May v. Texaco Inc

• Court: Court of Appeals for the Fifth Circuit
• Decided: June 20, 2003
• Docket: 02-30123
• Status: Unpublished

Opinion

United States Court of Appeals Fifth Circuit F I L E D UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT June 19, 2003 ____________________ Charles R. Fulbruge III 02-30123 Clerk ____________________

NORMA DIANE MAY; MATTIE SNELL, individually and on behalf of Robert H. Snell; MARY LOPEZ; MARTIN LOPEZ; ERIC GESN; ET AL.,

Plaintiffs-Appellants,

versus

TEXACO INC.; BANK ONE LOUISIANA N. A., Executor & Trustee on behalf of Alexander W. Knight Succession, on behalf of Alexander W. Knight Testamentary Trust,

Defendants-Appellees. _______________________________________

JOHN H. MAY; MATTIE SNELL; MARY LOPEZ; MARTIN LOPEZ; ERIC GESN; ET AL.,

TEXACO, INC.

Defendant-Appellee. _________________________________________________________________

Appeal from the United States District Court for the Western District of Louisiana (97-CV-2019) _________________________________________________________________

Before GARWOOD, SMITH and BARKSDALE, 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 R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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. Plaintiffs contest: the denial of remand to state court

(removal based on fraudulent joinder); the FED. R. CIV. P.

12(b)(6)(failure to state claim) dismissal of Bank One; the similar

dismissal of their property claims against Texaco; and the summary

judgment awarded it for their remaining claims. Primarily at issue

is whether, under Louisiana law, a party who sells property it

knows to be polluted owes a perpetual duty to warn all subsequent

purchasers. AFFIRMED.

I.

Beginning in 1929, near Shreveport, Louisiana, Texaco operated

a refinery and tank farm on approximately 200 acres known as

Anderson Island (the property). The refinery operation continued

until 1940. Texaco sold the property in 1941 to Alexander Knight,

a Louisiana resident. The act of conveyance required Texaco to

dismantle the refinery and some of the tanks; pursuant to a lease

with Knight, the remaining tanks were to be used by Texaco. By

1949, Texaco no longer used the tanks; however, it never removed

the attendant subsurface pipelines or certain other items from the

property.

Through ten separate sales, between 1950 and 1959, Knight

conveyed his interest in the property. The purchasers and their

grantees subdivided and developed the property. None of the

purchasers to whom Knight sold the property are plaintiffs in this

action. Instead, plaintiffs acquired portions of the property

2 after an indeterminable number of intermediary transactions between

the subdividers’ sales and plaintiffs’ purchases.

Knight died in October 1981. One year later, the

Environmental Protection Agency (EPA) conducted a “potential

hazardous waste site inspection” on the property. It found, inter

alia, arsenic, mercury, benzyne, chromium, and lead; it estimated

that millions of gallons of sludge and oil remained under the

property. Thereafter, the EPA listed it as a potential hazardous

waste site; since 1992, it has listed it as a potential Superfund

site. See 42 U.S.C. § 9601, et seq.

The putative class of more than 5,000 Louisiana residents

includes past and present residents or business owners of the

property. They allege: Texaco caused the pollution; caused them

personal injuries, including, inter alia, cancer and respiratory

disorders; and decreased the value of their property.

Plaintiffs (Louisiana residents) sued Texaco and Bank One (the

trustee of Knight’s estate) in Louisiana state court. Texaco is a

Delaware Corporation; Bank One, a Louisiana bank (hereinafter

referred to as Knight).

The defendants removed this action to federal court, claiming,

as a basis for jurisdiction, inter alia, diversity jurisdiction

because Knight was fraudulently joined. Along this line, Knight

moved to dismiss for failure to state a claim under Louisiana law.

3 Plaintiffs sought remand to state court and, in opposition to

Knight’s motion to dismiss, amended their complaint.

Based upon fraudulent joinder, a magistrate judge denied

remand. For the reasons stated by the magistrate judge, the

district court affirmed the remand-denial.

Concerning Knight’s motion to dismiss, the magistrate judge

recommended that the claims in the original petition/complaint be

dismissed with prejudice; those in the amended complaints, without

prejudice. The district court agreed and dismissed the original

claims against Knight, as well as those in the amended complaints.

Subsequently, Texaco moved under Rule 12(b)(6) for dismissal

of the property claims against it; the district court granted that

motion. Later, it granted Texaco summary judgment for the

remaining claims.

II.

Plaintiffs contend: Knight was not fraudulently joined,

therefore this action should have been remanded to state court and

Knight should not have been dismissed pursuant to Rule 12(b)(6);

such dismissal was improper for their property claims against

Texaco; and summary judgment was improper for their remaining

claims against it.

A.

In determining fraudulent joinder vel non, courts determine

whether there exists a reasonable basis for recovery against the

4 party whose joinder is challenged. E.g., Travis v. Irby, 326 F.3d

644, 646-49 (5th Cir. 2003); Great Plains Trust Co. v. Morgan

Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir. 2002);

Burden v. General Dynamics Corp., 60 F.3d 213, 216 (5th Cir. 1995);

Carriere v. Sears, Roebuck & Co., 893 F.2d 98, 100 (5th Cir.),

cert. denied, 498 U.S. 817 (1990). In general, whether there is a

reasonable basis for recovery is determined only in reference to

the complaint at the time of removal. E.g., Cavallini v. State

Farm Mut. Auto Ins. Co., 44 F.3d 256, 264 (5th Cir. 1995). A

district court’s ruling that no such recovery is possible is

reviewed de novo, “evaluat[ing] all of the factual allegations in

the light most favorable to the plaintiff, [and] resolving all

contested issues of substantive fact in favor of the plaintiff”.

Burden, 60 F.3d at 216 (internal quotations omitted).

Plaintiffs contend Knight was negligent in failing to warn

them of the pollution on the property. They do not contend,

however, that Knight failed to warn those to whom he sold the

property; rather, they maintain Knight owed a duty to every

succeeding purchaser to warn of defects in that property.

Plaintiffs offer no authority, however, imposing upon a seller the

duty to so warn all succeeding purchasers, some of whom purchased

the property decades after the seller sold it. Likewise, our

review of Louisiana law reveals no such authority. E.g., David v.

Guidry, 645 So. 2d 1234 (La. Ct. App. 1994) (seller owed no duty to

5 warn future inhabitants who he had no reason to know would inhabit

the property), writ denied, 649 So. 2d 393 (1995).

Similarly, plaintiffs contend Knight fraudulently

misrepresented the condition of the property to succeeding

purchasers by failing to notify them of the pollution. Along this

line, plaintiffs contend that, when deciding the fraudulent joinder

issue, the district court erred by failing to consider the

allegations in their amended complaint. As discussed, Louisiana

law does not impose that duty on Knight. Moreover, plaintiffs’

fraud allegation was made by amended complaint, not by their

original, state petition. Again, allegations made only in an

amended complaint are beyond the scope of review for fraudulent

joinder. Cavallini, 44 F.3d at 264.

On the same day as his fraudulent joinder ruling, the

magistrate judge, in his recommendation to dismiss plaintiffs’

original claims against Knight, as well as those in their amended

complaint, did examine the “new” allegations in the amended

complaint. The magistrate judge noted, however, that the amended

complaint offered no new allegations against Knight, except for

“conclusory claims of a conspiracy”.

Plaintiffs claim Knight breached a “warranty of fitness and

peaceful possession”. Because this claim was not raised in

district court, we will not consider it for the first time on

6 appeal. E.g., Stewart Glass & Mirror, Inc. v. U.S. Auto Glass

Discount Centers, 200 F.3d 307, 316-17 (5th Cir. 2000).

Finally, plaintiffs maintain summarily that Knight is

“absolutely liable” for injuries caused by virtue of his abnormally

dangerous or ultra-hazardous activities. Their conclusory

statement notwithstanding, Knight is not absolutely liable either

for damages caused when he did not own the property, Schneider v.

United States, 734 F. Supp. 239, 247 (E.D. La. 1990), or for

damages caused to those who were never his “neighbor”, LA. CIV. CODE

art. 667.

In the light of the foregoing, plaintiffs have no reasonable

basis for recovery against Knight. Therefore, remand was properly

denied; Knight, properly dismissed. (As noted, for the dismissal

of the claims against Knight, although it was with prejudice for

those in the original, state petition, it was without prejudice for

those in the amended complaints.)

B.

We review de novo both the dismissal of plaintiffs’ property

claims against Texaco, e.g., Beanal v. Freeport-McMoran, Inc., 197

F.3d 161, 164 (5th Cir. 1999), and the summary judgment awarded it

against the remaining claims, e.g., Daniels v. City of Arlington,

246 F.3d 500, 502 (5th Cir.), cert. denied, 534 U.S. 951 (2001).

For a Rule 12(b)(6) dismissal, the reviewing court does not look

beyond the pleadings; accepts all well-pleaded facts as true; and

7 views the facts “in the light most favorable to the plaintiff”.

Cinel v. Connick, 15 F.3d 1338, 1341 (5th Cir.), cert. denied, 513

U.S. 868 (1994). In a similar vein, summary judgment is proper

only if “there is no genuine issue as to any material fact and ...

the moving party is entitled to a judgment as a matter of law”.

FED. R. CIV. P. 56(c).

In its well-reasoned opinion, the district court held Texaco

had no duty to preserve the property for all future owners.

Plaintiffs maintain the Louisiana Supreme Court’s subsequent

decision in Hopewell, Inc. v. Mobil Oil Co., 784 So. 2d 653 (La.

2001), requires a different result. The plaintiff in Hopewell

purchased property which the vendor’s ancestors had previously

leased to a company for oil and gas operations. The plaintiff

cleared the property of structures built by that prior lessee and

sued its successor (Mobil Oil), including for pollution caused by

the oil and gas operations. A claim pertinent to this action was

based upon a combination of: (1) a statutory requirement that an

owner of a mineral servitude is “obligated, insofar as practicable,

to restore the surface to its original condition....”, LA. REV. STAT.

§ 31:22; and (2) the conveyance of sale to plaintiff, which

conveyed all of the vendor’s rights.

The intermediate court of appeal held: the claim against the

prior lessee was a personal right of the owner of the property when

the lessee failed to restore it; there was no assignment of that

8 personal right to plaintiff through the conveyance. Hopewell, Inc.

v. Mobil Oil Co., 770 So. 2d 874, 878 (La. Ct. App. 2000). In

holding the right personal, the court of appeal relied on Prados v.

South Central Bell Telephone Co., 329 So. 2d 744 (La. 1975). In

Prados, a non-mineral lease required the lessee to remove any

improvements it made on the property. When the lease ended,

however, the owner did not require the lessee to do so. The owner

sold the property; the purchaser sued the lessee. The Louisiana

Supreme Court held the claim against the lessee involved a

personal, rather than real, right.

In a nine-line opinion, however, the Louisiana Supreme Court

reversed the court of appeal’s decision in Hopewell and remanded

the action for further proceedings. The court stated: “Prados

..., which the Court of Appeal relied upon, involves rights arising

under a lease and is distinguishable from the instant facts”.

Hopewell, 784 So. 2d at 653. As noted, the rights in Hopewell

arose under a statute concerning the duty imposed upon the owner of

a mineral servitude. That, of course, is not the situation in this

action.

Plaintiffs contend the Louisiana Supreme Court’s extremely

brief Hopewell decision held “the right to sue for damages to the

land is a real (as opposed to personal) right that ‘runs with the

land’”. Needless to say, such a rule of Louisiana property law is

not ascertainable from that opinion.

9 Indeed, as discussed by the district court, plaintiffs’

interests are protected through the title search process and

redhibitory actions. Similarly, and as earlier discussed with

respect to Knight, when viewed against the bases claimed by

plaintiffs, Texaco owed no duty to successive purchasers, decades

after it conveyed the property to Knight.

Accordingly, essentially for the reasons stated by the

district court in its opinions of 12 February 1999 (dismissal of

property claims) and 21 December 2001 (adopting reasons underlying

magistrate judge’s recommended summary judgment for the remaining

claims), the Rule 12(b)(6) dismissal and the summary judgment

awarded Texaco were proper.

III.

For the foregoing reasons, the judgment is

AFFIRMED.