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Springfield Premium Natural Water, Inc. v. Zerbo

United States District Court, N.D. Alabama, Northwestern Division

November 25, 2014

DONNA ZERBO, et al., Defendants.


C. LYNWOOD SMITH, Jr., District Judge.

Timothy Shelton, former owner and principal of plaintiffs Springfield Premium Natural Water, Inc., and Tennessee Valley Bottling Co., LLC, [1] commenced this action on behalf of those entities in the Circuit Court of Lauderdale County, Alabama, on January 31, 2014. The complaint alleged claims against six defendants: i.e., Donna Zerbo; AAF-Springfield, Inc.; Sage Capital Management, LLC; Laurence C. Busch; Gerald McGee; and, Joey Bogus.[2] Defendant AAF-Springfield, Inc., timely removed the action on March 7, 2014.[3] Defendant Donna Zerbo is the president and Chief Executive Officer of defendant AAF-Springfield, Inc.[4] Defendants Sage Capital Management, LLC, and Laurence Busch are former financial advisors to the plaintiffs.[5] Defendants Gerald McGee and Joey Bogus are former employees of plaintiff Springfield Premium Natural Water, Inc.

Plaintiffs' complaint asserts five state-law claims. Count I alleges that defendants Donna Zerbo and AAF-Springfield, Inc., fraudulently induced Timothy Shelton to convey control of plaintiffs, and that Zerbo and AAF-Springfield then used that control to misappropriate plaintiffs' assets.[6] Count II alleges that Zerbo intentionally and negligently breached her fiduciary duty to plaintiffs.[7] Count III alleges that the defendants fraudulently induced plaintiffs to appoint Donna Zerbo and her business partner to the board of directors of plaintiff Springfield Premium Natural Water, Inc., and to convey all interests in plaintiffs to AAFCOR, Inc., a "sham" corporation.[8] Count IV alleges that defendants Joey Bogus and Gerald McGee converted plaintiffs' assets for "their own use or for the benefit and use of the defendants."[9] Finally, Count V alleges that defendants conspired to commit the misconduct described in Counts I through IV.[10]

Plaintiffs filed a motion to remand the action to state court, alleging a lack of complete diversity of citizenship.[11] All defendants (except Gerald McGee, whom plaintiffs failed to serve) filed (or joined in) motions to dismiss plaintiffs' claims based upon multiple grounds.[12] Plaintiffs, in turn, filed a motion for leave to amend their complaint, in order to address the issues raised in defendants' motions to dismiss.[13] One of the two attorneys representing plaintiffs renewed a previously-denied motion to withdraw.[14] Defendants also filed two motions to strike several of plaintiffs' replies.[15] Finally, plaintiffs filed a motion to continue.[16]

The motions referenced in the preceding paragraph were set for oral argument on November 21, 2014, at 10:00 a.m.[17] Despite notice, plaintiffs' counsel failed to appear: see the attached affidavits of Stephanie Tolen, Docket Specialist, and Lisa Waters, Courtroom Deputy Clerk (testifying that this court's order setting all pending motions for oral argument was successfully transmitted to plaintiffs' counsel via e-mail on November 14, 2014). Accordingly, this opinion will address the merits of all pending motions based solely upon the parties' pleadings.


Plaintiffs moved to remand based upon the contention that complete diversity of citizenship is lacking.[18] See 28 U.S.C. § 1332(a)(2); Lincoln Property Co. v. Roche, 546 U.S. 81, 84 (2005). There are two allegedly non-diverse defendants whose citizenship purports to defeat diversity jurisdiction: Joey Bogus and Gerald McGee, both of whom, like plaintiffs, are citizens of the State of Alabama.[19] Defendants argue, however, that Bogus and McGee have been fraudulently joined, and that the court must exclude those defendants from its jurisdictional analysis.[20]

The Eleventh Circuit has held that a non-diverse defendant will be deemed to have been fraudulently joined when there is no possibility that a plaintiff can prove a cause of action against the resident (non-diverse) defendant. See, e.g., Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998). A defendant may meet its "heavy" burden of proving that there is no such possibility by showing that a plaintiff's claims are time-barred. See Henderson v. Washington National Insurance Co., 454 F.3d 1278, 1281 (11th Cir. 2006); Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997).

Here, plaintiffs' claims of fraud, conspiracy, and conversion against Bogus and McGee are time-barred under Alabama law. The statutes of limitation governing those claims are either two or six years. See Ala. Code §§ 6-2-3, 6-2-34 (1975). According to the complaint, Bogus and McGee engaged in the alleged misconduct in 2006 and 2007: more than six years before the commencement of this action on January 31, 2014.[21]

Plaintiffs do not address those issues in their motion to remand. Instead, they contend that defendants have not produced "clear and convincing evidence" of fraudulent joinder.[22] This court concludes, however, that defendants have produced clear and convincing evidence that plaintiffs' claims against Joey Bogus and Gerald McGee are time-barred and, thus, those defendants were fraudulently joined. Accordingly, plaintiffs' motion to remand is due to be denied, and all claims asserted against Joey Bogus and Gerald McGee are due to be dismissed with prejudice.


A court may deny a motion for leave to amend a complaint when the claims asserted in the amended complaint would have been subject to dismissal as a matter of law. See, e.g., Hall v. United Insurance Company of America, 367 F.3d 1255, 1263 (11th Cir. 2004). Here, all of the claims in plaintiffs' proposed amended complaint are founded upon theories of negligence, wantonness, breach of fiduciary duty, fraud, breach of contract, and conspiracy, and all are time-barred. Each of those claims is governed by either a two or six-year statute of limitations. See Ala. Code §§ 6-2-3, 6-2-34. Again, according to plaintiffs' proposed amended complaint, the facts giving rise to those claims occurred in 2006 and 2007: more than six years before the commencement of this action.[23] Even so, plaintiffs offer five reasons why this court should not find that their claims are time-barred.[24] First, they ask the court to use its discretion to allow plaintiffs to conduct discovery before ruling on the statute of limitations issue. The court declines the invitation to do so.

Plaintiffs next argue that the statute of limitations issue involves factual disputes that must be resolved by a jury.[25] The Alabama Supreme Court has held that a court may decide questions regarding statutes of limitation as a matter of law only when the relevant facts are not in dispute. See Gonzales v. U-J Chevrolet, Co., 451 So.2d 244, 247 (Ala. 1984); Sexton v. Liberty National Life Insurance Co., 405 So.2d 18, 21 (Ala. 1981). Here, plaintiffs' proposed amended complaint clearly alleges that the facts supporting each of plaintiffs' claims occurred in 2006 and 2007.[26] Further, as discussed below, the only two arguments offered by plaintiffs in favor of tolling the statutes of limitation - arguments which might have created a factual dispute - are without merit. Accordingly, this argument fails.

Plaintiffs next argue that defendants committed "overt acts" in 2012, 2013, and 2014 which effectively restarted the statute of limitations governing plaintiffs' conspiracy claims.[27] For this proposition, plaintiffs cite federal, criminal conspiracy cases and one case from the Northern District of California.[28] The Alabama Supreme Court has held, however, that the statute of limitations governing a civil conspiracy claim begins to run at the same time as the underlying cause of action. See Boyce v. Cassese, 941 So.2d 932, 943 (Ala. 2006); Kelly v. Alexander, 554 So.2d ...

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