Durel et al v. Howard, et al

Filing 9

ORDER and REASONS denying 6 Motion to Remand, as stated within document. Signed by Judge Kurt D. Engelhardt on 12/11/2013. (cbs)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CHARLES DUREL, ET AL

CIVIL ACTION

VERSUS

NO. 13-5991

SHERRI HOWARD, ET AL

SECTION “N” (2)

ORDER AND REASONS
Before the Court is the plaintiffs’ Motion to Remand (Rec. Doc. 6).

Defendant’s

response is filed at Rec. Doc. 8.
Plaintiffs Charles and Elizabeth Durel are Louisiana residents who seek damages for
personal injuries allegedly sustained by Charles Durel on April 4, 2012, when the vehicle he
owned and was driving was allegedly rear-ended by another vehicle. The plaintiffs brought suit
in the Twenty-Fourth Judicial District Court, Parish of Jefferson, against: (1) Sherri Howard, the
driver of the other vehicle; (2) US Agencies Insurance Company, Howard’s liability insurer; and
(3) Durel’s own uninsured motorist carrier, Hartford Insurance Company. Plaintiffs settled their
claims against the alleged tortfeasor (Howard) and her insurer (US Agencies) on June 28, 2013.
Rec. Doc. 6-5. On September 18, 2013, they filed a motion to dismiss these two defendants,
which was granted on September 20, 2013. Rec. Doc. 1-2 at 16-17 of 22. Hartford removed the
case to this Court on October 1, 2013, on grounds of diveristy.

“A party may remove an action from state court to federal court if the action is one over
which the federal court possesses subject matter jurisdiction.” Manguno v. Prudential Property
& Casualty Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002) (citing 28 U.S.C. § 1441(a)). “The
removing party bears the burden of showing that federal jurisdiction exists and that removal was
proper.” Id. Federal courts have diversity jurisdiction where there is complete diversity
between all plaintiffs and all defendants, and the amount in controversy exceeds $75,000,
exclusive of interest and costs. 28 U.S.C. § 1332(a). In this case, no one questions that the
jurisdictional amount is met. The dispute concerns diversity of citizenship.
In removal cases, as a general rule, “diversity of citizenship must exist both at the time of
filing in state court and at the time of removal to federal court.” Coury v. Prot, 85 F.3d 244, 249
(5th Cir. 1996). However, an exception to this rule exists where the non-diverse defendant is
dismissed voluntarily by the plaintiff. In such cases, the matter becomes removable even though
diversity did not exist at the time suit was filed. See Weems v. Louis Dreyfus Corp., 380 F.2d
545, 548 (5th Cir. 1967); see also, e.g., Smith v. Union Carbide Corp., 2013 WL 6244199 *2-3
(E.D. La. 2013); Mumfrey v. ANCO Insulations, 2011 WL 4745626 (E.D. La. 2011).
Here, the defendant asserts that the case became removable when the plaintiffs settled
with and voluntarily dismissed Sherri Howard and US Agencies, the only non-diverse
defendants. See Rec. Docs. 6-5 and 1-2 at 16-17 of 22. The order granting the plaintiffs’ partial
motion to dismiss contained the following language:
ON MOTION of plaintiffs, Charles Durel, husband of/and Elizabeth
Durel...and on suggesting...that this matter has been partially compromised and
settled, including all interventions and liens as to defendants, Sherri Howard and US
Agencies Insurance Company, plaintiffs wish to dismiss, with prejudice, Sherri
Howard and US Agencies Insurance Company, each party to bear its own costs,
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reserving all plaintiffs’ rights against all remaining defendants...including but not
limited to Hartford Insurance Company, as the UM carrier of Charles Durel and
Elizabeth Durel; and that Sherri Howard remains a defendant, in name only, in order
to perfect the reservation of recovery rights against any excess insurance coverage,
IT IS ORDERED, ADJUDGED AND DECREED that the above captioned
matter on behalf of Charles Durel, husband of/and Elizabeth Durel, be and the same
is hereby DISMISSED, with prejudice, as to Sherri Howard and US Agencies
Insurance Company, ONLY, each party to bear its own costs, and that defendant
Sherri Howard, remain as a nominal defendant, in order to reserve rights of plaintiffs
against any excess insurance coverage.
Rec. Doc. 1-2 at 16-17 of 22. The legal effect of the order would seem quite clear. Because the
plaintiffs’ claims against the two in-state defendants were dismissed voluntarily and with
prejudice, the case became removable. See Smith, 2013 WL 6244199 at *2-3. Plaintiffs,
however, point to the language in the order “that defendant Sherri Howard, remain as a nominal
defendant, in order to reserve rights of plaintiffs against any excess insurance coverage.” They
argue that the settlement was a “Gasquet release” and that because Sherri Howard remained a
“nominal defendant, in order to reserve rights of plaintiffs against any excess insurance
coverage,” her citizenship cannot be disregarded. The Court disagrees.
Although adorned with language that appears superficially Gasquet-like, the release here
is not a Gasquet release and does not implicate the concerns at issue in Gasquet.1 In Gasquet,
the plaintiff settled with the tortfeasor’s primary liability insurer for less than policy limits and
continued to pursue his direct action claim against the tortfeasor’s excess insurer. Id. at 470-72.
Toward that end, the plaintiff released his claims against the tortfeasor to the extent they might
be recovered from the tortfeasor directly, but specifically reserved his claims against the

1

Gasquet v. Commercial Union Ins. Co., 391 So.2d 466 (La. Ct. App. 4th Cir. 1980), writ
denied, 396 So.2d 921, 922 (La. 1981).
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tortfeasor to the extent that collectible coverage was afforded the tortfeasor “by the said policy of
excess insurance issued by Stonewall.” Id. The tortfeasor in Gasquet was not dismissed by the
plaintiff,2 but instead proceeded as a proper defendant throughout the trial of the case and on
appeal.3 The circumstances in Gasquet likely would have precluded removal had it been
attempted. Although the plaintiff in that case released his right to collect from the in-state
tortfeasor directly, he retained a very real and specific claim against the tortfeasor, and the
tortfeasor remained a true, proper party defendant.
In contrast, there is no indication in this case that the alleged tortfeasor (Sherri Howard)
was an insured under any policy (other than the US Agencies policy) that might afford coverage
for the plaintiffs’ claims. The only remaining defendant is the plaintiffs’ own UM carrier, whose
obligations, if any, are clearly unaffected by Howard’s release. It has long been well settled that
a tort victim, “despite his release of the tortfeasor, nevertheless retain[s] all of his rights as
against his UM carrier.” Carona v. State Farm Ins. Co., 458 So. 2d 1275, 1279 (La. 1984);

2

Indeed, until recently, it was widely held that absent certain special circumstances
enumerated in the direct action statute, a plaintiff had to maintain his suit against the insured
tortfeasor in order to preserve his direct action against the tortfeasor’s insurers. This view was
dispelled in Soileau v. Smith True Value and Rental, 2013 WL 3305265 (La. 6/28/13), a four-tothree decision, wherein the Louisiana Supreme Court held that so long as the action is
commenced against both the insurer and the insured tortfeasor, the case may proceed against the
insurer alone (without the six special circumstances enumerated in La. Rev. Stat. §
22:1269(B)(1)(a)–(f) being implicated) “regardless of whether the insured tortfeasor is thereafter
dismissed.” Id.
3

At the conclusion of trial, after the jury’s verdict, the trial court dismissed the
plaintiff’s claims against the tortfeasor (H & B Construction Company of Louisiana, Inc.) and its
excess insurer, based upon the jury’s finding of contributory negligence. 391 So.2d at 468. The
Court of Appeal reversed this dismissal upon finding manifest error in the jury’s verdict that
plaintiff’s own negligence had been a proximate cause of his injuries. Id. at 478.
4

Gaspard v. Allstate Ins. Co., 903 So. 2d 518 (La. Ct. App. 3d Cir.), writ denied, 917 So. 2d 1114
(La. 2005). Under these circumstances, the Court finds the language regarding Howard’s
retention as a “nominal defendant” in order to preserve plaintiffs’ rights “against any excess
insurance coverage” to be legally meaningless. The plaintiffs have voluntarily dismissed their
claims against Howard with prejudice and thus have no possibility of recovery against her.
Removal was therefore proper, and the in-state defendants’ consent to removal was unnecessary.
Accordingly;
IT IS ORDERED that plaintiff’s Motion to Remand (Rec. Doc. 6) is hereby DENIED.
New Orleans, Louisiana, this 11th day of December 2013.

______________________________________
KURT D. ENGELHARDT
UNITED STATES DISTRICT JUDGE

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