Thermoset Corporation v. Building Materials Corp of America
849 F.3d 1313
| 11th Cir. | 2017Background
- Thermoset (Florida citizen) installed a GAF TPO roofing system at a Bahamas airport; materials were purchased through RSGO (a Delaware LLC with principal place in Texas). Failures occurred, causing ~ $1M claimed damages.
- Thermoset sued GAF (manufacturer) and RSGO (distributor) in Florida state court asserting warranty, negligent misrepresentation, and FDUTPA claims; GAF removed the case to federal court relying on diversity jurisdiction.
- District Court granted summary judgment for defendants; Thermoset appealed to the Eleventh Circuit.
- On appeal the Court discovered a jurisdictional defect: RSGO was a Florida citizen at removal (one member was a Florida citizen), destroying complete diversity.
- Defendants argued RSGO was a nominal party or should be dismissed under Fed. R. Civ. P. 21 to preserve diversity; Thermoset argued RSGO was a real, indispensable party and sought remand to state court.
- The Eleventh Circuit vacated the district court’s summary-judgment order and remanded with instructions to return the case to Florida state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court has diversity jurisdiction given RSGO's citizenship | Thermoset: RSGO is a real, non-diverse party; diversity destroyed; remand required | Defendants: RSGO is nominal; its citizenship can be ignored; diversity exists | RSGO is not nominal; its Florida citizenship defeats diversity jurisdiction |
| Whether RSGO is a nominal party for jurisdictional purposes | Thermoset: RSGO played an active role (recommendations, seller duties), so not nominal | Defendants: RSGO was a middleman with no liability; GAF indemnifies RSGO | Court: RSGO could be liable (warranties, recommendations); indemnity does not cure inability to assess liability; not nominal |
| Whether non-diverse RSGO may be dismissed under Rule 21 to preserve jurisdiction | Thermoset: Opposes dismissal; RSGO indispensable; remand appropriate | Defendants: Use Rule 21 to drop RSGO and keep federal forum | Court: Cannot dismiss under Rule 21 because prejudice and Rule 19 analysis show RSGO is indispensable; Rule 21 dismissal improper |
| Whether RSGO is indispensable under Rule 19 | Thermoset: RSGO required to afford complete relief and avoid repeated suits | Defendants: Even if required, equitable factors favor keeping case in federal court | Court: RSGO is a required and indispensable party under Rule 19(a)–(b); equity, risk of incomplete relief, and fact GAF removed weigh for remand |
Key Cases Cited
- Navarro Savings Association v. Lee, 446 U.S. 458 (nominal-party principle for diversity jurisdiction)
- Rolling Greens MHP, L.P. v. Comcast SCH Holdings, L.L.C., 374 F.3d 1020 (LLC citizenship follows members)
- PTA–FLA, Inc. v. ZTE USA, Inc., 844 F.3d 1299 (diversity determined at filing or removal)
- Mallory & Evans Contractors & Eng’rs, LLC v. Tuskegee Univ., 663 F.3d 1304 (court must raise subject-matter jurisdiction sua sponte)
- Molinos Valle Del Cibao, C. por A. v. Lama, 633 F.3d 1330 (Rule 21/Newman-Green framework; dismiss non-diverse parties sparingly)
- Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826 (limits on dismissing non-diverse parties to preserve jurisdiction)
- Tri-Cities Newspapers, Inc. v. Tri-Cities Printing Pressmen, 427 F.2d 325 (test for nominal/formal parties)
- Caterpillar Inc. v. Lewis, 519 U.S. 61 (finality/efficiency considerations in post-trial jurisdictional defects)