Ferraro v. Humphrey et al

Filing 15

OPINION AND ORDER DENYING 9 MOTION to Remand. Signed by Judge Theresa L Springmann on 2/18/15. (mc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
PETER FERRARO,
Plaintiff,
v.
JOHN A. HUMPHREY, AMERICAN
NATIONAL SERVICES CORP.,
MASCO CORP., and OLD REPUBLIC
INSURANCE COMPANY,
Defendants.

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CAUSE NO.: 2:14-CV-396-TLS

OPINION AND ORDER
The Plaintiff, Peter Ferraro, filed a complaint for declaratory judgment in state court on
September 8, 2014, which the Defendants removed to this Court on November 3, 2014. This
matter is before the Court on the Motion to Remand [ECF No. 9] filed by the Plaintiff on
November 7, 2014. The Plaintiff contends that this case must be remanded back to state court
due to procedural defects in the Defendants’ removal of this case to federal court. Defendant
American National Services Corporation (ANSC), joined by co-Defendants Masco Corporation
(“Masco”) and Old Republic Insurance Company (“Old Republic”), filed their Response [ECF
No. 12] on November 19, 2014. The Plaintiff filed his Reply [ECF No. 13] on November 25,
2014. For the following reasons, the Plaintiff’s Motion to Remand will be denied.

BACKGROUND
On June 8, 2006, the Plaintiff brought an action for personal injuries against Defendant
John A. Humphrey in the Superior Court of Lake County, Indiana, under Cause No. 5D05-0606CT-116 for injuries suffered during a June 9, 2004, automobile collision. On January 4, 2007, the

Plaintiff obtained a default judgment against Humphrey for $372,543.41. The Plaintiff then
instituted proceedings supplemental naming Masco as garnishee defendant, alleging that
Humphrey was an employee of Masco’s wholly owned subsidiary, ANSC, and was driving
Masco’s vehicle at the time of the collision.
On September 8, 2014, the Plaintiff commenced an action for declaratory judgment in
Lake Superior Court under Cause No. 45D01-1409-PL-95 against Defendants Humphrey,
Masco, ANSC, and Old Republic, the insurer of the vehicle Humphrey drove at the time of the
collision. The Plaintiff completed service on Humphrey on September 18, 2014, on Masco on
September 19, 2014, and on Old Republic on September 22, 2014. Service on ANSC was
accomplished via alias summons on October 16, 2014. On November 3, 2014, ANSC filed a
Notice of Removal [ECF No. 2], along with consents to removal executed by Masco and Old
Republic, bringing the case before this Court. At issue is whether the consent of co-Defendant
Humphrey was also necessary to effectively remove this case to this Court. From the Plaintiff’s
perspective, the executed consent to removal by Humphrey is a necessary procedural
requirement for effective removal before this Court, requiring a remand of this action back to the
Lake Superior Court. The Defendant argues that Humphrey’s consent is unnecessary because he
is merely a nominal defendant in this case. Thus, the Defendant argues that all necessary
elements were satisfied for removal and that this Court has proper jurisdiction.

DISCUSSION
The Plaintiff makes two arguments in support of his Motion to Remand. First, the
Plaintiff argues that removal requires the consent of all defendants, making the lack of consent
by Humphrey, whom the Plaintiff argues is not a nominal defendant, a procedural error requiring

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remand. Second, the Plaintiff argues that the removal of this action was untimely. The Court will
address these issues in reverse order.

A.

Timeliness of Removal
The basis of the Plaintiff’s timeliness argument centers on the so-called “first served

defendant” rule, which held that a removal petition must be filed within 30 days of the service of
the first defendant in multi-defendant litigation. Although this rule was once applied in a
minority of jurisdictions, the Defendants correctly cite the Federal Courts Jurisdiction and Venue
Clarification Act, which subsequently rewrote the language of 28 U.S.C. § 1446(b) with respect
to the time to file a notice of removal. See Pub. L. No. 112–63, 125 Stat. 758 (2011). Section
1446(b)(2)(B) and (C) provide:
(B) Each defendant shall have 30 days after receipt by or service on that
defendant of the initial pleading or summons described in paragraph (1) to file the
notice of removal.
(C) If defendants are served at different times, and a later-served defendant files a
notice of removal, any earlier-served defendant may consent to the removal even
though that earlier-served defendant did not previously initiate or consent to
removal.
Thus, the plain language of the statute allows each defendant 30 days after receipt of service to
file a notice of removal. See also Pietrangelo v. Alvas Corp., 686 F.3d 62, 64 (2d Cir. 2012)
(noting that the December 7, 2011, amendents to § 1446 codified the last-served defendant rule).
Here, ANSC was the last-served defendant, with service completed on October 16, 2014. ANSC
then filed its notice of removal on November 3, 2014, with the 30-day time period for doing so.
28 U.S.C. § 1446(b). Therefore, removal of this action was timely (so long as all other
requirements for removal are met, which the Court will now address).

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B.

Nominal Defendant
In order to effectively remove an action to federal court, “all defendants who have been

properly joined and served must join in or consent to the removal of the action.” 28 U.S.C.
§ 1446(b)(2)(A); MB Fin., N.A. v. Stevens, 678 F.3d 497, 499 (7th Cir. 2012) (“Removal requires
the consent of all defendants.”). At issue is whether all defendants joined or consented to
removal. In its Notice of Removal, Defendant ANSC explicitly indicated that co-Defendants
Masco and Old Republic consented to the motion, and that ANSC did “not [seek] the consent of
Humphrey, as he is a nominal defendant.” (ECF No. 1, at 5 (citing case law in support of the
position that consent of a nominal defendant is not required for removal).) The parties do not
dispute the relevant law; they agree that consent from a nominal defendant is unnecessary to
satisfy the requirement that all defendants join or consent to removal. See, e.g., Benson v.
Unilever U.S., Inc., 884 F. Supp. 2d 708, 714 (S.D. Ill. 2012) (“[R]emoval generally requires the
consent of all defendants—but only indispensable defendants. The consent of so-called nominal
or formal parties is not required.”) (citing Ryan v. State Bd. of Elections of the State of Ill., 661
F.2d 1130, 1134 (7th Cir. 1981)). The issue is whether Humphrey is a nominal defendant. The
Plaintiff argues that Humphrey is not a nominal defendant, meaning his lack of consent is fatal to
the Defendants’ notice of removal.
A defendant is nominal if there is “no reasonable basis for predicting it will be held
liable.” Shaw v. Dow Brands, Inc., 994 F.2d 364, 369 (7th Cir.1993) (citing 14A Charles Alan
Wright, et al., Federal Practice and Procedure § 3731 n. 10 (1985)), overruled on other grounds,
Carroll v. Stryker Corp., 658 F.3d 675, 680 n.1 (7th Cir. 2011). In determining the “real party in
interest,” courts are to, “reference [ ] the essential nature and effect of the proceedings.” Adden v.

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Middlebrooks, 688 F.2d 1147, 1150 (7th Cir. 1982). “It is appropriate for a federal court to
consider state law as a factor in determining . . . the real party in interest.” Id. at 1152.
The Defendants argue that Humphrey’s liability has already been established, as reflected
in the state court’s default judgment in the amount of $372,543.41. Therefore, from the
Defendantss perspective, Humphrey’s liability cannot be relitigated a second time. (Resp. 3, ECF
No. 12 (citing Marrese v. Am. Acad. Of Orthopaedic Surgeons, 470 U.S. 373 (1985) (discussing
claim preclusion)). Rather, the Defendants assert that this action is merely seeking a declaratory
judgment as to the liability of the other defendants to pay the judgment already entered against
Humphrey.
The Plaintiff asserts that the “question in this action is whether Humphrey’s relationship
to ANSC and Masco at the time of the collision gives rise to liability by ANSC or Masco, or Old
Republic as their insurer.” Br. in Support of Mot. to Remand 4, ECF No. 10. Thus, Humphrey
cannot be a nominal party because, the Plaintiff argues, “Humphrey needs to be named as a party
for full liability to be apportioned, either on him alone or on some or all named defendants.” Id.
The Plaintiff’s apportionment argument is unpersuasive, however, because as the
Defendants have pointed out, Humphrey’s liability is already established for the full amount of
the default judgment against him. In his Complaint, the Plaintiff asserts:
After the judgment against Humphrey issued, a dispute arose between the parties
to this action as to whether Plaintiff could collect the judgment from proceeds of
the [insurance] Policy. Accordingly, Plaintiff has an interest under the written
contract that is the Policy, and a declaration of this court is needed to determine
coverage and declare the parties;’ respective rights and legal obligation relating to
it.
Compl. ¶ 13, ECF No. 1-1. Thus, the Plaintiff’s interest in the insurance policy as a means of
satisfying the judgment against Humphrey is proper because “under federal and Indiana law . . .
an injured party can have a legally protectable interest in an alleged tortfeasor’s insurance policy
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sufficient to support Article III jurisdiction and the discretionary exercise of power under the
Declaratory Judgments Act.” Nat’l Cas. Co. v. Floyd Cnty. Bd. of Comm’rs, No. NA 01-182-CH/K, 2002 WL 31045373, at *3 (S.D. Ind. Aug. 29, 2002) (citing Bankers Trust Co. v. Old
Republic Ins. Co., 959 F.2d 677, 682 (7th Cir. 1992); Truck Ins. Exch. v. Ashland Oil, Inc., 951
F.2d 787, 789 (7th Cir. 1992); Cmty. Action of Greater Indianapolis, Inc. v. Ind. Farmers Mutual
Ins. Co., 708 N.E.2d 882, 885 (Ind. Ct. App. 1999)). However, the Plaintiff does not show how
his interests are adverse to the interests of Humphrey in this action. Humphrey’s liability need
not be apportioned, for it has already been established in full, and Humphrey’s interests in
having the proceeds of the insurance policy satisfy as much of that judgment as possible is
aligned with the Plaintiff’s interests.
“[T]he parties must be aligned according to their ‘attitude towards the actual and
substantial controversy.’” City of Indianapolis v. Chase Nat'l Bank, 314 U.S. 63, 75 (1941)
(quoting Sutton v. English, 246 U.S. 199, 204 (1918)). “Realignment is proper when the court
finds that no actual, substantial controversy exists between parties on one side of the dispute and
their named opponents . . . .” Am. Motorists Ins. Co. v. Trane Co., 657 F.2d 146, 149 (7th Cir.
1981); City of Indianapolis, 314 U.S. at 80 (“The doctrine of realignment permits and requires a
nominal defendant to be treated as a plaintiff for the purpose of defining the real
controversy . . . .”) (Jackson, J., dissenting). In deciding whether there is an actual, substantial
controversy, the court may look beyond the pleadings. Fid. & Deposit Co. v. City of Sheboygan
Falls, 713 F.2d 1261, 1264 (7th Cir. 1983); Am. Motorists, 657 F.2d at 149. The decision must
be based on the facts as they existed at the time the action was commenced. See Am. Motorists,
657 F.2d at 149.

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The “real controversy” in this action for declaratory judgment is whether ANSC, Masco,
and/or Old Republic must use the proceeds of the insurance policy to satisfy the judgment
against Humphrey. The Court finds that Defendant Humphrey is properly realigned as a plaintiff
because no actual, substantial controversy exists between the Plaintiff and Humphrey.
Humphrey’s interests are aligned with the Plaintiff’s interests. It is in Humphrey’s interest for the
proceeds of the insurance policy to satisfy as much of the judgment against Humphrey as
possible. Other cases have reached similar conclusions. See Truck Ins. Exch. v. Ashland Oil, Inc.,
951 F.2d 787, 788 (7th Cir. 1992) (concluding that insured and insured’s victims’ interests
should be aligned in action by plaintiff insurer seeking declaratory judgment that it had no duty
to defend or indemnify the insured or the insured’s victims); Davis v. Carey, 149 F. Supp. 2d
593, 596 (S.D. Ind. 2001) (concluding that insured and insured’s victim’s interests should be
aligned in action by plaintiff insured’s victim seeking declaratory judgment to satisfy judgment
against insured through insurance policy and therefore denying motion to remand by plaintiff);
Randolph v. Employers Mut. Liab. Ins. Co., 260 F.2d 461, 464 (8th Cir. 1958) (concluding
insured should be aligned as a plaintiff because “it would be to [his] interest to have the
judgment against him satisfied by his insurer.”).
The Plaintiff argues that Humphrey’s interest in the subject matter of this action is
“‘substantial’ and ‘safeguards’ his rights as a person potentially covered by the policies at issue.”
(Reply 2, ECF No. 13 (citing Lutheran Hosp. of Ft. Wayne, Inc. v. Dept. of Publ Welfare, 397
N.E.2d 638, 646 (Ind. Ct. App. 1979) (stating that a party seeking to bring a declaratory
judgment “must demonstrate a substantial present interest in the relief sought and that a question
has arisen affecting their rights which ought to be decided in order to safeguard such rights”)).)
The Plaintiff argues that because Humphrey’s interest is “substantial,” he cannot be a nominal

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defendant. Indeed, the Plaintiff argues that “Humphrey would be entitled to bring this very action
on his own.” (Reply 2, ECF No. 13.) That is correct. Humphrey could have brought an action
seeking a declaratory judgment that the proceeds of the insurance policy be used to satisfy the
judgment against him, and this fact provides further support that he should be realigned with the
plaintiff and is merely a nominal defendant in this action. Humphrey and the Plaintiff share the
same “attitude towards the actual and substantial controversy,” namely, whether the proceeds of
the insurance policy should be used to satisfy the default judgment the Plaintiff obtained against
Humphrey in state court. City of Indianapolis, 314 U.S. at 75. Therefore, the Court finds that
realignment is proper, for no actual, substantial controversy exists between the Plaintiff and
Humphrey in this action. See Am. Motorists, 657 F.2d at 149.
Co-Defendant ANSC’s timely notice of removal explicitly indicated that co-Defendants
Masco and Old Republic consented to the motion, and that ANSC did “not [seek] the consent of
Humphrey, as he is a nominal defendant.” (ECF No. 1, at 5.) The Court finds that Humphrey is a
nominal defendant in this action. Therefore, all defendants have timely consented to the removal
of this action before this Court.

CONCLUSION
For the foregoing reasons, the Court DENIES the Plaintiff’s Motion to Remand [ECF No.
9].
SO ORDERED on February 18, 2015.
s/ Theresa L. Springmann
THERESA L. SPRINGMANN
UNITED STATES DISTRICT COURT
FORT WAYNE DIVISION

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