Quality First Roofing, Inc. v. HDI Glob. Speciality SE

QUALITY FIRST ROOFING, INC., Plaintiff, v. HDI GLOBAL SPECIALITY SE, andNORTH AMERICAN RISK SERVICES, INC., Defendants.

Case No. 2:21-cv-00110-KWR-GJF

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO

May 13, 2021

MEMORANDUM OPINION AND ORDER

THIS MATTER comes before the Court upon Plaintiff's Motion to Remand to State Court (Doc. 4). Having reviewed the parties' briefs and applicable law, the Court finds that Plaintiff's Motion is well taken and, therefore, is GRANTED. This case is remanded back to the Fifth Judicial District Court, Eddy Count, State of New Mexico.

BACKGROUND

This case involves an insurance coverage dispute. Plaintiff Quality First Roofing, Inc. argues that its insurers, the Defendants, acted in bad faith in denying coverage on the underlying construction dispute.

Plaintiff filed this case on December 22, 2020 in New Mexico's Fifth Judicial District Court. Plaintiff served Defendant NARS on January 21, 2021. Plaintiff then served Defendant HGS through the New Mexico Office of the Superintendent of Insurance pursuant to NMSA § 59A-4-31 and -32. The State of New Mexico Office of Superintendent of Insurance accepted service on HGS's behalf on January 29, 2021. Doc. 4-1. HGS received a copy of the complaint and summons from the Superintendent of Insurance on February 5, 2021. The Superintendent certified that the summons and complaint was served on HGS on January 29, 2021 and received by HGS on February 5, 2021. Doc. 17-1, Ex. 2

Defendant NARS removed this case on February 11, 2021, asserting diversity jurisdiction under 28 U.S.C. § 1332(a). In a footnote in the notice of removal, Defendant NARS noted that Defendant HGS had not been served and its consent was not required but "if and when served, HGS consents to removal to federal court." Doc. 1 at 6 n. 2.

LEGAL STANDARDS

Generally, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). A notice of removal must be filed within thirty days after receipt by the defendant of a copy of a pleading or other paper from which it may first be ascertained that the case is one which is removable. 28 U.S.C. § 1446(b). "When a civil action is removed solely under section 1441(a), all defendants who have been properly joined and served must join in or consent to the removal of the action." 28 U.S.C. § 1446(b)(2)(A). A notice of removal must be filed within thirty days after receipt of service by the removing defendant. See 28 U.S.C. §§ 1446(b)(1) and 1446(b)(2)(B).

"The failure of one defendant to join in [or consent to] the notice renders the removal notice procedurally defective, which requires that the district court remand the case." Brady v. Lovelace Health Plan, 504 F.Supp.2d 1170, 1172-73 (D.N.M.2007) (quoting Cornwall v. Robinson, 654 F.2d 685, 686 (10th Cir. 1981)). This rule is commonly known as the "unanimity rule." See Brady, 504 F.Supp at 1173.

The Court follows the "last-served rule" pursuant to § 1446(b)(2)(C) where "the clock begins running on each defendant to either remove a case or join a removal petition when that defendant receives formal service of process." Sawyer v. USAA Ins. Co., 839 F. Supp. 2d 1189, 1208 (D.N.M. 2012); Lucero v. Ortiz, 163 F. Supp. 3d 920, 931 (D.N.M. 2015) ("The last-served rule provides that each defendant has a right to remove within thirty days of service."). A defendant's consent to removal is not necessary where he or she has not been served at the time another defendant filed its notice of removal. See Sheldon v. Khanal, 502 Fed.Appx. 765 (10th Cir. 2012).

Federal courts are courts of limited jurisdiction; thus, there is a presumption against removal jurisdiction, which the defendant seeking removal must overcome. See Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir. 1995). "It is well-established that statutes conferring jurisdiction upon the federal courts, and particularly removal statutes, are to be narrowly construed in light of our constitutional role as limited tribunals." Pritchett v. Office Depot, Inc., 420 F.3d 1090, 1095 (10th Cir. 2005) (quoting Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); United States ex rel. King v. Hillcrest Health Ctr., 264 F.3d 1271, 1280 (10th Cir. 2001)). "All doubts are to be resolved against removal." Fajen v. Found. Reserve Ins. Co., 683 F.2d 331, 333 (10th Cir. 1982). "The burden of establishing subject-matter jurisdiction is on the party asserting jurisdiction." Montoya v. Chao, 296 F.3d 952, 955 (10th Cir. 2002).

DISCUSSION

Plaintiff seeks to remand this case back to the Fifth Judicial District Court, Eddy County, State of New Mexico because Defendants failed to timely and unanimously consent to removal pursuant to 28 U.S.C. § 1446(b)(2)(A). Defendant NARS argues that remand is not appropriate because (1) Defendant HGS was not served and its consent was not required until April 1, 2021,or (2) Defendant HGS's consent was noted in a footnote in the notice of removal. The Court rejects these arguments, concluding that Defendant HGS was served on February 5, 2021 and therefore its consent was due by March 8, 2021. Because Defendant HGS was properly served but failed to timely give consent to removal pursuant to 28 U.S.C. § 1446(b)(2)(A), the Court will remand this case pursuant to 28 U.S.C. § 1447(c) to the Fifth Judicial District Court, Eddy County, State of New Mexico.

I. Defendants failed to give timely unanimous consent pursuant to 28 U.S.C. § 1446(b)(2)(A).

Section 1446(b)(2)(A) requires that "all defendants who have been properly joined and served must join in or consent to the removal of the action." The "lack of unanimity is a procedural defect clearly established by statute as precluding removal." Harvey v. UTE Indian Tribe of the Uintah & Ouray Rsrv., 797 F.3d 800, 805 (10th Cir. 2015). The Tenth Circuit has held that "[t]he failure to comply with these express statutory requirements for removal can fairly be said to render the removal 'defective' and justify a remand." Huffman v. Saul Holdings Ltd. P'shp, 194 F.3d 1072, 1077 (10th Cir.1999) (quotation omitted). Section 1446(b)(2)(B) and (C) provide:

(B) Each defendant shall have 30 days after receipt by or service on that defendant of the initial pleading or summons described in paragraph (1) to file the notice of removal.

(C) If defendants are served at different times, and a later-served defendant files a notice of removal, any earlier-served defendant may consent to the removal even though that earlier-served defendant did not previously initiate or consent to removal.

28 U.S.C. § 1446(b)(2)(B) and (C).

The Court does not read this language as providing served defendants an open-ended time frame to consent. Rather, "the Court reads...the structure of 28 U.S.C. § 1446(b)[] to stand for the proposition that when there are multiple defendants, all served defendants must consent to removal within thirty days from when the last defendant was served." Zambrano v. New Mexico Corr.Dep't, 256 F. Supp. 3d 1179, 1184 (D.N.M. 2017), citing Hurt v. D.C., 869 F.Supp.2d 84, 86 (D.D.C. 2012) ("Nonetheless, removal to federal court additionally requires a timely demonstration of consent from all served defendants within thirty days of service of the complaint, under the widely recognized "rule of unanimity."). The Court notes that Defendants cite Zambrano and agree that all served defendants must consent to removal within thirty days from when the last defendant was served. Doc. 9 at 2.

This interpretation of § 1446(b) is consistent with other cases in this district and elsewhere which have held that defendants must consent to removal within the 30-day removal period of the last-served defendant. Zambrano v. New Mexico Corr. Dep't, 256 F. Supp. 3d 1179, 1186 (D.N.M. June 1, 2017) (Johnson, J.) ("The Court finds unanimous consent was required by April 26, 2017, which was thirty days after the last Defendants were served. Defendant Hohman did not consent to removal until two days after this thirty-day window ... Defendant Hohman did not timely give consent to removal and, therefore, removal is procedurally defective."); Alston v. Wells Fargo Bank, Nat'l Ass'n, No. CV TDC-17-1085, 2017 WL 2839629, at *2 (D. Md. June 29, 2017) ("Section 1446(b)(2)(C), however, does not explicitly impose a timing requirement for obtaining the consent of co-defendants to remove. LPS reads this omission as implying an open-ended deadline for satisfying the unanimity requirement. But this reading chafes against the language in the broader statute, which suggests that the deadlines to remove and to secure consent are the same."); see also A. N. v. Target Corp., No. CV2011380PARAOX, 2021 WL 53169, at *2 (C.D. Cal. Jan. 5, 2021) ("Consent to Removal was filed well outside the 30-day removal period that began running when the last defendant was served with the Summons and Complaint."), citing Sotelo v. Browning-Ferris Indus. of Cal., Inc., 2020 WL 7042816, 2020 U.S. Dist. LEXIS 224665, at *10-11 (C.D. Cal. Nov. 30, 2020) ("Here, Piste, the last-served defendant, filed a joinder toDefendants' notice of removal on September 8, 2020. This was outside the 30-day removal period, which began running when Piste was served on July 6, 2020."); Lopez v. Michael Weinig, Inc., 2020 WL 4192260, 2020 U.S. Dist. LEXIS 128501 (C.D. Cal. July 17, 2020) (collecting cases); Lewis v. HSBC Bank USA, N.A., No. CV 17-00234 DKW-KSC, 2017 WL 3671279, at *8 (D. Haw. Aug. 25, 2017), report and recommendation adopted, No. CV 17-00234 DKW-KSC, 2017 WL 4019416 (D. Haw. Sept. 12, 2017) ("Because Martin and Jensen were served on May 7, 2017, their removal window closed on June 6, 2017. Accordingly, HSBC's consent had to be filed by June 6, 2017."); Rouege Trucking, LLC v. Canales, No. CIV.A....