. Whitney Nat’l Bank, 523 F.3d 546, 551
(5th Cir. 2008). “Under this principle, even though the plaintiff has artfully
avoided any suggestion of a federal issue, removal is not defeated by the
plaintiff’s pleading skills in hiding a federal question.” Id. The doctrine allows
for removal “only where state law is subject to complete preemption.” Id.We now apply these principles to the positions advanced by the parties.
PetroTex’s first argument is essentially that a federal question appears on
the face of Bellfort’s well-pleaded complaint. This court has noted that the
PMPA “is designed to protect franchisees from arbitrary and discriminatory
termination or nonrenewal of a franchise . . . .” Kostantas v. Exxon Co., U.S.A.,
663 F.2d 605, 606 (5th Cir. 1981). In PetroTex’s view, Bellfort alleged that
PetroTex terminated the franchise agreement. In particular, PetroTex points
to the following statements in the complaint:
PetroTex’s refusal to deliver motor fuel . . . is arrogant and
tantamount to putting Bellfort out of business; and it did.
PetroTex’s refusal to deliver motor fuel goes to the heart of the
Dealer Marketing Contract. Such a refusal renders the contract
useless . . . and destroys the mutuality of the agreement . . . and is
a purposeful, vengeful breach of contract.
We do not find that Bellfort’s complaint sought to invoke the protections
of the PMPA. Rather, in reviewing the just-quoted averments, we find that
Bellfort, “as master of its complaint,” intended only to state a breach of contract
claim. See Terrrebonne Homecare, Inc. v. SMA Health Plan, Inc., 271 F.3d 186,
189 (5th Cir. 2001). We note that Bellfort sought, in part, a declaratory
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No. 08-20231
judgment that its agreement with PetroTex be terminated. Such requested
relief is inconsistent with an argument that PetroTex had already terminated
the agreement.
PetroTex also invokes the artful pleading doctrine. The argument is that,
even if a federal cause of action did not appear on the face of Bellfort’s complaint,
the PMPA completely preempts the state law causes of action brought by
Bellfort, and federal question jurisdiction therefore exists. This is the argument
the district court accepted, though it did not perform the complete preemption
analysis required under our precedents. See, e.g., Gutierrez, 543 F.3d at 252.
To establish complete preemption, a defendant must demonstrate that:
(1) the statute contains a civil enforcement provision that creates a
cause of action that both replaces and protects the analogous area
of state law; (2) there is a specific jurisdictional grant to the federal
courts for enforcement of that right; and (3) there is a clear
Congressional intent that claims brought under the federal law be
removable.
Id. Our former complete preemption test has been altered by the Supreme Court
insofar as the Court “shifted the focus of the last part of [our] test from
Congress’s intent that the claim be removable, to Congress’s intent that the
federal action be exclusive.” Id. (citing Beneficial Nat’l Bank v. Anderson, 539
U.S. 1, 11 (2003)).
The preemption provision in the PMPA provides the following:
To the extent that any provision of this subchapter applies to the
termination (or the furnishing of notification with respect thereto)
of any franchise, . . . no State or any political subdivision thereof
may adopt, enforce, or continue in effect any provision of any law or
regulation (including any remedy or penalty applicable to any
violation thereof) with respect to termination (or the furnishing of
notification with respect thereto) of any such franchise . . . unless
such provision of such law or regulation is the same as the
applicable provision of this subchapter.
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No. 08-20231
15 U.S.C. § 2806(a)(1). By its terms, the provision allows states to regulate
aspects of the franchise relationship not affecting termination by a franchisor.
This is a form of ordinary preemption, not complete preemption. Our case law
distinguishes the two: “‘Complete preemption,’ which creates federal removal
jurisdiction, differs from more common ‘ordinary preemption’ (also known as
‘conflict preemption’), which does not.” Johnson v. Baylor Univ., 214 F.3d 630,
632 (5th Cir. 2000).
The PMPA does not completely preempt Bellfort’s state law claims.
Consequently, those claims may be pursued in state court and are not subject to
removal.
The judgment is REVERSED. We REMAND to the district court with
instructions to remand the case to state court.
5