Pace v. Cirrus Design Corp.

93 F.4th 879

Glen PACE, Plaintiff—Appellant, v. CIRRUS DESIGN CORPORATION, Individually and, doing business as Cirrus Aircraft Corporation;Continental Motor Corporation; AmSafe; Arapahoe Aero, Defendants—Appellees.

No. 22-60603

United States Court of Appeals, Fifth Circuit

FILED February 23, 2024

Appeal from the United States District Court for the Southern District of Mississippi, USDC No. 2:22-CV-46, Keith Starrett, U.S. District Judge

Wayne E. Ferrell, Jr., Esq. (argued), Law Offices of Wayne E. Ferrell, Jr., Jackson, MS, for Plaintiff-Appellee.

Howard Carter Marshall, Esq. (argued), Attorney, James Aristide Holmes, Kevin Richard Tully, Christovich & Kearney, L.L.P., New Orleans, LA, for Defendant-Appellee Cirrus Design Corporation.

Hugh Ruston Comley, Esq., Sidney E. Lampton, Attorney, Watkins & Eager, P.L.L.C., Jackson, MS, Michael Ross Cunningham, Esq. (argued), Cunningham Swaim, L.L.P., Dallas, TX, for Defendant-Appellee Continental Motor Corporation.

Malissa Wilson, Forman Watkins & Krutz, L.L.P., Jackson, MS, Nafiz Cekirge (argued), Riley Safer Holmes & Cancila, L.L.P., New York, NY, for Defendant-Appellee AmSafe.

Edward C. Bresee, Anne M. Landrum, Attorneys, Mozley, Finlayson & Loggins, L.L.P., Atlanta, GA, William Wright Hill, Jr., Jernigan, Copeland Attorneys, P.L.L.C., Madison, MS, Clyde X. Copeland, III, Esq. (argued), Jones Petroleum Company, Incorporated, Jackson, GA, for Defendant-Appellee Arapahoe Aero.

Before Smith, Southwick, and Higginson, Circuit Judges.

Leslie H. Southwick, Circuit Judge:

Glen Pace appeals the dismissal of his claims against multiple corporate defendants for the personal injuries he suffered from the crash of a single-engine, general aviation airplane he was piloting. Pace filed this suit in Mississippi state court, but it was later removed to federal district court. The district court held the two Mississippi defendants were improperly joined, which allowed removal, and then dismissed the claims against the out-of-state defendants for lack of personal jurisdiction. We AFFIRM.

FACTUAL AND PROCEDURAL BACKGROUND

On November 22, 2019, Pace was piloting a Cirrus SR22T aircraft owned by Martin Aviation, LLC when it crashed in Smith County, Texas. He had no passengers. Pace's flight began in Hattiesburg, Mississippi, continued to multiple Texas stops, and was to return to Hattiesburg. The crash occurred during the aircraft's flight between Terrell, Texas, and Gladewater, Texas, when several components of the aircraft allegedly malfunctioned. Pace, a Mississippi resident, suffered several severe injuries from the crash.

Pace filed suit in a Mississippi state circuit court in November 2021. He asserted multiple claims against corporate defendants Cirrus, Continental, AmSafe, and Apteryx, Inc.¹ Cirrus allegedly manufactured the aircraft and its emergency parachute. Continental is the alleged manufacturer of the aircraft's engine. AmSafe is the alleged manufacturer of several safety features on the aircraft: seatbelts, shoulder harnesses, and inertial reels. Apteryx allegedly maintained, overhauled, rebuilt, and/or repaired the aircraft and/or its engine. None of these corporate defendants are Mississippi-based.

Pace amended his complaint in January 2022 to add four claims of negligence and misrepresentation against Wade Walters, individually and doing business as Performance Aviation, LLC. Walters is a resident of Mississippi, and Performance Aviation is a Mississippi limited liability company. They owned the aircraft from February 2014 until October 2017. Walters and Performance Aviation lost possession of the aircraft in 2016 when it was seized as part of a forfeiture action against Walters. Martin Aviation purchased the aircraft at a court-sanctioned sale in October 2017 and remained the registered owner until the crash.

The non-Mississippi corporate defendants filed a notice of removal in April 2022, removing the action to the United States District Court for the Southern District of Mississippi. These defendants alleged Walters and Performance Aviation had been fraudulently joined and diversity jurisdiction existed. Pace sought remand to state court, arguing he had viable claims against the Mississippi defendants. The district court held Pace failed to state a claim against either in-state defendant and there was fraudulent misjoinder.

The diverse corporate defendants also filed motions to dismiss for lack of personal jurisdiction. Pace requested jurisdictional discovery and filed oppositions to each motion. The district court found that it lacked personal jurisdiction over the corporate defendants, granted each motion to dismiss, and denied Pace's motion for jurisdictional discovery. Pace timely appealed.

DISCUSSION

On appeal, Pace argues the district court erred in three ways: (1) finding the two Mississippi defendants were fraudulently joined; (2) determining it did not have personal jurisdiction over the non-Mississippi, corporate defendants; and (3) denying Pace jurisdictional discovery.

A district court's denial of remand and determination of personal jurisdiction are both reviewed de novo. Clemens v. McNamee, 615 F.3d 374, 378 (5th Cir. 2010); Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 311 (5th Cir. 2002). A district court's ruling on a remand motion "under the fraudulent joinder doctrine" is also reviewed de novo. Johnson v. Heublein Inc., 227 F.3d 236, 240 (5th Cir. 2000).

We now discuss each of Pace's contentions.

I. Fraudulent joinder of the Mississippi defendants

Pace argues the Mississippi defendants were properly joined based on plausible negligence and misrepresentation claims. The validity of the district court's decision that they were improperly joined turns on whether Pace sufficiently pled at least one viable cause of action against either Walters or Performance Aviation.

Defendants may remove a civil action brought in state court to federal court if the action is within a federal court's original jurisdiction. 28 U.S.C. § 1441(a). The removal statute is strictly construed, with doubts "resolved in favor of remand." Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008). Defendants may remove an action based on diversity jurisdiction only if there is complete diversity between all named parties, "and no defendant is a citizen of the forum State." Lincoln Prop. Co. v. Roche, 546 U.S. 81, 84, 126 S.Ct. 606, 163 L.Ed.2d 415 (2005). If a non-diverse defendant is fraudulently joined, however, the citizenship of that party can be ignored. Williams v. Homeland Ins. Co. of New York, 18 F.4th 806, 812 (5th Cir. 2021). "[W]e have recognized two ways to establish improper joinder: '(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.' " Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc). Only the second way is relevant to this appeal.

An in-state defendant is fraudulently joined when the moving "defendant has demonstrated that there is no possibility" the plaintiff can recover against the in-state defendant. Id. One method courts utilize to determine fraudulent joinder is to review the allegations within the complaint under "a Rule 12(b)(6)-type analysis." Id. If there is a possibility that, when looking at the facts and inferences in a light most favorable to the plaintiff, the plaintiff could succeed in establishing a claim against the defendant, the defendant's citizenship must not be disregarded. Great Plains Tr. Co., 313 F.3d at 311.

The district court addressed three claims against the Mississippi defendants: breach of contract, fraudulent misrepresentation, and negligence. Only the misrepresentation and negligence claims are disputed.

a. Fraudulent misrepresentation

Because Pace's misrepresentation claim "sound[s] in fraud," we assume, as did the district court, that his claim was for fraudulent misrepresentation. Lone Star Ladies Inv. Club v. Schlotzsky's Inc., 238 F.3d 363, 369 (5th Cir. 2001). Under Mississippi law, fraudulent misrepresentation requires:

(1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of the truth; (5) his intent that it should be acted on by the hearer and in the manner reasonably contemplated; (6) the hearer's ignorance of its falsity; (7) his reliance on the truth; (8) his right to rely thereon; and (9) his consequent and proximate injury.

Elchos v. Haas, 178 So. 3d 1183, 1198 (Miss. 2015).

The claimed fraudulent misrepresentation here is the prior owner's assertion, in some manner, that the aircraft did not have the defects that caused Pace's injuries. The district court found Pace's allegations failed to meet either the Mississippi or the federal pleading standard.

The federal standard is found in Federal Rule of Civil Procedure 9(b):

Fraud or Mistake; Conditions of Mind. In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.

Rule 9(b)'s heightened pleading requirements apply when a plaintiff's misrepresentation claim "sound[s] in fraud." Lone Star Ladies Inv. Club, 238 F.3d at 368-69. Because Pace's misrepresentation claims are based on alleged false statements, he must satisfy Rule 9(b)'s heightened pleading. Id.

This rule does separate pleading the factual circumstances of the fraud from pleading the state of mind. As to the circumstances supporting fraud, we have held that they must be alleged with particularity. United States v. Bollinger Shipyards, Inc., 775 F.3d 255, 260 (5th Cir. 2014). The district court called this the "who, what, when, where, and how of the fraud or misrepresentation," which is a fair characterization. We do not find any discussion of the pleading of "conditions of a person's mind" in the district court's opinion. FED. R. CIV. P....