Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-2_06-cv-00300/USCOURTS-alsd-2_06-cv-00300-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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1 Under the E-Government Act of 2002, this is a written opinion and therefore is

available electronically. However, it has been entered only to decide the motion or matter

addressed herein and is not intended for official publication or to serve as precedent.

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

NORTHERN DIVISION

LULA CALHOUN, et al., )

 )

Plaintiffs, )

 )

v. ) CIVIL ACTION 06-0300-WS-M

 )

TRANSPORTATION INSURANCE )

COMPANY, )

 )

Defendant. )

ORDER

This matter is before the Court on plaintiffs’ Motion to Remand (doc. 4) this action to the

Circuit Court of Marengo County, Alabama. The Motion has been briefed and is ripe for

disposition.1

I. Background.

This case springs from a tangled web of litigation that encompasses multiple actions in

both the Circuit Court of Marengo County, Alabama and this District Court. A brief overview of

these intertwined actions will be helpful in placing this piece of the dispute in its proper context.

On December 26, 2002, John R. Stabler (“Stabler”) sustained injuries and Robert Lee

Calhoun was killed in an explosion at the Linden Lumber Company, Inc. (“Linden”) plant in

Marengo County, Alabama, while they were performing assigned duties for Linden. Robert Lee

Calhoun’s widow, plaintiff Lula Calhoun (“Calhoun”), proceeded to file suit against Linden in

Marengo County Circuit Court for recovery of workers’ compensation benefits arising from the

explosion, and later amended her complaint to assert negligence and wantonness claims against

Forest Products Engineering, Inc. (“Forest”), based on Forest’s alleged role as a general advisor

Case 2:06-cv-00300-WS-M Document 9 Filed 07/24/06 Page 1 of 17
2 Stabler filed a parallel lawsuit against Linden and Forest in Marengo County,

represented by the same counsel as Calhoun and propounding theories of relief against those

defendants that were analogous to those interposed by Calhoun. 

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and its alleged knowledge of the dangerous condition that culminated in the explosion.2

 At some

point, plaintiff Robert Coleman (“Coleman”), a dependent minor child, joined the Calhoun

lawsuit in state court as an intervenor plaintiff.

The parties are not in full agreement as to exactly what happened next; however, it

appears that Forest notified its insurance carrier, Transportation Insurance Company

(“Transportation”), of the pendency of the Calhoun lawsuit, but that Transportation did not

immediately provide a defense or otherwise indemnify Forest. When Transportation failed to

take action within a certain time frame, Forest negotiated an agreement with Calhoun and

Coleman to allow entry of consent judgment against Forest in Calhoun and Coleman’s favor in

the amount of $1 million. This agreement was subject to the provisos that Calhoun and Coleman

would execute said judgment only against insurance funds (i.e., against Transportation, which

had no knowledge of the agreement and did not consent to it), not against Forest or its principal,

and that Forest would assign to Calhoun and Coleman its rights to the insurance proceeds

allegedly owed by Transportation under said judgment. On March 24, 2006, Transportation filed

a petition in intervention and objection to entry of consent judgment. Transportation’s position

was that it had had multiple communications with Forest about providing a defense before the

settlement and consent judgment occurred, that Transportation had never refused to provide a

defense, and that it had decided to defend Forest before receiving notice of the settlement and

consent judgment. Nonetheless, on April 2, 2006, the Circuit Court of Marengo County entered

a consent judgment in favor of Calhoun and Coleman and against Forest in the amount of $1

million.

Shortly thereafter, on April 6, 2006, Transportation filed a motion to reconsider and

motion to set aside the consent judgment, reiterating and further explaining many of its previous

objections to entry of the consent judgment. As one might expect, Calhoun and Coleman

opposed Transportation’s efforts to set aside the consent judgment. The Court’s understanding is

that Transportation’s motions to intervene and to set aside, vacate or otherwise unwind the

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3 Despite the fact that the same counsel is representing Transportation in both this

action and the Stabler garnishment proceedings, and despite the fact that both cases were

removed to federal court by the same attorney within weeks of each other, and despite the fact

that the legal and factual issues presented in the two garnishment actions are identical, removing

counsel failed to designate these two cases as “related cases” in the civil cover sheet for this

action. If Stabler and Calhoun are not “related cases,” then there is no such thing. The result of

this omission was that this District Court’s case assignment process could not function properly,

such that Calhoun was originally assigned to a different district judge’s docket, notwithstanding

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consent judgment remain pending in state court, and have not yet been ruled on. Transportation

has argued in that litigation that if intervention is denied and if the consent judgment is not set

aside, then Transportation will challenge whether the consent judgment was reasonable and

entered into in good faith.

With knowledge of Transportation’s pending legal challenges to the consent judgment

and without waiting for a conclusive determination by Alabama courts as to whether that consent

judgment would remain in place, Calhoun and Coleman filed Process of Garnishment against

Transportation in Marengo County Circuit Court on April 12, 2006. (The same procedure was

followed in the parallel Stabler action.) Additionally, on March 30, 2006, Calhoun and Coleman

filed a counterclaim in the Marengo County action seeking a declaratory judgment as to

Transportation’s rights and obligations under the subject insurance policy, and specifically

requesting that the Alabama court “[e]nter a judgment declaring that there is coverage under the

aforementioned insurance policy in connection with the” consent judgment and “[e]nter a

judgment declaring that [Transportation] has an obligation to indemnify [Forest].” (Doc. 4, at

Exh. 8.)

It is at this point in our narrative that the high-velocity proliferation of litigation

commenced in earnest. On May 12, 2006, Transportation filed a Notice of Removal (doc. 1)

removing the Calhoun/Coleman garnishment proceeding to this District Court on grounds of

diversity of citizenship, pursuant to 28 U.S.C. § 1332, and creating the instant federal action. 

Several weeks earlier, Transportation filed a separate Notice of Removal removing the Stabler

garnishment proceeding to this District Court, where it now resides on the undersigned’s docket

under the caption John R. Stabler v. Transportation Insurance Company, Civil Action No. 06-

0237-WS-M.3

 Also, on March 17, 2006, without awaiting a ruling by the state court on its

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its substantively identical posture, leaving court personnel to discover the near-total overlap on

their own and initiate transfer proceedings to place Stabler and Calhoun on the same judge’s

docket. The resulting inefficiencies could have been avoided had removing counsel simply

completed the civil cover sheet accurately, which counsel is admonished to do in future

appearances in this District Court.

4 Regrettably, Transportation’s counsel (the same counsel representing it both of

the garnishment proceedings) neglected to identify the garnishment actions as “related cases” in

the civil cover sheet accompanying the declaratory judgment action filing. As a result, that

action was initially assigned to yet a third district judge’s docket, requiring further expenditure

of judicial resources to disentangle the dockets of judges and place all of these obviously related

cases on the docket of a single judge. 

5 Transportation bears primary responsibility for this morass, having morphed two

lawsuits into five even though all relevant legal and factual issues had been joined or appeared

readily capable of being joined in the two pre-existing actions. That said, Stabler and Calhoun’s

counsel is not immune from blame, given their precipitous filing of Process of Garnishment

despite actual knowledge that Transportation was challenging the validity and enforceability of

the consent judgment. See generally State Farm Mut. Auto Ins. Co. v. Brown, 894 So.2d 643,

648 (Ala. 2004) (third party cannot bring action against responsible party’s insurer “absent a

final judgment against its insured”); Ala. Code § 6-6-390 (“no garnishment shall issue prior to a

final judgment”). Thus, escalation on both sides contributed to the unfortunate quagmire in

which this litigation now rests, with the attendant exponential increases in burdens on both

counsel and the courts (federal and state) to sift through the rubble and restore order.

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previously filed motions to intervene and to vacate the consent judgment, Transportation

initiated another federal lawsuit by filing a declaratory judgment action against Forest, Calhoun

and Stabler (but not Coleman), asking this Court to declare that it has no obligation to pay the

consent judgments against Forest, or otherwise to defend or indemnify Forest in connection with

the Marengo County suits. That action is captioned Transportation Insurance Co. v. Forest

Products Engineering, Inc. et al., Civil Action No. 06-0165-WS-M, and is now on the

undersigned’s docket.4

 In effect, the declaratory judgment action requests an order nullifying the

garnishment proceedings and excusing Transportation from any liability or duty to defend in the

Marengo County cases.

At latest count, then, there are no fewer than five lawsuits (three in federal court, two in

state court) pertaining to Calhoun, Coleman and Stabler’s claims for damages arising from the

December 2002 accident. In all of these actions, Transportation is endeavoring (either directly

or indirectly) to litigate identical coverage and liability issues.5 Calhoun and Coleman now seek

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to have this garnishment action remanded to Marengo County Circuit Court on the grounds that

diversity of citizenship is lacking; that the garnishment action is an ancillary proceeding and

therefore not removable; that removal is untimely and fails to include all papers filed in the

underlying state court action; that Alabama substantive law forbids removal of garnishment

actions; and that principals of comity and federalism require remand. The parties have been

afforded a full opportunity to brief these issues.

II. Legal Standard for Motion to Remand.

A removing defendant must establish the propriety of removal under 28 U.S.C. § 1441

and, therefore, must establish the existence of federal jurisdiction. Leonard v. Enterprise Rent a

Car, 279 F.3d 967, 972 (11th Cir. 2002) (“A removing defendant bears the burden of proving

proper federal jurisdiction.”); Tapscott v. MS Dealer Service Corp., 77 F.3d 1353, 1356 (11th Cir.

1996), overruled on other grounds by Cohen v. Office Depot, Inc., 204 F.3d 1069 (11th Cir.

2000). Because removal infringes upon state sovereignty and implicates central concepts of

federalism, removal statutes must be construed narrowly, with all doubts resolved in favor of

remand. See University of South Alabama v. American Tobacco Co., 168 F.3d 405, 411 (11th

Cir. 1999) (explaining that strict construction of removal statutes derives from “significant

federalism concerns” raised by removal jurisdiction); Whitt v. Sherman Int’l Corp., 147 F.3d

1325, 1333 (11th Cir. 1998) (expressing preference for remand where removal jurisdiction is not

absolutely clear); Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994) (uncertainties

regarding removal are resolved in favor of remand); Newman v. Spectrum Stores, Inc., 109 F.

Supp.2d 1342, 1345 (M.D. Ala. 2000) (“Because federal court jurisdiction is limited, the

Eleventh Circuit favors remand of removed cases where federal jurisdiction is not absolutely

clear.”).

III. Analysis.

A. The § 1332(c)(1) Issue.

The critical jurisdictional question posed here is whether the “direct action” limitation of

28 U.S.C. § 1332(c)(1) applies, so as to strip this Court of diversity jurisdiction. That section

provides, in pertinent part, “that in any direct action against the insurer of a policy or contract of

liability insurance ..., to which action the insured is not joined as a party-defendant, such insurer

shall be deemed a citizen of the State of which the insured is a citizen, as well as of any State

Case 2:06-cv-00300-WS-M Document 9 Filed 07/24/06 Page 5 of 17
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by which the insurer has been incorporated and of the state where it has its principal place of

business.” Id. (emphasis added). Calhoun is a citizen of Alabama, and Transportation’s state of

incorporation and principal place of business are Illinois; however, Forest (Transportation’s

insured) appears to be a citizen of Alabama for diversity purposes. If the “direct action” statute

applies, then Transportation assumes Forest’s Alabama citizenship, and is therefore non-diverse

as to Calhoun, so as to defeat diversity jurisdiction and require remand. By contrast, if

Calhoun’s Process of Garnishment is not a “direct action,” then the citizenship of Forest (which

is not a party to this garnishment action) does not count against Transportation for diversity

purposes, and complete diversity would remain, conferring federal jurisdiction.

At the Court’s request, the parties briefed the issue of whether these garnishment

proceedings are properly considered a “direct action” for § 1332(c)(1). The parties’ research

reveals a badly splintered division among federal courts on this question, with little binding

authority to light the way. Compare Wheelwright Trucking Co. v. Dorsey Trailers, Inc., 158 F.

Supp.2d 1298, 1301 (M.D. Ala. 2001) (“under the modern trend, a ‘direct action’ can include

post-judgment garnishments brought by a judgment creditor against the judgment debtor’s

commercial insurer”); Boston v. Titan Indem. Co., 34 F. Supp.2d 419, 424 (N.D. Miss. 1999)

(deeming garnishment proceeding a “direct action,” as insurer was being sued not for its

wrongful conduct against judgment creditor, but instead to collect judgment entered against its

insured); Reko v. Creative Promotions, Inc., 70 F. Supp.2d 998, 1003-04 (D. Minn. 1999)

(similar); Sherman v. Pennsylvania Lumbermen’s Mut. Ins. Co., 21 F. Supp.2d 543, 545 (D. Md.

1998) (similar); Prendergast v. Alliance Gen. Ins. Co., 921 F. Supp. 653, 655 (E.D. Mo. 1996)

(similar) with Hayes v. Pharmacists Mut. Ins. Co., 276 F. Supp.2d 985, 987 (W.D. Mo. 2003)

(holding that garnishment proceeding is not a direct action because plaintiff is not suing insurer

to establish insured’s liability, which has already been determined, but is instead suing insurer to

establish insurer’s liability); Freeman v. Walley, 276 F. Supp.2d 597, 600-02 (S.D. Miss. 2003)

(declaring that garnishment proceeding is not direct action because direct action is suit against

another’s insurer without joining insured and without having first obtained judgment against

insured); Hipke v. Kilcoin, 279 F. Supp.2d 1089, 1092-93 (D. Neb. 2003) (concluding that §

1332(c)(1) does not apply in garnishment context against liability insurer because direct actions

are limited to tort claims to determine liability, while garnishment is a contract claim to

Case 2:06-cv-00300-WS-M Document 9 Filed 07/24/06 Page 6 of 17
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determine coverage); Davis v. Carey, 149 F. Supp.2d 593, 600 (S.D. Ind. 2001) (opining that

“direct action,” as intended by Congress, is limited to cases in which creditor sues insurer

without joining insured as a defendant or first obtaining judgment against insured).

Upon review of these conflicting authorities, no clear consensus or majority view

emerges from the fractured lines of precedent. Although it is not eager to take sides in a debate

characterized by no clear answers, a relative dearth of appellate guidance, and superficially

sensible holdings in both camps, the Court must do so, given that the Motion to Remand and the

existence of federal jurisdiction both hinge on whether this case is a “direct action” for purposes

of § 1332(c)(1). The Eleventh Circuit has not specifically examined whether suits by judgment

creditors against the insurers of judgment debtors qualify as direct actions; however, it has

explained that the “direct action” exception turns on “the cause of action asserted against the

defendant insurer, not the relationship of the insurer to the insured.” Fortson v. St. Paul Fire and

Marine Ins. Co., 751 F.2d 1157, 1159 (11th Cir. 1985). To be considered a “direct action” under

§ 1332(c)(1), a claim must be one in which “a party suffering injuries or damage for which

another is legally responsible is entitled to bring suit against the other’s liability insurer without

joining the insured or first obtaining a judgment against him.” Id. (emphasis added); see also

Hernandez v. Travelers Ins. Co., 489 F.2d 721, 723 (5th Cir. 1974) (similar). The method to this

madness is that if an aggrieved third party sues a tortfeasor’s insurer without first securing

judgment against the tortfeasor, then the insurer and tortfeasor are unified in their interest against

the plaintiff. In that scenario, the insurer is essentially standing in the shoes of the tortfeasor and

defending the tortfeasor’s interests by arguing that the tortfeasor is not liable to the aggrieved

plaintiff, so it is only logical to superimpose the tortfeasor’s citizenship on the insurer. By

contrast, however, if the plaintiff can wait to sue the insurer until after entry of judgment against

the tortfeasor, then the tortfeasor and plaintiff’s interests are aligned against the insurer, because

both insured and plaintiff have a compelling interest in having the judgment paid by insurance

proceeds. In that context, the insurer is litigating its own coverage and liability, not that of its

insured. Under such circumstances, where the interests of insurer and insured are adverse and

the insurer is litigating its own liability (not that of its insured), it would be counterintuitive to

ascribe the insured’s citizenship to the insurer for diversity purposes.

With due recognition of the existence of credible precedents to the contrary, the Court

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6 The above-described policy justifications against “direct action” status are

particularly apt here. Far from being aligned with Forest, Transportation is in a position of

attempting to erase a consent judgment that Forest surreptitiously and unilaterally entered into

with plaintiffs for the purpose of visiting seven-figure liability on Transportation. Moreover,

Transportation would be primarily litigating its own coverage defenses, rather than whether

Forest is or is not liable to plaintiffs, in this action. Given the widely divergent interests and

apparent rancor between them, it would be inappropriate to affix Forest’s citizenship on

Transportation or to categorize this matter as a “direct action” against Transportation.

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adopts the definition of “direct action” as articulated by the Eleventh Circuit in Fortson and by

the old Fifth Circuit in Hernandez, and as supported by the policy rationales set forth above. 

That definition limits § 1332(c)(1) “direct actions” to those in which an aggrieved plaintiff files

suit against the wrongdoer’s insurer without either joining the wrongdoer as a defendant or first

obtaining a judgment against the wrongdoer. In this case, Calhoun initiated garnishment

proceedings against Transportation only after securing a judgment against Forest,

Transportation’s insured. Indeed, Alabama law prohibited Calhoun from commencing

garnishment proceedings against Transportation unless she first obtained a judgment against

Forest. See Ala. Code § 6-6-390; Bailey Realty & Loan Co. v. Bunting, 19 So.2d 609, 610 (Ala.

1944). Because Calhoun obtained a judgment against Forest before initiating a garnishment

action against Forest’s insurer, which judgment was a precondition to said garnishment, this case

is not a “direct action” for § 1332(c)(1) purposes.6

 Accordingly, Transportation is properly

deemed a citizen of Illinois for diversity purposes, and Forest’s Alabama citizenship does not

accrue to Transportation here. This action is between citizens of different states and involves an

amount in controversy in excess of $75,000; therefore, federal subject matter jurisdiction

properly lies pursuant to 28 U.S.C. § 1332, and remand is not warranted on jurisdictional

grounds.

B. Miscellaneous Grounds for Remand.

In addition to the jurisdictional issue, Calhoun and Coleman posit a host of alternative

reasons for seeking remand, including (a) this garnishment proceeding is not “separate and

independent” and can be removed only if the entire Marengo County action is removable; (b)

Transportation violated timeliness requirements for removal, and failed to include copies of all

pleadings, process and orders with its removal notice; and (c) Alabama substantive law requires

Case 2:06-cv-00300-WS-M Document 9 Filed 07/24/06 Page 8 of 17
7 Nor does the Court adopt plaintiffs’ assertion that this garnishment action must be

classified as an ancillary proceeding under Alabama law. It is true that Alabama courts have so

held. See, e.g., Rice v. State Farm Fire & Cas. Co., 628 So.2d 582, 583 (Ala. 1993) (“a postjudgment garnishment proceeding is an ancillary proceeding seeking satisfaction of a prior

judgment, and not an original civil suit”). It is equally true, however, that federal law and not

state law controls as to whether an action is removable under 28 U.S.C. § 1441. See Randolph v.

Employers Mut. Liability Ins. Co., 260 F.2d 461, 463-64 (8th Cir. 1958) (state classification of

garnishment proceedings is in no way binding on federal court’s determination of whether

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that the garnishment proceeding remain in Marengo County. These contentions may be

dispatched quickly.

Plaintiffs argue that this action must be remanded to state court because the removed

garnishment proceeding is not a separate and independent proceeding from the matters that

remain in state court. Plaintiffs reason that because the garnishment proceeding is not

independent, the entire Marengo County suit would have to be removed, which could not happen

because Forest is non-diverse from Calhoun. However, the clear weight of authority is that

garnishment proceedings are in fact separate and independent actions that are removable if all

other jurisdictional prerequisites are satisfied. See, e.g., Webb v. Zurich Ins. Co., 200 F.3d 759,

760 (11th Cir. 2000) (noting that lower court correctly denied motion to remand garnishment

proceedings that “were a separate and independent cause of action with diversity of the parties”);

Butler v. Polk, 592 F.2d 1293, 1295 (5th Cir. 1979) (opining that “garnishment actions against

third-parties are generally construed as independent suits, at least in relation to the primary

action”); Berry v. McLemore, 795 F.2d 452, 455 (5th Cir. 1986) (“The writ of garnishment, under

the clear precedent of this court, is an action separate and independent from the action giving rise

to the judgment debt.”); Hipke, 279 F. Supp.2d at 1092 (following Butler); Johnson v. Great

American Ins. Co., 213 F. Supp.2d 657, 661 (S.D. Miss. 2001) (“even though, procedurally, a

garnishment action may be filed under the same number as the case in which the judgment was

obtained, it is, in effect, an entirely separate lawsuit” and therefore removable under § 1441(a));

Reko, 70 F. Supp.2d at 1001 (“it has long been established that a garnishment proceeding is a

suit or civil action within the meaning of those terms in the removal statute”). The Court agrees

with these precedents that plaintiffs’ garnishment action is in fact separate and independent for

removal purposes.7

Case 2:06-cv-00300-WS-M Document 9 Filed 07/24/06 Page 9 of 17
garnishment is independent action for removal purposes); Johnson v. Wilson, 185 F. Supp.2d

960, 963 (S.D. Ind. 2002) (rejecting Indiana state court’s characterization of garnishment

proceeding as ancillary as not controlling for removal analysis).

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As additional alleged defects in the removal process, plaintiffs assert that this action was

untimely removed and that the notice of removal is defective because it lacks copies of all papers

from the state court action. Neither argument is persuasive. To be sure, 28 U.S.C. § 1446(b)

requires a removal predicated on diversity to be completed within one year after commencement

of the action. However, the operative commencement date is April 12, 2006 (the date on which

plaintiffs filed process of garnishment), not the date on which the underlying Marengo County

Circuit Court proceedings began. Transportation has plainly complied with the one-year

deadline of § 1446(b). Likewise, plaintiffs are correct that § 1446(a) requires a removing

defendant to include “a copy of all process, pleadings, and orders served upon” it with its

removal papers, and that Transportation did not include all papers from the Marengo County

action with its Notice of Removal. But again, the relevant action here is the garnishment

proceeding, not the entire underlying state court lawsuit; therefore, the Court finds that

Transportation fully complied with § 1446(a) because, in effectuating removal, it was required to

include only those papers relating to the garnishment proceeding.

Also, plaintiffs argue that Alabama law requires that writs of garnishment issue out of

and return to the same court, and that removal is improper because it conflicts with that

requirement by altering the return court. Half-century-old Alabama precedent confirms that

writs of garnishment to enforce judgments “must issue out of and be returnable to the court that

renders the judgment.” Pepperell Mfg. Co. v. Alabama Nat. Bank of Montgomery, 75 So.2d 665,

669 (Ala. 1954). However, plaintiffs read far too much into this authority. Nothing in Pepperell

purports to bar removal of garnishment proceedings; rather, it simply states the technical

requirement that the writ itself must reflect that it was issued by and returnable to the same court. 

Plaintiffs’ Process of Garnishment plainly satisfies Pepperell, inasmuch as it was both issued by

and returnable to Marengo County Circuit Court. That the garnishee opted to remove that

Process of Garnishment in no way ran afoul of Pepperell or violated the requirement that the

writ itself state that it is returnable to the same court that entered it. The Court will not read into

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Pepperell a constraint on federal jurisdiction that is not there, nor will it extrapolate from that

decision some sort of blanket prohibition on removal of garnishment actions in Alabama. See

generally Superior Beverage Co. v. Schieffelin & Co., 448 F.3d 910, 917 (6th Cir. 2006) (“A state

statute cannot divest a federal court of diversity jurisdiction.”).

C. Abstention.

A cornerstone of the Motion to Remand is that this action should be remanded to state

court pursuant to principles of comity and federalism because the state court is presently

confronting identical legal and factual issues to those presented in the instant garnishment action,

requiring this Court to rehash issues that are also being litigated in Marengo County. (Motion, at

2, 9, 14-15; Reply Brief, at 4-5.) Transportation’s opposition brief is largely silent on this

critical point.

It is well established that “the pendency of an action in the state court is no bar to

proceedings concerning the same matter in the Federal court having jurisdiction.” Ambrosia

Coal and Const. Co. v. Pages Morales, 368 F.3d 1320, 1328 (11th Cir. 2004) (citation omitted). 

However, both Eleventh Circuit case law on comity and federalism, as well as the doctrine of

Colorado River abstention, lend strong support to Calhoun’s position that federal jurisdiction

should not be exercised in these circumstances. Both lines of authority proceed from the premise

that while a federal court is not precluded from exercising jurisdiction if there is also a pending

parallel state court action, “a district court is under no compulsion to exercise that jurisdiction

where the controversy may be settled more expeditiously in the state court.” Will v. Calvert Fire

Ins. Co., 437 U.S. 655, 662-63, 98 S.Ct. 2552, 57 L.Ed.2d 504 (1978) (per Rehnquist, J., with

three Justices concurring and one Justice concurring in the judgment) (internal citations and

quotation marks omitted).

1. Comity and Federalism in the Eleventh Circuit.

In Merrill Lynch, Pierce, Fenner & Smith v. Haydu, 675 F.2d 1169 (11th Cir. 1982), the

Eleventh Circuit applied principles of federalism, comity and practicality to affirm the dismissal

of a federal action where there was a parallel state action proceeding simultaneously. The Haydu

court explained that “[p]rinciples of comity come into play when separate courts are presented

with the same lawsuit,” and that in such circumstances “one court must yield its jurisdiction to

the other.” Id. at 1173. In determining which court should yield jurisdiction, Haydu articulated

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the following rules of thumb: (a) “a court having jurisdiction over all matters in dispute should

have jurisdiction of the case” to avoid fragmenting the dispute for resolution in two different

fora; and (b) “[i]n absence of compelling circumstances, the court initially seized of a

controversy should be the one to decide the case.” Id. at 1173-74. In addition to comity

considerations, Haydu emphasized the federalism concerns which “require that a federal court

‘tread lightly’ when a state proceeding is already underway. ... Gratuitous interference with the

orderly and comprehensive disposition of a state court litigation should be avoided.” Id. at 1173.

Application of Haydu principles to this case counsels heavily in favor of abstention. The

Marengo County court has jurisdiction over all aspects of this multifaceted dispute, including the

state law claims as between plaintiffs and Forest. Those claims could not be litigated in federal

court, inasmuch as Calhoun and Forest are both Alabama citizens, such that diversity jurisdiction

would be lacking. Common sense dictates that it would be far more efficient to allow a court

with jurisdiction over all dimensions of a dispute to rule on it in toto than it would to carve the

dispute into pieces, allocating certain issues for state court decision and others for federal court

decision, all the while hoping that no inconsistencies emerge in the two tribunals’ overlapping

rulings. Moreover, the Marengo County Circuit Court has been confronting issues arising from

the December 2002 Linden explosion since March 2003, while this related garnishment action

was removed in May 2006. Finally, this Court finds that to allow this garnishment proceeding to

go forward in federal court would, to a near certainty, lead to gratuitous interference with the

state court proceedings. At this very moment, the issue of the legitimacy of the consent

judgment against Transportation is squarely before the Marengo County Circuit Court. No doubt

Transportation intends to reiterate those same arguments here in opposition to garnishment. 

Should the state court vacate the consent judgment, then this action will be moot because there

will no longer be a judgment on which plaintiffs might execute via writ of garnishment. Should

the state court leave the consent judgment intact, then Transportation will effectively be asking

this Court to overrule that determination and vacate the consent judgment. At best, conducting

separate garnishment proceedings in federal court in these circumstances is superfluous and

utterly unhelpful to resolving the parties’ dispute. At worst, it is interfering and meddling in

state court business, raising the specter of inconsistent rulings and doing violence to bedrock

principles of federalism and comity.

Case 2:06-cv-00300-WS-M Document 9 Filed 07/24/06 Page 12 of 17
8 But see Hawthorne Savings F.S.B. v. Reliance Ins. Co. of Illinois, 421 F.3d 835,

852 (9th Cir. 2005) (indicating that “[i]t is not clear to what extent comity remains an

independent basis for abstention, available even when none of the settled comity-based

abstention doctrines such as Burford and Colorado River apply”).

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The foregoing analysis strongly supports abstention of federal jurisdiction. Simply put,

“[a]lthough comity is clearly a discretionary judicial concept, the concerns embodied therein and

the equities asserted here compel a state court resolution of this matter.” Haydu, 675 F.2d at

1174.8

2. Colorado River Abstention.

Although plaintiffs’ briefs do not mention it by name, the Colorado River doctrine of

judicial economy is implicit in their requests that this Court not exercise jurisdiction. The

Colorado River doctrine authorizes a federal district court to dismiss or stay an action where

there is an ongoing parallel action in state court, but only under “exceptional circumstances.” 

Moorer v. Demopolis Waterworks and Sewer Bd., 374 F.3d 994, 997 (11th Cir. 2004); see also

Ambrosia Coal, 368 F.3d at 1328 (“federal courts can abstain to avoid duplicative litigation with

state courts only in ‘exceptional’ circumstances”). Indeed, the Supreme Court has framed this

doctrine as an “extraordinary and narrow exception to the duty of a District Court to adjudicate a

controversy properly before it.” Colorado River Water Conservation Dist. v. United States, 424

U.S. 800, 813, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976). In applying Colorado River, the Court is

mindful of the admonition that “[o]nly the clearest of justifications will warrant dismissal of the

federal action” under that doctrine. Ambrosia Coal, 368 F.3d at 1329 (citation omitted).

The Eleventh Circuit has identified six factors that district courts must consider in

assessing whether Colorado River abstention is proper, to-wit: (i) whether any court has assumed

jurisdiction over property, (ii) the relative inconvenience of the fora, (iii) the potential for

piecemeal litigation, (iv) the temporal order in which each forum obtained jurisdiction, (v)

whether state or federal law governs, and (vi) whether the state court is adequate to protect the

parties’ rights. See Ambrosia Coal, 368 F.3d at 1331. This Court “must weigh these factors

with a heavy bias in favor of exercising jurisdiction.” TranSouth Financial Corp. v. Bell, 149

F.3d 1292, 1295 (11th Cir. 1998). No one factor is necessarily dispositive; rather, “the factors

must be considered flexibly and pragmatically, not as a mechanical checklist.” Ambrosia Coal,

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368 F.3d at 1332. “One factor alone can be the sole motivating reason for the abstention.” 

Moorer, 374 F.3d at 997.

Although the first two Colorado River factors do not favor abstention, the others point

emphatically in that direction. If federal jurisdiction is exercised here, piecemeal (or worse,

duplicative) litigation will ensue with 100% certainty, as the parties will be litigating issues

relating to coverage and the legitimacy and enforceability of the consent judgment in both these

garnishment proceedings and in the ongoing state court litigation. Such repetition and

fragmentation may be easily and painlessly avoided, with no attendant incursions on the rights of

any party, if this Court abstains. Additionally, the Marengo County Circuit Court has been

vested with jurisdiction concerning this dispute for more than three years, so it obtained

jurisdiction long before this District Court did. For this Court to leap into the breach now would

be grossly inefficient, as it would oblige the undersigned to catch up on three years of underlying

litigation to adjudge fairly the legal issues presented in the garnishment action, whereas the state

court is already intimately acquainted with these circumstances and will need to ascend no such

learning curve antecedent to its rulings. Furthermore, the substantive legal issues presented in

the garnishment proceeding sound exclusively in state law, such that a state court would be

better equipped than a federal court to resolve them. And there is no indication that the state

court is in any way inadequate to safeguard Transportation’s rights in this matter or that

Transportation will not be afforded a full, fair opportunity to air its arguments against coverage,

viability of the consent judgment, and enforcement of the consent judgment against it in the

Marengo County Circuit Court. (Of course, if the state court denies Transportation that

opportunity by refusing to allow it to intervene, then circumstances would be far different and

the abstention question will need to be revisited.) Lastly, the state court is currently weighing

ripe motions that, if granted, would moot this entire garnishment action by causing the

underlying judgment to evaporate. It would be foolhardy to charge ahead with federal litigation

under these circumstances. In sum, the undersigned is of the opinion that the unique and unusual

posture of this action renders it one of those extraordinary cases in which Colorado River

abstention would be highly appropriate to prevent undue encroachment on state court

proceedings, waste of federal judicial resources, and duplication of effort by parallel courts,

where the state court is far better equipped (in terms of familiarity with both the case and the

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9 Given that plaintiffs’ briefs contain no analysis of whether remand is permissible

under the comity/federalism principles they cite, and given that Transportation’s briefs barely

address the comity/federalism issue at all, the undersigned examines the propriety of remand on

abstention grounds with no assistance from the parties’ written submissions.

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governing state law) to rule on the merits than is the undersigned.

3. Stay vs. Remand.

The Court is well aware that federal courts have a “virtually unflagging obligation ... to

exercise the jurisdiction given them.” Moorer, 374 F.3d at 997 (citing Colorado River, 424 U.S.

at 817-18); but see 31 Foster Children v. Bush, 329 F.3d 1255, 1274 (11th Cir. 2003) (pointing

out that “‘virtually’ is not ‘absolutely’”). Nonetheless, this is one those “limited” or

“exceptional” cases in which Colorado River abstention is warranted to prevent piecemeal

litigation, to avoid misallocation of judicial resources, and to allow for efficient resolution of

identical legal issues raised in federal proceedings that significantly postdate their state court

counterparts. Separate and apart from Colorado River abstention, the doctrines of comity and

federalism as espoused by the Eleventh Circuit in Haydu demand abstention. Otherwise, the

issues of insurance coverage, legitimacy of the consent judgment, and enforcement of that

consent judgment against Transportation would be litigated on a dual-track, presented to both

this Court and the Marengo County Circuit Court for resolution. In fact, those issues have

already been presented to the state court, and at least some of them are ripe for ruling by the state

court at this time. For this Court to swoop in at the last minute and pluck those state law issues

from the jaws of the state court that has been grappling with this case for more than three years

would be the epitome of unwise, inefficient judicial administration and would amount to flagrant

disregard of fundamental principles of comity and federalism. Under the circumstances,

abstention is the only appropriate course.

The remaining obvious question is whether this action should be remanded or stayed

pending resolution of issues concerning coverage, liability of Transportation, and enforceability

of the consent judgment in state court.9

 The Eleventh Circuit recently held that “a stay, not a

dismissal, is the proper procedural mechanism for a district court to employ when deferring to a

parallel state-court proceeding under the Colorado River doctrine.” Moorer, 374 F.3d at 998. 

More importantly, the Supreme Court has held that “federal courts have the power to dismiss or

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remand cases based on abstention principles only where the relief being sought is equitable or

otherwise discretionary.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 731, 116 S.Ct. 1712,

135 L.Ed.2d 1 (1996) (affirming appeals court determination that district court improperly

remanded damages action based on abstention principles); see also Pompey v. Broward County,

95 F.3d 1543, 1552 n.12 (11th Cir. 1996) (“It is doubtful that federal district courts may dismiss

claims for damages under abstention principles.”); Superior Beverage, 448 F.3d at 913

(construing Quackenbush as holding that “a federal court’s discretion to abstain from exercising

jurisdiction does not extend so far as to permit a court to dismiss or remand, as opposed to stay,

an action at law”); Myles Lumber Co. v. CNA Financial Corp., 233 F.3d 821, 823 (4th Cir. 2000)

(in the abstention context, “a threshold requirement that must be satisfied for a case to be subject

to remand is that the complaint seek either equitable or otherwise discretionary relief”). This

garnishment proceeding is in the nature of an action for damages, not one seeking injunctive or

declaratory relief, inasmuch as plaintiffs seek exclusively to recover certain funds from

Transportation. Therefore, under Quackenbush and its progeny, it would be clear error for this

Court to remand on abstention grounds. Rather, the appropriate (and indeed, the only

permissible) remedy is for this action to be stayed until such time as the overlapping issues have

been resolved by the state court.

IV. Conclusion.

For all of the foregoing reasons, the Motion to Remand (doc. 4) is denied. The Court

finds that subject matter jurisdiction properly lies pursuant to 28 U.S.C. § 1332, that the alleged

defects in the removal process are not fatal to removal, and that Alabama substantive law in no

way deprives this Court of jurisdiction. However, the Court also finds that principles of comity,

federalism, avoidance of duplicative litigation in multiple fora, and efficient utilization of

judicial resources render this case one of those extraordinary cases in which abstention is proper

pursuant to Haydu and the Colorado River doctrine. For that reason, this action is stayed until

such time as the Marengo County Circuit Court has fully resolved the issue of the viability of the

consent judgment. Additionally, if Transportation is allowed to intervene in the state court

action, the stay shall remain in place until such time as the Marengo County Circuit Court has

adjudicated the issues of whether Transportation’s insurance policy provides coverage to Forest

for the claims at issue, and whether Transportation may be held legally responsible for paying

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the consent judgment.

To facilitate the Court’s ability to monitor the status of this action, the parties are

ordered to file joint status reports on or before the fourth Friday of every month, beginning in

August 2006. These reports should, at a minimum, delineate the present status of the Marengo

County Circuit Court litigation vis a vis the consent judgment, as well as the coverage and

liability issues that lie at the heart of these stayed garnishment proceedings. Should any ruling

from the state court render these proceedings moot, or should plaintiffs wish to withdraw their

garnishment proceeding pending resolution of this cluster of legal issues that stand between them

and recovery under the Transportation policy, the parties must promptly notify the Court in

writing.

DONE and ORDERED this 21st day of July, 2006.

s/ WILLIAM H. STEELE 

UNITED STATES DISTRICT JUDGE

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