Vernita Bell v. Texaco, Incorporated

Case: 11-60462 Document: 00512018231 Page: 1 Date Filed: 10/12/2012
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 12, 2012
No. 11-60462 Lyle W. Cayce
Clerk
VERNITA BELL, Individually and on Behalf of E.A.B, Deceased; K.A., by and
Through Jestina Alsworth, Her Natural Mother, Adult Next Friend and
Guardian Ad Litem; JESTINA ALSWORTH, Individually and on Behalf of
T.A. and M.A., Deceased; P.F., By and Through Patricia Felton, Her Natural
Mother, Adult Next Friend and Guardian Ad Litem; S.D., By and Through
Brenda Doss, Her Natural Mother, Adult Next Friend and Guardian Ad
Litem; KATIE COLENBURG, Individually and on Behalf of I.C., Deceased;
THELMA SANDERS; CARL ELLIS; JOHN SCOTT; MARY CULBERT;
BETTY SCOTT; JAMES SCOTT; BERTHA FRANKLIN; LEVANDER
DAVIS,
Plaintiffs-Appellants
v.
TEXACO, INCORPORATED,
Defendant-Appellee
Appeal from the United States District Court for the
Southern District of Mississippi
U.S. Dist. Ct. No. 5:09–CV–192–KS–MTP
Before DAVIS, DENNIS, and HAYNES, Circuit Judges.
PER CURIAM:*
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
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A group of personal injury plaintiffs appeal the district court’s
determination that it had subject matter jurisdiction over this case and its
ultimate disposition of the case in which it awarded monetary sanctions and
dismissed the case for discovery violations. We AFFIRM.
I. FACTS AND PROCEDURAL BACKGROUND
The underlying dispute concerns injuries allegedly sustained due to
exposure to toxic chemicals that leaked from abandoned underground storage
gasoline tanks in Fayette, Mississippi. The property was once owned by W. Joe
Brown, long-since deceased, who operated a gas station on the premises, before
transferring the property to his son who sold it to the county in 1978. The
plaintiffs in this case (“Plaintiffs”) were employees and patients of a Jefferson
County mental services facility subsequently located at the property. They
allege that they were exposed to gas vapors from the leaking underground tanks,
which led to permanent injury.
Plaintiffs filed this action against Texaco, Chevron, W. Joe Brown and his
estate (collectively the “Brown Estate”), the Southwest Mississippi Mental
Health Foundation (“Mental Health Foundation”), and Doe defendants in
Mississippi state court in 2009. Texaco and Chevron1 removed the case to
federal court under diversity jurisdiction, asserting that the non-diverse
defendants were either nominal or improperly joined. Plaintiffs sought remand
and began, with the leave of the district court, to conduct discovery relating to
the viability of their claims against the non-diverse defendants. After discovery
and briefing, the district court denied Plaintiffs’ motion to remand, finding that
the non-diverse defendants had been improperly joined. Plaintiffs filed three
motions for reconsideration, each of which the district court denied.
1
Claims against Chevron were later voluntarily dismissed by Plaintiffs.
2
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Discovery began in the district court and was met with frequent delays
and failures by Plaintiffs over the course of several months to produce the court-
ordered interrogatories and other information.2 Several status conferences were
held during which the court attempted to impress upon Plaintiffs the importance
of complying with court orders and discovery requests. After extended
unsuccessful efforts to compel Plaintiffs and their attorneys to act, the court
sanctioned Plaintiffs under Rule 37, awarding costs and fees for the delays to
Texaco. Following another failure by Plaintiffs to timely respond to the order
imposing fees, Texaco filed a motion to dismiss the case for failure to comply
with the court’s orders, which the court granted.
II. STANDARD OF REVIEW
The denial of a motion to remand is reviewed de novo. Miller v. Diamond
Shamrock Co., 275 F.3d 414, 417 (5th Cir. 2001). The removing party bears the
burden of establishing jurisdiction. Id.We review the district court’s imposition of sanctions under Federal Rule
of Civil Procedure 37 for an abuse of discretion. Brown v. Oil States Skagit
Smatco, 664 F.3d 71, 76-77 (5th Cir. 2011). “[T]he question we address is not
whether this Court, in its own judgment and as an original matter, would have
imposed any of these sanctions. Rather, we ask only whether the district court
abused its discretion in doing so.” Topalian v. Ehrman, 3 F.3d 931, 934 (5th Cir.
1993) (citing Nat’l Hockey League v. Metro. Hockey Club, 427 U.S. 639, 642
(1976)). Factual findings underlying the imposition of sanctions are reviewed for
clear error. Positive Software Solutions, Inc. v. New Century Mortg. Corp., 619
F.3d 458, 460 (5th Cir. 2010).
2
The factual record relies upon the district court’s highly detailed recounting of the
discovery process. Bell v. Texaco, Inc., 5:09cv192KS-MTP, 2011 WL 2446577 (S.D. Miss. June
15, 2011). The parties did not challenge the facts as narrated by the district court.
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III. DISCUSSION
A. Subject-Matter Jurisdiction
Plaintiffs argue in their reply brief that the district court did not have
subject matter jurisdiction in this case because complete diversity of citizenship
between the parties did not exist.3 Whether the district court had jurisdiction
based on diversity of citizenship under 28 U.S.C. § 1332 depends on if the non-
diverse defendants—the Brown Estate and the Mental Health Foundation—
were improperly joined in the original suit. As citizens of Mississippi, their
joinder would destroy the diversity of citizenship that exists between appellants
(all citizens of Mississippi) and Texaco, a Delaware corporation with its principal
place of business in California.
The federal removal statute, 28 U.S.C. § 1441(a) allows for the removal of
“any civil action brought in a State court of which the district courts of the
United States have original jurisdiction,” with exceptions. Subsection (b)
specifies that suits not arising under federal law are removable only if none of
the “parties in interest properly joined and served as defendants is a citizen of
the State in which such action is brought.” 28 U.S.C. § 1441(b)(2). The doctrine
of improper joinder entitles a diverse defendant to remove a case to a federal
forum if an in-state defendant has been improperly joined. Smallwood v. Illinois
Cent. R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc). One way to establish
improper joinder is to show an “inability of the plaintiff to establish a cause of
action against the non-diverse party in state court.” Travis v. Irby, 326 F.3d 644,
646-47 (5th Cir. 2003).
3
Although the law is well-established that issues not raised in an opening brief are
waived, see Lockett v. E.P.A., 319 F.3d 678, 684 n.16 (5th Cir. 2003), jurisdictional arguments
may not be waived, see Bailey v. Cain, 609 F.3d 763, 764 (5th Cir. 2010). Therefore, we must
address the issue of jurisdiction here, regardless of the inadequacy of Plaintiffs’ briefing. See
FED. R. CIV. P. 12(h)(3); Mansfield, C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382 (1884).
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The parties concede that the Brown Estate and the Mental Health
Foundation are, or would be, citizens of Mississippi for diversity purposes.
Therefore, the inquiry is whether Texaco can show that there is no possibility
that Plaintiffs can establish a cause of action against the Brown Estate and the
Mental Health Center in Mississippi state court, or rather “that there is no
reasonable basis for the district court to predict that the plaintiff might be able
to recover against an in-state defendant.” Smallwood, 385 F.3d at 573. The
determination of whether a claim exists requires that “there must be a
reasonable possibility of recovery, not merely a theoretical one.” Campbell v.
Stone Ins., Inc., 509 F.3d 665, 669 (5th Cir. 2007) (quotation marks and citation
omitted). The burden of persuasion on the party asserting the improper joinder
is a “heavy one.” Id.In determining whether a non-diverse defendant has been improperly
joined, the court may “conduct a Rule 12(b)(6)-type analysis, looking initially at
the allegations of the complaint to determine whether the complaint states a
claim under state law against the in-state defendant.” Smallwood, 385 F.3d at
573. The district court also may, in its discretion, “pierce the pleadings” to
consider summary judgment-type evidence, including affidavits and deposition
testimony. Id., at 573-74. In doing so, however, the court “must also take into
account all unchallenged factual allegations, including those alleged in the
complaint, in the light most favorable to the plaintiff.” Travis, 326 F.3d at 649.
“[T]he focus of the inquiry must be on the joinder, not the merits of the plaintiff’s
case.” Smallwood, 385 F.3d at 573.
We nonetheless review de novo the district court’s determination of
improper joinder and denial of remand based on this summary inquiry.
McDonal v. Abbott Labs., 408 F.3d 177, 182 (5th Cir. 2005). After examining the
Plaintiffs’ claims against the named Mississippi defendants below, we conclude
that Texaco met its burden in demonstrating that Plaintiffs could not establish
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a cause of action against either defendant. Therefore, the district court was
correct to dismiss Plaintiffs’ motion to remand, and had subject-matter
jurisdiction over the case pursuant to § 1332.
Other than a “belief,” the Plaintiffs never provided any evidence to
contravene the Mental Health Foundation’s evidence that it was never, at any
point in time, in a position of control over the land (and gas tanks) at issue.
Plaintiffs cannot sustain a tort action based on premise liability against an
entity that had no control over or connection with the property at issue. See
Brookhaven Funeral Home, Inc. v. Hill, 820 So. 2d 3, 6 (Miss. Ct. App. 2002) (“In
order to prove ‘liability on the part of an owner or occupant of premises for
injuries resulting from the condition of the premises,’ a plaintiff must, as a
preliminary matter, show that the defendant had occupation or control.” (quoting
Wilson v. Allday, 487 So.2d 793, 796 (Miss. 1986)). The district court correctly
found that joinder of the Mental Health Foundation was improper.
The district court found that any potential claims against the Brown
Estate are time-barred under the Mississippi statute of limitations applying to
trusts. See MISS. CODE ANN. § 15-1-25. The statute provides that claims against
an estate must be brought within four years of the appointment of the estate’s
executor or administrator.4 Id.; see also MISS. CODE ANN. § 91-7-239; Townsend
4
Plaintiffs urged the court to consider an annotation to § 15-1-25, suggesting that the
section “does not apply to causes of action which accrue after the death of the decedent.” MISS.
CODE ANN. § 15-1-25, Annot. 2. However, Mississippi case law makes clear that the types of
claims exempt from the statute of limitations are narrowly construed to cover claims
attributable to the administrator, as opposed to claims for personal injury attributable to the
decedent or occurring during the decedent’s lifetime. See, e.g., Tom E. Taylor Undertaking Co.
v. Smith’s Estate, 183 So. 391 (Miss. 1938); Sivley v. Summers, 57 Miss. 712 (Miss. 1880)
Bingaman v. Robertson, 25 Miss. 501 (Miss. 1853);.
In contrast, claims for personal injuries allegedly caused by the decedent, as here, are
subject to the limitations period of § 15-1-25. See Powell v. Buchanan, 147 So. 2d 110, 112
(Miss. 1962); Jones v. Evans, 156 So. 2d 742, 743-44 (Miss. 1963). Plaintiffs’ claims against
the Brown Estate do not involve any action by the administrator, but arise from the decedent’s
alleged tortious conduct during his lifetime. The four year statute of limitations applies.
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v. Estate of Gilbert, 616 So.2d 333, 335-36 (Miss. 1993) (the four year statute of
limitations period begins to run after a ninety day exemption, so a claimant
must bring an action within four years and ninety days of the issuance of the
letters of administration). W. Joe Brown died over twenty years ago, and the
estate itself was closed in 1998. Plaintiffs initially brought this action in 2009.
Mississippi has expressed a public interest in finality of claims against
estates. See Townsend, 616 So.2d at 337. Allowing Plaintiffs to file claims more
than 25 years after Brown’s death would defeat the purpose of the Mississippi
special statute of limitations applying to estates. Moreover, Texaco produced
evidence showing that W. Joe Brown deeded the property to his son in 1975,
three years before the gas station ceased its sales. The gas station on the
property stopped selling Texaco products in 1978. The land was sold by Brown’s
son to the county in 1979. The abandonment of the underground tanks
necessarily had to occur after the time the property ceased selling the Texaco
gas. W. Joe Brown was not the owner of the property at that time. The trial
court concluded that it could “not foresee any possibility of recovery against a
former operator of the tanks, particularly in light of the thirty-four intervening
years.” Bell v. Texaco, 5:09cv192KS-MTP, 2010 WL 1490144, at *4 (S.D. Miss.
April 13, 2010). Plaintiffs offer no competent evidence to the contrary. Thus, the
district court did not err in concluding that the Brown Estate was improperly
joined.
Since the joinder of both named Mississippi defendants was improper as
a matter of law, the district court was correct to deny Plaintiffs’ multiple motions
to remand, and to exercise jurisdiction over the case pursuant to § 1332 on the
basis of complete diversity.
B. Monetary Sanctions
Plaintiffs appeal the district court’s imposition of monetary sanctions,
totaling $23,617.44, for failing to comply with discovery orders. The district
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court has authority, in its discretion, to impose sanctions against a party who
fails to cooperate in discovery. FED R. CIV. P. 37. The district court “must
require the party failing to act, the attorney advising that party, or both to pay
the reasonable expenses, including attorney’s fees, caused by the failure, unless
the failure was substantially justified or other circumstances make an award of
expenses unjust.” FED. R. CIV. P. 37(d)(3). We review the imposition of sanctions
for abuse of discretion. Brown, 664 F.3d at 76-77.
Plaintiffs in this case repeatedly missed deadlines and failed to participate
in discovery. The district court provided numerous time extensions and
opportunities for Plaintiffs to justify their noncompliance, to no avail. Plaintiffs
were warned that the court would impose sanctions for this behavior, but they
continued to ignore court orders. The amount of the sanctions was derived from
an itemization provided by Texaco, to which Plaintiffs failed to respond or
challenge in the district court. Plaintiffs offered no countervailing justification
for their delays other than the attorneys’ difficulty in reaching their clients.
Based on Plaintiffs’ total failure to heed court orders and participate in
discovery, we conclude that the district court did not abuse its discretion in
imposing monetary sanctions upon Plaintiffs.
C. Dismissal
The district court is authorized under FED. R. CIV. P. 37(b)(2)(A) to dismiss
a complaint with prejudice for failure to comply with a discovery order. Batson
v. Neal Spelce Assocs., Inc., 765 F.2d 511, 514 (5th Cir. 1985). We review a Rule
37 dismissal for abuse of discretion, considering a number of factors, including
bad faith, deterrence, prejudice, and negligence. Id.; see also Prince v. Poulos,
876 F.2d 30, 32 (5th Cir. 1989). Applying this standard to the facts of this case,
we have no difficulty concluding that the district court did not abuse its
discretion in dismissing Plaintiffs’ case with prejudice under Rule 37(b)(2).
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First, “dismissal is authorized only when the failure to comply with the
court’s order results from wilfulness or bad faith, and not from the inability to
comply.” Prince, 876 F.2d at 32. Willfulness may be demonstrated by a party’s
“failure to comply with the court’s discovery order even after he was personally
instructed to do so . . . and stated that he understood what was required of him.”
Chisesi v. Auto Club Family Ins. Co., 374 Fed. App’x 475, 477 (5th Cir. 2010)
(unpublished). Willfulness can also be evidenced by a repeated failure to provide
anything other than generalized or non-responsive answers in response to
specific requests for compliance by the court. See Yazdchi v. American Honda
Fin. Corp., 217 Fed. App’x 299, 303 (5th Cir. 2007) (unpublished). The district
court is permitted to “rely on its complete understanding of the parties’
motivations.” Smith v. Smith, 145 F.3d 335, 344 (5th Cir. 1998).
Here, the district court found that Plaintiffs’ repeated failure to comply
with discovery orders, even after being warned of the possibility of sanctions and
personally instructed on how to comply, constituted willful noncompliance.
Their attorneys argue that noncompliance was due to communication difficulties
rather than willfulness or bad faith. The attorneys claim they “had a difficult
time reaching the Plaintiffs, communicating with the Plaintiffs, and obtaining
detailed discovery information from the Plaintiffs.” This argument does not
stand in the face of the repeated discovery violations committed. Plaintiffs
regularly ignored court orders, even those ordering the submission of
information as basic as “a list of the Plaintiffs’ alleged symptoms or injuries.”
On two occasions, Plaintiffs misrepresented that they had complied with an
order with which they had not in fact complied. They admitted being in
possession of requested documents and provided no reasoning to explain the
failure to produce them. Plaintiffs and their counsel were repeatedly warned,
the consequences were explained to them, and they still did not participate in
discovery. The district court did not abuse its discretion in concluding that
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Plaintiffs’ serial failures to comply with discovery orders constituted willful
noncompliance.
Second, “dismissal is proper only in situations where the deterrent value
of Rule 37 cannot be substantially achieved by the use of less drastic sanctions.”
Prince, 876 F.2d at 32. The district court did impose lesser sanctions, the order
of money sanctions in order to reimburse Texaco, prior to dismissing the case.
At that time, the court again warned Plaintiffs that their case would be
dismissed as a punitive sanction if they continued to ignore court orders. This
warning had no apparent effect on Plaintiffs’ behavior in the litigation. We
conclude that the district court did not abuse its discretion in determining that
Plaintiffs’ previous failure to adhere despite the imposition of less drastic
sanctions indicated that additional monetary sanctions would not have ensured
compliance.
Third, we consider “whether the other party’s preparation for trial was
substantially prejudiced.” Id. at 32. The district court found that Plaintiffs’
failure to provide interrogatory responses or any expert witnesses for more than
one year after the removal of the case substantially prejudiced Texaco’s trial
preparation. Plaintiffs argue Texaco had access to “far more information” than
customarily available, given that a similar case had previously been litigated in
state court. However, there is no law that suggests that the availability of
information from a separate litigation precludes a finding of prejudice.
Regardless of the availability of information in other litigation, the district court
did not abuse its discretion in finding that Plaintiffs’ noncompliance in this case
caused significant delay and required the filing of multiple motions to compel.
As such, it was not an abuse of discretion to conclude that Texaco was
substantially prejudiced by Plaintiffs’ noncompliance.
Finally, the law cautions that “dismissal may be inappropriate when
neglect is plainly attributable to an attorney rather than a blameless client, or
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when a party’s simple negligence is grounded in confusion or sincere
misunderstanding of the court’s orders.” Id. at 32. The district court found here
that while the attorneys in this case bore the majority of responsibility for
noncompliance, the clients were not blameless in causing the harm. As their
attorneys themselves argued, the clients in this case were apparently
noncommunicative and difficult to reach. However, at the final status
conference, the clients were in attendance and were personally instructed by the
court of the importance of complying with discovery orders. They had specific
knowledge of the effects on their claim of their failure to comply and continued
the pattern of noncompliance. We conclude that the district court did not abuse
its discretion in finding that the clients were not blameless.
Considering all four factors applied to Plaintiffs’ repeated noncompliance
with court-ordered discovery, the district court’s order to dismiss the case with
prejudice was not an abuse of discretion.
IV. CONCLUSION
For the foregoing reasons, the district court’s dismissal with prejudice of
the case and the imposition of monetary sanctions against the Plaintiffs is
AFFIRMED.
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