Patin v. Allied Signal, Inc.
| Decision Date | 05 February 1996 |
| Docket Number | No. 94-41150,94-41150 |
| Citation | 77 F.3d 782 |
| Parties | Jimmy Charles PATIN, Sr., and Margaret Patin, Plaintiffs-Appellants, v. ALLIED SIGNAL, INC. and Travelers Insurance Company of Rhode Island, Defendants, Travelers Insurance Company of Rhode Island, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Richard Ellis Turkel, Nick C.E. LeBleu, Turkel, Dumas & LeBleu, Orange, TX, for appellants.
Hollis Horton, Craig P. Romero, Orgain, Bell & Tucker, Beaumont, TX, for appellee.
Appeal from the United States District Court for the Eastern District of Texas.
Before SMITH, WIENER and DeMOSS, Circuit Judges.
The opinion entered in this cause on November 1, 1995, has been withdrawn, and the following opinion has been entered in its place.
We render this opinion not only to decide the case before us, but also to resolve an intra-circuit conflict on an important and recurring issue implicating removal from and remand to state court. For the reasons set forth below, we hold that a covered employee's claims and the claims of those asserting rights through the employee against the employer's workers' compensation insurance carrier for breach of the duty of good faith and fair dealing are not immunized against removal to federal court by the provisions of 28 U.S.C. § 1445(c). We conclude that such a claim is not a civil action "arising under" the state workers' compensation law; rather, such a claim--basically an insurance malpractice tort--is separate from and independent of a claim for statutory workers' compensation benefits, regardless of the fact that such a tort claim is "related to" a compensation benefits claim and to the workers' compensation insurance coverage of the claimant's employer.
Plaintiff-Appellant Jimmy Charles Patin, Sr. sustained a work-related injury on October 2, 1990, while employed by Defendant Allied-Signal, Inc. (Allied). He continued to work for Allied without loss of time or compensation until he was discharged on November 2, 1990. As Allied's workers' compensation insurance carrier, Defendant-Appellee Travelers Indemnity Company of Rhode Island (Travelers) paid medical bills for Patin's treatment but never initiated payment of weekly workers' compensation benefits because (1) Patin had lost no time as a result of his work-related injury, and (2) he had a pre-existing physical limitation in his shoulder.
On March 21, 1991, Patin filed a workers' compensation claim with the Texas Industrial Accidents Board (IAB), which awarded Patin $42,091.02 in connection with the October 1990 accident. Both parties to that administrative proceeding appealed in a suit de novo filed in state district court. At the completion of the jury trial that ensued, Patin's award was increased to $75,021.88 for permanent partial disability; his claim for total temporary disability was rejected.
In another action, Patin sued Allied in federal court for age discrimination and wrongful discharge, claiming that Allied had retaliated against him for filing the workers' compensation claim for the October 1990 accident. In that case, a federal jury rendered a verdict in favor of Allied, producing a take-nothing judgment adverse to Patin.
Yet a third lawsuit implicating Patin's October 1990 accident--the suit from which this appeal arises--was filed by Patin and his wife, Margaret (collectively, the Patins), on July 23, 1993, in the 128th Judicial District Court, Orange County, Texas. It included, among others, a claim against Travelers for In February 1994, Travelers filed a motion for summary judgment, insisting that the Patins' claims were barred by both the statute of limitations and the doctrine of res judicata. In August 1994, subsequent to a full merits hearing on that motion, the district court granted summary judgment in favor of Travelers. The following month the Patins timely filed a motion for reconsideration, but it too was denied by the district court. 1
breach of the duty of good faith and fair dealing. Travelers removed the case to federal district court on the basis of diversity of citizenship. The Patins timely filed a motion to remand this case to state court, contending that (1) as an insurance company conducting business in Texas, Travelers is a de facto citizen of that state, and thus removal is not proper; and (2) no proof existed that the required $50,000 minimum jurisdictional amount was met. In addition, the Patins' motion made mention, in connection with the de facto citizenship argument, of the fact that Travelers does business under the Texas Workers' Compensation Act (TWCA). The Patins concluded their remand motion with the statement that "[t]he cause should be remanded because the outcome depends entirely on claims under the Texas Workers' Compensation Act, and there are not [sic] federal questions." After a full hearing in October 1993, the district court denied the Patins' motion to remand
The Patins timely filed their notice of appeal from the district court's denial of that post-judgment motion. On appeal the Patins insist that 28 U.S.C. § 1445(c) mandates remand to state court because their claims against Travelers arise under the TWCA. 2 Predictably, the Patins also assert that neither the doctrine of res judicata nor the applicable state statute of limitations bars their claims.
We review the district court's grant of a motion for summary judgment de novo, applying the same standard as the district court applied. 3 Questions of law are decided just as they are outside of the summary judgment context: de novo. 4
In the district court the Patins, citizens of Louisiana, contended that subject matter jurisdiction was wanting in federal district court for the following reasons: (1) the summary judgment evidence was insufficient to demonstrate that the amount in controversy was equal to or exceeded $50,000, and (2) Travelers was a de facto citizen of Texas by virtue of the way it does business there. 5 We agree with the district court's determination that the requirements for diversity jurisdiction under 28 U.S.C. § 1332 were present and that 28 U.S.C. § 1441(b) does not prevent removal. Presumably the Patins do too, as they do not challenge these holdings on appeal.
Before us, the Patins rely solely on § 1445(c) as justification for remand. They contend that all of their claims against Travelers "aris[e] under Workmen's Compensation laws" of Texas; as such, the removal of this case from state court was void, and the case therefore must be remanded to state court. In response, Travelers offers two theories on which it urges us to affirm the district court's denial of remand and retention of jurisdiction: (1) The Patins have waived their right to insist on remand; and (2) the Patins' common law claim that Travelers breached the duty of good faith and fair dealing, their Texas Insurance Code claim, and their claim of civil conspiracy, were all "separate and independent claims" from the claims for statutory workers' compensation benefits that they advanced in their IAB/state court litigation, confirming that the Patins' action cannot come within the purview of the non-removability provisions of § 1445(c). We address Travelers' two theories in sequence.
If Travelers is correct that the Patins have waived their right to claim improper removal, our remand inquiry is at an end, and we need not consider non-removability under § 1445(c). Travelers insists that the Patins neither cited nor relied on § 1445(c) in their Motion to Remand or in their argument to the district court at the hearing on that motion. Rather, states Travelers, remand based on § 1445(c) was raised for the first time in the Patins' motion for a new trial (reconsideration), thereby failing to comply with the requirement of § 1447(c) that "[a] motion to remand the case on the basis of any defect in removal procedure must be made within 30 days after the filing of the notice of removal under section 1446(a)." 6 Travelers notes correctly that in this circuit the wrongful removal of a civil action arising under a state's workers' compensation law is a procedural defect that is waivable under § 1447(c). 7 Patin no longer disputes that diversity is complete, so the instant claim clearly could have been brought originally in federal court. As such, the following rule of this circuit applies:
If a plaintiff initially could have filed his action in federal court, yet chose to file in state court, even if a statutory provision prohibits the defendant from removing the action and the defendant removes despite a statutory proscription against such removal, the plaintiff must object to the improper removal within thirty days after the removal, or he waives his objection. 8
Although Travelers correctly recites the applicable law when it asserts that the Patins' removal complaint is procedural in nature and thus waivable, the facts eschew waiver. True, § 1445(c) was neither quoted nor cited by section number in the Patins' removal motion or in their argument to the district court at the hearing on that motion. Nevertheless, the substantive concept embodied in § 1445(c)--non-removability of claims arising under state workmen's compensation laws--was adverted to in the motion and was discussed, however briefly, in the hearing. Moreover, in contesting removal Travelers apparently addressed briefly the issue of non-removability and referred to § 1445(c) by number, thereby eliminating any question whether that ground for remand was before the district court. Thus, we reject Travelers' contention that the Patins waived their right to insist on remand to state court.
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