U n i t e d S t a t e s D i s t r i c t C o u r t

N O R T H E R N D I S T R I C T O F T E X A S

D A L L A S D I V I S I O N

Η&Κ INTERNATIONAL, INC. §

§

V . §

§

Ε&Μ INSTALLATIONS CORP., H&s

INSTALLATIONS, CORP., SELECTIVE

I N S U R A N C E C O M P A N Y O F

AMERICA, ACE AMERICAN

INSURANCE COMPANY, and KGK

MANAGEMENT, INC.

§ C I V I L A C T I O N N O . 3 : 2 2 - C V - 2 2 7 8 - S

§

§

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§

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M E M O R A N D U M O P I N I O N A N D O R D E R

This Order addresses Plaintiff Η&Κ International, Inc.’s Motion to Remand (“Motion”)

[ECF No. 7]. Having reviewed and considered the Motion, Defendant ACE American Insurance

Company’s Response in Opposition to Plaintiffs Motion to Remand (“Response”) [ECF No. 12]

and Plaintiffs Reply in Support of Motion to Remand (“Reply”) [ECF No. 15], the Court

G R A N T S I N P A R T a n d D E N I E S I N P A R T t h e M o t i o n .

BACKGROUND

On August 10, 2022, Plaintiff filed suit against Defendants F&M Installations Corp., H

Installations, Corp., Selective Insui'ance Company of America, ACE American Insui'ance

Company, and KGK Management, Inc., in the 14th ludicial District Court of Dallas County,

Texas, seeking adeclaratory judgment and asserting claims for breach of contract, anticipatory

breach of contract, violations of the Texas Insurance Code, and bad faith/breach of the duty of

good faith and fair dealing. Pl.’s Original Pet., ECF No. 1-4 ธ49-102.

On October 11, 2022, ACE removed this action on the basis of diversity jurisdictioir. See

Notice of Removal, ECF No. 1. In the Notice of Removal, ACE conceded that though Selective

and KGK had consented to removal, F&M and H&s had not. Id. ٩٩ 14-15. Approximately two

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weeks later. Plaintiff sought remand, asserting that ACE’s removal was procedurally defective

because ACE did not obtain the consent of all properly joined and served Defendants. Plaintiff

also seeks an award of costs and attorney’s fees incurred in connection with the removal.

I I . L E G A L S T A N D A R D

Adefendant may I'emove acivil action filed in state court to federal court if the distri

court has original jurisdiction. 28 U.S.C. §1441(a). The removing party bears the burden of

establishing jurisdiction and compliance witlr the requirements of the removal statute. Shearer V.

Sw. Serv. Life. Ins. Co., 516 F.3d 276, 278 (5th Cir. 2008); Blanchard V. Wal-Mart Stores, Tex.,

L.P., 368 F. Supp. 2d 621, 623 (E.D. Tex. 2005) (citation omitted). The Court must resolve all

'doubts regarding whether removal jurisdiction is proper ...against federal jurisdiction.”rtcwnữ

V. Brown &Root Inc., 200 F.3d 335, 339 (5th Cir. 2000). Additionally, the Court must strictly

construe removal statutes “against removal and for remand.” Bosky V. Kroger Tex., LP, 288 F.3d

208, 211 (Stir Cir. 2002) (quoting Eastus V. Blue Bell Creameries, L.P., 97 F.3d 100, 106 (5th Cir.

1996)).

The stahrte governing removal procedui'e, 28 U.S.C. §1446, has been interpreted to require

that all defendants properly joined and served at the time of removal consent to the notice of

reirroval. Rico V. Flores, 481 F.3d 234, 239 (5th Cir. 2007) (quoting Getty Oil Corp. V. Ins. Co. of

N. Am., 841 F.2d 1254, 1262 (5th Cir. 1988)). This is commonly known as the “unanimity rule,'

'unanimity of consent rule,” or the “unanimous consent rule.” See Ortiz V. Young, 431 F. Αρρ’χ

306, 307 (5th Cir. 2011) (“unanimity of consent rule” (citation omitted)); Acosta V. Master Maint.

&Constr. Inc., 452 F.3d 373, 375 (5th Cir. 2006) (“unanimity rule”); Doe V. Keiiood, 969 F.2d

165, 169 (5th Cir. 1992) (“unanimous consent rule”). There are three exceptions to the rmanimity

rule: “(!) where the defendant was not yet served with process at the time the removal petition was

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filed; (2) where adefendant is merely anominal, unnecessary or formal party-defendant; a

(3) wlrere the removed claim is aseparate and independent claim under 28 U.S.C. §1441(c).'

Moreno Energy, Inc. V. Marathon .¿لم Co., 884 F. Supp. 2d 577, 582-83 (S.D. Tex. 2012) (footnotes

.see also Penson Fin. Servs., Inc. V. Golden Summit Invs. Grp., ltd ,cMiorv otằ,e<ty٠) (٦ه\١اهجة0

No. 3:12-CV-300-B, 2012 WL 2680667, at *6 (N.D. Tex. July 5, 2012) (same).

I I I . A N A L Y S I S

A . M o t i o n t o R e m a n d

ACE’s argument against renrand proceeds in two parts. First, ACE argues that removal was

proceduralty proper because F&M and H&s are not subject to personal jurisdiction in Texas and

thus were improperly joined and did not need to consent to rem,oval. Second, ACE contends that

the Court should consider the challenge to personal jurisdiction before considering Plaintiffs

Motion. Because ACE’s second ai'gument goes to the order in which the Court should analyze the

issues, the Court evaluates that argument firs

ACE cites several cases in support of its assertion that the Court should consider its

clrallenge to personal jurisdiction before considering Plaintiffs challenge to removal. But the cases

ACE cites share asingle, critical feature that is absent here_a motion to dismiss for lack of

personal jurisdiction was pending before the Court. See Alpine View Co. V. Atlas Copco AB,

205 F.3d 208, 212 (5th Cir. 2000) (statiirg that two defendants filed motions to dismiss for lack 

personal jurisdiction after the case was removed to federal court); Cooper V. McDermott Int 7) Inc.

62 F.3d 395, 1995 WE 450209, at *1 (5th Cir. 1995) (“International moved pursuant to Federal

Rule of Civil Procedure 12(b)(2) to dismiss Cooper’s claims for lack of personal jurisdiction.”);

Villar V. Crowley Mar. Corp., 780 F. Supp. 1467, 1472 (S.D. Tex. 1992) (“The Codefendants

jointly move to dismiss on the ground tlrat they are not subject to personal jurisdiction.”); see also

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Villar, 780 F. Supp, at 1474 (“In both Nolan and Martino, the Court, relying on existing Fifth

Circuit case law, held that when presented with both anrotion to remand and amotion to dismiss

for lack of personal jurisdiction, the district court has the discretion to decide which to take up

first.” (emphases added) (footnote omitted) (citations omitted)). Here, by contrast, H&s has nev

filed such amotion. Though F&M filed amotion to dismiss for lack of personal jurisdiction, 

motion has since been withdrawn and terminated as moot. See ECF No. 14. And F&M and H&S’s

special appearances iir state court are insufficient to bring the issue of personal jurisdiction befo

this Court. See, e.g., McCallum V. Camping World, Inc., No. SA-19-CV-01021-OLG, 2020 WL

4556145, at *1 (W.D. Tex. Apr. 21, 2020) (“[I]n fedei'al courts, aplaintiff wishing to challenge

personal jurisdiction generally must do so through amotion for relief under Rule 12 of the Federal

Rules of Civil Procedure.”). Because there is no motion challenging personal jurisdiction before

the Court, the only motion for the Court to consider is Plaintiffs Motion.

As to the propriety of removal, ACE contends that F&M and H&S’s consent is not required

because they were improperly joined. Specifically, ACE argues that F&M and H&s we

improperty joined because Texas courts do not have personal jurisdiction over them. ACE’s

argument is unavailing.

As an initial matter, the Court is skeptical that tire improper joinder doctrine applies where

aplaintiff allegedly joins adiverse, out-of state defendant to defeat federal removal jurisdiction.

The improper joinder doctrine provides that “federal removal jurisdiction premised on diversity

cannot be defeated by the presence of an improperly-joined nondiverse air d/or in-state defendant.'

Salazar V. Allstate Tex. Lloyd's, Inc.,4ةة١؟.Tifة \٦ة,ة) اة ا s e e a l s o Å k e r b l o m V. E z r

Holdings Ltd., 509 F. Αρρ’χ 340, 344 (5th Cir. 2013) (“Improper joinder exists when aplaintiff

cannot establish aclaim ...against adefendant whose presence in the action will defeat diversity

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or removal jurisdiction.” (citation omitted)), abrogated on other grounds by Int 7Energy Ventures

Mgmt., L.L.C. V. United Energy Grp., Ltd., 818 F.3d 193 (5th Cir. 2016). For this reason, multiple

courts in the Fifth Circuit have determined that improper joinder cannot excuse adefendant’s

failure to obtain consent where the Court’s subject-matter jurisdiction is not in question. See, e.g.

Breitling V. LNVCorp., 86 F. Supp. 3d 564, 571-72 (N.D. Tex. 2015) (holding that “the Removing

Defendants’ reliance on the doctrine of improper or fraudulent joinder to excuse [a defendant’s]

lack of consent is misplaced” because the non-consenting defendant’s presence in the case “has no

effect on the Court’s subject matter jurisdiction”)؛ Chavez V. Goodyear Tire &Rubber Co.,

No.4:17-CV-00714-ALM, 2018 I501092, at *2 (E.D. Tex. Jan. 22, 2018) (“Goodyear’s

application of improper joinder is troublesome because the issue is not whether Plaintiff joined

Nelson to destroy diversity, but whether Nelson’s consent to remove is necessary.”)؛ Pike Cnty. V.

Aries Bldg. Sys., LLC, No. 5:17-CV-17-DCB-MTP, 2017 WT 1737722, at *3 (S.D. Miss. May 3

2017) (“The Court is unconvinced tlrat the improper joinder analysis is relevant absent some nondiverse party.”).

The Court finds the reasoning in these cases persuasive. As the Breitling court explain؛

when acase with anon-diverse or in-state defendant is removed to federal court based on diversity

jurisdiction, the court “must perform th[e] improper joinder analysis to determine its subject-matter

jurisdiction.” 86 F. Supp. 3d at 571. Because the court must perform this analysis, “it logically

follows that ...a removing defendant may siirrply note in its notice of removal that the in-state

defendant is improperly joined and need not obtain the allegedly improperly joined defendant’s

consent to orjoinder in removal or even explain ... the lack of... consent.” Id. Here, by contrast.

the parties are completely diverse, and no defendant is aresident of the forum state. As such, the

Court would never need to conduct an improper joinder analysis, and ACE would never bear the

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burden to justify its assertion of improper joinder. This illogical outcome underscores the

inapplicability of the improper joinder doctrine in this case. Tellingly, ACE has not cited, and the

Court has not located, any binding authority applying an improperjoinder analysis where, as here^

aparty asserts that adiverse, out-of state defendant was improperly joined.

The Court acknowledges that the nominal defendant doctrine may apply where diversity

jurisdiction is not at issue and involves asimilar analysis. But ACE, the parfy with the bui'den to

justify removal, has not invoked that doctrine, and the Court must resolve all doubts in favor of

remand. Therefore, the Court declines to construe the Notice of Removal as asserting that this

exception applies. See Chavez, 2018 WE 501092, at *3 (“Goodyear failed to make any reference

or mention to ...the nominal defendant doctrine. ...As such, Goodyear did not meet its burden

to affirmatively explain why Nelson’s consent is unnecessary.”

But even if ACE could rely on the improper joinder or nominal defendant doctrines, ACE

cannot show that there is no possibility that Elaintiff would be able to establish acause of action

against Ε&Μ and H&s by asserting lack of personal jurisdiction on behalf of Ε&Μ and H&s.

[T]he defense of lack of personaljul'isdiction” can “be waived, and the right to waive inpersonam

jurisdiction is personal to the defendant.” Seguros Comercial Am., S.A. de c. V. V. Am. President

Lines, Ltd., 934 F. Supp. 243, 245 (S.D. Tex. 1996); see also Zhaoyin Wangv. Beta Pharma, Inc.

No. 3:14-cv-01790, 2015 WE 5010713, at *12 (D. Conn. Aug. 24, 2015) (collecting cases

standing for the proposition that co-defendants may not assert lack of personal jurisdiction on

behalf of other defendants in the improper joinder context).

Though ACE correctly notes that Ε&Μ and H&s filed special appearances in state cou

and have not yet affirmatively waived personal jurisdiction in this Court, the fact remains tlr

neither Ε&Μ nor H&s has achallenge to personal jurisdiction pending before this Court. See

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,2020 WL 4556145, at *1 (“؛A] special appearance is aform of pleading abolished

decades ago in the federal courts, and in federal courts, aplaintiff wishing to challenge personal

jurisdiction generally must do so through amotion ...(internal quotation marks and citation

omitted)). “The personal-jurisdiction analysis is fact-intensive. Typically, when there is amotion

to dismiss for lack of personal jurisdiction, there are affidavits and other evidence.” Zufelt V. Isu

Motors Am., L.C.C., 727 F. Supp. 2d 1117, 1131 (D.N.M. 2009) (internal citation omitted). Here؛

by contrast, the Court has only the evidence submitted in connection with F&M and H&S’s special

appearances in state court and F&M’s withdrawn motion to disnriss. The Court has no evidence

from Plaintiff supporting the existence of personal jurisdiction. In sum, ACE “cannot establish that

[F&M and H&s were] fraudulently joined based upon adefense that is only available to [F&M

and H&S].” Seguros Comercial Am., 934 F. Supp. at 245.

In support of its argument that the consent of adefendant who is not subject to personal

jurisdiction is not required, ACE cites only asingle, unpublished case from tire Northern District

of West Virginia. See Resp.20 ل) citing Young V. Select Portfolio Servicing, Inc., No. 3:19-CV92, 2019 WE 13150085, at *2 (N.D.W. Va. Aug. 7, 2019)). Young does not support ACE’s

position. The Young court merely reiterated tlrat defendants who have not been served at the time

of removal need not consent to removal. See 2019 WT 13150085, at *2 (holding that nonconsenting defendant’s consent was not required because it “was not properly served with the

sumnrons and complaint”). ACE does not dispute that F&M and H&s were served prior to

removal, so Young is inelevant.

Finally, the Court notes that despite its references to improper joinder in its Notice of

Removal and Response, ACE does not seriously contend that F&M and H&s were improperly

joined to defeat federal removal jurisdiction. ACE does not argue that F&M and H&s are not

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proper parties to this lawsuit. And the parties are diverse, so Plaintiff could not have known when

it filed suit that the joinder of F&M and H&s would preclude removal to federal court. In oth

woi'ds, the impediment to removal is not Plaintiffisjoinder of F&M and H&s but rather F&M a

H&S’s lack of consent, which Plaintiff ordinarily cannot control. ACE, however, argues that

Plaintiff controlled the situation by colluding with F&M and H&s in two ways: (1) by inducing

F&M and H&s to withdraw their consent to removal; and (2) by inducing F&M to withdraw its

motion to dismiss for lack of personal jurisdiction in an effort “to deprive ACE of afederal forum

based on F&M’s lack of consent to removal wlrile simultaneously permitting F&M to dispute

personal jurisdiction in state court.” Resp. ธ14, 25. “The Fifth Circuit has not recognized ...

collusion as providing alegal basis for improper joinder of anon-consenting diverse defendant.

Shamieh V. Am. Interstate Ins. Co., No. 06-CV-242, 2006 WL 8456142, at *(W.D. La. July 17؛

2006).

Few district courts in this Circuit have addressed the concept of collusion in tire context of

improper joinder and/or the unanimity rule, and those that have done so have reached differing

conclusions. Compare Wells V. Michelin N. Am., Inc., No. 3:12-C٧-212-DPJ-FKB, 2013 WL

12123371, at *2 (S.D. Miss. Jan. 23,2013) (rejecting defendant’s argument that proof of collusion

can establish improper joinder and noting that “[t]he Fifth Circuit has never sanctioned the

subjective-intent collusion test Defendants suggest”) M’ith Augustine V. Emps. Mut. Cas. Co.

No. 2:08-CV-1102, 2010 WL 4930317, at *6, *18 (W.D. La. Nov. 30, 2010) (noting that based on

district court decisions from other circuits, “[a] final exception to the unanimity of consent ru

seems to exist in asituation where it is found that there has been collusion between the plaintiff

and the non-consenting defendant,” but ultimately deciding that “[w]hether collusion could serve

as an exception to the rule of imanimity in this court is aquestion to be reserved for another day'

Case 3:22-cv-02278-S Document 16 Filed 01/31/23 Page 8 of 10 PageID 536
(citation omitted)). Regardless, most if not all courts to have recognized or considered acollusion

exception have required “clear and convincing evidence” of the alleged collusion. Augustine, 2010

WL 4930317, at *17; see also Rupert V. Winter, No. 3:10-CV-0799-N, 2012 WL 13102348, at *3

!

(N.D. Tex. Jan. 24, 2012). ACE has not met its burden to provide such evidence here.

The only evidence ACE cites to support its collusion allegations is the Declaration of

Christopher A. Wadley, in which counsel for ACE states that F&M’s attorney informed him that

F&M and H&s withdrew their consent to removal “because F&M and H&s have an ongoing

business relationship with [Plaintif, and [Plaintif, threatened to end that relationship if F&M and

H&s consented to removal.” ECF No. 12-1 at 125. ACE also points to the fact that Plaintiff and

F&M agreed that F&M should withdraw its motion to dismiss without prejudice to refilin

indicating that Plaintiff and F&M are trying to “have their cake and eat it, too.” Resp. ٩25. Plaintiff

replies that it was not colluding with F&M but instead that the parties wished to “avoid engaging

in jurisdictional discovery” if the case is subject to remand. Reply 7ل. Even if the Court assumes

that collusion is an exception to the unanimity rule, ACE has not put forth clear and convincing

evidence of impermissible collusion.

Acentral pirrpose of the unanimity rule is to ensure that acase is not removed unless the

defendants unanimously agree that it should be. See Moore V. Am. Home Prods. Corp., No. 3:98-

CV-2179-G, 1998 WE 760267, at *1 (N.D. Tex. Oct. 21, 1998) (citing Getty Oil Corp., 841 F.2d

at 1263)). Permitting ACE to challenge the Court’s jurisdiction over F&M and H&s “as ameans

of excusing [theii'] joinder in or consent to removal would deprive the non-removing defendant[s]

IThe Court also notes that courts in other circuits that have refijsed remand due to collusion have found evidence th

the plaintiff did not intend to proceed against the nonconsenting defendant. See Diaz V. Kaplan Univ., 567 F. Supp.

2d 1394, 1404 (S.D. Fla. 2008) ("The undisputed evidence before the Court shows that Plaintiff has joined Defendant

Wilcox to ensure that his case remain in state court and not to obtain ajudgment against him.”); In re Diet Drugs

Prods. Liab. Litig., 220 F. Supp. 2d 414, 422 (E.D. Pa. Aug. 13, 2002) (“'Based on the above evidence we find th

defendants have met their heavy burden of persuasion that plaintiffs have no real, intention in good faith to seek a

judgment against the phentermine defendants .. ..”). The Court has no such evidence before it here.

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Case 3:22-cv-02278-S Document 16 Filed 01/31/23 Page 9 of 10 PageID 537
..Marquette Bus. Credit, lue. V. Am.’s KttcBeu, lue ١’.omam 'm sialo ooml؟ lo ً

ً í١k\V \ه\ج\ا

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No. 3:09-CV-1937-D,2010 WL 1711767, at *4 (N.D. Тех. Apr. 28,2010). “؛[!tis well established

that each defendant has the right to insist on remaining in the state forum.” Id. For all the reasons

provided herein, the Court grants Plaintiffs request to remand this case to state court.

B. Request for Attorney’s Fees and Costs

Pursuairt to 28 ll.s.c. §1447(c), Plaintiff requests an award of “its reasonable fees and

costs incurred in preparing this Motion.” Mot. ٩26. Section 1447(c) provides that “[a]n order

remanding the case may require payment ofjust costs and any actual expenses, including attorney

fees, incurred as aresult of the removal.” Generally, courts may award attorney’s fees under this

provision only when the removing party lacked an objectively reasonable basis for seeking

removal. See Martin V. Franklin Cap. Cơr^.,546U.S. 132, 141 (2005); Valdes V. Wal-Mart Stores,

Inc., 199 F.3d 290, 292-93 (5th Cir. 2000). Although the Court finds that renroval was improp

in this case, the Court is unable to conclude that ACE lacked an objectively reasonable basis for

removing this case. Accordingly, the Court denies Plaintiffs request for attorney’s fees and costs.

I V . C O N C L U S I O N

For the reasons discussed above, the Court GRANTS IN PART and DENIES IN PART

Plaintiffs Motion to Remand [ECF No. 7]. The Court GRANTS the Motion as to the request to

remand the case and DENIES the Motion as to the request for attorney’s fees and costs. The case

is REMANDED to the 14th Judicial District Court of Dallas County, Texas.

S O O R D E R E D .

SIGNED January 31,2023.

c//

^ A R E N G R E N S C H O L E R

U N I T E D S T A T E S D I S T R I C T J U D G E

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