New Life Assembly Pampa v. Church Mut. Ins. Co.
| Decision Date | 12 May 2015 |
| Docket Number | NO. 2:15-CV-00051-J,2:15-CV-00051-J |
| Parties | NEW LIFE ASSEMBLY OF GOD OF THE CITY OF PAMPA, STATE OF TEXAS, Plaintiff, v. CHURCH MUTUAL INSURANCE COMPANY and STEVEN BUETTNER, Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Before the Court is Plaintiff's Motion to Remand. In that Motion, Plaintiff seeks to remand the above-captioned case to state court on the grounds that this Court lacks subject matter jurisdiction. Plaintiff's Motion is GRANTED.
Plaintiff New Life Assembly of God of the City of Pampa ("New Life") filed its Original Petition in the 223rd Judicial District Court of Gray County, Texas on January 12, 2015, seeking damages for the alleged denial or under-payment of a valid insurance claim for storm damage to its property. Specifically, Plaintiff asserts causes of action for breach of contract, Texas Insurance Code violations, and Texas Deceptive Trade Practices Act ("DTPA") violations against Church Mutual Insurance Company ("Church Mutual") and Steven Buettner ("Buettner")—an adjuster hired by Church Mutual. Plaintiff further asserts that "[n]o diversity of citizenship exists in this matter."
In its petition, Plaintiff alleges that a storm hit Pampa, Texas on June 10, 2014 and damaged Plaintiff's church and other property. At the time of the storm, Plaintiff's property wasinsured by Church Mutual. Plaintiff alleges that it filed a claim on its insurance policy and that Church Mutual underpaid that claim. Plaintiff alleges that Church Mutual assigned Buettner as an individual adjuster on the claim and that Buettner "conducted a substandard investigation and inspection of the property, prepared a report that failed to include all of the damages that he noted during the inspection, and undervalued the damages he observed during the inspection." Plaintiff further alleges that "Church Mutual and Buettner performed an outcome-oriented investigation of Plaintiff's claim," and that the actions of Church Mutual and Buettner resulted in a biased, unfair, and inequitable evaluation of the property damage. This ultimately led to the underpayment of Plaintiff's claim.
Defendants removed the case to this Court on February 4, 2015. In their Notice of Removal, Defendants argued that removal was proper under 28 U.S.C. § 1441 because this Court has diversity jurisdiction over the case—Plaintiff is a citizen of Texas, Defendant Church Mutual is a citizen of Wisconsin, and the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332(a). Although Defendant Buettner is also a citizen of Texas—which would normally preclude a finding of complete diversity—Defendants argued that Buettner's Texas citizenship was irrelevant and should be disregarded for the purposes of removal because he was improperly joined by Plaintiff for the sole purpose of defeating diversity jurisdiction.
Plaintiff filed a Motion to Remand on April 13, 2015, sixty-eight days after the case was removed to federal court. In its Motion, Plaintiff argues that Buettner was not improperly joined because, under the Texas "fair notice" pleading standards, there is a reasonable possibility that Plaintiff will be able to establish a cause of action against Buettner in state court. And because Buettner is properly joined as a Defendant, this Court lacks subject matter jurisdiction and must remand the case to state court. Defendants filed a response on April 29, 2015, arguing (A) that Plaintiff had waived its right to seek remand and, in the alternative, (B) that Buettner wasimproperly joined for the sole purpose of defeating diversity jurisdiction. Plaintiff filed a reply on May 11, 2015.
A defendant may remove a case from state to federal court where there is federal subject matter jurisdiction and the removal procedure is properly followed. See 28 U.S.C. § 1441(a); Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). Conversely, remand of a case from federal to state court is proper where the federal court lacks subject matter jurisdiction. See 28 U.S.C. § 1447(c). A federal district court has subject matter jurisdiction over a case involving only state law claims—such as this case—where there is complete diversity of citizenship among the parties and where the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332(a). Complete diversity exists where "all persons on one side of the controversy [are] citizens of different states than all persons on the other side." Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1079 (5th Cir. 2008) (quoting McLaughlin v. Miss. Power Co., 376 F.3d 344, 353 (5th Cir. 2004)). If a plaintiff shares the same state citizenship as any one of the defendants, there is no complete diversity and the case is not removable to federal court. See Corfield v. Dall. Glen Hills LP, 355 F.3d 853, 857 (5th Cir. 2003). However, even if the parties to the action are completely diverse, a case cannot be removed to federal court if any defendant is a citizen of the state in which the action is brought. See 28 U.S.C. § 1441(b)(2); Moore v. Travelers Indem. Co., No. 3:10-CV-1695-D, 2010 WL 5071036, at *3 (N.D. Tex. Dec. 7, 2010). This is often referred to as the "forum-defendant rule." In re 1994 Exxon Chem. Fire, 558 F.3d 378, 391 (5th Cir. 2009).
Before this Court reaches the merits of Defendants' improper joinder arguments, it must first address the preliminary question of whether Plaintiff's Motion to Remand is timely filed.The Federal Rules of Civil Procedure require that "[a] motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a)." 28 U.S.C. § 1447(c) (emphasis added); Price v. Johnson, 600 F.3d 460, 462 n.6 (5th Cir. 2010). Here, Plaintiff argues, in part, that its Motion to Remand should be granted because Defendant Buettner is a properly joined defendant who is a citizen of the state where the suit was filed—thus precluding removal of this case to federal court under the forum-defendant rule. See 28 U.S.C. § 1441(b)(2); Bank of N.Y. Mellon Trust Co., N.A. v. De La Fuente, No. 3:14-cv-3627-G-BN, 2014 U.S. Dist. LEXIS 170209, at *11 (N.D. Tex. Nov. 7, 2014). The Fifth Circuit has recognized that the presence of an in-state forum defendant under 28 U.S.C. § 1441(b)(2) is a procedural defect—not a subject matter jurisdiction defect—and is waived if a plaintiff first raises the defect more than thirty days after removal. See Denman by Denman v. Snapper Div., 131 F.3d 546, 548 (5th Cir. 1998). Because Plaintiff's Motion to Remand was filed sixty-eight days after Defendants' Notice of Removal, Defendants argue that the Court should waive this procedural defect and deny Plaintiff's Motion to Remand as untimely filed.
However, Defendants' response ignores the fact that the joinder of Defendant Buettner raises not only a waivable procedural defect under 28 U.S.C. § 1441(b)(2)'s forum-defendant rule, but also an independent subject matter jurisdiction defect under 28 U.S.C. § 1332(a) that is not waivable. A federal district court has an ongoing responsibility to ensure that it has subject matter jurisdiction over its cases and must remand a case to state court if it concludes that it lacks subject matter jurisdiction—even if the issue has never been raised by the parties. See 28 U.S.C. § 1447(c) (); Gasch v. Hartford Accident & Indem. Co., 491F.3d 278, 281 (5th Cir. 2007) ().
Here, Plaintiff seeks remand because, if Buettner is properly joined, this Court lacks subject matter jurisdiction. Plaintiff, a Texas citizen, shares the citizenship of Defendant Buettner—also a Texas citizen. Because Plaintiff and one of the Defendants have the same state citizenship, there is no complete diversity of parties. See Corfield v. Dall. Glen Hills LP, 355 F.3d 853, 857 (5th Cir. 2003). This lack of complete party diversity is a subject matter jurisdiction defect that is distinct from the forum-defendant procedural defect found in 28 U.S.C. § 1441(b)(2). Plaintiff's right to raise a subject matter jurisdiction defect is not constrained by 28 U.S.C. § 1447(c)'s thirty-day time limit. See Esteban v. State Farm Lloyds, 23 F. Supp. 3d 723, 727-28 (N.D. Tex. 2014) (). Contrary to Defendants' arguments, Plaintiff has not waived—and, indeed, can never waive—its right to complain that this Court lacks subject matter jurisdiction. Plaintiff's Motion to Remand is timely because it seeks remand, at least in part, on the basis of a non-waivable defect—this Court's alleged lack of subject matter jurisdiction.
Improper joinder is a limited exception to the forum-defendant rule and the requirement of complete diversity. See Cuevas v. BAC Home Loans Servicing, LP, 648 F.3d 242, 249 (5th Cir. 2011). It allows a court to disregard an in-state defendant's citizenship when determining whether there is diversity jurisdiction, and permits removal of a case from state to federal court where the removing defendant can show that an in-state defendant was improperly or fraudulently joined by the plaintiff for the purpose of defeating diversity jurisdiction. SeeSalazar v. Allstate Tex. Lloyds's, Inc., 455 F.3d 571, 574 (5th Cir. 2006); Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 572-73 (5th Cir. 2004).
Here, Defendants argue that Steven Buettner—a defendant whose Texas citizenship would ordinarily defeat federal...
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