Polk v. Sentry Ins.

• Decision Date: 25 September 2000
• Docket Number: No. CIV.A. 3:99CV858WS.,CIV.A. 3:99CV858WS.
• Parties: Tommie Ruth POLK, Plaintiff, v. SENTRY INSURANCE, A Mutual Company, Defendant.
• Court: U.S. District Court — Southern District of Mississippi

Page 975

129 F.Supp.2d 975

Tommie Ruth POLK, Plaintiff, v. SENTRY INSURANCE, A Mutual Company, Defendant.

No. CIV.A. 3:99CV858WS.

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

September 25, 2000.

John G. Jones, Jones & Funderburg, Jackson, MS, for Tommie R. Polk, plaintiff.

Arthur F. Jernigan, Jr., Watson & Jernigan, P.A., Clyde X. Copeland, III, Page, Kruger & Holland, P.A., Jackson, MS, for Sentry Insurance, a mutual company, defendant.

ORDER DENYING REMAND

WINGATE, District Judge.

Before the court is the motion of plaintiff Tommie Ruth Polk brought pursuant to Title 28 U.S.C. § 1447¹ asking this court to remand this lawsuit to the Mississippi state court where it originated. Defendant Sentry Insurance removed this lawsuit from state court to this federal forum under the auspices of Title 28 U.S.C. §§ 1441(a)² and 1332,³ alleging diversity of citizenship and the requisite amount in controversy. The parties here are of diverse citizenship and the amount in controversy exceeds $75,000.00, exclusive of costs and interest, factors contested by neither party. What is in dispute, however, is whether Sentry Insurance timely removed this case to this court under the thirty (30) day window provided by Title 28 U.S.C. § 1446(b), which begins when a removing party receives notice by an "other paper" that a previously non-removable case has now become removable. In his motion to remand, Polk contends that defendant slept on the first "other paper" alerting defendant that this case had become removable to federal court and defendant now is precluded from taking advantage of the removal statutes. Accordingly, the plaintiff asks this court to remand this matter to state court. This court, however, is unpersuaded by Polk's motion to remand and hereby denies the motion for the reasons which follow.

FACTS AND PROCEDURE

On March 9, 1999, this action, arising out of an automobile accident, was initiated in the Circuit Court of Copiah County, Mississippi, by Jerry Mahaffey. Mahaffey, a passenger in an automobile driven by J.C. Lomax, sued Lomax and Tommie Ruth Polk, the driver of the other automobile involved in the accident. Mahaffey also sued Federal Express Corporation, Polk's employer and the owner of the automobile Polk was driving at the time of the automobile accident. Thereafter, Federal Express and Polk filed their answers and defenses to Mahaffey's complaint and, jointly, filed a cross-claim against co-defendant Lomax for damages and other relief. At the time, Federal Express and Polk were represented by the firm of Watson and Jernigan. On August 11, 1999, Polk, represented by Jones and Miller, filed a counterclaim against Sentry Insurance. After the necessary waivers of conflict had been obtained, Sentry also retained the firm of Watson and Jernigan to represent it in defense of Polk's counterclaim. As such, Clyde Copeland of Watson and Jernigan represented Federal Express and Polk (defendant), as well as Sentry Insurance (counter-defendant).

One by one, the various parties began to resolve and voluntarily dismiss these claims. On September 25, 1999, Polk and Lomax entered a final settlement of claim and covenant not to sue. Thereafter, on November 1, 1999, counsel for Federal Express and Polk (defendant), Watson and Jernigan, received correspondence from counsel for Lomax, dated October 29, 1999, which appears to memorialize an earlier oral settlement agreement voluntarily extinguishing Federal Express's claim against Lomax. Enclosed with the correspondence were an Absolute Release With Covenants between Federal Express and Lomax and an insurance draft from Lomax's insurer in favor of Federal Express for $10,000.

The next correspondence received by counsel for Federal Express and Polk was on November 4, 1999. At that time, said counsel received correspondence from Craig Sessums, counsel for Lomax, dated November 3, 1999, in which Sessums forwarded to said counsel a "Final Judgment of Dismissal With Prejudice" signed by himself and Dale Schwindaman, Jr., counsel for plaintiff Mahaffey. Pursuant to that agreed judgment, Mahaffey was dismissing his claim against Federal Express and Polk simultaneously with Lomax. This judgment was signed by the state trial court and filed with that court on November 9, 1999.

Upon the entry of the above judgment, only Polk's claim against Sentry remained. Sentry, a corporate citizen of Wisconsin, and Polk, a citizen of Mississippi, are diverse in citizenship.

On December 3, 1999, Sentry Insurance filed its notice of removal seeking to realign the parties as plaintiff and defendant and to seek the jurisdiction of this court on the notion that this court now had diversity jurisdiction. Prior to the settlements by the other parties, this court lacked diversity jurisdiction since plaintiff is a resident citizen of Mississippi, as are defendants Lomax and Polk. On December 16, 1999, Polk filed her motion to remand, arguing that Sentry's removal had been untimely.

ANALYSIS

The issue presented is whether, by virtue of diversity, this court possesses subject matter jurisdiction over Polk's claim against Sentry. The burden here of establishing that federal jurisdiction exists is on the removing party, the defendant Sentry Insurance. Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42 (5th Cir. 1992). Both parties agree that the requirements for diversity jurisdiction exist in this case: the "matter in controversy exceeds the sum or value of $75,000," and the parties are "citizens of different states." Title 28 U.S.C. § 1332(a). What the parties do not agree on, however, is whether Sentry Insurance timely removed the case to this court pursuant to Title 28 U.S.C. § 1446(b). Section 1446(b) provides in pertinent part that:

[the] notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based...

If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order, or other paper from which it may first be ascertained that the case is one which is or has become removable....

Sentry Insurance contends that its right of removal under § 1441(b) first arose when Sentry's counsel received a November 3, 1999, correspondence from Lomax's attorney, indicating that the plaintiff Mahaffey desired to settle his claims against all defendants whose citizenships would preclude diversity jurisdiction. Plaintiff Polk, on the other hand, points to a letter dated October 29, 1999, from Lomax' attorney to Sentry's counsel which, says Polk, provided the requisite notice to Sentry that the lawsuit was now removable. The pivotal issue before this court thus implicates two considerations: first, whether the embrace of § 1446(b) includes correspondence between counsel as "other paper," notwithstanding that the correspondence was not filed with the Clerk of Court. If not, then further analysis is unwarranted since the correspondence in question were not filed with the Clerk of Court. Should this court determine that § 1446(b) includes counsel correspondence, then the court's next task is to determine whether and when the thrust of the correspondence in question properly triggered removal.

Section 1446(b) does not define "other paper." On at least two occasions, the Fifth Circuit Court of Appeals resolved remand issues without deciding what constitutes "other paper." See FDIC v. Loyd, 955 F.2d 316, 326 (5th Cir.1992) (declining to reach the question of whether "other paper" under § 1446(b) includes or excludes the appointment papers of a receiver); Chapman v. Powermatic, Inc., 969 F.2d 160, 164 n. 8 (5th Cir.1992) (refusing to express an opinion as to whether medical bills and demand letter would be adequate as "other paper" for purpose of the second paragraph of § 1446(b)).

This court, however, in Sunburst Bank v. Summit Acceptance Corp., 878 F.Supp. 77 (S.D.Miss.1995), followed that line of case authority which holds that § 1446(b) is not restricted solely to papers filed in the case. In Sunburst, this court, after relying principally upon the plain language of § 1446(b), interpreted the meaning of "other paper" to include informal correspondences between parties.

The essential purpose of § 1446(b) is to commence the running of the 30-day period once the defendant receives the requisite written notice that the case has become removable. This actual notice may be communicated in a formal or informal manner. Accordingly, this court holds that a demand letter under proper circumstances may be accorded "other paper" status under § 1446(b).

878 F.Supp. 77 at 82.

Similarly, in Hessler v. Armstrong World Industries, Inc., 684 F.Supp. 393 (D.Del.1988), that court adjudged attorneys' correspondence as a permissible "other paper" under the removal statute. In that case, the parties were notified via letter from counsel that the non-diverse parties to the suit had settled. The remaining defendants, however, did not file a petition to remove until more than three months later. They argued that the thirty day time limit had not begun to run until the court had formally received notice that the non-diverse defendants had settled. The Hessler court found that the defendants' petition for removal was untimely. Hessler, 684 F.Supp. at 395. The court reasoned that because the earlier correspondence among the attorneys had given the defendants adequate notice that the case had become removable, that correspondence, not the subsequent notification of the court, constituted an "other paper" for § 1446(b) removal purposes. Id. at 394-95.

This court, still inclined to follow its reasoning in Sunburst Bank v. Summit Acceptance Corp., supra, finds that...