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Pike County v. Aries Building Systems, LLC

United States District Court, S.D. Mississippi, Western Division

May 3, 2017




         This cause is before the Court on plaintiff Pike County, Mississippi (“Pike County”)'s Motion to Remand (docket entry 2), defendant CMS Consultants, LLC (“CMS”)'s Objection to Removal and Joinder in Motion to Remand (docket entry 8). Having carefully considered the motions, responses, and applicable law, and being otherwise fully informed in the premises, the Court finds as follows:

         I. Background

         This case is one in a series of litigation arising out of the construction of a workforce housing facility in the Gateway Industrial Park at Fernwood in Pike County, Mississippi.[1] On July 25, 2014, defendants CMS and Aries entered into a contract for the construction of the “workers' lodge, ” and pursuant to that contract, CMS claims to have provided goods and services to Aries in the amount of $1, 529, 862.33. Doc. 1-1, p.2. According to CMS, Aries has paid only $715, 016.03, leaving an unpaid balance of $814, 846.30. Id. CMS filed a construction and materialman's lien on the property in the amount of $282, 632.44, which it seeks to enforce in a separate state court action filed in the Chancery Court of Pike County.[2] Id.

         Prior to the filing of the CMS lien, Pike County executed and delivered a Warranty Deed conveying a 40-acre tract of property located within the Gateway Industrial Park to Aries. Id. The Warranty Deed provided that Pike County would have the option to repurchase the 40-acre tract in the event that Aries failed to comply with certain conditions set forth in the agreement. Pike County alleges that Aries has defaulted on its contractual obligations and claims that the County is entitled to repurchase the property for the original purchase price of $480, 000. Id.

         On January 25, 2017, Pike County filed its Complaint for Leave to Interplead, for Specific Performance, and for General Relief in the Chancery Court of Pike County, Mississippi. Pike County's Complaint seeks interpleader in the amount of $480, 000 to avoid the possibility of multiple liability which could result from an adverse determination regarding the amount owed by Aries under the CMS contract. The Complaint also requests an order compelling Aries to comply with the County's right to repurchase the 40-acre tract, along with an order canceling the CMS construction lien and directing Aries to pay CMS the amount owed.

         Aries filed its Notice of Removal on February 3, 2017. See Doc. 1. Pike County filed a motion to remand on February 23, 2017, and CMS filed an Objection to Removal and Joinder in Motion to Remand shortly thereafter on March 16, 2017. See Docs. 2, 8.

         II. Discussion

         Under 28 U.S.C. § 1441(a), “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed . . . to the district court of the United States for the district and division embracing the place where such action is pending.” The removing party bears the burden of showing that federal jurisdiction exists and that removal was proper. Manguno v. Prudential Prop. & Cas. Ins. Co. 276 F.3d 720, 723 (5th Cir. 2002). Because removal implicates significant federalism concerns, the removal statute is to be strictly construed, and any doubts or ambiguities are resolved in favor of remand. Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008).

         A. Removal Procedure

         Pike County moves to remand under 28 U.S.C. § 1447(c), arguing that removal was procedurally defective because defendant CMS did not join in or consent to Aries's Notice of Removal. The rule of unanimity, as codified by 28 U.S.C. § 1446(b)(2)(A), requires that “when a civil action is removed solely under section 1441(a), all defendants who have been properly joined and served must join in or consent to the removal of the action.” When multiple defendants are involved, each defendant “shall have 30 days after receipt by or service on that defendant of the initial pleading or summons ... to file the notice of removal.” 28 U.S.C. § 1446(b)(2)(B); Andrews v. Miss. Farm Bureau Cas. Ins. Co., 187 F.Supp.3d 749, 755 (S.D.Miss. 2016) (recognizing a shift from the Fifth Circuit's traditional first-served defendant rule following a 2011 amendment to 28 U.S.C. § 1446); but see Faulkner v. Miss. Dept. of Human Services, 2016 WL 3661521 (S.D.Miss. July 5, 2016) (citing the traditional first-served defendant rule). Failure to obtain the consent of all served defendants within the removal period renders removal procedurally defective. Doe v. Kerwood, 969 F.2d 165, 167, 169 (5th Cir. 1992); see Harden v. Field Memorial Community Hosp., 516 F.Supp.2d 600, 607 (S.D.Miss. 2007) (“district courts have no power to overlook procedural errors relating to the notice of removal”); Spillers v. Tillman, 959 F.Supp. 364, 368 (S.D.Miss. 1997) (“defective removal procedure is a proper ground for remand”).

         When discussing the rule of unanimity, the Fifth Circuit has held that consent to removal is not required from: (1) improperly or fraudulently joined parties, see Jernigan v. Ashland Oil Inc., 989 F.2d 812 (5th Cir. 2003); (2) nominal or unnecessary defendants, see Farias v. Bexar Co. Bd. of Trustees for Mental Health Mental Retardation Services, 925 F.2d 866 (5th Cir. 1991); and (3) defendants who have not been served by the time of removal, see Jones v. Houston Indep. Sch. Dist., 979 F.2d 1004, 1007 (5th Cir. 1992). Jones v. Watts, 2011 WL 2160915 (S.D.Miss. June 1, 2011). Relying on the first and third articulated exceptions to the rule, Aries maintains that CMS's consent is unnecessary because the defendant was not properly joined or served.

         As to improper joinder, Aries's argument appears to be misplaced. Improper joinder functions as a narrow exception to the rule of complete diversity. Campbell v. Stone Ins., Inc., 509 F.3d 665, 669 (5th Cir. 2007). To establish improper joinder, the removing party, must show either: “(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.” Travis v. Irby, 326 F.3d 644, 647 (5th Cir. 2003). Aries appears to take the second approach, arguing that Pike County's interpleader action must fail because CMS's underlying state court claim is without hope of success. Aries claims that CMS was joined in this action for the sole purpose of defeating diversity, but the defendant has not alleged, nor do the facts suggest, that CMS is a non-diverse party whose presence would defeat diversity. As the Fifth Circuit observed in dicta in Smallwood v. Illinois Cent. R. Co., 385 F.3d 568 (5th Cir. 2004), “a claim of improper joinder is by definition directed toward the joinder of an in-state party.” The Court is unconvinced that the improper joinder analysis is relevant absent some non-diverse party. Nevertheless, the Court need not reach the issue, as it appears that CMS's consent to removal was unnecessary under the unserved defendant exception.

         As to the unserved defendant rule, Aries argues that removal was procedurally proper because CMS has not been served in this case. “Defendants . . . who are unserved when the removal petition is filed need not join in it.” Getty Oil, 841 F.2d at 1261, n.9; see Hanks v. Porter, 2012 WL 5512332 (S.D.Miss. Nov. 14, 2012) (finding that a defendant's unilateral removal was acceptable because “at the time there were no other served defendants required to consent to removal”); Tilley v. Tisdale,914 F.Supp.2d 846, 850 (E.D. Tex. 2012) (“a defendant who has not been properly served need not consent to removal”). Aries removed the case on February 3, 2017, and the parties agree that defendant CMS was not served with process prior to removal. It appears that Pike County attempted service on CMS via certified mail, but service was unsuccessful. See Doc. 13-1. Since CMS was not served, Aries's Notice of Removal is not procedurally defective based on CMS's failure to join the petition. See Williams ex rel. Williams v. ...

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