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Lilly Industries v. Employers Insurance of Wausau

United States District Court, W.D. Michigan, Southern Division
Jan 16, 2001
No. 1:00 cv 772 (W.D. Mich. Jan. 16, 2001)

Opinion

No. 1:00 cv 772

January 16, 2001.


OPINION AND ORDER ON CERTAIN DEFENDANT-INSURERS' JOINT MOTION TO REMAND AND FOR ATTORNEYS' FEES AND COSTS UNDER 28 U.S.C. § 1447(c)


This diversity action was originally filed by Employers Insurance of Wausau, A Mutual

Company ("Wausau") in Michigan's Kent County Circuit Court on or about October 25, 1999. Wausau named as defendants Lilly Industries (USA), Inc. ("Lilly") and numerous insurance companies. Nearly one year later, on September 29, 2000, the State court issued an order granting-in part-a motion by Lilly seeking realignment of the parties. The State court's order, among other things, realigned Lilly as the sole plaintiff in the action and realigned Wausau to join the other insurers as a defendant.

On October 13, 2000, Lilly filed its Notice of Removal in this action, pursuant to 28 U.S.C. § 1446(b), contending that the State court's realignment order created complete diversity among the parties. This case is currently before the court on certain of the defendant-insurers' Joint Motion to Remand this action back to the Kent County Circuit Court (docket no. 8). For the reasons to follow, the court GRANTS the motion.

I

Lilly is an Indiana corporation having its principal place of business in Indianapolis, Indiana. In April, 1996, Lilly acquired Guardsman Products, Inc. ("Guardsman") through a merger transaction. Guardsman was a Delaware corporation having its principal place of business in Grand Rapids, Michigan. Lilly contends that as a result of the merger, Lilly was the surviving corporation and became the owner of all of Guardsman's potential legal claims against other parties and also assumed Guardsman's liabilities to other parties.

In early 1996, while Lilly was in the process of acquiring Guardsman, Guardsman was named as a defendant in a personal injury action filed in a Texas state court. In that lawsuit, known as the "Allen lawsuit," more than 1,000 plaintiffs sued numerous defendants, alleging that they had suffered personal injuries arising out of the use of products manufactured by and sold to a Curtis Mathes/Harvey Industries television assembly plant in Athens, Texas ("the Athens plant"). One of the allegations made by the plaintiffs was apparently that Guardsman had sold to the Athens plant wood-finishing products used in the manufacture of cabinets for the television sets.

Eventually, Lilly determined that Guardsman products were sold to the Athens plant between the years 1975 and 1981. Lilly thereafter embarked on an effort to locate relevant liability insurance policies in effect during the relevant time periods, all the while continuing to defend the Allen lawsuit. Lilly ultimately located liability insurance policies purchased by Guardsman from Wausau, among other insurers. In November, 1996, Lilly notified Wausau of the Allen lawsuit. In December, 1996, Lilly entered into a tentative settlement of the Allen claims, even though Wausau had not yet articulated a coverage position.

In June, 1997, Lilly proceeded to obtain court approval of the settlement in the Allen lawsuit, amounting to a total of $385,000. By the time of the settlement, Lilly had incurred defense costs of more than $300,000. Wausau denied coverage under the Guardsman policies. Three other lawsuits similar to the Allen lawsuit were also filed by plaintiffs, and although Wausau has participated in the defense of these other three actions, it has done so only under a complete reservation of rights.

On December 1, 1998, Lilly filed an insurance coverage lawsuit against Wausau in the United States District Court for the Southern District of Indiana. In that action, Lilly Industries (USA) Inc. v. Wausau Insurance Co., No. IP98-1641-C-M/S ("the Indiana federal court action"), Lilly invoked diversity jurisdiction and asserted claims against Wausau for breach of contract, bad faith, and punitive damages based on Wausau's failure to defend and indemnify Lilly in the Allen lawsuit.

Wausau is a Wisconsin corporation having its principal place of business in Wausau, Wisconsin. In May, 1999, Wausau moved the Indiana federal court for leave to assert a counterclaim for a declaratory judgment that Wausau had no duty to defend Lilly not only as to the Allen lawsuit, but also as to the three other similar lawsuits which had been filed. Wausau also moved for leave to file a third-party complaint seeking declaratory relief against Guardsman's other insurers, whom Wausau claimed were potentially liable for coverage of all four underlying lawsuits. Lilly opposed Wausau's request to amend its pleadings in the Indiana federal court action, contending, among other things, that the proposed amendments "would cause severe prejudice to Lilly if allowed" by causing its "straightforward coverage lawsuit [to] grow from two parties to at least twelve[.]" Affidavit of Daniel S. Weiss, Exhibit 3. Lilly also argued that denial of the proposed amendments "would not cause similar prejudice to Wausau, which can bring separate lawsuits against other parties if it so chooses." Id. Lilly's opposition was successful, insofar as the Indiana federal court denied Wausau's motion to amend to the extent that it pertained to the three lawsuits filed in addition to the Allen lawsuit.

In October, 1999, after having failed to succeed in asserting all of its requests for declaratory relief in the Indiana federal court action, Wausau filed this action in Michigan's Kent County Circuit Court, raising many of the same issues which it had sought to raise in the Indiana federal court. Over Lilly's objections, Wausau also persuaded the Indiana federal court to stay proceedings in the action pending there, so that Wausau could litigate the same and additional claims in the Michigan court.

The Indiana federal court action, although stayed, remains pending.

In its original and a first amended complaint filed in this action, Wausau named its insured, Lilly, as a defendant, along with the following co-defendants: American Empire Surplus Lines Insurance Company; American International Specialty Lines Insurance Company; Canadian Universal Insurance Company, Ltd.; Century Indemnity Company; Columbia Casualty Company; Continental Casualty Company; Hartford Accident Indemnity Company; Home Insurance Company; International Insurance Company; National Union Fire Insurance Co. of Pittsburgh, Pennsylvania; Northland Insurance Company; Old Republic Insurance Company; Reliance National Indemnity Company; and The American Insurance Company. Because Reliance National Indemnity Company ("Reliance") is incorporated in the state of Wisconsin, as is Wausau, complete diversity did not nominally exist. None of the defendant-insurers other than Wausau have asserted claims of any type against Lilly in this action. However, by virtue of its answer, cross-claim, and third-party complaint filed in the action (the latter which added third-party defendants Allstate Insurance Company and American Universal Insurance Company), Lilly has sued each of the moving defendant-insurers for breach of contract and bad faith, arising out of the four underlying personal injury lawsuits.

In August, 2000, approximately 10 months after having been sued by Wausau in Michigan's Kent County Circuit Court, Lilly filed a motion to realign the parties in that action "in acknowledgment of the principal purpose of this suit and the primary and controlling matter in dispute: Whether the insurers, or any of them, have a duty to defend and indemnify Lilly, their insured." Affidavit of Daniel S. Weiss, Exhibit 9 at 3, ¶ 1. However, although contending that a determination of the insurers' duty to defend and indemnify Lilly was the "principal purpose" of the action, Lilly sought to have all of the insurers realigned to join Wausau as plaintiffs, with Lilly realigned as the sole defendant. Id.

At a September 15, 2000 hearing on Lilly's motion to realign, the Kent County Circuit Judge presiding over the action expressed the view that if Lilly continued to press for realignment, he would indeed realign the parties-but only if Lilly would agree to be realigned as the sole plaintiff, with the insurers as defendants. Id., Exhibit 19, at 29-30. Taking the position that "any realignment would be better than no realignment," Lilly expressly "approve[d] and agree[d] with the ruling."Id. at 31. The Kent County Circuit Court issued its written order realigning Lilly as sole plaintiff in this action on September 29, 2000. Two weeks later, Lilly, as plaintiff, filed its Notice of Removal in this court.

Lilly has also filed a motion to transfer venue in this action to the Southern District of Indiana, for purposes of consolidation with the earlier-filed Indiana federal court action, which remains pending. It is noted that virtually the same result could most likely have been achieved if Lilly had not opposed Wausau's motion for leave to amend its pleadings in that action.

II

"[T]he statutes conferring removal jurisdiction are to be construed strictly because removal jurisdiction encroaches on a state court's jurisdiction." Brierly v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527, 534 (6th Cir. 1999) (citing Shamrock Oil Gas Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S.Ct. 868, 85 L.Ed.2d 1214 (1941)), cert.denied, 528 U.S. 1076 (2000). The removing parties bear the burden of establishing federal subject matter jurisdiction. Ahearn v. Charter Township of Bloomfield, 100 F.3d 451, 453-54 (6th Cir. 1996), appeal after remand, No. 97-1187, 1998 WL 384558 (6th Cir. June 18, 1998);Alexander v. Electronic Data Sys. Core.,, 13 F.3d 940, 948-49 (6th Cir. 1994). Like the statutes conferring removal jurisdiction, removal petitions are to be strictly construed, with all doubts resolved against removal. Her Majesty The Queen v. City of Detroit, 874 F.2d 332, 339 (6th Cir. 1989). In its Notice of Removal, Lilly states that removal is based on the second paragraph of 28 U.S.C. § 1446(b), which reads as follows:

If a case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action.

Section 1446, however, addresses the procedure for removal, while 28 U.S.C. § 1441 specifies which actions are, generally, removable. Section 1441(a) provides in pertinent part as follows:

Except as otherwise expressly provided by Act of Congress, any 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 for the district and division embracing the place where such action is pending . . . .

(emphasis supplied).

Here, the existence of complete diversity is not disputed; the current alignment of the parties with Lilly on one side and all of the insurers on the other has not been questioned. That the amounts in controversy satisfy jurisdictional requirements is likewise not disputed. Instead, in their joint motion to remand, the defendant-insurers argue that remand of this case to the Kent County Circuit Court is required because, among other reasons, Lilly is the plaintiff, and under the plain language of 28 U.S.C. § 1441 (a) and the uniform line of cases construing this statute, only a defendant may remove an action from state court.

"[C]omplete diversity requires that no party share citizenship with any opposing party." Safeco Ins. Co. v. City of White House, Tennessee, 36 F.3d 540, 545 (6th Cir. 1994); see also International Union United Automobile Aerospace Agricultural Implement Workers of America v. Bristol Brass Co., 123 F.R.D. 431, 432 ("when more than one plaintiff or defendant exists, there must be complete diversity of citizenship between the parties opposed in interest in order for a federal court to obtain diversity") (citation omitted).

In refusing to allow the plaintiff to remove in Shamrock, 313 U.S. 100, the Supreme Court stated

We can find no basis for saying that Congress, by omitting from the present statute all reference to `plaintiffs,' intended to save a right of removal to some plaintiffs and not to others.
Id. at 108. "Quite simply, a party who is in the position of a plaintiff cannot remove." Yonkers Racing Corp. v. City of Yonkers, 858 F.2d 855, 863 (2d Cir. 1988). Lilly, however, argues that even though it is currently a nominal plaintiff in this action, it is nonetheless a proper party to remove because it was originally a defendant and remains a "functional defendant." Thus, the question at issue is whether Lilly may be deemed a "functional defendant" for purposes of the federal removal statute. Lilly is correct to the extent that it argues that its nominal status in the state court proceedings does not control for purposes of determining whether Lilly is a "defendant" within the meaning of the federal removal statute. "For the purpose of removal, the federal law determines who is plaintiff and who is defendant. It is a question of the construction of the federal statute on removal[.]" Chicago Rock Island Pacific Railroad Co. v. Stude, 346 U.S. 574, 580 (1954). As the Court stated in Shamrock,

The removal statute which is nationwide in its operation, was intended to be uniform in its application, unaffected by local law definition or characterization of the subject matter to which it is to be applied. Hence the Act of Congress must be construed as setting up its own criteria, irrespective of local law, for determining

in what instances suits are to be removed from the state to the federal courts. 313U.S.at104.

The federal courts have recognized that the Supreme Court has established a "functional test" for determining the parties' status for purposes of removal. General Motors Corp. v. Gunn 752 F. Supp. 729, 731 (N.D.Miss. 1990). This functional test had its apparent origins in Mason City Fort Dodge Railroad Co. v. Boynton, 204 U.S. 570 (1907).

Boyntoninvolved a railroad's condemnation of a landowner's property under Iowa law. Pursuant to an Iowa statute, a commission determined the value of the landowner's property, and the landowner appealed the determination to Iowa state court. Although the railroad had initiated the condemnation proceedings, Iowa statutes specifically designated that the landowner would be the plaintiff and the railroad the defendant in the state court appeal. The landowner subsequently removed the action to federal court, referring to himself as the defendant. Thus, the question before the Supreme Court in Boyntonwas whether the landowner was properly considered a defendant for removal purposes, even though the Iowa statute designated him as the plaintiff. Noting that it was required "to construe the act of Congress regarding removal," the Court held that whatever the Iowa law provided, the removal was proper. 204 U.S. at 579. The Court's reasoning for its decision included the following:

[T]he position of the parties under the act of Congress should be determined upon general considerations, without regard to what has happened. Looked at as a whole, the Iowa statutes provide a process by which railroads and others may acquire land for their purposes which the owner refuses to sell. The first step is the valuation. Whether it is part of the case or not, it is a necessary condition to the proceedings in court. Against the will of the owner the title to the land is not acquired until the case is decided and the price paid. The intent of the railroad to get the land is the mainspring of the proceedings from beginning to end, and the persistence of that intent is the condition of their effect . . . . Therefore, in a broad sense, the railroad is the plaintiff, as the institution and
continuance of the proceedings depend upon its will. Boynton, 204 U.S. at 580 (emphasis supplied).

In applying this "mainspring of the proceedings from beginning to end" test, courts have held that when a party in a civil action is merely opposing claims made upon it in another forum, that party should be treated as the defendant for removal purposes. Welborn v. Classic Syndicate. Inc., 807 F. Supp. 388, 389 (W.D.N.C. 1992) (citing International Tin Council v. Amalgamet Inc., 645 F. Supp. 879, 882 (S.D.N.Y. 1986)). As stated in Amalgamet,

A party who is merely opposing rather than instituting a claim should be treated as a defendant for removal purposes. Because ITC presses this claim not to effect its own ends, but rather to avoid claims made upon it, and because the `mainspring' of these proceedings is Amalgamet's institution of arbitration proceedings of contested validity, ITC, although nominally a plaintiff, should be deemed a defendant for removal purposes.
645 F. Supp. at 882. Applying this reasoning, courts have also held that a party who files a cause of action in anticipation of being sued by another may be deemed a defendant for removal purposes. Gunn, 752 F. Supp. at 731-32 (manufacturer which filed a Bill of Discovery in state court in order to inspect and protect vehicle expected to be subject of product liability action was defendant for purposes of removal, where plaintiff filed wrongful counterclaim based on death of family members in vehicle); Estate of C S Spragins v. Citizens Nat'l Bank of Evansville, 563 F. Supp. 424, 428-29 (N.D.Miss. 1983) (bank which filed claim in estate proceedings for recovery of alleged indebtedness was not a party which could remove action to federal court). Here, in determining the "mainspring of the proceedings from beginning to end,"see Boynton, 204 U.S. at 580, it is not possible to ignore Lilly's earlier institution of proceedings against Wausau in Indiana, seeking recovery of damages including the amount of the Allen lawsuit settlement, defense costs of that suit, and "all other reimbursement provided for in any portions of the policies[.]" Affidavit of Daniel S. Weiss, Exhibit 1, at 12, 46. As stated in Boynton, a party is the plaintiff for removal purposes where "the institution and continuance of the proceedings depend upon its will." Id. To quote Lilly's own words, "the principal purpose of this suit and the primary and controlling matter in dispute [are]: Whether the insurers, or any of them, have a duty to defend and indemnify Lilly, their insured." Affidavit of Daniel S. Weiss, Exhibit 9 at 3, ¶ 1. It cannot genuinely be questioned that but for Lilly's filing of the claim against Wausau in the Indiana federal court action, none of the parties would be here now. For that reason, Lilly is, both nominally and functionally, a plaintiff for removal purposes, having no right to removal under § 1441(a).

Lilly, although arguing that its status as a "functional defendant" provides the basis for removal, has virtually ignored the "mainspring of the proceedings" functional test, instead focusing principally on case language indicating that "[t]he rational behind limiting the right of removal to the defendant is to restrict removal to the party who had no choice in the selection of the forum." Varghese v. Hilite Indus. Employee ERISA Med. Benefit Plan, No. A. 3:98-cv-0800, 1999 WL 76401, at * 1 n. 3 (N.D.Tex. 1999) (citing Scott v. Communications Serv. Inc., 762 F. Supp. 147, 150 (S.D.Tex. 1991) and Gunn, 752 F. Supp. at 730). Because Lilly did not choose to be sued in the Kent County Circuit Court, the argument goes, Lilly has been forced to litigate in Michigan against its will and is therefore a "defendant" for removal purposes. However, "[u]nder the functional test for party status, courts are not required to look solely to the party which initiates the claim. Rather, a court looks to which party is attempting to achieve a particular result and which party is resisting the other party's claims." OPNAD Fund. Inc. v. Watson, 863 F. Supp. 328, 334 (S.D.Miss. 1994). Here, Lilly is affirmatively asserting claims for money due under the terms of insurance policies and damages based on the insurers' refusal to pay. In contrast, Wausau is seeking to resist these claims, and has made other insurers, whom it believes are potentially liable, parties. These other parties are also resisting Lilly's claims. Thus, whether or not it was Lilly's "choice" to be sued in the Michigan court, the fact remains that its pursuit of claims against Wausau is the mainspring of the proceedings.

As the court previously observed, Lilly opposed Wausau's attempt to expand the scope of the Indiana federal court action, and it cannot seriously be questioned that had Lilly stipulated to Wausau's amendment of its pleadings, the court would most likely have granted the motion. The action was subsequently stayed only because Wausau was forced to pursue relief elsewhere. Under the circumstances, the court takes a rather dim view of Lilly's argument that "Wausau's continuation of this lawsuit has prevented Lilly from pursuing its claims in the forum of its choice[,]" the Indiana federal court. Lilly's Surreply at 2 n. 2.

The court is likewise not persuaded by Lilly's reliance on case law pertaining to realignment of parties which does not address removal. See Commercial Union Ins. Co. v. Cannelton Indus., 154 F.R.D. 164 (W.D.Mich. 1994); Employers Ins. of Wausau v. Crown Cork Seal Co., 942 F.2d 862 (3d Cir. 1991). This is not a realignment case; indeed, for reasons already discussed, federal case law holds that the State court's alignment of the parties is, as Lilly itself has contended, "immaterial and irrelevant to the proper designation of a party for federal removal purposes." Lilly's Brief in Opposition at 1. Moreover, and not incidentally, for this reason Lilly's attempt to remove this action at this point in the proceedings would be untimely in any event, for if Lilly has from the outset been the sole "functional defendant" as it contends, it should have filed its notice of removal within thirty days of service of Wausau's original complaint as required by 28 U.S.C. § 1446 (b). The same arguments which it is presently making could have been made at that time. Nevertheless, had they been made at that time, the result would have been the same; the case would have been remanded because Lilly is not a party entitled to remove.

Although Lilly argues that it could not remove until the realignment created diversity, nothing prevented Lilly from attempting to establish diversity in a timely removal; this can be accomplished in other situations, such as when a defendant claims fraudulent joinder. See Delaney v. Viking Freight, Inc, 41 F. Supp.2d 672, 674 n. 2 (E.D.Tex. 1999)("most reported opinions have enforced a 30-day removal period that begins to run from the time the defendants can first ascertain that a party has been fraudulently joined").

The first paragraph of 28 U.S.C. § 1446(') requires the notice of removal to be filed "within thirty days after the receipt by the defendant . . . of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based[.]" However, in its notice of removal filed long after Wausau commenced this action in State court, Lilly of course relied on the second paragraph of § 1446('), which permits a later filing where "the case stated by the initial pleading [was] not removable[.]" The inconsistency of Lilly's positions-that the State court's alignment of Lilly as a plaintiff is "immaterial and irrelevant," and that the State's realignment order rendered the case removable-is not lost on the court.
Lilly argues that its position on the jurisdictional effects of the realignment order-that it created diversity-is not inconsistent with its position that Lilly's realignment as plaintiff is immaterial and irrelevant. Lilly contends that other courts have expressly held that a state court realignment order that creates diversity jurisdiction does render a case removable. E.g., Crumb v. Wal-Mart Group Health Plan, 925 F. Supp. 1214, 1220 (W.D.Ky. 1996). Lilly forgets, however, that the existence of complete diversity here is not disputed; instead, what is disputed is whether Lilly is a proper party to remove under the federal statute. Being a functional plaintiff, Lilly is not a proper party to remove under 28 U.S.C. § 1441(a).

III

The insurers argue that Lilly should be ordered to pay their attorneys' fees and costs incurred as a result of the improper removal, pursuant to 28 U.S.C. § 1447(c).

A finding of bad faith, improper purpose, or vexatious or wanton conduct is not necessary to support an award under section 1447(c).Morris v. Bridgestone/Firestone, Inc., 985 F.2d 238, 240 (6th Cir. 1993). The goal of this provision of the statute is to deter improper removal. Circle Indus. USA. Inc. v. Parke Construction Group. Inc., 183 F.3d 105, 109 (2d Cir. 1999), cert. denied, 528 U.S. 1062 (1999). Because the simplicity of the removal procedure facilitates removal,

it also exposes a plaintiff to the possibility of abuse, unnecessary expense and harassment if a defendant removes improperly, thereby requiring plaintiff to appear in federal court, prepare motion papers and litigate, merely to get the action returned to the court where the plaintiff initiated it. Providing for attorneys' fees when granting a motion to remand serves the purpose of deterring improper removal[.]"
Id. (holding that § 1447(c) does not authorize award of fees to removing party when motion for remand is denied). "Unjustified removal complicates and extends litigation; the American Rule requires parties to bear their expenses in one set of courts, but when their adversary wrongly drags them into a second judicial system the loser must expect to cover the incremental costs." Garbie v. Daimlerchrysler Corp., 211 F.3d 407, 411 (7th Cir. 2000). In addition, "[b]ecause § 1447(c) is a fee-shifting statute, the [movants] as prevailing parties are presumptively entitled to recover the attorneys' fees incurred in defending their award." Id., 211 F.3d at 411 (citation omitted).

Lilly argues that the court should deny the insurers' request for an award of attorneys' fees because Lilly's actions had a "legitimate or supportable basis in the law." Lilly's Brief in Opposition at 9-10. However, while Lilly's position seemed to have some basis at first blush, closer examination has revealed serious deficiencies and fundamental inconsistencies in its arguments. On the one hand, Lilly argues that controlling federal law holds that the designation of a party as "plaintiff' or "defendant" in state court is "immaterial and irrelevant" to the proper designation of a party for federal removal purposes. On the other hand, Lilly also argues that the "separate issue of whether a jurisdictional basis for removal exists in the first place" is determined with reference to state law. Lilly's Surreply at 4. Thus, while Lilly relies on the state court realignment order for one purpose-to the extent that it creates diversity, the existence of which is not questioned Lilly ignores the order to the extent that it deems Lilly a plaintiff.

As a Sixth Circuit panel has recently observed, cases that involve a denial of fees or reverse an award of fees are "much less numerous" than those in which fees have been awarded. Ahearn v. Charter Township of Bloomfield, No. 97-1187, 1998 WL 384558, at **2 (6th Cir. June 18, 1998). Nonetheless, the former group of cases focuses "on the objective `propriety' of the removal attempt and set[s] forth the following standard: an award of costs, including attorney fees, is inappropriate where the defendant's attempt to remove the action was `fairly supportable,' . . . or where there has not been at least some finding of fault with the defendant's decision to remove[.]" Id. (citations omitted).

In addition, while a finding of bad faith or improper purpose is not necessary to support an award under section 1447(c), Morris, 985 F.2d at 240, Lilly's filing of a motion to transfer venue to the Southern District of Indiana for purposes of consolidation with the earlier-filed action there suggests that removal may be the product of an attempt by Lilly to reverse the result of what appears in retrospect to have been an ill-advised decision to oppose the expansion of that action. Such a purpose is an improper one. This court's October 24, 2000 order staying consideration of the venue motion has had the fortunate effect of sparing the insurers some additional expenses which might have been incurred in responding to that motion. However, the court concludes that the moving insurers, and those who have joined with them in their motion to remand, are entitled to an award of attorneys' fees and costs which they have incurred, as permitted by § 1447(c).

No specific amount has been requested for the award. Generally, non-removing parties are entitled to recover attorneys' fees at a reasonable rate for a reasonable number of hours spent in connection with the remand motion. Greenidge v. Mundo Shipping Corp., 60 F. Supp.2d 10, 12 (E.D.N.Y. 1999). Ideally, litigants will settle the amount of a fee; however, "[w]here settlement is not possible, the fee applicant bears the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates." Id. (citing Hensley v. Eckerhart. 461 U.S. 424, 437 (1983)). Determining the amount of a fee-shifting award is not a task which the court relishes. Nevertheless and regardless of the unpleasantness of the task, in this case an award is not only statutorily authorized, but also warranted and proper.

The insurers must document their request before the court is in a position to issue an order which awards any amount of fees and costs. While "[a] request for attorney's fees should not result in a second major litigation," id., the court will retain limited jurisdiction after the remand, for the sole purpose of determining the amount of the award under § 1447(c). See Stallworth v Greater Cleveland Regional Transit Auth., 105 F.3d 252, 256-57 (6th Cir. 1997) (holding that district court, after issuing order of remand, may make an award of attorney fees and costs in a separate order). However, the court will remand the remainder of the action to the Michigan court without delay, so that the substance of the litigation may proceed.

IV

The insurers have filed a timely, proper motion for remand which this court is obliged to grant pursuant to 28 U.S.C. § 1447(c). The court orders as follows:

1. The joint motion to remand filed by certain of the defendant insurers is GRANTED.

2. Lilly's motion to transfer venue is DENIED as moot.

3. The joint motion for attorneys' fees and costs under 28 U.S.C. § 1447(c) is GRANTED.

4. Any insurer claiming entitlement to attorneys' fees and costs incurred as a result of the removal shall , by not later than 14 days after the date file-stamped on the face of this order, file an itemized accounting of fees and costs so incurred, a supporting brief, and evidentiary support, including affidavits and time or billing records. The materials filed shall be prepared bearing in mind that the court's order herein awards only those fees and costs incurred as a result of the removal; any evidence which does not differentiate between such fees and costs and others generally incurred in the litigation shall not be deemed sufficient documentation. Lilly shall , by not later than 28 days after the date file-stamped on the face of this order, file a written brief setting forth its opposition, if any, to specific fees or costs claimed by any insurer. After passage of this time period, the court will consider the issue of the amount of the award ripe for decision. Motions for reconsideration will not be entertained.

5. This action is REMANDED to Michigan's Kent County Circuit Court. However, this court retains jurisdiction for the sole purpose of determining the amount of the award under § 1447(c).

6. A certified copy of this order of remand shall be mailed forthwith by the clerk to the clerk of the Kent County Circuit Court.


Summaries of

Lilly Industries v. Employers Insurance of Wausau

United States District Court, W.D. Michigan, Southern Division
Jan 16, 2001
No. 1:00 cv 772 (W.D. Mich. Jan. 16, 2001)
Case details for

Lilly Industries v. Employers Insurance of Wausau

Case Details

Full title:LILLY INDUSTRIES (USA), INC., Plaintiff, v. EMPLOYERS INSURANCE OF WAUSAU…

Court:United States District Court, W.D. Michigan, Southern Division

Date published: Jan 16, 2001

Citations

No. 1:00 cv 772 (W.D. Mich. Jan. 16, 2001)

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