Colo. Ins. Guaranty Ass'n v. United Artists Theatre Circuit, Inc.
| Decision Date | 12 January 2016 |
| Docket Number | Civil Action No. 15-cv-01420-MSK-NYW |
| Parties | COLORADO INSURANCE GUARANTY ASSOCIATION, Plaintiff, v. UNITED ARTISTS THEATRE CIRCUIT, INC., Defendant. |
| Court | U.S. District Court — District of Colorado |
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
This civil action is before the court on Defendant United Artists Theatre Circuit, Inc.'s ("Defendant" or "United Artists") Motion to Dismiss [#9, filed July 13, 2015] and Motion to Amend Notice of Removal Nunc Pro Tunc ("Motion to Amend"). [#11, filed July 24, 2015]. Also before the court is Plaintiff Colorado Insurance Guaranty Association's ("Plaintiff" or "CIGA") Motion for Remand [#17, filed August 7, 2015]. These matters were referred to the undersigned Magistrate Judge pursuant to the Order Referring Case dated August 14, 2015 [#24] and the memoranda dated August 17, 2015 [#25, #26, and #28].
CIGA initiated this litigation by filing a Complaint on June 3, 2015 in Arapahoe County District Court for the State of Colorado. [#1-2 at 2]. On July 6, 2015, United Artists removed this action from state court to the United States District Court for the District of Colorado pursuant to 28 U.S.C. §§ 1332, 1441, and 1446, and D.C.COLO.LCivR 81.1. United Artists asserted in the Notice of Removal that the Parties in this action are diverse and the amount in controversy exceeds $75,000. [Id. at ¶¶ 3-8]. For support, United Artists identified CIGA as "a statutory non-profit unincorporated legal entity created by the Colorado Insurance Guaranty Association Act, C.R.S. § 10-4-501, et seq., with its principal place of business located at 1720 S. Bellaire Street, Suite 408, Denver, Colorado 80222." [#1 at ¶ 4; see also #6 at ¶ 1]. United Artists acknowledged that it "is a citizen of a foreign state with its principal place of business outside of Colorado." [#1 at ¶ 5]. Specifically, "[United Artists] is a Maryland Corporation with its principal place of business located at 7132 Regal Lane, Knoxville, Tennessee 37918." Id. In addition, United Artists noted that CIGA prays to recover at least $186,907.56. [#1 at ¶ 7].
CIGA is a "statutory non-profit unincorporated legal entity created by the Colorado Insurance Guaranty Association Act, [the "Act"], C.R.S. § 10-4-501, et seq." for "the purpose of covering the Colorado claims of insolvent insurers." [#6 at ¶ 1; #17 at 4]. CIGA was created to pay Colorado claims when insurers are liquidated. [#6 at ¶ 9 (citing Colo. Rev. Stat. § 10-4-502)]. The Act provides CIGA with the right to recover amounts paid on behalf of insureds whose net worth exceeds $25 million on December 31st of the year preceding the insurer's liquidation. Id. (citing Colo. Rev. Stat. § 10-4-511(4)(a)).
This civil action arises out of workers compensation benefits that CIGA paid or settled with regard to injuries that Ludene Miller, a United Artists employee, suffered during a work related accident that occurred in 1998. [#6 at ¶¶ 6-9]. During that time, United Artists held workers compensation insurance through Lumberman's Mutual Casualty Company("Lumberman's") to cover "injured beneficiaries for benefits available under the Colorado Workers' Compensation Act." [Id. at ¶ 6].
On September 5, 2000, United Artists and various affiliates filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware. [#6 at ¶ 16; #9 at 3]. See also United Artists Theatre Co. v. Walton, 315 F.3d 217 (3rd Cir. 2003). On January 22, 2001, the bankruptcy court confirmed United Artists' plan of reorganization. [#6 at ¶ 17; #9 at 4]. United Artists thereafter exited Chapter 11 reorganization. [#9 at 1]. Lumberman's continued to pay Ms. Miller's claim following United Artists' exit from bankruptcy. [#9 at 4 n.4].
In May 2013, Lumberman's was declared insolvent and ordered into liquidation by order of the State of Illinois. [#6 at ¶ 7; #9 at 4]. As of that date, CIGA, as Lumberman's guarantor, "has paid, and settled, Ms. Miller's indemnity and medical benefits claims for her work related injuries in accordance with its statutory obligations to pay covered claims to the same extent as the insolvent insurer would have done." [Id. at ¶ 8 (citing Colo. Rev. Stat. § 10-4-508(1)(b))].
CIGA seeks in its First and Second Claims for Relief: (1) determination of the statutory net-worth of United Artists and its affiliates on December 31, 2012 pursuant to Colo. Rev. Stat. § 10-4-511(4)(a) [#6 at ¶¶ 11-14]; and (2) determination that CIGA's claim against United Artists arose subsequent to the bankruptcy court's confirmation of United Artists' plan of reorganization "and was not discharged in the 2001 plan of re-organization," [id. at ¶¶ 16-21]. Although styled as a claim for declaratory judgment, Plaintiff's Third Claim for Relief seeks a court order requiring United Artists to produce the notice of its filing for bankruptcy "that was provided to Ms. Miller," as well as proof that the notice was supplied to Ms. Miller in accordance with 11U.S.C. § 342; and, following any failure of United Artists to do so, CIGA asks the court to "strike any defense related to [United Artists'] bankruptcy." [Id. at ¶¶ 23-24]. As to its Fourth Claim for Relief, CIGA asserts a statutory right of recovery to at least $186,907.56, the sum of payments paid to Ms. Miller's claim. [Id. at ¶¶ 26-28]. Finally, CIGA asks for judgment in its favor and against United Artists for "all amounts Plaintiff has paid relating to Ludene Miller's workers compensation claim, and that CIGA be awarded interest, damages, costs, continuing future payments, and such other relief as this Court deems proper." [Id. at 5].
United Artists filed the pending Motion to Dismiss on July 13, 2015. [#9]. On July 24, 2015, CIGA filed the pending Motion to Amend. [#11]. On August 3, 2015, CIGA filed a Motion of Stay for all Proceedings Pending Determination of Jurisdiction ("Motion to Stay"). [#13]. On August 7, 2015, CIGA filed the pending Motion for Remand. [#17].
On August 19, 2015, this court granted the Motion to Stay in part, set a Status Conference and Motion Hearing for September 4, 2015, set a briefing schedule for the Motion to Amend and Motion for Remand, and stayed the deadline for Plaintiff to respond to the Motion to Dismiss pending the Status Conference. [#31]. Plaintiff filed a Response to the Motion to Amend on August 21, 2015. [#32]. Defendant filed a Response to the Motion for Remand on August 28, 2015. [#33]. On September 2, 2015, Plaintiff filed a Reply in support of the Motion for Remand [#34], and Defendant filed a Reply in support of the Motion to Amend [#35]. On September 4, 2015, this court held a joint Status Conference and Motion hearing at which the undersigned heard oral argument on the Motion to Amend and Motion for Remand and took both motions under advisement. [#36].
A civil action is removable only if a plaintiff could have originally brought the action in federal court. 28 U.S.C. § 1441(a). As a basis for removal, United Artists invoked 28 U.S.C. § 1332(a)(1). [#1 at ¶ 3]. Pursuant to diversity jurisdiction conferred by 28 U.S.C. § 1332(a)(1), a district court "shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000 and is between citizens of different States." 28 U.S.C. § 1332(a)(1). Federal courts also have federal question subject matter jurisdiction to hear "all civil actions arising under the Constitution, laws or treaties of the United States." 28 U.S.C. § 1331. The defendant bears the burden to prove the existence of federal subject matter jurisdiction and must establish that jurisdiction by a preponderance of the evidence. McPhail v. Deere & Co., 529 F.3d 947, 953 (10th Cir. 2008) (citing Martin v. Franklin Capital Corp., 251 F.3d 1284, 1290 (10th Cir. 2001)).
Pursuant to 28 U.S.C. § 1653, "[d]efective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts." The purpose of § 1653 is "to avoid dismissals on technical grounds." Daneshvar v. Graphic Technology, Inc., 237 F. A'ppx 309, 314-15 (10th Cir. 2007) () (citing Brennan v. Univ. of Kan., 451 F.2d 1287, 1289 (10th Cir. 1971)). "An application under § 1653 is...addressed to the discretion of the court, and usually the section is to be construed liberally to permit the action to be maintained if it is at all possible to determine from the record thatjurisdiction does in fact exist." Id. at 315 (citing John Birch Soc'y v. NBC, 377 F.2d 194, 198-99 (2d Cir. 1967)). However, § 1653 permits amendment of "incorrect statements about jurisdiction that actually exists, and not defects in the jurisdictional facts themselves." Id. at 314 (quoting Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 831, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989)). See also Wood v. Crane Co., 764 F.3d 316, 322 (4th Cir. 2014) () (citation omitted).
Removal statutes are construed narrowly and doubts regarding the propriety of removal are resolved against such action. Pritchett v. Office Depot, Inc., 420 F.3d 1090, 1094-95 (10th Cir. 2005). See also City of Neodesha, Kansas v. BP Corporation North America, Inc., 355 F. Supp. 2d 1182, 1185 (D. Kan. 2007) (citations omitted). This court must decline to exercise jurisdiction on removal where its source of jurisdiction is not affirmatively apparent on the record. Baker v. PDC Energy, Inc., No. 14-cv-02537-RM-MJW, 2014 WL...
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