Advanced Construction and Renovation, Inc. v. Mt. Hawley Insurance Company
ORDER DENYING PLAINTIFF'S MOTION TO REMAND denying 7 Motion to Remand to State Court. Signed by Judge Marcia G. Cooke on 2/9/2018. (tm)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 17-61080-CIV-COOKE/GOODMAN
ADVANCED CONSTRUCTION AND
MT. HAWLEY INSURANCE COMPANY,
ORDER DENYING PLAINTIFF’S MOTION TO REMAND
This case arises from a breach of contract claim in which Plaintiff Advanced
Construction and Renovation, Inc. (“Plaintiff”) alleges it was a third party beneficiary of an
insurance policy that was issued by Defendant Mt. Hawley Insurance Company (“Mt.
Hawley” or “Defendant”) to Argov Gavish Properties, LLC. Plaintiff contends Mt. Hawley
breached the policy by failing to pay Plaintiff for the total loss it sustained on a property
damage claim. Mt. Hawley removed this case from state court, asserting federal diversity
jurisdiction under 28 U.S.C. § 1332. Plaintiff challenges Defendant’s removal, arguing there
is no diversity of citizenship and that Defendant waived its right to remove to federal court.
Pending is Plaintiff’s Motion to Remand to State Court. (ECF No. 7). Defendant has
filed its Response to Plaintiff’s Motion (ECF No. 10), and Plaintiff has filed its Reply to
Defendant’s Response (ECF No. 11).1 I have reviewed the parties’ arguments, the record,
and the relevant legal authorities. For the reasons that follow, I deny Plaintiff’s Motion to
Mt. Hawley issued a property and casualty insurance policy to Argov Gavish
Properties, LLC for the period of October 7, 2014 to October 7, 2015. ECF No. 5-1 at 12, ¶
Defendant filed a Motion to File a Sur-Reply (ECF No. 14), which I denied. See Ord.
Denying Def.’s Motion to File Sur-Reply, ECF No. 27.
3. During this period, Plaintiff occupied the first floor of Argov Gavish Properties, LLC’s
property as a licensed contractor and as a kitchen and bath distributor. Id. at 12, ¶ 6.
On or about August 18, 2015, the first floor of Argov Gavish Properties, LLC’s
property—Plaintiff’s premises—sustained damage due to an air conditioning leak. Id. at 12,
¶ 9. As a result, Plaintiff filed an insurance claim with Defendant and Defendant began
adjusting the loss. Id. at 12, ¶ 10. On or about June 21, 2016, Plaintiff learned that Rami
Argov and/or Argov Gavish Properties, LLC released the insurance claim filed by Plaintiff.
Id. at 12, ¶ 12. Plaintiff subsequently commenced this action against Mt. Hawley on April
20, 2017, in the Circuit Court of the Seventeenth Judicial Circuit for Broward County,
Florida. Id. at 10–14. Plaintiff asserts Defendant was aware Plaintiff was a third party
beneficiary of the Policy, and therefore breached the policy by failing to pay Plaintiff the
total loss it sustained. Id. at 13, ¶¶ 15–16. Defendant timely filed its answer and affirmative
defenses on May 22, 2017. Id. at 93–96.
Defendant filed its corrected Notice of Removal to this Court on May 31, 2017. ECF
No. 5. Defendant asserts this Court has jurisdiction over this case because it is a matter in
which the amount in controversy exceeds $75,000 and is between citizens of different States.
Id. ¶ 7. Defendant establishes that the total amount in controversy exceeds $75,000. Id. ¶ 11.
Defendant further contends that Defendant is a citizen of Illinois while Plaintiff is a citizen
of Florida, thus showing complete diversity. Id. ¶¶ 14–16.
Plaintiff subsequently filed its Motion to Remand to State Court (ECF No. 7).
Plaintiff concedes that Defendant has met its burden that the amount in controversy exceeds
the jurisdictional requirement. Id. ¶ 2. However, Plaintiff contends that Defendant failed to
establish diversity of citizenship, (Id. ¶ 3), and nevertheless waived its right to removal by
including a demand for jury trial within its answer and affirmative defenses, (Id. at 4–5).
The burden of establishing federal jurisdiction falls on the party who is attempting to
invoke the jurisdiction of the federal court. See McNutt v. General Motors Acceptance Corp., 298
U.S. 178, 189 (1936). Courts should strictly construe the requirements of 28 U.S.C. § 1441
(removal jurisdiction) and remand all cases in which such jurisdiction is doubtful. See
Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 109 (1941). Moreover, removal statutes are
construed narrowly, and when the plaintiff and defendant clash on the issue of jurisdiction,
uncertainties are resolved in favor of remand. See Burns v. Windsor Ins. Co., 31 F.3d 1092,
1095 (11th Cir. 1994).
Plaintiff moves for remand on the basis that Defendant has not met its burden of
proving diversity of citizenship. Even if Defendant has adequately shown diversity, Plaintiff
maintains Defendant nevertheless waived its right of removal when it demanded a jury trial
in its answer and affirmative defenses filed in state court prior to removal.
A. Diversity of Citizenship
Plaintiff contends Defendant failed to meet its burden of proving by a preponderance
of the evidence diversity of citizenship as required by 28 U.S.C. § 1332(a). I disagree.
A defendant can remove an action to a United States District Court if that court has
original jurisdiction over the action. 28 U.S.C. § 1441(a). Federal district courts have
original jurisdiction over civil matters where the amount in controversy exceeds the sum or
value of $75,000 and is between citizens of different states. 28 U.S.C. § 1332(a). For
purposes of diversity jurisdiction, a corporation shall be deemed to be a citizen of every state
by which it has been incorporated and of the State where it has its principal place of
business. 28 U.S.C. § 1332(c)(1). A corporation’s “principal place of business” is its “nerve
center,” or a corporation’s headquarters “where a corporation’s high level officers direct,
control, and coordinate the corporation’s activities.” Hertz Corp. v. Friend, 559 U.S. 77, 80–
A party removing a case to federal court based on diversity of citizenship bears the
burden of proving by a preponderance of the evidence the existence of the court’s
jurisdiction. Williams v. Best Buy Co., Inc., 269 F.3d 1316, 1319 (11th Cir. 2001). “When
challenging allegations of jurisdictional facts, the parties must support their allegations by
competent proof.” Hertz Corp., 559 U.S. at 96–97. In determining whether removal was
proper, a district court may review the record as a whole—including post-removal evidence
submitted by any party. See Sierminski v. Transouth Financial Corp., 216 F.3d 945, 949 (11th
Cir. 2000) (“. . . [T]here is no good reason to keep a district court from eliciting or reviewing
evidence outside the removal petition.”).
Because this case was removed to federal court by Mt. Hawley, Mt. Hawley bears
the burden of proving the existence of federal diversity jurisdiction. See Williams, 269 F.3d at
1319. Here, it is clear that Mt. Hawley is registered under the Illinois Department of
Insurance as a domestic stock company. See ECF No. 7-2. As Defendant has established,
domestic stock companies in Illinois are governed by the Illinois Insurance Code, 215 Ill.
Comp. Stat. 5/6, and must register with the Illinois Department of Insurance, 215 Ill.
Comp. Stat. 5/15. Furthermore, domestic companies in Illinois must have their principal
place of business in Illinois. 215 Ill. Comp. Stat. 5/8.
Plaintiff points out that Defendant did not provide actual evidence of its articles
showing it was organized under the laws of Illinois and contends that because the articles
themselves were not submitted, Defendant has not established its citizenship by a
preponderance of the evidence. ECF No. 11 at 6. Plaintiff supports its argument by
providing proof that no company under the name “Mt. Hawley” or “Mt. Hawley Insurance
Company” is registered under the Illinois Secretary of State. See ECF No. 7-1. However,
Plaintiff concedes that Mt. Hawley is registered with the Illinois Department of Insurance as
a “P&C Domestic Stock” company with a “Corporate Home” in Peoria, Illinois. See ECF
No. 7-2. As stated above, a corporation is a citizen of the State where it has its principal
place of business. 28 U.S.C. § 1332(c)(1) (2012). Other than citing to the absence of the
actual articles of incorporation in the record, Plaintiff does not present any competent proof
to overcome the evidence of Defendant’s registration with the Illinois Department of
Insurance and its Illinois “corporate home,” both placed into the record by Plaintiff itself.
Defendant need only show its citizenship by a preponderance of the evidence. The
uncontested facts establish that Mt. Hawley is a domestic stock insurance company
registered in Illinois with a corporate home in Illinois. See ECF No. 7-2. Absent some
evidence to the contrary, Defendant has satisfied its burden of proving diversity of
citizenship. See Sierminski, 216 F.3d at 949.
B. Waiver of Removal
Plaintiff next contends that Mt. Hawley waived its right to removal when it
requested a jury trial in its answer and affirmative defenses filed in state court. A plaintiff
may remand if a defect exists with the defendant’s removal, which effectively waives the
defendant’s right to remove. Yusefzadeh v. Nelson, Mullins, Riley & Scarborough, LLP, 365 F.3d
1244, 1246 (11th Cir. 2004). Litigating on the merits is one such defect because the
defendant is deemed to have taken “some substantial offensive or defensive action in the
state court action indicating a willingness to litigating in that tribunal before filing a notice
of removal.” Id. at 1246 (quoting Charles A. Wright, et al., 14B Federal Practice &
Procedure § 3721 (2003)). A waiver must be “clear and unequivocal.” Miami Herald Pub. Co.,
Div. of Knight-Ridder Newspapers, Inc. v. Ferre, 606 F. Supp. 122, 124 (S.D. Fla. 1984).
“However, an action to maintain the status quo in state court, as opposed to an action to
dispose of the matter, does not constitute a waiver.” Scholz v. RDV Sports, Inc., 821 F. Supp.
1469, 1470–71 (M.D. Fla. 1993) (“[A] motion to dismiss is an affirmative use of the statecourt process, and thus, distinguishable from actions to maintain the status quo in state
court, such as . . . filing answers and affirmative defenses.”). Whether a state court
defendant waived its right to remove must be determined on a case-by-case basis. Hill v.
State Farm Mut. Auto. Ins. Co., 72 F. Supp. 2d 1353, 1354 (M.D. Fla. 1999).
Plaintiff argues that because Mt. Hawley did not need to file a demand for jury trial
when it filed its answer and affirmative defenses, the demand for a jury trial acted as a
specific intent to have this matter heard in state court. However, I do not find this demand
for jury trial to be “some substantial offensive or defensive action” that would constitute
“litigating on the merits.” Yusefzadeh, 365 F.3d at 1246. In part, Plaintiff relies on Ferre,
where the court held the defendant did not waive its right to remove by simply filing an
answer and affirmative defenses in state court prior to filing a timely removal. Ferre, 606 F.
Supp. at 124. Plaintiff argues this matter is different than Ferre in that Defendant went
beyond filing an answer and filed a demand for jury; in Ferre, it was not clear from the
record whether the defendant demanded a jury trial. See id. I am unpersuaded by Plaintiff’s
argument. A demand for jury trial is not a clear and unequivocal action, nor is it an
affirmative use of the state-court process. A demand for jury trial is merely the intent to have
the matter heard in front of a jury if the matter goes to trial. As previous courts have held, I
believe a demand for jury trial in a defendant’s answer and affirmative defenses is “an action
to maintain the status quo,” not a “substantial offensive or defensive action.” Yusefzadeh,
365 F.3d at 1246; Scholz, 821 F. Supp. at 1470.
Plaintiff also claims the fact that a defendant does not need to file a demand for a
jury trial in its answer and affirmative defenses under Federal Rule of Civil Procedure
81(c)(3)(B) supports its contention that filing a jury demand constitutes an affirmative action
in state court, and therefore a waiver. See Rule 81(c)(3)(B) (“[A] party entitled to a jury trial
. . . must be given one if the party serves a demand within 14 days after . . . a notice of
removal.” However, Rule 81(c)(3)(A) states, “A party who, before removal, expressly
demanded a jury trial in accordance with state law need not renew the demand after
removal.” Because Rule 81(c)(3)(A) explicitly acknowledges a situation where a defendant
demanded a jury trial prior to removal, concluding that a demand for jury trial effectively
waived a defendant’s right to remove would be contrary to Rule 81(c)(3)(A) and deem the
rule meaningless. Reading both Rule 81(c)(3)(A) and Rule 81(c)(3)(B) together, it is clear
that Rule 81(c)(3)(B) is inapplicable here. Accordingly, I find that Defendant did not waive
its right to remove by filing a demand for jury trial in its answer and affirmative defenses in
state court. I agree with Defendant that concluding otherwise would require the Court to rewrite Rule 81(c)(3)(A).
Based on the above, I find that the Defendant has established federal diversity
jurisdiction under 28 U.S.C. § 1332, and has not waived its right to remove by filing a
demand for jury trial in its answer and affirmative defenses in state court. Accordingly, it is
ORDERED and ADJUDGED that Plaintiff’s Motion to Remand to State Court (ECF No.
7) is DENIED.
DONE and ORDERED in chambers at Miami, Florida this 9th day of February
Copies furnished to:
Jonathan Goodman, U.S. Magistrate Judge
Counsel of record
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