Sunflower Redevelopment, LLC v. Illinois Union Insurance Company
Filing
30
ORDER denying 23 motion for reconsideration and certification for interlocutory appeal. Signed on 3/28/16 by Chief District Judge Greg Kays. (Francis, Alexandra)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
SUNFLOWER REDEVELOPMENT, LLC,
Plaintiff,
v.
ILLINOIS UNION INSURANCE CO.,
Defendant.
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No. 4:15-CV-577-DGK
ORDER DENYING RECONSIDERATION AND
CERTIFICATION FOR INTERLOCUTORY APPEAL
This case arises out of an insurance dispute. After insurer Defendant Illinois Union
Insurance Co. (“ILU”) refused to indemnify Plaintiff Sunflower Redevelopment, LLC
(“Sunflower”), Sunflower sued. ILU removed and the Court denied Sunflower’s motion to
remand.
Now before the Court is Sunflower’s motion to either reconsider that order, or else certify
the order for interlocutory appeal (Doc. 23). Because the Court is unconvinced that it committed
a significant legal error or that there is substantial ground for difference of opinion on the issue,
the motion is DENIED in all respects.
Background
Defendant ILU issued an insurance policy (“the Policy”) to Plaintiff Sunflower. The
Policy provided premises pollution liability coverage to Sunflower for a former army
ammunition plant in De Soto, Kansas. Endorsement 021 of the Policy—what the parties call the
service-of-suit endorsement—states:
If the insured requests, the company will submit to the jurisdiction of any court of
competent jurisdiction. The company will accept the final decision of that court
or any Appellate Court in the event of an appeal.
Pet., Ex. A (Doc. 2-2 at 43).
During the period of coverage, the Kansas Department of Health and Environment
ordered Sunflower to investigate and remediate contaminated soils at the plant. The Department
of Health and Environment also told Sunflower it was liable for remediation costs at the plant.
Sunflower submitted a claim to ILU under the Policy, but ILU denied coverage.
Sunflower sued in the Circuit Court of Jackson County, Missouri, for a declaratory judgment that
the Policy covers its claim, and for breach of contract. ILU then removed.
Sunflower moved to remand, arguing that Endorsement 021 tethered ILU to Missouri
state court. The Court denied remand, finding that while Endorsement 021 obligated ILU to
submit to the jurisdiction of a Missouri state court, it did not waive ILU’s right to remove from
that court.
Discussion
Sunflower seeks alternate forms of relief: (1) reconsideration of the order denying
remand; or (2) permission to file an interlocutory appeal on the issue.
I. Reconsideration is unwarranted because Sunflower has already made these
arguments and because the Court did not err in its earlier order.
Sunflower urges the Court to reconsider its order denying remand, arguing that the Court
should have found that ILU clearly and unequivocally waived its right to remove. In support,
Sunflower expands on arguments it made in its original motion. It also cites over thirty cases
that it claims supports its position, none of which is by the Eighth Circuit but one of which is
from the U.S. District Court for the Eastern District of Missouri.
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Under Federal Rule of Civil Procedure 54(b), a district court may revise an order that
adjudicates fewer than all the claims in a case. The Court will reconsider an interlocutory order
only if the moving party demonstrates that: (1) “it did not have a fair opportunity to argue the
matter previously,” and (2) reconsidering the order is “necessary to correct a significant error.”
Mayo v. GMAC Mortg., LLC, 763 F. Supp. 2d 1091, 1114 (W.D. Mo. 2011). This framework
safeguards the Court’s “interest in judicial economy and ensuring respect for the finality of its
decisions, values which would be undermined if it were to routinely reconsider its interlocutory
orders.” Id.
First, Sunflower had a fair opportunity to make its arguments previously; indeed, it did
make these arguments previously. Its new motion merely replicates and amplifies the arguments
it made in its original motion. For this reason alone, the Court would deny the motion to
reconsider.
Second, granting this motion would not correct a significant error. Sunflower argues that
the Court erred because: (1) “it is well-established” that service-of-suit provisions categorically
waive the right to remove; and (2) courts have held that service-of-suit provisions worded
similarly to Endorsement 021 waive the right to remove.
A. No controlling authority holds that service-of-suit provisions categorically waive
the right to remove.
Sunflower first implies that service-of-suit provisions categorically waive the right to
remove. Pl.’s Br. 4 (Doc. 24) (“Numerous courts in every circuit have held that, by executing an
insurance policy with a clause like that contained in Endorsement 021, commonly referred to as a
‘service-of-suit’ clause, an insurer waives the right to remove any dispute arising under the
policy to federal court.”).
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This argument is rejected because of a point downplayed by Sunflower: there is no clear,
controlling law on this issue. The Eighth Circuit has apparently issued only two opinions that
address waiver by agreement. In a 1989 case, it held that a “[w]aiver of the right to remove must
be ‘clear and unequivocal,’” and because the agreement in that case “did not address removal,”
there was no waiver. Weltman v. Silna, 879 F.2d 425, 427 (8th Cir. 1989). However, the
opinion neither expounded “clear and unequivocal” nor reproduced the agreement at issue, thus
obscuring the standard and how it should be applied. Id.
In the only Eighth Circuit case to rely on Weltman for this issue, a contract said that the
defendant “irrevocably waive[d] any and all objections . . . to the exercise of personal and
subject matter jurisdiction by the federal or state courts in the State of Missouri and to the laying
of venue of any [suit] brought in any such federal or state court in the State of Missouri.” iNet
Directories, LLC v. Developershed, Inc., 394 F.3d 1081, 1081–82 (8th Cir. 2005). In a threeparagraph, per curiam opinion with almost no discussion, the Court concluded that that language
“unambiguously prohibited [the defendant] from objecting to venue by removing the case to
federal court.” Id. at 1082.
As these two cases reflect, Eighth Circuit law establishes only that the standard is “clear
and unequivocal,” a standard which is met when the contract explicitly waives objections to
venue, but which is not met when the contract “d[oes] not address” removal. This guidance is
minimal—but it is the only binding guidance. So although Sunflower has cobbled together
thirty-some cases, those cases are, at most, persuasive authority. Nowhere has the Eighth Circuit
held that its “clear and unequivocal” standard is always met when faced with any type of serviceof-suit clause. As Sunflower’s own cases reveal, the wording of service-of-suit provisions varies
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widely, rendering them insusceptible of the broad categorical rule it champions. The Court
rejects Sunflower’s first contention.
B. Sunflower fails to use its non-controlling authority to show why the Court’s
reasoning was flawed.
Sunflower next argues that the Court should follow the dozens of cases which have
construed “identical” service-of-suit provisions and concluded that the provisions waived the
defendant’s right to remove.
Because the Court is persuaded by logic and not just outcomes when considering noncontrolling authority, Sunflower must explain why its cases are better reasoned than the Court’s
order. But it never explains why the Court’s prior analysis is wrong, instead just saying that a
whole bunch of cases reached the opposite conclusion. For example, the Court explained why it
believed that Endorsement 021 was similar to the contracts in City of New Orleans v. Municipal
Administrative Services, Inc., 376 F.3d 501, 504–05 (5th Cir. 2004) and Mihlfield & Associates,
Inc. v. Glock, Inc., No. 05-3085-CV-S-ODS, 2005 WL 1009579, at *1–2 (W.D. Mo. Apr. 27,
2005), which were found to not waive the right to remove. Order 5–6 (Doc. 22). Sunflower
baldly states that none of the cases cited by the Court “involved a service-of-suit clause similar to
this case,” Pl’s Br. 8 (Doc. 24), but fails to explore the subtle distinctions among the contracts of
City of New Orleans, Mihlfield, this case, and its own cattle call of cases.
Even reviewing Sunflower’s cases on its own, the Court is not convinced that it made a
“significant error” in denying remand. First, many of Sunflower’s cases arise in circuits that do
not apply the Eighth Circuit’s “clear and unequivocal” standard.
For example, the Court
previously explained, “[T]he Third and Eleventh Circuits . . . have explicitly rejected the Eighth
Circuit’s ‘clear and unequivocal’ standard in favor of a less stringent, pro-remand standard.”
Order 7 n.1 (Doc. 22) (citing Foster v. Chesapeake Ins. Co., 933 F.2d 1207, 1217 n.15 (3d Cir.
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1991); Russell Corp. v. Am. Home Assur. Co., 264 F.3d 1040, 1048 (11th Cir. 2001)). Yet
Sunflower continues to cite cases from those circuits, even as it concedes this distinction. Pl’s
Br. 4 n.1 (Doc. 24). The same is true of cases from other circuits. See, e.g., Hanover Ins. Grp.,
Inc. v. Chartis Specialty Inc., Civil Action No. 12-40156-TSH, 2013 WL 4495659, at *3 (D.
Mass. Aug. 19, 2013) (not listing a standard).
Second, most of the cited cases do not involve contracts with language similar to
Endorsement 021. Most of these cases’ service-of-suit provisions lack language binding the
parties to “the law and practice of [the chosen state court],” a phrase the Court found significant.
See, e.g., Pine Top Receivables of Ill., LLC v. Transfercom, Ltd., No. 15-CV-8908, 2015 WL
8780611, at *1 (N.D. Ill. Dec. 14, 2015). A scant few of Sunflower’s cases do have an identical
service-of-suit provision, but the Court does not find them facially persuasive, including one
emphasized by Sunflower: Hazelwood Logistics Center LLC v. Illinois Union Insurance Co.,
which found that an identical service-of-suit provision had waived the defendant’s right of
removal. No. 4:13-CV-2572 CAS, 2014 WL 805886, at *1–2 (E.D. Mo. Feb. 28, 2014).
The Court previously rejected reliance on Hazelwood for several reasons. First, the
primary issue in that case was whether the service-of-suit endorsement superseded language in
the original contract that read, “Nothing in this clause constitutes . . . a waiver of the insurer’s
right to remove an action to a United States District Court.” Id. at *2. Here, ILU is not
disclaiming that Endorsement 021 supersedes the original contract. Second, Hazelwood did not
cite the “clear and unequivocal standard,” instead relying on Russell, an Eleventh Circuit
decision. As discussed above, Sunflower has failed to explain why Eleventh Circuit decisions
are persuasive here. Third, Hazelwood appeared to accept the contention—rejected here—that
service-of-suit provisions categorically waive the right to remove: “[A]t least two district courts
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in the Eighth Circuit have agreed that by executing an insurance policy with a Service of Suit
clause, the insurer waives the right to remove the case to federal court.” Id. (citing two federal
district court decisions involving different contract language). On that basis, the Hazelwood
Court concluded that this language waived the defendant’s right to remove, without any further
analysis or parsing of the endorsement’s language.
Therefore, the Court finds Hazelwood
unpersuasive.1
Sunflower has failed to explain why the Court’s order denying remand was an “error,”
much less a “significant” one. Nor has the Court discerned error on its own. Therefore, the
Court declines to reconsider its order. See Mayo, 763 F. Supp. 2d at 1114.2
II. Because there is no substantial ground for difference of opinion, Sunflower has
failed to demonstrate the propriety of certifying the remand order for an
interlocutory appeal.
Alternatively, Sunflower asks the Court to certify this issue for interlocutory appeal. ILU
resists, arguing that this issue is not so significant that immediate appeal is warranted.
Normally, a party may not appeal a district court order that fails to resolve all claims in
the lawsuit. See 28 U.S.C. § 1291. That is the situation here; the Court has not issued a
judgment on the underlying claims in this case. However, in some cases the district court may
certify a non-final order for immediate appeal. Id. § 1292(b). The court may do so if it believes
that: (1) its order “involves a controlling question of law;” (2) “there is substantial ground for
1
Sunflower mistakenly claims that Hazelwood’s holding was “cited with approval” by the District of Minnesota in
Rembrandt Enterprises, Inc. v. Illinois Union Ins. Co., — F. Supp. 3d. —, Civil No. 15-2913 (RHK/HB), 2015 WL
5450182, at *3 (D. Minn. Sept. 16, 2015). Pl.’s Br. 7 n.3 (Doc. 24). Rembrandt cited Hazelwood only to agree that
“the plain meaning of an identical service of suit endorsement . . . supplanted an identical forum-selection clause.”
Id. at *3. Rembrandt did not address remand or waiver. See id. at *2–3.
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As a third point, Sunflower spends almost two pages protesting the Court’s citation to Cruthis v. Metropolitan Life
Insurance Co., 356 F.3d 816, 819 (7th Cir. 2004). Pl’s Br. 5–7 (Doc. 24) (“[T]his case is distinguishable from
Cruthis, and the Court should reconsider the weight afforded to Cruthis in the Order denying the Motion to
Remand.”). The Court did not give great weight to Cruthis or find any similarity to its facts. The Court cited
Cruthis only for its pithy restatement of the law, a restatement made in many other cases, including Sunflower’s.
E.g. City of New Orleans, 376 F.3d at 504.
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difference of opinion;” and (3) “an immediate appeal from that order may materially advance the
ultimate termination of the litigation.” Id. The courts of appeals disfavor interlocutory appeals,
and the moving party carries the “heavy burden” of showing why an immediate appeal is
necessary. White v. Nix, 43 F.3d 374, 376 (8th Cir. 1994).
Sunflower fails on at least the second prong: there is no substantial ground for difference
of opinion. A substantial ground for disagreement is reflected by a “sufficient number of
conflicting and contradictory opinions,” but not by an “established body of law” or “dearth of
cases.” Id. at 378. Sunflower has cited, at most, only three cases that involve a substantially
similar service-of-suit provision and that apply the Eighth Circuit’s standard, all from the Sixth
or Tenth Circuits.3 Whatever a “sufficient” number of conflicting opinions is, three from outside
the circuit is not enough. Cf. Oyster v. Johns-Manville Corp., 568 F. Supp. 83, 88 (E.D. Pa.
1983) (“[A] single case demonstrates that while there may be grounds for differences of opinion,
they are not, however, substantial.”), cited with approval in White, 43 F.3d at 378; Eggleton v.
Plasser & Theurer Export Von Bahnbaumaschinen Gesellschaft, MBH, 495 F.3d 582, 585 (8th
Cir. 2007) (suggesting that conflicting panel opinions within the circuit might be sufficiently
“substantial”). Rather, the Court finds that there is essentially a “dearth of cases” on point.
The Court appreciates that the Eighth Circuit has not fully explored what constitutes
“clear and unequivocal” waiver of the right to remove, and that the Eighth Circuit may well
disagree with the Court’s order at a later juncture. But “§ 1292(b) was not intended merely to
provide an avenue for review of difficult rulings in hard cases.” FDIC v. First Nat’l Bank of
Waukesha, Wis., 604 F. Supp. 616, 620 (E.D. Wis. 1985), cited with approval in White, 43 F.3d
3
Elevation Builders, Inc. v. Companion Specialty Ins. Co., No. 15-CV-490-PAB-KMT, 2015 WL 4159426, at *2–3
(D. Colo. July 8, 2015); Garcia v. Century Sur. Co., No. 14-CV-3196-RM-MJW, 2015 WL 1598069, at *2 (D.
Colo. Apr. 7, 2015); Sestech Envt’l LP v. Westchester Surplus Lines Ins. Co., No. 1:08CV2417, 2009 WL 233620, at
*1–2 (N.D. Ohio Jan. 30, 2009).
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at 376, 378. Sunflower has not carried its “heavy burden” of demonstrating a “substantial
ground for difference of opinion,” and thus has failed to justify why the Court should certify an
interlocutory appeal. See White, 43 F.3d at 376.4
Conclusion
For the reasons discussed above, Sunflower’s motion for reconsideration or for
certification for interlocutory appeal (Doc. 23) is DENIED.
IT IS SO ORDERED.
Date: March 28, 2016
/s/ Greg Kays
GREG KAYS, CHIEF JUDGE
UNITED STATES DISTRICT COURT
4
Sunflower argues that the relevant issues here satisfy a different standard for “substantial ground for difference of
opinion,” from Emerson Elec. Co. v. Yeo, No. 4:12CV1578 JAR, 2013 WL 440578, at *2 (E.D. Mo. Feb. 5, 2013).
However, the Court finds that Yeo, which apparently rests on Sixth Circuit law, is incompatible with the Eighth
Circuit’s approach in White by neglecting the “substantial” portion of “substantial ground for difference of opinion.”
Therefore, the Court sticks to the standard from White.
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