Frank's Int'l, LLC v. Nat'l Union Fire Ins. Co. of Pittsburg
| Decision Date | 15 November 2016 |
| Docket Number | CIVIL ACTION NO. 16-525-JJB-RLB |
| Parties | FRANK'S INTERNATIONAL, LLC v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURG, PA, ET AL. |
| Court | U.S. District Court — Middle District of Louisiana |
Please take notice that the attached Magistrate Judge's Report has been filed with the Clerk of the United States District Court.
In accordance with 28 U.S.C. § 636(b)(1), you have fourteen (14) days after being served with the attached Report to file written objections to the proposed findings of fact, conclusions of law and recommendations therein. Failure to file written objections to the proposed findings, conclusions, and recommendations within 14 days after being served will bar you, except upon grounds of plain error, from attacking on appeal the unobjected-to proposed factual findings and legal conclusions of the Magistrate Judge which have been accepted by the District Court.
ABSOLUTELY NO EXTENSION OF TIME SHALL BE GRANTED TO FILE WRITTEN OBJECTIONS TO THE MAGISTRATE JUDGE'S REPORT.
Signed in Baton Rouge, Louisiana, on November 15, 2016.
/s/_________
RICHARD L. BOURGEOIS, JR.
UNITED STATES MAGISTRATE JUDGE
Before the Court is Plaintiff's Motion to Remand (R. Doc. 5) filed on September 7, 2016. The Motion is opposed by Defendant National Union Fire Insurance Company of Pittsburgh, PA ("National Union"). (R. Doc. 7). Plaintiff filed a Reply. (R. Doc. 15).
Oral argument was held on the foregoing motion on October 24, 2016. (R. Doc. 16).
On May 9, 1995, EOG Resources, Inc. ("EOG") entered into a Master Service Contract ("MSC") with Frank's International, LLC ("Plaintiff") to perform services at a leased drilling site. (R. Doc. 1-3 at 22-33). Similarly, EOG and Nabors Drilling Technologies USA, Inc., the operator of the oil drilling rig, executed a Master Drilling Contract ("Drilling Contract") in which EOG agreed to defend and indemnify Nabors Drilling Technologies USA, Inc. (R. Doc. 5-1 at 2).
Plaintiff's employee, Ricardo Ruiz, was injured on or about January 21, 2014, at the drilling site. At the time of the accident, Plaintiff had in place a commercial general liability policy issued by National Union and bearing Policy No. GL 194-99-96 ("the Policy"). (R. Doc. 1-3 at 34-132). In accordance with the MSC, the Policy named EOG as an additional insured.
On January 19, 2016, Mr. Ruiz initiated a personal injury action in Texas state court against EOG and Nabors Drilling Technologies USA, Inc. f/k/a Nabors Drilling USA LP, its affiliates, employees and affiliates' employees, including Upstream International, LLC, Jeremy Calvery, Blake Stevenson, and Tim Smiley (collectively, "Nabors"). (R. Doc. 1-2 at 13-22). See Ricardo Ruiz, Jr. v. EOG Resources, Inc. et al., Cause No. 26, 186, currently pending in the 25th Judicial District Court in Gonzalez County, Texas (the "underlying suit").
Nabors sought indemnity and defense from EOG pursuant to the Drilling Contract, and then EOG sought indemnity and defense for both itself and Nabors pursuant to the Policy. National Union granted coverage for the indemnity and defense of EOG, but denied coverage for the indemnity and defense of Nabors. (R. Doc. 1-3 at 133-137).
On July 6, 2016, Plaintiff initiated the instant lawsuit against National Union by filing a "Petition for Declaratory Judgment & Bad Faith Denial of Defense and Indemnity" in the 19th Judicial District Court, East Baton Rouge Parish, Louisiana. (R. Doc. 1-2 at 1-12).
On July 21, 2016, Plaintiff filed an Amended Petition adding EOG as a defendant. (R. Doc. 1-3 at 1-11). In its prayer for relief, Plaintiff requests that a "declaratory judgment be issued stating that National Union owes defense and indemnity to Nabors . . . for all claims against them in the underlying suit" and for an award of bad faith damages and penalties. (R. Doc. 1-3 at 10).
On August 5, 2016, National Union removed the action claiming diversity jurisdiction and asserting that EOG was improperly joined as a defendant to destroy complete diversity. (R. Doc. 1). National Union asserts that EOG is not a proper defendant because Plaintiff has not asserted a claim against it, and, therefore, EOG's citizenship should be ignored for determining whether the court has diversity jurisdiction. (R. Doc. 1 at 3).
On September 7, 2016, Plaintiff filed the instant Motion to Remand, asserting that there is not complete diversity because both Plaintiff and EOG are citizens of Delaware. (R. Doc. 5).
Plaintiff argues that this action must be remanded because EOG is a properly joined defendant, and as a result, complete diversity between the parties does not exist. (R. Doc. 5-1 at 1). Plaintiff argues that EOG is a proper party because it stands to benefit from an insurance coverage decision in this declaratory judgment action. (R. Doc. 5-1 at 2). Plaintiff asserts that EOG has "a substantial interest in [Plaintiff's] suit because the coverage issues presented in this suit will determine, inter alia, coverage for claims that EOG has tendered to [Plaintiff]." (R. Doc. 5-1 at 6-8). Plaintiff also asserts that another district court has rejected National Union's current argument with regard to finding improper joinder of a defendant named in a declaratory judgment action. (R. Doc. 5-1 at 8-9).
In opposition, National Union argues that Plaintiff improperly joined EOG as a defendant because it has not asserted a cause of action against EOG and does not otherwise seek recovery from EOG. (R. Doc. 7 at 2-4). National Union further argues that the decisions relied upon by Plaintiff are distinguishable because EOG is not a necessary party to this action. (R. Doc. 7 at 4-6). Finally, National Union argues that if the Court finds that EOG is a necessary party, then the Court should realign EOG as a party-plaintiff because its interests align with those of Plaintiff. (R. Doc. 7 at 6-7). Such realignment would preserve complete diversity between the parties even if the Court concludes that EOG was properly joined as a party. (R. Doc. 7 at 7).
In reply, Plaintiff argues that EOG is properly joined as a defendant, and that realignment is not available because Plaintiff and EOG's interests are divergent. (R. Doc. 15).
A defendant may remove "any civil action brought in a State court of which the district courts of the United States have original jurisdiction . . . ." 28 U.S.C. § 1441(a). When original jurisdiction is based on diversity of citizenship, the cause of action must be between "citizens of different States" and the amount in controversy must exceed the "sum or value of $75,000, exclusive of interest and costs." 28 U.S.C. § 1332(a)-(a)(1).1 Subject matter jurisdiction must exist at the time of removal to federal court, based on the facts and allegations contained in the complaint. St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998) (). Remand is proper if at any time the court lacks subject matter jurisdiction. See 28 U.S.C. § 1447(c). The removal statute, 28 U.S.C. § 1441, is strictly construed and any doubt as to the propriety of removal should be resolved in favor of remand. Gasch v. Hartford Acc. & Indem. Co., 491 F.3d 278, 281-82 (5th Cir. 2007). The removing party has the burden of proving federal diversity jurisdiction. Garcia v. Koch Oil Co. of Tex. Inc., 351 F.3d 636, 638 (5th Cir. 2003).
The party seeking removal based on improper joinder of a non-diverse defendant bears a "heavy" burden of proving that the joinder was improper. Travis v. Irby, 326 F.3d 644, 649 (5th Cir. 2003). To meet its burden, the removing party must show an "(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court." Id. at 647.2
Generally, a court should "conduct a Rule 12(b)(6)-type analysis . . . to determine whether the complaint states a claim under state law against the in-state defendant." Id. However, where a plaintiff has omitted or misstated "discrete facts that would determine the propriety of joinder," the district court may "pierce the pleadings and conduct a summary inquiry" to determine whether a non-diverse defendant has been improperly joined. Id. Although the court may consider "summary judgment-type evidence in the record," it must resolve all disputed questions of fact and ambiguities in the controlling state law in favor of the plaintiff. Travis, 326 F.3d at 649.
The Louisiana Declaratory Judgment Act, La. Code Civ. Proc. art. 1871, et seq., applies to declaratory judgment actions initiated in Louisiana courts. In pertinent part, the Louisiana Declaratory Judgment Act provides that "[w]hen declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding." La. Code Civ. Proc. art. 1880.
The U.S. District Court for the Western District of Louisiana has recently ruled that in light of the Louisiana Declaratory Judgment Act, the citizenship of non-diverse defendants properly joined in a declaratory judgment action pursuant to article 1880 is considered in determining whether the federal court, upon removal, has diversity jurisdiction. See Bilyeu v. Wells Fargo Ins. Servs., Inc., No. 16-23, 2016 WL 5721070 (W.D. La. Sept. 29, 2016), adopting report and recommendation sub nom., Bilyeu v. Wells Fargo Ins. Servs. USA, Inc., No. 16-23, 2016 WL 5721060, at *1 (W.D. La. Aug. 8, 2016); see also Johnson v. Metro. Life Ins. Co., No. 08-4312, 2009 WL 511282, at *1 n.8 (E.D. La. Feb. 27, 2009) (...
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