Summary
finding that a settlement demand letter requesting $400,000 was an "other paper" making defendant's subsequent removal untimely
Summary of this case from Marullo v. Dollar Gen. Corp.Opinion
Civil Action No: 04-1537, Section: R(1).
July 22, 2004
ORDER AND REASONS
Plaintiff Doris Clark moves the Court to remand this matter to state court under 28 U.S.C. § 1447(c). Plaintiff also moves for attorney's fees and costs. For the following reasons, the Court GRANTS plaintiff's motion to remand but DENIES plaintiff's request for attorney's fees and costs.
I. Background
Doris Clark sued Nestle on April 13, 2000 in Louisiana state district court in Assumption Parish. In her complaint, Clark stipulated that the amount in controversy was less than the amount necessary for federal diversity jurisdiction. After more than four years of litigation and three months before trial, Clark moved to amend her petition to withdraw the stipulation. Nestle opposed the amendment. The state court deferred issuing a ruling on the motion to amend and ordered Nestle to file its removal proceedings. Nestle removed the case to this Court on June 2, 2004. Clark moved to remand on June 21, 2004.
II. Discussion
A. Remand 1. Applicable Law
If the initial pleading presents a case that is not removable, the defendant may file for removal within thirty days of receipt of a paper that indicates that the case is removable. 28 U.S.C. § 1446(b). "[A] case may not be removed on the basis of [diversity jurisdiction] more than 1 year after commencement of the action." Id. Nestle removed this case on the basis of diversity jurisdiction more than one year after it was filed in state court. Nestle concedes that the plain language of 1446(b) would bar removal here, but it contends that principles of equitable estoppel permit it to remove after the one-year period.
The Fifth Circuit recently held that Section 1446(b) is subject to equitable exception. Tedford v. Warner-Lambert Co., 327 F.3d 423, 426 (5th Cir. 2003). The Court reasoned that time requirements in private lawsuits are usually subject to equitable tolling and that the time limit for removal "is merely modal and formal and may be waived." Id. at 426. Hence, the Court concluded that the conduct of the parties may be examined to determine whether the one-year limit should be strictly enforced. In Tedford, plaintiff filed suit against several defendants in state court, including one non-diverse defendant. Id. at 424-25. Defendant informed plaintiff of its intention to remove once it discovered that the non-diverse defendant was not a proper party. Id. at 425. Plaintiff added another non-diverse defendant within hours. Id. Plaintiff then signed and post-dated a notice of non-suit as to the non-diverse defendant before the one-year period expired, but plaintiff did not file the notice until after the one-year time limit passed. Id. at 427-28. Defendants removed the case to federal court less than ten days after they received the notice of nonsuit. Id. at 425. The Court found that plaintiff's forum manipulation justified the application of an equitable exception in the form of estoppel. Id. at 427-28. The Court also stressed that the defendant had been vigilant in seeking removal. Id. at 428.
Other courts have found equitable grounds to extend the time for removal under 1444(b) based on similar showings of forum manipulation by plaintiffs and vigilance by defendants in protecting their removal rights. For example, in Shiver v. Sprintcom, Inc., where removal after one year was permitted, plaintiff filed suit in state court against diverse defendants and dismissed the suit after defendants removed to federal court. 167 F. Supp.2d 962, 962 (S.D. Tx. 2001). Plaintiff then filed a second suit in state court asserting identical claims, but joined a non-diverse defendant. Id. at 962-63. On the eve of trial, plaintiff non-suited the non-diverse defendant. Id. at 963. Defendant removed to federal court the same day. Id. See also Kinabrew v. Emco-Wheaton, Inc., 936 F. Supp. 351, 352-53 (M.D. La. 1996) (denying motion to remand where plaintiff intentionally delayed service of process until the one-year period had expired and defendant removed within one month of service of process); Morrison v. Natl. Benefit Life Ins. Co., 889 F. Supp. 945, 947 (S.D. Miss. 1995) (denying motion to remand where plaintiff admitted to forum manipulation and defendant removed eight days after learning that the case qualified for federal diversity jurisdiction).
2. Analysis
Nestle argues that Clark has engaged in forum manipulation. Nestle points out that Clark seeks to amend her complaint three months before trial and four years after she filed suit to eliminate her stipulation that the amount in controversy is less than $75,000. Nestle offers no other evidence of bad faith. Although Clark's action could reflect an effort to manipulate the forum, the record here is less clear cut than the pattern of manipulation and the telltale, post-dated notice of non-suit in Tedford, the intentional delay of service in Kinabrew, or the open admission of forum manipulation in Morrison. Indeed, Clark apparently asserted that the reason for the amendment was that four years of psychological treatment and therapy had increased the value of her claim. (Def.'s Pet. Removal at ¶ 5.)
Nestle, on the other hand, was not vigilant in asserting its rights. Clark sent Nestle a settlement letter dated September 11, 2003, in which she indicated that she would accept a settlement of $400,000. When it received the letter, Nestle knew or should have known that the amount in controversy exceeded the minimum for diversity jurisdiction. Cf. Addo v. Globe Life and Accident Ins. Co., 230 F.3d 759, 762 (5th Cir. 2000) (holding that a post-complaint settlement letter is sufficient to provide the grounds for removal on the basis of the amount in controversy under section 1446(b)). Unlike the defendants in the above-reviewed cases, many of whom acted within days to remove their cases to federal court, Nestle waited approximately nine months to remove. Even without the one-year bar, Nestle would have been required to remove within 30 days of receiving the settlement letter which signaled that the case was removable. Nestle's lack of diligence fails to satisfy § 1444(b) and the equitable test for invoking estoppel. Plaintiff's motion to remand is therefore granted.
B. Attorney's Fees and Costs
1. Applicable Law
The Court has discretion to award "payment of just costs and any actual expenses, including attorney's fees, incurred as a result of removal" under 28 U.S.C. § 1447(c). See also Miranti v. Lee, 3 F.3d 925, 929 (5th Cir. 1993) (noting that the district court has discretion to award fees only if defendant's removal was improper). Section 1447(c) applies only to those costs and expenses incurred in federal court as a result of removal. W.H. Avitts v. Amoco Production Co., 111 F.3d 30, 32 (5th Cir. 1997). The statute does not apply to "ordinary litigation expenses that would have been incurred had the action remained in state court." Id. In applying section 1447(c), "the court should consider the propriety of the removing party's actions based on an objective view of the legal and factual elements" as they stood at the time of removal. Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290, 293 (5th Cir. 2000). The court inquires only into the propriety of removal, not the alleged or apparent motive of the removing party. Id. at 292. An award of fees is not an abuse of discretion when the basis for removal is expressly contrary to established precedent. Garcia v. Amfels, Inc., 254 F.3d 585, 588 (5th Cir. 2001).
2. Analysis
The Court declines to award attorney's fees and costs to Clark. Nestle's request for equitable tolling was not expressly contrary to established Fifth Circuit precedent. Notably, the availability of equitable tolling of the one-year period for removal under 1446(b) is of recent vintage in the Fifth Circuit, and the decision to permit tolling is within the district court's discretion. Based on the law and facts of this case, the Court does not find an award of costs and fees to be appropriate.
III. Conclusion
For the above reasons, the Court GRANTS Clark's motion to remand and DENIES Clark's request for fees and costs.