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Calhoun v. BNSF Railway Co.

United States District Court, D. Montana, Great Falls Division

January 3, 2018

BNSF RAILWAY COMPANY, a Delaware Corporation; ROBINSON INSULATION COMPANY, a Montana Corporation for profit; JOHN SWING; and DOES A-Z, Defendants.




         Plaintiff William Calhoun (Mr. Calhoun) filed this action in Montana state district court[1] alleging various asbestos-related tort claims. On August 16, 2017, Defendant BNSF Railway Co. (“BNSF”) timely removed to this Court on diversity of citizenship grounds. (See Doc. 1). Defendant BNSF acknowledged that John Swing (Mr. Swing) is a citizen of Montana, but claims he has been fraudulently joined. On September 12, 2017, Mr. Calhoun filed a Motion to Remand the action back to State court, arguing Mr. Swing is a proper defendant and that his presence in the action prevents removal under the forum defendant rule. (Doc. 12). The motion has been fully briefed, and the Court held a hearing on the matter on November 1, 2017. The motion is ripe for adjudication.


         A. Fraudulent joinder

         District courts have jurisdiction over state law claims in which the matter in controversy exceeds $75, 000, and is between citizens of different states. 28 U.S.C. § 1332(a). Removal under section 1332(a) requires “complete diversity” of citizenship, meaning each plaintiff, with few exceptions, must be diverse from each defendant. Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001) (citation omitted). If any defendant who is “properly joined and served” is “a citizen of the State in which the action is brought[, ]” then the action is not removable. 28 U.S.C. 1441(b)(2). Therefore, unless Mr. Swing has been fraudulently joined, this action must be remanded.

         The removal statutes are to be strictly construed against removal jurisdiction. Lovell v. Bad Ass Coffee Co. of Hawaii, Inc., 103 F.Supp.2d 1233, 1236 (D. Haw. 2000). All doubts are to be resolved “against removal, . . . employ[ing] a presumption against fraudulent joinder.” Macey v. Allstate Property & Casualty Ins. Co., 220 F.Supp.2d 1116, 1117 (N.D. Cal. 2002) (citation omitted). Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The party alleging fraudulent joinder bears the burden of persuasion. Lovell, 103 F.Supp.2d at 1237 (citations omitted).

         A party “will be considered fraudulently joined - and removal will be permitted - when the plaintiff has not or cannot state a claim for relief” against the non-diverse individual under the applicable state substantive law. 14B Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure §3723 at 631 (3d ed. 1998); see also Lovell, 103 F.Supp.2d at 1237 (citing McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987)). Any disputed issues of fact are to be resolved in favor of the plaintiff. Charlin v. Allstate Ins. Co., 19 F.Supp.2d 1137, 1140 (C.D. Cal. 1998).

         BNSF has established diversity of citizenship in this action. In its Notice of Removal, BNSF alleges that BNSF Railway is incorporated in Delaware, and has its principal place of business in Texas, and is therefore a citizen of Delaware and Texas. (Doc. 1 at ¶ 5). It further alleges that Mr. Calhoun is a citizen of Arizona. (Id. at ¶ 4, see Doc. 7 at ¶ 1). Finally, BNSF alleges that Mr. Swing is a citizen of Montana and that none of the other defendants are citizens of Arizona. (Id. at ¶ 6, see Doc. 7 at ¶ 3). Therefore, there is complete diversity between the plaintiff and all defendants. However, the presence of Mr. Swing as a defendant in this case and his Montana citizenship requires remand to State court under the forum defendant rule, 28 U.S.C. §1441(b)(2).

         BNSF premises its opposition to Mr. Calhoun's Motion to Remand on the argument that Mr. Swing is fraudulently joined and his presence in the action should therefore be ignored under application of the forum defendant rule. Therefore, the issue is whether Mr. Swing can be held personally liable under Montana law given the allegations in Mr. Calhoun's Complaint and is therefore properly joined as a defendant in this action.

         A corporate agent under Montana law may be held personally liable if “the agent was personally negligent or that the agent's actions were tortious in nature.” Crystal Springs Trout Co. v. First State Bank of Froid, 732 P.2d 819, 823 (Mont. 1987); Mont. Code Ann. § 28-10-702 (2001); see also Bottrell v. Am. Bank, 773 P.2d 694, 708-09 (Mont. 1989) (“officer or director [personally liable if he] acts against the best interests of the corporation, acts for his own pecuniary benefit, or with the intent to harm the plaintiff”) (citing Phillips v. Montana Education Ass'n, 610 P.2d 154, 158 (Mont. 1980)); Little v. Grizzly Mfg., 636 P.2d 839, 841 (Mont. 1981). Where, as here, there are allegations against an employee personally, the Montana Supreme Court has allowed the employee to be named as a defendant. Dagel v. City of Great Falls, 819 P.2d 186, 195 (Mont. 1991).

         BNSF argues that any negligence on the part of Mr. Swing was in the course and scope of his employment, and therefore he cannot personally be held liable. (Doc. 40 at 13-14). It argues that the exception holding corporate agents personally liable for acts that are “wrongful in nature” is narrow and against the general policy of shielding officers and agents “from personal liability for acts taken on behalf of a corporation.” (Id. at 14 (quoting Crystal Springs, 732 P.2d at 823)).

         However, courts in the District of Montana have held that it is enough to allege that the corporate agent either ignored warnings or participated in the principal's tortious conduct to hold the agent personally liable. For instance, in Castro v. ExxonMobil Oil Corp., 2012 WL 523635 (D. Mont. 2012), the Court reasoned as follows in granting a motion to remand:

As recently as 2009, the Montana Supreme Court affirmed the longstanding rule that corporate agents can be personally liable if they were personally negligent or their actions were tortious in nature. Ammondson v. Northwestern Corp., 353 Mont. 28, 220 P.3d 1, 21 (Mont. 2009) [citation omitted]. Here, for example, Plaintiffs allege Montgomery is the Terminal Superintendent for EMPC [and] was aware that the Silvertip Pipeline was not buried deep enough below the Yellowstone River and that high water could damage the pipeline, that he was actively involved in ExxonMobil's ...

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