Opinion
Case No. 3:21-cv-03105-TLW Case No. 3:21-cv-03107-TLW
2021-12-02
Crystal CAUGHMAN as Personal Representative of the Estate of M.C., Plaintiff v. ATRIUM FINANCE I, LP; Atrium Hospitality, LP; and Charles Johnson, Defendants
Badge Humphries, Griffin Humphries LLC, Sullivan's Island, SC, David W. Farrell, David W. Farrell Law Office, James Mixon Griffin, Margaret Nicole Fox, Griffin Davis LLC, Columbia, SC, for Plaintiff. Daniel Richard Fuerst, Elizabeth Fraysure Fulton, Hall Booth Smith PC, Mt. Pleasant, SC, Joseph D. Thompson, III, Hall Booth Smith, Charleston, SC, for Defendants.
Badge Humphries, Griffin Humphries LLC, Sullivan's Island, SC, David W. Farrell, David W. Farrell Law Office, James Mixon Griffin, Margaret Nicole Fox, Griffin Davis LLC, Columbia, SC, for Plaintiff.
Daniel Richard Fuerst, Elizabeth Fraysure Fulton, Hall Booth Smith PC, Mt. Pleasant, SC, Joseph D. Thompson, III, Hall Booth Smith, Charleston, SC, for Defendants.
Order
Terry L. Wooten, Senior United States District Judge
Plaintiff Crystal Caughman filed these wrongful death and survival actions against Defendants Atrium Finance, Atrium Hospitality, and Charles Johnson in South Carolina state court, and Defendants removed them to federal court. Because the Court lacks subject matter jurisdiction over these cases, they are remanded to state court.
The case numbers for the wrongful death and survival actions are 3:21-cv-03105 and 3:21-cv-03107, respectively.
I. Factual and Procedural History
The Court recites the facts in the light most favorable to Caughman and construes all disputed facts in her favor, as the Court must do at this stage. See Hartley v. CSX Transp., Inc. , 187 F.3d 422, 424 (4th Cir. 1999) (holding that when deciding a motion to remand based on an allegation of fraudulent joinder, a court must "resolv[e] all issues of law and fact in the plaintiff's favor").
These cases arise out of the death of Caughman's four-year-old daughter, M.C., at an Embassy Suites hotel in Columbia, South Carolina. Caughman, who worked at the hotel, was staying as a guest at the hotel with her daughters. They checked in on February 8, 2021 and were assigned a room on the seventh floor of the hotel.
Caughman became concerned about M.C.’s safety because M.C. would lean over and through the railing overlooking the open atrium and water fountain seven stories below. Caughman expressed her safety concerns to Johnson—the hotel's general manager—and asked him to move her family to a ground floor room, but her request was not granted. As the general manager, Johnson was the person on the property with the highest level of authority over the hotel's operations and all hotel employees reported to him.
Johnson denies that she asked him to move her family to a lower floor and he denies that she raised any concerns to him about her children's safety due to their room being on a high floor. ECF No. 16-1 at ¶¶ 14–15. But as noted previously, this and all other factual disputes must be construed in Caughman's favor at this stage. Hartley , 187 F.3d at 424.
In the early morning hours of February 20, 2021, M.C. wandered out of their room, fell over or through the railing overlooking the open atrium, and landed on the concrete floor seven stories below, suffering life-ending injuries.
Caughman, as personal representative of M.C.’s estate, brought these actions against Atrium Finance, Atrium Hospitality, and Johnson. Atrium Finance and Atrium Hospitality are Delaware limited partnerships that own and manage the hotel, respectively. Johnson is a South Carolina citizen and resident.
Defendants removed the cases to federal court, invoking this Court's diversity jurisdiction under 28 U.S.C. § 1332(a). Caughman filed a motion to remand, Defendants filed a response in opposition, and she filed a reply. This matter is now ripe for decision.
In the wrongful death case, these briefs were filed at ECF Nos. 12, 16, and 18. Identical briefs were filed in the survival case at ECF Nos. 11, 15, and 17. For ease of reference, the Court will only cite the briefs and filings in the wrongful death case.
The Court also notes that Johnson filed a motion to dismiss, which has been fully briefed. ECF Nos. 5, 13, 17. Because the Court lacks subject matter jurisdiction over these cases for the reasons discussed in this order, it would not be appropriate for the Court to rule on that motion. See Brantley v. Vaughan , 835 F. Supp. 258, 261 (D.S.C. 1993). However, the briefs on both motions contain overlapping arguments about the jurisdictional issue, so the Court has considered the arguments raised on both motions in ruling on the remand motion.
II. Discussion
Defendants argue that, despite Johnson's South Carolina citizenship, complete diversity exists in this case because he was fraudulently joined. " ‘Fraudulent joinder’ is a term of art, it does not reflect on the integrity of plaintiff or counsel, but is merely the rubric applied when a court finds either that no cause of action is stated against the nondiverse defendant, or in fact no cause of action exists." AIDS Counseling & Testing Ctrs. v. Group W. Television, Inc. , 903 F.2d 1000, 1003 (4th Cir. 1990) (cleaned up and citation omitted). "To show fraudulent joinder, the removing party must demonstrate either outright fraud in the plaintiff's pleading of jurisdictional facts or that there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court." Hartley , 187 F.3d at 424. "The party alleging fraudulent joinder bears a heavy burden—it must show that the plaintiff cannot establish a claim even after resolving all issues of law and fact in the plaintiff's favor. This standard is even more favorable to the plaintiff than the standard for ruling on a motion to dismiss under Fed. R. Civ. P. 12(b)(6)." Id. "[C]ourts should resolve all doubts about the propriety of removal in favor of retained state court jurisdiction." Id. at 425. In making this determination, "all legal uncertainties are to be resolved in the plaintiff's favor," and "a ‘novel’ issue ... cannot be the basis for finding fraudulent joinder." Id. "[U]ltimate success is not required to defeat removal. Rather, there need be only a slight possibility of a right to relief. Once the court identifies this glimmer of hope for the plaintiff, the jurisdictional inquiry ends." Id. at 426.
Hartley , a leading case on fraudulent joinder in the Fourth Circuit, serves as a shot across the bow to district judges who might otherwise attempt to decrypt unclear state law when considering fraudulent joinder allegations. In that case, a South Carolina plaintiff was involved in a vehicular collision with a train operated by CSX, an out-of-state corporation, at a railroad crossing in the Town of Allendale. Id. at 423. In South Carolina state court, the plaintiff brought various claims against the state department of transportation and the town, generally alleging negligence regarding their maintenance of the railroad crossing, in addition to bringing claims against CSX. Id. at 423–24. CSX removed the case to federal court, arguing that complete diversity existed because the department and town were sham defendants who were named solely to defeat diversity. Id. at 424. CSX argued that the department and town were fraudulently joined because, under the public duty rule, they could not be liable as a matter of law. Id.
The district court ultimately determined that the public duty rule applied, and thus concluded that the department and town were fraudulently joined. Id. However, the district court recognized that the public duty rule's application in those circumstances presented a novel issue and that other courts might disagree. Id. at 425. In light of that uncertainty, the district court certified its order for interlocutory appeal. Id.
On appeal, the Fourth Circuit recognized—as did the district court—that "[n]o South Carolina case has squarely held that the public duty rule forecloses [the plaintiff's] claims." Id. at 424. The Fourth Circuit noted that deciding whether the rule applied calls for the use of a six-part test, with each part requiring a judgment call that could be impacted by several variables and might need factual investigation. Id. at 424–25. Recognizing that "a jurisdictional inquiry is not the appropriate stage of litigation to resolve these various uncertain questions of law and fact," the Fourth Circuit concluded that the district court "should not have made its own determination concerning the novel application of the public duty rule to [the plaintiff's] claims." Id. at 425. Instead, the Fourth Circuit held that the district court "should have resolved its doubts in favor of remanding the case to state court." Id.
In this case, while Defendants refer to Johnson as a "sham defendant," they do not allege actual fraud by Caughman. ECF No. 16 at 4. Instead, the focus is on whether they have shown that there is no possibility that she could establish a claim against him in state court. In making this determination, the Court is not bound by the allegations in the pleadings and may consider the entire record. AIDS Counseling , 903 F.2d at 1004. The record in this case includes the complaint, memoranda filed by counsel for the parties, and affidavits relevant to the jurisdictional issue.
To determine whether it is possible that Caughman could establish a claim against Johnson in state court, the Court turns to consideration of the duties owed to a hotel guest.
In South Carolina, while an innkeeper is not the insurer of safety of its guests, it is settled that an innkeeper is under a duty to its guests to take reasonable action to protect them against unreasonable risk of physical harm. As a guest at the motel, [the innkeeper] undoubtedly had a duty to protect [the guest] on some level. The extent of that duty may be determined with an analysis of whether the innkeeper knew or had reason to know of a probability of harm to its guests. Perhaps a clearer description of a business owner's duty, then, is that a business owner has a duty to take reasonable action to protect its invitees against the foreseeable risk of physical harm.
Bass v. Gopal, Inc. , 395 S.C. 129, 716 S.E.2d 910, 913 (2011) (citations omitted).
Keeping in mind that Defendants bear the burden of showing that Caughman does not have a viable claim against Johnson, the Court notes that neither party has submitted a factually-on-point case from a South Carolina appellate court or any other court.
This is not a criticism of the parties’ able counsel, who have briefed this issue in detail. If a case does not exist, it cannot be found.
Defendants cite Benjamin v. Wal-Mart Stores, Inc. , 413 F. Supp. 2d 652 (D.S.C. 2006). That federal district court opinion concluded that the plaintiff, who slipped on some spilled bird seed, did not have a viable negligence claim against a Walmart pet department manager for failing to keep the aisle in a reasonably safe condition even though there was no indication that the manager knew of the spill. See id. at 654, 657. Those facts, of course, are much different from the facts of this case. A South Carolina court may or may not rely on the principles in the non-precedential opinion in Benjamin to conclude that a hotel's general manager, whose precise duties are in debate at this early stage, cannot be held liable for a four-year-old guest's death after allegedly declining to grant the parent's request to be moved to a lower floor due to the precise risk that ultimately came to pass.
On the other side, Caughman cites Baker v. Dallas Hotel Co. , where the Fifth Circuit held that an innkeeper could be liable under Texas law for a child guest falling out of a window with a defective window screen. See 73 F.2d 825, 827 (5th Cir. 1934). Those facts are closer to the facts of this case. But a South Carolina court may or may not be persuaded by an 87-year-old Fifth Circuit case applying Texas law.
Caughman also cites Crosswhite v. Shelby Operating Corp. , which reached the same conclusion as Baker under virtually identical facts, but this time under Virginia law. 182 Va. 713, 30 S.E.2d 673, 675 (1944). A South Carolina court may or may not be persuaded by a 77-year-old case applying Virginia law.
Of course, none of those cases are a "South Carolina case ... squarely hold[ing] that" there is or is not potential liability for Johnson under the disputed facts of this case. Hartley , 187 F.3d at 424.
In addition to that uncertainty, Johnson argues that he is merely an employee of an innkeeper, not an innkeeper himself, so he does have liability as an innkeeper as a matter of law. ECF No. 17 at 2. In support of his argument, he quotes the definition of "innkeeper" in S.C. Code Ann. § 45-1-40 : "proprietor of any hotel, inn, boarding house, motor court or motel where beds or lodging are for hire." But that quotation omits the highly-relevant first part of the sentence. The full sentence reads as follows: " ‘Innkeeper’ as used in this section shall mean the proprietor of any hotel, inn, boardinghouse, motor court, or motel where beds or lodging are for hire." S.C. Code Ann. § 45-1-40 (emphasis added). That section deals only with an innkeeper's liability for the loss of valuables left in a guest's room.
The generally-applicable definition of innkeeper is found in § 45-2-20. That statute precisely provides that, for purposes of § 45-2-10 through -80, " ‘innkeeper’ means the owner, operator, manager , or keeper of a lodging establishment." S.C. Code Ann. § 45-2-20(1) (emphasis added). Sections 45-2-10 through -80 include such generally-applicable provisions as denial of accommodations (§ 45-2-30), criminal liability for allowing guests to use drugs (§ 45-2-40), maintaining a guest register (§ 45-2-50), and ejecting guests (§ 45-2-60). When considering a hotel manager's potential liability for negligence, the Court is not persuaded that the definition of innkeeper that the South Carolina General Assembly explicitly confined to the statute dealing with loss of valuables applies over the generally-applicable statutory definition of innkeeper, which specifically includes managers. Notably, however, there is not any South Carolina caselaw on point.
"Lodging establishment" includes a hotel. S.C. Code Ann. § 45-2-20(2).
The purpose of the preceding discussion is not to provide a treatise on innkeeper liability in South Carolina. Instead, it merely serves to illustrate the uncertainty about the precise state of the law. The Court could hazard an educated guess about what a South Carolina court may do when presented with these issues and these facts, but that is exactly what the Fourth Circuit held that district judges should not do when state law is not clear. See Hartley , 187 F.3d at 425 (concluding that the district court describing the case as "novel" and saying that other courts might look at it differently should have led the district court to "resolve[ ] its doubts in favor of remanding the case to state court").
The parties also debate the possible success of a claim against Johnson based on the allegedly defective design of the railing and whether the attractive nuisance doctrine applies. But because the Court concludes that it is possible that Johnson could be liable to Caughman under a standard negligence theory based on his alleged denial of her request to be moved to a lower floor, the Court will not address the possible success of the design claim or the attractive nuisance theory.
As it is required to do, the Court follows the Fourth Circuit's guidance and declines to speculate on the precise state of innkeeper liability in South Carolina under the disputed facts of this case. The facts are uncertain in light of the dispute about whether Caughman warned Johnson of the risk posed to her children by being on a high floor. And the legal outcome is uncertain regardless of how that factual issue is resolved. Due to this factual and legal uncertainty, these issues "are properly left to the state court for later stages of litigation." Id. The Court holds that Defendants have not carried their burden of showing "that that there is no possibility that [Caughman] would be able to establish a cause of action against [Johnson] in state court." Id. at 424. Because it is possible that she could establish a claim against him, that is the end of the inquiry and the cases must be remanded. Id. at 426. III. Conclusion
A review of the memoranda, affidavits, and applicable caselaw leads the Court to conclude that Caughman may have a viable state law claim against Johnson, so he was not fraudulently joined. Thus, there is not complete diversity in these cases, so the Court lacks subject matter jurisdiction under 28 U.S.C. § 1332(a)(1). Accordingly, Caughman's motions to remand, ECF No. 12 in 3:21-cv-03105 and ECF No. 11 in 3:21-cv-03107, are GRANTED . These cases are REMANDED to the Richland County Court of Common Pleas.
IT IS SO ORDERED .