Gulf Coast Cold Storage, Inc. et al v. Philips Electronics North America Corporation et al
MEMORANDUM OPINION AND ORDER finding as moot 27 Motion for Leave to File; granting 18 Motion to Remand to State Court; denying 23 Motion for Remand Related Discovery. Signed by Chief District Judge Louis Guirola, Jr on 4/4/17. (JCH)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
GULF COAST COLD STORAGE, INC. (a
wholly owned subsidiary of Neeb Kearney
& Company, Inc.), suing on its own behalf
and on behalf of its insurance subrogees,
including Indian Harbor Insurance
Company, Certain Underwriters at Lloyds
Subscribing to Policy Number AMR-34288,
Steadfast Insurance Company, and QBE
Specialty Insurance Company; and
NEEB KEARNEY AND COMPANY, LLC
(formerly Neeb Kearney & Company, Inc.)
CAUSE NO. 1:17CV13-LG-RHW
PHILIPS ELECTRONICS NORTH AMERICA
CORPORATION; PHILIPS LIGHTING COMPANY;
A.L.P. LIGHTING COMPONENTS, INC.; A.L.P.
LIGHTING AND CEILING PRODUCTS, INC.;
ACUITY BRANDS LIGHTING, INC.; ACUITY
BRANDS, INC.; and DOES 1-100, inclusive
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS’
MOTION TO REMAND AND DENYING DEFENDANTS’
MOTION FOR REMAND-RELATED DISCOVERY
BEFORE THE COURT are (1) the Motion to Remand to State Court 
filed by the plaintiffs Gulf Coast Cold Storage, Inc., suing on its own behalf and on
behalf of its insurance subrogees, including Indian Harbor Insurance Company,
Certain Underwriters at Lloyds Subscribing to Policy Number AMR-34288,
Steadfast Insurance Company, and QBE Specialty Insurance Company, and Neeb
Kearney and Company, LLC (formerly Neeb Kearney & Company, Inc.), (2) the
Motion for Remand-Related Discovery  filed by the defendants Philips
Electronics North America Corporation, Philips Lighting Company, A.L.P. Lighting
Components, Inc., A.L.P. Lighting and Ceiling Products, Inc., Acuity Brands
Lighting, Inc., and Acuity Brands, Inc., and (3) the Motion for Leave to File Surreply  filed by the defendants. The parties have fully briefed the Motion to
Remand. The defendants did not file a reply supporting their Motion for RemandRelated Discovery or their Motion for Leave to File Sur-reply. After reviewing the
submissions of the parties, the record in this matter, and the applicable law, the
Court finds that the Motion to Remand should be granted, and the Motion for
Remand-Related Discovery should be denied. The Motion for Leave to File a Surreply is moot.
The plaintiffs filed this lawsuit in the Circuit Court of Jackson County,
Mississippi, alleging that the defendants’ products caused a fire that damaged the
A1 Cold Storage Warehouse. Indian Harbor Insurance, Lloyds, Steadfast
Insurance, and QBE Insurance provided commercial property insurance and
business income coverage to Gulf Coast Cold Storage (“GCCS”) and its parent
company Neeb Kearney (“Neeb”). Neeb signed a Subrogation Receipt providing that
the insurance companies had paid $8,275,292.78 for claims submitted as a result of
the fire. The Receipt further provides:
In consideration of and to the extent of said payment the undersigned
hereby subrogates said Insurance Companies to all of the rights,
claims and interest which the undersigned or it’s [sic] subsidiaries may
have against any person or corporation liable for the loss mentioned
above paid unto it by Insurance Companies, and authorizes the said
Insurance Companies to sue, compromise, or settle in the
undersigned’s name, it’s [sic] subsidiary’s name, or otherwise all such
claims it is subrogated to and to execute and sign releases and
acquittances and endorse checks or drafts given in settlement of such
claims in the name of the undersigned, with the same force and effect
as if the undersigned executed or endorsed them.
(Pls.’ Mot., Ex. C, ECF No. 19-3).
The defendants removed the case to this Court on the basis of diversity
jurisdiction. The plaintiffs filed a Motion to Remand asserting that the citizenship
of the insurance subrogees listed in the case caption should be considered when
determining whether diversity of citizenship exists. Insurance subrogees Indian
Harbor and Steadfast Insurance are residents of Delaware. The Philips defendants
and the Acuity Brands defendants are also residents of Delaware. Thus, if the
insurance subrogees are plaintiffs to the lawsuit, diversity of citizenship does not
exist.1 The defendants argue that the insurance subrogees are not parties to the
lawsuit, such that the citizenship of these entities should be disregarded. In the
alternative, the defendants request permission to conduct remand-related discovery
concerning any additional subrogation agreements entered into by GCCS, Neeb,
and the insurance subrogees that may affect their standing as real parties in
interest to the lawsuit.
According to the First Amended Complaint, GCCS is a Mississippi corporation.
(1st Am. Compl. at 2, ECF No. 19-2). Neeb is a limited liability company, and all of
its members are citizens of Louisiana. (Id.; see also Pls.’ Mem. at 2, ECF No. 19).
Indian Harbor Insurance is a citizen of Delaware and Connecticut. (Id.) Lloyds is
an English company with its principal place of business in New York. (Id.) QBE
Insurance is a citizen of North Dakota and New York. (Id.) Steadfast Insurance
Company is a citizen of Delaware and Illinois. (Id.) Philips Electronics and Philips
Lighting are citizens of Delaware and Massachusetts. (Id. at 3). The A.L.P.
Lighting defendants are citizens of Illinois. (Id. at 4). The Acuity Brands
defendants are citizens of Delaware and Georgia. (Id. at 6).
I. MOTION TO REMAND
“Federal courts are courts of limited jurisdiction. We must presume that a
suit lies outside this limited jurisdiction, and the burden of establishing federal
jurisdiction rests on the party seeking the federal forum.” Howery v. Allstate Ins.
Co., 243 F.3d 912, 916 (5th Cir. 2001). The federal removal statute, 28 U.S.C. §
1441(a), permits defendants to remove “any civil action brought in a State court of
which the district courts of the United States have original jurisdiction.” Federal
courts have original jurisdiction over controversies between citizens of different
states when the amount in controversy exceeds $75,000, exclusive of interest and
costs. 28 U.S.C. § 1332(a).
“[T]he ‘citizens’ upon whose diversity a plaintiff grounds jurisdiction must be
real and substantial parties to the controversy.” Navarro Sav. Ass’n v. Lee, 446
U.S. 458, 460 (1980); see also KeyBank Nat’l Ass’n. v. Perkins Rowe Ass’n, LLC, 539
F. App’x 414, 416 (5th Cir. 2013). “Thus, a federal court must disregard nominal or
formal parties and rest jurisdiction only upon the citizenship of real parties to the
“There is a rough symmetry between the real party in interest standard of
Rule 17(a) and the rule that diversity jurisdiction depends upon the citizenship of
real parties to the controversy. But the two rules serve different purposes and need
not produce identical outcomes in all cases.” Aetna Cas. & Sur. Co. v. Iso-Tex, Inc.,
75 F.3d 216, 218 n.2 (5th Cir. 1996). Fed. R. Civ. P. 17(a) provides that “[a]n action
must be prosecuted in the name of the real party in interest.” “The real party in
interest is the person holding the substantive right sought to be enforced, and not
necessarily the person who will ultimately benefit from the recovery.” Farrell
Constr. Co. v. Jefferson Parish, La., 896 F.2d 136, 140 (5th Cir. 1990). State law
governs the question of whether a party holds the substantive right. Id. Under
Mississippi law, the right of subrogation is a “substantive right protected under the
law.” Miss. Food & Fuel Workers’ Comp. Trust v. Tackett, 778 So. 2d 136, 142-43
(¶26) (Miss. Ct. App. 2000) (citing McDonald v. E.J. Lavino Co., 430 F.2d 1065 (5th
Cir. 1970). Since the insurance subrogees in the present case had a right to
subrogation, they cannot be considered nominal or formal parties to this lawsuit.
Nevertheless, GCCS claimed in the case caption to be prosecuting this lawsuit on
behalf of the insurance subrogees; thus, the question remains whether the
insurance subrogees were actually named as parties to this lawsuit.
“The citizenship of one who has an interest in the lawsuit but who has not
been made a party to the lawsuit . . . cannot be used . . . to defeat diversity
jurisdiction.” Corfield v. Dallas Glen Hills LP, 355 F.3d 853, 864-65 (5th Cir. 2003)
(quoting Plains Growers, Inc. v. Ickes-Braun Glasshouses, Inc., 474 F.2d 250, 252
(5th Cir. 1973)). “The plain meaning of the phrases ‘on whose behalf’ or ‘on behalf
of’ is an act by a representative of, or an act for the benefit of, another.” United
States v. Dish Network, L.L.C., 667 F. Supp. 2d 952, 963 (C.D. Ill. 2009); see also
Tallman v. HL Corp., No. 14-5550 (WHW)(CLW), 2015 WL 306964, at *6 (D.N.J.
Jan. 20, 2015) (“‘On behalf of’ generally means ‘for the benefit of,’ as in a derivative
suit brought by a shareholder through which the corporation would recover . . . or a
claim brought by a guardian because her ward was unable to do so.”).
Although “the caption of a complaint is not necessarily determinative with
respect to whether the plaintiff is acting in a representative capacity,” a district
judge may consider the case caption as a factor when attempting to identify the
parties to the lawsuit. Jones v. Tex. Tech Univ., 656 F.2d 1137, 1143 (5th Cir.
1981); see also Tallman, 2015 WL 306964, at*7 (since the case caption conflicted
with the body of the complaint, the court resolved its doubt as to the identity of the
plaintiffs in favor of remand); Dressler v. Hartford Fin. Servs. Grp., Inc., No. 1402134 MMM (MANx), 2014 WL 12560795, at *3 (C.D. Cal. May 27, 2014) (holding
that defendants who were not listed in the case caption but were listed in the body
of the complaint should be considered when considering diversity of citizenship);
Fed. Ins. Co. v. Brasscraft Mfg. Co., No. 13-08867MMM (Ex.), 2014 WL 545786, at
*4 (C.D. Cal. Feb. 10, 2014) (holding that the party opposing remand was required
to plead facts demonstrating why citizenship of a defendant who was included in
the body of the complaint but not in the caption should not be considered for
purposes of considering diversity of citizenship).
The First Amended Complaint was the operative complaint at the time of
removal. See Spear Mktg., Inc. v. BancorpSouth Bank, 844 F.3d 464, 469 (5th Cir.
2016) (quoting Brown v. Sw. Bell Tel. Co., 901 F.2d 1250, 1254 (5th Cir. 1990))
(“When a defendant seeks to remove a case, the question of whether jurisdiction
exists is resolved by looking at the complaint at the time the petition for removal is
filed.”). The caption and the opening paragraph of the plaintiffs’ First Amended
Complaint provide that GCCS has filed this lawsuit on its own behalf and on behalf
of its insurance subrogees: Indian Harbor Insurance, Lloyds, Steadfast Insurance,
and QBE Insurance. (1st Am. Compl. at 1, ECF No. 19-2). Paragraph 7 of the First
Amended Complaint provides that both GCCS and Neeb are bringing this lawsuit
on their own behalves and on behalf of the insurance subrogees. (Id. at 3).
Paragraph 9 provides, “The GCCS insurance subrogees are participating in this
action in the name of GCCS, Neeb and in their own interests. GCCS, Neeb and
GCCS insurance subrogees are collectively referred to herein as ‘Plaintiffs.’” (Id.)
The statements in Paragraph 9 indicate that the insurance subrogees are
plaintiffs to this lawsuit who should be considered when determining whether
diversity of citizenship exists. Nevertheless, at the very least, the confusion created
by the contradictory statements in the body of the First Amended Complaint and
the case caption causes sufficient doubt as to the presence of diversity jurisdiction
to justify remand to state court. See Gasch v. Hartford Accident & Indem. Co., 491
F.3d 278, 281-282 (5th Cir. 2007) (“[A]ny doubt about the propriety of removal must
be resolved in favor of remand.”).
II. MOTION FOR REMAND-RELATED DISCOVERY
Typically, remand-related discovery is utilized in cases where a defendant
alleges improper joinder. See Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573-74
(5th Cir. 2004). Remand-related discovery is only permitted where the defendant
demonstrates its necessity. Id. at 574. The discovery must be kept on “a tight
judicial tether, sharply tailored to the question at hand.” Id.
The defendants ask the Court for permission to conduct discovery regarding
whether other subrogation agreements exist between GCCS and/or Neeb and the
insurance subrogees, because the defendants are concerned that the insurance
subrogees may have assigned their right to recovery to GCCS and/or Neeb. Counsel
for the plaintiffs has represented to the Court that the only subrogation agreement
between the parties is the Subrogation Receipt that has previously been submitted.
That Subrogation Receipt indicates that the insurance subrogees have not assigned
any of their rights to GCCS and/or Neeb. As a result, the defendants have not
demonstrated that remand-related discovery is necessary.
III. DEFENDANTS’ MOTION FOR LEAVE TO FILE SUR-REPLY
The Court has reviewed the defendants’ proposed sur-reply and finds that it
does not affect the Court’s decision. As a result, the defendants’ Motion for Leave to
File a Sur-reply is moot.
IV. PLAINTIFFS’ REQUEST FOR ATTORNEY’S FEES AND COSTS
The plaintiffs ask the Court to award them costs and attorney’s fees incurred
as a result of the removal of the case to this Court. “Absent unusual circumstances,
courts may award attorney’s fees under [28 U.S.C.] § 1447(c) only where the
removing party lacked an objectively reasonable basis for seeking removal.” Martin
v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). This is certainly not a case in
which costs and fees should be awarded, because the plaintiffs created the
ambiguity as to the identity of the parties in this lawsuit that resulted in the
removal. Since GCCS, Neeb, and the insurance subrogees claim they are
prosecuting this lawsuit in their own individual interests, no party should have
claimed to file this lawsuit “on behalf of” other parties.
For the foregoing reasons, the plaintiffs’ Motion to Remand is granted, and
the defendants’ Motion for Remand-Related Discovery is denied. The defendants’
Motion for Leave to File a Sur-reply is moot. The plaintiffs’ request for an award of
fees and costs is denied.
IT IS, THEREFORE, ORDERED AND ADJUDGED that the Motion to
Remand to State Court  filed by the plaintiffs is GRANTED. The plaintiffs’
requests for attorney’s fees and costs is denied.
IT IS, FURTHER, ORDERED AND ADJUDGED that the Motion for
Remand-Related Discovery  filed by the defendants is DENIED.
IT IS, FURTHER, ORDERED AND ADJUDGED that the Motion for
Leave to file Sur-reply  filed by the defendants is MOOT.
IT IS, FURTHER, ORDERED AND ADJUDGED that a certified copy of
this order of remand shall be immediately mailed by the Clerk of this Court to the
clerk of the state court pursuant to 28 U.S.C. § 1447(c).
SO ORDERED AND ADJUDGED this the 4th day of April, 2017.
Louis Guirola, Jr.
LOUIS GUIROLA, JR.
CHIEF U.S. DISTRICT JUDGE
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