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Thermoset Corp. v. Building Materials Corp of America

United States Court of Appeals, Eleventh Circuit

March 2, 2017

THERMOSET CORPORATION, a Florida corporation f.k.a. Thermoset Roofing Corp., Plaintiff-Appellant,
v.
BUILDING MATERIALS CORP OF AMERICA, a Delaware corporation d.b.a. GAF Materials Corporation, ROOFING SUPPLY GROUP ORLANDO LLC, a Delaware limited liability company, Defendants-Appellees.

         Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 0:14-cv-60268-JIC

          Before HULL, MARTIN, and EBEL, [*] Circuit Judges.

          MARTIN, Circuit Judge

         Thermoset Corporation ("Thermoset"), a roofing contractor, brought this product liability action in Florida state court against Building Materials Corporation ("GAF") and Roofing Supply Group Orlando ("RSGO"), a manufacturer and a distributor of roofing materials (collectively, "the defendants"). GAF removed the case to federal court based on diversity jurisdiction, and the District Court granted summary judgment to the defendants. Thermoset appealed. Shortly afterwards, it became apparent that RSGO was not a diverse party at the time of removal. In light of this jurisdictional defect, Thermoset asks us to remand the entire case back to state court. After careful consideration, and with the benefit of oral argument, we vacate the District Court's summary judgment order and remand with instructions to send this case back to the state court for further proceedings.

         I. BACKGROUND AND PROCEDURAL HISTORY

         A. THERMOSET SUES GAF AND RSGO OVER MALFUNCTIONING ROOFING SYSTEM

         Thermoset is a roofing contractor organized under Florida law with its principal place of business in Florida. In 2005, Thermoset entered into a "Master Select Roofing Contractor Agreement" with GAF, a manufacturer of roofing products and systems incorporated in Delaware with a principal place of business in New Jersey. This agreement enabled Thermoset to use GAF's products on various jobs, and over time, Thermoset developed a working relationship with GAF's representatives.

         Thermoset and its affiliates were hired to install a roof system at Lynden Pindling International Airport in Nassau, Bahamas. The system had to satisfy certain project requirements because of the Bahamian climate. It had to be able to withstand certain wind velocities and uplift pressures. Thermoset asked GAF if it manufactured a roof system that fit these specifications. Dario Miranda, GAF's senior commercial specialist, told Thermoset that GAF had something called the "TPO system" that met the requirements and used a water-based adhesive ("H2O adhesive"). Thermoset also discussed the TPO system and the project requirements with Bob Vitale, an employee of RSGO. RSGO is a distributor of GAF roofing products organized as a limited liability company under Delaware law with a principal place of business in Texas. Thermoset says it relied on recommendations from RSGO and GAF to buy roofing materials and components for the TPO system from RSGO.

         Thermoset began work on the project in March 2010. However, portions of the TPO system's outer membrane soon became detached from the insulation in several places. The same thing happened when Tropical Storm Nicole struck Nassau, even though those winds were weaker than the wind velocities that the roofing system was required by the specifications to withstand. Thermoset notified GAF and RSGO of the TPO system's malfunction. Although RSGO issued an $82, 000 credit to Thermoset for return of the H2O adhesive and certain replacement materials, Thermoset says this amount didn't fully compensate for its damages. Thus, it continued to make demands from GAF and RSGO for compensation and assistance with repairs, but to no avail.

         Thermoset says it incurred losses upwards of $1 million. To recover these losses, it filed suit in Florida state court against the defendants on December 31, 2013. Thermoset made claims for breach of the implied warranty of merchantability; breach of implied warranty of fitness for a particular purpose; breach of express warranty; negligent misrepresentation; and violation of Florida's Deceptive and Unfair Trade Practices Act, Fla. Stat. §§ 501.201-213. On February 3, 2014, GAF removed the case to federal court. Specifically, it invoked the District Court's diversity jurisdiction. After the parties conducted discovery, the defendants jointly moved for summary judgment. The District Court granted summary judgment to the defendants. Thermoset appealed.

         B. JURISDICTIONAL ISSUE

         After Thermoset filed its notice of appeal, this Court noticed that the pleadings below did not sufficiently allege the citizenship of RSGO, as is required to invoke the District Court's diversity jurisdiction. See 28 U.S.C. § 1332(a). Specifically, because "a limited liability company is a citizen of any state of which a member of the company is a citizen, " Rolling Greens MHP, L.P. v. Comcast SCH Holdings, L.L.C., 374 F.3d 1020, 1022 (11th Cir. 2004) (per curiam), the pleadings were required (but failed) to provide the citizenship of each member of RSGO. Thus, we inquired of the parties how they thought this defect could and should be cured. See Mallory & Evans Contractors & Eng'rs, LLC v. Tuskegee Univ., 663 F.3d 1304, 1304 (11th Cir. 2011) (per curiam) ("We are obligated to raise concerns about the district court's subject matter jurisdiction sua sponte."). From the answers to the jurisdictional question, it became apparent that RSGO was in fact not diverse at the time of removal. One of its members was-like Thermoset-a Florida citizen.

         II. DISCUSSION

         The threshold issue now before us is therefore whether we have diversity jurisdiction. Belleri v. United States, 712 F.3d 543, 547 (11th Cir. 2013) ("We may not consider the merits . . . unless and until we are assured of our subject matter jurisdiction."). The defendants admit RSGO was not a diverse party at the time of removal. However, they say both this Court and the District Court can properly exercise diversity jurisdiction over the entire case because RSGO is a nominal party whose citizenship should not be considered for jurisdictional purposes. In the alternative, the defendants argue we should dismiss the non-diverse RSGO under Federal Rule of Civil Procedure 21 in order to preserve diversity jurisdiction over the rest of the case. For its part, Thermoset says RSGO is a real party in interest whose citizenship cannot be ignored. Thermoset also urges us not to use our Rule 21 powers to dismiss RSGO, but to instead vacate the District Court's summary judgment order for lack of ...


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