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granting remand where removing defendant did not prove the existence of an enforceable settlement agreement
Summary of this case from Drawhorn-Davis v. State Farm Mut. Auto. Ins. Co.Opinion
Civil Action No. 00-0920 SECTION "A"
July 5, 2000
ORDER AND REASONS
This tort action was removed here from state court on allegations of diversity jurisdiction. Before the Court is the issue of whether the action should be remanded to state court for lack of jurisdiction. Plaintiff Bush and defendant Waterman Steamship Corporation ["Waterman"] are both Louisiana citizens for jurisdictional purposes. The removing defendant, American Bureau of Shipping ["ABS"], is a citizen of Delaware (state of incorporation) and Texas (principal place of business).
BACKGROUND
By contract, plaintiff Bush retained the law firm of Stern and Miller ["Stern"] to represent her regarding her claims against Waterman. The contract provided, in part, that neither Bush nor Stern could settle the matter without the other's consent. Shortly thereafter, Bush retained the firm of Leger Mestayer ["Mestayer"], who filed this action in state court in Orleans Parish, Louisiana. On learning of that filing, Stern filed its contract with Bush in the Notarial Office of Orleans Parish in order to protect its right to its fee, pursuant to La.R.S. 37:218. Stern also filed a motion to intervene in the action. That motion was filed into the state-court record, but was not granted or served before removal.
Bush and Waterman agreed to a settlement. Despite Bush's certain knowledge of her contract with Stern and despite the fact that Stern's motion to intervene, setting forth that contract, had been filed into the record, in their "settlement" Bush and Waterman did not seek the consent of Stern or consider the issue of Stern's fee. The action was not dismissed, and no settlement was entered into the record.
Bush amended her complaint to add claims against American Bureau of Shipping ["ABS"]. ABS removed the action, asserting that ABS and Bush were of diverse citizenship and that Waterman's citizenship was irrelevant because of the settlement. Stern learned of the alleged settlement when it learned of the removal. With that knowledge, Stern intervened in this court for its fee.
Plaintiff Bush moved to dismiss her claims against Waterman, asserting settlement of those claims. Stern opposed that motion because its fee claim was unresolved. The Court denied the motion to dismiss, finding that Stern's claim for fees was an unresolved matter between Bush and Waterman, for reasons set out infra.
See Record, document 21.
Because the non-diverse Waterman remained a party, the Court sua sponte questioned its subject-matter jurisdiction and invited briefing regarding the apparent necessity of remand. ABS filed a memorandum opposing remand. (Intervenor Stern filed an unnecessary "Motion to Remand.")
Because the Court has not considered Stern's motion, it need not examine the issue of whether the intervenor could move for remand.
DISCUSSION
Because of the federalism concerns raised by removal, removal jurisdiction is strictly construed. Willy v. Coastal Corp., 855 F.2d 1160, 1164 (CA5 1988), and cases cited. A federal court "must be certain of its jurisdiction" before it addresses the merits of a removed action. B., Inc. v. Miller Brewing Company, 663 F.2d 545, 548-549 (CA5 1981). Therefore, any doubts regarding removal jurisdiction must be resolved against federal jurisdiction, Acuna v. Brown Root, Inc., 200 F.3d 335, 339 (CA5 2000), cert. denied, ___ S.Ct. ___ (2000), 2000 WL 365315, citing Willy; and in favor of nonremoval, Vasquez, at 694, citing B., Inc.
In a case similar to the instant action, the Fifth Circuit Court of Appeals has stated:
We hold that a case that was not originally removable under our diversity jurisdiction because of the presence of a nondiverse defendant may be removed only after it is clear under applicable state law that the nondiverse defendant has been taken out of the case, leaving a controversy wholly between the plaintiff and the diverse defendant.Vasquez v. Alto Bonito Gravel Plant Corporation, 56 F.3d 689, 694 (CA5 1995). To render such an action removable, any settlement between the plaintiff and the nondiverse defendant must be irrevocable, binding and enforceable under state law. Vasquez, at 693-694; Estate of Martineau v. Arco Chemical Company, 203 F.3d 904, 910-911 (CA5 2000). The removing diverse defendant, ABS, has the burden of proving the action is removable. Vasquez, at 692; Martineau, at 910.
Under Louisiana law:
A transaction or compromise is an agreement between two or more persons who, for . . . putting an end to a lawsuit, adjust their differences by mutual consent. . . . This contract must be either reduced into writing or recited in open court . . . [in order to be judicially enforceable]
La.C.C. art. 3071. ABS has not presented evidence showing that the "settlement" between plaintiff Bush and Waterman complies with this article. ABS has not shown that the settlement was irrevocable under state law at the time of removal.
More importantly, any "settlement" between the plaintiff and Waterman did not consider Stern's claim for fees. Pursuant to La.R.S. 37:218, Stern has an enforceable claim for its fee if the firm was discharged by plaintiff without cause, and if Stern properly recorded its contract with the plaintiff. Saucier v. Hayes Dairy Products, Inc., 373 So.2d 102, 117 (La. 1979). Thus, despite the settlement, Waterman and plaintiff remain solidarily liable for Stern' claim, Martin v. David, 685 So.2d 158, 162 (La.App. 3d Cir.), writ denied, 682 So.2d 766 (La. 1966); and "the extinguishing effect of the settlement will therefore be suspended. . . . until recognition and payment of the fee. . . ." Scott v. Kemper Insurance Company, 377 So.2d 66, 70 (La. 1979). Thus, even if there was an otherwise-binding settlement between plaintiff Bush and Waterman, at the time of removal the settlement had no extinguishing effect and Waterman had not been taken out of the case.
Until the matter of Stern's fees is resolved by the parties or by the state court, Waterman remains a party to this action. Waterman and Bush are both Louisiana citizens, so there is not complete diversity of citizenship between the parties. This Court has no jurisdiction of this matter and it must be remanded to state court. 28 U.S.C. 1447(c). Accordingly,
IT IS ORDERED that the above-captioned action be REMANDED to the Civil District Court, Parish of Orleans, State of Louisiana.