TALLMAN v. HL CORP. USA
Filing
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OPINION. Signed by Judge William H. Walls on 5/27/15. (DD, )
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UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
LINDA K. TALLMAN, INDIVIDUALLY
AND AS THE GUARDIAN AND
ADMINISTRATOR OF THE ESTATE OF
JOHN ADAM TALLMAN, ON BEHALF
OF ONTEL PRODUCTS CORPORATION,
HARTFORD CASUALTY INSURANCE
CO., and HARTFORD FIRE INSURANCE
CO.,
Plaintiffs,
OPINION
Civ. No. 14-5550 (WHW)(CLW)
V.
HL CORP (SHENZHEN); HL CORP USA;
SOUTH CHINA INSURANCE COMPANY;
TAIWAN FIRE & MARINE INSURANCE
CO., LTD.; THE FIRST INSURANCE CO.,
LTD.; SHINKONG INSURANCE CO.
LTD.; CATHAY CENTURY INSURANCE
CO., LTD.; AZAD INTERNATIONAL
(H.K.) LTD.; AZAD INTERNATIONAL
CO.; JOHN DOES 1-20 (FICTITIOUS
NAMES), and ABC CORPORATIONS 1-10
(FICTITIOUS ENTITIES),
Defendants.
Walls, Senior District Judge
The Court remanded this insurance indemnification dispute to New Jersey Superior Court
in January of 2015. In granting the remand motion of Plaintiff Linda K. Tall;nan (“Tailman”),
the Court cited the forum-state citizenship of Defendant Azad International Co. (“Azad”), and
rejected the argument of Defendant HL Corp. (USA) (“HL”) that Azad was improperly joined.
HL now moves for reconsideration under Local Rule 7.1(1). HL asserts that newly discovered
evidence, in the form of deposition testimony by a representative of Azad, shows that the
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complaint’s allegations against Azad lack a colorable factual basis. Accompanying HL’s motion
for reconsideration is a second notice of removal. Taliman opposes HL’s reconsideration motion
and moves to remand.
The Court finds that the second removal notice is untimely, and that HL has not presented
sufficient evidence of Plaintiffs’ bad faith to overcome the statutory time limit. HL’ s motion for
reconsideration is barred by statute and case law. HL’s motion is denied and Tallman’s motion is
granted: the case is again remanded to New Jersey Superior Court.
FACTUAL AND PROCEDURAL BACKGROUND
The Court’s earlier opinion states the facts of the case in greater detail. Ct.’s
Op., ECF
No. 20. The litigation centers on the apportionment of liability among manufacturers, distributors
and insurers for an injury allegedly caused by defective exercise equipment. According to the
complaint, the matter arose when Tallman’s ward suffered a catastrophic injury after using an
“Iron Gym,” a product designed and manufactured by Defendant HL Corp. (Shenzhen) (“HL
Shenzhen”), and sold or marketed by Defendants HL, Azad, and Azad International (Hong
Kong) (“Azad (Hong Kong)”), as well as Ontel Products Corporation (“Ontel”). See Id. at 3.
Taliman, an Ohio resident, filed an action in Ohio state court against Ontel, a New Jersey
corporation. Id. As part of the settlement of that claim, Ontel assigned Tallman its rights to sue
for indemnification under insurance policies allegedly issued or co-insured by South China
Insurance Co., Taiwan Fire & Marine Insurance Co., The First Insurance Co., Shinkong
Insurance Co., and Cathay Century Insurance Co. (collectively, “the insurer defendants”). Id.
Hartford Casualty Insurance Co., Hartford Fire Insurance Co. (together, “Hartford”), as Ontel’s
insurers, also assigned rights to Tallman as part of the settlement. Tallman, as an individual, as
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John Tailman’s guardian and allegedly “on behalf of’ Hartford and Ontel, then brought this
action against the insurer defendants and the upstream manufacturers/distributors of the Iron
Gym, demanding indemnification and alleging other common law causes of action. See first
Amended Complaint (“FAC”), ECF No. 1-2. Tallman filed the action in New Jersey Superior
Court on March 17, 2014. ECF No. 1-1.
Having been served with the FAC in August of 2014, HL removed the action to this
Court in September 2014, invoking the Court’s diversity jurisdiction. ECF No. 1. Tallman
moved to remand the case to New Jersey Superior Court, stressing that, although the parties were
otherwise completely diverse, Azad’s forum state citizenship prevented removal under 28 U.S.C.
§
1441(b). See Pl.’s Mot. to Remand, ECF No. 7; FAC ¶J 5, 34. HL acknowledged that Azad is a
New Jersey corporation, but maintained that this Court has jurisdiction because Taliman
improperly joined Azad solely to defeat federal diversity jurisdiction. Def.’s Opp. to Pl.’s Mot. to
Remand, ECF No. 11.
The Court granted Plaintiffs motion to remand, applying
§
1441(b). ECF Nos. 20-21.
The Court found that the FAC stated a colorable cause of action against Azad, despite several
ambiguities which were necessarily resolved in favor of remand. Id. The FAC alleged that Azad
was interposed between Ontel and HL in the stream of commerce, having “contracted for the
design, fabrication, engineering, formulation, production, construction and assembly of the work
out bar,” supporting Ontel’s action for common law indemnification. Court’s
20; FAC
Op. at 7, ECF No.
¶ 93. The Court noted Tailman’s submission of an invoice and an inspection report that
identified Azad as the buyer of a bulk shipment of the Iron Gym. Exs. A-B to Aff. of Cynthia
Walters, ECF No. 7-2.
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On March 3, 2015, HL deposed Victor Khubani, a representative and principal
shareholder of Azad, in another case. Ex. 1 to Notice of Removal, ECF No 24. In contrast to the
allegations of the FAC, Khubani stated that Azad is not a sourcing agent to locate manufacturers
for third parties, Khubani Dep. 25:4-10, never received a shipment of the Iron Gym, and never
purchased a shipment. Id. 21:4-14. He denied that Azad had any involvement with the marketing,
advertising, distribution, packaging, or shipping of the product. Id. 19:25-20:23. In light of the
deposition, HL now asks the Court to reconsider its initial remand order to prevent injustice.
ECF No. 25. HL also filed a second notice of removal on April 1, 2015, again invoking the
Court’s diversity jurisdiction and naming Azad as a fraudulently joined party. ECF No. 24.
Tallman again moved to remand the case on April 29, 2015. ECF No. 30. Tallman
resubmits two exhibits from the original motion to remand. The first is the shipping invoice from
Azad (Hong Kong), forwarding 500,000 sets of the Iron Gym “[tJhrough MR. V. KHUBANI” to
Azad, which is listed as the “Buyer.” Ex. A to Aff. of Cynthia Walters, ECF No. 30-3. The
second is the inspection report of the Iron Gym shipment, which also lists Azad as the “Buyer.”
Id. Ex. B. Tallman requests attorneys’ fees and costs associated with its motion. ECF No. 30-1.
STANDARD FOR RECONSIDERATION
Local Civil Rule 7.1(i) allows a party to move for reconsideration within 14 days after
entry of an order, and directs the moving party to submit “a brief setting forth the matter or
controlling decisions which the party believes the Judge.
.
.
has overlooked.” L. Civ. R. 7.1(i).
The Third Circuit has held that the “purpose of a motion for reconsideration is to correct
manifest errors of law or fact or to present newly discovered evidence.” Max ‘s Seafood Cafe ex
ret. Lou-Ann v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999) (citation omitted).
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Reconsideration motions may not be used to relitigate old matters, nor to raise arguments
or present evidence that could have been raised before the entry ofjudgment. See Charles A.
Wright, Arthur R. Miller & Mary Kay Kane, Fed. Prac. & Proc. Civ.
§ 2$ 10.1. Such motions will
only be granted where (1) an intervening change in the law has occurred, (2) new evidence not
previously available has emerged, or (3) the need to correct a clear error of law or prevent a
manifest injustice arises. North River Ins. Co. v. CIGNA Reins. Co., 52 f.3d 1194, 1218 (3d Cir.
1995).
STANDARDS FOR REMOVAL AND REMAND
“[Amy 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.
.
.“
28 U.S.C.
§ 1441(a); see also Metropolitan Life Ins. Co. v.
Taylor, 481 U.S. 58, 63 (1987). To establish a district court’s diversity jurisdiction, “the matter
in controversy [must] exceed[J the sum or value of $75,000,” and must be “between.
of different states.” 28 U.S.C.
.
.
citizens
§ 1332(a).
Afler removal, a party may move to remand the action back to state court. 2$ U.S.C.
1447(c). The removing party bears the burden of establishing the federal court’s jurisdiction.
Samuel-Bassett v. KIA Motors America, Inc., 357 F.3d 392, 396 (3d Cir. 2004). “[R]emoval
statutes are to be strictly construed against removal, and all doubts resolved in favor of
remand.” Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990).
I.
TALLMAN’S MOTION TO REMAND IS GRANTED
1. HL’s Second Notice of Removal Is Untimely under 28 U.S.C.
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§ 1446(c)
§
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“The removal statute.
.
.
does not categorically prohibit the filing of a second removal
petition following remand.” Brown v. Jevic, 575 F.3d 322, 328 (3d Cir. 2009). “If subsequent
pleadings or conduct by the parties or various other circumstances brings a case that was not
previously removable within the removal jurisdiction of the federal courts, a second notice of
removal is permissible.” Id. (citations omitted). A removing party must still comply with
statutory time limits. See A.S. ex rel. Miller v. SmithKline Beecham Corp., 769 F.3d 204, 209 (3d
Cir. 2014) (noting that the federal removal statute expressly forbids untimely removals).
A case may not be removed based on diversity jurisdiction more than one year after
commencement of the action, unless the court finds that the plaintiff acted in bad faith to prevent
removal. 28 U.S.C.
§ 1 446(c)( 1). The time of commencement of the state court action is
determined by reference to the relevant state law. See In re Pautsboro Derailment Cases, No. 13784 RBK/KMW, 2014 WL 1214037, at *5 (D.N.J. Mar. 24, 2014) (citing Wright, Miller &
Kane, 14B fed. Prac. & Proc. Juris.
§ 3723 (4th ed.)). In New Jersey, an action is commenced on
the date of filing. SeeR. 4:2-2 (stating that, in New Jersey, “[a] civil action is commenced by
filing a complaint with the court.”).
Here, Tailman filed—and commenced—the action in New Jersey Superior Court on
March 17, 2014. ECF No. 1-1. HL filed its second notice of removal on April 1, 2015, more than
one year later. ECF No. 25. The second removal notice was untimely under
§ 1446(c)(1). HL
may only remove the action if it demonstrates Tailman’s bad faith.
2. HL Does Not Demonstrate Taliman’s Bad Faith
To demonstrate that Tallman joined Azad simply to defeat diversity jurisdiction, HL
offers deposition testimony from Victor Khubani. Khubani Dep., Ex. 1 to Notice of Removal,
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ECF No 24. The testimony does tend to show that the allegations in the complaint are incorrect;
Mr. Khubani stated that Azad’s only involvement with the Iron Gym was as a financier, rather
than as a supplier interposed between the manufacturer and the consumer in the stream of
commerce. Id. 19-25; cf Court’s
Op. at 7, ECF No. 20.
Tailman submits evidence that casts doubt on Mr. Khubani’s assertions. The Court
cannot find bad faith in alleging that Azad was interposed between Ontel and HL in the Iron
Gym’s stream of commerce when Azad is listed as the purchaser on an invoice for a bulk
shipment of the product, and on documents related to the inspection of the shipment. Exs. A-B to
Aff. of Cynthia Walters, ECF No. 30-3. The invoice and inspection certificates, which conflict
with Mr. Khubani’s testimony, provide a colorable basis for the FAC’s allegations against Azad.
Defendant has not made the showing of bad faith required to overcome the removal’s
untimeliness under
§ 1446(c)(1).
3. HL May Not Invoke Equitable Tolling
The one-year time limit is also subject to equitable tolling, a remedy that becomes
available after intentional misconduct by the plaintiff. See A.S. ex rel. Miller, 769 F.3d at 211-12
(citing Tedfordv. Warner—Lambert Co., 327 F.3d 423, 428—29 (5th Cir. 2003) (“Where a
plaintiff has attempted to manipulate the statutory rules for determining federal removal
jurisdiction, thereby preventing the defendant from exercising its rights, equity may require that
the one-year limit.
.
.
be extended.”); and Namey v. Malcolm, 534 F. Supp. 2d 494, 499 (M.D.Pa.
2008) (holding that equitable exception to one-year limitation did not apply because “Defendants
have not met their burden of demonstrating sufficient culpability on the part of Plaintiffs”)).
Equitable tolling may be appropriate if a litigant can demonstrate “(1) that he has been pursuing
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his rights diligently, and (2) that some extraordinary circumstance stood in his way.” Pace v.
DiGuglielmo, 544 U.S. 408, 418 (2005) (habeas case); cf Oshiver v. Levin, fishbein, Sedran &
Berman, 38 F.3d 1380, 1387, 1390 (3d Cir. 1994) (holding that the time limit to file an EEOC
charge may be tolled “where the plaintiff in some extraordinary way has been prevented from
asserting his or her rights,” but noting that a “plaintiff who fails to exercise this reasonable
diligence may lose the benefit of [equitable tolling]”). See also A.S. ex rel. Miller, 769 F.3d at
212.
As stated above, there is insufficient evidence of Taliman’s misconduct to merit a finding
of bad faith. Absent sufficient evidence that Tallman manipulated statutory rules, the Court
declines to find extraordinary circumstances here. Equitable tolling is unavailable to HL.
Removal of this action is improper; Tallman’s motion to remand is granted.
II.
HL MAY NOT MOVE FOR RECONSIDERATION OF A REMAND ORDER
PROPERLY ISSUED UNDER § 1447(c)
HL asks the Court to reconsider its remand decision in light of new evidence. The Court
may not do so. “An order remanding a case to the State court from which it was removed is not
reviewable on appeal or otherwise.
.
.“
28 U.S.C.
§ 1447(d); see also Quackenbush v. Allstate
Ins. Co., 517 U.S. 706, 712 (1996) (clarifying that “remands based on grounds specified in
1447(c) are immune from review under
§
§ 1447(d).”). “[Third Circuit] precedent suggests a
district court would lack jurisdiction to reconsider its order of remand [made under
§ 1447(c)]
once a certified copy of the remand order has been sent to the state court.” Trans Penn Wax
Corp. v. McCandless, 50 f.3d 217, 226 (3d Cir. 1995). Section 1447(d)’s “prohibition on review
of remand orders contemplates that district courts may err in remanding cases.” A.S. ex rel.
Miller, 769 f.3d at 213 (citations and quotations omitted).
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HL suggests that its second removal notice reestablished this Court’s jurisdiction, and
that as a result the Court may reconsider the remand order. Def.’s Reply Br., ECF No. 33-1. In
support, HL points to Agostini v. Piper Aircraft Corp., 729 f.3d 350, 355-56 (3d Cir. 2013).
The case highlighted the narrow window in which reconsideration of a remand order would be
possible: the time after the district court issues the order, and before the Clerk mails the order to
the state court. “At the moment of mailing—the jurisdictional event—the remand order became
unreviewable ‘on appeal or otherwise.” Id. at 356 (citing 28 U.S.C.
§ 1447(d)). The Third
Circuit’s holding is clear: “[o]nce mailed, the order may not be reconsidered.” Id.
Here, the Court granted Tailman’s motion to remand under
§ 1447(c) on January 20,
2015, ECF No. 21, and the Clerk mailed a certified copy of the remand order to New Jersey
Superior Court that day. ECF No. 22. The Court lost jurisdiction when the order was mailed,
foreclosing the possibility of reconsideration. HL’s motion, filed 73 days after the Clerk mailed
the remand order, is barred by
§ 1447(d). Neither Agostini nor any other authority holds to the
contrary. Because the remand order became “unreviewable” before HL moved for
reconsideration, HL’s motion is denied.
III.
TALLMAN’S REQUEST FOR ATTORNEYS’ FEES IS DENIED
Tailman requests attorneys’ fees and costs from HL for improperly removing this case a
second time. A court may impose fees on a party who removes a case improperly under 28
U.S.C.
§ 1447(c). Lott v. Dufft’, No. 13-4727, 2014 WL 4357594, *3 (3d Cir. 2014) (citing
Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005)). “[A]n award of fees under
§
1447(c) is left to the district court’s discretion.” Martin, 546 U.S. at 139. “[T]he standard for
awarding fees should turn on the reasonableness of the removal.” Id. at 141.
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Mr. Khubani’s deposition testimony is insufficient to demonstrate bad faith, but it gives
HL reasonable grounds to allege that the FAC’s allegations against Azad lack a colorable basis,
and that removal is warranted based on Azad’s improper joinder. The Court declines to impose
attorneys’ fees or costs on HL.
CONCLUSION
HL’s motion for reconsideration is denied. Tailman’s motion to remand the case to New
Jersey Superior Court, Essex County, is granted.
DATE:
/i
alls
illia
ed States District Judge
.
Senior
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