Molina v. Am. Access Cas. Co.

• Decision Date: 17 August 2021
• Docket Number: SA-21-CV-00363-XR
• Parties: HUMBERTO MOLINA, AS JUDGMENT CREDITOR OF ALBERTO VARGAS; Plaintiff v. AMERICAN ACCESS CASUALTY COMPANY, A-MAX AUTOMOBILE INSURANCE COMPANY, Defendants
• Court: U.S. District Court — Western District of Texas

HUMBERTO MOLINA, AS JUDGMENT CREDITOR OF ALBERTO VARGAS; Plaintiff v. AMERICAN ACCESS CASUALTY COMPANY, A-MAX AUTOMOBILE INSURANCE COMPANY, Defendants

No. SA-21-CV-00363-XR

United States District Court, W.D. Texas, San Antonio Division

August 17, 2021

ORDER

XAVIER RODRIGUEZ, UNITED STATES DISTRICT JUDGE

On this date, the Court considered Plaintiff's motion for remand (ECF No. 8) and Defendant A-Max Automobile Insurance Company's response (ECF No. 13), and Plaintiff's second motion for remand (ECF No. 19). After careful consideration, the motions are DENIED.

BACKGROUND

This case arises out of an insurance dispute between Plaintiff Humberto Molina and Defendants American Access Casualty Company (“AACC”) and A-Max Automobile Insurance Company (“A-Max”). A-Max was an insurance agency that facilitated the issuance of an AACC policy (the “Policy”) to Annette and Alberto Vargas, covering their 2008 Mitsubishi Lancer ES (the “Vehicle”). Molina alleges that on or about September 8, 2017, he suffered severe injuries as a result of a collision with Mr Vargas while Vargas was driving the Vehicle. Plaintiff subsequently filed suit against Mr. Vargas in state court. On December 5, 2019, Plaintiff obtained a default judgment against Mr. Vargas and was awarded $200, 000 in damages along with costs and interest. See ECF No. 1-1 at 14-15. Plaintiff filed suit on March 8, 2021, in the 438th Judicial District Court, Bexar County, Texas, bringing claims for breach of contract, bad faith, violations of the Texas Deceptive Trade Practices Act (“DTPA”) and Texas Insurance Code, fraud, and declaratory judgment against Defendants. ECF No. 1-1 at 7-13.

A-Max was served with citation on March 12, 2021. ECF No. 5 ¶ 16. On April 9, 2021, A-Max removed the case to this Court on the basis of diversity jurisdiction without obtaining AACC's consent to removal, which A-Max asserts was not required because AACC had not been properly served at the time of removal.^[1] ECF No. 5 ¶ 19; see 28 U.S.C. § 1446 (“When a civil action is removed solely [on the basis of diversity jurisdiction], all defendants who have been properly joined and served must join in or consent to the removal of the action.”) (emphasis added). According to A-Max, this Court has jurisdiction under 28 U.S.C. § 1332 because the amount in controversy exceeds $75, 000, and there is complete diversity of citizenship between the parties. ECF No. 5 ¶¶ 4-15. A-Max alleges that for diversity purposes Plaintiff is a citizen of Texas and AACC is a citizen of Illinois. Id. ¶¶ 5-6. Although A-Max itself is admittedly a citizen of Texas, A-Max contends that its citizenship should be disregarded because it is not a proper party under the doctrine of improper joinder. Id.

Plaintiff timely moved to remand the case to state court, arguing that A-Max's removal was procedurally defective. See ECF No. 8. A-Max opposes remand. ECF No. 13.

DISCUSSION

I. Procedural Sufficiency of Removal

Plaintiff asserts that A-Max's removal was procedurally deficient under 28 U.S.C. § 1446(a) because A-Max (1) failed to attach the docket sheet from the state court action pursuant to this Court's standing order, (2) failed to attach the citation directed to AACC to the Notice of Removal, and (3) failed to identify the underlying case that resulted in a judgment against Mr. Vargas as a “related case” in Section VIII of the Civil Cover Sheet. ECF No. 8 at 4.

With respect to Plaintiff's first challenge to the procedural sufficiency of removal, it appears that A-Max did in fact attach the state-court docket sheet to the Notice of Removal. See ECF No. 1-4. Plaintiff's second challenge also fails. A-Max's failure to include the citation directed to AACC did not render the removal procedurally defective because AACC had not been served at the time of removal. Section 1446(a) requires that the notice of removal “contain[] a short and plain statement of the grounds for removal, together with a copy of all process, pleadings and orders served upon such defendant or defendants in such action.” 28 U.S.C. § 1446(a) (emphasis added). Because the citation directed to AACC had not been served at the time of removal, A-Max was not required to include it with the notice of removal. Finally, with respect to Plaintiff's third procedural challenge, the instructions to Form JS 44, the Civil Cover Sheet, clearly indicate that Section VIII “is used to reference related pending cases, if any.”^[2] Given that the underlying case resulted in a judgment against Mr. Vargas, it would appear to the Court that the case against him, though related to this action, was no longer pending at the time of removal and thus need not have been listed in Section VIII of the Civil Cover Sheet.

Plaintiff has filed a second motion for remand, in which he asserts that removal by A-Max, an in-state defendant, is barred by the forum defendant rule. ECF No. 19. Although the second motion is untimely, the Fifth Circuit has held that once a motion to remand is timely filed, the Court may remand the case on any procedural ground, even one not raised in the motion. See Schexnayder v. Entergy La., Inc., 394 F.3d 280, 284 (5th Cir. 2004). Stated differently, although the Court may not sua sponte remand for procedural defects in the removal process, once a plaintiff seeks remand, the Court is entitled to do so for procedural reasons not raised in the plaintiff's motion.^[3] See id. (rejecting removing defendant's argument that district court was not entitled to remand on grounds not raised by motion to remand). The forum-defendant rule is a procedural rule and not a jurisdictional one. In re 1994 Exxon Chem Fire, 558 F.3d 378, 392-93 (5th Cir. 2009). Accordingly, before addressing A-Max's improper joinder argument, the Court will consider whether removal by A-Max, an in-state defendant, is procedurally defective based on the forum defendant rule.

“A defendant removing a case on diversity grounds must not only demonstrate that the case satisfies the requirements of 28 U.S.C. § 1332(a), but must also clear the ‘additional hurdle' of 28 U.S.C. § 1441(b)(2), or the ‘forum defendant rule.'” Hurley v. Motor Coach Indus., Inc., 222 F.3d 377, 378 (7th Cir. 2000). Under the forum defendant rule, a suit that is “otherwise removable solely on the basis of [diversity of citizenship] may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” 28 U.S.C. § 1441(b)(2) (emphasis added). In light of the forum defendant rule, Plaintiff asserts that a properly served, in-state defendant such as A-Max cannot remove an action to federal court on the basis of its own improper joinder. See ECF No. 19 at 5-6.

The Fifth Circuit recently addressed the forum defendant rule in the context of “snap removal”-removal prior to service on all defendants-in Texas Brine Co. v. Am. Arb. Ass'n, Inc., 955 F.3d 482, 487 (5th Cir. 2020). It concluded that “[a] non-forum defendant may remove an otherwise removable case even when a named defendant who has yet to be ‘properly joined and served' is a citizen of the forum state.” Id. at 487 (emphasis added). However, it did not address whether in-state defendants who have been served but assert that they have been improperly joined can remove to federal court on the basis of diversity jurisdiction.

In condoning snap removal by non-forum defendants, the Fifth Circuit emphasized that, under the circumstances of the case, “snap removal [was] at least rational” because it did not offend the underlying principles of either the forum-defendant rule or diversity jurisdiction: “Of some importance, the removing party is not a forum defendant. Diversity jurisdiction and removal exist to protect out-of-state defendants from in-state prejudices” Id. at 486-87 (citing J.A. Olson Co. v. City of Winona, 818 F.2d 401, 404 (5th Cir. 1987)). It follows that diversity jurisdiction does not exist to protect forum defendants from the prejudices of their own state. See Morris v. Nuzzo, 718 F.3d 660, 665 (7th Cir. 2013) (“[T]he forum defendant rule disallows federal removal premised on diversity in cases where the primary rationale for diversity jurisdiction-to protect defendants against presumed bias of local courts-is not a concern because at least one defendant is a citizen of the forum state.”); Dresser Indus., Inc. v. Underwriters at Lloyd's of London, 106 F.3d 494, 499 (3d Cir. 1997) (“If diversity jurisdiction exists because of a fear that the state tribunal would be prejudiced [against] the out-of-state plaintiff or defendant, that concern is understandably allayed when the party is joined with a citizen from the forum state.”); Lively, 456 F.3d at 940 (“[T]he need for such protection is absent, however, in cases where the defendant is a citizen of the state in which the case is brought.”).

Further if one of the aims of the forum defendant rule is to “limit gamesmanship, ” Texas Brine, 955 F.3d at 487, allowing removal by forum defendants would appear to be somewhat counterproductive. For example, permitting an in-state defendant to independently remove an action from state court and be dismissed from the case on the basis of its own improper joinder would deprive the state court of the opportunity to evaluate the sufficiency of claims asserted against one of its own citizens. That is, an in-state defendant's assertion that it is not a proper party to a state court action is better presented to the state court in the form of a motion to dismiss than under the guise of a jurisdictional argument before a federal court. Removal by “improperly joined” forum defendants would also leave the remaining parties in a forum they never sought in the first place, which, if not gamesmanship, is at the...