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Town of Florence v. Florence Copper, Inc.

United States District Court, D. Arizona

March 10, 2014

Town of Florence, Plaintiff,
Florence Copper, Inc., et al., Defendants.

ORDER AND OPINION (Motion at docket 14)

JOHN W. SEDWICK, District Judge.


At docket 14, plaintiff Town of Florence ("Town") moves to remand this action to state court. At docket 16, defendant Florence Copper, Inc. ("Copper") opposes the motion. Town's reply is at docket 20. Oral argument is not requested and would not aid the court.


The focal point of the case at bar is a 1, 187 acre parcel of real property located within the boundaries of Town ("the Property"). The Property became subject to a Pre-Annexation Development Agreement in 2003 which incorporated a Planned Unit Development by reference ("the PADA"). In 2007 the Property's zoning was changed from Light Industrial to Residential. Copper is the present owner of the Property.[1]

Town filed this action against Copper, RK Mine Finance Trust 1 ("RK"), and Pinal County in the Superior Court for the State of Arizona In and For Pinal County on October 14, 2013. Town is an Arizona municipal corporation located within Pinal County. Copper is a Nevada Corporation which alleges that its principal place of business is in Canada. RK is an Australian trust. Pinal County is an Arizona municipal corporation. Copper contends that joinder of Pinal County is fraudulent. Town's complaint advances two claims for relief. The first is for a declaration of the parties' rights under various documents that apply to the Property. The second is a claim to acquire all nonconforming uses and structures on the Property through exercise of the Town's power of eminent domain.

Copper removed the litigation from state court pursuant to 28 U.S.C. § 1441(a) on December 3, 2013. The Notice of Removal indicates that there is diversity of citizenship jurisdiction under 28 U.S.C. § 1332(a)(3) and that Pinal County has no interest in the Property which could support its inclusion as a defendant.


A lawsuit may be removed to federal court under 28 U.S.C. § 1441 if the suit could have been brought in federal court originally. Removal statutes are strictly construed against removal and any doubts regarding removal must be resolved against removal and in favor of remand.[2] The Ninth Circuit has explicitly recognized a "strong presumption against removal jurisdiction."[3] The Ninth Circuit has also recognized a "general presumption against fraudulent joinder."[4] This presumption may be overcome where the plaintiff has failed to state a claim against a resident defendant which is obvious under the settled rules of the state.[5] However, where "there is a possibility that a state court would find that the complaint states a cause of action against any of the resident defendants, the federal court must find that the joinder was proper and remand the case to the state court."[6] The removing party bears the burden of establishing federal jurisdiction.[7]


A. Remand

Town's first argument in support of its motion to remand is that the presence of Pinal County as a defendant defeats diversity jurisdiction. There is, of course, no doubt that Pinal County is a citizen of Arizona, as is Town. However, Copper contends that Pinal County has been fraudulently joined. Copper argues that Pinal County is merely a "nominal party" and therefore should be disregarded citing Navarro Savings Ass'n v. Lee .[8]

The question presented in Navarro was "whether the trustees of a business trust may invoke the diversity jurisdiction of the federal courts on the basis of their own citizenship, rather than that of the trust's beneficial shareholders."[9] The trial court had dismissed the action on the basis that the trust was a citizen of every state wherein any of its beneficial shareholders was a resident. That decision was reversed by the Fifth Circuit, and its decision was affirmed by the Supreme Court. Navarro is not instructive with respect to the case at bar. Pinal County is not a trust, and it has no beneficial shareholders.

Copper goes on to argue that Pinal County's only interest in the Property arises from the fact that the Property is subject to Pinal County tax levies so that a tax lien in its favor is imposed by state statute.[10] This it submits is an insufficient interest, because "any tax lien held by the County will remain in place regardless of which side prevails in this case."[11] That does not alter the fact that Pinal County has a continuing interest in the Property, even if its interest appears to be well secured. Copper also points out that the taxes for - were paid.[12] While the - taxes had been paid at the time of removal, the underlying statutory right to a lien was not eliminated. It was in place at the time of the removal and will remain in place. That statutory right means that Pinal County has an interest in the proper disbursal of funds paid in the exercise of Town's power of eminent domain. ...

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