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McNary v. Cottrell

December 17, 2009

TIMOTHY J. MCNARY AND SHARON MCNARY, PLAINTIFFS,
v.
COTTRELL, INC., CASSENS CORPORATION, KURT MUSKOPF, PROREHAB, P.C., AND UNKNOWN OWNERS/LESSOR OF TRAILER NUMBER 76288, DEFENDANTS.



The opinion of the court was delivered by: Reagan, District Judge

MEMORANDUM AND ORDER

A. Introduction

On February 23, 2009, Timothy and Sharon McNary filed suit in Illinois state court against Kurt Muskopf, seeking damages related to an accident that allegedly occurred in the course of Timothy McNary's employment as a car hauler driver. The McNarys alleged that Muskopf's functional capacity evaluation of Timothy McNary distorted and misrepresented McNary's physical capacities. Doc. 2-2, p. 1. et seq. They claimed that, as a result, McNary's physician terminated further medical treatment and determined that he was able to return to full-duty work. According to the McNarys, Timothy McNary was unable to return to his position as a car hauler driver and was forced to seek employment elsewhere, a search which netted him no comparable employment. Timothy McNary sought damages in excess of $50,000 for loss of benefits from his employment and loss of employment opportunity as well as pain and mental anguish; Sharon McNary sought in excess of $50,000 for loss of consortium.

On June 3, 2009, the McNarys filed an amended complaint (Doc. 2-2, p. 16, et seq.), which added claims against Cottrell, Inc., (strict liability, negligence, warranty, and willful and wanton disregard for safety), Cassens Corporation (negligence - direct liability, breach of contract, violation of the Consumer Fraud and Deceptive Business Practices Act, equitable estoppel, fraud, and willful and wanton disregard for safety) and Unknown Owners/Lessor of Trailer Number 76288 (strict liability, negligence, warranty, and willful and wanton disregard for safety). An additional count for willful and wanton disregard is lodged against Cottrell, Cassens and Unknown Owners/Lessor, alleging that they placed known dangerous and defective equipment into the stream of commerce in order to reap large profits while disregarding injuries as minor business expenses. Muskopf and ProRehab are sued for willful and wanton disregard, negligence, fraud, violation of the Consumer Fraud and Deceptive Business Practices Act and civil conspiracy.

On August 20, 2009, Cottrell removed the action to this federal district court, alleging that the citizenship of nondiverse Defendants Cassens and Muskopf must be disregarded because they were fraudulently joined.*fn1

The McNarys' motion to remand the action to state court and for an award of attorney's fees is fully briefed and ready for disposition (Docs. 18, 37, 39).

B. Standard for Fraudulent Joinder

Courts presume that a plaintiff's choice of forum is valid and resolve all doubts regarding jurisdiction in favor of remand. See Doe v. Allied-Signal Inc., 985 F.2d 908, 911 (7th Cir. 1993). As an out-of-state Defendant seeking removal, Cottrell must clear a high hurdle to show that the McNarys fraudulently joined Muskopf and Cassens. The Seventh Circuit has noted:

An out-of-state defendant who wants to remove must bear a heavy burden to establish fraudulent joinder. The defendant must show that, after resolving all issues of fact and law in favor of the plaintiff, the plaintiff cannot establish a cause of action against the in-state defendant.

Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir. 1992).*fn2

In Schwartz v. State Farm Mutual Auto Ins. Co., 174 F.3d 875, 878 (7th Cir. 1999), the Seventh Circuit explained that although a plaintiff is normally free to choose his own forum, he may not join an in-state defendant solely to defeat federal diversity jurisdiction. "Such joinder is considered fraudulent, and is therefore disregarded, if the out-of-state defendant can show there exists no 'reasonable possibility that a state court would rule against the [in-state] defendant.'" Id. (quoting Poulos, 959 F.2d at 73).In other words, the federal district court must determine whether the plaintiff can state a cause of action against the nondiverse defendant. Gottlieb v. Westin Hotel Co., 990 F.2d 323, 328 (7th Cir. 1993).

As required by 28 U.S.C. § 1332, complete diversity of citizenship means that "none of the parties on either side of the litigation may be a citizen of a state of which a party on the other side is a citizen." Howell v. Tribune Entertainment Co., 106 F.3d 215, 217 (7th Cir. 1997). Here, it is undisputed that Plaintiffs, the McNarys, and Defendants, Muskopf and Cassens, are citizens of Illinois. Cottrell claims - and must bear the burden of establishing - that these Defendants were fraudulently joined.

C. Timeliness of Removal

On August 20, 2009, Cottrell removed the action to this District Court, invoking subject matter jurisdiction under the federal diversity statute, 28 U.S.C. ยง 1332. On threshold review, the Court found the ...


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