GEICO General Insurance Company v. Harvey
Filing
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Opinion and Order Remanding Case to State Court. This case is CLOSED. Signed by Judge Kenneth A. Marra on 10/6/2011. (ir)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 11-80495-CIV-MARRA
TRACEY POTTS, as personal Representative
of the Estate of JOHN POTTS, deceased,
Plaintiff,
vs.
JAMES M. HARVEY and US MULTICO
CO. INC.,
Defendants,
and
JAMES M. HARVEY,
Crossclaimant,
vs.
GEICO GENERAL INSURANCE COMPANY,
Crossclaim Defendant.
_____________________________________/
OPINION AND ORDER
THIS CAUSE is before the Court upon Defendant/Crossclaimant’s Motion to Remand.
(DE 6). The motion is now fully briefed and is ripe for review. The Court has carefully
considered the motion and is otherwise fully advised in the premises.
This matter arises out of an automobile accident that occurred in August 2006. Plaintiff,
Tracey Potts, originally filed a cause of action against Defendant, James M. Harvey (“Harvey”)
in the Fifteenth Judicial Circuit in and for Palm Beach County, Florida in September 2006. In
December 2010, a jury awarded an $8,000,000 verdict in favor of Plaintiff, finding Harvey to be
100% negligent. On March 28, 2011, Plaintiff filed a Motion to Join GEICO as a Party
Defendant, which was granted by the state court on April 14, 2011. On April 21, 2011, Harvey
filed a crossclaim against GEICO in which he asserted a new cause of action for bad faith. On
May 4, 2011, GEICO filed its Notice of Removal of Harvey’s Crossclaim to this Court, relying
exclusively on diversity of parties as its basis for jurisdiction. 28 U.S.C. § 1332. On June 3,
2011, Harvey filed the Motion to Remand presently before the Court.
“No case . . . may be removed from state to federal court based on diversity of citizenship
‘more than 1 year after commencement of the action.’ ” See Caterpillar, Inc. v. Lewis, 519 U.S.
61, 69 (1996) (quoting 28 U.S.C. 1446(b)).1 Here, the initial complaint was filed in September
2006, but GEICO’s Notice of Removal was filed over 4 years later. To avoid the clear restriction
articulated in § 1446(b), GEICO asserts that Harvey’s bad faith crossclaim is “separate and
independent” from the underlying cause of action in negligence. GEICO, however, does not
assert that this matter is governed by § 1441(c), the subsection which outlines the procedure for
removing a “separate and independent claim or cause of action.” Thus, the threshold question is
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§ 1446(b), in its entirety, provides:
The notice of removal of a civil action or proceeding shall be filed within thirty
days after the receipt by the defendant, through service or otherwise, of a copy of
the initial pleading setting forth the claim for relief upon which such action or
proceeding is based, or within thirty days after the service of summons upon the
defendant if such initial pleading has then been filed in court and is not required to
be served on the defendant, whichever period is shorter.
If the case stated by the initial pleading is not removable, a notice of removal may
be filed within thirty days after receipt by the defendant, through service or
otherwise, of a copy of an amended pleading, motion, order or other paper from
which it may first be ascertained that the case is one which is or has become
removable, except that a case may not be removed on the basis of jurisdiction
conferred by section 1332 of this title more than 1 year after commencement
of the action.
(Emphasis supplied).
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whether, in cases removed to federal court based upon diversity jurisdiction, an exception to the
one-year limitation of § 1446(b) exists for “separate and independent” claims.
The Court proceeds by first acknowledging that “[t]he rule of construing removal statutes
strictly and resolving doubts in favor of remand is well-established.” See Miedema v. Maytag
Corp., 450 F.3d 1322, 1328-29 (11th Cir. 2006) (citing Syngenta Crop. Prot. Inc. v. Henson, 537
U.S. 28, 32 (2002); Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108 (1941); Burns v.
Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994)). “[A]ll doubts about jurisdiction should
be resolved in favor of remand to state court.” Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d
405, 411(11th Cir. 1999). “A removing defendant,” in this case GEICO, “bears the burden of
proving proper federal jurisdiction.” Leonard v. Enterprise Rent a Car, 279 F.3d 967, 972 (11th
Cir. 2002) (citing Williams v. Best Buy Co., 269 F.3d 1316, 1319-20 (11th Cir. 2001)).
“A defendant’s right to remove an action against it from state to federal court ‘is purely
statutory and therefore its scope and the terms of its availability are entirely dependent on the will
of Congress.’ ” Global Satellite Communication Co. v. Starmill U.K. Ltd., 378 F.3d 1269, 1271
(11th Cir. 2004) (quoting 14B Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper,
Federal Practice and Procedure, § 3721, pp. 285-86 (3d ed. 1998)). Initially, the only cases that
could be removed from state to federal court on the basis of diversity jurisdiction were those
involving complete diversity between each plaintiff and defendant. See 14B Charles Alan
Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and Procedure, § 3722.3, p. 584
(4d ed. 2009). Eventually, Congress codified a separable-controversy provision, which allowed
smaller, separable controversies within a larger lawsuit that involved diverse parties to be
removed to federal court, while leaving the remaining matters that did not have complete
diversity in state court. See id. at 584. In 1948, Congress revised that statutory scheme
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governing removal and enacted 28 U.S.C. § 1441(c), which read:
Whenever a separate and independent claim or cause of action, which
would be removable if sued upon alone, is joined with one or more
otherwise non-removable claims or causes of action, the entire case may
be removed and the district court may determine all issues therein, or, in
its discretion, may remand all matters not otherwise within its original
jurisdiction.
28 U.S.C.A. § 1441(c) (1948), amended by 28 U.S.C.A. § 1441(c) (1990). This revision was the
first time that Congress applied a “separate and independent” controversy test to federal question
cases, whereas in the past that test merely applied to diversity cases. See 14B Charles Alan
Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and Procedure, § 3722.3, p. 586
(4d ed. 2009). One important purpose of Congress enacting § 1441(c), despite its apparent
expansion of the separable-controversy provision, was to limit removal from state courts. See
American Fire & Cas. Co. v. Finn, 341 U.S. 6, 9-10 (1951).
In 1990, Congress again amended § 1441(c) to read:
Whenever a separate and independent claim or cause of action within the
jurisdiction conferred by section 1331 this title is joined with one or more
otherwise non-removable claims or causes of action, the entire case may be
removed and the district court may determine all issues therein, or, in its
discretion, may remand all matters in which State law predominates.
(Emphasis supplied). This amendment, which is the current form of the statute, “restricted the
availability of removal involving a ‘separate or independent claim or cause of action’ to
situations in which the jurisdictionally sufficient claim providing the predicate for removal falls
within the subject-matter jurisdiction conferred by Section 1331—the general federal question
statute.” 14B Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and
Procedure, § 3722.3, p. 589 (4d ed. 2009). Through the 1990 amendment, Congress eliminated
diversity jurisdiction as a basis for removal pursuant to § 1441(c). See e.g., Riddley v. Walgreen
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Co., 549 F.Supp. 2d 806, 809 n. 4 (S.D. Miss. 2008) (“Although defendant purported to rely on §
1441(c) as the source of its right to remove, that statute only provides for removal of ‘a separate
and independent claim within the jurisdiction conferred by [28 U.S.C. § 1331],’ the statute
providing for federal question jurisdiction. Section 1441(c), section does not apply to a removal
based on diversity. Thus, if Capital were entitled to remove . . . the source of that right would
have to be § 1441(a).”); RK Dixon Co. v. Dealer Marketing Services, Inc., 284 F.Supp. 2d 1204,
1212 n. 10 (S.D. Iowa 2003) (“The 1990 amendment to 28 U.S.C. § 1441(c) made it inapplicable
to cases founded on § 1332 diversity jurisdiction.”).
Here, GEICO attempts to do precisely what Congress set out to prohibit through its 1990
amendment to § 1441(c): apply the “separate and independent” test to diversity cases. GEICO’s
underlying argument is that because a bad faith claim in Florida is a “separate and independent”
cause of action, the one-year limitation imposed by § 1446(b) commences anew when the
“separate and independent” claim is asserted in the lawsuit. However, whether a bad faith claim
is “separate and independent” from an underlying claim in negligence is a question that Congress
has deemed irrelevant when a party seeks to exercise its statutory right to removal in diversity
cases. Accordingly, GEICO’s ability to remove this matter from state to federal court is barred
by the one-year limitation imposed by § 1446(b).
The Court recognizes that other courts have reached different conclusions when
considering the issue of whether a bad faith claim raised in Florida is tantamount to a new claim
warranting a circumvention of the one-year time bar imposed by § 1446(b). Compare Love v.
Property & Cas. Ins. Co. of Hartford, 2010 WL 2836172 (M.D. Fla. 2010), Curran v. State Farm
Mut. Auto. Ins. Co., 2009 WL 2003157 (M.D. Fla. 2009), and Lahey v. State Farm Mut. Aut. Ins.
Co., 2007 WL 2029334 (M.D. Fla. 2007) (denying motions to remand bad faith claims raised
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more than one year after the underlying action) with Arroyave v. State Farm Mut. Auto. Ins. Co.,
No. 08-14125-cv-Graham/Lynch (S.D. Fla. 2008), Daggett v. American Sec. Ins. Co., 2008 WL
1776576 (M.D. Fla. 2008), Suncoast Country Clubs, Inc. v. U.S. Fire Ins. Co., 2006 WL
2534197 (M.D. Fla. 2006), and McCreery v. State Farm Mut. Auto. Ins. Co., No. 07-80489-cvHurley/Hopkins (S.D. Fla. 2007) (granting motions to remand bad faith claims raised more than
one year after the underlying action).
The progeny of cases that have favored removal, however, fail to discuss when it is
appropriate to apply a “separate and independent” analysis in the removal context, let alone the
statutory prohibition against such an application in the diversity context. In Lahey, the plaintiffs
amended their initial complaint five years later to seek, for the first time, damages for insurer bad
faith pursuant to Florida law. See 2007 WL 2029334 at *1. In deciding whether removal was
appropriate pursuant to § 1446(b), the Middle District of Florida discussed whether a bad faith
claim is “separate and independent of” an underlying uninsured motorist claim. See id. at *1-2.
After answering this question in the affirmative, the Middle District concluded its analysis by
stating:
Since Plaintiffs' bad faith claim is a separate and distinct cause of action,
Defendant was entitled to remove the bad faith claim within 30 days of when it
was filed and was not precluded from filing it more than one year after the
original UM claim was filed. 28 U.S.C. § 1446(b). [FN2]
FN2. See Parks v. State Farm Mutual Automobile Ins. Co.,
Case No. 8:06-CV-811-T-26MSS (M.D. Fla. June 20, 2006) (“[a]
claim for bad faith is a civil action distinct from an underlying
contractual claim such that it does not accrue for removal purposes
until the underlying contractual claim has been resolved”).
Id. at *2. The Lahey court, however, failed to provide any rationale for its application of a
“separate and independent” analysis to § 1446(b). Love and Curran, the two other relevant cases
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relied on by GEICO that support removal, each simply cite to Lahey without providing any
independent analysis for why a “separate and independent” analysis should be applied to a
diversity case governed by § 1446(b). See Love v. Property & Cas. Ins. Co. of Hartford, 2010
WL 2836172 (M.D. Fla. 2010), Curran v. State Farm Mut. Auto. Ins. Co., 2009 WL 2003157
(M.D. Fla. 2009). Like Lahey, both of those cases simply discuss whether actions for bad faith
are “separate and independent” from an underlying action, failing to provide any basis for
applying that test to diversity cases.
GEICO’s reliance on American Fire and Casualty Co. v. Finn, 341 U.S. 6 (1951), is also
misplaced. Although Finn defined when an action is “separate and independent” from an
underlying action, it was decided 39 years before Congress amended § 1441(c). At the time Finn
was decided, § 1441(c) applied to both diversity and federal question cases. See 14B Charles
Alan Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and Procedure, § 3722.3,
p. 586 (4d ed. 2009). Since the 1990 amendment to § 1441(c), however, the test articulated in
Finn is no longer applicable to diversity cases, such as the one presently before the Court.
For all the aforementioned reasons, it is hereby ORDERED AND ADJUDGED that this
case is REMANDED to state court. The Clerk of Court is directed to transfer this case back to
the Circuit Court of the Fifteenth Judicial District of Florida and CLOSE this case.
DONE AND ORDERED in Chambers at West Palm Beach, Palm Beach County,
Florida, this 6th day of October, 2011.
_______________________________________
KENNETH A. MARRA
United States District Judge
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