Helford v. Cheyenne Petroleum Company et al

Filing 54

Memorandum Opinion and Order accepting 47 Findings, Conclusions and recommendation of the United States Magistrate Judge. The court accepts the findings and conclusions of the magistrate judge as those of the court; overrules Defendants' objections; grants 18 Plaintiff's Motion to Remand; denies Plaintiff's request for attorney's fees; and remands this action to the 191st Judicial District Court of Dallas County, Texas, from which it was removed. (Ordered by Judge Sam A Lindsay on 9/30/2015) (jrr)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
MATTHEW HELFORD,
Plaintiff,
v.
CHEYENNE PETROLEUM
COMPANY; CHEYENNE
INTERNATIONAL CORPORATION;
CHEYENNE PETROLEUM
COMPANY, LP; and CHEYENNE
ENERGY SERVICES, LLC,
Defendants.

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Civil Action No. 3:14-CV-4539-L

MEMORANDUM OPINION AND ORDER
Before the court is Plaintiff’s Motion to Remand (Doc. 18), filed January 21, 2015. On
August 6, 2015, Magistrate Judge Paul D. Stickney entered Findings, Conclusions and
Recommendation of the United States Magistrate Judge (“Report”) (Doc. 47), recommending that
the court grant Plaintiff’s Motion to Remand and remand this case to the 191st Judicial District
Court of Dallas County, Texas. The magistrate judge also recommended that the court deny
Plaintiff’s request for attorney’s fees. Defendants Cheyenne Energy Services, LLC; Cheyenne
Petroleum Company, LP; and Cheyenne International Corporation filed objections to the Report
to which Matthew Helford (“Plaintiff” or “Helford”) responded. Cheyenne Petroleum Company
did not file objections to the Report.
I.

Motion to Remand, Report, and Objections
The magistrate judge determined that remand was warranted because, in expressly waiving

their right to remove the case to federal court, Cheyenne Petroleum Company; Cheyenne
Petroleum Company, LP; and Cheyenne International Corporation also waived their right to join
Memorandum Opinion and Order – Page 1

in and consent to the subsequent removal to federal court by Cheyenne Energy Services, LLC, a
later-added and served defendant. In its objections, Cheyenne Energy Services, LLC contends
that: (1) the implicit finding in the Report that the Rule 11 Agreement (the “Agreement”) between
Plaintiff and all Defendants, other than Cheyenne Energy Services, LLC, included a valid and
enforceable forum selection clause is erroneous; (2) by agreeing not to remove the case to federal
court, Cheyenne Petroleum Company, LP and Cheyenne International Corporation did not waive
their right under section 28 U.S.C. § 1446(b)(2)(C) to consent to the removal of the action by
Cheyenne Energy Services, LLC; and (3) the Report incorrectly focuses on the equities to Plaintiff
while disregarding the equities to Cheyenne Energy Services, LLC, the later-added defendant that
was not a party to the Agreement.
Cheyenne Petroleum Company, LP and Cheyenne International Corporation filed separate
objections to the Report. They contend in their objections to the Report that: (1) the magistrate
judge erred in relying on Ondova Ltd. v. Manila Indus., Inc., 3:07-CV-1812-D, 2007 WL 4104192,
at*3 (N.D. Tex. Nov. 19, 2007) (citing Brown v. Demco, Inc., 792 F.2d 478, 481-82 (5th Cir.
1986)), because it was decided before the enactment of the 2011 amendments to 28 U.S.C. § 1446;1
(2) Cheyenne Petroleum Company; Cheyenne Petroleum Company, LP; and Cheyenne
International Corporation could not have waived their right to initiate removal or their right to
consent to the removal by later-added Defendant Cheyenne Energy Services, LLC, when they
executed the Agreement because it was executed before the case became removable; (3) the
determination that section 1446 does not permit a defendant that has waived its own right to
remove to consent to another defendant’s removal does not comport with the 2011 amendments to

1

 This objection is quite beside the point because the court in no way relies on Ondova in reaching
its decision. The court’s ruling is based on its reading and interpretation of 28 U.S.C. § 1446(b)(2)(C), the
waiver doctrine, and existing precedent. Ondova simply does not come into play in the court’s analysis as
to whether this action should be remanded. 
Memorandum Opinion and Order – Page 2

section 1446; (4) the Report incorrectly conflates a defendant’s right to remove and its ability to
consent to removal by another defendant; (5) the Report misinterprets the bargained-for rights in
the Agreement and impermissibly broadens the intent of Defendants Cheyenne Petroleum
Company; Cheyenne Petroleum Company, LP; and Cheyenne International Corporation in
entering the Agreement; and (6) the effect of the Report’s recommendation contravenes
Congress’s intent in enacting the 2011 amendments to section 1446 and public policy.
The court does not construe the Report as expressly or implicitly finding that the
Agreement includes a valid and enforceable forum selection clause. The magistrate judge instead
determined that the Agreement of Cheyenne Petroleum Company; Cheyenne Petroleum Company,
LP; and Cheyenne International Corporation not to remove the case to federal court at any time in
the future, even if it became removable, is binding and encompassed these Defendants’ right to
join in or consent to removal by later-added Cheyenne Energy Services, LLC. The court, therefore,
overrules Cheyenne Energy Services, LLC’s forum selection clause objection.
Moreover, the court agrees with the magistrate judge’s determination that the waiver
provision of the Agreement entered into between the parties on October 31, 2014, and at issue
precluded Cheyenne Petroleum Company; Cheyenne Petroleum Company, LP; and Cheyenne
International Corporation from joining in or consenting to removal by Cheyenne Energy Services,
LLC. The court reaches this conclusion based on its interpretation of 28 U.S.C. § 1446(b)(2)(C),
which provides, “If defendants are served at different times, and a later-served defendant files a
notice of removal, any earlier-served defendant may consent to the removal even though that
earlier-served defendant did not previously initiate or consent to removal.” This provision simply
allows an earlier-served defendant to consent to a removal filed by a later-served defendant even
if that earlier-served defendant did not initiate or consent to removal at an earlier time when the

Memorandum Opinion and Order – Page 3

case may have been removed. In other words, this statutory provision gives the earlier-served
defendant a second chance or “bite at the apple” to consent to the removal if that defendant did not
previously initiate or consent to removal. The question that the court must decide is the validity
and scope of the waiver, and the court concludes that neither the language of the statute nor
legislative history supports the contention that section 1446 as amended in December 2011 was
intended to apply to a case in which a defendant engages in affirmative conduct and expressly and
unequivocally agrees to waive its right to remove, even if the case later becomes removable.
“[W]aiver is the ‘intentional relinquishment or abandonment of a known right.’” United
States v. Olano, 507 U.S. 725, 733 (1993) (quoting Johnson v. Zerbst, 304 U.S. 458, 464 (1938)).
That parties may waive statutory or constitutional rights is so well-settled in American
jurisprudence that no citation to authority is needed. The question in this case is the effect, if any,
that the 2011 amendments have on the waiver entered into between Plaintiff and the initial
Cheyenne Defendants, and the court concludes that the 2011 amendments do not affect a valid
contractual waiver.
Helford and the initial Cheyenne Defendants entered into the Agreement by letter on
October 31, 2014. The Agreement provided, in relevant part, as follows:
Please allow this correspondence to serve as a Rule 11 memorialization of
the parties’ agreement concerning the pending Motion to Transfer Venue in this
case.
Plaintiff agrees to the transfer of the case (currently in state Court in
Atascosa County) to Dallas County (state District Court). Your clients (the
Cheyenne Defendants) agree to clearly and unequivocally waive their right, if any,
to remove the case to federal court, should diversity jurisdiction ever exist, should
a federal question ever be raised, or should there be any other reason which would
otherwise make the case otherwise potentially removable to federal court at any
time throughout the pendency of the litigation.

Memorandum Opinion and Order – Page 4

Agreement 1. The Agreement was signed by Plaintiff’s counsel, Mr. Robert E. Wolf. Mr. Wolf
signed Ms. Chelsen Keeton’s, one the initial Cheyenne Defendants’ counsel, name to the
Agreement with her permission.
Subsequent to the Agreement, the action was transferred from the 218th Judicial District
Court, Atascosa County, Texas, to the 191st Judicial District Court, Dallas County, Texas. On
December 5, 2014, Helford filed Plaintiff’s Second Amended Original Petition and added
Cheyenne Energy Services, LLC, as a defendant. On December 29, 2014, Cheyenne Energy
Services, LLC removed the action to federal court, and the initial Cheyenne Defendants filed
Notices of Consent to the removal. Helford filed a motion seeking remand to state court, arguing
that the initial Cheyenne Defendants could not consent to removal because they had contractually
waived the right to consent to removal.
The language in the Agreement regarding the waiver by the initial Cheyenne Defendants
is clear and unequivocal. The initial Cheyenne Defendants unmistakably relinquished and gave
up their right to remove the case to federal court on the basis of federal question and diversity
jurisdiction. Further, the Agreement clearly and unequivocally bars removal based on any other
reason that would otherwise potentially make the case removable during the pendency of the
litigation. The latter clause of the waiver provision informs the court that the parties’ clear
objective was a waiver of any act, circumstance, or reason that might allow the case to be removed
to federal court, and that objective necessarily includes the waiver of consent by the initial
Cheyenne Defendants that were previously served.

In other words, the initial Cheyenne

Defendants not only waived their right to remove but also waived any act or reason that would
allow the case to be removed to federal court. The Agreement is a contractual waiver, and the
initial Cheyenne Defendants relinquished their right to consent to removal in exchange for the case

Memorandum Opinion and Order – Page 5

being transferred from a state district court in Atascosa County to a state district court in Dallas
County.
“For a contractual clause to prevent a party from exercising its right to removal, the clause
must give a ‘clear and unequivocal’ waiver of that right.” City of New Orleans v. Municipal Admin.
Servs., Inc., 376 F.3d 501, 504 (5th Cir. 2004) (citing McDermott Int’l, Inc. v. Lloyd’s
Underwriters of London, 944 F.2d 1199, 1212-13 (5th Cir. 1991)). “A party may waive its right[
] [to removal] [1] by explicitly stating that it is doing so, [2] by allowing the other party the right
to choose venue, or [3] by establishing an exclusive venue within the contract.” City of New
Orleans, 376 F.3d at 504. The initial Cheyenne Defendants chose the first option and explicitly
included the scope of their waiver in the Agreement. The waiver set forth in the Agreement,
therefore, is valid and legally binding against the initial Cheyenne Defendants.2
Moreover, it logically and necessarily follows that the initial Cheyenne Defendants waived
their ability to consent to a later removal because of the “unanimous consent” rule, which provides
that all defendants that have been properly joined and served must join in or consent to the removal
of an action. 28 U.S.C. § 1446(b)(2)(A). The requirement that all defendants join in or consent to
the removal of an action was well-established in this circuit long before the 2011 amendments to
section 1446; Doe v. Kerwood, 969 F.2d 165, 167 (5th Cir. 1992) (citations omitted); and nothing
in the 2011 amendments changes this requirement. Compliance with the “unanimous consent”
rule was the “other reason” or act that would potentially make the action removable to federal
court. Thus, the initial Cheyenne Defendants knew at the time the Agreement was made that their
consent would be required for a later-served defendant to remove the action; however, they

2
The court also holds that the contractual waiver is not ambiguous, as its meaning is not susceptible
to more than one reasonable interpretation; and its meaning is not doubtful or uncertain. Coker v. Coker,
650 S.W.2d 391, 93-94 (Tex. 1983).

Memorandum Opinion and Order – Page 6

expressly and unequivocally waived their right to consent to removal by a later-served defendant.
As the initial Cheyenne Defendants expressly waived their right to remove and their right to give
consent to removal, their purported Notices of Consent are legally invalid. Accordingly, since
Cheyenne Energy Services, LLC, has not obtained the legal consent of all defendants, the removal
is procedurally defective, and this action must be remanded to the 191st Judicial District Court of
Dallas County, Texas.
As a final matter, the court addresses the contention that the magistrate judge incorrectly
focused on the equities to Plaintiff while disregarding the equities to Cheyenne Energy Services,
LLC. Cheyenne Energy Services, LLC, misapprehends the relevant law. As stated before, the
“unanimous consent” rule is well-established and requires all defendants that have been properly
joined and served to consent to removal. That the initial Cheyenne Defendants voluntarily elected
to bargain away their right to remove and their right to consent to the removal of the action by a
later-served defendant is no fault of Helford. It is the initial Cheyenne Defendants’ waiver that
prevents them from giving consent to the removal. For the court to hold otherwise would be
contrary to well-established law and allow later-served defendants to use legal prestidigitation to
avoid legally binding contracts.
II.

Attorney’s Fees and Costs
Plaintiff seeks attorney’s fees and costs incurred for obtaining a remand of this action to

state court pursuant to 28 U.S.C. § 1447(c). Section 1447(c) provides that “[a]n order remanding
the case may require payment of just costs and any actual expenses, including attorney fees,
incurred as a result of the removal.” 28 U.S.C. § 1447(c). There is no “automatic entitlement to an
award of attorney’s fees.” Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290, 292 (5th Cir. 2000). Bad
faith is not “a prerequisite to awarding attorney fees and costs.” Id. (citation omitted). “Absent

Memorandum Opinion and Order – Page 7

unusual circumstances, courts may award attorney’s fees under § 1447(c) only where the removing
party lacked an objectively reasonable basis for seeking removal. Conversely, when an objectively
reasonable basis exists, fees should be denied.” Martin v. Franklin Capital Corp., 546 U.S. 132,
141 (2005) (citations omitted). In this regard, the court must decide “whether the defendant had
objectively reasonable grounds to believe the removal was legally proper” at the time of removal,
“irrespective of the fact that it might ultimately be determined that removal was improper.”
Valdes, 199 F.3d at 293.
Helford filed no objection to the magistrate judge’s recommendation that his request for
attorney’s fees and costs be denied. Moreover, after a careful consideration of the entire record
and because of a lack of authority by the Fifth Circuit addressing the key issue in this case, the
court, although not ultimately convinced by Defendants’ arguments regarding consent and the
2011 amendments to section 1446, concludes that a reasonable person could arguably believe that
Cheyenne Energy Services, LLC, had objectively reasonable grounds to believe removal was
legally proper. Accordingly, the court will deny Plaintiff’s request for attorney’s fees and costs.
III.

Conclusion
After considering the motion, briefs, pleadings, record in this case, applicable law, Report,

the Cheyenne Defendants’ objections, and Plaintiff’s response, the court determines, for the
reasons stated, that the findings and conclusions of the magistrate judge regarding Plaintiff’s
Motion to Remand are correct. The court further determines that the findings and conclusions of
the magistrate judge regarding attorney’s fees, which were not objected to by Plaintiff, are correct.
The court, therefore, accepts the findings and conclusions of the magistrate judge as those of the
court; overrules Defendants’ objections; grants Plaintiff’s Motion to Remand (Doc. 18); denies
Plaintiff’s request for attorney’s fees; and remands this action to the 191st Judicial District Court

Memorandum Opinion and Order – Page 8

of Dallas County, Texas, from which it was removed. The clerk of the court shall effect the remand
in accordance with the usual procedure.

The clerk shall also term Defendants Cheyenne

Petroleum Company and Cheyenne International Corporation’s Motion to Dismiss under Rule
12(b)(6) (Doc. 10).
It is so ordered this 30th day of September, 2015. 

_________________________________
Sam A. Lindsay
United States District Judge

Memorandum Opinion and Order – Page 9