Reported / Citable
Background
Transportes de Carga Fema sued Hyundai Translead and W&B Service Company in Texas state court. W&B, an LLC with Texas-citizen members, removed the case on diversity grounds; the parties agreed that complete diversity existed and that the amount in controversy exceeded $75,000.
Fema moved to remand, arguing that W&B could not remove because it was a properly served Texas forum defendant. W&B argued that its citizenship should be disregarded under the improper-joinder doctrine and also moved to dismiss under Rule 12(b)(6).
The Court’s Holding
Magistrate Judge Christopher dos Santos recommended remand to the 341st Judicial District Court of Webb County, Texas. Although complete diversity existed, W&B was a Texas citizen, so its removal violated the forum-defendant rule in 28 U.S.C. § 1441(b)(2).
The magistrate judge concluded that improper joinder did not supply an exception. That doctrine is a narrow jurisdictional exception to complete diversity, while the forum-defendant rule is procedural; because diversity jurisdiction already existed, there was no basis to disregard a diverse forum defendant. The recommendation denied fees and costs because no circuit court has resolved the issue and district courts are divided. It also recommended denying W&B’s dismissal motion as moot.
Key Takeaways
- A properly served Texas defendant could not remove a diversity case filed in Texas.
- The improper-joinder doctrine did not permit disregarding a diverse forum defendant.
- The unsettled law on that issue made removal objectively reasonable enough to deny fees.
Why It Matters
The recommendation adds to district-court authority declining to extend improper joinder beyond its role in curing a lack of complete diversity. It underscores that a defendant’s diverse citizenship does not eliminate the separate bar imposed by the forum-defendant rule.