Lefort et al v. Entergy Corporation et al

Filing 19

ORDER denying 9 Motion to Remand. Signed by Judge Jay C. Zainey. (jrc)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JAY LEFORT, ET AL.

CIVIL ACTION

VERSUS

NO: 15-1245

ENTERGY CORP., ET AL.

SECTION: "A" (5)

ORDER AND REASONS
Before the Court is a Motion to Remand (Rec. Doc. 9) filed
by plaintiffs Jay Lefort and Darlene Lefort, individually and on
behalf of Daniel Lefort, Darby Lefort, and Jayden Lefort
("Plaintiffs").

Defendants Entergy Corp., Entergy Services,

Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana,
LLC, Entergy New Orleans, Inc., and Associated Electric & Gas
Insurance Services, Ltd. ("Defendants") have filed a joint
opposition to the motion.

The motion, set for hearing on June 3,

2015, is before the Court on the briefs without oral argument.
I.

BACKGROUND

The instant case was originally filed by Plaintiffs in the
Civil District Court for the Parish of Orleans, Louisiana, on
April 2, 2015.

Plaintiffs allege that Daniel Lefort, a minor

child, made contact with an overhead power line while using a
pool net to clean leaves from the family pool.

As a result,

electricity provided by Entergy transferred from the power line
owned by Entergy to Daniel via the pool net, rendering him
unconscious and causing severe injuries.

Upon hearing the sound

of an electrical impact, Daniel's father ran outside, found
Daniel unconscious, and began to administer CPR.

The other

family members arrived on the scene shortly thereafter.
Plaintiffs bring an action under Louisiana law alleging
several theories of negligence.

In addition to the Entergy

defendants, Plaintiffs named "AEGIS Insurance Services, Ltd." in
their Complaint as a foreign insurer that may be served through
the Louisiana Secretary of State.

Plaintiffs went on to state

that "Defendant, AEGIS, was, upon information and belief, either
in its own capacity or through one or more of its agents,
subsidiaries, related or affiliated insurers, the insurer for
Defendant, Entergy, and is made a defendant pursuant to the
Louisiana Direct Action Statute, La. Rev. Stat. 22:655."
Associated Electric & Gas Insurance Services, Ltd., stating
that it had been incorrectly named in Plaintiffs' Complaint as
AEGIS Insurance Services, Ltd., filed its notice of removal on
April 20, 2015.
Via the instant motion, Plaintiffs move to remand this case
to state court.

Plaintiffs urge that the Court lacks subject

matter jurisdiction over this case because it was removed by a
non-party.

Thus, they contend that the case should be remanded

and Plaintiffs can then "1) amend their petition and name as a
defendant Associated Electric & Gas Insurance Services, Limited;
2) amend their petition and name as a defendant AEGIS Insurance

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Services, Inc.; or 3) dismiss AEGIS Insurance Services, Ltd. and
forego their direct action claim altogether."

In the

alternative, Plaintiffs seek to have their state law claims
severed and remanded.
II.

LEGAL STANDARD

Federal courts are courts of limited jurisdiction.

Howery

v. Allstate Insurance Co., 243 F. 3d 912, 916 (5th Cir. 2001)
(citing Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S.
375, 114 S. Ct. 1673, 128 L. Ed. 2d 391 (1994)).

The Court must

assume that a suit lies outside this limited jurisdiction until
jurisdiction is established.

Id.

When a case is removed from

state court, the removing party bears the burden of showing that
federal jurisdiction exists and that removal was proper.

Manguno

v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir.
2002) (citing DeAguilar v. Boeing Co., 47 F.3d 1404 (5th Cir.
1994); Jernigan v. Ashland Oil Inc., 989 F.2d 812 (5th Cir. 1993)
(per curiam); Willy v. Coastal Corp., 855 F.2d 1160 (5th Cir.
1988)).

Any doubt regarding whether removal jurisdiction is

proper should be resolved against federal jurisdiction and in
favor of remand.

Acuna v. Brown & Root, Inc., 200 F.3d 335, 339

(5th Cir. 2000)(citing Willy, 855 F.2d at 1164).
III. ANALYSIS
Plaintiff argues that on April 2, 2015 it filed its suit
against AEGIS Insurance Services, Ltd., not Associated Electric &
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Gas Insurance Services, Ltd.

On April 15, 2015, Plaintiffs

received a letter from the Louisiana Secretary of State that
AEGIS Insurance Services, Ltd. does not exist.

Plaintiffs have

since identified the existence of yet another entity – AEGIS
Insurance Services, Inc.

They allege that these are "entirely

separate entit[ies]."
Plaintiffs, pointing to a recent unpublished Fifth Circuit
case, argue that a non-party may not remove a case, thereby
invoking a federal court's jurisdiction.

They contend that

Defendants' removal is based on their admission that they are an
"incorrectly named" party.

Plaintiffs argue that, as "masters of

their complaint," it should be left to them to make any edits to
their pleadings and that the Court cannot effect its own
substitution to cure the defect.
Defendants respond that Plaintiffs rely on an overly
technical point and that the case was removed by a mis-named
party, not a non-party.

Defendants note that Plaintiffs are

clearly trying to sue Entergy's insurer.

The insurer is

Associated Electric & Gas Insurance Services, Ltd., which does
business as AEGIS.

They further note that AEGIS Insurance

Services, Inc. is actually a "wholly-owned managing general agent
of [Associated Electric & Gas Insurance Services, Ltd.], which
provides professional staff and services to [Associated Electric

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& Gas Insurance Services, Ltd.]."1
Plaintiffs reply, stating for the first time that they
"[c]learly . . . intended to sue AEGIS Insurance Services, Inc.,
a New Jersey corporation, believing that it was the insurer of
Entergy."

They contend that they should not have to rely on

Defendants' representation in their opposition that this entity
is a staffing service for Associated Electric & Gas Insurance
Services, Ltd., and that they are entitled to discovery from all
parties.

They state the insurance policy makes the importance

all the more clear, as the one purportedly issued by Associated
Electric & Gas Insurance Services, Ltd. covers only where "in
excess" of $3,000,000.
Both parties cite two cases from the Fifth Circuit, Salazar
v. Allstate Texas Lloyd's, Inc., 455 F.3d 571 (5th Cir. 2006),
and De Jongh v. State Farm Lloyds, Inc., 555 F. Appx. 435 (5th
Cir. 2014).

In Salazar, the plaintiff sued an entity named

Allstate Texas Lloyd's, Inc. regarding insurance coverage for
damage to his house, as opposed to Allstate Texas Lloyd's Company
(based in Illinois) which actually underwrote the policy at
issue.

Salazar, 455 F.3d at 572.

Allstate Texas Lloyd's, Inc.

removed the case, contemporaneously filing motions to dismiss
itself and to join Allstate Texas Lloyd's Company as the actual

1

Defendants have since filed an amended corporate disclosure
reiterating this relationship. (Rec. Doc. 16).

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insurer, arguing that the plaintiff was trying to improperly
avoid federal jurisdiction by not suing the diverse Allstate
Texas Lloyd's Company.2
motions.

Id.

The district court granted both

On appeal, the Fifth Circuit stated the question before

it is "whether a district court can create removal jurisdiction
based on diversity by substituting parties."

Id. at 573.

After

a consideration of several possible bases, the Fifth Circuit
concluded that "[FRCP] 21 does not allow for substitution of
parties to create jurisdiction.

The district court therefore

abused its discretion by adding Allstate Illinois as a defendant,
dropping Allstate Texas from the suit, and thereby asserting
removal jurisdiction based on diversity."

Id. at 575.

In 2014, in an unpublished opinion,3 the Fifth Circuit
considered a case with similar facts where the plaintiff sued
State Farm Lloyd's, Inc. for insurance coverage issues arising
out of damage to her home.

De Jongh, 555 F. Appx. at 436.

State

Farm filed an answer in state court asserting that it had been

2

Texas law, which applied to the insurance policy in the cited
case, provides for what it terms a "Lloyd's plan insurer" which is a
group of underwriters who join together to issue insurance through an
"attorney in fact" who is not a member of the group. Salazar, 455
F.3d at 572 n.1. In the cited case, Allstate Texas Lloyd's, Inc.
served as the attorney in fact while Allstate Texas Lloyd's Company
was the underwriter. Id.
3

As cited at the beginning of that opinion, "[The De Jongh]
opinion . . . is not precedent except under the limited circumstances
set forth in 5TH CIR. R. 47.5.4." De Jongh, 555 F. Appx. at 436.

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incorrectly named as State Farm Lloyd's, Inc.4

Id.

Without

moving the state court to allow it to intervene or substitute,
State Farm removed the case based on diversity jurisdiction.

Id.

The Fifth Circuit vacated the judgment in that case, finding that
the court had no subject matter jurisdiction.

Id. at 439.

That

court stated, citing Salazar, "[O]nly a defendant may remove a
civil action from state court to federal court.

A non-party,

even one that claims to be a real party in interest, lacks the
authority to institute removal proceedings."

Id. at 437.

The Court finds that these cases do not stand for the broad
proposition for which Plaintiffs cite them.

First, Salazar

explicitly seeks to remedy the manufacturing of diversity
jurisdiction by sua sponte substitution where there would
otherwise be none.

Salazar, 455 F.3d at 572.

Although De Jongh

is more broadly phrased, it effectively addressed the same
situation.

De Jongh, 555 F. Appx. at 438 ("In Salazar, we held,

under facts nearly identical to those here, that a district court
cannot 'create removal jurisdiction based on diversity by
substituting parties.'").

Further, contrary to appellees'

arguments that the plaintiff had simply misnamed the correct
party in that case, the Fifth Circuit stated "critical to this
analysis [that this is not a case of simply misnaming the

4

Similar to the scenario in Salazar, State Farm underwrote the
policy while State Farm Lloyd's, Inc. was merely the "attorney in
fact" in the Lloyd's plan. Id. at n.1.

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intended defendant] is the fact that Jongh – the author of the
petition – disputes State Farm's assertion that she named Lloyds
as a defendant in her original petition in error."

Id. at n.4.

The basis of jurisdiction in the present case is federal
question jurisdiction via the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, 9 U.S.C. § 200, et seq.
This is a critical distinction from the above cases, as the Court
would not be manufacturing diversity jurisdiction based on
inserting defendants into or dismissing them from a case.
Instead, Plaintiffs sought via their petition to sue Entergy's
insurer.

They misnamed the insurer, naming instead a non-

existent entity.

Importantly, they do not maintain a contention

that the non-existent entity is indeed who they wanted to sue;
rather, they state that they wanted to sue Entergy's insurer.
The actual insurer answered, admitting it is Entergy's insurer,
and asserted its federal defense allowing it to remove the case.
See Beiser v. Weyler, 284 F.3d 665, 671 (5th Cir. 2002)("[Unlike]
most other forms of federal question jurisdiction[, § 205]
permits removal on the basis of a federal defense.").

This is a

simple misnaming mistake on part of Plaintiffs, and the Court
will consider Associated Electric & Gas Insurance Services, Ltd.
as the properly-named party.
Absent controlling authority, this Court will not impose
such an illogical reading on what it construes as a procedural

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defect.

To hold otherwise in a case like this would be to

immediately call into doubt the jurisdictional bases in an untold
number of cases where a minor mistake has been made in naming but
both parties are otherwise in concert about the intended party
and their involvement in the proceedings.
Finally, Plaintiffs ask in the alternative, should the Court
deny the motion to remand, that the claims against the other
defendants be severed and remanded.

Plaintiffs point to 28

U.S.C. § 1441(c) which provides for the remand of additional
claims "not within the original or supplemental jurisdiction of
the district court or a claim that has been made nonremovable by
statute."

Plaintiffs note the related legislative history which

explained that this section's language "permit[s] removal of the
case but require[s] that a district court remand unrelated state
law matters."

H.R. Rep. No. 112-10, at 12 (2011).

The cited statutory language, as applied to this case, does
not require severing and remanding any of the other claims.

The

issues addressed in claims against the insurer will go far beyond
application of the arbitration clause to include many of the
state-law claims, and the Court, in its discretion, declines to
sever and remand the other claims.
Accordingly, and for the foregoing reasons;
IT IS ORDERED that the Motion to Remand (Rec. Doc. 9) filed
by Plaintiffs is DENIED.

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August 18, 2015

______________________________
JAY C. ZAINEY
UNITED STATES DISTRICT JUDGE

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