Choctaw Nation of Oklahoma v. Occidental Fire and Casualty Company of North Carolina et al

Filing 31

OPINION AND ORDER by Magistrate Judge Kimberly E. West: granting Plaintiff's Motion to Remand (Dkt No 17 ). Case remanded to District Court in and for Bryan County, Oklahoma. (case terminated) (neh, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF OKLAHOMA
CHOCTAW NATION OF OKLAHOMA,

)
)
Plaintiff,
)
)
v.
)
)
OCCIDENTAL FIRE AND CASUALTY
)
COMPANY OF NORTH CAROLINA; and )
GENERAL STAR INDEMNITY COMPANY, )
)
Defendants.
)

Case No. CIV-14-182-KEW

OPINION AND ORDER
This matter comes before the Court on Plaintiff’s Motion to
Remand (Docket Entry #17).

Plaintiff Choctaw Nation of Oklahoma

(the “Nation”) alleges it is insured by a commercial automobile
liability insurance policy issued by Defendant Occidental fire and
Casualty Company of North Carolina (“Occidental”) with limits of
$5,000,000

per

accident

and

an

excess

automobile

liability

insurance policy issued by Defendant General Star Indemnity Company
(“General Star”) with limits of $5,000,000.

The controversy

surrounding these policies began when a bus carrying passengers to
the Nation’s Choctaw Casino & Resort was involved in an accident on
April 11, 2013. The accident resulted in three deaths and injuries
to the passengers.
As

a

part

of

The victims brought claims against the Nation.
the

mediation

process

on

these

claims,

a

stipulation agreement provided the victims would not seek damages
directly from the Nation in excess of the insurance coverage.
Defendants agreed as a part of the stipulation that they would

attend the mediation and make the insurance coverage available to
the level of the Nation’s established liability.

Thereafter, the

Nation alleges that Occidental refused to attend the medication,
which it contends exposed the Nation to potential liability from
direct claims brought by the victims in excess of the insurance
coverage.

General Star allegedly advised the Nation that if the

Nation partially waived its sovereign immunity to the level of the
insurance coverage, it might deny coverage altogether under the
“failure to cooperate under the policy” provision.
The Nation commenced this case in the District Court in and
for Bryan County, Oklahoma on April 4, 2014, seeking a declaratory
judgment under the authority of Okla. Stat. tit. 12 § 1651 that (1)
Defendants may not assert the Nation’s sovereign immunity without
the Nation’s consent in order to avoid the application of the
insurance coverage; (2) only the Nation may provide a limited
waiver of its sovereign immunity to the level of insurance coverage
provided; and (3) no provision of the insurance policy at issue in
this case is breached by the Nation providing a limited waiver of
sovereign immunity up to the level of insurance coverage.

The

Nation also brought a claim for breach of the duty of good faith
and fair dealing as a result of Defendants’ handling of the claim.
On May 12, 2014, Occidental removed this action to this

2

Court1, citing broadly to 28 U.S.C. § 1331 which allows for
original federal jurisdiction “of all civil actions arising under
the Constitution, laws, or treaties of the United States.”

More

specifically, Occidental also stated in its Notice of Removal that
it was asserting jurisdiction under 28 U.S.C. § 1362, which
provides
The district courts shall have original jurisdiction of
all civil actions, brought by any Indian tribe or band
with a governing body duly recognized by the Secretary of
the Interior, wherein the matter in controversy arises
under the Constitution, laws, or treaties of the United
States.
Occidental encapsulates its basis for assumption of original
jurisdiction under Section 1362 in stating that “[t]he basic issue
raised by the Choctaw Nation’s lawsuit is, who can assert the
tribes sovereign immunity.”

See, Notice of Removal (Docket Entry

#3) at p. 4. To further illustrate this point, Occidental cites to
the Nation’s original Petition filed in state court wherein the
Nation stated that
[t]here exists an actual controversy between the parties
concerning whether Occidental or General Star may,
without the Nation’s express consent, assert sovereign
immunity as a defense in any action filed, and/or
otherwise prevent the Nation from giving a limited waiver
of its sovereign immunity up to the amount of available
insurance coverage.

1

Occidental represented in the Notice of Removal that General Star
“notified Occidental that it consents to this Notice of Removal.” See,
Notice of Removal (Docket Entry #3 at p. 2.

3

Petition for Declaratory Judgment and Breach of Duty of
Good Faith and Fair Dealing, Docket Entry #3, Exh. 1 at
p. 5, ¶ 20.
Generally,
jurisdiction,’

“‘[f]ederal
possessing

courts
‘only

are

that

courts
power

of

limited

authorized

by

Constitution and statute.’” Gunn v. Minton, ____ U.S. ____, 133,
1059, 1064 (2013) quoting Kokkonen v. Guardian Life Ins. Co. of
America, 511 U.S. 375, 377 (1994).

As a result, “there is a

presumption against [federal] jurisdiction, and the party invoking
federal jurisdiction bears the burden of proof.”

McKenzie v. U.S.

Citizenship and Immigration Servs., Dist. Director, 761 F.3d 1149,
1154 (10th Cir. 2014).
While Occidental contends this action turns upon “[w]hether
an insurer can assert the defense of sovereign immunity on behalf
of its insured, an Indian tribe” which it deems to be a federal
question, this Court concludes this action involves solely state
law claims which does not implicate federal question jurisdiction.
Little doubt can remain that the Indian tribes possess sovereign
immunity.

“Indian tribes are ‘domestic dependent nations’ that

exercise ‘inherent sovereign authority.’”

Michigan v. Bay Mills

Indian Cmty., ____ U.S. ____, 134 S.Ct. 2024, 2030 (2014)(quoting
Okla. Tax Comm'n v. Citizen Bank Potawatomi Indian Tribe of Okla.,
498 U.S. 505, 509, 111 S.Ct. 905).

“The tribes' status as

distinct, independent political communities qualified to exercise

4

powers

of

self-government

arises

from

their

original

tribal

sovereignty over their members rather than from any constitutional
source.”

Montana v. Gilham, 133 F.3d 1133, 1137 (9th Cir. 1998).

Thus, “tribes retain whatever inherent sovereignty they had as the
original

inhabitants

of

this

continent

to

the

extent

that

sovereignty has not been removed by Congress.” Id.
Indian tribes are entitled to immunity from suit, particularly
on matters integral to sovereignty and self-governance.

See Santa

Clara Pueblo v. Martinez, 436 U.S. 49, 55–58, 98 S.Ct. 1670 (1978)
(citation omitted).

Congress has plenary authority, however, to

“limit, modify or eliminate the powers of local self-government
which the tribes otherwise possess.”

Id. at 56, 98 S.Ct. 1670.

Suits

therefore

against

Indian

tribes

are

barred

absent

congressional abrogation or a clear waiver from the tribe itself.
Okla. Tax Comm'n v. Citizen Band of Potowatomi Indian Tribe of
Okla., 498 U.S. 505, 509, 111 S.Ct. 905 (1991).

“[T]o abrogate

such immunity, Congress must ‘unequivocally’ express that purpose.”
Michigan v. Bay Mills Indian Cmty., ____ U.S. ____, 134 S.Ct. 2024,
2031 (2014) (quoting Santa Clara Pueblo v. Martinez, 436 U.S. 49,
58, 98 S.Ct. 1670 (1978))(second modification and second internal
quotation

marks

omitted).

Indeed,

when

Congress

intends

to

abrogate tribes' sovereign immunity, that intent cannot be implied,
but must be “unequivocally expressed” in “explicit legislation.”

5

Krystal Energy Co. v. Navajo Nation, 357 F.3d 1055, 1056 (9th Cir.
2004)(internal quotation marks omitted).

Thus, the existence of

sovereign immunity in the Nation is not contestable under the
circumstances of this case.
Occidental characterizes the issue in this case as whether it
may assert or waive the Nation’s sovereign immunity in connection
with insurance coverage on a claim made on the policy.

It has not

been suggested that Congress provided authority for an insurer such
as Occidental to abrogate, waive, or otherwise assert the sovereign
immunity of an Indian nation

through appropriate legislation.

Consequently, the source of the waiver must be the Nation itself.
The sole unequivocal statement of the relationship between the
Nation and the insurers is the policy itself.

Indeed, Occidental

recognizes this fact by relying upon certain provisions within the
policy to argue the Nation has specifically granted it a waiver or
control

over

the

assertion

of

sovereign

immunity.2

The

interpretation of the terms of the policy as a contract is governed
exclusively by state law.
This does not end the inquiry into whether federal question
jurisdiction exists under either 28 U.S.C. §§ 1331 or 1362.

2

In its response to the Motion, Occidental cites to the policy
language which grants it the “right to control the defense of Choctaw
Nation” and which requires the Nation to “[c]ooperate with us in the .
. . defense against the ‘suit.’”
See, Defendant Occidental Fire and
Casualty Company of North Carolina’s Response to Plaintiff Choctaw Nation
of Oklahoma’s Motion to Remand (Docket Entry #26) at p. 3.

6

Federal question jurisdiction may exist if (1) the Nation’s cause
of action arises under federal law; or (2) the Nation’s state law
claims

“raise

a

stated

federal

issue,

actually

disputed

and

substantial, which a federal forum may entertain without disturbing
any congressionally approved balance of federal and state judicial
responsibilities.”

Grable & Sons Metal Products, Inc. v. Darue

Engineering & Mfg., 545 U.S. 308, 312-14 (2005).
Nation’s

action

arises

exclusively

contract and bad faith law.

and

As stated, the

expressly

from

state

The assertion of state law claims in

this case does not involve an actual dispute in the assertion of
federal law or a federal issue - the Nation’s sovereign immunity is
intact and not disputed.

The question presented by this action is

whether the assertion or waiver of sovereign immunity by the Nation
affects the terms of the contract between the parties requiring the
exclusive application of state law.
Occidental’s reliance upon the line of cases which finds
federal question jurisdiction over the appropriate application of
sovereign immunity by an Indian nation or tribe is of no moment to
the dispute represented in this action.

The Nation’s ability to

assert or waive sovereign immunity is not challenged.

See, Kiowa

Tribe of Okla. v. Manuf. Technologies, Inc., 523 U.S. 751, 760
(1998)(“Tribes enjoy immunity from suits on contracts, whether
those contracts involve governmental or commercial activities and

7

whether they were made on or off a reservation. Congress has not
abrogated this immunity, nor has petitioner waived it, so the
immunity governs this case.”); Nat’l Farmers Union Ins. Cos. v.
Crow Tribe of Indians, 471 U.S. 845, 857 (1985)(Ҥ 1331 encompasses
the federal question whether a tribal court has exceeded the lawful
limits of its jurisdiction, and . . . exhaustion is required before
such a claim may be entertained by a federal court.”); Normandy
Apartments, Ltd. v. United States Dept. of Housing and Urban
Development,

554

F.3d

1290

(10th

Cir.

2009)(addressing

assertion of governmental, non-tribal sovereign immunity).

the
As a

result, no federal issue is “actually in dispute” in this action.
Moreover, no substantial federal issue is implicated in this
case.

The claims in this case surround a unique but routine

insurance contract dispute.

It is unique only because of the

nature of the right which the insurers seek to control through
their contractual relationship with the Nation - the application
and exercise of sovereign immunity.

The contract itself will

control on this question and the principles of state contract law.
No basis exists to disturb the traditional balance between state
and federal interests in this dispute over a contract simply
because one party to the contract is an Indian tribe.
Occidental also contends that federal question jurisdiction is
found on the face of the Nation’s well-plead complaint. Under this

8

rule, the face of the complaint must show the federal question
which gives rise to federal jurisdiction.
335 F.3d 1189, 1192 (10th Cir. 2003).

Karnes v. Boeing Co.,

It is recognized that the

plaintiff is “the master of his claims and may choose to have his
claims heard in state court by avoiding claims based on federal
law.”

Id. at 1193 citing Caterpillar v. Williams, 482 U.S. 386,

398–99 (1987). As a result, a defendant cannot introduce a federal
question into the action which is governed by state law and
transform the case into one arising under federal law.

Id.

On the face of the Petition, the Nation seeks declaratory
relief upon the parties’ obligations and rights under the insurance
contracts as well as a judgment for bad faith - both purely state
law claims.

The insertion of sovereign immunity into the case

arises because that is the assertion of immunity represents the
right which is claimed under the contract and because the Nation
anticipates the insurers’ defense to the claims.

The anticipation

of a defense within a well-plead complaint cannot convert a state
law claim into one arising from a federal question.

Okla. Tax.

Comm’n v. Graham, 489 U.S. 838, 841 (1989).
The final issue raised in this case is whether General Star
has appropriately joined in the request to remand.

Generally, an

action must be removed within thirty days after a defendant’s
receipt of the initial pleading.

28 U.S.C. § 1446(b)(1).

9

“[A]ll

defendants who have been properly joined and served must join in or
consent to the removal of the action.”
If

this

requirement

is

procedurally defective.

not

met,

28 U.S.C. § 1446(b)(2)(A).

the

notice

28 U.S.C. § 1447(c).

of

removal

is

While the Tenth

Circuit Court of Appeals has not established the requirements for
multiple defendants joining or consenting in the removal, this
Court concurs with those courts that require “each party must
independently and unambiguously file notice of their consent and
intent

to

allowed.”

join

in

the

removal

within

the

thirty

day

period

Jarvis v. FHP of Utah, Inc., 874 F.Supp. 1253, 1254

(D.Utah 1995). “There is nothing unfair about requiring each
defendant to either sign the notice of removal, file its own notice
or removal, or file a written consent or written joinder to the
original

notice

of

removal.”

Id.

at

1255.

Certainly,

the

representation in the notice of removal that General Star consents
to the remand is insufficient.

See, Forsythe v. City of Woodward,

Okla., 2013 WL 5230005 (W.D. Okla.)(“courts at all levels of the
federal judiciary require written consent by all of the defendants,
either in the notice of removal or in other papers filed with the
district court.

Thus, the mere statement by the removing attorney

that the other Defendants consented was insufficient.”); State Farm
Fire and Casualty Co. v. Dunn–Edwards Corp., 728 F. Supp 2d. 1273,
1277 (D.N.M. 2010)(noting that “the majority of circuit courts

10

require written, timely consent from each defendant” and stating
that “[i]f you represent a served, properly joined defendant who
consents to a con-defendant's removal, you must sign the notice of
removal on behalf of your client, file your own notice of removal,
or file a notice of consent to removal within the thirty-day
removal period”); McEntire v. Kmart Corp., 2010 WL 553443 at 5
(D.N.M. 2010) (“it is insufficient for the removing defendant, in
its notice or removal, to represent that all other defendants
consent to removal”); McShares, Inc. V. Barry, 979 F.Supp. 1338,
1342

(D.Kan.

1997)(“[e]ach

party

must

independently

and

unambiguously file notice of its consent and its intent to join in
the removal within the thirty-day period”); Prod. Stamping Corp. V.
Maryland

Cas.

Co.,

829

F.Supp.

1074,

1076

(E.D.

Wis

1993)

(favorably noting that the majority view is that “mere assertion in
a removal petition that all defendants consent to removal fails to
constitute a sufficient joinder”); Landman v. Borough of Bristol,
896

F.Supp.

406,

409

(E.D.Pa.

1995)

(citations

omitted)(“[s]tatements made in a removal petition concerning a
co-defendant's position on removal are inappropriate without some
form of filing by the co-defendant”).
As noted in this case, Occidental included a statement within
the Notice of Removal that General Star notified Occidental that it
consented to the removal.

No other express written statement of

11

consent or joinder in the removal was filed by General Star within
the thirty day period.

Consequently, in addition to the bases

already set forth in this Opinion and Order, remand is required as
the removal was procedurally defective.
IT IS THEREFORE ORDERED that Plaintiff’s Motion to Remand
(Docket Entry #17) is hereby GRANTED.

Accordingly, this case is

hereby REMANDED to the District Court in and for Bryan County,
Oklahoma.
IT IS SO ORDERED this 13th day of January, 2015.

______________________________
KIMBERLY E. WEST
UNITED STATES MAGISTRATE JUDGE

12