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Maynard, Cooper & Gale, P.C. v. AAL Group, Ltd.

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

August 23, 2019

MAYNARD, COOPER & GALE, P.C., JON D. LEVIN, and J. ANDREW WATSON, III, Plaintiffs,
v.
AAL GROUP, LTD. and AAL USA, INC., Defendants.

          MEMORANDUM OPINION

          ABDUL K. KALLON, UNITED STATES DISTRICT JUDGE.

         Maynard, Cooper & Gale, P.C., and two lawyers from the law firm, Jon D. Levin, and J. Andrew Watson, III, all of whom are citizens of Alabama, filed this action in Alabama state court against AAL Group, Ltd., a foreign corporation, and AAL USA, Inc., a company whose principal place of business is in Alabama, asserting declaratory judgment, interpleader, and indemnity claims. Doc. 1-2. Plaintiffs allege they face liability arising out of their representation of AAL USA in connection with an Asset Purchase Agreement (“APA”), pursuant to which AAL USA agreed to sell its assets to Black Hall Aerospace, Inc. Id. at 30. Both Defendants have sued the Plaintiffs separately to recover damages related to obligations AAL USA owes AAL Group that predate the APA, and which AAL USA is apparently unable to pay because of the APA. To perhaps obtain some guidance on the competing obligations against it by the AAL USA and AAL Group, Plaintiffs filed this lawsuit in the Circuit Court of Madison County. Although the presence of AAL USA destroys the complete diversity necessary for jurisdiction in this court, AAL Group removed the case to this court on a theory that Plaintiffs fraudulently joined AAL USA to destroy diversity jurisdiction. Doc. 1 at 5. This action is before the court on Plaintiffs' motion to remand, doc. 10, which is due to be granted in light of AAL Group's failure to establish that no possibility exists that Plaintiffs could establish a cause of action against AAL USA, or that the claims against AAL Group have no real connection to the claims against AAL USA.

         I. STANDARD OF REVIEW

         Federal courts are courts of limited jurisdiction, with the power to hear only cases authorized by the Constitution or by statute. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). By federal statute, “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.” 28 U.S.C. § 1441(a). A party seeking removal bears the burden of establishing that jurisdictional requirements are met. See Lowery v. Ala. Power Co., 483 F.3d 1184, 1207 (11th Cir. 2007). “[F]ederal courts are directed to construe removal statutes strictly . . . . [A]ll doubts about jurisdiction should be resolved in favor of remand to state court.” Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999).

         To prove fraudulent joinder, a defendant must show by clear and convincing evidence that “there is no possibility the plaintiff can establish a cause of action against the resident defendant . . . .” Henderson v. Washington Nat'l Ins. Co., 454 F.3d 1278, 1281 (11th Cir. 2006) (quoting Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997)). Alternatively, the defendant must demonstrate that “[it was] joined with a nondiverse defendant as to whom there is no joint, several or alternative liability and . . . the claim against the diverse defendant has no real connection to the claim against the nondiverse defendant.” Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998). This burden “is a ‘heavy one, '” and the court must construe the facts and “resolve any uncertainties about state substantive law in favor of the plaintiff.” Crowe, 113 F.3d at 1538 (citations omitted). “The determination of whether a resident defendant has been fraudulently joined must be based upon the plaintiff's pleadings at the time of removal, supplemented by any affidavits and deposition transcripts submitted by the parties.” Legg v. Wyeth, 428 F.3d 1317, 1322 (11th Cir. 2005) (quotation and emphasis in original omitted).

         “When considering a motion for remand [based on fraudulent joinder], federal courts are not to weigh the merits of a plaintiff's claim beyond determining whether it is an arguable one under state law. If 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.” Crowe, 113 F.3d at 1538 (quotation omitted) (emphasis added). “The plaintiff need not have a winning case against the allegedly fraudulent defendant; [s]he need only have a possibility of stating a valid cause of action in order for the joinder to be legitimate.” Triggs, 154 F.3d at 1287 (emphasis in original). But, “[t]he potential for legal liability ‘must be reasonable, not merely theoretical.'” Legg, 428 F.3d at 1325 n.5 (quotation omitted).

         II. FACTUAL AND PROCEDURAL BACKGROUND

         Oleg Sirbu is the owner of AAL USA and is also the President of AAL Group. Doc. 1-2 at 32. This dispute involves in part contracts AAL USA and AAL Group entered with each other to provide aviation services to governments and prime contractors. Doc. 1-2 at 32. Relevant here, as part of an asset purchase agreement, AAL USA agreed to sell its assets to Black Hall Aerospace. Id. at 30. However, AAL USA refused to proceed with the transaction. Id. AAL USA claimed that the APA caused it to default on obligations (which the parties refer to as Receivables) it owes to AAL Group, related to AAL USA's failure to deliver equipment to AAL Group, or to pay AAL Group for maintenance, equipment, leased products, training, support, licenses, and inspections. Id. at 6-8.

         AAL USA's refusal to proceed with the APA transaction triggered a series of lawsuits. First, Black Hall filed a lawsuit against AAL USA in state court. Id. at 33. AAL USA in turn also sued entities related to Black Hall and former AAL USA employees in state court (the “AAL USA/Black Hall Action”), which the defendants removed to this court, doc. 1 (2:16-cv-02090-KOB-HNJ). Finally, AAL Group sued Black Hall and other defendants in this court (the “AAL Group/Black Hall Action”), doc. 1 (2:17-cv-00399-KOB). This court consolidated the AAL USA/Black Hall Action and the AAL Group/Black Hall Action. Doc. 53 (2:17-cv-00399-KOB); Doc. 144 (2:16-cv-02090-KOB-HNJ). Black Hall subsequently moved to dismiss the consolidated actions. Doc. 170 (2:17-cv-00399-KOB). In partially granting the motion, Judge Karon Bowdre held that AAL USA assigned to Black Hall only those liabilities that AAL USA incurred after it executed the APA, and that Black Hall was not liable to AAL Group for AAL USA's liabilities that pre-dated the APA. Doc. 169 at 13 (2:17-cv-00399-KOB). In other words, the court ruled that Black Hall had no liability for the Receivables AAL USA owed AAL Group. Thereafter, the parties settled the consolidated action. Doc. 245 (2:17-cv-00399-KOB).

         Relevant to this specific case now before this court, AAL USA and Sirbu filed a lawsuit in the Circuit Court of Jefferson County, Alabama, captioned AAL USA, Inc., et al. v. Maynard, Cooper & Gale, P.C., 01-CV-2017-905393.00, against Maynard, asserting claims related to Maynard's representation of AAL USA in the APA transaction for alleged violations of the Alabama Legal Services Liability Act, Ala. Code § 6-5-570 et seq. (“ALSLA”). Doc. 1-2 at 35-36. AAL USA and Sirbu alleged that Maynard failed to disclose that AAL USA would be left with “substantial liabilities, ” and the APA transaction depleted AAL USA of its assets, rendering it unable to pay the Receivables it owed to AAL Group. Doc. 1-2 at 35-36. For its part, AAL Group sued Maynard in this court, captioned AAL Group, Ltd. v. Maynard Cooper & Gale, P.C., also under the ALSLA, doc. 1 (2:18-cv-01536-SGC), alleging, in part, that Maynard breached its duties to AAL Group by, among other things, “[f]ailing to disclose to AAL Group that the terms of the APA and Assignment would essentially divest AAL Group of the full value of the Receivables, ” id. at 19.

         In response to the AAL USA and AAL Group lawsuits against Maynard, Plaintiffs filed this lawsuit in the Circuit Court of Madison County, Alabama, asserting: (1) a claim interpleading AAL USA and AAL Group to resolve their dual claims for damages over the Receivables; (2) two requests for declaratory judgments that Plaintiffs bear no liability to AAL Group regarding the APA, and that the settlement in the consolidated action before Judge Bowdre sets off Plaintiffs' liability for AAL USA's and AAL Group's claims for the Receivables; and (3) a request that AAL USA indemnify Plaintiffs for any liability to AAL Group. Id. at 33, 37-40. Although complete diversity of citizenship amongst the parties does not exist, AAL Group removed the case to this court on a fraudulent joinder theory. Doc. 1. Presently before the court is the Plaintiffs' motion to remand, doc. 10.

         III. ANALYSIS

         The court turns now to AAL Group's contention in the Notice of Removal that Plaintiffs fraudulently joined the non-diverse defendant, AAL USA, because “[t]here is no reasonable basis in law and/or fact for believing that Plaintiffs could recover or obtain any relief from AAL USA on any of the claims . . . .” Doc. 1 at 6. For the reasons stated below, the court finds that AAL Group has failed to show that no possibility exists that the state court would find that Plaintiffs have pleaded at least one plausible cause of action against AAL USA.

         A. Whether Plaintiffs can recover on their interpleader claim ...


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