Boone v. Citigroup, Inc. , 416 F.3d 382 ( 2005 )

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
July 7, 2005
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 04-60766
PATRICIA BOONE, ET AL,
Plaintiffs,
PATRICIA BOONE; MANDOLYN BOYD;
MARY JORDAN; MARY MCBRIDE;
ARTHAWAY MCCULLOUGH; CONSTANCE
MCFARLAND; EUGENE PAINE; BERNICE
PAINE; MARY SPRATT; PEGGY WASHINGTON,
Plaintiffs-Appellants,
versus
CITIGROUP INC; CITIFINANCIAL INC;
ASSOCIATES FIRST CAPITAL CORPORATION;
ASSOCIATES CORPORATION OF NORTH AMERICA;
PAUL SPEARS; D LAVENDER; MICHELLE EASTER;
JOHN DOES 1 - 50; CITIFINANCIAL CORPORATION,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Mississippi
Before GARWOOD, GARZA, and BENAVIDES, Circuit Judges.
GARWOOD, Circuit Judge:
Appellants, all of whom are residents of Mississippi, brought
suit in Mississippi state court alleging only state law claims
against five out-of-state corporations and three individual
Mississippi residents. One of the corporate appellees removed the
case to federal court on the ground that the three in-state
residents had been improperly joined in order to defeat diversity
jurisdiction. The district court denied appellants’ motion to
remand and granted summary judgment to appellees on the merits.
Appellants appeal this disposition principally on the ground that
our recent decision in Smallwood v. Ill. Cent. R.R. Co., 385 F.3d
568 (5th Cir. 2004) (en banc) cert. denied 125 S. Ct. 1825 (2005)
(Smallwood II), establishes that the doctrine of improper joinder
does not apply under the facts of this case and, accordingly, the
district court lacked subject matter jurisdiction under 28 U.S.C.
§ 1332. We affirm.
I.
The nine appellants are residents of Mississippi.1 Each
appellant obtained at least one consumer loan from First Family
Services, Inc (First Family) at First Family’s offices in
Aberdeen, Amory, or Tupelo, Mississippi. The most recent of
these loans originated on May 12, 1998. Appellants also
purchased credit insurance from First Family to insure against
the possibility of default in the event of, for example, death or
1
Though the style of this case includes Mary McBride as an
appellant, she died while this case was before the district court
and her estate has chosen not to pursue her claims.
2
serious illness.
In October 2001, appellants, later joined by several since-
dismissed co-plaintiffs, filed a complaint in the circuit court
of Monroe County, Mississippi. They generally alleged that First
Family engaged in a pattern of unlawful misrepresentation and
non-disclosure in connection with the loans and credit insurance.
Appellants contend that First Family exploited their lack of
sophistication in inducing them to buy credit and insurance
products they did not need, did not want, or did not know they
had purchased. Appellants do not allege that the relevant terms
of the transactions were not disclosed in the written instruments
themselves. Rather, they contend that First Family and its
employees orally misrepresented what was in the written
instruments, which, appellants maintain, they could not
understand because they lacked the sophistication to do so.2
Appellants sought to recover on state law claims for common law
fraud, fraud in factum, constructive fraud, civil conspiracy,
unconscionability, economic duress, fraudulent deceit, continuing
fraudulent misrepresentation, fraudulent concealment, and the
intentional infliction of emotional distress. The removed state
court complaint expressly limits the claims asserted to those
2
Appellees dispute that appellants were at their mercy.
Appellees cite evidence, including deposition testimony,
establishing that appellants all have experience with consumer
credit, mortgages, banking, and other aspects of personal
finance.
3
arising under Mississippi law and affirmatively excludes any
federal claims.
Appellants named eight defendants, five of which were
corporations which were citizens of states other than Mississippi
and three of whom were individual Mississippi residents.3
Significantly, appellants did not sue First Family. Appellants
did, however, sue two related entities, Associates First Capital
Corporation and Associates Corporation of North America, both of
which are Delaware corporations. Associates First Capital
Corporation is the parent corporation of Associates Corporation
of North America and First Family is a subsidiary of one or the
other. Appellants also sued Citigroup, Inc., a Delaware
corporation, because on August 30, 2000 Citigroup, Inc. acquired,
and became the successor in interest to, Associates First Capital
Corporation. Citifinancial Corporation and Citifinancial, Inc.,
each likewise a Delaware corporation owned by Citigroup, Inc.,
were also named defendants because First Family was apparently
merged into (or sold all its assets to) the Citifinancial
entities. It is undisputed that each of the five corporate
defendants is and was at all relevant times a citizen of a state
other than Mississippi under 28 U.S.C. § 1332(c)(1) and that the
amount in controversy exceeded $75,000.
3
The complaint also named fifty “John Doe” defendants but
the complaint was never amended to include any person or entity
in addition to the eight named defendants.
4
Finally, appellants also named three individual Mississippi
residents. The individual defendants had been at all relevant
times employees of First Family and were alleged to have been
directly or indirectly involved in the loan and credit insurance
process for at least some of the appellants. Defendant Paul
Spears supervised several First Family branches. Defendant
Durlynn Lavender managed the First Family branch in Aberdeen,
Mississippi. Defendant Michelle Easter was a loan officer at the
same branch.
On November 16, 2001, Citigroup, Inc. removed the suit to
the Northern District of Mississippi, contending that the three
individual defendants had been improperly joined to destroy
diversity jurisdiction under 28 U.S.C. § 1332 in that there was
no reasonable possibility of recovery against them because, inter
alia, the claims against them were barred by the Mississippi
statute of limitations. Shortly thereafter, appellants moved to
remand on the apparent ground that joinder was proper because
there was a reasonable possibility that they could recover
against the non-diverse appellees.4 After allowing remand-
4
We infer the apparent ground of appellants’ motion to
remand by reading the district court’s order denying the
requested relief. Appellants’ memorandum in support of its
motion was not in the record even though the motion itself
expressly referred to a memorandum in support.
5
related discovery, the district court5 determined: (1) recovery
against the three individual defendants was indisputably
precluded by Mississippi’s three-year residual statute of
limitations, Miss. Code. Ann. § 15-1-49; (2) appellants failed to
read the loan and insurance contracts at issue and were therefore
not entitled to assert that there were discrepancies between the
contracts and oral representations allegedly made by the non-
diverse appellees; and (3) none of the five appellants who were
deposed as part of the remand-related discovery could identify a
single misrepresentation made by any of the three non-diverse
appellees.6 Based on these conclusions, the district court
denied the motion to remand, reasoning that the impossibility of
recovery against the non-diverse appellees meant that joinder of
the non-diverse appellees had been improper and thus subject
matter jurisdiction existed under 28 U.S.C. § 1332.
On December 29, 2003, following the close of discovery,
appellees, including the three non-diverse individual defendants,
moved for summary judgment. On January 21, 2004, before they
filed their memorandum in opposition to the pending motion for
summary judgment, appellants filed a second motion for remand,
5
The parties consented to trial by magistrate judge so
references to the district court refer to proceedings conducted
by the magistrate judge.
6
The district court also summarily denied a rule 59(e)
motion to reconsider the denial of remand.
6
arguing that two intervening appellate decisions, Smallwood v.
Ill. Cent. R.R. Co., 342 F.3d 400 (5th Cir. 2003) (Smallwood I),
and Collins v. Am. Home Prod. Corp., 343 F.3d 765 (5th Cir.
2003), established that the district court had erroneously denied
remand. On February 23, 2004, the district court entered an
order “withholding” any ruling on the motion to remand until May
1, 2004, or the en banc decision in Smallwood, whichever came
first.7
In the meantime, however, appellants filed a response in
opposition to summary judgment in which they apparently claimed
that the statute of limitations was tolled on the grounds of
fraudulent concealment and a related 1997 class action in
Arizona.8 The district court, without waiting for the May 1,
2004 deadline to expire, issued an order on April 8, 2004,
granting summary judgment to all defendants. The basis of the
district court’s summary judgment order was that appellants’
claims were untimely as to all defendants under the Mississippi
three-year residual statute of limitations.
7
Smallwood I was taken en banc December 19, 2003. See 355
F.3d 357. The district court apparently selected Friday May 1,
2004, as the deadline to ensure that the parties would be able to
get back on track for the pretrial conference scheduled for
Monday, May 11, 2004, and the trial scheduled to begin two weeks
later.
8
Once again, the record does not contain appellants’ legal
memorandum. The record only contains exhibits to the memorandum
which, apparently, would have argued that there remained material
facts in dispute.
7
Appellants timely filed a Rule 59(e) motion to alter or
amend the judgment, arguing that the district court erred by
ruling on the merits of their claims without first addressing the
threshold issue of subject matter jurisdiction raised by their
second motion to remand. They also maintained that the district
court erred in concluding that a class action in Arizona, and a
related global settlement, did not toll the statute of
limitations as to all or at least some of the diverse corporate
defendants. On August 6, 2004, the district court denied the
motion on the ground that, whatever the outcome of the Smallwood
case, the statute of limitations had run on all of appellants’
claims as to all defendants.
Appellants then filed a timely notice of appeal. While
their appeal was pending and before briefs were due, this court
issued its en banc decision Smallwood II, and it is upon this
case that appellants primarily rely in challenging subject matter
jurisdiction.
II.
Appellants contend on appeal that this case should be
remanded for want of subject matter jurisdiction under section
1332 because defendants interposed a “common defense” of the
statute of limitations that disposed equally of all claims
against all defendants and, under Smallwood II, such a “common
8
defense” precludes a finding of improper joinder.9
A.
The denial of a motion to remand for want of subject matter
jurisdiction is reviewed de novo. Miller v. Diamond Shamrock
Co., 275 F.3d 414, 417 (5th Cir. 2004). Appellees, as the
removing parties below, bear the burden of establishing
jurisdiction. Frank v. Bear Stearns & Co., 128 F.3d 919, 921-22
(5th Cir. 1997).
A motion to remand is normally analyzed with reference to
the well-pleaded allegations of the complaint, which is read
leniently in favor of remand under a standard similar to Rule
12(b)(6). Smallwood II, 385 F.3d at 573. The district court,
however, may allow limited remand-related discovery, and conduct
9
As a preliminary matter, we reject appellee’s contention
that Smallwood II does not apply to the instant case because it
was issued after the district court entered its summary judgment.
Appellees cite, among other authorities, Bailey v. Ryan
Stevedoring Co., for the proposition that a “change in decisional
law after entry of judgment does not constitute exceptional
circumstances [under FED. R. CIV. P. 60(b)(5) & (6)] and is not
alone grounds for relief from a final judgment.” 894 F.2d 157,
160 (5th Cir. 1990). The relevant and obvious distinction
between Bailey and the instant case is that the change in
decisional law occurred after Bailey lost both in the district
court and on appeal to this court. In the instant case, on the
other hand, the potentially important change in decisional law
occurred while the appellants’ appeal was still pending. It is
well-settled that in such cases the new law must be applied with
the full force of the precedent that it is. See, e.g., Concerned
Citizens of Vicksburg v. Sills, 567 F.2d 646, 649 (5th Cir.
1978).
9
a summary judgment type inquiry thereupon.10 Ibid.
B.
Diverse defendant-appellee Citigroup removed this ostensibly
non-diverse case to federal district court on the ground that
appellants had improperly joined the non-diverse individual
defendants, thereby destroying diversity and denying the diverse
defendants a federal forum. There are two ways to establish
improper joinder: “(1) actual fraud in the pleading of
jurisdictional facts, or (2) inability of the plaintiff to
establish a cause of action against the non-diverse party in
state court.” Smallwood II, 385 at 573 (citing Travis v. Irby,
326 F.3d 644, 646-47 (5th Cir. 2003)). Citigroup in the district
court and appellees on appeal do not allege any outright fraud in
the drafting of the complaint, so this case turns on the second
Travis test. Following this approach, Citigroup sought to
establish that joinder was improper because there was “no
reasonable basis for the district court to predict that the
plaintiff[s] might be able to recover against [the] in-state
defendant[s].” Id.; see also Badon v. RJR Nabisco, Inc., 236
F.3d 282, 286 n. 4 (5th Cir. 2000) (stating that it is
insufficient for the party seeking remand to adduce a “mere
theoretical possibility” of recovery against the non-diverse
10
Appellants do not contend that the district court in any
way erred in permitting remand-related discovery in this case.
10
defendant) (emphasis omitted). In particular, Citigroup argued
that, in light of remand-related discovery, there was no reason
to believe that any of appellants’ claims against the non-diverse
appellees were timely under Mississippi’s three-year statute of
limitations.
The district court agreed and denied remand primarily on the
ground of limitations. The district court then exercised subject
matter jurisdiction over the case under the improper joinder
doctrine. Following regular discovery, the district court
ultimately granted summary judgment to all of the defendants,
diverse and non-diverse alike, on the same residual statute of
limitations defense. Smallwood II held that “when a nonresident
defendant’s showing that there is no reasonable basis for
predicting that state law would allow recovery against an in-
state defendant equally disposes of all defendants, there is no
improper joinder[.]” 385 F.3d at 571. Appellants argue that
under Smallwood II, there was no improper joinder in this case
because the same statute of limitations, if it precluded their
claims against the non-diverse defendants, necessarily equally
precluded all claims against all defendants. Accordingly,
appellants contend that the parties remain incompletely diverse
and, consequently, that there is no federal subject matter
jurisdiction over their case.
C.
11
In Smallwood II, plaintiff Smallwood, a Mississippi
resident, was injured when her car was struck at a railroad
crossing in Mississippi by a train operated by the Illinois
Central Railroad Company (Illinois Central), an Illinois
corporation. 385 F.3d at 571-72. The railroad crossing was
maintained by the Mississippi Department of Transportation (MDOT)
with equipment it had purchased using federal funds. Ibid.
Smallwood brought suit against both Illinois Central and the MDOT
in Mississippi state court solely on state law causes of action.
Ibid. Illinois Central removed the case to federal court where
it argued that Smallwood’s negligence claims against the MDOT
were preempted by the Federal Railroad Safety Act, 49 U.S.C. §
20101 et seq, and, as such, that the MDOT had been improperly
joined. The district court agreed and denied remand because
there was no realistic reason to believe that Smallwood could
recover against the non-diverse MDOT. Smallwood v. Ill. Cent.
R.R., 203 F. Supp. 2d 686, 693-94 (S.D. Miss. 2002). Then,
applying the law of the case doctrine, the district court granted
summary judgment to Illinois Central on precisely the same
preemption ground. Smallwood v. Ill. Cent. R.R., 2002 U.S. Dist.
LEXIS 27674, *13-17 (S.D. Miss. August 13, 2002) (noting that
Smallwood had adduced no evidence or argument suggesting that the
prior preemption conclusion against the MDOT did not equally
compel judgment for Illinois Central).
12
The en banc court reversed the district court’s judgment and
directed remand to state court. Where, as in Smallwood, the
diverse defendant establishes that a non-diverse defendant was
improperly joined by way of a showing that equally disposes of
all claims against the non-resident defendant as well, there is
no improper joinder because the non-resident defendant has merely
demonstrated that the plaintiff’s entire case is without merit
and an improper joinder inquiry is about subject matter
jurisdiction, not the merits of the entire case. Smallwood II,
385 at 575-76 (citing Chesapeake & O.R. Co. v. Cockrell, 34 S.
Ct. 278 (1914)); McDonal v. Abbot Laboratories, — F.3d — (5th
Cir. 2005), 2005 U.S. App. LEXIS 7177, * 15 (“As long as the
asserted defense applies uniformly to all defendants and
dismisses the suit as a whole, the resident defendants were no
more improperly joined than the non-resident defendants.”). It
bears emphasizing that Smallwood II applies “only in that limited
range of cases where the allegation of improper joinder rests
only on a showing that there is no reasonable basis for
predicting that state law would allow recovery against the in-
state defendant and that showing is equally dispositive of all
defendants.” 385 F.3d at 576 (emphasis added). See also id. at
574 (“when, on a motion to remand, a showing that compels a
holding that there is no reasonable basis for predicting that
state law would allow the plaintiff to recover against the in-
13
state defendant necessarily compels the same result for the
nonresident defendant, there is no improper joinder; there is
only a lawsuit lacking in merit”) (emphasis added); McDonal,
supra (same).
Thus, the crux of Smallwood II’s holding is that “only”
where the showing that there is no reasonable basis for
predicting state law would allow the plaintiff to recover against
the resident defendant is such that the same showing “equally”
and “necessarily” “compels” the conclusion that recovery is
precluded against “all” non-resident defendants, then there is no
improper joinder, but simply a wholly meritless suit. That is
not the situation here.
Although it is true that the district court denied remand
and granted summary judgment on the basis of the same residual
statute of limitations, it is not true that the statute of
limitations defense assertion by the resident defendants
“equally” and “necessarily” “compel[led]” dismissal of all claims
against all the diverse defendants.
In broad strokes, appellants allege that the non-diverse
appellees induced them to buy credit and insurance products by
orally misrepresenting the terms of the contracts at issue. The
appellants contend that this conduct constituted an array of
state law frauds and the intentional infliction of emotional
distress. Significantly, none of the allegations in the amended
14
complaint aver a tortious act after May 12, 1998, the origination
date of the last loan at issue. This date is thus the accrual
date for the most recent of appellants’ claims. See Andrus, et
al. v. Ellis, et al., 887 So. 2d 175, 180-82 (Miss. 2004). The
initial complaint, however, was filed three and a half years
later on October 5, 2001, meaning that even the most recent
claims against the non-diverse appellees are plainly time-barred
by Mississippi’s three-year residual statute of limitations.11
11
In the section of their brief contesting summary
judgment, appellants argue that summary judgment in favor of both
the non-diverse and diverse appellees was error because, inter
alia, the statute of limitations was tolled as to all appellees
by their fraudulent concealment of the facts giving rise to this
suit. See MISS. CODE ANN. § 15-1-67.
However, appellants provided no summary judgment evidence
tending to support a conclusion that the statute of limitations
was tolled by any fraudulent concealment on the part of any
appellee. Appellants bear the burden of establishing fraudulent
concealment by showing both (1) an affirmative act to conceal the
underlying tortious conduct, and (2) a failure to discover the
factual basis for the claims despite the exercise of due
diligence. Robinson v. Cobb, 763 So. 2d 883, 887 (Miss. 2000).
The affirmative act of concealment must have occurred after and
apart from the discrete acts upon which the cause of action is
premised. Stephens v. Equitable Life Assur. Soc’y of the U.S.,
850 So. 2d 78, 83-84 (Miss. 2003). Yet following discovery,
appellants were unable to produce any summary judgment evidence
of even any material misrepresentation by any of the appellees,
much less a post facto act of concealing the facts giving rise to
the fraud claims. As to infliction of emotional distress, there
is no summary judgment evidence of any wrongful act done by any
appellee to any appellant within the limitations period.
Furthermore, appellants do not anywhere argue that they were even
minimally duly diligent in the management of their affairs.
Nowhere, for example, do appellants challenge the district
court’s finding that none of them even bothered to read the
written instruments at issue. A person who fails to read his or
her own loan and insurance contracts may not be characterized as
having been duly diligent. Russell v. Performance Toyota, Inc.,
15
MISS. CODE ANN. § 15-1-49; Nicols v. Tri-State Brick & Tile Co.,
608 So. 2d 324, 333 (Miss. 1992).
Having determined that even the most recent claims against
the non-diverse appellees are conclusively barred by the residual
statute of limitations, we turn now to the claims against the
diverse defendants. If, but only if, the showing which
forecloses appellants’ claims against the non-diverse defendants
necessarily and equally compels foreclosure of all their claims
against all the diverse defendants, then Smallwood II applies and
there was no improper joinder, meaning that the entire case
should be remanded for want of subject matter jurisdiction.
However, Smallwood II does not apply here because the
limitations showing made as to the resident defendants does not
equally and necessarily compel dismissal of all claims against
all diverse defendants. Appellants underscored at oral argument
that their claims against the diverse corporate defendants were
826 So. 2d 719, 726 (Miss. 2002) (“In Mississippi, a person is
charged with knowing the contents of any document that he
executes.”). See also Washington Mut. Finance Group v. Bailey,
364 F.3d 260, 264-266 (5th Cir. 2004) (same); Ross v.
Citifinancial, 344 F.3d 458 (5th Cir. 2003) (same). Accordingly,
the exception to the statute of limitations found in section 15-
1-67 does not apply.
Appellants also contend that the statute of limitations
ought to be equitably tolled because of a purported fiduciary
relationship between them and the appellees. This too fails,
however, for similar reasons because Mississippi law will not
equitably toll a statute of limitations unless the untimely
plaintiff establishes that he exercised due diligence. Russell
v. Williford, — So. 2d —, 2004 Miss. App. LEXIS 1111, *7-*8
(Miss. 2004). See also Ross, 344 F.3d at 466-67.
16
not simply premised on vicarious liability for the tortious acts
of the three non-diverse individual appellees working for First
Family.12 However, in properly conceding that at least some of
12
For example, the removed state court amended complaint
alleges, inter alia:
“The Defendants herein are sued individually and as co-
conspirators, aiders and abettors. The liability of
the Defendants arises from the fact that, directly and
through their agents, employees, instrumentalities, and
alter egos, they engaged in all or part of the unlawful
acts, plans, schemes, or transactions complained of
herein. Each of the Defendants is jointly and
severally liable for the damages caused to Plaintiffs.
Each of the Defendants (and/or their agents)
substantially participated or assisted in the
wrongdoing complained of herein and had knowledge of
the false and misleading statements and deceptive
activities and other wrongdoing alleged herein or
recklessly disregarded such wrongful conduct.
. . .
Defendants acted in conspiracy, in concert, and/or
agency capacity with each other in connection with the
claims alleged herein. The Associates controlled and
directed the wrongful conduct of First Family as
alleged herein. Defendants are jointly and severally
liable for the wrongful conduct alleged herein.
. . .
This action seeks redress for damages sustained by
Plaintiffs resulting from a habit, pattern and practice
of predatory lending by these Defendants, to include,
but not limited to, fraud, deceit, insurance packing
and equity skimming. In short, the Defendants strip,
flip and pack their way to profit at the expense of
trusting and unknowing consumers . . .
. . .
In designing, marketing and implementing this
intentional course of calculated conduct, the
17
their claims against the non-resident defendants are analytically
distinct from and in addition to their respondeat superior claims
against those defendants based on the wrongs allegedly committed
by the resident defendants, appellants have conceded that the
failure of their claims against the resident defendants does not
in and of itself cause those of the claims against the non-
resident defendants which are not based on respondeat superior
liability for the wrongs committed by the resident defendants to
fail as well.
Appellants have urged that limitations was tolled by the
pendency of a class action filed in 1997 in the United States
District Court for the District of Arizona in which the named
defendants included Associates First Capital Corporation and
Associates Corporation of North America, which are two of the
Defendants targeted counties in Mississippi which are
generally all too often populated by lower income
people and of those with limited educations because of
withheld opportunities.
. . .
The Defendants created and trained its employees to use
budget proposals and similar solicitation tools, to
compare the customer’s current debts with one or more
of the Defendants’ loan proposals and to demonstrate
the ‘benefits’ of consolidating the consumer’s debts
with the Defendants’ loan . . . .”
18
diverse defendants herein.13 However, none of the resident
defendants in the present suit were defendants in the Arizona
suit (and appellants have never alleged that any of them were),
so it is facially obvious that the pendency of the Arizona suit
could not toll limitations as to any of the resident
defendants.14 The tolling issue, however, cannot be resolved on
that basis as to the diverse defendants because at least two of
them were named defendants in the Arizona suit, and the other
diverse defendants are alleged to have some form of successor or
derivative or alter ego liability respecting the two who were
defendants in the Arizona suit.15 Accordingly, at least for this
13
Plaintiffs also allege that a subsequent settlement
released all claims of the class in the Arizona case against all
the corporate defendants (who constitute all the diverse
defendants) in this case. And, plaintiffs further contend in
this case that Citigroup Inc., Citifinancial Corporation and
Citifinancial Inc. have, by merger or other acquisition or “alter
ego,” in some way succeeded to the liability of Associates First
Capital Corporation and Associates Corporation of North America.
There are no similar allegations as to any of the resident
defendants.
14
Indeed, at oral argument appellants admitted that their
claim of tolling by virtue of the Arizona suit was inapplicable
to the resident defendants.
15
While the Arizona suit tolling claim is ultimately
unavailing as to the diverse defendants for the reasons stated
below in part III hereof, that is not because they were not
defendants in the Arizona action (as at least two non-resident
defendants here were defendants there and the other three non-
resident defendants allegedly have some form of successor or
alter ego liability respecting the two that were defendants in
Arizona), which is the reason that it is unavailing as to the
resident defendants here.
19
reason, the showing that limitations bars the suit against all
the resident defendants does not (as Smallwood II requires for
its “common defense” doctrine to apply) “equally” and
“necessarily” “compel” the conclusion that limitations bars the
entire suit against “all” the non-resident defendants.
Therefore, though both the non-diverse and diverse appellees
successfully asserted a defense based on the same residual
statute of limitations, this was not a “common defense” in the
particularized sense meant by Smallwood II.
Given that there is no reasonable possibility of recovery
against the non-diverse appellees and given that Smallwood II
does not apply, joinder of the non-diverse appellees was improper
under Travis. See, e.g., McDonal, supra. The district court,
therefore, had, and we too have, subject matter jurisdiction over
this case under section 1332.
III.
Having determined that subject matter jurisdiction exists,
we turn finally to the district court’s decision to grant summary
judgment to appellees. We review a grant of summary judgment de
novo under the same standard applied by the district court.
Mowbray v. Cameron County, Tex., 274 F.3d 269, 278 (5th Cir.
2001).
For the purposes of their argument against summary judgment,
appellants implicitly concede that their claims are untimely
20
under Mississippi’s residual statute of limitations. They argue,
however, that the clock was tolled by (1) the appellees’
fraudulent concealment of the facts giving rise to this suit,
and, (2) that the commencement of a class action lawsuit in
Arizona in 1997 tolled limitations as to the non-resident
defendants.
For the reasons discussed above, supra § II.C n. 11,
appellants’ contention that the limitations clock was tolled by
the fraudulent concealment of the appellees is without merit.
Their contention that the statute of limitations was tolled
as to the diverse defendants by the Arizona class action is also
without merit. There is no showing that the putative class
action in Arizona ever embraced claims under Mississippi
statutory or common law or that appellants were ever members of
the putative class in that suit.16
Moreover, Mississippi does not have class actions and we are
cited to no Mississippi court decision applying class action
tolling to a Mississippi law cause of action allegedly barred by
a Mississippi statute of limitations.
16
The class ultimately certified in the Arizona case
consisted of “residents of the State of Arizona” sold credit life
insurance “in connection with any real estate loan made by
Defendants” when the insurance “will not pay off the loan in the
event of their death during the term of coverage.” Seimer Assoc.
First Capital Corp., 2001 U.S. Dist. LEXIS 12810, *18 (D. Ariz.
March 30, 2001). Appellants are not Arizona residents and none
of the loans to appellants here complained of are real estate
loans.
21
The cases cited by appellants, such as American Pipe and
Constr. Co. v. Utah, 94 S. Ct. 756 (1974), and Crown, Cork & Seal
Co., Inc. v. Parker, 103 S. Ct. 2392, 2397-98 (1983), all involve
a federal class action for violation of a federal statute
tolling, until class certification is denied or limited so as to
exclude the party claiming tolling, the running of the statute of
limitations, on an action, within the scope of the putative class
action, for violation of the same federal statute by a member of
the putative class against a defendant in the class action.
The only case appellants have cited involving Mississippi
law is Piney Woods Country Life School v. Shell Oil Co., 170 F.
Supp. 2d 675 (S.D. Miss. 1999). That was a class action by
royalty owners brought in United States District Court for the
Southern District of Mississippi complaining of how the defendant
Shell Oil Company accounted to royalty owners for gas produced in
Mississippi and run through Shell’s Thomasville, Mississippi,
plant. Royalty owners within the scope of that putative class
but who were excluded by the 1978 class certification order which
limited the class to those whose claims by then exceeded $10,000,
moved after 1984 to be added back to the class. The district
court denied the motion on the basis that the movants’ claims
were barred by limitations, and that class action tolling did not
save the movants’ claims because, though they and their claims
were within the putative class action as filed, any tolling did
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not extend beyond 1978 when they were excluded from the class by
the 1978 class certification order, and that the Mississippi
limitations statute had run since then and before their motion.
While the opinion does discuss American Pipe and Crown, Cork &
Seal, it does not cite any Mississippi court opinions. Piney
Woods – even if it purported to apply Mississippi law – is
clearly distinguishable. The parties claiming tolling were
indisputably members of the putative class seeking to recover on
the identical cause of action by intervening in the allegedly
tolling class action. Here an Arizona class action is the basis
for the claimed tolling, and it is not shown that the Mississippi
law claims asserted here were embraced within that Arizona case
or that appellants were members of the putative class there. No
opinion of a Mississippi court, or purporting to apply
Mississippi law, is cited in support of appellants’ tolling
claims.
We conclude that appellants have adduced no summary judgment
evidence which would support a finding that the Mississippi
statute of limitations as to their Mississippi law claims was
tolled by the pendency of the Arizona class action suit.
Conclusion
For the foregoing reasons, the judgment of the district
court is
AFFIRMED.
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