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Rouege Trucking, LLC v. Canales

United States District Court, M.D. Louisiana

December 11, 2014

ROUEGE TRUCKING, LLC,
v.
SHAWN CANALES, INDIVIDUALLY AND IN HIS CAPACITY OF AN INSURANCE AGENT AND PRODUCER, d/b/a B&D INSURANCE SERVICES, INC.; AIG PROPERTY CASUALTY INSURANCE AGENCY, INC. (formerly known as CHARTIS INSURANCE COMPANY); AXIS INSURANCE COMPANY, INC.; and ABC INSURANCE COMPANY.

MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

RICHARD L. BOURGEOIS, Jr., Magistrate Judge.

Before the Court is Plaintiff's Motion to Remand. (R. Doc. 11). The motion is opposed by Defendant Axis Insurance Company. (R. Doc. 13). Plaintiff has filed a reply (R. Doc. 21) and Axis Insurance Company has filed a surreply (R. Doc. 32). Plaintiff has also moved for Rule 11 sanctions. (R. Doc. 28), which is opposed by Axis Insurance Company (R. Doc. 30).

I. BACKGROUND

This is an insurance action. On April 8, 2014, Rouege Trucking, LLC ("Plaintiff")[1]filed this action in the 19th Judicial District Court for the Parish of East Baton Rouge, Louisiana ("State Court"), naming as defendants Shawn Canales, individually ("Canales"), and in his capacity as an insurance agent and producer d/b/a B&D Insurance Services, Inc. ("B&D"), AIG Property Casualty Insurance Agency, Inc. (formerly known as Chartis Insurance Company) ("AIG"), Axis Insurance Services, LLC, and the fictitious ABC Insurance Company (collectively, "Defendants") (R. Doc. 1-4 at 6-11, "Petition"). On April 11, 2014, Plaintiff named Axis Insurance Company, Inc. ("Axis")[2] as defendant in place of Axis Insurance Services, LLC. (R. Doc. 1-4 at 19-21, "First Amended Petition").[3]

Plaintiff is a trucking carrier which contracted to deliver 41, 700 lbs. of frozen chicken from Mississippi to New Jersey for C.H. Robinson. (Petition, ¶ 3). Sanderson Farms shipped the chicken from Mississippi and PFG AFI Food Service received the chicken in New Jersey. Plaintiff alleges that prior to delivery of the frozen chicken, the delivery truck's refrigeration unit failed causing the frozen chicken to spoil. (Petition, ¶ 4). Plaintiff submitted a claim to AIG, its cargo insurance provider. (Petition, ¶¶ 7-8). According to Plaintiff, the claim "was delayed and ultimately denied through the course of numerous discussions between Michael Rouege and Shawn Canales, the producer, owner and incorporator of B&D." (Petition, ¶ 9). The claim was then referred to B&D's errors and omissions ("E&O") carrier, Axis. (Petition, ¶ 9). According to Plaintiff, its claim remains denied by B&D, AIG, and Axis. (Petition, ¶ 9). Plaintiff has alleged breach of contract and is seeking recovery for economic losses resulting from the breach, including $111, 194.05 in premiums allegedly paid toward insurance coverage. (Petition, ¶ 13).

Axis removed the action on May 16, 2014. (R. Doc. 1). Axis alleges that this Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(1). Axis claims that at the time of removal the only defendant who had been served was AIG, which Axis states consented to removal. (R. Doc. 1 at 5).

Also on May 16, 2014, the Plaintiff filed a "Second Supplemental and Amending Petition, " which reduced the amount of premium payments sought to be recovered to $10, 108.55 and stipulated that the amount in controversy has not been satisfied. (R. Doc. 11-3, "Second Amended Petition").

On May 29, 2014, Plaintiff moved to remand his suit to State Court on procedural and jurisdictional grounds. (R. Doc. 11).

II. ARGUMENTS OF THE PARTIES

In support of remand, Plaintiff argues that the removal is procedurally defective because (1) Axis's filing of the Notice of Removal was untimely; (2) AIG's filing of its consent to removal was untimely, and (3) Axis's notice to the State Court of the removal was untimely. (R. Doc. 11-1 at 4-9). More specifically, Plaintiff argues that under the "first-served" defendant rule, removal would only be timely if Axis filed its removal, AIG consented to removal, and Axis provided the State Court with its notice of the removal within 30 days of April 17, 2014, when AIG became the first-served defendant in the action. Plaintiff argues that removal was untimely because AIG did not file its consent to removal, and Axis did not notify the State Court of the removal, until May 19, 2014. (R. Doc. 11-1 at 6-9).

Plaintiff also argues that removal is improper because the amount in controversy requirement has not been satisfied. Plaintiff claims that because it filed the Second Amended Petition the same day that Axis removed the action, and prior to when the State Court was notified of the removal, the Second Amended Petition was the operative pleading at the time of removal. (R. Doc. 11-1 at 9). Plaintiff argues that the amount in controversy is not satisfied under the Second Amended Petition, which reduced the amount of premium payments sought to be recovered and stipulated that the amount in controversy has not been satisfied. (R. Doc. 11-1 at 9).

In response to Plaintiff's procedural arguments, Axis argues that the "first-served" defendant rule has been statutorily overruled by the Federal Courts Jurisdiction and Venue Clarification Act of 2011. (R. Doc. 14 at 6-7). Based on the "last-served" defendant rule, Axis argues that it has properly removed the action within thirty days of April 24, 2014, the date on which Plaintiff formally served Axis with the Petition and the First Amended Petition. (R. Doc. 14 at 6). Axis acknowledges that it received informal copies of the initial pleadings on April 9, 2014, but claims that the receipt of those undated courtesy copies of the pleadings did not trigger the thirty-day removal deadline. (R. Doc. 14 at 5-6).

Axis further argues that the amount in controversy requirement has been satisfied. (R. Doc. 14 at 9-14). Axis argues that the operative pleading at the time of removal was the First Amended Petition, including the factual and legal allegations as stated in the original Petition. (R. Doc. 14 at 10-12). Axis argues that because it had not been served or notified of Plaintiff's Second Amended Petition prior to the filing of its Notice of Removal, that pleading was not the operative pleading. (R. Doc. 14 at 10-11). Axis then argues that regardless of whether the Court accepts the Second Amended Petition as the operative pleading, the amount in controversy requirement has been satisfied. (R. Doc. 14 at 10-14).

Plaintiff also argues that Rule 11 sanctions are justified because Axis misleadingly informed the court that Plaintiff had not filed its Second Amended Petition when Axis notified the State Court of its filing of the Notice of Removal in federal court. (R. Doc. 28 at 2). Axis responded by explaining that it faxed its "Notice of Filing Notice of Removal" to state court on May 16, 2014, but received a return fax with instructions to counsel to re-fax the document to a different fax number at the State Court. (R. Doc. 30 at 1-2). Axis sent this second fax on May 19, 2014. (R. Doc. 30 at 2). It is Axis's position that the state court received actual ...


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