United States District Court, D. New Mexico
MEMORANDUM OPINION AND ORDER GRANTING MOTION TO
MATTER is before the Court upon Plaintiff's Motion to
Remand, filed on April 8, 2019 (Doc. 22),
and Plaintiff's Motion to Stay Further Proceedings and
Briefing Pending a Decision on Plaintiff's Motion to
Remand, filed on April 8, 2019 (Doc 24).
Having reviewed the parties' pleadings and applicable
law, the Court finds that Plaintiff's Motion to Remand is
well-taken and therefore, is GRANTED.
Plaintiff's Motion to Stay is DENIED AS
MOOT. Finally, because the Court lacks subject
matter jurisdiction, it declines to rule on the three pending
motions to dismiss.
filed a complaint in the Fifth Judicial District Court,
County of Eddy, State of New Mexico, and asserted state law
claims against Defendants for alleged abuse by Br. Kerry
Guillory. Defendants removed this case to this Court based on
diversity jurisdiction. On the face of the Notice of Removal,
there appears to be lack of complete diversity, because
Defendants St. Edward Parish and St. Edward School are both
New Mexico entities with principal places of business in
Carlsbad, New Mexico. In the Notice of Removal, Defendants
alleged that St. Edward Parish and St. Edward school were
fraudulently joined, because no claims could be asserted
against the entities. Plaintiff subsequently filed a motion
to remand, arguing there is a lack of subject matter
jurisdiction and there was no fraudulent joinder. Defendants
argue that Plaintiff cannot sue the now incorporated
entities, because they were unincorporated at the time of the
alleged abuse between 1972 and 1974.
Diversity Jurisdiction and Fraudulent
courts are courts of limited jurisdiction; thus, there is a
presumption against removal jurisdiction, which the defendant
seeking removal must overcome. See Fajen v. Found.
Reserve Ins. Co., 683 F.2d 331, 333 (10th Cir.1982);
Martin v. Franklin Capital Corp., 251 F.3d 1283,
1290 (10th Cir. 2001). Removal statutes are strictly
construed, and ambiguities should be resolved in favor of
jurisdiction under 28 U.S.C. § 1332(a)(1) requires: (i)
complete diversity among the parties; and (ii) that the
matter in controversy exceeds the sum or value of $75, 000,
exclusive of interest and costs. However, fraudulent joinder
is an exception to the requirement of complete diversity.
Black Iron, LLC v. Helm-Pacific, 2017 WL 2623846, at
*4 (D.Utah, 2017). The joinder of a non-diverse party is
“fraudulent” when it serves no purpose other than
“to frustrate federal jurisdiction.” Dodd v.
Fawcett Publ'ns, Inc., 329 F.2d 82, 85 (10th Cir.
1964). A defendant may remove a case to federal court based
upon diversity jurisdiction in the absence of complete
diversity if a plaintiff joins a non-diverse party
fraudulently to defeat federal jurisdiction. See Am.
Nat'l Bank & Trust Co. v. Bic Corp., 931 F.2d
1411, 1412 (10th Cir.1991). The citizenship of fraudulently
joined defendants “should be ignored for the purposes
of assessing complete diversity.” See Dutcher v.
Matheson, 733 F.3d 980, 987-988 (10th Cir. 2013).
Tenth Circuit has stated that fraudulent joinder must be
“established with complete certainty upon undisputed
evidence.” Smoot v. Chicago, Rock Island &
Pacific Railroad Co., 378 F.2d 879 (10th Cir.1967). In
evaluating a claim of fraudulent joinder, “all doubts
are to be resolved against removal.” Fajen v.
Found. Reserve Ins. Co., 683 F.2d 331, 333 (10th Cir.
1982). In other words, the removing party “bears a
heavy burden of proving fraudulent joinder, and all factual
and legal issues must be resolved in favor of the
plaintiff.” See Dutcher, 733 F.3d at 988
(quoting Pampillonia v. RJR Nabisco, Inc., 138 F.3d
459, 461 (2d Cir. 1998)). This is a high bar for Defendants
to meet, and poses a standard “more exacting than that
for dismissing a claim under Fed.R.Civ.P. 12(b)(6)” and
“which entails the kind of merits determination that,
absent fraudulent joinder, should be left to the state court
where the action was commenced.” Montano v.
Allstate Indemnity, 2000 WL 525592 at **1-2 (10th Cir.
party defending removal may carry this “heavy
burden” and successfully assert fraudulent joinder by
demonstrating either: (1) actual fraud in the pleading of
jurisdictional facts, or (2) the inability of the plaintiff
to establish a cause of action against the non-diverse party
in state court. Dutcher v. Matheson, 733 F.3d 980,
988 (10th Cir. 2013); Black Iron, LLC v.
Helm-Pacific, 2017 WL 2623846, at *4 (D.Utah, 2017);
see also Montano v. Allstate, 2000 WL 525592 at
**1-2 (to prove fraudulent joinder, the removing party must
demonstrate that there is no possibility that plaintiff would
be able to establish a cause of action against the joined
party in state court).
fraudulent joinder analysis is a jurisdictional inquiry and
therefore a district court should “pierce the
pleadings, consider the entire record, and determine the
basis of joinder by any means available, ” Dodd v.
Fawcett Publ'ns, Inc., 329 F.2d 82, 85 (10th
Cir.1964) (citations omitted); Albert v. Smith's Food
& Drug Centers, Inc. 356 F.3d 1242, 1247 (10th Cir.
2004)(fraudulent joinder analysis is a jurisdictional
inquiry); Smoot, 378 F.2d at 882 (federal courts may
look beyond the pleadings to determine if joinder is
fraudulent); see also De La Rosa v. Reliable, Inc.,
113 F.Supp.3d at 1151.
St. Edward Parish and St. Edward School are now incorporated,
and it is undisputed that they now have the power to sue or
be sued. Therefore, as incorporated New Mexico entities with
a principal place of business in Carlsbad, New Mexico, it
appears that their presence in this case defeat diversity
Defendants argue that St. Edward School and St. Edward Parish
were fraudulently joined. They argue that St. Edward Parish
and St. Edward School cannot be sued for the abuse claims at
issue, because they were unincorporated at the time of the
alleged abuse and cannot be held liable for the actions of
their unincorporated predecessors. See, e.g., Dutcher v.
Matheson, 733 F.3d 980, 988 (10th Cir. 2013) (“To
establish [fraudulent] joinder, the removing party must
demonstrate … inability of the plaintiff to establish
a cause of action against the non-diverse party in state
issue appears to be whether the now incorporated parish and
school can be sued for liabilities incurred when they were
unincorporated, or whether the incorporated entities have any
successor liability for their actions while unincorporated.
See, e.g., Garcia v. Coe Mfg. Co., 1997-NMSC-013,
¶ 12, 123 N.M. 34, 38, 933 P.2d 243, 247 (listing four
exceptions to general rule that successor corporation is not
liable for ...