United States District Court, D. New Mexico
RICHARDSON INVESTMENTS, INC., A New Mexico corporation, Plaintiff,
JOHN DOE I, QWEST CORPORATION, a foreign profit corporation, GREENWICH INSURANCE COMPANY, a foreign company, And SEDGWICK CLAIMS MANAGEMENT SERVICES, INC., A foreign profit organization, Defendants.
ORDER DENYING PLAINTIFF'S MOTION FOR AWARD OF
C. YARBROUGH UNITED STATES MAGISTRATE JUDGE.
moves for reimbursement of attorneys' fees incurred in
connection with Defendants' removal of this case to
federal court following the Court's Order (Doc. 62)
granting Plaintiff's Motion to Remand this matter to
state court. Doc. 65. As described in more detail below, the
Court finds that when Defendants removed this case to federal
court they had a legal basis for doing so and, therefore, the
removal was not improvident. As a result, the Court DENIES
Plaintiff's Motion for Attorneys' Fees Based on
Defendants' Improvident and Objectively Unreasonable
Removal (Doc. 65).
initially filed its Complaint in the Second Judicial District
Court of the State of New Mexico. Doc. 1-1. Plaintiff alleged
that Defendants were liable for damage to its property
following a collision between Defendant Qwest's service
truck and Plaintiff's building. Doc. 1-1. Plaintiff
alleged that Defendant John Doe I was the driver of the
vehicle responsible for Plaintiff's property damage. Doc.
1-1. Plaintiff further alleged that John Doe I was acting
within the course and scope of his employment at the time of
the collision. Doc. 1-1 at 7. Plaintiff acknowledged that the
identity of John Doe I was unknown at the time of filing but
would be determined through discovery. Doc. 1-1 at ¶ 3.
January 20, 2017, Defendants removed the action to this
Court. Doc. 1. Within seven days thereafter, Plaintiff's
counsel sent an e-mail to Defendants' counsel seeking the
name and address of John Doe I in anticipation of filing a
motion to remand. Doc. 57 at 7. Defendant apparently declined
to provide this information. See doc. 22 at 2-3.
Nonetheless, Plaintiff filed its Motion to Remand on February
28, 2017. Doc. 22. In the Motion, Plaintiff contended that
although the identity of John Doe I had not been conclusively
determined, John Doe I was, in all likelihood, a citizen of
New Mexico and that removal was therefore improper. Doc. 22.
Plaintiff attached an affidavit by Charlie Wingate, the
maintenance manager of the property, representing that he had
asked the driver for identification and that the driver
produced a New Mexico license. Doc. 22-1. On March 9, 2017,
Defendants provided Plaintiff their initial disclosures. Doc.
28. Although the Court has not been provided a copy of these
initial disclosures, Plaintiff represents that Defendants
“named the driver but withheld the real party in
interest's address and phone number (citizenship) from
Plaintiff.” Doc. 45 at 2.
Magistrate Judge Karen Molzen held a scheduling conference on
April 11, 2017. Doc. 43. Due to Plaintiff's Motion to
Remand, Judge Molzen stayed discovery but ordered Defendants
to provide to Plaintiff information regarding the citizenship
of the driver by April 14, 2017. Doc. 43. It appears that
Defendant then provided this information on April 14, 2017.
See Defendants' Notice of Admission, Doc. 48
(noting that “Defendants notified Plaintiff's
counsel of Mr. Hummel's home address by electronic
mail”); Plaintiff's Reply to Defendants'
Response in Opposition of Plaintiff's Motion to Remand,
Doc. 45 at 7 (“Under Order of the Court, the Defendants
have disclosed Jonathan Hummel is a citizen of the State of
Defendants' disclosure of this information, the Court
held a status conference on May 11, 2017, to discuss the
status of Plaintiff's Motion to Remand. During the status
conference, the Court referenced McPhail v. Deere &
Co., 529 F.3d 947, 951 (10th Cir. 2008), and explained
to Plaintiff that the onus was on it to either file a motion
to amend the complaint or file briefing as to why the Motion
to Remand should be granted without an amendment to the
Complaint. See Doc. 55. Plaintiff subsequently filed
its Motion for Joinder and Motion to File Second Amended
Complaint on May 26, 2017. Doc. 56. On June 9, 2017,
Defendant filed a response opposing Plaintiff's motion.
Doc. 57. The Court, on July 21, 2017, entered an Order
granting Plaintiff's Motion to Amend and ordered that the
case be remanded to state court. Doc. 62. The Court did not,
however, address the issue of attorney fees which, although
briefly referenced in Plaintiff's Motion, was not
substantively addressed in the parties' briefs.
argues that it is entitled to attorney fees because
Defendants improvidently removed this case to federal court.
The starting point for analyzing such a claim is 28 U.S.C.
§ 1447(c), which states in relevant part, “An
order remanding the case may require payment of just costs
and any actual expenses, including attorney fees, incurred as
a result of the remand.” In 2005, the Supreme Court
noted that this language, “provides little guidance on
when such fees are warranted” and resolved a Circuit
split over when fees should be awarded under § 1447(c).
Martin v. Franklin Capital Corp., 546 U.S. 132, 134,
136 (2005). Specifically, the Court rejected a presumption in
favor of awarding fees when a remand is issued and, instead,
held, “absent unusual circumstances, attorney's
fees should not be awarded when the removing party has an
objectively reasonable basis for removal.” Martin
v. Franklin Capital Corp., 546 U.S. 132, 136 (2005).
Plaintiff does not argue that unusual circumstances existed;
therefore, whether Plaintiff should receive attorney fees
pursuant to § 1447(c) turns on whether Defendants had an
objectively reasonable basis for removal.
removed the case to federal court on the basis of diversity
jurisdiction. Specifically, at the time of removal, complete
diversity existed because Defendant Jonathon Hummel had not
yet been substituted in for John Doe 1. See 28
U.S.C. § 1441(b)(1) (“[T]he citizenship of
defendants sued under fictitious names shall be
disregarded.”). Plaintiff does not dispute that
complete diversity existed at the time of removal and that
Defendants therefore met the requirements of 28 U.S.C. §
1441 in removing the case to federal court. That federal law
allowed Defendants to remove the case makes it very difficult
for Plaintiff to establish that such removal was improvident.
Indeed, Plaintiff cites no instance in which a court found
that a defendant improvidently removed a case where complete
diversity existed and removal occurred shortly after the
complaint was filed.
Plaintiff argues that removal here was improvident because,
as the Court previously stated, “Defendants knew from
the outset that Plaintiff intended to formally name as a
defendant a person who would defeat diversity
jurisdiction.” Doc. 62 at 7. The Court, however, made
this statement in the context of determining whether joining
Hummel would unfairly prejudice Defendants. It found that
Defendants' knowledge that Plaintiff intended to join
Hummel to the lawsuit undermined their later assertion that
his joinder would unfairly prejudice them. While
Defendants' knowledge of Plaintiff's intentions might
have served to prevent Defendants from being prejudiced when
those intentions came to pass, it does not follow that
Defendants' knowledge of Plaintiff's intentions
barred Defendants from removing the case to federal court at
a time when complete diversity of citizenship existed.
so, Plaintiff's argument does have intuitive appeal. As
the Supreme Court recognized, “[t]he process of
removing a case to federal court and then having it remanded
back to state court delays resolution of the case, imposes
additional costs on both parties, and wastes judicial
resources. Assessing costs and fees on remand reduces the
attractiveness of removal as a method for delaying litigation
and imposing costs on the plaintiff.” Martin,
546 U.S. at 140. Here, Defendants knew from the outset that
Plaintiff was bringing a lawsuit against the driver of the
vehicle. See Compl, doc. 1-1, at ¶ 3,
(“John Doe 1 is the driver of the vehicle which caused
the property damage alleged herein. The actual name is
currently unknown to Plaintiff and will be substituted
through discovery.”). Although Plaintiff did not have
ready access to John Doe I's citizenship, Defendant
Qwest, as John Doe I's employer, did. Thus, Defendants
also knew from the outset that the driver was a citizen of
New Mexico and, as a result, his joinder in the lawsuit would
destroy federal diversity jurisdiction. Knowing all of this,
Defendants removed the case to federal court and declined to
provide Plaintiff with their driver's citizenship.
See Doc. 57 at 7 (Defendants' acknowledgment
that almost immediately after Defendants removed the case,
Plaintiff began seeking the name and address of the John Doe
defendant so that it could get the remand process started).
While Plaintiff sought information about John Doe I's
citizenship so that it could have the case remanded to state
court, Defendants filed a motion to dismiss. Doc. 5.
litigation strategy is obvious. Defendants hoped to have the
federal court rule on its motion to dismiss before Plaintiff
could learn John Doe I's citizenship and have the case
remanded to state court. Because the Court ordered Defendants
to disclose John Doe I's citizenship before it ruled on
Defendants' motion to dismiss, this strategy failed. The
present question is whether fees should be shifted under
§ 1447(c) when a defendant pursues such a strategy.
Tenth Circuit's decision in McPhail v. Deere &
Co., indicates that, even though the Court does not
countenance such a strategy, adoption of such a strategy does
not lead to fee shifting under § 1447(c). 529 F.3d 947
(10th Cir. 2008). In McPhail, a plaintiff sued a
known defendant and three unidentified John Doe defendants.
529 F.3d at 950-51. The defendant removed the case to federal
court on the basis of diversity jurisdiction. Id.
The three John Doe defendants were then identified as
entities whose citizenship would destroy diversity
jurisdiction. Id. at 951. Even though the plaintiff
had not moved to amend her complaint, she argued that the
identification of these defendants destroyed diversity
jurisdiction. Id. The Tenth Circuit disagreed. It
found that, despite knowledge that these John Doe defendants
were actually entities that destroyed diversity ...