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Overholt v. Purina Animal Nutrition LLC

United States District Court, Western District of Michigan, Southern Division

April 13, 2015

PURINA ANIMAL NUTRITION LLC, d/b/a LAND O’LAKES PURINA FEED LLC, a foreign limited liability company, and DANIEL DEMEYER, an individual, Defendants.



This matter is before the Court on Plaintiffs’ motion for remand. (ECF No. 9.) For the reasons that follow, the motion will be granted.


Plaintiffs Mary Overholt and Diamond Creek Country Store, Inc. filed this action against Purina Animal Nutrition LLC, d/b/a Land O’Lakes Purina Feed LLC (“Purina”) and Daniel DeMeyer in the Circuit Court for St. Joseph County, alleging breach of contract, fraud, and negligent hiring against Purina, and breach of fiduciary duty and tortious interference with prospective business opportunity against DeMeyer. (Compl., ECF No. 1-1.) Defendants removed the action to federal court on the basis of diversity of citizenship. (ECF No. 1.) Although Defendants acknowledge that Defendant DeMeyer is a resident of the State of Michigan, Defendants assert that DeMeyer was fraudulently joined, and that his presence in the action does not destroy diversity. (Notice of Removal ¶ 12, ECF No. 1.)

Plaintiffs’ have moved to remand this action to state court based on their assertion that DeMeyer was not fraudulently joined.


“A civil case is properly removed under § 1441(b) where there is complete diversity of the parties at the time of removal, meaning that ‘all parties on one side of the litigation are of a different citizenship from all parties on the other side of the litigation.’” Kent State Univ. Bd. of Trustees v. Lexington Ins. Co., 512 F. App’x 485, 489 (6th Cir. 2013) (quoting Coyne v. Am. Tobacco Co., 183 F.3d 488, 492 (6th Cir. 1999)). The doctrine of fraudulent joinder is an exception to the complete diversity rule. “Under the fraudulent joinder rule, courts may disregard the citizenship of parties against whom there is no ‘colorable’ cause of action.” Traver v. Live Nation Worldwide, Inc., No. 13-10831, 2013 WL 5913902, at *2 (E.D. Mich. Oct. 28, 2013).

“The removing party bears the burden of demonstrating fraudulent joinder.” Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 949 (6th Cir. 1994). “To prove fraudulent joinder, the removing party must present sufficient evidence that a plaintiff could not have established a cause of action against non-diverse defendants under state law.” Coyne, 183 F.3d at 492-93 (citing Alexander, 13 F.3d at 949). In reviewing a motion to remand in the face of fraudulent joinder allegations, courts apply a test “similar to, but more lenient than, the analysis applicable to a Rule 12(b)(6) motion to dismiss.” Casias v. Wal-Mart Stores, Inc., 695 F.3d 428, 433 (6th Cir. 2012); see also Walker v. Philip Morris USA, Inc., 443 F. App’x 946, 954 (6th Cir. 2011) (noting that the standard of review is “arguably even more deferential” to the plaintiff than a Rule 12(b)(6) motion). The court may pierce the pleadings and consider material outside the pleadings, such as affidavits, “for the limited purpose of determining whether there are ‘undisputed facts that negate the claim.’” Id. (quoting Walker , 443 F. App’x at 955-56). The court must resolve all disputed questions of fact and ambiguities in the controlling state law in favor of the non-removing party. Coyne, 183 F.3d at 493. All doubts as to the propriety of removal are resolved in favor of remand. Id. “[I]f there is a colorable basis for predicting that a plaintiff may recover against non-diverse defendants, ” the court must remand the action to state court. Id. “‘[T]he question is whether there is arguably a reasonable basis for predicting that the state law might impose liability on the facts involved.’” Alexander, 13 F.3d at 949 (quoting Bobby Jones Garden Apts., Inc. v. Suleski, 391 F.2d 172, 176 (5th Cir. 1968)). “The combination of the ‘colorable’ standard with the requirement that all ambiguities of state law are to be resolved in favor of the non-removing party presents a significant hurdle. A defendant attempting to prove fraudulent joinder thus faces a particularly heavy burden.” Kent State, 512 F. App’x at 489.


The parties dispute whether Plaintiffs have stated a colorable cause of action against DeMeyer for either breach of fiduciary duty or for tortious interference with prospective business opportunity.

A. Breach of Fiduciary Duty

In count 4 of their complaint, [1] Plaintiffs allege that DeMeyer breached his fiduciary duties to Plaintiffs.

“[A] fiduciary relationship arises from the reposing of faith, confidence, and trust and the reliance of one on the judgment and advice of another.” Teadt v. Lutheran Church Mo. Synod, 603 N.W.2d 816, 823 (Mich. Ct. App. 1999) (citing Vicencio v. Ramirez, 536 N.W.2d 280, 284 (Mich. Ct. App. 1995)). “Relief is granted when such position of influence has been acquired and abused, or when confidence has been reposed and betrayed.” Id. (citing Vicencio, 536 N.W.2d at 284).

“[W]hether there exists a confidential relationship apart from a well defined fiduciary category is a question of fact.” Fassihi v. Sommers, Schwartz, Silver, Schwartz & Tyler, P.C., 309 N.W.2d 645, 648 (Mich. Ct. App. 1981); see also Wysong Corp. v. M.I. Indus., 412 F.Supp.2d 612, 632 (E.D. Mich. 2005) (“In the Sixth Circuit there is no rule that a specific relationship may never be the basis of fiduciary obligations; rather, courts must look to the actual relationship between the parties.”); see also Mike Vaughn Custom Sports, Inc. v. Piku, 15 F.Supp. 3d 735, 751 (E.D. Mich. 2014) (holding that a non-employee could be an agent, and that allegations that the defendants made false representations to the plaintiffs’ customers that were designed to promote the defendants’ own interests were sufficient to allow an inference of an agency relationship imbued with fiduciary duties); Vargo v. Sauer, 576 ...

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