Richardson Investments, Inc. v. John Doe et al

Filing 70

ORDER by Magistrate Judge Steven C. Yarbrough denying 65 Motion for Attorney Fees (cm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
RICHARDSON INVESTMENTS, INC.,
A New Mexico corporation,
Plaintiff,
v.

No. 1:17-cv-00103-SCY-KBM

JOHN DOE I,
QWEST CORPORATION, a foreign profit corporation,
GREENWICH INSURANCE COMPANY, a foreign company,
And SEDGWICK CLAIMS MANAGEMENT SERVICES, INC.,
A foreign profit organization,
Defendants.
ORDER DENYING PLAINTIFF’S MOTION FOR AWARD OF ATTORNEYS’ FEES
Plaintiff moves for reimbursement of attorneys’ fees incurred in connection with
Defendants’ removal of this case to federal court following the Court’s Order (Doc. 62) granting
Plaintiff’s Motion to Remand this matter to state court. Doc. 65. As described in more detail
below, the Court finds that when Defendants removed this case to federal court they had a legal
basis for doing so and, therefore, the removal was not improvident. As a result, the Court
DENIES Plaintiff’s Motion for Attorneys’ Fees Based on Defendants’ Improvident and
Objectively Unreasonable Removal (Doc. 65).1
I.

BACKGROUND

1
 Although the Court previously remanded this case to state court, the Court has never issued a ruling on
Plaintiff’s request for attorney fees and costs and retains jurisdiction over the award of fees and costs
under § 1447(c). See Martin v. Franklin Capital Corp., 546 U.S. 132, 138 (2005) (“the predecessor to §
1447(c) was enacted, in part, because courts would otherwise lack jurisdiction to award costs on
remand.”); In re C and M Properties, L.L.C. 563 F.3d 1156, 1162 n. 2 (10th Cir. 2009) (distinguishing
post-remand fee awards under § 1447(c) from improper retention of jurisdiction); Agostini v. Piper
Aircraft Corp., 729 F.3d 350, 353–54 (3d Cir. 2013) (“[F]ederal courts may decide ‘collateral’ issues,”
such as attorneys' fees, “after remand because such issues by definition cannot affect the progress of a
case once it has been returned to state court.”).
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Plaintiff initially filed its Complaint in the Second Judicial District Court of the State of
New Mexico. Doc. 1-1. Plaintiff alleged that Defendants were liable for damage to its property
following a collision between Defendant Qwest’s service truck and Plaintiff’s building. Doc. 1-1.
Plaintiff alleged that Defendant John Doe I was the driver of the vehicle responsible for
Plaintiff’s property damage. Doc. 1-1. Plaintiff further alleged that John Doe I was acting within
the course and scope of his employment at the time of the collision. Doc. 1-1 at 7. Plaintiff
acknowledged that the identity of John Doe I was unknown at the time of filing but would be
determined through discovery. Doc. 1-1 at ¶ 3.
On January 20, 2017, Defendants removed the action to this Court. Doc. 1. Within seven
days thereafter, Plaintiff’s counsel sent an e-mail to Defendants’ counsel seeking the name and
address of John Doe I in anticipation of filing a motion to remand. Doc. 57 at 7. Defendant
apparently declined to provide this information. See doc. 22 at 2-3. Nonetheless, Plaintiff filed
its Motion to Remand on February 28, 2017. Doc. 22. In the Motion, Plaintiff contended that
although the identity of John Doe I had not been conclusively determined, John Doe I was, in all
likelihood, a citizen of New Mexico and that removal was therefore improper. Doc. 22. Plaintiff
attached an affidavit by Charlie Wingate, the maintenance manager of the property, representing
that he had asked the driver for identification and that the driver produced a New Mexico license.
Doc. 22-1. On March 9, 2017, Defendants provided Plaintiff their initial disclosures. Doc. 28.
Although the Court has not been provided a copy of these initial disclosures, Plaintiff represents
that Defendants “named the driver but withheld the real party in interest’s address and phone
number (citizenship) from Plaintiff.” Doc. 45 at 2.
Chief Magistrate Judge Karen Molzen held a scheduling conference on April 11, 2017.
Doc. 43. Due to Plaintiff’s Motion to Remand, Judge Molzen stayed discovery but ordered

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Defendants to provide to Plaintiff information regarding the citizenship of the driver by April 14,
2017. Doc. 43. It appears that Defendant then provided this information on April 14, 2017. See
Defendants’ Notice of Admission, Doc. 48 (noting that “Defendants notified Plaintiff’s counsel
of Mr. Hummel’s home address by electronic mail”); Plaintiff’s Reply to Defendants’ Response
in Opposition of Plaintiff’s Motion to Remand, Doc. 45 at 7 (“Under Order of the Court, the
Defendants have disclosed Jonathan Hummel is a citizen of the State of New Mexico.”).
Following Defendants’ disclosure of this information, the Court held a status conference
on May 11, 2017, to discuss the status of Plaintiff’s Motion to Remand. During the status
conference, the Court referenced McPhail v. Deere & Co., 529 F.3d 947, 951 (10th Cir. 2008),
and explained to Plaintiff that the onus was on it to either file a motion to amend the complaint
or file briefing as to why the Motion to Remand should be granted without an amendment to the
Complaint. See Doc. 55. Plaintiff subsequently filed its Motion for Joinder and Motion to File
Second Amended Complaint on May 26, 2017. Doc. 56. On June 9, 2017, Defendant filed a
response opposing Plaintiff’s motion. Doc. 57. The Court, on July 21, 2017, entered an Order
granting Plaintiff’s Motion to Amend and ordered that the case be remanded to state court. Doc.
62. The Court did not, however, address the issue of attorney fees which, although briefly
referenced in Plaintiff’s Motion, was not substantively addressed in the parties’ briefs.
II.

ANALYSIS
Plaintiff argues that it is entitled to attorney fees because Defendants improvidently

removed this case to federal court. The starting point for analyzing such a claim is 28 U.S.C. §
1447(c), which states in relevant part, “An order remanding the case may require payment of just
costs and any actual expenses, including attorney fees, incurred as a result of the remand.” In
2005, the Supreme Court noted that this language, “provides little guidance on when such fees

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are warranted” and resolved a Circuit split over when fees should be awarded under § 1447(c).
Martin v. Franklin Capital Corp., 546 U.S. 132, 134, 136 (2005). Specifically, the Court
rejected a presumption in favor of awarding fees when a remand is issued and, instead, held,
“absent unusual circumstances, attorney’s fees should not be awarded when the removing party
has an objectively reasonable basis for removal.” Martin v. Franklin Capital Corp., 546 U.S.
132, 136 (2005). Plaintiff does not argue that unusual circumstances existed; therefore, whether
Plaintiff should receive attorney fees pursuant to § 1447(c) turns on whether Defendants had an
objectively reasonable basis for removal.
Defendants removed the case to federal court on the basis of diversity jurisdiction.
Specifically, at the time of removal, complete diversity existed because Defendant Jonathon
Hummel had not yet been substituted in for John Doe 1. See 28 U.S.C. § 1441(b)(1) (“[T]he
citizenship of defendants sued under fictitious names shall be disregarded.”). Plaintiff does not
dispute that complete diversity existed at the time of removal and that Defendants therefore met
the requirements of 28 U.S.C. § 1441 in removing the case to federal court. That federal law
allowed Defendants to remove the case makes it very difficult for Plaintiff to establish that such
removal was improvident. Indeed, Plaintiff cites no instance in which a court found that a
defendant improvidently removed a case where complete diversity existed and removal occurred
shortly after the complaint was filed.
Nonetheless, Plaintiff argues that removal here was improvident because, as the Court
previously stated, “Defendants knew from the outset that Plaintiff intended to formally name as a
defendant a person who would defeat diversity jurisdiction.” Doc. 62 at 7. The Court, however,
made this statement in the context of determining whether joining Hummel would unfairly
prejudice Defendants. It found that Defendants’ knowledge that Plaintiff intended to join

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Hummel to the lawsuit undermined their later assertion that his joinder would unfairly prejudice
them. While Defendants’ knowledge of Plaintiff’s intentions might have served to prevent
Defendants from being prejudiced when those intentions came to pass, it does not follow that
Defendants’ knowledge of Plaintiff’s intentions barred Defendants from removing the case to
federal court at a time when complete diversity of citizenship existed.
Even so, Plaintiff’s argument does have intuitive appeal. As the Supreme Court
recognized, “[t]he process of removing a case to federal court and then having it remanded back
to state court delays resolution of the case, imposes additional costs on both parties, and wastes
judicial resources. Assessing costs and fees on remand reduces the attractiveness of removal as a
method for delaying litigation and imposing costs on the plaintiff.” Martin, 546 U.S. at 140.
Here, Defendants knew from the outset that Plaintiff was bringing a lawsuit against the driver of
the vehicle. See Compl, doc. 1-1, at ¶ 3, (“John Doe 1 is the driver of the vehicle which caused
the property damage alleged herein. The actual name is currently unknown to Plaintiff and will
be substituted through discovery.”). Although Plaintiff did not have ready access to John Doe I’s
citizenship, Defendant Qwest, as John Doe I’s employer, did. Thus, Defendants also knew from
the outset that the driver was a citizen of New Mexico and, as a result, his joinder in the lawsuit
would destroy federal diversity jurisdiction. Knowing all of this, Defendants removed the case to
federal court and declined to provide Plaintiff with their driver’s citizenship. See Doc. 57 at 7
(Defendants’ acknowledgment that almost immediately after Defendants removed the case,
Plaintiff began seeking the name and address of the John Doe defendant so that it could get the
remand process started). While Plaintiff sought information about John Doe I’s citizenship so
that it could have the case remanded to state court, Defendants filed a motion to dismiss. Doc. 5.

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Defendants’ litigation strategy is obvious. Defendants hoped to have the federal court
rule on its motion to dismiss before Plaintiff could learn John Doe I’s citizenship and have the
case remanded to state court. Because the Court ordered Defendants to disclose John Doe I’s
citizenship before it ruled on Defendants’ motion to dismiss, this strategy failed. The present
question is whether fees should be shifted under § 1447(c) when a defendant pursues such a
strategy.
The Tenth Circuit’s decision in McPhail v. Deere & Co., indicates that, even though the
Court does not countenance such a strategy, adoption of such a strategy does not lead to fee
shifting under § 1447(c). 529 F.3d 947 (10th Cir. 2008). In McPhail, a plaintiff sued a known
defendant and three unidentified John Doe defendants. 529 F.3d at 950-51. The defendant
removed the case to federal court on the basis of diversity jurisdiction. Id. The three John Doe
defendants were then identified as entities whose citizenship would destroy diversity jurisdiction.
Id. at 951. Even though the plaintiff had not moved to amend her complaint, she argued that the
identification of these defendants destroyed diversity jurisdiction. Id. The Tenth Circuit
disagreed. It found that, despite knowledge that these John Doe defendants were actually entities
that destroyed diversity jurisdiction, the federal court retained jurisdiction until the plaintiff
moved to amend her complaint and the court then determined that the parties to be joined were
either indispensable or should be permissibly joined. Id. at 952.
In so holding, the Tenth Circuit did not indicate that it found anything untoward about the
defendant litigating the case in federal court pending joinder of the diversity-destroying
defendants. This is true even where the litigation in federal court proceeds after the diversity-

6 

destroying defendants have been identified and the plaintiff is seeking remand.2 McPhail, then,
is inconsistent with Plaintiff’s contention that Defendant’s foreknowledge of Hummel’s
citizenship rendered its removal of the case improper.
Despite the fact that complete diversity of citizenship existed at the time Defendants
removed this case, Plaintiff argues that a shifting of attorney fees is warranted, in part, because
Defendants “actively obstructed Plaintiff from learning the identity and citizenship of the driver
both before and after Plaintiff filed suit, and both before and after removal to the federal district
court.” Doc. 68 at 3. Plaintiff does not, however, cite to any legal obligation Defendants had to
turn over Hummel’s citizenship prior to the Court ordering Defendants to do so.3 And, even if
Plaintiff had established a discovery violation, Federal Rule of Civil Procedure 37 rather than §
1447(c) governs sanctions connected to a party’s failure to comply with its discovery obligations.
Plaintiff also complains that Defendants’ opposition to its motion to amend was
unreasonable and that, in opposing the motion, Defendants cited cases out of context. Doc. 68 at
4-5. Plaintiff’s motion for attorney fees, however, does not seek (and Rule 1447(c) does not
govern) attorney fees in connection with Defendants’ alleged unreasonable opposition to

2
 The Court acknowledges that Defendants in the present case knew Plaintiff intended to join a diversitydestroying defendant before they removed the case to federal court whereas in McPhail it is not clear
when the named defendant knew the citizenship of the John Doe defendants. The Tenth Circuit in
McPhail noted that the John Doe defendants were “identified as in-state distributors” after removal, but
does not indicate whether this post-removal identification applied to all parties or just plaintiff. 529 F.3d
at 951. Presumably, the originally named defendant, John Deere, had regular interactions with its
distributors and so knew their identity and citizenship prior to removal. Regardless of whether defendant
John Deere knew the citizenship of the diversity-destroying defendants before or after remand, McPhail
indicates that until a diversity-destroying defendant is joined, it is not improvident to proceed with federal
litigation – even where the diversity-destroying defendant has been identified and plaintiff has moved for
remand.
3
 In an earlier brief, Plaintiff asserted that Defendants’ initial disclosures “named the driver but withheld
the real party in interest’s address and phone number (citizenship) from Plaintiff.” Doc. 45 at 2. Because
Plaintiff did not make this assertion in their motion for attorney fees and because Plaintiff never provided
the Court a copy of Defendants’ initial disclosures, this issue is not presently before the Court.
Nonetheless, the Court recognizes that it would not be unusual for a defendant corporation to provide
counsel’s address for witnesses who are employees of the corporation. 
7 

Plaintiff’s motion to amend. Instead, it seeks attorney fees pursuant to § 1447(c) based on
improvident removal. The issues related to Defendants’ removal of this case to federal court
(Hummel’s citizenship) are distinct from the issues addressed in Defendants’ opposition to
Plaintiff’s motion to amend (whether Hummel should be joined in spite of his citizenship). In
other words, although Defendants’ opposition to Plaintiff’s motion to amend may have been
unreasonable, this unreasonableness does not mean Defendants had no legal basis to remove the
case when they did. Because Defendants’ removal was objectively reasonable, Martin does not
allow the award of attorney fees pursuant to § 1447(c). A different result would “undermin[e]
Congress’ basic decision to afford defendants a right to remove as a general matter, when the
statutory criteria are satisfied.” Martin, 546 U.S. at 140.
III.

CONCLUSION
Based on the foregoing, Plaintiff’s Motion for Attorneys’ Fees Based on Defendants’

Improvident and Objectively Unreasonable Removal (Doc. 65) is DENIED.
IT IS SO ORDERED

____________________________________
Steven C. Yarbrough   

UNITED STATES MAGISTRATE JUDGE
Sitting by Consent

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