Federated Towing & Recovery, LLC v. Praetorian Ins. Co.

Decision Date21 May 2012
Docket NumberNo. CIV 11-0592 JB/LFG,CIV 11-0592 JB/LFG
CourtU.S. District Court — District of New Mexico
PartiesFEDERATED TOWING & RECOVERY, LLC, a New Mexico Limited Liability Company, Plaintiff, v. PRAETORIAN INSURANCE COMPANY, a Foreign Insurance Company; and DEEP SOUTH SURPLUS, INC. a Foreign Corporation, Defendants.
MEMORANDUM OPINION AND ORDER

THIS MATTER comes before the Court on the Defendants Praetorian Insurance Company and Deep South Surplus, Inc.'s Motion for Relief from Judgment Pursuant to Federal Rule of Civil Procedure 60(b), filed February 15, 2012 (Doc. 29)("Motion"). The Court held a hearing on April 24, 2012. The primary issues are: (i) whether the Court has jurisdiction under rule 60(b) of the Federal Rules of Civil Procedure to entertain the Motion; (ii) whether counsel for Defendants Praetorian Insurance Company and Deep South Surplus, Inc. committed excusable neglect under rule 60(b)(1) in agreeing to dismissal without prejudice of Plaintiff Federated Towing & Recovery, LLC's claims and this case; (iii) whether the newly filed lawsuit filed after this action was dismissed constitutes newly discovered evidence justifying relief under rule 60(b)(2); (iv) whether the allegedly fraudulent joinder in which Federated Towing has engaged permits relief under rule 60(b)(3); and (v) whether there are any other bases for relief present that would permit relief under rule 60(b)(6). The Court will deny the Motion. The Court concludes that it has jurisdiction to hear the Motion under rule 60(b) for purposes of vacating the stipulated dismissal without prejudice. TheCourt also concludes, however, that the Defendants have not satisfied any of the bases under rule 60(b) for relief. First, the nature of the mistake counsel for the Defendants made, if any, does not permit rule 60(b)(1) relief, and the Defendants have not presented any evidence to the effect that their counsel lacked authority to dismiss this action without prejudice. Second, the Court concludes that the second lawsuit Federated Towing has recently filed does not counsel in favor of relief under rule 60(b)(2). Third, the Court concludes that the allegedly fraudulent joinder does not warrant relief under rule 60(b)(3) under the circumstances presented. Last, the Court concludes that the Defendants have not presented any other sound basis for relief under rule 60(b)(6).

PROCEDURAL BACKGROUND

On May 27, 2011, Federated Towing filed its Complaint for Damages in the First Judicial District Court, County of Santa Fe, State of New Mexico. See Doc. 1-1 ("Original Complaint"). Federated Towing alleged that, following an accident one of its employees, Joseph Estrada, had with an uninsured motorist, the Defendants improperly refused to renew the insurance policy it had with the Defendants. See Original Complaint ¶¶ 6-11, at 2. Federated Towing asserted various statutory and common-law causes of action based on this conduct. See Complaint at 2-6. On July 6, 2011, the Defendants filed their Notice of Removal removing this case to federal court. See Doc. 1. On December 16, 2011, the parties filed a Stipulation to Dismissal Without Prejudice. See Doc. 27 ("Stipulation"). The Stipulation contained an agreement between the parties that Federated Towing will dismiss its claims and the action against the Defendants without prejudice under rule 41(a)(1)(ii) of the Federal Rules of Civil Procedure. See Stipulation at 1. Counsel for both parties signed the Stipulation. See Stipulation at 1-2.

On December 16, 2011, Federated Towing and Estrada, who was not a plaintiff in the previous lawsuit before the Court, filed a Complaint for Damages in the First Judicial District Court asserting substantially the same lawsuit that the parties had agreed to dismiss without prejudice infederal court with the addition of a claim by Estrada against an individual named Joe Griego, Jr. See Doc. 29-1 ("Second Lawsuit Complaint"). Estrada asserts a battery claim against Griego for "intentionally slamm[ing] his vehicle into Estrada." Second Lawsuit Complaint at 9.

On December 27, 2011, the Court entered its Final Judgment dismissing Federated Towing's claims and the case without prejudice. See Doc. 28. On January 26, 2012, the Defendants removed the second lawsuit to federal court; that case is currently pending before the Honorable M. Christina Armijo, United States District Judge for the District of New Mexico. See Federated Towing & Recovery, LLC v. Praetorian Ins. Co., No. CIV 12-0083, Notice of Removal at 1 (D.N.M.)(Doc. 1).

On February 15, 2012, the Defendants filed their Motion under rule 60(b) of the Federal Rules of Civil Procedure to set aside the Final Judgment. See Doc. 29. The Defendants recount that "[c]ounsel for Plaintiff . . . unexpectedly contacted counsel for Defendants and sought consent for a stipulated dismissal without prejudice." Motion at 2. The Defendants assert that "[c]ounsel for Defendants gave his consent to dismissal without obtaining permission from Defendants." Motion at 2. The Defendants contend that the Plaintiffs have added Estrada as a plaintiff to the second lawsuit for the purposes of defeating diversity jurisdiction in federal court, because "[t]he claim by Estrada against Griego is unrelated to Federated Towing's claims against" the Defendants. Motion at 2-3. The Defendants ask the Court to reopen this case under rule 60(b)(1) based on mistake, inadvertence, or excusable neglect. See Motion at 4. The Defendants assert that their counsel "did not give due consideration to the effect of the joinder of additional parties in the second lawsuit." Motion at 4. The Defendants contend that, "[h]ad counsel for Defendants considered that a new action would be brought joining additional parties, the Defendants could have refused to consent to the stipulation and required the joinder of additional parties to be litigated in the present action." Motion at 4-5. They "request that the stipulated judgment be set aside." Motion at 5. They also assert that the second lawsuit is "newly discovered evidence" under rule 60(b)(2) that justifiesreopening the case. See Motion at 5-6. The Defendants contend that the joinder of Estrada and Griego in the second lawsuit qualifies as fraud, misrepresentation, or misconduct for purposes of rule 60(b)(3), because Griego, a resident of New Mexico, was fraudulently joined to the second lawsuit to defeat diversity jurisdiction. See Motion at 6-7. They also argue that "forum shopping by fraudulently joining additional parties" warrants relief under rule 60(b)(6). Motion at 7-8.

On March 19, 2012, Federated Towing filed its Plaintiff's Response to Defendants' Motion for Relief from Judgment Pursuant to Federal Rule of Civil Procedure 60(b). See Doc. 32 ("Response"). Federated Towing asserts that "Defendants' Motion fails to establish any basis for relief pursuant to Rule 60(b)." Response at 1. It asserts that, "if a party enters into a Rule 41(a)(1)(A)(ii) voluntary dismissal without prejudice, the only procedural mechanism to 'undismiss' is to file a motion to vacate or modify the dismissal prior to the Court's ministerial closing of the case through its final judgment." Response at 1. Federated Towing argues that, "assuming Rule 60(b) is applicable, Defendants failed to attach any evidence to suggest 'mistake, inadvertence, surprise, or excusable neglect' on behalf of their counsel." Response at 1-2. It also contends that, even if the Defendants had not agreed to voluntary dismissal, it "could have and would have sought a voluntary dismissal without prejudice pursuant to Rule 41(a)(2)." Response at 2. Federated Towing relates that its attorney, George "Ben" Davis, sent an electronic mail transmission on December 2, 2011, to counsel for the Defendants, Michael Clemens, asking whether they would stipulate to voluntary dismissal without prejudice. Response at 6 (citing Affidavit of George "Ben" Davis ¶ 5, at 2 (executed March 19, 2012)(Doc. 32-5)("Davis Aff."); Electronic Mail Transmission from Ben Davis to Mike Clemens at 5 (dated December 2, 2011 10:29 AM), filed March 19, 2012 (Doc. 32-5)). Federated Towing asserts that, on approximately December 5, 2011, Mr. Davis had a conversation with Mr. Clemens explaining that Federated Towing intended to dismiss the lawsuit in federal court, "because it was going to file a new Complaint against Praetorian and Deep South,as well as the underlying tortfeasor, Joe Griego, Jr." Response at 6 (citing Davis Aff. ¶ 7, at 2). Federated Towing represents that Mr. Clemens noted that he might remove the case to federal court and stated that he would agree to stipulate to dismissal without prejudice. See Response at 6 (citing Davis Aff. ¶ 7, at 2).

Federated Towing contends that, once the parties' filed the voluntary dismissal under rule 41(a)(1)(ii) of the Federal Rules of Civil Procedure, no further action was required by the Court for the lawsuit to end. See Response at 9. Federated Towing asserts that, to the extent rule 60(b) applies to the Motion, the Defendants have not presented grounds for relief under rule 60(b). See Response at 13. Federated Towing argues that rule 60(b)(1) does not apply, because the "Defendants failed to cite any evidence that their attorney lacked authority to stipulate to a voluntary dismissal" that would counter the presumption that an attorney has authority to act on behalf of the client. Response at 14-15. Federated Towing notes that, between December 15, 2011, when the parties' filed the Stipulation dismissing the case, and December 27, 2011, when the Court entered Final Judgment, the "Defendants never notified the Court that the stipulation was not authorized or that the Final Judgment should not be entered." Response at 16. Federated Towing further contends that rule 60(b)(1) does not apply, because "counsel's failure to 'give due consideration' to the dismissal does not rise to the level of excusable neglect or mistake as contemplated by Rule 60(b)(1)." Response at 16...

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