Wiatt v. State Farm Ins. Companies
| Decision Date | 06 August 2007 |
| Docket Number | No. CIV 07-526 JB/KBM.,CIV 07-526 JB/KBM. |
| Citation | 560 F.Supp.2d 1068 |
| Parties | Mark E. WIATT and Peggy E. Wiatt, his wife, Plaintiffs/Counterdefendant/Third-Party Plaintiff, v. STATE FARM INSURANCE COMPANIES, Defendant/Counterclaimant, v. Allstate Insurance Company, Allstate Indemnity Company, Third-Party Defendants. |
| Court | U.S. District Court — District of New Mexico |
Mark K. Wiatt, Peggy E. Wiatt, Martin H. Poel, Las Cruces, NM, for Plaintiffs/Counterdefendant/Third-Party Plaintiff;
Randal, W. Roberts, Albuquerque, NM, for Defendant/Counterclaimant.
Ripley B. Harwood, Ripley B, Harwood, P.C., Albuquerque, NM, for Third-Party Defendants.
THIS MATTER comes before the Court on: (i) the Putative Third-Party Defendants' Motion to Dismiss, filed June 4, 2007 (Doc. 4)("Motion to Dismiss"); (ii) the Motion to Allow Special Appearance of Petitioners' Attorney, and Motion to Remand Back to State Court, filed June 15, 2007 (Doc. 5)("Motion to Remand"); and (iii) the Putative Third-Party Defendants' Motion for Leave to File Surreply to Plaintiffs' Motion for Remand, filed July 13, 2007 (Doc. 12)("Motion for Surreply"). The Court held a hearing on these motions on July 20, 2007. The primary issues are: (i) whether the Court should permit Plaintiffs Mark and Peggy Wiatt to be heard in federal court through their attorney, Martin H. Poel, who is not a member of the federal bar; and (ii) whether the Court should remand this case to the Third Judicial District, County of Dona Ana, State of New Mexico. Because Mr. Poel qualifies for a temporary waiver of membership, the Court will allow him to represent the Wiatts before the Court. Because this case does not meet the $75,000.00 amount-in-controversy threshold necessary for diversity jurisdiction, the Court will remand this case to state court.
On April 10, 2005, the Wiatts sold their house in Truth or Consequences, New Mexico, to James and Rita Timperman. See Notice of Removal, filed May 25, 2007 (Doc. 1), Exhibit A, Action for Declaratory Judgment (3rd N.M.Jud.Dist.) at 1-2; Exhibit A, Defendant's Answer and Counterclaim to Petitioner's Action for Declaratory Judgment (3rd N.M.Jud.Dist.) at 2 ("Counterclaim"). In 2006, after the Timpermans moved in, there was a problem with the septic system that caused damage to the house. See Action for Declaratory Judgment at 2. State Farm alleges that it paid the Timpermans $8,572.66 to settle their claim concerning damage to the house and that the Timpermans paid a $500.00 deductible. See id. at 2; Counterclaim at 3.
An inspection of the house was performed before it was sold to the Timpermans. See Action for Declaratory Judgment at 3; Counterclaim at 2-3, Exhibit A, Letter from Howard Bartoo to Randal Roberts (dated April 26, 2006)("April 26, 2006 Letter"). There is an apparent factual dispute whether that inspection revealed a problem with the septic system. See Counterclaim at 2-3; April 26, 2006 Letter. There is also an apparent factual dispute whether the inspector of the septic system notified the Wiatts of the problem. See Counterclaim at 2-3; April 26, 2006 Letter; Motion to Dismiss at 1-2. Further, there is an apparent factual dispute whether the Wiatts promised to fix the problem and/or disclose it to the Timpermans. See Counterclaim at 2-3; April 26, 2006 Letter; Motion to Dismiss at 1-2.
Mr. Poel represents that he graduated from the University of New Mexico School of Law, and that he is admitted to the New Mexico State Bar. See Motion to Remand at 1. Mr. Poel also represents that he has applied to the Federal Bar so that he may be heard in federal court. See id. Mr. Poel submits that, before this case, he never expected to appear in federal court. See id.
The Wiatts are residents of the State of New Mexico, and Allstate and State Farm are Illinois corporations with their respective principal places of business in Illinois. See Notice of Removal at 2-3; Action for Declaratory Judgment at 1.
On March 9, 2007, the Wiatts filed a declaratory judgment action against State Farm in the State of New Mexico's Third Judicial District Court, County of Dona Ana. See Action for Declaratory Judgment at 1. The Wiatts filed the action seeking a declaration that they are not liable to State Farm for the expenditures it made to the Timpermans for the damage the septic system caused to the house. See id. at 3-4. State Farm counterclaimed for its expenditures. See Counterclaim at 2-3. Thereafter, the Wiatts filed their Third-Party Complaint against Allstate, which had provided them with homeowner's insurance during their ownership of the property at issue. See Notice of Removal, Exhibit A, Third Party Complaint at 1.
The Wiatts, as Counterdefendante, assert that Allstate insured them against the claim State Farm brings against them in its counterclaim. See Third Party Complaint ¶¶ 3-5, at 1-2. They also assert that Allstate may be liable to them in the event that State Farm prevails on its subrogation claim. See id. ¶ 5, at 2. The Wiatts allege that Allstate is contractually obligated to defend them against State Farm's lawsuit. See id ¶ 37, at 6. They represent that Allstate has refused to provide them with a defense. See id. ¶ 38, at 6. The Wiatts argue that Allstate has thus breached its contract with them by failing to investigate State Farm's claims against them and/or defend them. See id. ¶¶ 38-39, at 6. Further, they contend that Allstate, in allegedly failing to defend or indemnify them, has behaved in bad faith and in a manner that violates the New Mexico Insurance Code. See id. ¶¶ 41, 48, 50-52, at 6-7.
On May 25, 2007, purportedly pursuant to 28 U.S.C. §§ 1441(b) and 1446, Allstate removed this case to federal court. See Notice of Removal. In its Notice of Removal, Allstate identifies the Wiatts' claims against it as "breach of contract, insurance bad faith, and insurance code violations." Id. at 2. Allstate also states that diversity of citizenship among the parties and the amount in controversy provides the federal courts with subject-matter jurisdiction to hear the case. See id. Allstate submits that, upon information and belief, the amount in controversy in this case, excluding interest and costs, exceeds $75,000.00. Allstate notes that, in addition to compensatory damages, the Wiatts seek "damages arising under NMSA § 59A-16-20 (2007), punitive damages, and attorneys fees." Id In its Notice of Removal, Allstate does not assert that it has secured State Farm's consent to removal. See Notice of Removal.
After removing the case to federal court, Allstate filed a motion to dismiss, rather than an answer to, the Wiatts' Third Party Complaint. See Motion to Dismiss at 1. Allstate filed its motion on June 4, 2007. See id. Pursuant to local civil rule 7.6(a) of the United States District Court for the District of New Mexico, the Wiatts' response in opposition was due, allowing three days for mailing, on June 21, 2007. As of July 12, 2007, the Plaintiffs had not filed a response. On July 12, 2007, Allstate notified the Court that briefing on the Putative Third-Party Defendants' Motion to Dismiss was complete. See Notice of Completion, filed July 12, 2007 (Doc. 10).
On June 15, 2007, the Wiatts moved the Court both to allow Mr. Poel to represent them before it and to remand this case to New Mexico state court. See Motion to Remand at 1. Specifically, in their Motion to Allow Special Appearance of Petitioners' Attorney, and Motion to Remand Back to State Court, Mr. Poel, pursuant to local civil rules 83.2(e) and 83.4(c), requests temporary admission to the Federal Bar for the limited purpose of contesting federal jurisdiction, and the Wiatts, pursuant to 28 U.S.C. § 1447(c), request that the case be remanded. See id. at 1. The Wiatts also seek attorney's fees and costs under § 1447(c). See id. at 3. The Clerk of the Court has notified the Court that Mr. Poel has provided a check in the amount of $ 15.00, rather than the Court's fee of $150.00, to cover his admission fee to Federal Court.
Allstate responded to the Wiatts' remand request on June 22, 2007. See Allstate's Response to Plaintiffs' Motion for Remand (Doc. 5), filed June 22, 2007 (Doc. 6), In its response, Allstate contends that it has been "miscast" as a third-party defendant and that, as a result, the authority the Wiatts cite in support of their request for remand is not pertinent. Id at 1. Allstate also attaches to its response the affidavit of Randal W. Roberts, counsel for State Farm. See id, Exhibit A, Affidavit of Randal W. Roberts, Esq. (executed June 21, 2007)("Roberts Affidavit"). In that affidavit, Mr. Roberts states that, at all material times, he was retained as legal counsel for State Farm in this case. See Roberts Affidavit ¶ 1, at 1. Mr. Roberts certifies that Allstate's counsel, Mr. Harwood, conferred with him before filing the notice of removal in this action and that State Farm consented to removal. See id. ¶ 2, at 1.
Allstate notified the Court that briefing on the Wiatts' motion to remand was complete on July 12, 2007. See Notice of Completion, filed July 12, 2007 (Doc. 11). As of July 12, 2007, the Wiatts had not filed a reply to Allstate's response in opposition to their remand request. Allstate contends that a reply from the Wiatts was, allowing three days for mailing, due on July 9, 2007. See id. at 1.
On July 13, 2007, Allstate requested permission to file a surreply on the motion to remand. See Motion for Surreply. In its motion for leave to file a surreply, Allstate notes that the Wiatts filed an untimely reply. See id. at 1. Allstate requests that in the event the Court decides to consider the Wiatts' reply, the Court also grant it permission to address the newly raised contention that it is a proper third-party defendant under rule 14(b). See id.
Under local civil rule 7.6(b), "[t]he filing of a...
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