United States District Court, M.D. Louisiana
take notice that the attached Magistrate Judge's Report
has been filed with the Clerk of the United States District
accordance with 28 U.S.C. § 636(b)(1), you have fourteen
(14) days after being served with the attached Report to file
written objections to the proposed findings of fact,
conclusions of law and recommendations therein. Failure to
file written objections to the proposed findings,
conclusions, and recommendations within 14 days after being
served will bar you, except upon grounds of plain error, from
attacking on appeal the unobjected-to proposed factual
findings and legal conclusions of the Magistrate Judge which
have been accepted by the District Court.
NO EXTENSION OF TIME SHALL BE GRANTED TO FILE WRITTEN
OBJECTIONS TO THE MAGISTRATE JUDGE'S REPORT.
MAGISTRATE JUDGE'S REPORT AND
RICHARD L. BOURGEOIS, JR. UNITED STATES MAGISTRATE JUDGE
the Court is a Motion to Remand (R. Doc. 7) filed by Scott
Folse, DMI Contractors, Inc., and DMI Pipe Fabricators,
L.L.C. (collectively, “DMI”). The motion is
opposed by Liberty Mutual Insurance Corporation
(“LMIC”). (R. Doc. 17). LMIC also filed a
Supplemental Opposition to DMI's Motion to Remand (R.
Doc. 26) and a Second Supplemental Opposition to DMI's
Motion to Remand (R. Doc. 34). Oral argument was held on
November 6, 2017. (R. Doc. 32). LMIC filed a Post-Hearing
Memorandum in Opposition to DMI's Motion to Remand (R.
Doc. 40) on November 14, 2017.
before the Court is a Motion to Dismiss filed by Powko
Industries, LLC (“Powko”). (R. Doc. 44).
following reasons, the undersigned recommends the Motion to
Remand (R. Doc. 7) be DENIED and that the
Motion to Dismiss (R. Doc. 44) be GRANTED.
action was initially filed in state court on March 21, 2014
(R. Doc. 1-2 at 17) by Powko Industries, LLC
(“Powko”) against DMI Contractors, Inc. and DMI
Pipe Fabrication, L.L.C. (“DMI Pipe”), arising
out of a purported joint venture between Powko and DMI Pipe
(the “State Court Action”). During the pendency
of the State Court Action, Powko filed a separate suit in
federal court against DMI as well as a few additional
defendants on June 16, 2015, bringing RICO and Lanham Act
allegations. Powko Industries, L.L.C. v. Scott Folse, et
al., Civil Action No. 3:15-cv-388-BAJ-SCR (M.D. La.)
(the “Federal Court Action”). Powko and DMI
apparently mediated the claims in both the State Court Action
and Federal Court Action on October 23, 2015. (R. Doc. 17-1
at 5). While the parties disagree as to the date the
settlement was actually finalized, it appears from the record
that, on December 8, 2015, counsel for DMI provided counsel
for Powko with executed originals of the settlement documents
as well as a draft of a Motion for Dismissal of the State
Court Action, and authorized the release of the cash portion
of the settlement. (R. Doc. 17-1 at 12-13). In the same
correspondence, counsel for DMI confirmed, apparently per the
agreement with Powko, that he would not “file the
dismissal in the matter pending in the 19th JDC
until the Third Party Demand filed against Liberty Mutual has
been served on Liberty Mutual.” (R. Doc. 17-1 at 12).
There is no evidence presented, however, that the dismissal
was ever filed in the State Court Action.
for DMI advised the federal court of settlement by way of
correspondence dated November 17, 2015. (R. Doc. 17-1 at 8).
On December 15, 2015, a Thirty Day Order of Dismissal was
docketed in the Federal Court Action. (R. Doc. 17-1 at 9).
No. further action was taken in the Federal Court Action
until January 17, 2017, when Civil Action No. 17-19 was
reassigned to Chief Judge Jackson on the grounds of
presenting common questions of law and fact with the initial
Federal Court Action.
November 22, 2016, over a year after the mediation, DMI filed
a Third Party Demand (R. Doc. 1-2 at 227-230) against LMIC in
the State Court Action. LMIC removed that action to this
court on January 11, 2017. (R. Doc. 1-2 at 240; Notice of
Removal, Powko Industries, L.L.C. v. DMI Contractors,
Inc., et al., Civil Action No. 3:17-cv-19-BAJ-EWD, ECF
No. 1). On May 26, 2017, that action was remanded back to
state court because DMI had failed to request leave of the
state court to file its Third Party Demand as required by
law. (Ruling and Order, Powko Industries, L.L.C. v. DMI
Contractors, Inc., et al., Civil Action No.
3:17-cv-19-BAJ-EWD, ECF No. 20, adopting Report and
Recommendation, Powko Industries, L.L.C. v. DMI
Contractors, Inc., et al., Civil Action No.
3:17-cv-19-BAJ-EWD, ECF No. 19 (Mar. 22, 2017)). DMI then
requested leave of state court to file the Third Party
Demand, which was granted on May 31, 2017. (R. Doc. 1-2 at
264). LMIC again removed the State Court Action to federal
court on July 17, 2017. (R. Doc. 1).
same day that LMIC removed this action, on January 11, 2017,
LMIC also filed a separate Complaint for Declaratory Judgment
in LM Insurance Corporation v. Scott Folse, et al.,
Civil Action No. 3:17-cv-20-BAJ-RLB (the “Declaratory
Judgment Action”). The Declaratory Judgment Action
remains pending in this Court.
August 8, 2017, DMI filed the Motion to Remand.
Arguments of the Parties
removed this action on the basis of diversity jurisdiction
pursuant to 28 U.S.C. § 1332. In support of its removal,
LMIC alleges that it is a citizen of Illinois and
Massachusetts (R. Doc. 1 at 10); Scott Folse is a citizen of
Louisiana (R. Doc. 1 at 8); DMI Pipe is a citizen of
Mississippi (R. Doc. 1 at 8) and/or Louisiana (R. Doc. 1 at
9); and DMI Contractors, Inc. is a citizen of Louisiana (R.
Doc. 1 at 8). LMIC further alleges that the $75, 000 amount
in controversy is met because the settlement amount for which
DMI is seeking indemnification from LMIC is allegedly $1.5
million. (R. Doc. 1 at 11). LMIC also asserts that its
removal is proper as a “new suit” because all
other claims had been effectively resolved by way of
settlement more than a year prior to DMI's Third Party
Demand. (R. Doc. 1 at 4-5). Further, LMIC suggests that its
removal was timely because it was made within 30 days of its
waiver of service of the Third Party Demand, that the
one-year limitation in 28 U.S.C. § 1446(c) does not
apply or, alternatively, should the one-year limitation
apply, it should run from the Third Party Demand or be
equitably tolled based on the purported bad faith of DMI. (R.
Doc. 1 at 6-7).
support of remand, DMI argues that LMIC, as a third party
defendant to the original State Court Action, could not
remove the action because 28 U.S.C. § 1446 only permits
“a defendant or defendants” to do so. (R. Doc.
7-1 at 2-3). DMI also asserts that the main demand between
Powko and DMI has not been dismissed, also preventing
removal. (R. Doc. 7-1 at 6). In addition, DMI suggests that
the one-year period in 28 U.S.C. § 1446 has expired
because it runs from the March 21, 2014 commencement of the
action between Powko and DMI. (R. Doc. 7-1 at 6). Lastly, DMI
argues that the removal is defective because LMIC did not
obtain the consent of Powko. (R. Doc. 7-1 at 7).
response to DMI's arguments, LMIC notes that no party
disputes the existence of complete diversity. (R. Doc. 17 at
1). LMIC argues that it is a “defendant” for
purposes of 28 U.S.C. § 1446 because DMI's claim
against it is effectively a new lawsuit, and the parties
should be aligned accordingly. (R. Doc. 17 at 4). In the
alternative, LMIC asserts that a third party defendant can
remove a lawsuit based upon Fifth Circuit precedent, and that
such a removal does not, in this situation, threaten or
defeat Powko's choice of forum because it no longer has
an interest. (R. Doc. 17 at 6). Lastly, LMIC also argues that
Powko's consent was not necessary because it was a
plaintiff, not a defendant, and DMI's consent was not
necessary because it functions as a plaintiff in regards to
the Third Party Demand. (R. Doc. 17 at 8).
requests costs and attorney's fees in its Motion to
Remand under 28 U.S.C. § 1447(c) on the grounds that
this is LMIC's second attempt to remove. (R. Doc. 7-1 at
7). LMIC responds that DMI is not entitled to attorney's
fees or costs because it had objectively reasonable grounds
upon which to seek removal to federal court. (R. Doc. 17 at
oral argument held on November 6, 2017, LMIC submitted a
Post-Hearing Memorandum in Opposition to DMI's Motion to
Remand. (R. Doc. 40). Therein, LMIC suggests the following
three theories in which the Court could potentially deny
remand: (1) disregard Powko as a nominal party; (2) drop
Powko or sever and remand Powko's claims sua sponte; or
(3) realign the parties with DMI as plaintiff and LMIC as
defendant. (R. Doc. 40).
Law and Analysis
Was LMIC capable of removing this action as a third party
may remove “any civil action brought in a State court
of which the district courts of the United States have
original jurisdiction.” 28 U.S.C. § 1441.
Nevertheless, because federal courts are courts of limited
jurisdiction, it is presumed that a suit removed to federal
court lies outside this limited jurisdiction. Howery v.
Allstate Ins. Co.,243 F.3d 912, 916 (5th Cir. 2001). A
defendant may remove “any civil action brought in a
State court of which the district courts of the United States
have original jurisdiction.” 28 U.S.C. § 1441(a).
When original jurisdiction is based on diversity of
citizenship, the cause of action must be between
“citizens of different States” and the amount in
controversy must exceed the “sum or value of $75, 000,
exclusive of interest and costs.” 28 U.S.C. §
1332(a)-(a)(1). Subject matter jurisdiction must exist at the
time of removal to federal court, based on the facts and
allegations contained in the complaint. St. Paul
Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253
(5th Cir. 1998) (“jurisdictional facts must be judged
as of the time the complaint is filed”). Remand is