W. ROYAL FURGESON, District Judge
Before the Court is Plaintiff Kardell's Motion to Remand to State Court, filed July 6, 2004 (Docket No. 7). A hearing on the matter was held August 12, 2004. After careful consideration, the Court is of the opinion that the Motion to Remand should be GRANTED.
FACTUAL AND PROCEDURAL BACKGROUND
This suit, alleging breach of contract and tortious interference with an existing contract, was originally filed May 4, 2004 in Atascosa County District Court, the 218th Judicial District of Texas. Defendants Century 21 Real Estate Corporation ("Century 21") and Nabb filed a joint notice of removal on June 14, 2004. Kardell opposes this removal, and he filed a Motion to Remand to State Court, claiming that there was no diversity jurisdiction as a result of the joinder of Nabb as a defendant.
Kardell's claims rise out of her July 2002 attempt to sell her real property and her Century 21 franchise to Stephen B. Hill for the sum of $180,000. Plaintiff entered into a five-year franchise agreement with Century 21 on September 30, 1999. With regard to the possible sale of the franchise by Kardell, the franchise agreement stated, "Consent shall not be unreasonably withheld, but may be subject to certain conditions, including, but not limited to . . . execution of the then current form of franchise agreement by the proposed assignee . . . for the remaining term of the assigned agreement"
Plaintiff's Exhibit A, page 30.
Following her agreement with Hill, Kardell informed Nabb, Century 21's Regional Service Director, of the impending sale of the franchise. In September 2002, Nabb informed Kardell that he could not assist her with the assignment of the franchise and that she would instead have to work it out with the managers of Century 21 whose business it was to sell the franchise. The franchise agreement subsequently prepared by Century 21 required Hill to accept a ten-year franchise agreement rather that the two years remaining on the agreement with Kardell. As a result of this condition, Hill refused to purchase Kardell's business.
Kardell argues that Century 21's actions amount to breach of contract. She further alleges that the actions of both Century 21 and Nabb constitute tortious interference with an existing contract. According to Kardell, Defendants perpetrated fraud and misrepresentation with regard to the terms of assignment of the franchise agreement due to their refusal to allow Plaintiff to assign the franchise and their attempt to sell Hill a new franchise. Kardell further complains that Nabb's refusal to assist Kardell was a willful and intentional act of interference with the sale of the Plaintiff's franchise.
DISCUSSION
Defendants allege that Nabb was fraudulently joined for the sole purpose of defeating diversity jurisdiction. The recent en banc decision of the Fifth Circuit Court of Appeals in Smallwood v. Illinois Central Railroad Co. guides this Court's determination of whether Nabb was improperly joined to defeat diversity jurisdiction. As the Fifth Circuit wrote in Smallwood, "The starting point for analyzing claims of improper joinder must be the statutes authorizing removal to federal court of cases filed in state court." While suits arising under federal law are removable irrespective of the citizenship of the parties, all other suits 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." If any party in the case has been improperly or collusively joined to manufacture federal diversity jurisdiction, the district court is prohibited from exercising jurisdiction over the suit. Federal courts should both carefully protect the right to proceed in federal court and allow state courts in proper cases to retain their own jurisdiction.
2004 WL 2047314 (5th Cir. Sept. 10, 2004) ( en banc). The decision of the Fifth Circuit adopts the term "improper joinder" as more accurately characterizing the concept that is frequently referred to as "fraudulent joinder." Id. at *1 n. 1.
Id. at *2.
Id. (citing 28 U.S.C. § 1441(b)).
28 U.S.C. § 1359.
14 CHARLES ALAN WRIGHT et al., FEDERAL PRACTICE PROCEDURE § 3641, at 173 (3d ed. 1998).
With these goals in mind, the Fifth Circuit in Smallwood recognized 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." As articulated in Travis v. Irby and explicitly reaffirmed in Smallwood, the test for fraudulent or improper joinder is whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant. Put another way, there is improper joinder if there is no reasonable basis for predicting that the plaintiff might be able to recover against an in-state defendant.
2004 WL 2047314, at *2 (quoting Travis v. Irby, 326 F.3d 644, 646-47 (5th Cir. 2003)).
Id.; Travis v. Irby, 326 F.3d at 648.
Smallwood at *2. To reduce possible confusion, the Fifth Circuit expressly adopted this phrasing of the required proof and rejected all others, whether they appear to describe the same standard or not. Id. n. 9 (quoting Badon II, 236 F.3d 282, 286 n. 4 ("A `mere theoretical possibility of recovery under local law' will not preclude a finding of improper joinder.")).
In Smallwood, the Fifth Circuit also clarified the proper procedures for predicting whether a plaintiff has a reasonable basis of recovery under state law, concluding that courts may resolve the issue in one of two ways. One method is for the court to 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." For a court to grant a Rule 12(b)(6) dismissal, it must appear "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." The other option is for the court to pierce the pleadings and conduct a summary inquiry, an approach appropriate only when a plaintiff has stated a claim but has "misstated or omitted discrete facts that would determine the propriety of joinder." The choice between these procedures is within the discretion of the trial court, with the favored approach being the former, 12(b)(6)-type analysis.
Id.
Id. (quoting McKee v. Kansas City S. Ry. Co., 358 F.3d 329, 334 (5th Cir. 2004)).
Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
Smallwood at *2.
Id.
The heavy burden of proving that Nabb has been fraudulently joined is on Century 21 and Nabb as the removing parties. If it is determined that there is no possibility of recovery against Nabb, the motion to remand will be denied. Because the only cause of action asserted against Nabb is for tortious interference with an existing contract, Kardell must be able to recover against Nabb for that cause in state court in order to have her suit remanded. To prove such a claim, Plaintiff would have to show (1) the existence of a contract subject to interference, (2) the occurrence of an act of interference that was willful and intentional, (3) that the act was a proximate cause of Plaintiff's damage, and (4) that actual damage or loss occurred.
Travis v. Irby, 326 F.3d 644, 649 (5th Cir. 2003).
Id. at 648.
Holloway v. Skinner, 898 S.W.2d 793, 795-96 (Tex. 1995).
Defendants cite the Texas Supreme Court's holding that because as a matter of law one can not interfere with one's own contract, an agent of a corporation cannot be found liable for tortious interference unless the agent's acts are so contrary to the corporation's interests that they could only have been motivated by personal interest. In the instant case, however, Plaintiff does not allege that Nabb interfered with the franchise agreement between his employer Century 21 and Kardell, but rather that he interfered with the contract Plaintiff had with Hill for the sale of her real property and business. The fact that Nabb acted as an agent of Century 21, therefore, has no bearing on the question of whether he can be found liable of tortious interference with the contract between Kardell and Hill.
Latch v. Gratty, Inc., 107 S.W.3d 543, 545 (Tex. 2003).
Defendants further argue that such a view of Plaintiff's cause of action is a mischaracterization of her claim. They contend that because the franchise agreement between Century 21 and Kardell did not allow for Plaintiff's franchise to be assigned to another party without Century 21's prior written consent, Kardell could not have entered a valid agreement to sell her franchise to Hill at the time of the alleged interference because she had not received consent from Century 21. Therefore, the only contract that Nabb could have interfered with is the one between Kardell and Century 21, for which under Texas law he can not be held liable.
Regardless of the fact that Plaintiff's contract with Hill for the sale of her real property and business may not have been able to legally assign her franchise rights without Century 21's written consent, the facts as alleged by Plaintiff are sufficient to argue that the contract did exist. Any further determination of the validity of the claim is a matter to be resolved by the trier of fact in the case. Resolving all questions of law in favor of Kardell, she would be able to allege facts supporting the other three prongs of the tortious interference claim, giving her the possibility of recovering against Nabb for that claim in state court. The job of the Court is "not to conduct a mini-trial of [Kardell's] claims but rather determine if there was . . . a `possibility that [Kardell] had set forth a valid cause of action' against" Nabb.
See Travis, 326 F.3d at 648.
McKee Kan. City S. Ry., 358 F.3d 329, 336 (5th Cir. 2004), quoting Travis, 326 F.3d at 648.
Kardell further requests that costs and attorney's fees in the sum of $1,500.00 be assessed against Defendants jointly and severally for services in connection with this motion. Pursuant to 28 U.S.C. § 1447(c), an order remanding "may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." Plaintiff has not submitted any facts or arguments in support of this request, and the Court denies the request.
See Avitts v. Amoco Prod. Co., 111 F.3d 30, 32 (5th Cir. 1997).
CONCLUSION
Because Defendants failed to meet their burden of demonstrating that Plaintiff has no possibility of recovering against Nabb for tortious interference with an existing contract in state court, there are no grounds for the Court to deny Plaintiff's motion.
See Cobb v. Delta Exports, Inc., 186 F.3d 675, 677 (5th Cir. 1999).
It is therefore ORDERED that the pending Motion to Remand to State Court (Docket No. 7) is GRANTED. The clerk is DIRECTED to EFFECT the remand.
FINAL JUDGMENT OF REMAND
On this day the Court entered an Order Granting Plaintiff's Motion to Remand. The Court now enters its Final Judgment in accordance with Rule 58 of the Federal Rules of Civil Procedure.
It is ORDERED that Plaintiff's Motion to Remand be GRANTED.
It is ORDERED that this case be REMANDED to Atascosa County District Court, the 218th Judicial District of Texas.
It is ORDERED that each party bear its own costs.
It is ORDERED that all pending motions be DENIED AS MOOT.