Brown v. Crop Hail Management, Inc.

Decision Date03 February 1993
Docket NumberCiv. A. No. G-92-444.
Citation813 F. Supp. 519
PartiesRonnie Joe BROWN, v. CROP HAIL MANAGEMENT, INC., d/b/a Crop Hail Management and Landmark America, Crop Insurance Services, Inc., and Laverne Stratton.
CourtU.S. District Court — Southern District of Texas

COPYRIGHT MATERIAL OMITTED

Richard Guy Baker, Hight Baker & Zbranek, Liberty, TX, for plaintiff.

Todd Alexander Kissner, Tekel Book Matthews & Limmer, Houston, TX, Kurt Henke, Henke Heaton & Bufkin, Clarksdale, MI, for defendants.

ORDER

KENT, District Judge.

Before the Court is the Plaintiff's Motion to Remand, to which the Defendants have filed an appropriate response. For the reasons set forth below, the Court DENIES the Plaintiff's motion.

Factual and Procedural History

In 1990, the Plaintiff purchased a Multi-Peril Crop Insurance policy from Defendants Crop Insurance Services and Laverne Stratton. The policy was issued by Defendant Landmark America ("Landmark") through that company's general agent, Defendant Crop Hail Management, Inc. ("Crop Hail"), under the auspices of a reinsurance contract that Landmark maintained with the Federal Crop Insurance Corporation ("FCIC").1 By the terms of this contract, the FCIC agreed to reimburse Landmark and Crop Hail for claims covered by the reinsurance contract, so long as Landmark and Crop Hail paid these claims in accordance with applicable FCIC regulations, practices, and procedures.

In the spring of 1990, the Plaintiff planted approximately 200 acres of rice. The crop was lost and the Plaintiff made a demand for coverage under his Multi-Peril Crop Insurance policy for $26,922.38. The Defendants denied the Plaintiff's claim, allegedly on the basis of the FCIC's regulations.

The Plaintiff subsequently filed suit against the Defendants in the 334th Judicial District Court of Chambers County, Texas. The Plaintiff claimed that the Defendants' refusal to honor his demand for coverage constituted a breach of contract, negligence, a breach of the duty of good faith and fair dealing, conspiracy, and a violation of various provisions of the Texas Deceptive Trade Practices-Consumer Protection Act and the Texas Insurance Code.

Asserting that this case contains a federal question, the Defendants removed the state action to this Court pursuant to 28 U.S.C. § 1441. While the Defendants readily acknowledge that the Plaintiff's complaint, on its face, alleges no federal cause of action, they maintain that a federal question nonetheless exists because federal law preempts all suits against the FCIC or a FCIC reinsured entity.

In response, the Plaintiff filed a Motion to Remand on the ground that this Court lacks jurisdiction over the matter. The Plaintiff properly notes that if federal law arises in a suit only as a defense to the Plaintiff's causes of action, then the case is not within the Court's original or removal jurisdiction. In this case, the Plaintiff contends, federal law arises only as a defense raised by the Defendants.

Thus, the question before the Court is whether this Court has jurisdiction over the Plaintiff's suit. The answer requires a detailed examination of a federal district court's removal jurisdiction.

Removal Jurisdiction

A defendant may remove a state court action to federal court only if the action could have been originally filed in federal court. 28 U.S.C. § 1441(a); Caterpillar v. Williams, 482 U.S. 386, 391-92, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987); Wallace v. Ryan-Walsh Stevedoring Co., 708 F.Supp. 144, 150 (E.D.Tex.1989). Where, like this case, there is no diversity jurisdiction, a federal question must exist for removal to be proper. Caterpillar, 482 U.S. at 392, 107 S.Ct. at 2429; Rheams v. Bankston, Wright & Greenhill, 756 F.Supp. 1004, 1008 (W.D.Tex.1991). Whether a federal question exists depends upon the well-pleaded complaint rule, which provides that the plaintiff's complaint governs the jurisdictional determination. Caterpillar, 482 U.S. at 392, 107 S.Ct. at 2429; Cedillo v. Valcar Enterprises, 773 F.Supp. 932, 934 (N.D.Tex.1991). If the complaint, on its face, contains no issue of federal law, then there is no federal question jurisdiction. Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 10, 103 S.Ct. 2841, 2846, 77 L.Ed.2d 420 (1983); Rheams, 756 F.Supp. at 1008. The fact that a federal defense may be raised to the plaintiff's action will not create federal question jurisdiction. Franchise Tax Board 463 U.S. at 12, 103 S.Ct. at 2847; Powers v. South Central United Food & Commercial Workers Unions, 719 F.2d 760, 764 (5th Cir.1983). If there is neither diversity jurisdiction nor a federal question, the court must remand the suit to the state court from whence it originated.

Artful Pleading Doctrine

There are two exceptions to the well-pleaded complaint rule, however. The first exception is known as the artful pleading doctrine. See 14A Wright, Miller & Cooper, Federal Practice and Procedure § 3722 at 266-76. Although a plaintiff is master of his claim and may choose to assert only state law claims, a court will occasionally seek to determine whether the real nature of an action is federal, regardless of the plaintiff's characterization. See, e.g., In re Carter, 618 F.2d 1093, 1101 (5th Cir.), cert. denied, 450 U.S. 949, 101 S.Ct. 1410, 67 L.Ed.2d 378 (1980). In many contexts, a plaintiff's claim may be one that, because of preemption or otherwise, is exclusively governed by federal law, necessarily making the claim federal. See, e.g., Brown v. Southwestern Bell Telephone Co., 901 F.2d 1250, 1254-55 (5th Cir.1990). Consequently, under the artful pleading doctrine, if a court encounters a suit that has been removed to federal court but has no federal question on its face, the court may seek to determine if the plaintiff had some motive for failing to plead a federal cause of action. Aaron v. National Union Fire Insurance Co., 876 F.2d 1157, 1164-65 (5th Cir.1989), cert. denied, 493 U.S. 1074, 110 S.Ct. 1121, 107 L.Ed.2d 1028 (1990). If the court concludes that the plaintiff's failure to plead a federal action was not in good faith, but rather a calculated effort to mask federal preemption, the court will allow removal and keep the case. See e.g., Federated Department Stores v. Moitie, 452 U.S. 394, 397 n. 2, 101 S.Ct. 2424, 2427 n. 2, 69 L.Ed.2d 103 (1981); Yawn v. Southern Railway, 591 F.2d 312, 316 (5th Cir.1979), cert. denied, 442 U.S. 934, 99 S.Ct. 2869, 61 L.Ed.2d 304 (1980). However, if the court finds that there is a choice between state and federal remedies, and the plaintiff has merely ignored the federal cause of action, then the artful pleading doctrine is inapplicable.

In the instant case, although federal law preempts the Plaintiff's action, see infra, the Court perceives no deleterious motive on the part of the Plaintiff. Consequently, the artful pleading doctrine plays no role in the Court's resolution of whether this case was properly removed to the Court. See Beers v. North American Van Lines, Inc., 836 F.2d 910, 913 (5th Cir. 1988).

Complete Preemption Doctrine

The second exception to the well-pleaded complaint rule is the complete preemption doctrine. Caterpillar, 482 U.S. at 393, 107 S.Ct. at 2430. The complete preemption doctrine holds that federal law can so thoroughly preempt a field of state law that the plaintiff's complaint must be characterized as stating a federal cause of action, even if the complaint, on its face, contains only state law causes of action. See, e.g., Id.; Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 64, 107 S.Ct. 1542, 1547, 95 L.Ed.2d 55 (1987); Franchise Tax Board, 463 U.S. at 23-24, 103 S.Ct. at 2854; Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 675, 94 S.Ct. 772, 781, 39 L.Ed.2d 73 (1974). "In these situations the federal removal court will look beyond the letter of the complaint to the substance of the claim in order to assert jurisdiction." Wright, Miller & Cooper § 3722 at 243. As opposed to the artful pleading doctrine, complete preemption exists even if the plaintiff in good faith chooses not to plead a federal claim. For complete preemption to adhere, the federal law must so completely preempt the field that any suit that sounds in that area necessarily is a federal action. Wallace, 708 F.Supp. at 151.

This doctrine was first formulated by the Supreme Court in Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968). In Avco, the defendant, a labor union, removed to federal court a suit in which an employer sought an injunction against a labor strike, arguing that the strike violated a collective bargaining agreement between the employer and the union. The Supreme Court upheld the union's removal despite the fact that the employer's suit contained no federal question on its face. The Court concluded that Section 301 of the Labor Management Relations Act ("LMRA") so thoroughly preempts state law as to force the Court to recharacterized the employee's complaint as arising under that section of the act.2

For the purposes of this case, whether complete preemption exists depends upon a test formulated by the Fifth Circuit in Aaron v. National Union Fire Insurance Co., 876 F.2d 1157, 1164-65 (5th Cir.1989), cert. denied sub nom., American Home Insurance Group v. Aaron, 493 U.S. 1074, 110 S.Ct. 1121, 107 L.Ed.2d 1028 (1990). In Aaron, the plaintiffs, the widow and children of a longshoreman killed while working on a vessel in navigable waters, filed suit alleging that intentional and negligent actions on the part of various defendants caused the longshoreman's death. The defendants removed the suit to federal court on the ground that the plaintiffs' action was completely preempted by the Longshore and Harbor Workers' Compensation Act ("LHWCA"). The Fifth Circuit overturned the district court's judgment that this removal was proper, holding that the LHWCA did not completely preempt the plaintiffs' action.

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