Arnett v. USAA Casualty Insurance Company

Filing 22

ORDER denying 19 Plaintiff's Motion for Attorney Fees. Signed by Judge James A Teilborg on 6/18/12.(DMT)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Plaintiff,
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vs.
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USAA Casualty Insurance Company, a )
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corporation,
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Defendant.
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Wayne C. Arnett, a married man,

No. CV 11-02569-PHX-JAT
ORDER

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Pending before the Court is Plaintiff Wayne C. Arnett’s Petition for Attorney’s Fees

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(Doc. 19). The Court now rules on the Motion.

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I.

BACKGROUND

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Plaintiff, an Arizona citizen, initiated this action in Maricopa County Superior Court

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(“Superior Court”) against Defendant United Services Automobile Association (“USAA”),

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and USAA CIC due to the parties’ disagreement regarding the valuation of damages to

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Plaintiff’s vehicle following an August 17, 2009 collision. Doc. 1-1 at 4–7. During the course

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of the state-court litigation, the Superior Court granted USAA’s Motion to Dismiss, leaving

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USAA CIC as the only remaining defendant. Doc. 1-4 at 56. USAA CIC then removed to

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federal court pursuant to 28 U.S.C. § 1441(b), alleging that the action was removable

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“because it is a civil action between parties with complete diversity of citizenship and

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Plaintiff seeks damages which exceed the jurisdictional minimum of $75,000” under 28

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U.S.C. § 1332. Doc. 1 at 1. Plaintiff subsequently filed a motion to remand this case to

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Superior Court on January 13, 2012. Doc. 7. This Court granted the motion, and remanded

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the case to Superior Court on March 23, 2012. Doc. 18.
On April 4, 2012, Plaintiff filed a motion for an award of costs and attorney’s fees

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incurred as a result of Defendant’s improper removal. Doc. 19.

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II.

AWARD OF ATTORNEY’S FEES

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A.

28 U.S.C. § 1447(c)

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Under 28 U.S.C. § 1447(c), “[a]n order remanding [a] case may require payment of

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just costs and any actual expenses, including attorney fees, incurred as a result of the

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removal.”

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B.

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A district court retains jurisdiction to award attorney’s fees permitted under 28 U.S.C.

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§ 1447(c) even after the district court remands the case to state court. Moore v. Permanente

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Med. Group, Inc., 981 F.2d 443, 445 (9th Cir. 1992); Cooter & Gell v. Hartmarx Corp., 496

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U.S. 384 at 395 (1990) (“It is well established that a federal court may consider collateral

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issues after an action is no longer pending.”). Generally, “[a]bsent unusual circumstances,

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attorney’s fees should not be awarded under § 1447(c) when the removing party has an

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objectively reasonable basis for removal. Conversely, where no objectively reasonable basis

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exists, fees should be awarded.” Martin v. Franklin Capital Corp., 546 U.S. 132 (2005).

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Under Martin, the Supreme Court’s test “for awarding fees under § 1447(c) should recognize

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Congress’ desire to deter removals intended to prolong litigation and impose costs on the

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opposing party, while not undermining Congress’ basic decision to afford defendants a right

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to remove as a general matter.” Id. at 133.

Legal Standard

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When the relevant case law clearly forecloses the defendant’s basis of removal,

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removal is not objectively reasonable. See Lussier v. Dollar Tree Stores, Inc., 518 F.3d 1062,

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1066–67 (9th Cir. 2006) (citing Lott v. Pfizer, Inc., 492 F.3d 789, 793–94 (7th Cir.2007)).

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While the “objectively reasonable” standard was left undefined by the Supreme Court in

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Martin, the Ninth Circuit Court of Appeals has held that removal is not objectively

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reasonable when the petition for removal is unsupported by the relevant statutory or case law.
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Patel v. Del Taco, Inc., 446 F.3d 996, 999 (9th Cir. 2006); see also Wolf v. Kennelly, 574

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F.3d 406, 412 (7th Cir. 2009) (“[I]f clearly established law [does] not foreclose a defendant’s

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basis for removal, then a district court should not award attorneys’ fees.”) (internal citations

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omitted). Furthermore, “removal is not objectively unreasonable solely because the removing

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party’s arguments lack merit, or else attorney’s fees would always be awarded whenever

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remand is granted.” Lussier, 518 F.3d at 1065.

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C.

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Here, Plaintiff contends that Defendant lacked an objectively reasonable basis for

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removal to federal court and requests the award of attorney’s fees. Specifically, Plaintiff

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highlights the remand to Superior Court due to Defendant’s failure to state a claim of

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fraudulent joinder as evidence that Defendant lacked a reasonable basis to remove. Doc. 21

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at 4. But “whether a removal is improper is not dispositive in determining whether fees

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should be awarded under 28 U.S.C. § 1447(c).” Gardner v. UICI, 508 F.3d 559, 562 (9th Cir.

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2007). The operative question, rather, is whether the removal was reasonable. See Martin,

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546 U.S. at 133.

Discussion

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Although Defendant still believes that the law in Arizona is clear that “Plaintiff could

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not bring a claim of aiding and abetting against USAA on the facts asserted in the

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Complaint,” (Doc. 20 at 3–4), this Court’s previous holding that the relevant “law in Arizona

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is not well-settled” contradicts the claim that existing state law clearly foreclosed

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Defendant’s basis of removal. Unsettled state law also supports a finding that a reasonable

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litigant in Defendant’s position could have concluded that federal court was a proper forum

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for litigation. Furthermore, consistent with Martin’s general rule that fees should be denied

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when an objectively reasonable basis for removal exists, nothing in the record suggests that

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Defendant removed to federal court for an improper purpose, such as imposing costs on

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Plaintiff or prolonging litigation.

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As a result, while neither party disputes the reasonableness of Plaintiff’s hourly rate

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or total number of hours expended on issues related to federal court and remand, the fact that

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this Court granted Plaintiff’s motion for remand to state court due to a lack of complete
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diversity does not make Defendant’s initial removal objectively unreasonable. Nor is this

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Court prepared to find that there was no basis for Defendant’s removal such that attorney’s

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fees should be awarded.

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III.

CONCLUSION

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Evaluated in light of Martin, this Court finds that Defendant had an objectively

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reasonable basis for removing to federal court. It is therefore unnecessary to address the issue

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of whether Plaintiff has demonstrated a genuine financial obligation to pay attorney’s fees.

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Accordingly,

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IT IS ORDERED that Plaintiff’s Petition for Attorney’s Fees (Doc 19) is denied.

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DATED this 18th day of June, 2012.

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