Blue Rhino Corp. v. Stockgrowers State Bank of Ashland

220 F.R.D. 369, 2004 U.S. Dist. LEXIS 7857, 2004 WL 316387
CourtDistrict Court, D. Kansas
DecidedJanuary 7, 2004
DocketNo. CIV.A.03-2123-CM
StatusPublished
Cited by1 cases

This text of 220 F.R.D. 369 (Blue Rhino Corp. v. Stockgrowers State Bank of Ashland) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Blue Rhino Corp. v. Stockgrowers State Bank of Ashland, 220 F.R.D. 369, 2004 U.S. Dist. LEXIS 7857, 2004 WL 316387 (D. Kan. 2004).

Opinion

MEMORANDUM AND ORDER

MURGUIA, District Judge.

This matter comes before the court on defendant Stockgrowers State Bank of Ash-land, Kansas’ (“Stockgrowers”) Motion to Dismiss plaintiff Blue Rhino Corporation’s (“Blue Rhino”) complaint (Doc. 2). In its Motion, Stockgrowers requests the court to dismiss Blue Rhino’s complaint or, in the alternative, to abstain from further review of the claims pending resolution of the state court proceedings. For the reasons set forth below, the court denies Stockgrowers’ Motion to Dismiss and grants Stockgrowers’ request for abstention.

I. Factual Background

Blue Rhino filed this action against Stock-growers on March 5, 2003. Blue Rhino claims that this court has jurisdiction over the matter because of the diverse citizenship of the parties and the amount in controversy exceeds $75,000. Blue Rhino alleges claims against Stockgrowers for replevin, conversion, and interference with a prospective business advantage.

Blue Rhino provides nationwide propane gas tank exchange services through distributors. Blue Rhino contracts with its distributors to deliver ready-to-use, propane-filled cylinders and to provide service to Blue Rhino’s customers in exchange for a commission. Blue Rhino leases to its distributors gas cylinders, valving and sleeving equipment, inventory displays and inventory cases. BBQ Express, L.L.C. of Garden City, Kansas (“BBQ Express”) was an authorized distributor for Blue Rhino from December 1999 until August 5, 2002. As a distributor, BBQ Express leased from Blue Rhino gas cylinders, valving and sleeving equipment, inventory displays and inventory cases. The lease between Blue Rhino and BBQ Express states that the leased items will be returned to Blue Rhino upon expiration of the lease. BBQ Express’ lease with Blue Rhino terminated on August 5, 2002. At the time of the termination, Blue Rhino made plans to recover its property that had been leased to BBQ Express.

On August 14, 2002, Blue Rhino sent representatives and a truck driver to BBQ Express’ location to load and remove Blue Rhino’s equipment. Blue Rhino representatives loaded part of the equipment onto a truck. [371]*371As the Blue Rhino representatives were loading the rest of its equipment onto a second truck, a representative from Stockgrowers arrived at the BBQ Express location and told the Blue Rhino representatives that they could not remove the property because the bank (Stockgrowers) claimed an interest in the property. Stockgrowers contacted a Fin-ney County Sheriffs deputy, who arrived and ordered Blue Rhino representatives to stop loading the equipment. The deputy then ordered the Blue Rhino representatives to unload the equipment already on the second truck and place it in a warehouse on BBQ Express’ premises.

On August 15, 2002, Blue Rhino representatives again tried to retrieve the property from BBQ Express’ premises. A Stockgrowers representative again told Blue Rhino representatives that Blue Rhino was not to remove the equipment. The same day, BBQ Express was forced into involuntary bankruptcy proceedings in the U.S. Bankrupcty Court for the District of Kansas (In re BBQ Express LLC, BB02-14014-REN). Blue Rhino claims Stockgrowers, as a creditor of BBQ Express, was motivated to seize the goods on BBQ Express’ property to supplement the bankruptcy estate or otherwise satisfy debts BBQ Express owed to Stockgrowers. Blue Rhino alleges that Stockgrowers has claimed ownership of Blue Rhino’s property based on a document signed by the owner of BBQ Express and that Stockgrowers has refused to return the property to Blue Rhino. Blue Rhino’s claims arise out of Stockgrowers’ alleged possession of the property belonging to Blue Rhino — specifically 9,272 propane gas cylinders, one sleeving machine, two hydraulic valve removal tools and a “Rhino Hub” computer system, for a total value of $257,971.

On March 27, 2003, Stockgrowers filed its Motion to Dismiss Blue Rhino’s complaint for lack of jurisdiction, asserting that Blue Rhino’s claims arise directly out of an action Stockgrowers filed in the District Court of Finney County, Kansas, on February 13, 2003, against Blue Rhino and six other defendants (Stockgrowers State Bank of Ashland, Kansas v. Blue Rhino Corporation, Blue Rhino Express, Inc., Robert Scott Selzer, Lynda Selzer, BBQ Express of Minnesota LLC, BBQ Express of Colorado LLC, and USA Leasing LLC, Case No. 03C51). All of the defendants in the state court case are residents of Kansas except Blue Rhino. Stockgrowers claims that Blue Rhino filed a separate federal court action because Blue Rhino was unable to remove the state court action to federal court because of the non-diverse citizenship of the parties. Stock-growers asserts that if it is required to litigate Blue Rhino’s claims in federal court, it will be forced to add the defendants from the state court action to the federal court action, thereby destroying the diversity of the parties.

Stockgrowers further claims that the property Blue Rhino claims is in Stockgrowers’ possession is either in the possession of BBQ Express (which is now a bankrupt corporation) or is in the possession of Blue Rhino or Propane Platinum Holding LLC (“Platinum”), a third party that provided accounting services to BBQ Express. Stockgrowers also claims that Blue Rhino and/or Platinum removed collateral from the State of Kansas, which is part of the issues raised in Stock-growers’ state court action. Stockgrowers claims that if this court does not dismiss Blue Rhino’s complaint, Stockgrowers will have mandatory counterclaims against Blue Rhino that duplicate the claims Stockgrowers has already brought in state court. Stockgrow-ers therefore requests that this court dismiss Blue Rhino’s complaint and allow the parties to proceed with the state court litigation

II. Defendant Stockgrowers’ Motion to Dismiss

Stockgrowers requests the court to dismiss Blue Rhino’s complaint because there is no true diversity among the parties and thus no valid jurisdiction by this court. Further, Stockgrowers asks the court to dismiss Blue Rhino’s complaint because of a similar pending suit in Kansas state court. The court will examine each of Stockgrowers’ arguments in turn.

Federal courts are courts of limited jurisdiction and may only exercise jurisdiction when specifically authorized to do so. Castaneda v. I.N.S., 23 F.3d 1576, 1580 (10th [372]*372Cir.1994). A court lacking jurisdiction must dismiss the case at any stage of the proceeding in which it becomes apparent that jurisdiction is lacking. Scheideman v. Shawnee County Bd. of County Comm’rs, 895 F.Supp. 279, 280 (D.Kan.1995) (citing Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir.1974)); Fed.R.Civ.P. 12(h)(3). As the party seeking to invoke federal jurisdiction, plaintiff bears the burden of establishing that such jurisdiction is proper. Basso, 495 F.2d at 909. When federal jurisdiction is challenged, plaintiff bears the burden of showing why the case should not be dismissed. Jensen v. Johnson County Youth Baseball League, 838 F.Supp. 1437, 1439-40 (D.Kan.1993).

A. Diversity

1. 28 U.S.C. § 1332

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Cite This Page — Counsel Stack

Bluebook (online)
220 F.R.D. 369, 2004 U.S. Dist. LEXIS 7857, 2004 WL 316387, Counsel Stack Legal Research, https://law.counselstack.com/opinion/blue-rhino-corp-v-stockgrowers-state-bank-of-ashland-ksd-2004.