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ALC Holding LLC v. Federated Service Insurance Co.

United States District Court, D. Arizona

December 22, 2015

ALC Holding LLC, Plaintiff,
v.
Federated Service Insurance Company, et al., Defendants.

ORDER

Honorable G. Murray Snow United States District Judge

Pending before this Court is Plaintiff, ALC Holding, LLC’s, motion to remand pursuant to 28 U.S.C. § 1447(c). (Doc. 18.) For the foregoing reasons, the Court grants the motion and remands the matter back to the Apache County Superior Court.

BACKGROUND

This case arises out of a 2011 fire that damaged the facilities of a business in which Plaintiff allegedly holds a majority interest. (Doc. 1 at 4.) Defendant provided property insurance coverage for the business. (Id.) A dispute arose over the extent of smoke damage, thus, Plaintiff requested an appraisal of said damage pursuant to the terms of its insurance policy with Defendant. (Id.) Both parties elected independent appraisers, but the appraisers could not agree on a third-party umpire required by the terms of the insurance agreement. (Id.)

On May 6, 2014, Plaintiff filed its Petition for Appointment of Umpire (“Petition”) in state court. (Doc. 18 at 1.) The Petition alleged complete diversity between the parties. (Doc. 1, Ex. B.) Plaintiff is an Arizona Limited Liability Company with members in Arizona and North Carolina. (Doc. 1.) And defendant, Federated Service Insurance Company, is a Minnesota corporation with its principal place of business in Minnesota. (Id.) The Petition, however, did not state on its face an amount in controversy. (Doc. 1, Ex. B.) On May 22, 2014, the state court appointed an umpire. (Doc. 1 at 4.) On October 23, 2014, the appraisers and umpire reached an appraisal award amount of $626, 000. (Id.) In light of the award amount, on December 10, 2014, Defendant paid Plaintiff the balance owed under the insurance policy. (Id.)

On May 21, 2015, Plaintiff filed a motion to confirm the appraisal award. (Doc. 25 at 5.) Plaintiff attached the October 23, 2014 appraisal award as an exhibit to the motion. (Id. at 8.) The motion prayed for the court to enter an order confirming the appraisal award without modification. (Doc. 1, Ex. H.) On July 10, 2015, Defendant filed a motion to dismiss the motion to confirm the appraisal award. (Id., Ex. J.) Plaintiff filed its response on July 28, 2015 within which it noted new claims for insurance bad faith. (Id., Ex K.) Plaintiff filed a “complaint” raising its new claims that same day. (Id., Ex. J.) Defendant filed a motion to dismiss the “complaint” on August 17, 2015. (Id., Ex. P.) On August 27, 2015, Defendant filed its notice of removal with the Court. (Id.) Plaintiff filed its motion to remand on September, 26, 2015. (Doc. 18.) The matter is fully briefed.

DISCUSSION

I. Legal Standard

Under 28 U.S.C. § 1446(b)(1), notice of removal “shall be filed within thirty days after the receipt [of a copy of the initial pleading] by the defendant.” However, “if the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.” § 1446(b)(3). In other words:

[S]ection 1446(b) identifies two thirty-day periods for removing a case. The first thirty-day removal period is triggered “if the case stated by the initial pleading is removable on its face.” Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 694 (9th Cir. 2005). The second thirty-day removal period is triggered if the initial pleading does not indicate that the case is removable, and the defendant receives “a copy of an amended pleading, motion, order or other paper” from which removability may first be ascertained. 28 U.S.C. § 1446(b).

Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 885 (9th Cir. 2010). Additionally, if the “case stated by the initial pleading is not removable solely because the amount in controversy does not exceed [$75, 000], information relating to the amount in controversy in the record of the State proceeding, . . . shall be treated as an “other paper” under subsection (b)(3).” § 1446(c)(3)(A). Generally, federal courts “strictly construe” the requirements of removal. See, e.g., Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1252 (9th Cir. 2006) (affirming that “[r]emoval statutes are to be strictly construed, and any doubts as to the right of removal must be resolved in favor of remanding to state court.”) (citation omitted); Nev. v. Bank of Am. Corp., 672 F.3d 661, 667 (9th Cir. 2012) (“Removal statutes are to be ‘strictly construed’ against removal jurisdiction.”). Accordingly, the thirty day time limit is likewise strictly construed against removal. See U.S. ex rel. Walker v. Gunn, 511 F.2d 1024, 1026 (9th Cir. 1975) (“[time for removal] is imperative and mandatory, must be strictly complied with, and is to be narrowly construed”).

Finally, when removal is sought on the basis of diversity jurisdiction, a defendant cannot remove under § 1446(b)(3) more than one year after the commencement of the action, “unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.” § 1446(c)(1). The statute specifically notes that if “the district court finds that the plaintiff deliberately failed to disclose the actual amount in controversy to prevent removal, that finding shall be deemed bad faith” and will permit removal after one year. § 1446(c)(3)(B).

II. Analysis

A. Timeliness of removal


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