Honey Holdings I, Ltd. v. Alfred L. Wolff, Inc.

81 F.Supp.3d 543

HONEY HOLDINGS I, LTD., Plaintiff

v.ALFRED L. WOLFF, INC., et al., Defendants.

Civil Action No. G–14–0240.

United States District Court, S.D. Texas, Galveston Division.

Signed Jan. 23, 2015.

Thomas Duncan Kennedy, Dickinson Wheelock, Houston, TX, for Plaintiff.

Stacey L. Barnes, Lewis & Barnes, Kevin Gerard Corcoran, Attorney At Law, Mary Cazes Greene, Phelps Dunbar LLP, Kristin Elizabeth Kruse, Yasmin Islam Atasi, Winstead PC, Jessica Glatzer Mason, Gardere Wynne Sewell LLP, Geoffrey Alan Berg, Berg Feldman Johnson Bell, LLP, Houston, TX, Nitoj P. Singh, Dhillon and Smith LLP, San Francisco, CA, Frederick William Sultan, IV, Gardere Wynne Sewell LLP, Austin, TX, Lucas C. Meyer, Elisabeth T. Kidder, Richard T. Rossier, McLeod Watkins & Miller, Washington, DC, Alan S. Madans, Daniel Cummings, Rothschild Barry & Myers LLP, Chicago, IL, for Defendants.

OPINION AND ORDER OF REMAND

MELINDA HARMON, District Judge.

The above referenced cause, removed by Defendant Bees Brothers, LLC (“Bees Brothers”) from the 334th Judicial District Court in Chambers County, Texas on both federal question jurisdiction, 28 U.S.C. § 1331, and diversity jurisdiction, 28 U.S.C. § 1332(a)(1), purportedly seeks a declaration of the rights, remedies, and obligations of the parties (including the agreements, representations, and warranties to defend, indemnify, and hold HHI harmless)¹ under various different purchase orders (“P.O.s”) for foreign origin honey bought by Plaintiff Honey Holding I, Ltd. (“HHI”)² from each of the Defendants (“Supplying Defendants”) other than the Burns Defendants.³ Inter alia, pending before the Court in the instant suit is HHI's motion to remand (# 26).

Because the Court must determine that it has subject matter jurisdiction before it can rule on other matters, the Court addresses HHI's motion to remand before numerous other pending motions. After reviewing the record and the applicable law, for the reasons state in this document, the Court concludes that the motion to remand should be granted.

HHI's Original Petition (# 1–1)

HHI alleges that the Supplying Defendants made representations and warranties about the foreign origin of honey that they supplied to HHI, including but not limited to the following: (1) that the honey they supplied complied with the definition of origin in U.S. Customs law and other applicable regulations and statutes; (2) that the honey was not adulterated or misbranded within the meaning of the Federal Food, Drug & Cosmetic Act and any similar state or local statute or regulation; (3) that Supplying Defendants guaranteed, assured and indemnified HHI from all liability, loss, damages and expenses, including attorney fees, because of the failure of the supplied honey to conform to the promises and warranties in the purchase order; (4) that Supplying Defendants agreed, promised and warranted to hold HHI harmless from all loss, liability, damages and claims for damages, suits, recoveries, judgments or executions which may be brought or arise from the sale of the honey they supplied; and (5) that Supplying Defendants agreed, promised, warranted, and guaranteed to maintain comprehensive liability insurance, including products liability insurance.

HHI explains that there is a consolidated class action filed in the United States District Court for the Northern District of Illinois against HHI and others by domestic honey producers asserting claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”). 18 U.S.C. §§ 1962(c) and (d), for false advertising and unfair competition under the Lanham Act, 15 U.S.C. § 1125(a), and common law misrepresentation and unjust enrichment. In re Honey Transshipping Litig., Case No. 13–cv–2905 (Honorable Judge Joan B. Gottschall, presiding); Murphy Decl., # 26–1. HHI contends that Defendants' obligations with regard to these suits arise under the common law and the contracts with HHI that each Defendant entered, on which HHI seeks declaratory relief here. Copies attached to the Original Petition: Exhibits A–1, A–2, A–3 (Defendant Alfred L. Wolff, Inc.); B–1, B–2, B–3, and B–4 (Bees Brothers, f/k/a MYM Trading, LLC); C–1, C–2, C–3 (Brightmin Enterprizes, LLC); D–1, D–2, and D–3 (China Industrial Manufacturing Group, Inc. (“CIMG”)); E–1 and E–2 (China Products, NA, Inc.); F–1, F–2, F–3. and F–4 (Eastin Wells, Inc.); G–1, G–2. G–3 (Ecotrade International, Inc.); H–1, H–2, and H–3 (Ergogenic Nutrition); I–1, I–2, and I–3 (Four Seasons Food Distributing, Inc.); J–1, J–2 and J–3 (National Commodities Company); K–1, K–2, and K–3 (Odem International, Inc.); L–1 and L–2 (Premium Food Sales, Inc.); M–1, M–2, and M–3 (Sunland International Trading, Inc.); N–1, N–2 and N–4 (Texas Boga, Inc.); and 0–1, Real Estate and Asset Purchase Agreement (Burns Defendants).

The Original Petition, ¶ 17, p. 5, requests

a declaration of the rights, remedies, and obligations of the parties (including each Defendant's obligation to indemnify and defend HHI) under the contractual relationship between each Defendant and HHI in the context of loss suffered by HHI and claims asserted in certain lawsuits filed against HHI concerning the sources and the contents of certain honey Defendants sold to HHI. Further, Plaintiff seeks a judgement awarding such other relief as permitted by law under the agreements at issue, including for the enforcement and or breach thereof.

Applicable Law

Under 28 U.S.C. § 1441(a)⁴ any state court action over which federal courts would have original jurisdiction may be removed from state to federal court. Gasch v. Hartford Accident & Indemnity Co., 491 F.3d 278, 282 (5th Cir.2007) ; Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir.2008) ( “A district court has removal jurisdiction in any case where it has original jurisdiction.”). The original jurisdiction may be federal question jurisdiction under 28 U.S.C. § 1331 (“The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.”) or diversity jurisdiction under 28 U.S.C. § 1332(a) (where there is complete diversity of citizenship between the sides and the amount in controversy exceeds the sum of $75,000.00, excluding interest and costs).⁵

The right to remove depends upon the plaintiff's pleading at the time of the petition for removal. Pullman Co. v. Jenkins, 305 U.S. 534, 537–38, 59 S.Ct. 347, 83 L.Ed. 334 (1939) ; Cavallini v. State Farm Mutual Auto Ins., 44 F.3d 256, 264 (5th Cir.1995) ; Ford v. Property & Cas. Ins. Co. of Hartford, No. Civ. A. H–09–1731, 2009 WL 4825222, *2 (S.D.Tex. Dec. 9, 2009).

The removing party bears the burden of showing that subject matter jurisdiction exists and that removal was proper. Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir.2002). Any doubts are construed against removal because the removal statute is strictly construed in favor of remand. Id.

A district court has original federal question jurisdiction over “all civil actions arising under the Constitution, laws or treaties of the United States.”28 U.S.C. § 1331. Under the well-pleaded complaint rule, “a federal court has original or removal jurisdiction only if a federal question appears on the face of the plaintiff's well-pleaded complaint” and “generally there is no federal jurisdiction if the plaintiff properly pleads only a state law cause of action.” Gutierrez, 543 F.3d at 251–52. “A federal question exists ‘only [in] those cases in which a well-pleaded complaint established either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law.’ ” Singh v. Duane Morris, LLP, 538 F.3d 334, 337–38 (5th Cir.2008), citing Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 27–28, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) (construing § 1331 ), and Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 809, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988) (construing § 1338(a)).⁶ “[T]he fact that federal law may provide a defense to a state claim is insufficient to establish federal question jurisdiction.” Bernhard v. Whitney Nat'l Bank, 523 F.3d 546, 550–51 (5th Cir.2008).

“ ‘A corollary to the well-pleaded complaint doctrine is that Congress may so completely preempt a particular area that any civil complaint raising this select group of claims is necessarily federal in character.’ ” Gutierrez, 543 F.3d at 252, quoting Johnson v. Baylor Univ., 214 F.3d 630, 632 (5th Cir.2000). Complete preemption creates federal removal jurisdiction, while ordinary preemption, which is a federal defense and may arise by express statutory provision or by a direct conflict between the operation of federal and state law, but does not appear on the face of the complaint, does not create removal jurisdiction. Id. at 252.

The United States Constitution, Article II § 2, cl. 2, gives to the Executive Branch the “ ‘[p]ower, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur.’ ” In re World Imports, Ltd., 511 B.R. 738, 742 (Bkrtcy.E.D.Pa.2014). The Constitution places a treaty “ ‘on the same footing, and in order of like obligation, with an act of legislation; both are declared ... to be the supreme law of the land, and no superior efficacy is give to either over the other.’ ” Id., quoting Whitney v. Robertson, 124 U.S. 190, 194, 8 S.Ct. 456, 31 L.Ed. 386 (1888).

Title 28 U.S.C. § 1331 gives federal courts subject matter jurisdiction over civil actions that inter alia “arise under” a treaty of the United States. Id. “A United States treaty is a contract with another nation which under Art. VI, Cl. 2 of the Constitution becomes a law of the United States.” El Paso Water Improvement Dist. No. 1 v. International Boundary & Water Comm'n, 701 F.Supp. 121, 124 (W.D.Tex.1988), citing United States v. Reid, 73 F.2d 153, 155 (9th Cir.1934), cert. denied, 299 U.S. 544, 57...