Spreitzer Props., LLC v. Travelers Corp
| Decision Date | 18 April 2022 |
| Docket Number | 21-CV-106-CJW-MAR |
| Parties | SPREITZER PROPERTIES, LLC, Joseph Spreitzer, and Jamie Spreitzer, Plaintiffs, v. TRAVELERS CORP; Travelers Property Casualty Co. of America; Travelers Companies, Inc.; Travelers Insurance Company; Travelers Indemnity Company; the Phoenix Insurance Company ; Housby Heavy Equipment, LLC, and Housby Mack, Inc., Defendants. |
| Court | U.S. District Court — Northern District of Iowa |
Samuel E. Jones, Steven J. Pace, Molly Parker, Shuttleworth & Ingersoll PLC, Cedar Rapids, IA, for Plaintiffs.
J. Michael Weston, Lederer Weston & Craig PLC, Cedar Rapids, IA, Matthew Scott Ponzi, Pro Hac Vice, Michael Sean Errera, Foran Glennon Palandech Ponzi & Rudloff PC, Chicago, IL, for Defendants Travelers Corp., Travelers Property Casualty Co. of America, Travelers Companies, Inc., Travelers Insurance Company, Travelers Indemnity Company, The Phoenix Insurance Company.
Wesley T. Graham, William W. Graham, Joseph G. Gamble, Duncan Green Brown & Langeness PC, Des Moines, IA, for Defendants Housby Heavy Equipment, LLC, Housby Mack, Inc.
C.J. Williams, United States District Judge This matter is before the Court on plaintiff Spreitzer Properties, LLC's and plaintiffs Joseph and Jamie Spreitzer's (collectively "plaintiffs") Motion to Remand to State Court. (Doc. 25). Defendants Travelers Corp, Travelers Property Casualty Co. of America, Travelers Companies, Inc., Travelers Insurance Company, and Travelers Indemnity Company (collectively "Travelers") timely filed a resistance (Doc. 31), in which defendants Housby Heavy Equipment, LLC and Housby Mack, Inc. (collectively "Housby") joined (Doc. 32). Plaintiffs timely filed a reply. (Doc. 33). For the following reasons, the Court grants plaintiffs’ motion.
At this stage, the Court accepts the following facts stated in plaintiffs’ petition as true. (Doc. 1-4). Plaintiffs are residents of Iowa. (Doc. 1-4, at 1). Travelers are insurance companies and citizens of the State of Connecticut, authorized to do business in Iowa. (Id. , at 2). Housby are businesses existing under the state of Nebraska with their principal place of business in Iowa. (Id. ).
In 2016, Housby purchased a company that leased plaintiffs’ premises located on 16th Avenue in Cedar Rapids, Iowa. (Id. , at 1-3). Housby assumed that company's lease and allegedly agreed to obtain property insurance at a replacement cost basis for the buildings, naming plaintiffs as additional insureds under the policy. (Id. , at 3). Housby obtained insurance from Travelers for their own property, but not on the buildings and did not name plaintiffs as insureds under the policy. (Id. , at 4).
On August 10, 2020, a strong storm event, known as a "derecho," destroyed the leased premises. (Id. ) Plaintiffs filed a claim with Travelers, but Travelers did not pay insurance benefits to plaintiffs. (Id. , at 12).
On October 8, 2021, plaintiffs filed a petition in the Iowa State Court for Linn County suing Travelers and Housby under various theories. (Id. , at 1). Travelers accepted service. (Doc. 1, at 2). On October 19, 2021, before Housby had been served, Travelers removed the case to this Court, under Title 28, United States Code, Section 1441. (Doc. 1). In its notice of removal, Travelers asserted removal was proper "as this Court would have had diversity jurisdiction over this action under 28 U.S.C. § 1332(a)." (Id. , at 1). Travelers further asserted that "[c]omplete diversity exists" because on the date of removal plaintiffs were citizens of Iowa while Travelers were citizens of Connecticut, thus "no party defendant that is a citizen of the state of Iowa has been properly served and joined to this case." (Id. , at 2-4). Plaintiffs served Housby on October 26, 2021, joining them to this case. (Docs. 9 & 10). Plaintiffs filed a motion to remand on November 22, 2021. (Doc. 25).
In their motion to remand, plaintiffs argue that this Court lacks diversity of citizenship jurisdiction because plaintiffs and Housby defendants are both citizens of the State of Iowa. (Doc. 25). Plaintiffs argue that Travelers used a legal maneuver, sometimes called a "snap removal," to remove this case to federal court before Housby was served. (Id. , at 4). Plaintiffs argue that snap removal is inconsistent with the purpose of the forum defendant rule, Title 28, United States Code, Section 1446(b)(2). (Id. , at 5-7). Plaintiffs also argue that snap removal is inconsistent with the general scheme of rules governing diversity jurisdiction. (Id. , at 7-9).
Travelers resist, first arguing that the motion is untimely. (Doc. 31, at 3-4). Travelers also argue that their use of snap removal is fitting and proper and allowed under a plain reading of the forum defendant rule. (Id. , at 4-7). Housby added nothing to the discussion, merely joining in Travelers’ resistance "[f]or the reasons stated" in that resistance. (Doc. 32).
In reply, plaintiffs argue that even if the case was properly removed to federal court, complete diversity was destroyed when Housby was joined as a party to this suit. (Doc. 33, at 1-3). Plaintiffs also argue that interpreting the forum defendant rule to permit snap removal would produce absurd results. (Id. , at 4-5).
The Court will first address defendants’ argument that plaintiffs’ motion to remand is untimely. Defendants argue that plaintiffs’ motion to remand is untimely because Title 28, United States Code, Section 1447(c) provides that a motion to remand must be filed "within 30 days after the filing of the notice of removal[.]" (Doc. 31, at 3) (quoting a portion of 28 U.S.C. § 1447(c) ). Plaintiffs argue their motion is timely because it was filed within 30 days of service on the Housby defendants. (Doc. 25, at 3 n.3). Plaintiffs further argue that even if they initially consented to removal, that is not the same as consenting to the case remaining in federal court after Housby was joined and destroyed complete diversity. (Doc. 33, at 3-4).
28 U.S.C. § 1447(c) (emphasis added).
Here, plaintiffs seek remand not on the ground that there was a defect in the removal of the case to federal court. Rather, plaintiffs seek remand on the ground that this Court lacks subject matter jurisdiction because there is not complete diversity of citizenship among the parties. As Section 1447(c) makes plain, that matter can be brought to the court at any time before final judgment is entered. See Filla v. Norfolk S. Ry. Co. , 336 F.3d 806, 809 (8th Cir. 2003).
Thus, the Court finds plaintiffs’ motion timely. Even were it to find otherwise, the Court would find on its own motion the obligation to ensure that it has subject matter jurisdiction over this matter. The Court has an independent duty to ensure it possesses the requisite subject matter jurisdiction to adjudicate the parties’ claims. FED. R. CIV. P. 12(h)(3) ; Ruhrgas AG v. Marathon Oil Co. , 526 U.S. 574, 577, 583, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999).
The Court begins its analysis where it should—with the United States Constitution. Federal courts are, by design, courts of limited jurisdiction, having subject matter jurisdiction only over matters authorized by the United States Constitution and Congress. U.S. CONST. , art. III, § 2, cl.1; see also Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) () (cleaned up). Federal courts should therefore "presume[ ] that a cause lies outside this limited jurisdiction[.]" Kokkonen , 511 U.S. at 377, 114 S.Ct. 1673 ).
The United States Constitution provides for federal courts to hear, among others, "Controversies ... between Citizens of different States ... and between a State, or the Citizens thereof, and foreign States, Citizens, or Subjects." U.S. CONST. , Art. III, § 2. This constitutional provision "does not automatically confer diversity jurisdiction upon the federal courts[, but r]ather, it authorizes Congress to do so, and, in doing so, to determine the scope of the federal courts’ jurisdiction within constitutional limits." Hertz Corp. v. Friend , 559 U.S. 77, 84, 130 S.Ct. 1181, 175 L.Ed.2d 1029 (2010). Congress determined that scope and codified diversity of citizenship jurisdiction in Title 18, United States Code, Section 1332. Under this statute, "diversity jurisdiction does not exist unless each defendant is a citizen of a different State from each plaintiff" and the amount in controversy exceeds $75,000. Owen Equip. & Erection Co. v. Kroger , 437 U.S. 365, 373, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978) (emphasis in original); 18 U.S.C. § 1332. The purpose of diversity jurisdiction "is to provide a federal forum for important disputes where state courts might favor, or be perceived as favoring, home-state litigants."1 Exxon Mobil Corp. v. Allapattah Servs., Inc. , 545 U.S. 546, 553-54, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005). "The presence of parties from the same State on both sides of a case dispels this concern[.]" Id. , at 554, 125 S.Ct. 2611.
"While [ Section] 1332 allows plaintiffs to invoke the federal courts’ diversity jurisdiction, [ Section] 1441 gives defendants a corresponding opportunity." Lincoln Prop. Co. v....
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