Charter Oak Fire Insurance Company, The et al v. Davis et al

Filing 82

REPORT AND RECOMMENDATION, as set out, w/out objection from any party, re (38 in 7:11-cv-02214-RRA, 42 in 7:11-cv-01721-RRA) Amended MOTION to Bifurcate and Remand filed by Marla Sartain Castillo, (41 in 7:11-cv-01721-RRA, 36 in 7:11-cv-02214-RRA) MO TION to Bifurcate and Remand filed by Marla Sartain Castillo, (51 in 7:11-cv-02214-RRA, 44 in 7:11-cv-01721-RRA) Supplemental MOTION to Remand to State Court filed by Marla Sartain Castillo.. Signed by Magistrate-Judge Robert R Armstrong on 9/12/12. Associated Cases: 7:11-cv-01721-RRA, 7:11-cv-02214-RRA(CTS, )

FILED
2012 Sep-12 AM 10:42
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
WESTERN DIVISION
THE CHARTER OAK FIRE
INSURANCE COMPANY; and
TRAVELERS PROPERTY
CASUALTY COMPANY OF
AMERICA,
Plaintiffs,
v.
GRACIE DAVIS, as personal
representative of the estate of GREGORY
D. CHANEY; MARLA SARTAIN
CASTILLO, as personal representative
of the estate of SERGIO CASTILLO
RIVAS; DANIEL PELAYO SILVERIO;
and CORNELIUS DANCY,

The Estate of SERGIO CASTILLO
RIVAS, by and through MARLA
SARTAIN CASTILLO, personal
representative and administratrix
of The Estate of Sergio Rivas,
deceased;
Plaintiff,
v.
KATHY CREPPEL GALLEGOS,
An individual; TRAVELERS
PROPERTY CASUALTY
COMPANY OF AMERICA;
THE CHARTER OAK FIRE
INSURANCE COMPANY,
Defendants.

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LEAD CASE
CIVIL ACTION NO.
CV-11-RRA-01721-W

MEMBER CASE
CIVIL ACTION NO.
CV-11-RRA-2214-W

REPORT AND RECOMMENDATION
This is a consolidated civil action. Before the court is the plaintiff’s motion to bifurcate
and remand (doc. 41, in CV-11-RRA-1721; doc. 36, in CV-11-RRA-2214); the plaintiff’s
amended motion to bifurcate and remand (doc. 42, in CV-11-RRA-1721; doc. 38, in CV-11RRA-2214); and the plaintiff’s supplemental and renewed motion to remand (doc. 44, in CV11-RRA-1721; doc. 51, in CV-11-RRA-2214).

FACTS AND PROCEDURAL HISTORY
On February 22, 2011, a car driven by defendant Kathy Creppel Gallegos collided
with a car occupied by Sergio Castillo Rivas, Gregory D. Chaney, Daniel Pelayo Silverio, and
Cornelius Dancy. At the time of the accident, Rivas, Cheney, Silverio, and Dancy all worked
for Superior Maintenance Company (“Superior”) and were riding in a company vehicle. The
vehicle was covered by a commercial insurance policy issued by the Charter Oak Fire
Insurance Company (“Charter”) and a commercial excess liability (umbrella) policy issued by
Travelers Property Casualty Company of America (“Travelers”).
After the accident, these two lawsuits were filed. The first to appear in this court was
The Charter Oak Fire Insurance Company, et al. v. Davis, et al., CV-11-RRA-1721-W, filed
in this court on May 24, 2011.

(Doc. 1, in CV-11-RRA-1721-W.) That case is an

interpleader and declaratory judgment action originally brought by Charter and Travelers
against Gracie Davis as personal representative of the estate of Gregory D. Chaney; Marla
Sartain Castillo as personal representative of the estate of Sergio Castillo Rivas; Daniel
Silverio; and Cornelius Dancy. The complaint claims that Gallegos’s insurance limits are
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insufficient to cover the injuries to the passengers of the vehicle with which Gallego collided.
It notes that the defendants are seeking underinsured motorist coverage from Charter and/or
Travelers. Charter deposited $3,000,000.00 with the court, which amount represents
underinsured motorist benefits, while Travelers denies that its policy with Superior provides
coverage. All occupants of the vehicle which Gallegos hit are potential claimants to the
insurance proceeds at issue.
The Estate of Sergio Castillo Rivas v. Gallegos, et al., CV-11-RRA-2214-W was the
second suit to arrive in this court. It was actually filed first, in Tuscaloosa County Circuit
Court, on May 23, 2011 (doc. 1-1, p. 3, in CV-11-RRA-2214-W), and was removed to this
court on June 23, 2011 on the basis of diversity jurisdiction under 28 U.S.C. § 1332.1 The
case was brought by Marla Sartain Castillo as personal representative of the estate of Sergio
Rivas, deceased, against Gallegos, Travelers, and Charter. The original complaint alleges
counts of negligence and/or wantonness (Count One), wrongful death (Count Two) against
Gallegos, and for payment of uninsured/under-insured motorist coverage benefits against
Charter and/or Travelers (Count Three). It also seeks a judgment declaring the extent of

1

The Eleventh Circuit has stated:

A defendant may remove an action to a district court that would have original
jurisdiction if complete diversity between the parties exists and the amount in
controversy exceeds $75,000. 28 U.S.C. § 1332. “Only state-court actions that
originally could have been filed in federal court may be removed to federal court by
the defendant.” Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425,
2429, 96 L.Ed.2d 318 (1987). Further, the removal statute forbids removal “if any of
the parties in interest properly joined and served as defendants is a citizen of the State
in which such action is brought.” 28 U.S.C. § 1441(b)(2).
City of Vestavia Hills v. Gen. Fid. Ins. Co., 676 F.3d 1310, 1313 n. 1 (11th Cir. 2012).

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insurance coverage available to the plaintiff (Count Four).
On June 28, 2011, the plaintiff filed a motion to remand in CV-11-RRA-2214-W,
claiming that Gallegos and the plaintiff were both Alabama citizens and, therefore, complete
diversity does not exist. (Doc. 5.)2 It was recommended in a report and recommendation
that that motion be denied, and the district judge accepted that recommendation and denied
the motion. (Docs. 14, 16, in CV-11-RRA-2214-W.) On August 17, 2011, an order
consolidating these cases was entered. (Doc. 30, in CV-11-RRA-1721-W.)3
On October 19, 2011 the plaintiff filed a motion to amend the complaint in CV11-RRA-02214-W and to “bifurcate and remand.” (Docs. 40, 41.) Later, the plaintiff filed
a supplemental motion to bifurcate and remand (doc. 42) and a motion to remand (doc. 44).
The court granted the motion to amend, and on October 21, 2011 the plaintiff filed an
amended complaint to add counts for negligence and/or reckless and/or wanton conduct
against Thomasa Horton (Count Five), a respondeat superior claim against Averitt Express,
Inc. (“Averitt”) (Count Six), negligent hiring and/or supervision against Averitt (Count Seven),
combining and concurrent negligence against Horton, Averitt, and Gallegos (Count Eight),
negligent hiring and/or supervision against Superior (Count Nine), failure to provide a safe
workplace against Mercedes Benz U.S. International, Inc. (“Mercedes”) (Count Ten), and
knowledge of failure to provide safety devices against Mercedes and Superior (Count
Eleven). (Doc. 37 in CV-11-RRA-02214-W.)

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See note 1.

3

All further document numbers, unless specifically noted, will reference documents in case
CV-11-RRA-1721-W, which is the lead case.

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DISCUSSION
The amendment has caused a shift in the diversity jurisdictional analysis. Now, with
the addition of defendant Thomas Horton, the parties agree that diversity jurisdiction is
destroyed in CV-11-RRA-02214-W because the plaintiff and the new defendant, Horton, are
both Alabama citizens. While the plaintiff asks the court to “bifurcate” the claims, the more
appropriate term is “sever.”
Rule 21 of the Federal Rules of Civil Procedure states that “[a]ny claim against
a party may be severed and proceeded with separately.” Fed.R.Civ.P. 21.4 “The
determination of whether to grant a motion to sever is left to the discretion of the trial
court .” Fisher v. Ciba Specialty Chem. Corp., ---F.Supp.2d ----, No. 03-0566-WS-B,
2007 WL 1795819, at * 1 (S.D. Ala. June 20, 2007). It is so broad that courts have
“virtually unfettered discretion in determining whether or not severance is
appropriate.” Id. (quoting Grigsby v. Kane, 250 F.Supp.2d 453, 456 (M.D.Pa.2003)
(internal quotation marks omitted)). Whether severance would facilitate settlement
or judicial economy is among the factors a court may examine while determining
whether to sever the claims. See id. Additionally, a court may consider “the
convenience of the parties, avoiding prejudice, promoting expedition and economy,
and the separability of law and logic.” Old Colony Ventures I, Inc. v. SMWNPF
Holdings, Inc., 918 F.Supp. 343, 350 (D.Kan.1996) (citation omitted).

Tillis v. Cameron, No. 1:07-CV-0078-WKW, 2007 WL 2806770 at *5 (M.D. Ala. Sept. 25,
2007).
In this case, the plaintiff asks the court to “bifurcate the insurance issues from the tort
issues and remand all of the tort claims to the Circuit Court of Tuscaloosa County, Alabama.”
(Docs. 41, 42, 44.) Defendants Charter and Travelers agree. (Doc. 43.) No other response
to the motions has been filed by any other party.
Such action would make sense in that it would result in all insurance issues being

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The Rule reads slightly differently now: “The court may also sever any claim against any
party.” Fed. R. Civ. P. 21. However, the notes to the rule state that the change is “intended to be
stylistic only.” Id.

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litigated here, together, with the underlying liability issues being litigated in state court. By
doing so, all of the overlapping insurance issues regarding the Charter Oak and Travelers
policies will be before one court in one action. The case filed in this federal court is the
proper case in which to decide all insurance issues claims, because all of the individuals who
could make a claim for insurance benefits under the policies are parties to that action, but
they are not all parties in the original state court action.

RECOMMENDATION
Accordingly, it is RECOMMENDED, without objection from any party, that all claims
in CV-11-RRA-02214-W, except Counts Three and Four, be SEVERED from this action and
that those claims be REMANDED to the Circuit Court of Tuscaloosa County, Alabama.5
Done this 12th day of September, 2012.

Robert R. Armstrong, Jr.
United States Magistrate Judge

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The court declines to consider Superior’s Motion to Dismiss, or in the Alternative for
Summary Judgment, filed in CV 11-RRA-2214-W. Superior insists that it “as the employer of the
decedent, is immune from suit outside the Workers’ Compensation Act.” (Doc. 67, p. 3 in CV
11-RRA-2214-W.) This matter relates to the tort causes of action which will be remanded. The
state court can resolve this dispute.

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