James Bennett et al v United Rentals (North America), Inc. DO NOT DOCKET. CASE HAS BEEN REMANDED., No. 3:2019cv00270 - Document 21 (S.D. Tex. 2019)
Court Description: MEMORANDUM OPINION AND ORDER granting 14 AMENDED 3 MOTION (Signed by Judge Jeffrey V Brown) Parties notified.(agould, 3)
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James Bennett et al v United Rentals (North America), Inc. DO NOT DOCKET. CASE HAS BEEN REMANDED. Doc. 21 United States District Court Southern District of Texas ENTERED UNITED STATES DISTRICT COURT SOUTH ERN DISTRICT OF TEXAS GALVESTON DIVISION J AMES BENNETT, et al., Plaintiffs, VS. UNITED RENTALS (NORTH AMERICA), INC., Defendant. § § § § § § § § § October 18, 2019 David J. Bradley, Clerk CIVIL ACTION NO. 3:19-cv-00270 MEMOR AN D U M OPI N I ON AN D OR D ER J EFFERY V. BROWN, UNITED STATES DISTRICT J UDGE Pending before the Court is plaintiffs J am es Bennett and Vera Bennett’s Am ended Motion to Rem and, Dkt. 14. After considering the m otion, the response, the reply, the pleadings, and the applicable law, the Court grants the m otion. I. BACKGR OU N D On J uly 26, 2017, the Bennetts filed the underlying action in the 23rd J udicial District Court of Brazoria County, Texas, 1 against Vernor Material & Equipm ent Co., Inc. (a Texas corporation), seeking dam ages from an accident involving a backhoe front loader at the Olin Freeport B Plant in Freeport which resulted in the death of Darrel Bennett. Dkt. 1– 1. 1 James Bennett, Individually and as a Representative of the Estate of Darrel Wayne Bennett and Vera Bennett, Surviving Mother v. Vernor Material Equipment Co., Inc.; Case No. 92755-CV, in the 23rd Judicial District Court, Brazoria County, Texas. Dockets.Justia.com On August 2, 2018, Plaintiffs filed their First Am ended Petition, adding three defendants: CNH Industrial Am erica, LLC (a Delaware com pany); United Rentals, Inc. (a Delaware corporation); and United Rentals (North Am erica), Inc. (a Delaware corporation with its principal place of business in Connecticut). See Dkt. 1– 2. On April 8, 2019, the Bennetts nonsuited United Rentals, Inc. Dkt. 1– 3. Then, on August 3, 2019, the Bennetts filed a Second Am ended Petition, rem ovin g CNH and Vernor as parties to the lawsuit. See Dkt. 1-4. On August 9, 2019—over two years after the Bennetts initially filed suit— United Rentals (North Am erica), Inc. (hereafter “Defendant”) rem oved the case to this Court based on diversity jurisdiction. Dkt. 1; see 28 U.S.C. §§ 1332, 1441. Defendant contends its notice of rem oval is tim ely because Defendant rem oved this case “as soon as practicable and within thirty (30) days of service of Plaintiffs’ Second Am ended Petition.” Dkt. 1 at 4. On August 27, 2019, the Bennetts filed the instant Am ended Motion to Rem and, 2 arguing Defendant’s rem oval is untim ely under 28 U.S.C. § 1446(c). That sam e day, the Court set an expedited briefing schedule because trial in the state court action is set for Novem ber 12, 2019. The Bennetts’ argum ent for rem anding this case is relatively straight-forward; rem oval is not perm itted m ore than one year after the com m encem ent of an action unless the plaintiffs acted in bad faith in order to prevent a defendant from rem oving the action. Therefore, because the Bennetts did not act in bad faith, and because Defendant rem oved this 2 Plaintiffs’ initial Motion to Remand was struck for failure to comply with Judge Hanks’ procedures. Dkt. 6. action m ore than one year after the Bennetts initiated the state-court action, rem oval is untim ely. Dkt. 14 at 1-2. On the issue of bad faith, the Bennetts contend that they filed their Second Am ended Petition the day after receiving CNH ’s settlem ent paym ent. Id. at 3-4. Although not m entioned until their reply briefing, the Bennetts m ediated their claim s against both CNH and Vernor on J une 18, 2019, reaching a settlem en t agreem ent that sam e day. See Dkt. 17 at 5. The Bennetts also point towards the com plexity of their settlem ent process with Vernor, which involved a bench trial on the issue of whether the decedent’s son was a dependent at the tim e of his death and, therefore, entitled to workers’ com pensation death benefits. Dkt. 14 at 4. According to the Bennetts, “a m ajor part of [their] settlem ent [with Vernor] was a waiver of both past and future subrogation of workers[’] com pensation carrier’s interest.” Id. Defendant’s response focuses on when the Bennetts settled their claim s against Vernor– – the party whose presence defeated com plete diversity and prohibited rem oval. Defendant argues that the Bennetts executed and exchanged settlem ent docum ents with Vernor on J uly 18, 2019, citing in support e-m ails between the Bennetts’ and Vernor’s counsel– – both dated J uly 18, 2019– – in which counsel for each party represents that a signed settlem ent release is attached. Dkt. 16 at 3 (citing Defendant’s Exs. 6 and 7). Defendant also directs the Court’s attention to a letter from Vernor’s counsel to the Bennetts’ counsel, also dated J uly 18, 2019, which states that a settlem ent check is enclosed. Id. (citing Ex. 1). According to the post office’s tracking service, the letter was delivered to the Bennetts’ counsel’s office on J uly 22, 2019– – twelve days before the Bennetts filed their Second Am ended Petition. Id. (citing Defendant’s Ex. 3). In their reply, the Bennetts elaborate on why they did not dism iss Vernor earlier from the suit. Som e of the m ore salient reasons are: (1) Vernor initially failed to respond to requests for adm issions; (2) before am ending their petition for the first tim e, the Bennetts attem pted to m ediate the dispute with Vernor; (3) the Brazoria County district judge was unavailable for an unspecified am ount of tim e for personal reasons; and (4) the second m ediation between with CNH and Vernor (i.e., the successful m ediation) did not occur until J une 18, 2019– – sixteen days before the Bennetts filed their Second Am ended Petition. Dkt. 17 at 4-5. Plaintiffs also provide additional inform ation regarding the previously m entioned bench trial concerning whether the decedent’s son was a dependent at the tim e of his death. Notably, the trial occurred m onths before the Bennetts’ second attem pt at m ediation and resulted in a verdict in the Bennetts’ favor that was “still subject to appeal while the [the Bennetts] awaited funding of the settlem ents from [CNH and Vernor].” Id. at 5. II. AN ALYSI S A. R e m o va l Ju ris d ictio n In an action that has been rem oved to federal court, a district court is required to rem and the case to state court if, at any tim e before final judgm ent, it determ ines that it lacks subject m atter jurisdiction. See 28 U.S.C. § 1447(c). When considering a m otion to rem and, “[t]he rem oving party bears the burden of showing that federal jurisdiction exists and that rem oval was proper.” Barker v. H ercules Offshore Inc., 713 F.3d 208, 212 (5th Cir. 2013) (quoting M anguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002)). In evaluating a m otion to rem and, courts should bear in m ind that “rem oval statutes are to be construed strictly against rem oval and for rem and.” Eastus v. Blue Bell Cream eries, L.P., 97 F.3d 100, 106 (5th Cir. 1996). B. D ive rs ity Ju ris d ictio n Federal courts have subject-m atter jurisdiction and are authorized to entertain causes of action only where a question of federal law is involved or where there is diversity of citizenship between the parties and the am ount in controver sy exceeds $75,000.00, exclusive of interest and costs. 28 U.S.C. §§ 1331, 1332; Arbaugh v. Y & H Corp., 546 U.S. 500, 513 (2006). In rem oved cases where, as here, there is no suggestion that a federal question is involved, subject-m atter jurisdiction exists only if there is com plete diversity am ong the parties and the am ount in controversy exceeds $75,000.00. See 28 U.S.C. § 1332; Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005). Com plete diversity requires that no plaintiff be a citizen of the sam e state as any defendant. Vaillancourt v. PNC Bank Nat’l Ass’n, 771 F.3d 843, 847 (5th Cir. 2014). H ere, there is no question com plete diversity exists between the Bennetts, citizens of Texas, and Defendant, a Delaware corporation with its principal place of business in Connecticut. Further, it is apparent from the pleadings that the am ount in controversy exceeds $75,000.00, which neither party disputes. Therefore, the sole rem aining question is the tim eliness of Defendant’s notice of rem oval. C. Tim e lin e s s o f R e m o va l The tim eliness of rem oval is governed by 28 U.S.C. § 1446(b), which provides, in pertinent part: The notice of rem oval of a civil action or proceeding shall be filed within 30 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, or within 30 days after the service of sum m ons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter. *** Except as provided in subsection (c), if the case stated by the initial pleading is not rem ovable, a notice of rem oval m ay be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an am ended pleading, m otion, order or other paper from which it m ay first be ascertained that the case is one which is or has becom e rem ovable. 28 U.S.C. § 1446(b). Thus, “if the initial pleading sets forth a claim that triggers the rem oval clock, the defendant m ust file notice of rem oval within thirty days of receiving it.” M um frey v. CVS Pharm acy , Inc., 719 F.3d 392, 397– 98 (5th Cir. 2013); see § 1446(b)(1). If the initial pleading does not trigger rem oval, however, “a notice of rem oval m ust be filed within thirty days of the defendant’s receipt of a docum ent from which it m ay ascertain that the case is, or has becom e, rem ovable.” Id. at 398; see § 1446(b)(3). Nevertheless, pursuant to section 1446(c)(1), even if a defendant receives such notice that a case has becom e rem ovable after the initial pleading, if it has been m ore than one year since the com m encem ent of the action, the case m ay not be rem oved “unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from rem oving the action.” 28 U.S.C. § 1446(c)(1). This rule is com m only called the “one-year bar.” See Tedford v. W arner-Lam bert Co., 327 F.3d 423, 426 n.8 (5th Cir. 2003). Before its am endm ent in 2011, section 1446(c)’s statutory text did not contain the bad-faith exception. H oy t v. Lane Constr. Corp., 927 F.3d 287, 293 (5th Cir. 2019), as revised (Aug. 23, 2019) (“Before 2011, § 1446 prohibited defendants . . . from rem oving a case ‘m ore than one year after com m encem ent of the action’– – full stop.”). Thus, cases that hinge on there being no exception to section 1446’s one-year bar have been superseded. So, too, have cases that rely on the “equitable tolling” exception articulated by the Fifth Circuit in Tedford, which provided that section 1446’s one-year lim itation was subject to exceptions where a strict application of the rule would be inequitable. Id. at 294 (“We therefore no longer apply the old § 1446 and the Tedford exception we created. We now apply the new § 1446 and the bad-faith exception Congress created.”). Although, adm ittedly, cases applying the equitable-tolling exception m ay still inform this Court’s decision under the bad-faith standard because, in m ost cases where there was bad-faith conduct on the part of the plaintiff, equity will have dem anded tolling the one-year lim itation period. See Solaija Enterprises LLC v. Am guard Ins. Co., CV H -19-0929, 2019 WL 2329832, at *2 (S.D. Tex. May 31, 2019) (“Although the Fifth Circuit has not defined ‘bad faith’ in the context of § 1446(c)(1), courts within the circuit have opined that the standard for showing bad faith is com parable to the legal standard for establishing equitable tolling under Tedford.”). Following the 2011 am endm ent to section 1446, “‘[c]ourts have not settled on a clear standard for determ ining bad faith’ in the [s]ection 1446(c)(1) context.” Jones v. Ram os Trinidad, 380 F. Supp. 3d 516, 521 (E.D. La. 2019) (citing Rantz v. Shield Coat, Inc., Case No. 17-3338, 2017 WL 3188415, at *5 (E.D. La. J uly 26, 2017) (quoting Shorraw v. Bell, Case No. 15-3998, 2016 WL 3586675, at *5 (D.S.C. J uly 5, 2016))). Recently, however, the Fifth Circuit provided som e guidance in H oy t, stating “[w]hen it com es to bad faith . . . the question is what m otivated the plaintiff in the past—that is, whether the plaintiff’s litigation conduct m eant ‘to prevent a defendant from rem oving the action.’” H oy t, 927 F.3d at 923 (em phasis in original). Other courts that have considered the issue have likewise focused on whether a plaintiff’s conduct dem onstrates m anipulation of the rem oval rules in order to prevent a defendant’s rem oval. Jones, 380 F. Supp. 3d at 521 n.50 (collecting cases). H ere, the record sim ply does not support a finding that the Bennetts acted in bad faith. They originally sued Vernor—the com pany whose em ployee operated the backhoe that was involved in the incident resulting in Darrel Bennett’s death— on J uly 26, 2017. Dkt. 1– 1. Vernor failed to respond to the Bennetts’ requests for adm ission, and, over the next year, the state trial court conducted four hearings regarding Vernor’s liability, which apparently were com plicated by the request-for adm ission issue. Dkt. 17 at 4. The Bennetts’ efforts were further frustrated through no fault of their own due to the state trial judge’s unavailability. See id. With the statute of lim itation approaching and the requests-for-adm issions issue still pending, the Bennetts nam ed as defendants the backhoe’s m anufacturer and leasing com pany, CNH and Defendant, respectively. See id. at 5; Dkt. 1– 2. Neither party provides m uch inform ation about what occurred between the filing of the First and Second Am ended Petitions, although the Bennetts contend “[e]xtensive discovery was undertaken.” Dkt. 17 at 4. Regardless, it was Defendant’s burden to show rem oval was proper. Barker, 713 F.3d at 212. And although the Bennetts provide little detail about their bench trial with Vernor, we know that it took place m onths before the second m ediation and resulted in a verdict in the Bennetts’ favor, which likely helped facilitate the eventual settlem ent. Dkt. 17 at 5. Contrary to Defendant’s assertion, it is not the Bennetts who “seek to m uddy the waters and further confuse the issue.”3 Rather, it is Defendant’s briefing that m akes repeated references to the fact that the Bennetts “waited” over “one year after com m encing the suit to add [Defendant as a party]” and dism issed Vernor “one year and one day” after filing their First Am ended Petition. See Dkt. 16 at 12, 7-8, 11. But these argum ents m iss the point; it is the inclusion of Vernor as a defendant that destroyed com plete diversity. 3 Dkt. 16 at 2. Even if the Bennetts nam ed Defendant in their original state-court petition, the case would not have been rem ovable on diversity grounds until a little over two years later, when the Bennetts dropped Vernor as a defendant. In other words, it is inconsequential that the Bennetts “waited” over a year to add Defendant as a party to a lawsuit that would not have been subject to rem oval in the first place. Further, the “one year and one day” argum ent pertains to cases where a plaintiff attem pts to circum vent diversity jurisdiction by including a non-diver se defendant, only to dism iss the non-diverse defendant one year after com m encem ent of the action. 28 U.S.C. § 1446(c) (em phasis added); see Tedford, 327 F.3d at 426-28. H ere, the com m encem ent of the action occurred on J uly 26, 2017, when the Bennetts filed their original petition in state court. See Tex. R. Civ. P. 22 (action is “com m enced” when petition is filed). Stated differently, the action becam e rem ovable only upon showing the plaintiffs “acted in bad faith in order to prevent a defendant from rem oving the action” on J uly 27, 2017—seven days before the Bennetts even nam ed diverse parties as defendants in their First Am ended Petition. See 28 U.S.C. § 1446(c); Dkt 1– 2. Neither party has cited any dispositive case law in their briefing. For their part, the Bennetts rely alm ost exclusively on cases decided based upon section 1446(c)’s prior absolute ban on rem oval after one year 4 or rem anded due to the defendant’s failure to include copies of “all process, pleadings, and orders served 4 See Dkt. 17 at 2-4. upon such defendant” along with their notice of rem oval, as required by 28 U.S.C. § 1446(a). 5 Defendant, however, m isses the m ark, as well, citing cases with easily distinguishable facts, som e of which were decided under the form er “equitable tolling” exception. In Tedford, the Fifth Circuit found that a plaintiff’s forum m anipulation justified application of the equitable tolling exception where the plaintiff, m ere hours after learning that the defendant intended to seek rem oval, am ended her pleading to add a non-diverse defendant, her own doctor, and then signed and post-dated a notice of nonsuit against the doctor. 327 F.3d at 427. The court and the defendants were unaware of the post-dated nonsuit until after the one-year deadline had passed. Id. at 428. In Shriver v. Spiritcom , Inc., this Court found equity dem anded tolling the one-year lim itations period when a plaintiff nonsuited the non-diverse defendant “beyond the eleventh hour,” essentially the night before the trial in state court was set to begin. 167 F. Supp. 2d 962, 963-64 (S.D. Tex. 2001) (Kent, J .). Also, the plaintiff in Shriver had previously dism issed his initial suit when it was rem oved to federal court and then re-filed essentially the sam e suit in state court but added a non-diverse defendant. Id. at 962-63. In Law son v. Parker H annifin Corp., the court found that a plaintiff engaged in badfaith forum m anipulation when the plaintiff failed to serve the defendant until seven m onths after filing suit, did not m ove for a default judgm ent when the defendant failed to appear or answer the plaintiff’s petition, and never sought 5 See Dkt. 14 at 4-5. discovery against the defendant. 4:13-cv-923-O, 2014 WL 1158880, at *4-6 (N.D. Tex. Mar. 20, 2014). Finally, in H oy t, the Fifth Circuit found the plaintiffs’ “halfhearted” pursuit of their claim s against a non-diverse defendant, only to dism iss the non-diverse defendant “for free” one year and two days after filing suit, supported the district court’s finding that the plaintiffs had acted in bad faith. 927 F.3d at 292-293. Notably, in contrast to the case at bar, both the district court and Fifth Circuit found it suspicious that the plaintiffs were unable to provide an explanation as to why they waited until just two days after the one-year deadline to dism iss the non-diverse defendant. Id. at 293. H ere, Defendant cannot point to any of the clearly egregious types of facts detailed in Tedford, Shriver, Law son, or H oy t. To the contrary, the settlem en t suggests the Bennetts’ claim s against Vernor were m eritorious. Cf., Bry son v. W ells Fargo Bank, N.A., 1:16-CV-28, 2016 WL 1305846, at *6 (E.D. Tex. Mar. 31, 2016). Moreover, the twelve-day lag between the Bennetts’ settling their claim s against CNH and Vernor and the Bennetts’ filing their Second Am ended Petition is irrelevant because, as m entioned above, this case was not rem ovable absent a showing of bad faith the very second the Bennetts added diverse defendants to this lawsuit. *** An evaluation of the relevant facts and controlling law reveals that Defendant’s notice of rem oval was untim ely. Therefore, this case was im providently rem oved, and rem and is required. The Court grants the Bennetts’ Am ended Motion to Rem and and rem ands this case to the 23rd J udicial District Court of Brazoria County, Texas. The District Clerk is directed to transm it the file to the District Clerk of Brazoria County, Texas. Signed at Galveston, Texas on this, the 18th day of October, 2019. _________________________ J EFFERY VINCENT BROWN UNITED STATES DISTRICT J UDGE
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