Opinion
3:18-cv-1849-JR
01-04-2019
PAULINE JANSEN, Plaintiff, v. MOVING ON UP, INC. and MOVING USA, INC., Defendants.
FINDINGS & RECOMMENDATION :
BACKGROUND
Plaintiff Pauline Jansen filed an action against defendants Moving On Up, Inc. and Moving USA, Inc. alleging breach of contract, elder abuse, conversion, and unlawful trade practices in Multnomah County, Oregon arising out of defendants' promise to move plaintiff's belongings from Maryland to Oregon (underlying action). Defendants tendered the defense of the underlying action to its insurer, AXIS Supplemental Insurance Company, pursuant to its commercial general liability policy. AXIS declined to defend or indemnify.
Plaintiff and defendants settled the underlying action for $100,000 and the Multnomah County Court entered a stipulated judgment on July 26, 2018. On September 7, 2018, the Multnomah County Court entered a supplemental judgment awarding $2,400.27 in costs to plaintiff and $135,143.50 in fees to plaintiff's attorney, Kirkpatrick Law, LLC.
On September 11, 2018, plaintiff's attorney Matthew Kirkpatrick issued a writ of garnishment to AXIS. The writ was for the $100,000 in damages under the first judgment and the $2,400.27 in costs in the second judgment. The writ reached AXIS's mail room on September 14, 2018, but was lost before being directed to an appropriate person within AXIS.
To date, AXIS has not found the first writ of garnishment. AXIS states it was not aware of the first writ until counsel for plaintiff called to confer regarding the present motion to remand. AXIS concedes it was properly served with the writ on the date it was delivered to its mail room.
On September 17, 2018, Kirkpatrick issued a second writ of garnishment and AXIS received it on September 20, 2018. This writ sought to garnish the $135,143.50 attorney fee award in the second judgment.
Kirkpatrick Law, LLC is the creditor for the second writ of garnishment because plaintiff Jansen assigned the statutory claim for attorney fees to the LLC.
AXIS removed the second writ of garnishment to this court on October 19, 2018. Plaintiff moves to remand. The motion should be denied.
DISCUSSION
A defendant ... desiring to remove any civil action from a State court shall file in the district court ... a notice of removal ... containing a short and plain statement of the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant or defendants in such action.28 U.S.C.A. § 1446(a). Such notice must be filed within 30 days after receipt of service of a copy of the pleading setting forth the claim for relief on which the action is based. 28 U.S.C.A. § 1446(b)(1). There is a strong presumption against removal jurisdiction and the statute is strictly construed against removal. Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1107 (9th Cir. 2010).
Plaintiff asserts AXIS failed to comply with the 30-day requirement, failed to allege the citizenship of all parties in the notice of removal, and failed to include all process and pleadings served in the Multnomah County Court. A. Thirty-Day Requirement
AXIS filed the notice of removal on October 19, 2018. As noted above, the first writ of garnishment was served on September 14, 2018 and thus removal would not be timely for that action. However, Axis did not remove the first writ. The notice of removal removed only the second writ of garnishment. Kirkpatrick, LLC served the second writ of garnishment on September 20, 2018, less than 30 days before Axis filed the notice of removal.
The removal statute does not define the term "civil action," but federal courts have broadly construed the term. Mach v. Triple D Supply, LLC, 773 F.Supp.2d 1018, 1024 (D.N.M. 2011). Some cases examine whether garnishment actions are merely supplemental proceedings and therefore not subject to removal apart from the underlying action. See, e.g., Richmond v. Allstate Ins. Co., 624 F.Supp. 235, 236 (E.D.Pa. 1985) (citation omitted) ("A suit which is merely ancillary or supplemental to another action cannot be removed from a state court to a federal court."); W. Med. Props. Corp. v. Denver Opportunity, Inc., 482 F.Supp. 1205, 1207 (D.Colo. 1980) (citations omitted) ("It is a well settled rule that a suit which is merely ancillary or supplemental to another action cannot be removed from a state court to a federal court."). However, other courts have determined garnishment proceedings can be "original and independent actions between the holders of the judgments and the insurer.... And, being original and independent actions of that kind with diversity of citizenship and the requisite sum in controversy, they [are] open to removal." Adriaenssens v. Allstate Ins. Co., 258 F.2d 888, 890 (10th Cir. 1958).
Plaintiff agrees garnishment actions are separate and independent from the underlying action. See Motion to Remand (doc. 4) at pp. 3-4 ("Garnishor Kirkpatrick Law, LLC served the first writ on this action on AXIS on September 14, 2018 .... Section 1446(b) therefore required any removal to occur on or before October 15, 2018."). Despite recognizing the independent nature of the writ action, plaintiff nonetheless contends the two writs are part of the same action and thus the time to seek removal commences on the date the first writ was served. To accept such an argument, the court would have to find that the writs are part of the underlying action and thus not original and independent. However,
The Ninth Circuit has expressly held that a garnishment proceeding, although spurred from a judgment in a prior lawsuit, is a discrete action so as to be separately removable. Swanson v. Liberty Nat'l Ins. Co., 353 F.2d 12, 13 (9th Cir.1965); Triad Mech., Inc. v. Coatings Unlimited, Inc., CV No. 07-516-HU, 2007 WL 2713842, at *7 (D.Or. Sept. 12, 2007). That is, garnishment is "an independent civil action" from the underlying lawsuit. Swanson, 353 F.2d at 13.Alford v. LaCoste, 2010 WL 5487532, at *5 (D. Or. Nov. 18, 2010), report and recommendation adopted, 2011 WL 11249 (D. Or. Jan. 3, 2011).
In Alford, the court also analyzed whether separate writs of garnishment could be aggregated for purposes of determining whether together they meet the amount in controversy requirement for purposes of diversity jurisdiction under the Sovereign Camp doctrine, Sovereign Camp v. O'Neill, 266 U.S. 292 (1924). The court determined they could not because:
Essential to application of the Sovereign Camp exception is an allegation of a conspiracy among the parties whose claims are to be aggregated. See, e.g., Indemnity Ins. Co. of North America v. School Dist. No. 1, Stockbridge Tp., Ingham County, Mich., 63 F.2d 878, 879 (6th Cir.1933) ("We are of the opinion that, in the absence of an allegation of conspiracy, the decree of the District Court [denying jurisdiction] must be affirmed upon authority of Sovereign Camp ...."); accord Armour & Co. v.
Haugen, 95 F.2d 196, 200 (8th Cir.1938); Georgia Power Co. v. Hudson, 49 F.2d 66, 68 (4th Cir.1931). It is the act of conspiracy among the claimants that creates the "common and undivided interest" among their claims and, by balancing the equities, justifies the court's treatment of the claims as one claim for jurisdictional purposes.Alford v. LaCoste, 2010 WL 5487532, at *4.
Here, plaintiff argues that because the two writs relate to the same plaintiff's claims against the same defendants, they can be considered part of the same action. However, this argument misses the point of the analysis in Alford. The Sovereign Camp doctrine does not create one cause of action out of separate actions, it merely aggregates "separate and distinct," otherwise united claims pursuant to a court's equitable powers for jurisdictional purposes. Moreover, the two writs do not seek a jointly held right by plaintiff: One writ seeks to obtain damages for Moving USA's conduct payable to creditor plaintiff Pauline Jansen; the second writ seeks to obtain attorney fees payable to creditor Kirkpatrick, LLC. Nonetheless, a garnishment proceeding is a separate and distinct action regardless of whether it may be aggregated with another action for purposes of determining the amount in controversy. Accordingly, the removal clock starts running each time a writ is filed. See Alford, 2010 WL 5487532 at *7 (The thirty-day removal period is appropriately calculated from service of the each garnishment action.). Consequently, AXIS timely removed the second writ of garnishment. B. Jurisdictional Grounds for Removal
Plaintiff asserts the notice of removal did not allege complete diversity because the notice of removal does not allege the citizenship of plaintiff Jansen and defendants Moving on Up and Moving USA. However, they are not parties to the second writ of garnishment. The Garnishor is Kirkpatrick Law, LCC and the Garnishee is AXIS. The notice of removal alleges Kirkpatrick Law LLC is an Oregon LLC and that AXIS is an Illinois corporation. Notice of Removal (doc. 1) at ¶ 9. Therefore, the removal notice properly alleged complete diversity. C. Pleadings from Multnomah County Court
The allegation states, "On information and belief, Garnishor Matthew Kirkpatrick is a resident of Oregon, and Kirkpatrick Law, LLC is an Oregon LLC." Notice of Removal (doc. 1) at ¶ 9. However, AXIS's counsel confirms the information and belief allegation relates to only Matthew Kirkpatrick and not Matthew Kirkpatrick LLC. Counsel confirmed the LLC's citizenship prior to filing the notice. See Declaration of Lloyd Bernstein (doc. 8) at ¶ 5. The writ of garnishment confirms that the creditor is Kirkpatrick Law, LLC. Writ of Garnishment attached to Notice of Removal (doc. 1) at p. 5. Thus, even if alleging citizenship on information and belief is insufficient, the notice appropriately alleged the citizenship of the real parties in interest. --------
Plaintiff asserts the notice of removal fails to include the first writ and thus remand is required. However, as noted above, the first writ of garnishment is a separate and distinct action. The notice properly removed only the second writ. D. Supplemental Jurisdiction
Despite relying on Alford for its argument that the second writ is a separate cause of action, AXIS requests the court to exercise "supplemental jurisdiction" over the first writ of garnishment. However, precisely because each writ is a separate cause of action, supplemental jurisdiction is inappropriate. See Alford, 2010 WL 5487532 at *7 (because the writs are separate actions, not separate claims in a single action, the court cannot exercise supplemental jurisdiction over the separate writs). This request should be denied. Further, this court expresses no opinion as to whether any abstention doctrines apply assuming that the defense to garnishment raised by AXIS is the same defense asserted in State court with respect to the first writ, i.e., the insurance policy did not provide coverage for the underlying action.
CONCLUSION
Plaintiff's motion to remand (doc. 4) should be denied. AXIS's request to the court to exercise supplemental jurisdiction over the first writ of garnishment should be denied.
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of the district court's judgment or appealable order. The parties shall have fourteen (14) days from the date of service of a copy of this recommendation within which to file specific written objections with the court. Thereafter, the parties shall have fourteen (14) days within which to file a response to the objections. Failure to timely file objections to any factual determination of the Magistrate Judge will be considered as a waiver of a party's right to de novo consideration of the factual issues and will constitute a waiver of a party's right to appellate review of the findings of fact in an order or judgment entered pursuant to this recommendation.
DATED this 4th day of January 2019.
/s/ Jolie A. Russo
JOLIE A. RUSSO
United States Magistrate Judge