Mt Carmel Mutual Insurance Association v. CNH America LLC
Filing
15
ORDER denying 6 Motion to Remand (See Order Text). Signed by Senior Judge Donald E OBrien on 2/22/2013. (des)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION
MT. CARMEL MUTUAL INSURANCE
ASSOCIATION, as subrogee of
Jacob Kuker, insured,
Plaintiff,
No. 12-CV-4112-DEO
vs.
ORDER ON MOTION FOR REMAND
CNH AMERICA, L.L.C.,
Defendant.
____________________
I.
INTRODUCTION
Presently before the Court is Plaintiff Mt. Carmel Mutual
Insurance Association’s [hereinafter the Plaintiff] Motion for
Remand.
court.
The Plaintiff seeks to remand this case to state
The partes appeared for a telephonic hearing on this
matter on February 13, 2013.
After listening to the parties’
arguments, the Court took the matter under advisement and now
enters the following.
II.
FACTUAL BACKGROUND
At this early stage of the proceeding, few facts are
before the Court.
This case arises out of a fire that
destroyed a piece of farm equipment; specifically, a combine,
owned by Jacob Kuker.
company.
The Plaintiff is Mr. Kuker’s insurance
After the fire destroyed Mr. Kuker’s combine, the
Plaintiff reimbursed him for his loss.
CNH American L.L.C.
[hereinafter the Defendant] manufactured or sold the combine.
The Plaintiff alleges that a defect caused the fire and the
Defendant is liable for its value.
III.
PROCEDURAL BACKGROUND
The Plaintiff filed a state court petition on September
17, 2012.
Docket #2.
The Defendant accepted service on
September 25, 2012, and filed an Answer on October 23, 2012.
Docket #3.
Thereafter, the Defendant served two discovery
questions on the Plaintiff.
Docket #1, Ex. 4.
Mt. Carmel
answered that none of its policy holders and/or members are
citizens of the state of Wisconsin or the State of Delaware.
Docket #1, Ex. 4.
December 18, 2012.
CNH then filed its Notice of Removal on
Docket #1.
On January 9, 2013, the
Plaintiff filed the present Motion to Remand.
IV.
ISSUE
The Plaintiff argues that the Defendant’s removal of this
case to federal court is not timely under 28 U.S.C. §1446.
V.
STANDARD
The parties generally agree to applicable standard.
28
U.S.C. § 1332 provides the authority for removal of civil
2
actions from state court to federal court based on diversity
of citizenship jurisdiction.
Removal under section 1332 is
dependent on the parties being “citizens” of different states
and requires the existence of complete diversity.
1332(a).
28
U.S.C
§
1441
provides
the
28 U.S.C §
basis
for
and
limitations on removal based on diversity of citizenship.
Finally, 28 U.S.C. § 1446 establishes the applicable time
periods for seeking removal of an action based on diversity of
citizenship.
Section 1446 provides an overarching one year deadline
for a defendant to seek removal of a state court action.
U.S.C. § 1446(c)(1).
28
This one-year deadline is generally
applied through two separate thirty-day deadlines that are
dependent on the circumstances of a particular matter. In the
first instance, § 1446 states that a defendant must seek
removal within 30 days of receiving the initial pleading, in
this case Plaintiff’s Petition, if the grounds or basis for
removal are clear from the initial pleading.
1446(b)(1).
28 U.S.C. §
In the second instance, a defendant must seek
removal within 30 days after receiving a subsequent pleading
or “other paper” that provides the basis for determining that
3
the case is or has become removable.
Id. at § 1446(b)(3).
The Court has summarized the factors to be considered in
a removal case such as this:
(1) the party seeking removal and opposing
remand bears the burden of establishing
federal subject matter jurisdiction; (2) a
fundamental
principle
of
removal
jurisdiction is that whether subject matter
jurisdiction exists is a question answered
by looking to the complaint as it existed
at the time the petition for removal was
filed;
(3)
lack
of
subject
matter
jurisdiction requires remand to the state
court under the terms of 28 U.S.C. §
1447(c);
(4)
the
court's
removal
jurisdiction must be strictly construed;
therefore, (5) the district court is
required to resolve all doubts about
federal jurisdiction in favor of remand;
and, finally, (6) in general, remand orders
issued under 28 U.S.C. § 1447(c) are not
reviewable by appeal or writ of mandamus.
Wells' Dairy, Inc. v. Am. Indus. Refrigeration, Inc., 157 F.
Supp. 2d 1018, 1025 (N.D. Iowa 2001).
VI. ANALYSIS
There is no dispute regarding whether this Court has
jurisdiction to hear the case.
1
1
The parties agree that the
There was discussion during the argument about Mr.
Kuker’s residence. The Court is persuaded that his residence
is not relevant to the outcome of this dispute. However, the
Court will make two observations. The first is that Mr. Kuker
lives in Iowa. So actual diversity exists. The second is
(continued...)
4
amount in controversy has been reached, and that the parties
are in fact diverse.
Instead, the Plaintiff’s Motion to
Remand argues that this case should be remanded to state court
because the Defendant did not comply with the thirty day
removal rule contained in 28 U.S.C. § 1446.
The Plaintiff
argues that because the Defendant did not comply with the time
limit to remove the case, the state court should retain
jurisdiction.
The Defendant makes two arguments in support of its
position that the case should remain before this Court.
First,
the
Defendant
argues
removal
was
timely
because
complete diversity between the two companies was not clear on
the face of the Plaintiff’s initial pleading.
The Defendant
states that it filed its notice of removal within thirty days
of obtaining papers which showed the existence of diversity,
specifically that the Plaintiff is incorporated in Iowa while
the Defendant is from Wisconsin and Delaware.
also
argues
that
remand
is
not
1
appropriate
The Defendant
because
the
(...continued)
that where Mr. Kuker lived was not clear on the face of the
pleading, so the question of Mr. Kuker’s residence would lead
to the same analysis the Court undertakes below.
5
Plaintiff is suing in its representative capacity and the
citizenship of its clientele was not readily apparent on the
face of its initial pleading.
A.
Corporate Diversity
The Court will first consider whether corporate diversity
was apparent on the face of the Plaintiff’s initial pleading.
As discussed above, 28 U.S.C. § 1332 provides the authority
for removal of civil actions from state court to federal court
based on diversity of citizenship jurisdiction. Removal under
section 1332 is dependent on
different
states
and
the parties being "citizens" of
requires
the
existence
of
complete
diversity. 28 U.S.C § 1332(a). The Defendant correctly notes
that in the Plaintiff’s initial pleading, the Plaintiff did
not state that it was incorporated in Iowa.
Rather, the
Complaint states “Plaintiff is a county mutual insurance
association doing business in Iowa...”
Doing business in a
state and being incorporated in a state are very different for
the purposes of establishing diversity jurisdiction.
The
Defendant argues that on the basis of the Plaintiff’s “doing
business” language, it was obligated to conduct discovery to
6
ascertain if diversity existed before removing the case to
Federal Court.
In making its argument, the Defendant relies primarily on
the case of Harris v. Bankers Life & Cas. Co., 425 F.3d 689,
694 (9th Cir. 2005).
In that case, the 9th Circuit stated
that diversity had to be apparent from the four corners of the
pleading to start the thirty day clock contained in 28 U.S.C.
§ 1446(b)(1).
Specifically, the Court stated that:
We now conclude that notice of removability
under § 1446(b) is determined through
examination of the four corners of the
applicable
pleadings,
not
through
subjective knowledge or a duty to make
further
inquiry.
Thus,
the
first
thirty-day requirement is triggered by
defendant's
receipt
of
an
“initial
pleading”
that reveals a basis for
removal.
If no ground for removal is
evident in that pleading, the case is “not
removable” at that stage. In such case,
the notice of removal may be filed within
thirty days after the defendant receives
“an amended pleading, motion, order or
other paper”
from which it can be
ascertained from the face of the document
that removal is proper.
See 28 U.S.C.§
1446(b). In coming to this resolution, we
consider the language of the statute and
survey the various approaches taken by our
sister circuits and district courts.
Harris, 425 F.3d at 694.
7
As discussed above, the party opposing remand bears the
burden of proving jurisdiction.
However, in this case, the
Plaintiff’s brief makes a persuasive argument that it is a
citizen of Iowa and diversity jurisdiction exists.
2
The
argument in this case is purely legal, regarding how to
interpret § 1446(b).
The Plaintiff states in its brief that Mt. Carmel is an
Iowa corporation with its nerve center in Iowa. The Plaintiff
goes on to say that it has been an Iowa citizen for diversity
purposes since 1921, and Mt. Carmel’s corporate residency was
“ascertainable” when CNH accepted service of the initial
pleadings. To demonstrate that diversity was “ascertainable,”
the Plaintiff has provided exhibits from the Secretary of
State’s website which show it is a citizen of Iowa.
#6, Ex. 1-2.
pleading.
Harris
case
Docket
No such exhibits were attached to its initial
Thus, the fighting question, as stated in the
quoted
above,
is
whether
the
Defendant
is
obligated to conduct outside research within the initial
thirty day time period or can the Defendant rely on the papers
2
In making its argument about being a corporation in
Iowa, the Plaintiff relies on I.C.A. §§ 491, 496A and 518.
8
it receives via service to determine if it can remove the case
to Federal Court.
This Court is persuaded that the Harris holding is the
correct holding; the Defendant need not conduct research to
determine if diversity exists for the purposes of the initial
thirty day time period.
Rather, the Defendant should be able
to rely on the words contained in the initial pleading.
If
diversity is not obvious on the face of the pleading, the
Defendant is not bound by that thirty day period if it
subsequently discovers diversity exists.
The Court is persuaded that this result is supported by
the way the statute is structured.
If the Defendant were
obligated to exhaust the question of whether diversity existed
during the initial thirty days, there would be no need for 28
U.S.C.A.§ 1446(b)(3), which allows for another thirty day
period “after receipt ... 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.”
Id. (Emphasis Added).
In this case, it was not
clear from the face of the Plaintiff’s pleading that diversity
existed.
The fact that diversity was ascertainable through
9
research is not enough to trigger the initial thirty day
period.
The Defendant acted appropriately when it conducted
limited discovery to determine if diversity existed, and
timely filed its notice of removal after receiving discovery
answers revealing the existence of diversity.
The Plaintiff does not cite any case law that refutes the
Harris case cited by the Defendant.
3
While the Harris case
originates in the 9th Circuit, there is no persuasive reason
to not apply its holding to this case.
Moreover, the result
in Harris is supported by the 8th Circuit case law.
The 8th
Circuit has considered when the thirty day period begins to
run in the context of a vague amount in controversy and stated
that the thirty day period only begins to run when the amount
3
Some Courts have come to the opposite conclusion. See
Richman v. Zimmer, Inc., 644 F. Supp. 540, 542 (S.D. Fla.
1986), stating that: “[s]ince the defendant had “clues” as to
the diverse citizenship of the plaintiffs and must have known,
from a fair reading of the complaint, that the damages claimed
exceeded $10,000.00, this case was removable upon receipt by
the defendant of the original complaint.” However, numerous
Courts have declined to follow those precedents.
See
Vartanian v. Terzian, 960 F. Supp. 58, 60 (D. N.J. 1997),
stating that “Richman focus[es] on what the defendant knew or
should know from the pleadings and from a comparison with
other cases. More recently, courts have shifted that focus
toward an analysis of what the relevant document says.”
10
in controversy is clearly determinable from the face of the
pleading.
See Knudson v. Sys. Painters, Inc., 634 F.3d 968,
974
Cir.
(8th
2011),
stating
that
“since
[plaintiff's]
complaint did not explicitly state the amount in controversy,
[plaintiff's] complaint did not trigger the running of §
See also In re Willis, 228
1446(b)'s thirty-day deadline.”
F.3d 896 (8th Cir. 2000).
rule
“promotes
certainty
The Knudson Court stated that this
and
judicial
efficiency
by
not
requiring courts to inquire into what a particular defendant
Knudson, 634 F.3d at 974.
may or may not subjectively know.”
The
Knudson
Court’s
rational
is
also
applicable
to
the
question of whether diversity must be discernable from the
face of the pleading. It would be illogical to determine that
amount
in
controversy
must
be
explicitly
stated
in
the
Complaint to trigger the thirty day clock, but the thirty day
clock automatically runs on the diversity issue and the
Defendant must either “know” that the Plaintiff is diverse or
research the issue within the thirty days.
Accordingly, the Defendant timely filed a Notice of
Removal
within
existence
of
thirty
diversity
days
in
from
finding
compliance
11
out
with
28
about
the
U.S.C.A.§
1446(b)(3), and the Plaintiff’s Motion to Remand the case must
be denied.
B.
Diversity in Representative Capacity
Because
the
Court
has
concluded
that
remand
is
inappropriate under the Defendant’s first theory, the Court
need
not
reach
the
Defendant’s
argument
regarding
the
Plaintiff acting in a representative capacity.
VII.
CONCLUSION
For the reasons set out above, the Plaintiff’s Motion to
Remand this case to state court is denied.
IT IS SO ORDERED this 22nd day of February, 2013.
__________________________________
Donald E. O’Brien, Senior Judge
United States District Court
Northern District of Iowa
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