Landry et al v. Eagle, Inc. et al
Filing
12
ORDER & REASONS granting 5 Motion to Remand to State Court; FURTHER ORDERED that the oral argument requested on Plaintiffs' motion, currently set for June 20, 2012, at 9:30 a.m., is hereby CANCELED. Signed by Judge Carl Barbier on 6/19/12. (sek, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CYNTHIA K. LANDRY, ET AL.
CIVIL ACTION
VERSUS
NO: 12-1022
EAGLE, INC., ET AL.
SECTION: J(3)
ORDER AND REASONS
This matter is before the Court on a Motion to Remand (Rec.
Doc. 5) filed by Plaintiffs Dennis and Cynthia Landry.
The
Defendant, J.A. Sexauer, Inc., opposes the motion (Rec. Doc. 8).
Having considered the motion, the parties’ arguments, the
evidence in the record, and the applicable law, the Court finds
that Plaintiff’s motion should be GRANTED.
PROCEDURAL HISTORY AND BACKGROUND FACTS
Plaintiffs Dennis and Cynthia Landry (“Plaintiffs”)
originally filed this action in 2010 in the Civil District Court
for Orleans Parish, alleging that Mr. Landry had contracted
malignant mesothelioma on account of occupational exposure to
asbestos during the years he worked as a union plumber and
seeking to recover damages.
Among the 27 parties named as
defendants in the suit were J.A. Sexauer (“Sexauer”), Taylor-
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Seidenbach, Inc. (“Taylor-Seidenbach”), and Georgia-Pacific, LLC
(“Georgia-Pacific”), each of whom Plaintiffs alleged had
designed, tested, evaluated, manufactured, packaged, furnished,
stored, handled, transported, installed, supplied, and/or sold
the asbestos or asbestos-containing products causing Mr. Landry’s
mesothelioma.
Sadly, while the suit was pending, Mr. Landry
passed away, at which point an amended petition was filed wherein
his heirs were added as plaintiffs.
Trial was originally set to commence in state court on May
16, 2011, but the matter was continued until November 7, 2011.
Several weeks before trial, Plaintiffs voluntarily dismissed J.A.
Sexauer from the case without prejudice.
The state court then
granted another continuance, resetting the trial to March 19,
2012, at which point only Plaintiffs’ claims against GeorgiaPacific were reportedly set to be tried.
On the eve of trial,
however, Plaintiffs reached a settlement with Georgia-Pacific.
Plaintiffs then filed a Second Supplemental and Amended Petition
on March 21, 2012, reasserting their claims against Sexauer based
on new evidence that had reportedly been uncovered during expert
discovery.
Just shy of one month later, on April 20, 2012,
Sexauer removed the case to this Court on the basis of diversity
of citizenship.
The instant motion to remand followed shortly
thereafter.
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PARTIES’ ARGUMENTS
In their motion, Plaintiffs argue that this matter is not
removable for three distinct reasons.
First, they argue that
Sexauer cannot show the existence of complete diversity of
citizenship, as required to remove a case pursuant to federal
diversity jurisdiction.
Specifically, because Plaintiffs share
the same state citizenship as Defendant Taylor-Seidenbach, and
because Plaintiffs are still actively pursuing their claims
against Taylor-Seidenbach, they argue that complete diversity is
not present and that federal jurisdiction is therefore lacking.
Second, even if complete diversity exists, Plaintiffs argue that
Sexuaer’s notice of removal is untimely under the removal statute
because it was filed more than one year after the commencement of
the state court action.
See 28 U.S.C. § 1446(c).
Finally,
Plaintiffs argue that removal is prohibited under 28 U.S.C. §
1441(b)(2) because Taylor-Seidenbach is a citizen of the state in
which the action was filed, i.e., Louisiana.
Based on the
foregoing, Plaintiffs request that their motion be granted, and
that this matter be remanded to the Civil District Court for
Orleans Parish.
In response, however, Sexauer argues that Plaintiffs’ motion
is without merit.
First, Sexauer argues that complete diversity
of citizenship exists in this case, because at the time that the
notice of removal was filed, it was under the impression that
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Plaintiffs had settled their claims against Taylor-Seidenbach.
As support for this contention, Sexauer cites the March 14, 2012
pre-trial outline from the state court proceeding.
It points out
that this outline includes no reference to any pending claims
against Taylor-Seidenbach.
Accordingly, because Taylor-
Seidenbach was no longer a party to the action at the time of
removal, and because complete diversity exists between Plaintiffs
and Sexauer, it argues that federal diversity jurisdiction is
present and that removal is not barred by the forum defendant
rule.
Next, Sexauer argues that Plaintiffs’ second argument is
similarly flawed, in that Plaintiffs’ supplemental petition
reasserting claims against Sexauer must be considered a new
action and cannot revive their previously dismissed claims
against Sexauer.
Thus, because the case was removed well within
a year of the date that Plaintiffs’ supplemental petition was
filed, Sexauer argues that its notice of removal was timely
filed.
Finally, should the Court find that the notice of removal
was not timely filed, Sexauer alternatively contends that the
“bad faith” exception of 28 U.S.C. § 1446(c)(1) applies.
The
removal statute permits a defendant to remove a case pursuant to
diversity jurisdiction more than one year after the action was
commenced if “the district court finds that the plaintiff has
acted in bad faith in order to prevent a defendant from removing
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the action.”
28 U.S.C. § 1446(c)(1).
Here, Sexauer
characterizes Plaintiffs’ actions in initially dismissing it from
the lawsuit without prejudice and then subsequently reasserting
their claims after the one-year period for removal had expired as
indicative of bad faith.
Consequently, it argues that
Plaintiffs’ motion should be denied.
DISCUSSION
Generally, a defendant may remove a civil action filed in
state court if a federal court would have had original
jurisdiction over the case.
See 28 U.S.C. § 1441(a).
The
removing defendant bears the burden of proving by a preponderance
of the evidence that federal diversity jurisdiction exists.
De
Aguilar v. Boeing Co., 47 F.3d 1404, 1412 (5th Cir. 1995).
The
jurisdictional facts supporting removal are examined as of the
time of removal.
Gebbia v. Wal–Mart Stores, Inc., 233 F.3d 880,
883 (5th Cir. 2000).
Because of the federalism concerns inherent
in removing a case from the state court system, the removal
statute should be strictly construed, and any doubt as to the
propriety of removal must be resolved in favor of remand.
Manguno v. Prudential Prop. and Cas. Ins. Co., 276 F.3d 720, 723
(5th Cir. 2002).
Federal diversity jurisdiction exists where the amount in
controversy exceeds $75,000 and there is complete diversity
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between the parties, meaning that no individual plaintiff and no
individual defendant share the same state citizenship.
§ 1332(a)(1).
28 U.S.C.
For the purposes of diversity jurisdiction, a
natural person is a citizen of the state in which he is
domiciled.
Preston v. Tenet Healthsystem Mem’l Med. Ctr., Inc.,
485 F.3d 793, 797 (5th Cir. 2007).
A corporation is deemed a
citizen of the state in which it is incorporated and the state of
its principal place of business.
28 U.S.C. § 1332(c)(1).
Here, the parties do not appear to dispute the state
citizenship of any relevant party.
Both the Plaintiffs and
Taylor-Seidenbach are Louisiana citizens, and Sexauer is a
citizen of New York and Florida.
Accordingly, the only issue is
whether Sexauer has carried its burden of establishing that there
was complete diversity among the parties at the time that the
notice of removal was filed.
A.
Has Sexauer Shown that Diversity Jurisdiction Exists?
A case that was not originally removable under federal
diversity jurisdiction because of the presence of a nondiverse
defendant may be removed only after it is clear under applicable
state law that all nondiverse defendants have been effectively
removed from the case, leaving a controversy between the
plaintiff and diverse defendants.
Vasquez v. Alto Bonito Gravel
Plant Corp., 56 F.3d 689, 694 (5th Cir. 1995).
Federal courts
must look to state law to determine whether a nondiverse
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defendant is no longer effectively a party to a case.
Estate of
Martineau v. ARCO Chem. Co., 203 F.3d 904, 910 (5th Cir. 2000).
Settlement by a plaintiff with all nondiverse defendants has
been held to render a case removable, provided the settlement is
irrevocable, binding, and enforceable under state law.
See
Vasquez, 56 F.3d at 693–694; accord Taco Tico of New Orleans,
Inc. v. Argonaut Great Central Ins. Co., No. 09-3502, 2009 WL
2160436, *2 (E.D. La. July 16, 2009) (“Defendants who have
settled are nominal parties who are no longer effectively a party
to the case.”) (internal citation and quotation omitted);
Hargrove v. Bridgestone/Firestone N. Am. Tire, LLC, No. 10-0318,
2012 WL 692410, at *3 (W.D. La. Mar. 2, 2012) (“When, as here,
there is a voluntary action by the plaintiff, i.e. the execution
of settlement documents showing no intention of proceeding
against [the nondiverse] defendants, the case becomes
removable.”).
Here, the parties dispute whether Plaintiffs have previously
settled their claims against Taylor-Seidenbach, thereby
effectively removing this nondiverse defendant from the suit and
creating complete diversity.
Accordingly, the Court must look to
state law to determine whether Sexauer has demonstrated the
existence of a binding settlement agreement under Louisiana law
as of the date this matter was removed.
Estate of Martineau, 203
F.3d at 910 (noting that state law governs the issue of “whether
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there was a binding settlement agreement between [the parties as
of] the date of removal”).
Under Louisiana law, an agreement to settle a lawsuit is
referred to as a “compromise.”
See Townsend v. Square, 94-0758,
p. 6 (La. App. 4 Cir. 9/29/94), 643 So. 2d 787, 790.
“A
compromise is a contract whereby the parties, through concessions
made by one or more of them, settle a dispute or an uncertainty
concerning an obligation or other legal relationship.”
CODE art. 3071.
LA. CIV.
Under Louisiana law, a compromise must generally
be made in writing and signed by both parties in order to be
valid.
Preston Law Firm, L.L.C. v. Mariner Health Care Mgmt.
Co., 622 F.3d 384, 390 (5th Cir. 2010) (per curiam) (citing LA.
CIV. CODE art. 3072).1
Applying the foregoing principles to the facts of this case,
the Court finds Sexauer has failed to demonstrate by a
preponderance of the evidence that Plaintiffs have settled their
claims against Taylor-Seidenbach, or that any settlement the
parties may have theoretically reached constitutes a valid
compromise under Louisiana law.
The only evidence Sexauer offers
is a March 9, 2012 joint pre-trial outline referencing
Plaintiffs’ claims against Georgia-Pacific and a docket sheet
from the Civil District Court website stating that the case had
1
A compromise may also be recited in open court, provided
that the terms thereof are “susceptible of being transcribed from
the record of the proceedings.” LA. CIV. CODE art. 3072.
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been settled.
Standing alone, this does not establish that the
settlement agreement constitutes a valid and enforceable
compromise under Louisiana law.
See, e.g., Cella v. Allstate
Prop. & Cas. Ins. Co., No. 10-2744, 2010 WL 4027712, at *2-*3
(E.D. La. Oct. 13, 2010) (granting motion to remand where only
evidence of settlement agreement was correspondence between
plaintiff’s counsel and nondiverse defendant’s counsel stating “I
am pleased that we have been able to settle this claim in an
amicable manner,” which failed to establish an “agreement in
writing, signed by the parties or recited in open court and
susceptible of being transcribed from the record of the
proceedings”); Bush v. Waterman Steamship Corp., No. 00-0920,
2000 WL 913812, at *2 (E.D. La. July 5, 2000) (granting
plaintiff’s motion to remand where removing defendant failed to
present any evidence that settlement that had been reported
between plaintiff and nondiverse defendant was compliant with
Civil Code articles 3071 and 3072); Williams v. Exec. Risk
Specialty Ins. Co., No. 11-0686, 2011 WL 2461346, at *3 (W.D. La.
June 17, 2011) (remand proper where removing defendants provided
no evidence that plaintiffs executed enforceable settlement
agreements with nondiverse defendants under Louisiana law).
Furthermore, Plaintiffs offer at least a facially plausible
explanation of Sexauer’s proffered evidence.
According to
Plaintiffs, the pre-trial outline only addresses their claims
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against Georgia-Pacific and not any other defendants because
those were the only claims set to be tried during the March 19,
2012 trial setting.
As Plaintiffs point out, the outline does
not state that the claims against Georgia-Pacific are the only
claims pending in the suit.
They further explain that the docket
sheet attached to the notice of removal only references the same
claims against Georgia-Pacific, and not their claims against
Taylor-Seidenbach.
They represent to the Court that no
settlement has been reached with Taylor-Seidenbach, that they
have not settled or otherwise dismissed their claims against this
defendant, and that they currently intend to pursue such claims
as to this defendant if this matter is remanded.
Based on the parties’ competing explanations of these
documents, as well as the lack of evidence unequivocally showing
that Plaintiffs have executed a valid compromise with or
otherwise dismissed their claims against Taylor-Seidenbach, the
Court is ultimately not persuaded that diversity jurisdiction is
present in this matter.
Admittedly, there are lingering doubts
in the Court’s mind over whether these claims were in fact
settled or dismissed, as Sexauer suggests.
However, because the
Court is required to strictly resolve any such doubts in favor of
remand, see Manguno, 276 F.3d at 723, Plaintiffs’ motion will be
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granted.2
CONCLUSION
Accordingly, for all the reasons expressed above, IT IS
ORDERED that Plaintiffs’ Motion to Remand (Rec. Doc. 5) is
GRANTED and that this matter is hereby remanded to the Civil
District Court for Orleans Parish.
As such,
IT IS FURTHER ORDERED that the oral argument requested on
Plaintiffs’ motion, currently set for June 20, 2012, at 9:30
a.m., is hereby CANCELED.
New Orleans, Louisiana this 19th day of June, 2012.
CARL J. BARBIER
UNITED STATES DISTRICT COURT
2
Because the Court concludes that remand is proper based
on the lack of diversity jurisdiction, it need not reach the
remaining issues raised in the parties’ memoranda.
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