Brode v. Foremost Ins. Co., CIVIL ACTION NO. 1:15-CV-118

• Decision Date: 09 June 2015
• Docket Number: CIVIL ACTION NO. 1:15-CV-118
• Parties: RICHARD BRODE, Plaintiff, v. FOREMOST INSURANCE COMPANY GRAND RAPIDS, MICHIGAN, STEPHEN CZUBAK, and J. SHANE DUNHAM, Defendants.
• Court: U.S. District Court — Eastern District of Texas

RICHARD BRODE, Plaintiff, v. FOREMOST INSURANCE COMPANY GRAND RAPIDS,MICHIGAN, STEPHEN CZUBAK, and J. SHANE DUNHAM, Defendants.

CIVIL ACTION NO. 1:15-CV-118

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS

June 9, 2015

MEMORANDUM AND ORDER

Pending before the court is Plaintiff Richard Brode's ("Brode") Motion to Remand (#5), wherein Brode seeks remand to state court of this insurance action against Defendants Foremost Insurance Company Grand Rapids, Michigan ("Foremost"), Stephen Czubak ("Czubak"), and J. Shane Dunham ("Dunham"). Brode contends that Foremost's and Czubak's notice of removal was untimely and that complete diversity is lacking.¹ Having reviewed the motion, the submissions of the parties, the pleadings, and the applicable law, the court is of the opinion that remand is warranted.

I. Background

Brode held an insurance policy with Foremost, a Michigan-based insurance company that insured his boat. On or about May 1, 2014, Brode's boat unexpectedly sank while docked at the Pleasure Island Marina in Port Arthur, Texas. Brode subsequently submitted a claim for insurance benefits. Foremost hired Dunham, an inspector with the Anchor Marine Surveying andConsulting Company, to review the boat's damage and to determine why it sank. On June 18, 2014, Dunham submitted his report to Foremost, concluding that the damage to Brode's boat "was consistent with salt water corrosion, lack of maintenance, and the failure to regularly haul the vessel for inspection." The report went on to state that "the damage was progressive in development, as opposed to a single and sudden occurrence." Dunham made no conclusions or recommendations as to coverage.

On June 19, 2014, Czubak, Foremost's Recreational Products Claim Specialist, sent Brode a letter denying the claim because coverage purportedly did not extend to damage caused by "corrosion, wear and tear, lack of maintenance, [or] water accumulation." On February 6, 2015, Brode filed a state court petition in the 136th Judicial District Court of Jefferson County, Texas, asserting causes of action for noncompliance with the Texas Insurance Code, common law fraud, and conspiracy to commit fraud. On March 19, 2015, Defendants Foremost and Czubak removed the case to federal court based on diversity jurisdiction, alleging that complete diversity of citizenship exists among the real parties in interest, and that the amount in controversy exceeds $75,000.00. On April 15, 2015, Brode filed the instant motion to remand, contending that the notice of removal was untimely and that complete diversity does not exist because both he and Dunham are citizens of Texas.

II. Analysis

A. Grounds for Removal

"'Federal courts are courts of limited jurisdiction.'" Gunn v. Minton, ___ U.S. ___, 133 S. Ct. 1059, 1064 (2013) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)); accord Scarlott v. Nissan N. Am., Inc., 771 F.3d 883, 887 (5th Cir. 2014); Halmekangasv. State Farm Fire & Cas. Co., 603 F.3d 290, 292 (5th Cir. 2010). "They possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree." Kokkonen, 511 U.S. at 377 (citations omitted). The court "must presume that a suit lies outside this limited jurisdiction, and the burden of establishing federal jurisdiction rests on the party seeking the federal forum." Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir.), cert. denied, 534 U.S. 993 (2001) (citing Kokkonen, 511 U.S. at 377); see also Hertz Corp. v. Friend, 559 U.S. 77, 96 (2010); Boone v. Citigroup, Inc., 416 F.3d 382, 388 (5th Cir. 2005). In an action that has been removed to federal court, a district court is required to remand the case to state court if, at any time before final judgment, it determines that it lacks subject matter jurisdiction. See 28 U.S.C. § 1447(c); Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 571 (2004); In re 1994 Exxon Chem. Fire, 558 F.3d 378, 392 (5th Cir. 2009); McDonal v. Abbott Labs., 408 F.3d 177, 182 (5th Cir. 2005).

When considering a motion to remand, "[t]he removing party bears the burden of showing that federal jurisdiction exists and that removal was proper." Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002); accord DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n.3 (2006); Scarlott, 771 F.3d at 887; Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008); In re Hot-Hed Inc., 477 F.3d 320, 323 (5th Cir. 2007); see 13E CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 3602.1 (3d ed. 2013). "'This extends not only to demonstrating a jurisdictional basis for removal, but also necessary compliance with the requirements of the removal statute.'" Roth v. Kiewit Offshore Servs., Ltd., 625 F. Supp. 2d 376, 382 (S.D. Tex. 2008) (quoting Albonetti v. GAF Corp. Chem. Grp., 520 F. Supp. 825, 827 (S.D. Tex. 1981)); accord Crossroads of Tex., L.L.C. v. Great-West Life & Annuity Ins. Co.,467 F. Supp. 2d 705, 708 (S.D. Tex. 2006); Smith v. Baker Hughes Int'l Branches, Inc., 131 F. Supp. 2d 920, 921 (S.D. Tex. 2001). Non-jurisdictional defects in the removal procedure, such as removal by an in-state defendant, however, are waived unless raised in a motion to remand within thirty days after removal. See 28 U.S.C. § 1447(c); Schexnayder v. Entergy La., Inc., 395 F.3d 280, 284 (5th Cir. 2004); Denman by Denman v. Snapper Div., 131 F.3d 546, 548 (5th Cir. 1998) (citing In re Shell Oil Co., 932 F.2d 1518, 1523 (5th Cir. 1991)). "Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (citing 28 U.S.C. § 1441(a)); see Aetna Health Inc. v. Davila, 542 U.S. 200, 207 (2004); Halmekangas, 603 F.3d at 294; Gutierrez, 543 F.3d at 251. "The removal statute ties the propriety of removal to the original jurisdiction of the federal district courts." Frank v. Bear Stearns & Co., 128 F.3d 919, 922 (5th Cir. 1997); see 28 U.S.C. § 1441(a); Camsoft Data Sys., Inc. v. S. Elec. Supply, Inc., 756 F.3d 327, 333 (5th Cir. 2014); Barker v. Hercules Offshore, Inc., 713 F.3d 208, 228 (5th Cir. 2013). Because removal raises significant federalism concerns, the removal statutes are strictly and narrowly construed, with any doubt resolved against removal and in favor of remand. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); Gutierrez, 543 F.3d at 251; Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281-82 (5th Cir. 2007); In re Hot-Hed Inc., 477 F.3d at 323. In short, any "'doubts regarding whether removal jurisdiction is proper should be resolved against federal jurisdiction.'" Vantage Drilling Co. v. Hsin-Chi Su, 741 F.3d 535, 537 (5th Cir. 2014) (quoting Acuna v. Brown & Root Inc., 200 F.3d 335, 339 (5th Cir.), cert. denied, 530 U.S. 1229 (2000)).

B. Timeliness

Brode first argues that Foremost's and Czubak's notice of removal is untimely. Specifically, Brode asserts that the thirty-day period in which Foremost and Czubak had to remove the case began to run on February 6, 2015—the day that Brode e-mailed a copy of the state court petition to their counsel. Accordingly, Brode argues that Foremost's and Czubak's thirty-day removal deadline expired on March 8, 2015—eleven days before their removal on March 19, 2015. Foremost and Czubak respond that the thirty-day deadline began to run on February 17, 2015—the day on which they received formal service of the summons and the complaint. Foremost and Czubak contend that, as a result, the removal on March 19, 2015, exactly thirty days after February 17, 2015, fell within their thirty-day window and is therefore timely.

"The procedure for removal is set forth by 28 U.S.C. § 1446." Johnson v. Heublein, Inc., 227 F.3d 236, 240 (5th Cir. 2000); see Bd. of Regents of Univ. of Tex. Sys. v. Nippon Tel. & Tel. Corp., 478 F.3d 274, 278 (5th Cir. 2007); City of Clarksdale v. BellSouth Telcomms., Inc., 428 F.3d 206, 210 (5th Cir. 2005). Section 1446(b) provides:

(1) The notice of removal of a civil action or proceeding shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within 30 days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

(2) (A) When a civil action is removed solely under section 1441(a), all defendants who have been properly joined and served must join in or consent to the removal of the action.

(B) Each defendant shall have 30 days after receipt by or service on that defendant of the initial pleading or summons described in paragraph (1) to file the notice of removal.

(C) If defendants are served at different times, and a later-served defendant files a notice of removal, any earlier-served defendant may consent to the removal even though that earlier-served defendant did not previously initiate or consent to removal.

(3) Except as provided in subsection (C), if the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.

28 U.S.C. § 1446(b). At issue, here, is whether an e-mailed copy of a state court petition qualifies as "service or otherwise" such that it triggers the commencement of the thirty-day period for removal.

The United States Supreme Court has held that it does not. See Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 348 (1999). In Murphy, the plaintiff faxed a "courtesy copy" of a file-stamped complaint to the defendant after filing suit in state court. Id. Thirty days...