IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
Nos. 97-20179 & 97-20610
LUPE VALDES,
Plaintiff-Appellant,
versus
WAL-MART STORES, INC.; TERRY WILLIAM; PETSMART INCORPORATED,
Defendants-Appellees.
Appeal from the United States District Court for the Southern District of Texas, Houston (H-94-CV-1388)
September 4, 1998
Before GARWOOD, JONES and WIENER, Circuit Judges.*
GARWOOD, Circuit Judge:
Plaintiff-appellant Lupe Valdes (Valdes) appeals the district
court’s grant of summary judgment in favor of defendant-appellee
Wal-Mart, Inc. (Wal-Mart), contending that the district court erred
in denying her motion to remand the case to state court and in
subsequently granting summary judgment in favor of Wal-Mart.
* 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 R. 47.5 the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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. Valdes also appeals the district court’s denial of her motion to
vacate the judgment in favor of Wal-Mart.1 We reverse and remand.
Facts and Proceedings Below
On the afternoon of August 2, 1993, Valdes parked her car in
the parking lot of a Wal-Mart store located in Humble, Texas,
intending to shop there. She went shopping in the Wal-Mart store
and then, when in the store’s parking lot returning to her car, was
confronted by a sixteen-year-old male——not a Wal-Mart employee or
customer——brandishing a knife. After forcing Valdes into her car,
the abductor ordered her to drive to the rear of a nearby shopping
mall. Once there, Valdes’ abductor directed her to park the car
behind a Petsmart store, where they would be partially hidden from
sight by several trash dumpsters. He then raped her and fled.
On February 24, 1994, Valdes brought this suit in Texas state
court, alleging that Wal-Mart had breached the Texas law duty of
care it owed to its customers, and specifically to her, by
negligently failing to provide adequate security in its parking
lot, taking little or no action to implement security measures
despite its awareness that a number of crimes had occurred in the
lot. In addition to Wal-Mart, Valdes named as defendants Terry
Williams, the general manager of the store from which she was
abducted, and Petsmart, Inc., the business on whose property the
1 Valdes’ appeal of the district court’s denial of her motion to vacate was originally filed as a separate appeal, but her two appeals were subsequently consolidated.
2 rape occurred. As to Petsmart, Valdes claimed that the area behind
the store was hidden from public view and not adequately monitored
by employees or security guards, thus constituting an unreasonably
dangerous condition.
With regard to Williams, Valdes alleged that, by virtue of his
position as general manager, he owed a separate Texas law duty to
store patrons to exercise ordinary care in recognizing, and in
taking steps to remedy, those situations and conditions on the
store premises——including the parking lot——that posed an
unreasonable risk of harm to customers. Valdes further asserted
that, although he had been aware that a number of crimes had been
committed in the Wal-Mart parking lot, Williams had failed to take
any action either to warn or to provide adequate security for store
patrons.
Neither Wal-Mart nor Petsmart is or was a citizen of Texas,
each being a citizen of another state; both Williams and Valdes are
and were citizens of Texas.
On April 22, 1994, defendants removed the case to federal
court pursuant to 28 U.S.C. § 1441(b), alleging diversity of
citizenship and that Williams had been fraudulently joined as a
defendant "solely for the purpose of defeating diversity
jurisdiction" and that Valdes’ original petition contained "no
allegations" that "would result in personal liability of Mr.
Williams." In reply, on May 13, 1994, Valdes moved to remand,
arguing that she had stated a valid cause of action against
3 Williams, that he was a proper defendant in the suit, and therefore
that the federal district court lacked diversity jurisdiction over
the case. Williams subsequently also filed a formal motion under
Fed. R. Civ. P. 12(b)(6) to be dismissed as a defendant, again
asserting, in a somewhat brief and conclusory manner, that no
viable cause of action had been pleaded against him. Valdes
replied with a memorandum of law citing S.H. Kress & Co. v. Selph,
250 S.W.2d 883 (Tex. Civ. App.--Beaumont 1952, writ ref’d n.r.e.),
for the proposition that "[a] store manager in Texas does have a
duty to take steps to inspect and make the premises safe, and can
be held liable for harm caused to others by his failure to exercise
reasonable care." Valdes also relied on Leyendecker & Assocs.,
Inc. v. Wechter, 683 S.W.2d 369 (Tex. 1984), as establishing that
joint and several liability may be imposed on an employee who
commits or participates in committing a tort in the course of his
employment.
Petsmart filed a motion for summary judgement, contending that
because Valdes had technically been a trespasser, albeit an
unwilling one, Petsmart did not owe her a duty of due care under
Texas law and was therefore entitled to summary judgment.
On August 26, 1994, the district court ruled on all three
motions, denying Valdes’ motion to remand, granting the motion to
dismiss Williams, and granting Petsmart’s motion for summary
judgment. Williams was thus then dismissed from the case. Valdes
4 subsequently attempted to appeal the district court’s ruling, but
this Court, on November 17, 1994, dismissed the appeal for lack of
jurisdiction. Valdes also requested that the district court
certify its order for interlocutory appeal, which the district
court declined to do.
On March 15, 1995, Wal-Mart, the only remaining defendant,
filed its first and only motion for summary judgment. On January
30, 1997, the district court granted summary judgment in favor of
Wal-Mart. Valdes filed notice of appeal from this final judgment
on February 28, 1997, challenging the grant of the motion to
dismiss Williams, the denial of her motion to remand, and the grant
of summary judgment in favor of Wal-Mart.2
On May 23, 1997, Valdes moved to vacate under Rule 60,
alleging that Wal-Mart had failed to produce internal memos
regarding safety in parking lots. The district court denied
Valdes’ Rule 60 motion on July 19, 1997. Contending that the
district court abused its discretion in refusing to vacate the
judgment, Valdes filed a second notice of appeal.3 The two appeals
have been consolidated before this Court.
Discussion
On appeal, Valdes, among other things, reasserts her
contention that removal was improper due to lack of complete
2 This first appeal was docketed under case number 97-20179. 3 Valdes’ second appeal was docketed under case number 97- 20610.
5 diversity, in that she and Williams were each Texas citizens and
Williams was not fraudulently joined, and consequently that the
district court lacked subject matter jurisdiction over this case
and erred in overruling her motion to remand. In response, Wal-
Mart argues that, pursuant to the doctrine of "fraudulent joinder,"
the district court properly excluded Williams from consideration
for purposes of determining complete diversity, and, accordingly,
did not err in denying Valdes’ motion to remand.
The denial of a motion to remand an action removed from state
to federal court is a question of federal subject matter
jurisdiction, which we review de novo. Burden v. General Dynamics
Corp., 60 F.3d 213, 216 (1995). As the party invoking federal
jurisdiction in this case, Wal-Mart bears the burden of
demonstrating that the case is properly before the federal
tribunal. Sid Richardson Carbon & Gasoline Co. v. Interenergy
Resources, Ltd., 99 F.3d 746, 751 (5th Cir. 1996); Carpenter v.
Wichita Falls Indep. School Dist., 44 F.3d 362, 365 (5th Cir.
1995). Additionally, because removal was premised on an allegation
of "fraudulent joinder," Wal-Mart bears the particularly "heavy
burden" of establishing either outright fraud in Valdes’ recitation
of jurisdictional facts or that there is no reasonable possibility
of establishing the liability of, or recovering from, the
nondiverse defendant. Burden, 60 F.3d at 217; B., Inc. v. Miller
Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981); Parks v. New York
6 Times Co., 308 F.2d 474, 477 (5th Cir. 1962).
I. Fraudulent Joinder Analysis
A. Analytical Framework
An allegation of fraudulent joinder raises the "single
threshold question" of jurisdiction. B., Inc., 663 F.2d at 548.
Consequently, "[u]nlike the parties who joust for victory on who
wins or loses our sole concern is: Who tries the case? State or
Federal Court?" Bobby Jones Garden Apartments, Inc. v. Suleski,
391 F.2d 172, 175 (5th Cir. 1968). "In order to establish that an
in-state defendant has been fraudulently joined, the removing party
must show either that there is no possibility that the plaintiff
would be able to establish a cause of action against the in-state
defendant in state court; or that there has been outright fraud in
the plaintiff’s pleadings of jurisdictional facts." B., Inc., 663
F.2d at 549 (footnote and internal citations omitted). See also
Sid Richardson, 99 F.3d at 751. (The case sub judice involves the
former of these two alternatives.)4
"We have consistently held that claims of fraudulent joinder
should be resolved by a summary judgment-like procedure whenever
possible." Sid Richardson, 99 F.3d at 751. See also B., Inc., 663
F.2d at 549 n.9; Carriere v. Sears, Roebuck and Co., 893 F.2d 98,
4 As there has been no allegation of "outright fraud" in the case sub judice, Wal-Mart must prove that there is no possibility Valdes could establish a cause of action in state court against Williams.
7 100 (5th Cir. 1990). This summary determination "does not
anticipate a judgment on the merits, but merely considers whether
there is any possibility that the plaintiff might prevail." Sid
Richardson, 99 F.3d at 751 (emphasis added). In conducting this
analysis, the district court must "evaluate all of the factual
allegations in the light most favorable to the plaintiff, resolving
all contested issues of fact in favor of the plaintiff." B., Inc.,
663 F.2d at 549 (citations omitted). Next, the district court must
ascertain the applicable substantive law, "resolv[ing] any
uncertainties as to the current state of controlling substantive
law in favor of the plaintiff." Id. (citations omitted). See also
Parks v. New York Times Co., 308 F.2d 474, 479-80 (5th Cir. 1962)
("We need only decide whether there was a reasonable basis in law
and fact for such a contention in the state court suits.").
Finally, the court must determine whether there is "’arguably a
reasonable basis for predicting that the state law might impose
liability on the facts involved.’" Jernigan v. Ashland Oil Inc.,
989 F.2d 812, 816 (5th Cir. 1993) (quoting Bobby Jones Garden
Apartments v. Suleski, 391 F.2d 172, 177 (5th Cir. 1968)).
If, at the end of this inquiry, the district court "should
find that there is no possibility of a valid cause of action being
set forth against the in-state [defendant], only then can it be
said that there has been a ‘fraudulent joinder.’" B., Inc., 663
F.2d at 550. Conversely, "[i]f there is any possibility that the
8 plaintiff has stated a cause of action against any non-diverse
defendant, the federal court must conclude that joinder is proper,
thereby defeating complete diversity, and the case must be
remanded." Sid Richardson, 99 F.3d at 751 (citing Burden, 60 F.3d
at 216; and B., Inc., 663 F.2d at 550).
B. Valdes’ Claim
Texas recognizes a cause of action based on the failure of a
land owner or occupier to exercise reasonable care to protect
individuals coming onto the premises against intentional injuries
caused by third persons if the land owner or occupier has reason to
know that such acts are likely to occur there, either generally or
at some particular time. See, e.g., Nixon v. Mr. Property
Management Co., 690 S.W.2d 546 (Tex. 1985). Claims under such a
cause of action are evaluated using a basic negligence analysis,
requiring the showing of duty, breach, and causation. Id. at 549-
551.
Valdes contends that "[u]nder Texas law, a local store manager
of a national chain can be held liable for harm caused to invitees
by [such manager’s] failure to exercise reasonable care."
Whether Valdes has pleaded a fraudulent claim against Williams
turns largely on whether there is no reasonable possibility under
Texas law that Williams, by virtue of his position as store
manager, owed Valdes a duty of care which, if breached, could give
rise to personal liability. In arguing that Williams did owe her
9 such a duty, Valdes relies principally on a single forty-five-year-
old case, S.H. Kress & Co. v. Selph, 250 S.W.2d 883 (Tex. Civ.
App.--Beaumont 1952, writ ref’d n.r.e.), which held that a general
store manager owed an independent duty of care toward business
invitees based on his right, as manager of the store, to exercise
control over the premises. Wal-Mart replies that recent cases
indicate the Texas Supreme Court would not hold Selph to be good
law and that Selph is essentially limited to its facts and has
"little or no" applicability to the case at bar.
In Selph, a store patron who had sustained injuries when she
slipped on a piece of candy and fell to the floor brought suit
against both the company that owned the store and a Mr. H. Howe,
the store’s general manager. In the court of appeals, it was
specifically argued that under Texas law Howe did not owe a duty of
care to business invitees based on his position as manager of the
store. 250 S.W.2d at 891. The court of appeals rejected this
argument, holding that, by virtue of the control that he exercised
as manager of the store, Howe had a partially nondelegable duty of
due care, separate from that of the owner, toward business
invitees.5 Concluding that Howe was the "custodian" of the
5 Id. at 893. In reaching this holding, the court relied on cases from other jurisdictions as well as section 355 of the Restatement (First) of Agency, which states the view that:
"An agent who has the custody of land or chattels and who should realize that there is an undue risk that their condition will cause harm to the person, land, or
10 premises, and that he had both charge and control of the store, the
court held that Howe personally owed business invitees a separate
duty of due care and consequently that he could be held
individually liable for negligently failing to remedy a condition
on the store premises that he knew or should have known posed an
unreasonable risk to store patrons. Id. at 893-94.
Valdes argues that the holding in Selph is directly applicable
to the case sub judice, claiming that the facts of Selph closely
parallel those of the case at bar. It is uncontested that Williams
was the general manager of the Wal-Mart from the parking lot of
which Valdes was abducted, and Valdes has alleged that Williams had
reason to know that criminal activity on the Wal-Mart premises
posed an unreasonable risk to business invitees. Valdes thus
contends that Selph establishes that, as store manager, Williams
owed her a duty of due care requiring him to remedy or repair any
unreasonably dangerous conditions on the premises of which he knew
or should have known, and that he breached this duty by not taking
steps to provide adequate security in the parking lot.
Wal-Mart strongly disagrees, arguing that Selph is
inapplicable to the facts of this case and, in all likelihood, is
no longer good law. Wal-Mart asserts that Selph is a simple "slip
chattels of others is subject to liability for such harm caused during the continuance of his custody, by his failure to use care to take such reasonable precautions as he is authorized to take."
11 and fall" case and "speaks [only] to the duties of a store manager
with regard to that which he or she could reasonably expect to
encounter in the course of day-to-day operations, namely foreign
substances on the floor," and consequently is entirely inapplicable
to the facts of the case at bar.6 Neither the holding nor the
6 In asserting both that Selph is no longer good law and that Williams did not owe Valdes an individual duty of care, Wal-Mart relies on Leitch v. Hornsby, 935 S.W.2d 114 (Tex. 1996); Centeq Realty Inc. v. Siegler, 899 S.W.2d 195 (Tex. 1995); Holloway v. Skinner, 898 S.W.2d 793 (Tex. 1995), and Natividad v. Alexis, Inc., 875 S.W.2d 695 (Tex. 1994). If read broadly, the principles of Leitch might well undermine Selph. It is unclear why Williams personally would not owe a duty to Valdes if she had been a Wal-Mart employee, but would owe such a duty to her as a Wal-Mart customer, though Wal-Mart itself would owe the duty——and presumably could not delegate it to Williams——in either case. But Leitch was not a premises case and we cannot say with full confidence that it will be applied outside of the employer-employee context. Nothing in it expressly reflects that it would be so extended. As explained below, a Texas court of appeals has recently held that neither Centeq nor Natividad undermines the holding of Self. We cannot say that that conclusion is so clearly wrong as to be unreasonable. With regard to Holloway, the court declined to hold a corporate agent liable for tortious interference with contractual rights unless the plaintiff could show that "the alleged act of interference [was] performed in furtherance of the defendant’s personal interests so as to preserve the logically necessary rule that a party cannot tortiously interfere with its own contract." 898 S.W.2d at 796. Thus, it is reasonably arguable that Holloway does not stand for the general proposition that an agent cannot be held liable for tortious conduct incident to his employment, but rather avoids "convert[ing] every [corporate] breach of contract claim into a tort claim" by holding that unless an agent is clearly acting in his personal capacity (and motivated solely by personal interest) he cannot be held liable in tort for causing a corporation to violate its contractual obligations. Id. at 795.
12 reasoning of Selph clearly mandates such a limitation.7
We are aided in assessing the continuing validity of Selph,
and guided in our assessment of whether there is a reasonable
possibility that Texas courts would view the law as Valdes contends
it is, by the decision of a Texas court of appeals in a premises
liability case presenting issues similar to those in the case sub
judice. In Wal-Mart Stores, Inc. v. Deggs, 971 S.W.2d 72 (Tex.
App.--Beaumont 1996), rev’d on other grounds, 968 S.W.2d 354 (Tex.
1998), the court of appeals cited Selph as good law, stating that
as "general manager, we know of no reason why [defendant] should
not be considered as the operator of the premises in question."
971 S.W.2d at 75. The court went on to hold that the Sam’s
Wholesale Club store manager, "as the operator of the premises in
question, had the duty to maintain the premises in a condition that
would not pose an unreasonable risk of harm." Id. (citations
omitted). As Selph has never been explicitly overruled, and
considering that a Texas court of appeals has recently cited it as
precedent for the proposition in question, we cannot agree with
Wal-Mart’s assertion that there is no reasonable possibility that
7 In discussing section 355 of the Restatement (First) of Agency, the court appeared to equate the scope of the agent’s duty with that of the owner’s, being limited only to the extent that the agent lacked full control over the premises. See Selph, 250 S.W.2d at 893 ("’One who is in complete control over either land or chattels is under the same duty to protect others from the condition of such things as is the possessor of land or chattels.’") (citation omitted).
13 Selph would be considered valid law by Texas courts.8 Thus, we
hold that Valdes’ allegation that Williams, by virtue of his
position as store manager, had a duty to maintain the premises in
a condition that would not pose an unreasonable risk of harm to
business invitees is sufficient to demonstrate a reasonable
possibility that a Texas court would recognize this duty.
We are left with the issues of breach and proximate cause.
Valdes alleged that Williams knew or should have known about
various crimes that had been committed in the Wal-Mart parking lot,
thus putting him on notice of an unreasonably dangerous situation
on the premises, and that he negligently had failed to take
measures to minimize the risk to customers which a similarly
situated reasonable retail store manager would have taken,
including failing to have adequate security personnel and/or
patrols and other security measures. Valdes also alleged that such
minimal security precautions would have prevented her abduction.
Viewing these allegations in the light most favorable to Valdes,
"we cannot predict with absolute certainty that a Texas court would
summarily dismiss the cause[] of action asserted against defendant
[Williams]." B., Inc., 663 F.2d at 554. We are unable to conclude
8 In Deggs, the court of appeals rejected Wal-Mart’s arguments that Centeq and Natividad had undermined the holding in Selph regarding the manager’s individual duty. The Deggs court found Natividad "irrelevant to the question of whether the general manager of a store has a duty to the general public to maintain the store in a reasonably safe condition." Deggs, 971 S.W.2d at 75. The Deggs court also found Centeq to be inapposite. Id. at 75-76.
14 that there is no reasonable possibility that Valdes’ allegations,
if accepted as true, would be sufficient to state a valid Texas law
cause of action. See, e.g., Holder v. Mellon Mortgage Co., 954
S.W.2d 786 (Tex. App.--Houston 1997, writ pending); Kendrick v.
Allright Parking, 846 S.W.2d 453 (Tex. App.--San Antonio 1992, writ
denied); Midkiff v. Hines, 866 S.W.2d 328 (Tex. App.--Houston 1993,
no writ).
Conclusion
In sum, "having assumed all of the facts set forth by [Valdes]
to be true and having resolved all uncertainties as to state
substantive law against the defendants," B., Inc., 663 F.2d at 550,
we find that there is a reasonable possibility that Valdes has
stated a valid Texas law cause of action against Williams.
Accordingly, we hold that the district court erred in finding that
Williams was fraudulently joined and consequently erred in denying
Valdes’ motion to remand this case to state court. This holding
renders all other issues presented on appeal moot. We therefore
reverse and remand with instructions that the district court remand
this case to the state court from which it was removed.
REVERSED and REMANDED9
9 All pending motions are hereby DENIED.