Carlson v. American Int'l Grp., Inc.

• Decision Date: 10 April 2012
• Docket Number: 11-CV-874-A
• Parties: MICHAEL J. CARLSON, SR., Individually and as Administrator of the Estate of Claudia D'Agostino Carlson and as Assignee of William Porter, Plaintiff, v. AMERICAN INTERNATIONAL GROUP, INC., AIG DOMESTIC CLAIMS, INC., AMERICAN ALTERNATIVE INSURANCE CO., NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, and DHL EXPRESS (USA) INC. f/k/a DHL Worldwide Express, Inc., Defendants.
• Court: U.S. District Court — Western District of New York

MICHAEL J. CARLSON, SR., Individually and as Administrator of the Estate

of Claudia D'Agostino Carlson and as Assignee of William Porter, Plaintiff,

v.AMERICAN INTERNATIONAL GROUP, INC., AIG DOMESTIC CLAIMS, INC.,

AMERICAN ALTERNATIVE INSURANCE CO., NATIONAL UNION FIRE INSURANCE COMPANY

OF PITTSBURGH, PA, and DHL EXPRESS (USA) INC. f/k/a DHL Worldwide Express, Inc., Defendants.

11-CV-874-A

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NEW YORK

DATED: April 10, 2012

DECISION AND ORDER

This is an auto accident insurance coverage dispute. It follows an earlier state court wrongful death and personal injury verdict against defendant DHL Express (USA) Inc. ("DHL") and others that was overturned on appeal as against defendant DHL. The case arises from attempts by the plaintiff, Michael J. Carlson, Sr., Individually and as Administrator of the Estate of Claudia D'Agostino Carlson, and as Assignee of William Porter, to recover under two insurance policies issued to DHL on the theory that other persons who are liable for the accident were covered under the insurance policies issued to DHL even thoughthey were not named in the insurance policies and even though the verdict against DHL was overturned on appeal.

The case was removed from state court pursuant to 28 U.S.C. § 1441(a) by the defendants, American International Group, Inc., AIG Domestic Claims, Inc., American Alternative Insurance Co., National Union Fire Insurance Company of Pittsburgh, PA, and DHL, based upon alleged federal-question jurisdiction under 28 U.S.C. § 1331. It is now before the Court on a motion filed by plaintiff Carlson to remand it to state court pursuant to 28 U.S.C. § 1447(c).

For the reasons that are stated below, plaintiff Carlson's motion to remand the case is granted. The Court lacks subject matter jurisdiction because the case is not within the narrow category of cases in which a state-law claim arises under federal law.

BACKGROUND

On July 7, 2004, Claudia D'Agostino Carlson suffered severe injuries in an automobile accident. The accident took place on Niagara Falls Boulevard in the town of Wheatfield, New York. Ms. D'Agostino Carlson's vehicle was hit, head on, by a commercial delivery van being driven by William Porter as Mr. Porter was trying to avoid colliding with another vehicle.

Ms. D'Agostino Carlson passed away on July 20, 2004 as a result of her injuries. She is survived by her husband, Michael J. Carlson, Sr., the plaintiff in this action, and by their three children.

The delivery van that collided with Ms. D'Agostino Carlson's vehicle was owned by MVP Delivery and Logistics, Inc. ("MVP"). It was carrying property for DHL pursuant to a written cartage contract between MVP and DHL. The driver of the delivery van, Mr. Porter, was an employee of MVP, but Mr. Porter was on a personal errand at the time of the accident.

A wrongful death and personal injury trial in state court resulted in a jury verdict in favor of Ms. D'Agostino Carlson's estate and plaintiff Carlson individually against MVP, DHL, Mr. Porter, and others, and judgment was entered on March 13, 2007. On appeal, the verdict against DHL was set aside on the ground that DHL was not liable for the accident based upon a theory of respondeat superior due to the negligence of the driver of the delivery van, Mr. Porter, because Mr. Porter was not acting within the scope of his employment with MVP at the time of the accident. Carlson v. Porter, 53 A.D.2d 1129 (4th Dep't 2008). A final judgment of $7.3 million was entered against Mr. Porter, MVP¹ , and other defendants who are not named here, on May 12, 2009.

Although the jury verdict against DHL was set aside on appeal, this case was filed by plaintiff Carlson on January 25, 2011, in New York State Supreme Court, County of Niagara, to obtain proceeds of two DHL insurance policies, one issued by defendant American Alternative Insurance Co., the other by defendant National Union Fire Insurance Company of Pittsburgh, PA ("National Union"), to satisfy the $7.3 million judgment against Mr. Porter, MVP, and others. The plaintiff alleges a breach of contract and seeks direct recovery on the DHL insurance policies pursuant to New York Insurance Law § 3420, even though DHL was found on appeal not to be liable for the accident, on the ground that Mr. Porter and MVP, who are liable, qualified as "insured" persons covered pursuant to the terms of the DHL insurance policies, the written cartage contract between MVP and DHL, and the course of dealing between MVP and DHL. The plaintiff is also seeking damages resulting from alleged tortious conduct by DHL and the defendants, including the defendants American International Group, Inc. and AIG Domestic Claims, Inc., which are affiliates of National Union, partly for the defendants' refusals to pay the plaintiff as a judgment creditor and as the assignee of Mr. Porter's rights as an insured person.

The defendants filed motions to dismiss plaintiff Carlson's complaint in state court. Based upon arguments of the plaintiff in response to the defendants' motions to dismiss, on October 19, 2011, the case was removed to this Court by defendant American Alternative Insurance Co. ("AAIC") pursuant to 28 U.S.C. §1441(a) based upon federal-question jurisdiction. On November 15, 2011, the plaintiff moved to remand the case to state court pursuant to 28 U.S.C. § 1447(c) based upon alleged procedural defects in the removal and a lack of federal subject matter jurisdiction² .

DISCUSSION

Defendant AAIC's Notice of Removal acknowledges that plaintiff Carlson's complaint asserting the state-law breach of contract and direct recovery claim did not raise any issue of federal law and AAIC maintains that no substantial federal question was reasonably ascertainable from the complaint alone. AAIC alleges that the plaintiff later asserted a federal question when opposing the defendants' motions to dismiss the complaint because the plaintiff relied upon an endorsement in the AAIC-DHL policy required by the federal Motor Carrier Act of 1980 that provides for mandatory-minimum personal injury liability insurance coverage for the public. See 49 U.S.C. § 31139.

Plaintiff Carlson moved to remand the case to state court on the ground that the removal by the insurance company AAIC did not timely occur within 30days of AAIC's receipt of the complaint in February of 2011, and on the alternative ground that DHL did not timely file unambiguous proof of consent to the removal in October of 2011. The plaintiff also disputes that there is a federal question and argues that the federal law requiring a commercial motor carrier to have mandatory-minimum personal injury liability insurance coverage poses neither a necessary nor a sufficiently substantial question of law for federal-question jurisdiction to lie pursuant to 28 U.S.C. § 1331.

Because Fed. R. Civ. P. 12(h)(3) and 28 U.S.C. § 1447(c) require the Court to dismiss any case found to be lacking subject matter jurisdiction, the Court's analysis begins with its subject matter jurisdiction. The applicable law is well-settled.

Federal courts are courts of limited jurisdiction and "possess only that power authorized by Constitution and statute, which is not to be expanded upon by judicial decree." Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375, 377 (1994). The statutory authority to remove a case from state court to federal court, 28 U.S.C. § 1441, et seq., permits removal only if the case is within the federal courts' limited jurisdiction and could properly have been brought in federal court in the first instance. See 28 U.S.C. § 1447(c) (a case lacking subject matter jurisdiction is to be remanded); Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987); Montefiore Medical Center v. Teamsters Local 272, 642 F.3d 321, 327 (2d Cir. 2011). Any doubts about the propriety of removal fromstate court must be resolved against removal "out of respect for the limited jurisdiction of the federal courts and the rights of states." In re Methyl Tertiary Butyl Ether ("MTBE") Product Liability Litigation, 488 F.3d 112, 124 (2d Cir. 2007); Lupo v. Human Affairs, 28 F.3d 269, 274 (2d Cir. 1994). Statutory authority for removal is therefore strictly construed. Syngenta Crop Protection, Inc. v. Henson, 537 U.S. 28, 32 (2002).

The burden of establishing that a case is properly removed from state court on the ground that it is within a federal court's original jurisdiction rests upon the party seeking removal. See Hertz Corp. v. Friend, 130 S.Ct. 1181, 1194-95 (2010) (diversity jurisdiction); Blockbuster, Inc. v. Galeno, 472 F.3d 53, 57 (2d Cir. 2006). To demonstrate that federal-question jurisdiction exists over a state-law claim, a party seeking removal has to establish that the "state-law claim necessarily raise[s] a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities." Grable & Sons Metal Products, Inc., v. Darue Engineering & Manufacturing, 545 U.S. 308, 314 (2005) (construing 28 U.S.C. § 1331). The category of cases alleging a state-law claim that arises under federal law is "special and small" and "slim." Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006); see Sortisio v. Accetta, 2009 WL 4571814 *4-6 (W.D.N.Y. Dec. 7, 2009).

A short and plain statement of the jurisdictional basis for removal is required in a notice of removal. See 28 U.S.C. § 1446(a). "[I]in determining whether jurisdiction is proper, [courts] look only to the jurisdictional facts alleged in the Notice[] of Removal." In re Methyl Tertiary Butyl Ether ("MTBE") Product Liability Litigation, 488 F.3d at 24; see Whitaker v. American Telecasting, 261 F.3d 196, 205 (2d Cir. 2001). Discretion to allow a party seeking removal to amend a jurisdictional statement in a notice of removal is limited. See Lupo v. Human Affairs Intern., Inc., 28 F.3d 269, 274 (...