Choi v. Ace American Insurance Co.

• Decision Date: 29 June 2021
• Docket Number: and ORDER,4:21-cv-10020-JEM KIM
• Parties: JAY CHOI, YOUNGHEE KIM, and JINSUK HONG, Plaintiffs, v. ACE AMERICAN INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Florida

JAY CHOI, YOUNGHEE KIM, and JINSUK HONG, Plaintiffs, v. ACE AMERICAN INSURANCE COMPANY, Defendant.

No. 4:21-cv-10020-JEM KIM, and ORDER

United States District Court, S.D. Florida

June 29, 2021

OMNIBUS REPORT AND RECOMMENDATION ^[1] ON PLAINTIFFS' MOTION TO REMAND AND DEFENDANT'S MOTION TO VACATE AND/OR SET ASIDE CLERK'S DEFAULT JUDGEMENT

JACQUELINE BECERRA United States Magistrate Judge

THIS CAUSE came before the Court on Plaintiffs' Jay Choi, Younghee Kim, and Jinsuk Hong (“Plaintiffs”) Motion to Remand (“Motion to Remand”). ECF No. [9]. Defendant Ace American Insurance Company (“Defendant”) filed a Response in Opposition to Plaintiffs' Motion to Remand, ECF No. [11]. Plaintiffs did not file a reply in support of their Motion to Remand. In addition, Defendant filed a Motion to Vacate and/or Set Aside Clerk's Default Judgment (“Motion to Vacate”). ECF No. [7]. Plaintiffs filed a Response in Opposition to Defendant's Motion to Vacate, ECF No [10], and Defendant filed a Reply, ECF No. [12]. The parties appeared for a hearing on the Motion to Remand and the Motion to Vacate on June 8, 2021. ECF No. [24]. After due consideration of the Motions, the arguments made during the hearing, the pertinent portions of the record, and being otherwise fully advised in the premises, the undersigned respectfully RECOMMENDS that Plaintiffs' Motion to Remand, ECF No. [9], be DENIED, and Defendant's Motion to Vacate, ECF No. [7], be GRANTED.

I. BACKGROUND

On December 3, 2020, Plaintiffs filed suit against Defendant in the Sixteenth Judicial Circuit in and for Monroe County, Florida, alleging one count for underinsured motorist benefits (Count I) and one count for bad faith (Count II). ECF No. [1-4]. On December 28, 2020, Plaintiffs served the Summons and Complaint upon Florida's Chief Financial Officer (the “CFO”). ECF No. [1-6]. The CFO sent a copy to Defendant on January 5, 2021. ECF No. [1-12] at 45. On January 19, 2021, upon Plaintiffs' motion, the Clerk of Court entered a Clerk's Default against Defendant “for failure to serve or file any papers as required by law.” ECF Nos. [1-7], [1-8]. Thereafter, Plaintiffs filed Motion for Final Judgement of Default as to Liquidated Damages on January 27, 2021. ECF No. [8-8] at 1-2.

On February 1, 2021, Defendant's counsel entered its Notice of Appearance. ECF No. [1-10]. The following day, Defendant filed its Answer, Affirmative Defenses, and Demand for Jury Trial, ECF No. [1-11], and its Emergency Motion to Vacate and/or Set Aside Clerk's Default Judgement, ECF No. [1-12]. On February 3, 2021, Defendant filed its Notice of Removal to this Court. ECF No. [1]. Thereafter, on February 8, 2021, Defendant filed its Amended Answer and Affirmative Defenses. ECF No. [6].

In the Motion to Remand, Plaintiffs argue that Defendant waived its right to remove the case to this Court. ECF No. [9] at 5. Specifically, Plaintiffs contend that the Answer and Affirmative Defenses and Emergency Motion to Vacate filed in state court was a substantial defensive action, constituting an attempt to litigate on the merits. Id. at 6-9. Plaintiffs note that the Emergency Motion to Vacate was an intentional and willful tactic to seek substantial action and avoid delay before the opportunity to remove expired, particularly in light of the alleged emergency nature to the motion. Id. at 6. Moreover, Plaintiffs assert that defense counsel's prior experience in removing related litigation to federal court^[2] and its description of diversity jurisdiction in its Notice of Removal indicate it always intended to remove. Id. at 8. Finally, Plaintiffs argue that Defendant's meritorious affirmative defenses prove its willingness to litigate in state court. Id. at 9.

In response, Defendant argues that none of its state court filings show the intent to litigate on the merits, but instead, were attempts to maintain the status quo. Id. at 3-4. In particular, Defendant notes that an emergency motion is not a substantial action because (1) the request for an expedited hearing was the result of Plaintiffs' litigation tactics; (2) the emergency nature of a motion is irrelevant to the issue of waiver because it relates to the speed upon which the motion is heard, not the substance of the relief sought; (3) the hearing was never set; and (4) Plaintiffs failed to cite any legal authority for the proposition that the request for an emergency motion waives a defendant's right to remove. Id. at 5-6.

As to the Motion to Vacate, Defendant argues that the Clerk's Default, entered on January 19, 2021, was premature because its deadline to file a responsive pleading was January 25, 2021. ECF No. [7] ¶¶ 18-20. In the alternative, Defendant contends that there is good cause for this Court to vacate the Clerk's Default because (1) the delay in response was minimal, (2) the delay was not intentional nor willful, (3) Plaintiffs failed to show they would suffer prejudice, and (4) Defendant has meritorious defenses. Id. ¶¶ 23-28.

In response to the Motion to Vacate, Plaintiffs restate the arguments made in their Motion to Remand. ECF No. [10] at 2. Plaintiffs argue that the Motion to Vacate should be denied because Defendant waived its right to remove, ECF No. [10] at 2, and for this reason, this Court does not have jurisdiction to rule on the Motion to Vacate. Id. Additionally, Plaintiffs argue that Defendant failed to show good cause by (1) failing to file its answer by January 25, 2021, and (2) filing an Emergency Motion to Vacate while knowing that it intended to remove to this Court. Id. at 4-5.

In its Reply, Defendant asserts that its filing of the Emergency Motion to Vacate in state court did not waive its right to remove. ECF No. [12] at 2. Defendant notes that when removal is proper, a federal court may set aside a default entered in state court before the action was removed. Id. Specifically, Defendant emphasizes that the Clerk's Default was premature and void because it was entered before the expiration of the time to file a responsive pleading. Id. at 3-4. Moreover, there was no substantial delay because Defendant contacted opposing counsel after learning of the Clerk's Default, did not receive a response, and filed the Motion to Vacate within eight days of January 25, 2021, the date a responsive pleading was actually due. Id. at 4-5. Finally, Defendant argues that Plaintiffs failed to address that they obtained a premature clerk's default, that there is no prejudice in granting the Motion, or that Defendant has meritorious defenses. Id. at 5.

II. ANALYSIS

A. Defendant's Filing Of The Answer And The Motion To Vacate The Clerk's Default Did Not Waive Its Right To Remove

Title 28, United States Code, Section 1441 provides that “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.” 28 U.S.C. § 1441(a). Once an action has been removed by a defendant, a plaintiff may file a motion to remand within 30 days based on any defects in removal. 28 U.S.C. § 1447(c). On a motion to remand, the Court applies “a general presumption against the exercise of federal jurisdiction, such that all uncertainties as to removal jurisdiction are to be resolved in favor of remand.” Williams v. Aquachile, Inc., 470 F.Supp.3d 1277, 1279 (S.D. Fla. 2020) (quoting Scimone v. Carnival Corp., 720 F.3d 876, 882 (11th Cir. 2013)).

Although litigating on the merits waives the defendant's right to remove the matter to federal court, waiver does not occur if “the defendant's participation in the state action has not been substantial or was dictated by the rules of that court.” Yusefzadeh v. Nelson, Mullins, Riley & Scarborough, LLP, 365 F.3d 1244, 1246 (11th Cir. 2004) (quoting Charles A. Wright, et al., 14B Federal Practice & Procedure § 3721 (4th ed. 2003)). Specifically, a filing in state court for the purpose of maintaining the status quo does not constitute waiver. Miami Herald Pub. Co., Div. of Knight-Ridder Newspapers, Inc. v. Ferre, 606 F.Supp. 122, 124 (S.D. Fla. 1984) (defending at the preliminary injunction hearing or filing an answer and affirmative defenses did not waive removal); see also Cogdell v. Wyeth, 366 F.3d 1245, 1249 (11th Cir. 2004) (holding that removal was not waived when a motion to dismiss was filed, but no hearing was set, and the court did not rule on the motion); Livolsi v. State Farm Mut. Auto. Ins. Co., No. 17-CV-80407, 2017 WL 7792572, at *3 (S.D. Fla. June 30, 2017) (“[T]he filing of a motion for extension of time, the taking of discovery, and the filing of an answer do not constitute active participation sufficient to amount to waiver of the right to remove.”) (citing Estevez-Gonzalez v. Kraft, Inc., 606 F.Supp. 127, 128 (S.D. Fla. 1985)); Bennett v. Bistro of Coconut Grove, LLC, No. 10-22035-CIV-Moore/Simonton, 2010 WL 11601830, at *2 (S.D. Fla. Aug. 27, 2010) (noting that the law is clear that a defendant does not waive its right to removal by filing an answer in state court).

Here the filing of the Answer and Affirmative Defenses was not a substantial action, and therefore, Defendant did not waive its right to remove the action to federal court. First, as noted above, the case law is clear that the filing of an answer simply preserves the status quo. Because the filing of an answer is a non-dispositive, preliminary action, it simply is not comparable to a substantive motion that addresses the merits of the case and thereby clearly demonstrates the intent to litigate. See, e.g., Advanced Constr. & Renovation, Inc. v. Mt. Hawley Ins. Co., No. 17-61080-CIV, 2018 U.S. Dist. LEXIS 21274, at *10 (S.D. Fla. Feb. 9,...