United States District Court, E.D. Pennsylvania
June 9, 2004.
DONALD ANDERSON and JANICE ANDERSON, Plaintiffs
PHILADELPHIA SUBURBAN DEVELOPMENT CORPORATION and 7-ELEVEN, INC., Defendants.
The opinion of the court was delivered by: ANITA BRODY, District Judge
MEMORANDUM AND ORDER
On April 12, 2004, plaintiffs moved under 28 U.S.C. § 1447(c)
to remand this case back to state court and for reimbursement of
counsel fees. Plaintiffs' motion to remand will be granted and
plaintiffs' request for counsel fees denied.
On January 22, 2004, plaintiffs Donald and Janice Anderson,
husband and wife and Pennsylvania residents, filed suit in the
Philadelphia Court of Common Pleas against defendants
Philadelphia Suburban Development Corporation ["PSDC"], a
Pennsylvania corporation with its principal place of business in
Pennsylvania, and 7-Eleven, Inc. ["7-11"], a Texas corporation
with its principal place of business in Texas. (Notice of Removal ¶¶
The complaint alleges that on February 21, 2003 Mr. Anderson
was walking in a 7-11 store parking lot when he fell on ice,
causing him severe and permanent injuries. (Compl. ¶ 6.)
Plaintiffs allege that, "[a]t all times material hereto
defendants owned, operated, controlled, maintained, managed,
supervised and possessed the premises known as 7-11 Store, 1035
Allentown Road, Lansdale, PA." (Compl. ¶ 5.) The complaint
contains no facts specifying the relationship between defendants
PSDC and 7-11, nor any more specific allegations about the
ownership of the 7-11 store where Mr. Anderson was injured.
However, subsequent pleadings have established that PSDC was the
lessor and 7-11 was the lessee of the premises where plaintiff
was injured. (Mot. Remand Ex. C.) The parties do not dispute this
On March 11, 2004, defendants removed the action to federal
court under 28 U.S.C. § 1441(a) and 1446, claiming that the
citizenship of PSDC should be disregarded for purposes of
determining diversity jurisdiction under 28 U.S.C. § 1551(b).
Defendants claim that PSDC was fraudulently joined, that is
joined solely to defeat diversity jurisdiction. (Notice of
Removal ¶ 9.) In support of their position, defendants claim that
PSDC is a landlord out of possession and not responsible for
injuries to third parties on the leased premises. (Id. at ¶
11.) If PSDC was not a proper defendant, diversity would exist
between plaintiffs and the remaining defendant, 7-11. Because
plaintiffs have also alleged damages in excess of $75,000, if
diversity is established, federal jurisdiction would lie under
28 U.S.C. § 1332.
Arguing for remand, plaintiffs contend that PSDC may be liable
to plaintiffs for failing to maintain the 7-11 parking lot. (Mot.
Remand ¶ 12.) Plaintiffs attached to the remand motion the
original lease between landlord PSDC and tenant 7-11 (then listed
by its former name, "The Southland Corporation"), dated October 20, 1964. (Mot. Remand Ex.
C.) The lease states in pertinent part:
Landlord covenants and agrees . . . [t]o keep the
exterior of the building in good repair, including
repair and maintenance of the roof and the structural
soundness of the foundation, exterior walls, paving
and curbing, but excluding any painting.
(Mot. Remand Ex. C, Lease between PSDC and the Southland
Corporation, Art. 7.)
Plaintiffs state that, subsequent to the filing of the
complaint, defendants supplied plaintiffs with a partially
executed lease agreement amendment dated March 1, 1994. (Mot.
Remand ¶ 14, Ex. D.) This amendment allegedly deletes the portion
of the original lease agreement holding the landlord responsible
for the repair and maintenance of the paving and curbing. (Mot.
Remand Ex. D.) Plaintiffs claim in their remand motion that the
alleged amendment defendants produced to them is unsigned by the
lessee and the amendment plaintiffs attach to their motion to
remand is indeed not signed by the lessee. (Mot. Remand Ex. D.)
Defendants have since provided the court with a fully executed
copy of the March 1, 1994 amendment, which does appear to release
PSDC of responsibility for maintenance of the paving and curbing.
(Def. Reply to Pl. Sur-Reply to Def. Opp. to Pl. Mot. Remand Ex.
On March 12, 2004, prior to defendants' removal of this case to
federal court, counsel for PSDC asked plaintiffs to dismiss PSDC
from the case based on the amendment to the lease contract. (Pl.
Sur-Reply 1.) On March 31, 2004, one of plaintiffs' two
attorneys, Adam Wilf, sent PSDC's attorney a stipulation
dismissing PSDC from the action without prejudice. (Def. Opp. to
Pl. Mot. Remand Ex. A.) Neither of plaintiffs' attorneys signed
the circulated stipulation prior to sending it to defendants'
attorneys. (Id.) Plaintiffs state that they sent the
stipulation "based on [the] addendum [to the original lease agreement]". (Pl.
Sur-Reply 1.) Plaintiffs now claim that, subsequent to the
circulation of the stipulation, plaintiffs discovered evidence
that the parking lot at issue had problems with ice and slippery
conditions dating back as far as 1991, and that PSDC did not do
anything to remedy the problem. (Pl. Sur-Reply 2.) Based on this
evidence and their understanding that the amendment was never
fully executed, plaintiffs ultimately decided not to sign the
proposed stipulation. (Pl. Sur-Reply 2.)
In addition, plaintiffs' attorney Adam Wilf represents that he
spoke with counsel for PSDC subsequent to the circulation of the
proposed stipulation, and advised PSDC counsel that plaintiffs
reserved the "right to add PSDC as a party any time prior to the
statute of limitation expiring on February 20, 2005 if further
investigation and discovery warranted it." (Pl. Sur-Reply 2.)
II. STANDARD OF REVIEW
Plaintiffs seek to remand this case on the ground that there
was no fraudulent joinder. When a party removes a case by
claiming that a non-diverse defendant was fraudulently joined,
the removing party carries a "heavy burden of persuasion" in
showing that the non-diverse party was fraudulently joined.
Batoff v. State Farm, 977 F.2d 848, 851 (3d Cir. 1992). This is
because "removal statutes are to be strictly construed against
removal and all doubts should be resolved in favor of remand"
Id. (quoting Steel Valley Author v. Union Switch & Signal
Div., 809 F.2d 1006, 1010 (3d Cir. 1987).)
The standard for examining the complaint to determine whether
the joinder of the nondiverse defendant was colorable is whether
the joinder was "wholly insubstantial and frivolous." Id. at
852. "[I]f there is even a possibility that a state court would
find that the complaint states a cause of action against any one of the resident defendants, the
federal court must find that joinder was proper and remand the
case to state court." Id. at 851 (quoting Boyer v. Snap-On
Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990).) This
jurisdictional inquiry into a plaintiff's allegations is less
searching than the analysis applied under Fed.R.Civ.P. 12(b)(6)
for failure to state a claim. Batoff, 977 F.2d at 852.
The Third Circuit has further instructed that, "where there are
colorable claims or defenses asserted against or by diverse and
non-diverse defendants alike, the court may not find that the
non-diverse parties were fraudulently joined based on its view of
the merits of those claims or defenses." Id. (quoting Boyer,
913 F.2d at 113.) Finally, "[i]n evaluating the alleged fraud,
the district court must focus on the plaintiff's complaint at the
time the petition for removal was filed. In so ruling, the
district court must assume as true all factual allegations of the
complaint." Id. at 851-52 (quoting Steel Valley, 809 F.2d at
In their briefs in support of their motion to remand,
plaintiffs stress that they were unaware of the alleged amendment
to the lease agreement at the time the complaint was filed.
Defendants do not dispute this. On its face, the original lease
gives PSDC responsibility for maintaining the pavement and curbs
of the 7-11 premises. Because plaintiffs were only aware of the
original lease at the time they filed their complaint, and
because I "must focus on the plaintiff's complaint at the time
the petition for removal was filed," Batoff, 977 F.2d at
851-52, it was proper for plaintiffs to join PSDC.
Plaintiffs further argue that, even if the court were to
consider the 1994 amendment in determining whether plaintiffs fraudulently joined PSDC, PSDC may
still be proper defendants under the heightened burden of proving
fraudulent joinder. Pennsylvania law holds that leases are
treated "as sales of the land for the duration of the lease."
Rich v. Kmart Corp., No. Civ. A. 94-6711, 1999 WL 397383 at *2,
1999 U.S. Dist. LEXIS 7801 at *4 (E.D.Pa. May 20, 1999) (citing
Deeter v. Dull Corp., Inc., 617 A.2d 336, 339 (Pa.Super.
1992).) "Accordingly, landlords out of possession are generally
not liable for injuries suffered by third parties on leased
property." Id. (citing Dinio v. Goshorn, 270 A.2d 203, 206
(Pa. 1969).) However, there are six exceptions to this general
rule wherein a landlord out of possession may incur liability:
1. if the lessor has reserved control over a
defective portion of the demised premises;
2. if the demised premises are so dangerously
constructed that the premises are a nuisance per se;
3. if the lessor has knowledge of a dangerous
condition existing on the demised premises at the
time of transferring possession and fails to disclose
the condition to the lessee;
4. if the landlord leases the property for a purpose
involving the admission of the public and he neglects
to inspect for or repair dangerous conditions
existing on the property before possession is
transferred to the lessee;
5. if the lessor undertakes to repair the demised
premises and negligently makes the repairs; or
6. if the lessor fails to make repairs after having
been given notice of and a reasonable opportunity to
remedy a dangerous condition on the leased premises.
Henze v. Texaco, Inc., 352 Pa. Super. 538, 508 A.2d 1200, 1202
(Pa. Super. 1986).
Plaintiffs argue that, even though PSDC was a landlord out of
possession at the time of the accident, it may still be liable
under exceptions 1, 4, and 5. As for the first exception, the
lessor reserving control over a defective portion of the
premises, plaintiffs cite the clause in the original lease that
PSDC remained responsible for maintenance of the paving and
curbing as evidence that might establish PSDC's liability. With
respect to the fourth and fifth exceptions, a landlord neglecting
to repair a dangerous condition before transferring the property
and a landlord negligently making repairs, plaintiffs have brought forth
evidence suggesting that the icy condition of the parking lot may
have been a problem as far back as January 1991. If the hazardous
condition preceded the 1994 amendment to the lease, plaintiffs
argue that PSDC could be liable under these exceptions.
As explained above, the court's inquiry when deciding whether
to remand an action to state court is limited to whether the
claim is "wholly insubstantial and frivolous." Batoff, 977 F.2d
at 852. The Third Circuit is clear that "a claim which can be
dismissed only after an intricate analysis of state law is not so
wholly insubstantial and frivolous that it may be disregarded for
purposes of diversity jurisdiction." Batoff, 977 F.2d at 853.
Therefore, there is no need to proceed further in the analysis of
whether PSDC could be liable under an exception to the general
landlord out of possession rule. There is a possibility that the
state court will find that plaintiffs stated a cause of action
against PSDC. Accordingly, the defendants have failed to sustain
their heavy burden that plaintiffs fraudulently joined PSDC. My
decision is not a reflection of the merits of plaintiffs' case
against PSDC, but rather a conclusion that I do not have
jurisdiction to fully examine these merits.*fn2 See
Batoff, 977 F.2d at 854; Boyer, 913 F.2d at 113. I will
remand this case to the Court of Common Pleas of Philadelphia
County.*fn3 Plaintiffs have also requested reimbursement of counsel fees in
the amount of $1890.00. "An order remanding the case may require
payment of just costs and any actual expenses, including
attorney's fees, incurred as a result of the removal."
28 U.S.C. § 1447(c). Imposition of costs pursuant to this provision is
within the district court's discretion. Mitchell v. Street,
Civ. A. No. 04-1110, 2004 U.S. Dist. LEXIS 4505 at *7 (E.D.Pa.
Mar. 19, 2004.) "Courts generally exercise this discretion where
the issue of non-removability is obvious or where a defendant did
not act in good faith in removing the case." Naulty v. Kraft
Foods, Inc., No. Civ. A. 02-8343, 2003 U.S. Dist. LEXIS 15677 at
*15 (E.D.Pa. Aug. 12, 2003). Defendants relied on reasonable
legal arguments to support their removal of this case. Their
actions were done in good faith and I will not impose
reimbursement of counsel fees.
For all the foregoing reasons, plaintiff's motion to remand is
granted because defendants have failed to prove that plaintiffs
fraudulently joined PSDC. Plaintiffs' request for reimbursement
of counsel fees is denied. An appropriate order follows. ORDER
AND NOW, this day of June, 2004, plaintiffs' motion to remand
(Docket #6) is GRANTED. The Clerk of Court shall REMAND this
matter to the Court of Common Pleas in Philadelphia County and
mark this case as CLOSED.