Fidelity Financial v. Robinson

• Decision Date: 02 May 1997
• Docket Number: Civil Action No. 3:96CV922LN.
• Citation: 971 F.Supp. 244
• Parties: FIDELITY FINANCIAL, Plaintiff, v. Danny ROBINSON, et al., Defendants. Danny ROBINSON, et al., Counterclaimant, v. FIDELITY FINANCIAL SERVICES, INC. Regency Subaru, and Balboa Insurance Company, Counterdefendants and Third-Party Defendants.
• Court: U.S. District Court — Southern District of Mississippi

Page 244

971 F.Supp. 244

FIDELITY FINANCIAL, Plaintiff, v. Danny ROBINSON, et al., Defendants.

Danny ROBINSON, et al., Counterclaimant, v. FIDELITY FINANCIAL SERVICES, INC. Regency Subaru, and Balboa Insurance Company, Counterdefendants and Third-Party Defendants.

Civil Action No. 3:96CV922LN.

United States District Court, S.D. Mississippi, Jackson Division.

May 2, 1997.

Ross F. Bass, Jr., William C. Brabec, Phelps, Dunbar, Jackson, MS, Stephen E. Bardner, Young, Williams, Henderson, Fuselier, Jackson, MS, for Plaintiff.

Dennis C. Sweet, III, Langston, Frazer, Sweet & Freese, Jackson, MS, for Defendant.

TOM S. LEE, Chief Judge.

MEMORANDUM OPINION AND ORDER

Plaintiff/counterdefendant Fidelity Financial (Fidelity) has filed in this cause a motion to dismiss counterclaim or, in the alternative, to stay the counterclaim. Defendants/counter-plaintiffs Danny and Felicia Robinson have responded with a motion to remand and to dissolve or modify injunction, and have further moved to stay any ruling on Fidelity's motion to dismiss or stay until such time as the court has decided the motion to remand. The court has considered the parties' memoranda of authorities, together with attachments, submitted in connection with these motions, and concludes, for reasons which follow, that the motion to remand should be granted. The court therefore will not proceed with consideration of Fidelity's motion to dismiss or stay.

A full explanation of the circumstances which have resulted in this case being before the court will facilitate the court's discussion of the issues raised by the motions. In January 1996, a Fidelity customer, Barbara Thomas, filed suit against Fidelity in this court alleging a number of claims relating to what Thomas alleged was Fidelity's wrongful purchase of collateral protection insurance, or "CPI," ostensibly on Thomas's behalf.¹ Barbara Thomas v. Fidelity Financial Services, Inc., et al., Civil Action No. 3:96CV35LN. Thomas included class allegations in her complaint and soon after she filed suit, Thomas, through her counsel, along with Fidelity, through its counsel, submitted to the court an agreed order, prepared and signed by the parties' counsel, by which the parties agreed to the temporary certification of a "settlement class action," with the class consisting of "[a]ll persons who have or had loans with Fidelity ... secured by personal property who were charged for collateral protection insurance and related charges." The order specified that this "certification" was for the "limited purpose of Plaintiff and Fidelity entering negotiations for possible settlement of this action," and reiterated therein:

This Court's preliminary and temporary certification of the class is for the limited purpose of allowing Plaintiff and Fidelity to enter into settlement negotiations. If a settlement is reached, the Court will then schedule a fairness hearing, at which time the Court will hear arguments of counsel and any objection of class members to the proposed settlement, subsequent to which this Court will render a final decision regarding approval of the settlement and certification of the settlement class.

The order further provided, as is pertinent here, that all members of the temporary class were enjoined "from commencing new actions against Fidelity" relating to the allegations of the Thomas action. The parties' agreed order was signed and entered by this court on May 3, 1996 and by its terms, was to expire in September 1996. However, it was extended, first to December 3, 1996, and later to March 17, 1997, based on representations by the parties that they were engaged in continuous "meaningful settlement negotiations."

In the meantime, on October 23, 1997, at a time when the Thomas injunction was in effect, Fidelity filed a collection suit against Danny and Felicia Robinson in the County Court of Hinds County seeking to recover a deficiency judgment on the Robinson's automobile loan following Fidelity's repossession and sale of the vehicle upon Robinson's default. The Robinsons, who had been given no notice of the Thomas class or the injunction, timely answered and asserted against Fidelity a counterclaim, as well as a third-party complaint against Regency Subaru and Balboa Insurance company, all relating to the forced-placement of CPI in connection with the Robinson's loan from Fidelity. Upon the filing of the Robinson's counterclaim, Fidelity removed the case to this court asserting as the sole authority for its doing so the All Writs Act, 28 U.S.C. § 1651. After removal, Fidelity filed its motion to dismiss, or in the alternative, to stay the Robinson's counterclaim, arguing that the counterclaim contravenes the Thomas injunction. The Robinsons responded by moving to remand.

Following the completion of the parties' briefing on their motions, the plaintiff in Thomas moved, and the court allowed her to voluntarily dismiss her suit by order entered March 29, 1997.

However, just before that order was entered, a virtually identical suit was filed in the Hattiesburg Division of this District by several other Fidelity customers, Coats v. Fidelity Financial Servs., Inc., No. 2:97CV116PG, and Judge Charles Pickering immediately signed an agreed order on March 27, 1997 certifying a temporary settlement class in the Coats case. His order was identical to that which was entered by the undersigned in Thomas, and is to remain in effect until July 1, 1997.

By their motion to remand, the Robinsons vigorously challenge the propriety of Fidelity's removal, insisting that the All Writs Act does not provide a basis for the exercise of removal jurisdiction over this case and that there otherwise exists no basis for jurisdiction in this court, and hence, no basis for Fidelity's removal to this court. In response, Fidelity acknowledges that there is no diversity of citizenship to support federal jurisdiction over this case under 28 U.S.C. § 1332. And it concedes, implicitly if not explicitly, that the state court pleadings raise no federal question that would support an exercise of federal jurisdiction under § 1331. For these reasons, Fidelity has not purported to justify its removal under 28 U.S.C. § 1441. Nevertheless, it maintains that removal jurisdiction exists which this court can and should exercise in order to give effect to the Thomas/Coats injunction against prosecution of CPI claims against Fidelity.

The All Writs Acts states:

The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their jurisdiction and agreeable to the usages and principles of law.

28 U.S.C. § 1651. The notion that this Act might serve as a vehicle for removal is of relatively recent vintage, and there have been few cases addressing the issue. In Yonkers Racing Corp. v. City of Yonkers, 858 F.2d 855 (2d Cir.1988), cert. denied, 489 U.S. 1077, 109 S.Ct. 1527, 103 L.Ed.2d 833 (1989), the earliest reported decision of which this court is aware in which removal was allowed under the authority of the All Writs Act, the court rejected the argument that the removal statutes were the exclusive source of removal jurisdiction and held that "residual jurisdictional authority" derived from the All Writs Act exists to permit removal in "exceptional cases." Id. at 864. The court concluded that the plaintiffs in the removed action — which was a suit to condemn certain property which the City had previously agreed in federal court litigation would be condemned for public housing — were in a position to frustrate the implementation of a previously-entered federal consent decree which was intended to remedy the condition of unconstitutionally segregated public housing in the City of Yonkers. The court concluded that the City could, and likely should have invoked the court's residual jurisdiction under the All Writs Act by filing its condemnation suit in federal court in the first place since the City was, in effect, pursuing the condemnation proceedings at the behest of the federal court by virtue of the consent decree. In its view, though, as a practical matter, it was no less necessary or appropriate to assert removal jurisdiction over the case. The court explained:

[W]ere we to decide that removal was improper under the All Write Act, the state court would be faced with a situation in which any order it issued that was inconsistent with the Consent Decree would be subject to the injunctive powers of the federal court under the Anti-Injunction Act. See 28 U.S.C.§ 2283 (federal court may not grant injunction against state court "except as expressly authorized by ... Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments"); ... Use of the All Writs Act in this case to effectuate removal thus seems to us to be a less drastic, and therefore preferable, result.

Id. at 864.

Subsequently, in In re Agent Orange Product Liability Litigation, 996 F.2d 1425 (2d Cir.1993), cert. denied sub nom., 510 U.S. 1140, 114 S.Ct. 1125, 127 L.Ed.2d 434 (1994), the Second Circuit again permitted an All Writs Act removal, but in a class-action context. Agent Orange involved efforts by two groups of veterans to sue manufacturers of Agent Orange in state court in Texas despite an earlier settlement of a class action (or multidistrict litigation) brought against Agent Orange manufacturers in federal court in the Eastern District of New York. That settlement agreement, which had received judicial approval and of which notice had been given to class members, forever enjoined class members from instituting or maintaining an action against the defendant manufacturers based on exposure to Agent Orange. Id. at 1429. The plaintiffs in the subsequent Texas lawsuits were within the defined class covered by the settlement and had not opted out of the settlement, id., so the defendants in the cases removed the suits to the Texas district courts. The suits were then...