Civil No. 3:01-CV-0977-H.
September 10, 2001.
MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiff's Motion to Remand, filed June 11, 2001; Defendant Columbia Casualty Company's Response, filed June 25, 2001; and Plaintiff's Reply, filed July 2, 2001. The motion does not challenge this Court's subject matter jurisdiction over the case; rather, Plaintiff argues that the removal was procedurally defective, in that it was untimely filed. Upon review of the pleadings and the relevant authorities, the Court determines, for the reasons stated below, that Plaintiff's Motion to Remand should be GRANTED.
Plaintiff sues his employer, Ingram Sons Exxon and Automotive Shop ("Ingram"), and the insurance company, Columbia Casualty Company ("Columbia") with whom Ingram has an occupational loss insurance policy ("the policy") to cover work-related injuries of Ingram's employees. (Pet. ¶ 8). Plaintiff alleges that he sustained a knee injury during the course and scope of his employment with Ingram (Pet. ¶ 7), and that Ingram refused or failed to provide him with accurate information about what type of coverage was available to him. (Pet. ¶¶ 7-9). Because of the lack of medical treatment, Plaintiff's condition deteriorated to the point where he was no longer able to work. (Pet. ¶ 9). Plaintiff further alleges, in a section of his petition titled "Wrongful Denial of Claim," that, with the assistance of counsel, he was finally able to obtain the name of Ingram's insurance carrier. Id. Upon submitting a claim, Columbia allegedly initially represented that his claim would be accepted but ultimately denied coverage. Id.
In Plaintiff's state court petition, against Columbia he asserts causes of action for breach of contract, violations of the Texas Deceptive Trade Practices Act, violations of the Texas Insurance Code, and breach of the common law duty of good faith and fair dealing. (Pet. ¶¶ 10-16). Against Ingram, he asserts causes of action for tortious interference with contractual relations (Plaintiff's alleged contract with Columbia), breach of the employment contract between himself and Ingram, negligence (failure to provide a safe work environment), and breach of fiduciary duty. (Pet. ¶¶ 19-28). Finally, Plaintiff alleges that both Defendants conspired and agreed to deny benefits due to him under the occupational loss policy. (Pet. ¶¶ 17-18). Columbia, the removing party, argues that Plaintiff's claims are properly categorized as 1) Ingram's negligence, for which Ingram is allegedly liable for Plaintiff's injury; and 2) wrongful denial of benefits by Columbia. Grouped in this way, Columbia contends that all of the "extra-negligence causes of action" alleged by Plaintiff against it are preempted by ERISA (Def.'s Resp. Br. ¶ 5), and are separate and independent from the negligence cause of action.
Because Plaintiff moves to remand on the basis of allegedly untimely removal, the chronology of this case is particularly important. Based on the record pleadings and exhibits, the Court finds the following: Plaintiff filed this lawsuit in the 101st Judicial District Court of Dallas County, Texas, on March 23, 2001. (Def.'s Not. Removal, Ex. 2). Ingram was served with process on March 30, 2001. (Pl.'s Mot. Remand, Ex. A). Columbia was served with process on April 24, 2001, the date on which Columbia received the pleading from the Texas Department of Insurance, its statutory agent. (Pl.'s Mot. Remand, Ex. C). Columbia filed its Notice of Removal, based on this Court's federal question jurisdiction, on May 22, 2001. Ingram filed a consent to the removal on May 25, 2001. Plaintiff's Motion to Remand was timely filed, pursuant to 28 U.S.C. § 1447(c).
The Court here notes that there is no other basis for federal jurisdiction in this case. There is not complete diversity between the parties, as Plaintiff and Ingram are both citizens of Texas.
Under the relevant statute, "[t]he notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based. . . ." 28 U.S.C. § 1446(b). Where, as here, there are multiple defendants, the thirty-day period begins to run as soon as the first defendant is served so long as the case is then removable. Getty Oil Corp. v. Ins. Co. of North America, 841 F.2d 1254, 1262-63 (5th Cir. 1988). As a general rule, all served defendants must join in the petition for removal or consent to such action within that thirty days. Id. at 1263. At issue in the instant motion is whether Defendants fall within one of the recognized exceptions to this general rule, namely the exception in which the removed claim is a separate and independent federal claim under 28 U.S.C. § 1441(c). "[I]f one defendant's removal petition is premised on removable claims `separate and independent' from the claims brought against the other defendants, consent of the other defendants is not required." Henry v. Indep. Am. Sav. Ass'n, 857 F.2d 995, 999 (5th Cir. 1988); Acme Brick Co. v. Agrupacion Exportadora de Maquinaria Ceramica, 855 F. Supp. 163, 165 (N.D. Tex. 1994); Moody v. Commercial Ins. Co., 753 F. Supp. 198, 200 (N.D. Tex. 1990). Thus, if, as Columbia argues, Plaintiff's claims against it are separate and independent from his claims against Ingram, Columbia (the later-served Defendant) could properly remove within thirty days of service on Columbia.
As discussed below, the arguable basis for removing this case to federal court is ERISA preemption. To the extent that Plaintiff's state court petition could properly be read as a completely preempted, and thus removable, ERISA claim, this conclusion would be reached on the basis of Plaintiff's initial pleading. Thus, the provision in the second paragraph of § 1446(b) for removal later in the proceedings does not apply in this case.
The statute provides: "Whenever a separate and independent claim or cause of action within the jurisdiction conferred by section 1331 of this title is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters in which State law predominates."
The Supreme Court clarified when a cause of action will be considered "separate and independent," holding that "where there is a single wrong to [a] plaintiff, for which relief is sought, arising from an interlocked series of transactions, there is no separate and independent claim or cause of action under § 1441(c)." American Fire Cas. Co. v. Finn, 341 U.S. 6, 14 (1951). Based on American Fire, the Fifth Circuit's test for separateness focuses on "the separateness of the wrong to the plaintiff." Eastus v. Blue Bell Creameries, 97 F.3d 100, 104 (5th Cir. 1996). Beyond the separate wrong, Section 1441(c) also requires that the claims be independent, which is not the case if they "`involve substantially the same facts.'" Id. (citation omitted). Even where a plaintiff has asserted different legal theories against each defendant, the ultimate issue is the singularity of the harm. See, e.g., Mahmood v. Parkland Mem'l Hosp., 1998 WL 51364 at *3 (N.D. Tex. Jan. 26, 1998). In determining whether a claim is separate and independent, the plaintiff's complaint controls. Eastus, 97 F.3d at 105.
Because the alleged "separate and independent claim or cause of action" must fall within the Court's federal question jurisdiction, the Court must address at the threshold of its Section 1441(c) analysis whether certain of Plaintiff's claims are preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. Moreover, removal on federal question jurisdiction can only be based on ERISA Section 502(a), or "complete preemption." If a claim is not completely preempted, Section 514(a) of ERISA ("conflict preemption") is available as a defense to state law claims, but is not a basis for removal. See Copling v. The Container Store, Inc., 174 F.3d 590, 595 (5th Cir. 1999); 29 U.S.C. § 1132(f).
Under the statute, a plan participant or beneficiary may bring a civil action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 132(a)(1)(B). This statute provides the civil enforcement mechanism for denial of benefits and other coverage determinations made under ERISA plans, and thus completely preempts any state law cause of action seeking the same relief. See McClelland v. Gronwaldt, 155 F.3d 507, 516-17 (5th Cir. 1998). The Court notes, however, that state courts of competent jurisdiction and district courts of the United States have concurrent jurisdiction of actions under this provision. 29 U.S.C. § 1132(e)(1).
On these motion pleadings, the parties have not briefed the issue of complete preemption under ERISA. The Court assumes, for the purpose of considering Plaintiff's Section 1446(b) remand argument, that Columbia's removal basis is grounded in Section 502(a), as Columbia characterizes Plaintiff's claims against it as "wrongful denial of benefits." (Def.'s Resp. Br. ¶ 5). Based on Plaintiff's allegations (Pet. ¶ 8), the Court further assumes that the occupational loss policy at issue is an "ERISA plan," as that term has been statutorily defined. See 29 U.S.C. § 1002(1)(A), 1002(3); Memorial Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 240 (5th Cir. 1990). Finally, the Court concludes for purposes of this inquiry that the policy subscribed to by Ingram and provided by Columbia is not "maintained solely for the purpose of complying with applicable workmen's compensation laws." See 29 U.S.C. § 1003(b)(3); Guilbeaux v. 3927 Foundation, Inc., 177 F.R.D. 387, 393-94 (E.D. Tex. 1998); Pyle v. Beverly Enterprises-Texas, Inc., 826 F. Supp. 206, 209 (N.D. Tex. 1993) (both concluding that a Texas employer that is a "non-subscriber" under the state's worker's compensation law cannot rely on this statutory exemption from ERISA preemption). Plaintiff's claims against Columbia are arguably removable under a complete preemption analysis; under the two-part inquiry set out by the Fifth Circuit, see McClelland, 155 F.3d at 517, Plaintiff's five causes of action pleaded against Columbia "relate to" an employee benefit plan covered by ERISA, and appear to fall within the scope of Section 502(a).
However, even if Columbia is correct that all of Plaintiff's claims against it are removable under ERISA complete preemption, this does not end the Court's Section 1441(c) "separate and independent" claim analysis. The case law interpreting this statute in the specific context of ERISA does not categorically establish, as Columbia's response (¶ 6) suggests, that tort claims and ERISA claims are necessarily separate and independent. Rather, as indicated in the opinion that Columbia cites for this proposition, the relevant inquiry is whether Plaintiff's ERISA claim against Columbia is separate and independent from his tort and contract claims against Ingram. See Benoit v. W. W. Grainger, Inc., 1998 WL 749444 at *4 (E.D. La. Oct. 21, 1998). In Benoit, the court concluded that the plaintiff's medical malpractice action against his insurance company — ERISA preempted — was a separate and independent claim under Section 1441(c), and thus the insurance company was not bound by the general "first-served defendant" rule under Section 1446(b). Id. at *5. The court, however, severed and remanded the remaining defendants and claims, including premises liability and products liability claims based on the alleged causes of the plaintiff's motorcycle accident.
Upon careful consideration of Plaintiff's state court petition, the Court concludes that this case is distinguishable from the configuration of claims in Benoit. As stated above, Columbia's interpretation of "separate and independent claim" is based on its distinction between Plaintiff's negligence claim (brought against Ingram only) and the "extra-negligence" causes of action brought against Columbia. If Plaintiff's claims could be so neatly divided, the Court would be inclined to conclude that Plaintiff's ERISA-preempted claims, arising from the denial of medical benefits, are based in a separate wrong to Plaintiff than that on which his negligence claim is based. Columbia fails to address, however, the conspiracy claim that Plaintiff has pleaded against both Columbia and Ingram. With this in mind, the Court next turns to the requirement that the removable claims against Columbia also be independent from those against Ingram. See Eastus, 97 F.3d at 104.
Applying the Fifth Circuit's analysis in Eastus, the Court concludes that Columbia has not established the independence requirement. As stated above, a claim is not independent for purposes of Section 1441(c) if it involves substantially the same facts as the nonremovable claim(s). "For example, if one claim depends on establishing liability under the other, the two cannot be found to be independent." Id. (quoting Moore v. United Servs. Auto. Ass'n, 819 F.2d 101, 104 (5th Cir. 1987) (holding that a negligence claim against an insured and a bad faith claim against the insurer were not separate)). In this case, Plaintiff alleges that Ingram's negligence was a proximate cause of the injury for which he sought medical coverage from Ingram and Columbia. He also alleges that both Defendants conspired to deny him the benefits due him under the policy, with Ingram refusing to provide him with the necessary information to make a claim and Columbia ultimately rejecting the claim. This conclusion, moreover, conforms with the well established policy favoring narrow construction of the right to remove under Section 1441(c). See Getty Oil, 841 F.2d at 1263 n. 13; Moore, 819 F.2d at 103; Marshall v. Skydive America South, 903 F. Supp. 1067, 1069 n. 5 (E.D. Tex. 1995).
Because Columbia, which has the burden of establishing that its removal was proper, cannot show that Plaintiff's arguably preempted and removable claims against it are independent from Plaintiff's claims against Ingram, it cannot rely on the Section 1441(c) exception to the "first-filed defendant" thirty-day rule of Section 1446(b). As a result, Columbia's removal on May 22, 2001 was procedurally defective, and Plaintiff's cause must be remanded.
Finally, based on the foregoing ruling, the Court considers Plaintiff's request for attorneys' fees. The remand statute authorizes this Court to "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). "Central to the determination of whether attorneys' fees should be granted is the propriety of the defendant's decision to remove." Garcia v. Amfels, Inc., 2001 WL 687240 (5th Cir. June 19, 2001). The mere determination that removal was legally improper does not entitle a successful remand movant to a fee award. Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290, 292 (5th Cir. 2000).
In light of the authorities discussed above, the Court in its discretion concludes that Columbia had an objectively reasonable (although erroneous) belief that its removal was timely, based on the Section 1441(c) exception. See Valdes, 199 F.3d at 293. Plaintiff is not entitled to attorneys' fees.
The Court concludes that Columbia has not established that it properly and timely removed this case under the Section 1441(c) exception to the first-served defendant rule. Plaintiff's Motion to Remand is therefore GRANTED, and this case is hereby REMANDED to the 101st Judicial District Court of Dallas County, Texas. Plaintiff's Motion for Attorney's Fees is DENIED. Judgment will be entered accordingly.