United States District Court, D. Massachusetts
JOSEPH B. SANDOVAL, Plaintiff,
RLI INSURANCE COMPANY, Defendant.
MEMORANDUM OF DECISION AND ORDER ON PLAINTIFF'S
MOTION TO REMAND AND DEFENDANT'S MOTION TO STAY
Gail Dein, United States Magistrate Judge.
plaintiff, Joseph B. Sandoval, was injured on June 19, 2015
when he fell from a ladder while painting a hallway at the
Aloft Hotel in Lexington, Massachusetts. He brought an action
in Middlesex Superior Court on May 1, 2017 against Rockwood
Capital, LLC, the owner and/or operator of the premises, and
Rockwood's insurer, RLI Insurance Company. Sandoval
v. Rockwood Capital, LLC, Middlesex Superior Ct., Civil
Action No. 1781-CV-01304. In Count I of the complaint,
plaintiff asserted a negligence claim against Rockwood. In
Count II, plaintiff alleged that RLI engaged in unfair claims
settlement practices, in violation of Mass. Gen. Laws chs.
93A & 176D.
September 21, 2017, the Massachusetts trial judge severed the
claims against RLI from those against Rockwood, but refused
to stay discovery against RLI. RLI then removed the action
against it to this court on the basis of diversity
jurisdiction. The matter is before this court on RLI's
“Motion for Reconsideration of State Court's Denial
of Motion to Stay” (Docket No. 8), pursuant to which
RLI is seeking a stay of discovery in this federal action.
Sandoval responded by filing a “Limited
Opposition” (Docket No. 9) in which he argues that the
case should be remanded to state court where he will assent
to a stay of discovery. This court deemed the plaintiff's
pleading to be a motion to remand, and requested a response
from RLI. (See Docket No. 13). RLI then filed an
opposition to the motion to remand (Docket No. 14), and a
hearing was held on December 15, 2017.
reasons detailed herein, the motion to remand is DENIED as
the matter was properly removed on the basis of diversity
jurisdiction. Defendant's request for a stay of discovery
is ALLOWED. Discovery is stayed pending resolution of
the state court action against Rockwood. RLI shall file a
status report with this court every 90 days, unless otherwise
directed, informing this court about the status of the state
Motion to Remand
defendant is entitled to remove a state court action to a
United States District Court pursuant to 28 U.S.C. §
1446(a) if two conditions are met. “First, the opposing
parties must have complete diversity of citizenship, which
requires that no plaintiff may be a citizen of any state of
which any defendant is also a citizen.” Lucas v.
Ultima Framingham LLC, 973 F.Supp.2d 98, 99 (D. Mass.
2013) (citing 28 U.S.C. § 1332(a)(1, 2)). “Second,
the amount in controversy must ‘exceed the sum or value
of $75, 000, exclusive of interest and costs.'”
Id. at 99-100 (quoting 28 U.S.C. § 1332(a))
(internal punctuation omitted). A plaintiff may challenge the
removal of an action to federal court based on lack of
federal jurisdiction, and may seek a remand to state court
pursuant to 28 U.S.C. § 1447. “When the plaintiff
challenges removal based upon diversity jurisdiction, the
defendant bears the burden of demonstrating that the removal
is permissible.” Lucas, 973 F.Supp.2d at 100.
the state court action was commenced against Rockwood and
RLI, there was not complete diversity between the parties. It
is undisputed that the plaintiff is a citizen of New York,
and plaintiff has alleged that Rockwood is based in New York
and Massachusetts. (See State Court Compl. (Docket
No. 8-1) at ¶¶ 1, 2). RLI has submitted evidence
establishing that Rockwood is a limited liability company
organized under Delaware law, and that it has members based
in New York. (See Docket No. 14 at Ex. A). For
diversity purposes, “citizenship of a limited liability
company is determined by the citizenship of all its
members.” Pramco, LLC v. San Juan Bay Marina,
Inc., 435 F.3d 51, 54 (1st Cir. 2006). Therefore, there
was no diversity between plaintiff and defendant Rockwood at
the time suit was filed.
argues that since there was no diversity between Sandoval and
Rockwood at the time suit was filed, it could not remove the
case to federal court until its case was severed from
Rockwood's. Sandoval argues in response that since the
93A claim could not be tried to a jury in state court, the
93A claim was, in fact, “severed” at the time
suit was filed. Sandoval has not cited any cases holding
that a defendant may unilaterally deem the claims against it
to be “severed” from claims against other
defendants, and no support for this proposition has been
found. Rather, 28 U.S.C. § 1441 refers to a
defendant's right to remove a “civil action,
” not part of a civil action. Therefore, this court
concludes that RLI could not have removed the action to this
court when Sandoval filed his complaint since there was no
diversity between Sandoval and Rockwood.
exceptions not relevant here, “if the case stated by
the initial pleading is not removable, a notice of removal
may be filed within 30 days after receipt by the defendant .
. . 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.” 28 U.S.C. §
1446(b)(3). RLI is an Illinois corporation with a principal
place of business in Illinois. (See Notice of
Removal (Docket No. 1) at ¶ 9). Since there is complete
diversity between Sandoval and RLI, the action against RLI
became removable once the severance order issued.
See, e.g., Shannon v. Church Mut. Ins.
Co., No. 4:15 CV 1279 CDP, 2015 WL 5444790, at *1 (E.D.
Mo. Sept. 15, 2015) (“once the state court severed the
third-party coverage action from the underlying liability
action . . ., the coverage action became removable because
complete diversity existed” between the plaintiff and
insurer). RLI filed its notice of removal within 30 days of
the state court's order severing RLI's case from
Rockwood's, so its removal was timely. Plaintiff does not
dispute that the amount in controversy in this action exceeds
$75, 000.00. Therefore, this court has jurisdiction over this
action against RLI, and the motion to remand is denied.
Motion to Stay Discovery
evidenced by the plaintiff's willingness to enter into a
stay of discovery against RLI if the case were to be
remanded, the law in Massachusetts is clear that discovery
from RLI relating to the claim of unfair settlement practices
should be stayed until Sandoval's action against Rockwood
is completed. As the SJC recognized in Monty v.
Cenedella, No. SJ-2004-0480 (Jan. 13, 2005) (Docket No.
8 at Ex. C), “the standard practice is and has long
been to stay discovery and trial of an unfair claim
settlement practices case until the underlying tort claim has
been resolved.” Id. at *2-3 (Single Justice of
the SJC allows insurer's motion to sever and stay
discovery). This is because “[d]iscovery into and trial
of the unfair claim settlement practices claim prior to trial
of the underlying tort claim is . . . approaching the two
claims in the wrong order” and “creates a host of
problems, in particular allowing discovery of issues that
would, with respect to the tort claim, be undiscoverable
(e.g., the insurer's claim file).” Id. at
*1. For these reasons, RLI's motion to stay discovery in
this case is allowed.