Sherrod ex rel. Minor A.S. v. Wallace, Rush, Schmidt, Inc.

PRINCESS SHERROD,ON BEHALF OF THE MINOR A.S. v. WALLACE, RUSH, SCHMIDT, INC.,EDWARD S. SCHMIDT, DAVID RAY WALLACE,AND HOWARD J. RUSH, III

CIVIL ACTION NO. 18-746-SDD-EWD

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF LOUISIANA

February 25, 2019

NOTICE

Please take notice that the attached Magistrate Judge's Report has been filed with the Clerk of the U.S. District Court.

In accordance with 28 U.S.C. § 636(b)(1), you have 14 days after being served with the attached report to file written objections to the proposed findings of fact, conclusions of law, and recommendations set forth 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 accepted by the District Court.

ABSOLUTELY NO EXTENSION OF TIME SHALL BE GRANTED TO FILE WRITTEN OBJECTIONS TO THE MAGISTRATE JUDGE'S REPORT.

Baton Rouge, Louisiana, February 25, 2019.

/s/_________

ERIN WILDER-DOOMES

UNITED STATES MAGISTRATE JUDGE

MAGISTRATE JUDGE'S RULING AND ORDER ON CONTINGENT MOTION FOR LEAVE TO AMEND AND/OR FOR ENLARGMENT OF TIME AND REPORT AND RECOMMENDATION ON MOTION TO REMAND AND/OR ABSTAIN

Before the Court is a Motion to Remand and/or Abstain (hereinafter, the "Motion to Remand") filed by Plaintiff Princess Sherrod, on behalf of the Minor, A.S. ("Plaintiff").¹ Defendants Edward S. Schmidt ("Schmidt"), David Ray Wallace ("Wallace"), and Howard J. Rush, III ("Rush") (collectively, "the WRS Principals") have filed an Opposition and Contingent Motions for Leave to Amend and/or For Enlargement of Time ("Motion to Amend").² Plaintiff has filed a Reply.³

For the following reasons, the Motion to Amend⁴ is GRANTED. The undersigned further recommends⁵ that the Motion to Remand⁶ be GRANTED, and that this matter be equitably REMANDED to the Nineteenth Judicial District Court for the Parish of East Baton Rouge, Stateof Louisiana pursuant to 28 U.S.C. § 1452(b),⁷ and/or that the Court ABSTAIN from presiding over this matter pursuant to 28 U.S.C. §1334(c)(1).⁸ The undersigned further recommends that Plaintiff's request for costs and attorney's fees⁹ be DENIED.

I. Facts and Procedural Background

This is a civil action involving claims for damages based upon injuries allegedly sustained by, and the subsequent death of, Jermaine Starr ("Decedent"), the father of the minor A.S. Plaintiff is A.S.'s mother and natural tutor¹⁰ under Louisiana law.¹¹ The pertinent facts giving rise to Plaintiff's claims are straightforward: On the morning of August 28, 2016, a commercial bus owned by Kristina's Transportation ("Kristina's") was being driven westbound on Interstate 10 in St. John the Baptist Parish by Denis Yasmir Amaya Rodriquez ("Rodriquez"). Rodriquez allegedly struck the 2012 Toyota Camry in which Decedent was a passenger (the "Accident"),¹² which caused Decedent to suffer injuries that eventually resulted in his death.¹³

On September 23, 2016,¹⁴ Plaintiff filed her original Petition for Damages ("Petition") in the Nineteenth Judicial District Court for the Parish of East Baton Rouge against several defendants, including Kristina's, as the owner of the bus and/or employer of Rodriquez; Wallace,Rush, Schmidt, Inc. ("WRS"), as the alleged employer of Rodriquez; National Liability Fire and Insurance Company ("National Liability"), the insurer of Kristina's and/or Rodriquez; National General Insurance Company, the insurer of the Camry's driver; and, ABC Insurance Company, the then-unknown insurer of WRS and/or Rodriquez.¹⁵ In the Petition, Plaintiff asserted wrongful death and survival claims arising out of Decedent's injuries and death based on (1) Rodriquez's negligence in operating the bus while in the course and scope of his employment with Kristina's and/or WRS,¹⁶ (2)(a) Kristina's and/or WRS's responsibility for the alleged acts of their employee/agent Rodriquez while in the course and scope his employment, and (2)(b) their alleged negligence in hiring and/or supervising Rodriquez.¹⁷ Plaintiff also asserted a direct action against the insurance companies for recovery under the applicable policies of insurance.¹⁸

Plaintiff subsequently filed three additional Amended Petitions,¹⁹ which did not amend or supplement the substantive allegations described above but merely added the following defendants: Hallmark Specialty Insurance Company and National Union Fire Insurance Company of Pittsburg, PA, as the alleged insurers of WRS; and Louisiana Servpro, LLC, who is alleged to have provided the workers that were on the bus at the time of the Accident.²⁰

On March 24, 2017, WRS filed a petition for Chapter 11 bankruptcy ("the Bankruptcy Proceeding" or "the Bankruptcy") in the United States Bankruptcy Court for the Eastern District of Louisiana ("the Bankruptcy Court").²¹ On June 27, 2017, the Bankruptcy Court lifted the stayand allowed Plaintiff to proceed with her claims in the state court,²² but ordered that Plaintiff could not enforce any judgment obtained against WRS without Bankruptcy Court approval.²³ Plaintiff filed her proof of claim in the bankruptcy proceeding on January 11, 2018.²⁴

On May 11, 2018, Plaintiff sought and was ultimately granted leave by the state court to file the Petition pertinent to the instant Motion to Remand, i.e., her Fourth Supplemental and Amended Petition ("Fourth Petition").²⁵ In the Fourth Petition, Plaintiff re-avers and re-alleges all of her prior allegations set forth in the previous Petitions,²⁶ and further alleges the following additional facts: Rodriquez, the driver, was allegedly recruited by Edgar Emilio Rueda-Betancourt ("Betancourt"), the owner of North American Cleaning Crew, LLC ("North American") to drive the bus, which was transporting potential workers (also recruited by Betancourt and/or North American) from New Orleans to Baton Rouge.²⁷ Betancourt allegedly chartered the bus and recruited the workers on behalf of WRS for possible temporary work positions.²⁸ According to Plaintiff, WRS is "a staffing company that provides temporary labor for disaster recovery and cleanup operations."²⁹

Further, Plaintiff named additional defendants, to-wit: ServPro of Metairie, Inc. ("ServPro"), who allegedly contracted with WRS for labor to staff and provide clean-up services to clients; Betancourt and his alter ego North American, as the agent of WRS or ServPro, whohired Rodriquez and recruited the workers being transported; and the WRS Principals, individually, as the owners, shareholders, and/or officers of WRS, who allegedly participated in and had knowledge of the hiring and recruitment activities of WRS, including those of WRS's alleged agents, Betancourt and North American; and finally, Rodriquez, the driver of the bus.³⁰ Plaintiff raised new claims against the new defendants, as follows: WRS, the WRS Principals and ServPro negligently hired and used Betancourt as their agent to recruit and arrange transportation for workers for WRS, and Betancourt's negligence resulted in the negligent hiring of Rodriquez, an unlicensed driver who caused the Accident.³¹ Plaintiff further claimed that the activities of WRS, the WRS Principals, ServPro, Betancourt and Rodriquez all constituted a single business enterprise that gave rise to solidary liability. Plaintiff requested service on all of the named defendants, specifically including service pursuant to the Louisiana long arm statute of all of the Petitions on Wallace and Rush, and personal service of all of the Petitions on Schmidt at a Louisiana address.³²

On August 4, 2018, the WRS Principals removed the matter to this Court solely on behalf of themselves and WRS.³³ In their Notice of Removal, the WRS Principals allege that this Court has jurisdiction pursuant to 28 U.S.C. §1334, as this matter is "related to" a case under Title 11, i.e., WRS's Bankruptcy Proceeding, because the outcome of Plaintiff's claims against WRS and the WRS Principals herein can have an effect on the bankruptcy estate of WRS, in that "the outcome could alter, positively or negatively, the debtor's rights, liabilities, options or freedom ofaction or could influence the administration of the bankrupt estate."³⁴ The WRS Principals allege that Plaintiff filed a proof of claim in WRS's Bankruptcy on January 11, 2018, which brought her claims against WRS and the WRS Principals under the federal court's jurisdiction. Moreover, according to the WRS Principals, Plaintiff's filing of a proof of claim means that her claims "are now a core proceeding under the Bankruptcy Code."³⁵

The WRS Principals allege that they have properly removed the matter to this Court pursuant to 28 U.S.C. § 1452, which allows "removal of claims related to bankruptcy cases" to the district court for the district where such civil action is pending (i.e., this Court), "if such district court has jurisdiction of such ...cause of action under section 1334...." They allege that WRS consents to the removal, and because the matter is removed under 28 U.S.C. § 1452, which is "claim-specific and party-specific," the consent of the other Defendants to the removal of the state court proceeding is not necessary.³⁶ The WRS Principals further allege that the removal was timely pursuant to Fed. R. Bankr. P. 2027 because although they were named defendants in the May 18, 2018 Fourth Petition,³⁷ the records of the clerk of the Nineteenth Judicial District showed no service of that Fourth Petition on the WRS Principals as of the date of the removal; thus, "fewer than thirty days have passed since service of the Defendants."³⁸

The WRS Principals assert that claims against WRS have been brought by many plaintiffs in many cases and venues, and adjudicating the issue of WRS's liability in this Court would facilitate a consistent result, judicial expediency, centralization of the claim, and protection of WRS's estate from frivolous claims.³⁹ Considering this...