Stephens et al v. Holcomb Logging, LLC et al
Filing
90
MEMORANDUM OPINION re 89 Order on Motion to Remand to State Court, Order on Motion to Expedite. Signed by Senior Judge Glen H. Davidson on 11/6/14. (rel)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
ABERDEEN DIVISION
LISA BEAM STEPHENS and
PAMELA BEAM DRAKE,
Wrongful Death Beneficiaries of
Truman Edward Beam
v.
PLAINTIFFS
CIVIL ACTION NO.: 1:13-cv-00244-GHD-DAS
PROGRESSIVE GULF INSURANCE COMPANY
GARNISHEE
v.
HOLCOMB LOGGING, LLC; DARRYL HOLCOMB;
JAMES HOLCOMB; and IC TRUCKING
DEFENDANTS
MEMORANDUM OPINION DENYING PLAINTIFFS' MOTION FOR REMAND
Presently before this Court is Plaintiffs' motion to remand the case to state court [54].
Upon due consideration of the motion, response, and record, the Court is of the opinion that the
motion should be denied.
A. Factual and Procedural Background
On August 23, 2013, Plaintiffs Lisa Beam Stephens and Pamela Beam Drake, wrongful
death beneficiaries of the Decedent, Truman Edward Beam ("Plaintiffs"), obtained a judgment of
$920,034.00 plus court costs in the amount of $120.00 and post-judgment interest at the legal
rate of 8% per annum against Defendants Holcomb Logging, LLC; Darryl Holcomb; James
Holcomb; and IC Trucking ("Defendants") in the Circuit Court of Itawamba County,
Mississippi. Subsequently, Plaintiffs made a proper suggestion for writ of garnishment against
Defendants and/or Progressive Gulf Insurance Company ("Garnishee"). The writ of garnishment
was issued by the Circuit Clerk of Itawamba County, Mississippi, and was served on Garnishee
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on November 26,2013. On December 23,2013, Garnishee filed its notice of removal within 30
days of receipt of the writ of garnishment. On May 1, 2014, Plaintiffs filed the present motion to
remand [54], to which Garnishee filed a response in opposition on May 6, 2014. The matter is
ripe for review.
B. Legal Standard
The removal statute provides in pertinent part:
Except as otherwise expressly provided by Act of Congress, any
civil action brought in a State court of which the district courts of
the United States have original jurisdiction, may be removed by
the defendant or the defendants, to the district court of the United
States for the district and division embracing the place where such
action is pending.
28 U.S.C. § 1441(a). A case may be remanded upon a motion filed within thirty days after the
filing of the notice of removal on any defect except subject matter jurisdiction, which can be
raised at any time by any party or sua sponte by the district court. Wachovia Bank, NA. v. PICC
Prop. & Cas. Co., 328 F. App'x 946, 947 (5th Cir. 2009) (per curiam); see 28 U.S.C. § 1447(c)
("If at any time before final judgment it appears that the district court lacks subject matter
jurisdiction, the case shall be remanded."). Any ambiguities are construed against removal and
in favor of remand. Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir.
2002) (citing Acuna v. Brown & Root, Inc., 200 F.3d 335,339 (5th Cir. 2000». The party who
seeks to remove the case to federal court bears the burden of showing that federal jurisdiction
exists and that removal was proper. Id. (citations omitted). Courts are to consider "jurisdictional
facts as they existed at the time of removal" in ruling on a motion to remand. Cavallini v. State
Farm Mut. Auto Ins. Co., 44 F.3d 256, 265 (5th Cir. 1995). "When a federal court is properly
appealed to in a case over which it has by law jurisdiction, it is its duty to take such jurisdiction."
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England v. La. Med. Exam'rs, 375 U.S. 411, 415, 84 S. Ct. 461, 11 L. Ed. 2d 440 (1964); see
Cohens v. Virginia, 19 U.S. 264, 1821 WL 2186, 5 L. Ed. 257 (1821) ("It is most true that this
Court will not take jurisdiction if it should not: but it is equally true, that it must take jurisdiction
if it should.").
C. Analysis and Discussion
A case may be removed to federal court on the basis of diversity jurisdiction if both
requirements of diversity jurisdiction are met, that is, if complete diversity exists and the amount
in controversy exceeds $75,000.00. See 28 U.S.C. § 1332(a). The amount in controversy clearly
exceeds $75,000.00. The only issue before this Court is whether complete diversity exists
between the parties. It is undisputed that Plaintiffs and Defendants are Mississippi citizens and
that Garnishee is an Ohio citizen, having been incorporated in Ohio and having its principal
place of business there.
Plaintiffs contend that remand is warranted because this Court lacks subject matter
jurisdiction over the action. Plaintiffs specifically argue that at the time of removal, December
23, 2013, a motion for default judgment was pending in the Circuit Court of Itawamba County;
that consequently, the Circuit Court of Itawamba County had not issued a final judgment at the
time of removal; that this Court must thus look to the citizenship of Plaintiffs, Defendants, and
Garnishee--not merely the citizenship of Plaintiffs and Gamishee--to determine whether
complete diversity exists; and that in so doing, this Court must conclude that complete diversity
does not exist, as Plaintiffs and Defendants are citizens of Mississippi, and remand the case to
the Circuit Court ofItawamba County.
Garnishee argues in response that removal is proper because this Court has subject-matter
jurisdiction over the action and presents several specific arguments in support. First, Garnishee
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argues that Plaintiffs have admitted subject-matter jurisdiction in this Court. Because "subject
matter jurisdiction cannot be created by waiver or consent," Howery v. Allstate Ins. Co., 243
F.3d 912, 919 (5th Cir. 2001), this argument is unavailing. Garnishee further argues that this
garnishment action is a separate civil action from the underlying state-court litigation and not a
direct action under the diversity jurisdiction statute; that only the citizenship of Plaintiffs
(Mississippi) and Garnishee (Ohio) is properly considered for purposes of diversity jurisdiction;
and that in so doing, diversity jurisdiction is established.
The diversity statute provides in pertinent part:
[I]n any direct action against the insurer of a policy or contract of
liability insurance, whether incorporated or unincorporated, to
which action the insured is not joined as a party-defendant, such
insurer shall be deemed a citizen of the State of which the insured
is a citizen, as well as of any State by which the insurer has been
incorporated and of the State where it has its principal place of
business.
28 U.S.C. § 1331(c)(1). This "direct action" provision "treats a defendant insurer as a citizen of
the insured's state when the insured is not also a defendant." Boston v. Titan Indem. Co., 199
F.3d 437, 1999 WL 1067058, at * 1 (5th Cir. 1999) (per curiam).
However, "garnishment actions against third parties are construed as independent actions
from the primary action which established the judgment debt." Berry v. McLemore, 795 F.2d
452, 455 (5th Cir. 1986) (footnote omitted). "[A] garnishment action ... is founded on the
judgment creditor's right of action against the garnishee." Davenport v. Hamilton, Brown &
Babst, L.L.c., 624 F. Supp. 2d 542, 546 (M.D. La. 2008) (citing Johnson v. Great Am. Ins. Co.,
213 F. Supp. 2d 657, 660 (S.D. Miss. 2001».
"In the garnishment action, the parties are
'litigating the existence of a new liability,' whether the insurer owes a debt to its insured."
Chisolm v. Alfa Ins. Co., No. 2:1O--cv-OOI29, 2010 WL 2802169, at *2 (S.D. Miss. July 14,
4
2010) (quoting Freeman v. Walley, 276 F. Supp. 2d 597, 602 (S.D. Miss. 2003) (in tum citing
Butler v. Polk, 592 F.2d 1293, 1295-1296 (5th Cir. 1979))). "[A] judgment creditor cannot
commence a garnishment action until such time as he becomes a judgment creditor, i.e., secures
ajudgment." Id. (citing Johnson, 213 F. Supp. 2d at 660-61).
The Court notes that final judgment was entered in the underlying state-court litigation on
August 23, 2013 against Defendants. See State-Ct. J. [4-46] at 1-2. At that point, Plaintiffs
became judgment creditors and subsequently commenced the state-court garnishment action
against Garnishee which Garnishee subsequently removed to this Court.
Clearly, this
garnishment action is independent from the underlying state-court litigation.
The pending
motion for default judgment mentioned by Plaintiffs in their remand motion was one filed by
Plaintiffs with respect to the writ of garnishment, not the primary underlying state-court case in
which final judgment had been entered.
Garnishee is an insurance company which was not a party to the underlying civil action
giving rise to the judgment debt and thus is a third party. Interestingly, although Plaintiffs were
adverse to Defendants in the underlying state-court litigation, for purposes of this garnishment
action, Defendants realign with Plaintiffs, due to Defendants' interest in having Garnishee satisfy
the judgment, and thus, Defendants are considered party Plaintiffs for jurisdictional purposes.
See Mabins v. AI/a Ins. Co., No. 2:1O-cv-130, 2010 WL 2557743, at *2 n.3 (S.D. Miss. June 23,
2010) (citing Freeman, 276 F. Supp. at 602; Boston v. Titan Indem. Co., 34 F. Supp. 2d 419,
421-22 (N.D. Miss. 1999)); Moore v. Sentry Ins. Co., 399 F. Supp. 929, 931 (D.C. Miss. 1975).
In the proper alignment, Plaintiffs and Defendants are Mississippi citizens and are adversarial to
Garnishee, an Ohio citizen. Thus, complete diversity exists between the parties. Because the
requisite amount in controversy and complete diversity of citizenship are met, this Court has
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diversity jurisdiction over this action. Accordingly, Plaintiffs' motion to remand the case to state
court [54] is not well taken.
D. Conclusion
In sum, because the Court has subject-matter jurisdiction over this action, Plaintiffs'
motion to remand the case to state court [54] is DENIED. Plaintiffs' motion to expedite hearing
[55] on the remand motion is DENIED AS MOOT.
An order in accordance with this opinion shall issue this day.
THIS, the
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of November, 2014.
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ORJUDGE
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