RECOMMENDATION OF THE MAGISTRATE JUDGE
WALLACE CAPEL, Jr., Chief Magistrate Judge.
Before the court is Plaintiff's Motion to Remand (Doc. 9) and Defendant Susan Marie Nelson's ("Defendant Nelson") Response (Doc. 11) in opposition thereto. On October 11, 2016, Plaintiff filed a complaint in Alabama state court against Defendant Nelson and Plaintiff's insurer, Defendant ALFA Insurance Corporation ("ALFA"), as a result of an automobile accident that occurred on February 18, 2015, between Plaintiff and Defendant Nelson. Plaintiff alleges two claims: (1) a claim for negligence, recklessness, wantonness against Defendant Nelson, Doc. 1-1 at 3; and (2) an underinsured motorist claim against Defendant ALFA, id. at 3-4.
On February 16, 2017, Plaintiff filed a Motion to Remand (Doc. 9), arguing the parties were not completely diverse and that Defendant Nelson had not shown that the $75,000.00 amount in controversy was satisfied. The undersigned entered an Order (Doc. 10) directing Defendant Nelson, on or before March 14, 2017, to show cause, if any there be, why the motion should not be granted, and granting Plaintiff leave to file a reply on or before March 28, 2017. Defendant Nelson filed a response (Doc. 11) on February 21, 2017, opposing Plaintiff's motion. Plaintiff did not file a reply.
As the matter is now fully briefed before the court, it is ripe for recommendation to the District Judge.
Plaintiff filed a complaint in Alabama state court on October 16, 2016, and amended it for the second time on November 16, 2016. Doc. 1-3. Plaintiff alleged that on February 18, 2015, in Russell County, Alabama, Defendant Nelson collided her vehicle into the rear of Plaintiff's vehicle when Plaintiff stopped at a red light. Id. at 2. Plaintiff claimed that she was injured in the collision, and incurred damages. Id. Plaintiff also alleged that Defendant Nelson is and/or was underinsured. Id. Against Defendant Nelson, Plaintiff requested compensatory damages, court costs and attorney's fees, as well as punitive damages. Id. at 3.
Plaintiff alleges that at the time of the collision with Defendant Nelson, Plaintiff had an automobile insurance policy with Defendant ALFA that contained a provision for underinsured motorist coverage.
Plaintiff's motion seeks remand on the basis that this court does not have subject matter jurisdiction over his claims because the parties are not completely diverse due to Defendant ALFA's presence in the case. See generally Doc. 9 at 1-5. Before examining Plaintiff's argument, however, the undersigned turns first to examine whether the procedural requirements for removal have been met.
A. Procedural Requirements for Removal
When removing a case to federal court, notice must be filed with the federal court "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[.]" 28 U.S.C. § 1446(b)(1). This means that, once a Defendant is served with the complaint in state court, the clock begins ticking, and the defendant has thirty days from service to remove the case if he so desires. For multi-defendant litigation in which defendants are served on different days, the Eleventh Circuit recognizes the "last-served defendant" rule, which affords each defendant thirty days from the date of formal service to file a notice of removal. Bailey v. Janssen Pharmaceutica, Inc., 536 F.3d 1202, 1208-09 (11th Cir. 2008). Removal by the last-served defendant timely removes the case, even if a previously served defendant's thirty-day window to remove has expired. Jones v. Commonwealth Land Title Ins. Co., 459 F. App'x 808, 810 (11th Cir. 2012) (citing Bailey, 536 F.3d at 1207).
Here, Plaintiff's state court complaint was filed on October 16, 2016. Doc. 1-1. Defendant ALFA was served on October 19, 2016, while Defendant Nelson was served on January 9, 2017. Doc. 1-4 at 17, 146. Defendant Nelson, as the last served defendant in state court, filed her notice of removal with this court on January 18, 2017, based upon diversity jurisdiction.
When multiple defendants have been served in state court, however, the Rules require that all defendants either join in the removal or consent to the removal in federal court. 28 U.S.C. § 1446(b)(2)(A) ("When a civil action is removed solely under section 1441(a), all defendants who have been properly joined and served must join in or consent to the removal of the action."). This rule is well-settled, and often referred to as the "unanimity rule." See e.g., Russell Corp. v. Am. Home Assur. Co., 264 F.3d 1040, 1049 (11th Cir. 2001). "Like all rules governing removal, this unanimity requirement must be strictly interpreted and enforced because of the significant federalism concerns arising in the context of federal removal jurisdiction." Id. If all defendants do not consent to removal, a defect in the removal procedure under 28 U.S.C. §1447(c) occurs, making removal improper. Smith v. Health Ctr. of Lake City, Inc., 252 F.Supp.2d 1336, 1339 (M.D. Fla. 2003).
Here, thirty days has more than come and gone since Defendant Nelson filed her notice of removal to this court. Defendant ALFA did not join in Defendant Nelson's removal notice, nor has Defendant ALFA filed a consent to the removal in this court. Accordingly, the removal is defective under the unanimity rule, and remand is warranted.
B. Subject Matter Jurisdiction
Plaintiff challenges Defendant Nelson's removal on the grounds that the parties do not enjoy complete diversity and because the amount in controversy does not exceed $75,000.00. Because the undersigned concludes that the parties are not completely diverse, the undersigned will not address whether the amount in controversy has been satisfied in this case.
Plaintiff is a citizen of Alabama. Doc. 1-3 at 2, ¶ 1. Defendant Nelson is a citizen of Wisconsin. Id. at 2, ¶ 2. Defendant ALFA is a domestic corporation and citizen of the state of Alabama. Id. at 2, ¶ 3. Clearly, the parties are not completely diverse if Defendant ALFA's citizenship is considered. See, e.g., Triggs v. John Crump Toyota, Inc., et al., 154 F.3d 1284, 1287 (11th Cir. 1998) ("Diversity jurisdiction requires complete diversity; every plaintiff must be diverse from every defendant."). If the parties do not enjoy complete diversity, this court lacks jurisdiction over Plaintiff's claims. Id.
Defendant Nelson argues that Defendant ALFA's citizenship should not be considered in the complete diversity analysis because Defendant ALFA is a nominal party in the litigation. See Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 460-61 (1980) (For purposes of a diversity jurisdiction analysis, the citizenship of "nominal" parties need not be considered.) Whether such is the case turns on the principles of Alabama liability insurance law. Under Alabama law, when a plaintiff who holds an underinsured motorist policy sues an underinsured motorist for damages caused by the underinsured motorist,
Lowe v. Nationwide Ins. Co., 521 So.2d 1309, 1310 (Ala. 1988) (emphasis in original). Here, Plaintiff has joined Defendant ALFA as a party defendant; therefore, under Alabama law, Defendant ALFA has the option to participate in the trial or to sit on the sidelines and be bound by the court's determination.
As of this time, Defendant ALFA has not filed notice with this court, or with the state court, stating that it intends to "opt out" of the litigation. Nor has it indicated in any other fashion that it intends to forego its participation in trial. In contrast, Defendant ALFA has engaged in the litigation process, albeit minimally, by requesting discovery from Plaintiff, seeking a protective order for Plaintiff's medical records, and answering Plaintiff's complaint in state court. Defendant ALFA has also filed an answer to Plaintiff's complaint in this court. Doc. 7. While these actions do not necessarily indicate that Defendant ALFA is choosing to defend the suit, the actions do not lead the undersigned to believe, particularly considering that Defendant ALFA has not filed a notice of election to opt out of the litigation, that Defendant ALFA plans to sit idly on the sidelines. Thus, Defendant ALFA's participation in the proceedings, coupled with the fact that it has yet to opt out, suggests to the undersigned that Defendant ALFA is more than a nominal party in the litigation at this time. See Oliver v. Rodriguez, Civil Action No. 2:08-cv-81-WHA, 2008 WL 928328, at *2 (M.D. Ala. April 4, 2008) (holding that ALFA was a nominal party whose citizenship should not be considered in the complete diversity analysis because ALFA "has elected to opt out of the litigation completely and to be bound by the verdict and judgment of liability and damages".).
Nonetheless, Defendant Nelson protests that Defendant ALFA's failure to file an opt out notice is of no significance to the determination of Defendant ALFA's nominal party status, as such status is determined as a matter of law. Doc. 11 at 5. She further argues that Defendant ALFA's participation in the case does not establish that Defendant ALFA has assumed control over the litigation. Id. at 4. Although the undersigned agrees that Defendant ALFA's current involvement does not suggest that Defendant ALFA is manning the litigation ship, the undersigned cannot conclude, as explained further below, that Defendant ALFA's minimal participation and its decision not to "opt out" of the case, particularly in combination, equate to a determination that Defendant ALFA is a nominal party.
In the landmark case addressing this issue, Broyles v. Bayless, 878 F.2d 1400 (11th Cir. 1989), a Tennessee plaintiff sued a Georgia defendant in a Georgia federal court asserting claims arising from an automobile accident in Tennessee. Broyles, 878 F.2d at 1401. According to the requirements of Tennessee insurance liability law, the Broyles plaintiff served a copy of the lawsuit on his underinsured motorist carrier, which was deemed a Tennessee citizen for purposes of diversity. Id. The Tennessee insurer filed a motion to dismiss the suit, asserting that complete diversity was lacking, and the trial court agreed. Id. The Eleventh Circuit, however, reversed the Tennessee trial court. Id. at 1406. In so doing, the Circuit phrased the issue on appeal as follows: "Should a federal court consider the residence of an uninsured motorist carrier, served with process pursuant to Tennessee's uninsured motorist statute, when determining diversity for federal jurisdiction purposes?" Id. at 1401. In answering that question in the negative, the Circuit set forth the general rule that an uninsured motorist carrier is not a real party in interest (and thus a nominal party whose citizenship should not be considered for diversity purposes) except in the following three circumstances: where the carrier (1) is enforcing the action as subrogated to the rights of its insured after payment of the loss, (2) is defending against a direction action against it, and (3) where the carrier has assumed primary and visible control of the litigation. Id. at 1404.
Later, in Toole v. Chupp, 456 F.Supp.2d 1218 (M.D. Ala. 2008), this court applied the Broyles factors and determined that the uninsured motorist carrier's citizenship should be disregarded when examining complete diversity. In Toole, the plaintiff accident victim and her husband, both citizens of Alabama, sued the driver of the second vehicle involved in the accident and the vehicle's owner, both citizens of Georgia. Toole, 456 F. Supp. at 1219. The plaintiff also asserted an underinsured motorist claim against her own insurer, ALFA, a citizen of Alabama. Id. United States District Judge Myron H. Thompson addressed the following question: "whether the state citizenship of a defendant uninsured motorist carrier that has `opted out' pursuant to Alabama law should be considered in determining whether this court has removal jurisdiction." Id. (emphasis added). Judge Thompson applied the Broyles factors and determined that it should not.
However, there are important distinctions between Toole and this case. In Toole, Judge Thompson specifically phrased the issue presented to include the fact that ALFA, the uninsured motorist carrier, had opted out of the litigation. Id. at 1219. Thus, when analyzing the second Broyles factor—i.e., whether ALFA was defending an action brought directly against it—Judge Thompson relied upon the facts that (1) ALFA had opted out of the litigation, and (2) the plaintiffs named ALFA solely for the purpose of placing their insurer on notice according to Alabama law. Id. at 1221. Specifically, Judge Thompson reasoned:
Here, Defendant ALFA has not opted out, nor has it indicated in any way that it intends to sit second chair. Further, Plaintiff has not stated that he named Defendant ALFA as a party defendant solely for the purpose of satisfying the notice requirement in Alabama insurance law. Indeed, Plaintiff's opposition to Defendant Nelson's removal based upon the argument that Defendant ALFA is not a nominal party cuts against such a presumption. So does the wording of Plaintiff's complaint. Plaintiff's complaint specifically states that "Defendant ALFA Insurance has breached its contract with the Plaintiff by failing to make payments to the Plaintiff under the under-insured motorist provision of the Plaintiff's policy." Doc. 1-3 at 4, ¶ 20. Clearly, that statement indicates that there is a live controversy between Defendant ALFA and Plaintiff. Thus, at this time, the undersigned cannot conclude, like Judge Thompson did in Toole, that there is no longer a dispute between Plaintiff and Defendant ALFA.
Defendant Nelson would still advance the argument, however, that an uninsured motorist carrier is not required to opt out of litigation in order for this court to consider Defendant ALFA a nominal party for diversity purposes because caselaw does not require the carrier to explicitly opt out. Defendant Nelson concedes that "several of the cases have involved a carrier who has indeed already opted out," but that "no such limitation is clearly established by Broyles or subsequent caselaw."
In Tompkins, the uninsured motorist carrier had "conditionally" opted out of the litigation prior to this court determining that the insurer's citizenship should not be considered for the purposes of diversity. Defendant Nelson asserts that, because this court found "no difference where [the] UIM carrier `conditionally' opted out[,]" this court should also conclude there is no difference in this case where Defendant ALFA has not opted out at all. However, Defendant Nelson's interpretation of a conditional opt out is misplaced. It is significant to note that in Tompkins, ALFA, who was once again the underinsured motorist carrier, admitted in response to the plaintiff's motion to remand that it "had been sued solely for underinsured motorist benefits, with liability only in the event that Plaintiff proves liability against the primary Defendants over and above the high insurance liability limits applicable to this case." Tompkins v. Craft, et al., Case 2:08-cv-826-WHA-TFM (M.D. Ala. Dec. 22, 2008), Doc. 12 at 1, ¶ 1 (emphasis added). This statement is important because it indicates that ALFA had discovered that the tortfeasor had "high insurance liability limits" that would presumably cover the plaintiff's damages without having to reach the plaintiff's underinsured policy with ALFA. In such a situation, ALFA would not be responsible to cover the plaintiff's damages, and thus would have little reason to involve itself actively in the litigation.
In further response to the Tompkins's plaintiff's motion to remand, ALFA addressed the argument that remand should occur because ALFA reserved a right to "opt back in the case" if circumstances significantly changed. Id. at 2, ¶ 3. In opposing the argument that the conditional language changed its status as a nominal party, ALFA noted that its statement to opt back in "is a standard reservation in any situation in which an underinsured motorist carrier opts out of the case; it is part of the process of opting out under Alabama law, and the statement by [ALFA] in the notice in this case is no different from existing law." Id. (citing Ex parte Progressive Specialty Ins. Co., 985 So.2d 897 (Ala. 2007) (If the liability insurance carrier pays liability limits and settles a case, the underinsured motorist carrier, after it had previously opted out, has the absolute right to opt back into the lawsuit to be able to defend the underinsured motorist claim accordingly.)). Thus, ALFA stated, "whether expressly reserved in the document or not, every notice to opt out contains a right to re-enter the case in the future. However, at this time, just as in Broyles v. Bayless [and] Toole v. Chupp, . . . the underinsured motorist carrier is a nominal party whose citizenship should be disregarded[.]" Id. Accordingly, the Tompkins court determined that the plaintiff's motion to remand should be denied because, in part, ALFA had opted out of the litigation, albeit "conditionally," so that it was a nominal party whose citizenship did not destroy diversity jurisdiction. Tompkins, 2008 WL 5381250, at *2 ("While Alfa's conditional opt-out makes this case somewhat different from Toole . . ., the conditional opt-out does not remove this case from the holding in Broyles, because at least at this point, Alfa has done even less to participate in the case than did the insurer in Broyles, which was held to be a nominal party."). Here, however, the situation presents differently as Defendant ALFA has not opted out of the litigation conditionally or otherwise, nor has it stated, in any document, that it considers itself a nominal party.
In Hudson, this court determined that ALFA, once again the underinsured motorist carrier for the plaintiffs, was "a nominal party whose citizenship does not destroy diversity." Hudson, 2010 WL 1416510, at *1. At the time this court made that determination, the plaintiffs had filed a voluntary dismissal of ALFA because it had been determined that the case did not exceed the tortfeasor's policy limits. Hudson v. McGowan, Case No.: 3:10CV56-WHA-TFM (M.D. Ala. April 8, 2010), Doc. 6. Thus, it was clear that there was no actual dispute between ALFA and the plaintiffs since the tortfeasor's policy limits would cover the plaintiffs' damages.
Plaintiff has pointed to no case from a court in this Circuit addressing Alabama liability insurance law that has concluded that an uninsured motorist carrier is a nominal party when the carrier (1) has not opted out of the litigation and (2) has not determined whether it will be responsible for at least some of the plaintiff's damages. Therefore, under these circumstances, the undersigned cannot conclude that Defendant ALFA is a nominal party. This is because, as explained more fully above, Defendant ALFA has not opted out of this litigation or indicated in any way that it considers itself a nominal party. It is also because no determination has been made that Defendant Nelson's policy limits exceed Plaintiff's damages in this case. Thus, it is a very real possibility, at this time, that Defendant ALFA may be required to pay some portion of Plaintiff's damages. Accordingly, Defendant ALFA is not a nominal party to the litigation and its citizenship must be considered when determining whether the parties are completely diverse. When such citizenship is considered, it destroys complete diversity and requires remand to the state court. Accordingly, the undersigned recommends that Plaintiff's motion to remand be granted.
For the foregoing reasons, it is the RECOMMENDATION of the undersigned Magistrate Judge that Plaintiff's Motion to Remand (Doc. 9) be GRANTED. It is
ORDERED that the parties are DIRECTED to file any objections to the said Recommendation on or before
Alabama liability insurance law, in contrast, places an affirmative right upon the uninsured motorist carrier, if named as a party defendant, to elect within a reasonable time, either to participate in the trial, or not to participate in the trial. Lowe, 521 So. 2d at 1310. Therefore, it appears that the Alabama liability insurance scheme contemplates that a carrier is a participant in the trial unless election is made otherwise, while the Tennessee liability insurance scheme contemplates that the carrier is staying on the sidelines unless it engages in the litigation process by filing pleadings or taking other allowable actions. Such a distinction is important in this case because Defendant ALFA has not elected to opt out. Thus, until it indicates otherwise, it appears that Defendant ALFA plans to participate in the litigation according to the principles of Alabama liability insurance law.