Opinion
SA-23-CV-00575-FB
09-25-2023
JARED CARTER, Plaintiff, v. LIBERTY MUTUAL INSURANCE COMPANY, GEICO INSURANCE AGENCY, LLC, Defendants.
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
ELIZABETH S. ("BETSY") CHESTNEY UNITED STATES MAGISTRATE JUDGE.
To the Honorable United States District Judge Fred Biery:
This Report and Recommendation concerns Plaintiff's Motion to Remand [#6]. All pretrial matters in this case have been referred to the undersigned for disposition pursuant to Western District of Texas Local Rule CV-72 and Appendix C [#15]. The undersigned therefore has authority to enter this recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). For the reasons set forth below, it is recommended that Plaintiff's motion be granted.
I. Background
This insurance dispute arises out of alleged water damage caused by a plumbing leak to property located at 114 Coldwater Creek, Boerne, Texas, 78006. Plaintiff Jared Carter filed this action in state court against Defendants Geico Insurance Agency, LLC (“Geico”), and Liberty Mutual Insurance Company (“Liberty Mutual”), alleging Defendants failed to pay his full claim for damages. (Orig. Pet. [#1-2], at 7-14.) Carter's Original Petition asserts cause of action for breach of contract and violations of the Texas Deceptive Trade Practices Act (“DTPA”). (Id.) Liberty Mutual removed Plaintiff's Petition to this Court on May 5, 2023, on the basis of diversity jurisdiction. (Notice of Removal [#1].) In the Notice of Removal, Liberty Mutual asserted that Geico was served with process on April 6, 2023; had not yet filed an answer at the time of removal; but agreed to the removal. (Id. at 1-2.)
Shortly after removal, Liberty Mutual filed a motion to abate, arguing abatement of this case is mandatory under Texas Insurance Code § 542A.005(b) because Liberty Mutual requested an inspection of the property but was not provided a reasonable opportunity for the inspection. Liberty Mutual also argues Carter failed to provide it with the proper written notice of suit under Section 17.505 of the DTPA prior to filing this action. Carter responded by filing the motion to remand currently before the Court. The motion asserts the following arguments: (1) removal was procedurally improper because the Notice of Removal provided no evidence that Geico consented to the removal as required under the removal statute, 28 U.S.C. § 1446(b)(2)(A); (2) there is no diversity of citizenship because Liberty Mutual is also a citizen of Texas; and (3) Liberty Mutual failed to establish the amount in controversy exceeds $75,000. Liberty Mutual filed a response in opposition to the motion [#7], to which Carter filed a reply [#8]. Geico subsequently filed an Original Answer to the Petition. (Answer [#9].)
The undesigned held an initial pretrial conference on August 16, 2023, at which counsel for all parties appeared via videoconference. At the conference, the parties presented argument on the motion to remand. After the conference, the undersigned ordered Liberty Mutual to file any supplement to its response to the motion on or before August 23, 2023, and Carter to file any response to the supplement on or before August 30, 2023. The undersigned ordered Geico to file any response regarding its position on the motion by August 30, 2023, as well. Liberty Mutual filed a supplemental response [#22]; Geico filed a brief in opposition to the motion to remand [#23], and Carter filed a sur-reply [#24]. Carter's motion to remand is now ripe for the Court's review.
After considering all of the filings, the record before the Court, and the governing law, the undersigned finds that the removal was procedurally improper due to Liberty Mutual's failure to provide adequate evidence of Geico's consent to removal at the time of removal. Remand is thus required, and the undersigned need not consider the other two arguments raised in Carter's motion.
II. Legal Standard
Under the federal removal statute, notice of removal must be filed within thirty days of a defendant's receipt of service. 28 U.S.C. § 1446(b). The 30-day period starts to run as soon as the first defendant is served. Getty Oil Corp. v. Ins. Co. of North Amer., 841 F.2d 1254, 1262-63 (5th Cir. 1988). In cases with multiple served defendants, all defendants must consent to removal prior to the expiration of the thirty-day period. Gillis v. Louisiana, 294 F.3d 755, 759 (5th Cir. 2002) (citing 28 U.S.C. § 1446(b)(2)(A)). This requirement is frequently referred to as the “rule of unanimity.” Powers v. United States, 783 F.3d 570, 576 (5th Cir. 2015).
If the removing parties fail to comply with the rule of unanimity, or any other procedural requirement for removal, the plaintiff may move for remand within thirty days of removal. 28 U.S.C. § 1447(c) (“A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal . . . .”). The removing party always bears the burden of demonstrating removal was proper. Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). “Because removal raises significant federalism concerns, the removal statute is strictly construed and any doubt as to the propriety of removal should be resolved in favor of remand.” Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008) (internal quotation and citation omitted).
III. Analysis
Carter argues removal was procedurally improper because the Notice of Removal did not adequately demonstrate Geico's consent to the removal, as required by 28 U.S.C. § 1446(b)(2)(A). The undersigned agrees and will recommend this case be remanded to state court based on a defective removal.
The record reflects that Geico was the first Defendant served with process on April 6, 2023, meaning any notice of removal was due before Monday, May 8, 2023. 28 U.S.C. § 1446(b). Liberty Mutual timely filed its Notice of Removal on May 5, 2023. Carter timely filed his motion to remand less than 30 days later on June 2, 2023, arguing Liberty Mutual had not demonstrated Geico's consent to removal.
The only reference to Geico's consent in the Notice of Removal is an assertion by Liberty Mutual that Geico was “in agreement with the removal of this case to Federal Court.” (Notice of Removal [#1], at 1-2.) Liberty Mutual did not attach to the Notice of Removal any evidence of Geico's purported consent or include any other allegations regarding consent within the Notice of Removal itself. Carter argues this renders the Notice of Removal defective. The undersigned agrees.
The Fifth Circuit has explained that for consent to be valid, each defendant must consent to removal for itself. Getty Oil, 841 F.2d at 1262 n.11. “This does not mean that each defendant must sign the original petition for removal, but there must be some timely filed written indication from each served defendant, or from some person or entity purporting to formally act on its behalf in this respect and to have authority to do so, that it has actually consented to such action.” Id. “Otherwise, there would be nothing on the record to ‘bind' the allegedly consenting defendant.” Id. “Courts from the Fifth Circuit have found removals defective when they have not met the requirements laid out in Getty Oil, and have consistently rejected representations from one party that another party consents in the removal.” Okoronkwo v. Bolen, No. A-18-CV-00542-RP, 2019 WL 433739, at *3 (W.D. Tex. Feb. 2, 2019), report and recommendation adopted, No. 1:18-CV-542-RP, 2019 WL 2565251 (W.D. Tex. Feb. 20, 2019).
Liberty Mutual now argues that it did, in fact, have authority to represent Geico's consent on its behalf. As evidence, Liberty Mutual attaches an email from Geico's counsel to its response to Carter's motion to remand. (Email [#7-2], at 2.) The email, which is dated May 2, 2023, communicates to Liberty Mutual's counsel that “Geico agrees and consents to Liberty's removal of the case.” (Id.) The response was filed on June 9, 2023, approximately one month after the 30-day deadline for removal expired. This late attempt to cure a defect in the Notice of Removal is insufficient.
District courts in this Circuit faced with similar circumstances have concluded that the removal was improper. See, e.g., Spoon v. Fannin Cnty. Cmty. Supervision & Corr. Dep't, 794 F.Supp.2d 703, 705-06 (E.D. Tex. 2011) (collecting cases). In Spoon, the removing defendant had represented in the notice of removal that all defendants consented to removal, relying on a letter between counsel sent shortly before the notice of removal was filed. Id. But the letter itself was not filed with the Court until it was attached as an exhibit to a response to the motion to remand, as here, after the 30-day notice period had expired. Id. The district court explained its reasons for rejecting the argument of the removing defendant that it could correct the procedural error post-removal:
Thus, Getty Oil, and footnote eleven in particular, and its progeny hold that to properly establish consent to removal, a defendant who does not
sign an original notice of removal cannot rely solely on a representation of its consent from removing defendants or on any communication between the defendants not timely filed with the court. Rather, the removing defendants must also at a minimum unambiguously state that they have been authorized to represent to the court on behalf of the non-removing defendant that the non-removing defendant has consented to the removal. . . . Therefore, in keeping with Getty Oil and its progeny, because the court was not given anything within the notice period on which to bind Glaser to the removal, the court finds that he failed to adequately consent to the removal.Id. at 709.
The same result is compelled here. Liberty Mutual merely asserted in the Notice of Removal that Geico was “in agreement with the removal of this case to Federal Court.” (Notice of Removal [#1], at 1-2.) The Fifth Circuit has held that this same kind of unsubstantiated statement in a removal notice is insufficient to establish the required consent of all defendants to removal. Getty Oil, 841 F.2d at 1262 & n.11. Liberty Mutual's assertion in the Notice of Removal was not supported by any additional allegations or evidence as to Geico's actual consent to removal or authorization of Liberty Mutual to formally represent Geico's consent on its behalf until after the 30-day removal period expired. The evidence was at that point untimely.
In the supplemental briefing submitted to the Court after the initial pretrial conference, Liberty Mutual asks the Court to consider another theory not raised in either its Notice of Removal or its original response to Carter's motion to remand or at the Court's initial pretrial conference where it heard argument on the motion to remand from all parties. Liberty Mutual now argues that the Court should disregard Geico altogether as a Defendant because Geico was improperly joined in this suit and therefore its consent was not required for removal. See Jernigan v. Ashland Oil Inc., 989 F.2d 812, 815 (5th Cir. 1993) (holding that there is no need to obtain consent of an improperly or fraudulently joined defendant). Liberty Mutual contends that Geico is not an insurance company, does not underwrite insurance policies, and had no involvement in the handling of Carter's claim.
The District Court should not consider this theory, as Liberty Mutual forfeited any argument regarding improper joinder and its effect on the need for Geico's consent to removal by failing to raise it in its notice of removal or even the response to the motion to remand. See United States v. Olano, 507 U.S. 725, 733 (5th Cir. 1993) (distinguishing between waiver, which is the intentional relinquishment or abandonment of a known right, and forfeiture, which is the failure to make the timely assertion of a right). Some district courts in this Circuit have excused a failure to raise improper joinder in a notice of removal, where the argument is raised in a response to a motion to remand based on lack of diversity jurisdiction. See, e.g., Pharos Cap. Grp., LLC v. Nutmeg Ins. Co., 999 F.Supp.2d 947, 953 (N.D. Tex. 2014). But where a party waits to raise the argument of improper joinder for the first time in a later filing, such as in objections to a report and recommendation, district courts have found the argument to be forfeited or waived. See, e.g., Bridges v. Home Depot USA, Inc., No. 3:22-CV-29-L, 2022 WL 3337773, at *2 (N.D. Tex. May 26, 2022).
Some courts have described the failure to raise improper joinder in a notice of removal as an issue of waiver, not forfeiture. Whether Liberty Mutual waived or forfeited the argument, the District Court should not consider it.
A finding of forfeiture is particularly appropriate here, where the basis of the remand motion is not jurisdictional but instead procedural, and the argument of improper joinder was not raised until August 23, 2023, almost four months after the 30-day removal period expired. District courts have rejected late attempts at raising improper joinder as a basis to cure a procedurally defective removal. Accord Castro v. O'Neal, No. DR-19-CV-083-AM-VRG, 2020 WL 10051740, at *4 (W.D. Tex. June 29, 2020), report and recommendation adopted in part, rejected in part, No. DR-19-CV-083-AM/VRG, 2020 WL 10051735 (W.D. Tex. Nov. 20, 2020) (finding clear error in magistrate's report and recommendation, which considered improper joinder as new ground for removal and basis for curing lack of consent of non-removing defendant beyond 30-day removal period).
In summary, Liberty Mutual's Notice of Removal was defective for failure to adequately allege or establish Geico's consent to removal. Liberty Mutual cannot cure that defect by attaching evidence to its response to Carter's motion to remand outside of the 30-day removal period. Additionally, Liberty Mutual forfeited any right to assert improper joinder as a basis for removal or for disregarding Geico's lack of consent by not raising the argument in its Notice of Removal, its response to Carter's motion to remand, or its oral arguments to the Court at the initial pretrial conference. The removal statute therefore requires remand.
IV. Conclusion and Recommendation
Having considered the motion to remand, related filings, the record before the Court, and the governing law, the undersigned recommends that Plaintiff's Motion to Remand [#6] be GRANTED and this case remanded to state court.
V. Instructions for Service and Notice of Right to Object/Appeal
The United States District Clerk shall serve a copy of this report and recommendation on all parties by either (1) electronic transmittal to all parties represented by attorneys registered as a “filing user” with the clerk of court, or (2) by mailing a copy to those not registered by certified mail, return receipt requested. Written objections to this report and recommendation must be filed within fourteen (14) days after being served with a copy of same, unless this time period is modified by the district court. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). The party shall file the objections with the Clerk of Court and serve the objections on all other parties. A party filing objections must specifically identify those findings, conclusions or recommendations to which objections are being made and the basis for such objections; the district court need not consider frivolous, conclusive or general objections. A party's failure to file written objections to the proposed findings, conclusions and recommendations contained in this report shall bar the party from a de novo determination by the district court. Thomas v. Arn, 474 U.S. 140, 149-52 (1985); Acuna v. Brown & Root, Inc., 200 F.3d 335, 340 (5th Cir. 2000). Additionally, failure to file timely written objections to the proposed findings, conclusions and recommendations contained in this report and recommendation shall bar the aggrieved party, except upon grounds of plain error, from attacking on appeal the un-objected-to proposed factual findings and legal conclusions accepted by the district court. Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).