2020 Environmental Real Estate Issues

Claiming hazardous waste from a Louisiana manufacturing facility contaminated their soil and groundwater, landowners sued the facility’s past and present owners in state court. They also sued the Louisiana Department of Environmental Quality (LDEQ); the landowners claimed LDEQ knew for years the waste threatened to contaminate their property but failed to alert them.

No Complete Diversity with LDEQ as Defendant
Joining LDEQ had an important procedural effect. Without LDEQ, all the other defendants were residents of states other than Louisiana and the defendants could remove the case to federal court because of complete diversity. Having LDEQ as a defendant destroyed complete diversity and precluded federal jurisdiction.

Claim of Improper Joinder
Federal law allows removal without complete diversity if the diverse defendants can establish the Louisiana defendant was improperly joined. However, this applies only if the diverse defendants have “demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant.”

Failure to Demonstrate Improper Joinder
The diverse defendants argued Louisiana law provides no basis to sue LDEQ for failure to notify landowners of potential contamination. The majority of the 5th Circuit three-judge panel disagreed, saying Louisiana law may provide for civil liability against LDEQ and noting “any ambiguity or uncertainty in the controlling state law must be resolved in Plaintiffs’ favor.”

One judge dissented, saying Louisiana law clearly precludes a claim against LDEQ.

To see the majority and dissenting opinions https://www.ca5.uscourts.gov/opinions/pub/21/21-30523-CV0.pdf