Court Opinion

ID: 4444059
Source: CourtListenerOpinion
Date Created: 2019-10-03 19:00:36.387993+00
Date Added: 2024-06-11T14:27:54.873141
License: Public Domain

Case: 19-20519   Document: 00515143646      Page: 1   Date Filed: 10/03/2019

        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                               United States Court of Appeals
                                                                        Fifth Circuit

                                No. 19-20519
                                                                      FILED
                                                                October 3, 2019
                              Summary Calendar
                                                                 Lyle W. Cayce
                                                                      Clerk
COBALT INTERNATIONAL ENERGY, INCORPORATED,

             Plaintiff - Appellee

GAMCO GLOBAL GOLD, NATURAL RESOURCES ; INCOME TRUST;
GAMCO NATURAL RESOURCES, GOLD ; INCOME TRUST; JACK E.
GOLDEN; JON A. MARSHALL; D. JEFF VAN STEENBERGEN; MYLES W.
SCOGGINS; MARTIN H. YOUNG; WILLIAM P. UTT; KENNETH W.
MOORE, JR.; JAMES W. FARNSWORTH; JOSEPH H. BRYANT; JOHN P.
WILKIRSON; J. HARDY MURCHISON; PETER R. CONEWAY; N. JOHN
LANCASTER, JR.; HENRY CORNELL; KENNETH A. PONTARELLI,

             Intervenor Plaintiffs - Appellees

v.

ALTERRA AMERICA INSURANCE COMPANY,

             Defendant - Appellant

ALLIED WORLD ASSURANCE COMPANY,

             Intervenor Defendant - Appellant

                Appeal from the United States District Court
                     for the Southern District of Texas
                           USDC No. 4:19-CV-734
     Case: 19-20519      Document: 00515143646         Page: 2    Date Filed: 10/03/2019

                                      No. 19-20519
Before HIGGINBOTHAM, GRAVES, and COSTA, Circuit Judges.
PER CURIAM:*
       Plaintiff-Appellee Cobalt International Energy, Inc. (“Cobalt”) is a party
to two suits relevant to this appeal. The first is a class action that originated
in federal court. The second, a suit for insurance coverage of losses stemming
from the class action, was filed in state court but removed to federal court by
Defendant-Appellants Alterra America Insurance Company (“Alterra”) and
Allied World Assurance Company (“Allied World”). Following removal, Cobalt
filed a motion to remand the case to state court. The district court granted that
motion, and Alterra and Allied World appealed. For the reasons stated below,
we affirm.
                                  I. BACKGROUND
       Cobalt was a Texas-based oil exploration and production corporation
that engaged in offshore exploration in Angola, West Africa. At some point
prior to the litigation discussed herein, Cobalt purchased management liability
insurance policies to provide primary and excess liability coverage for itself
and its officers and directors. 1
       In 2011, Cobalt disclosed that the United States Securities and
Exchange Commission and United States Department of Justice were
investigating allegations of connections between the company’s Angolan local
partner and senior Angolan government officials. In 2013 and 2014, Cobalt
disclosed that certain of its wells in Angola did not contain viable oil reserves.
Those disclosures led to a consolidated class action (“the class action”). GAMCO

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
       1  Much of the litigation below involves Cobalt, its directors, and its officers. For
brevity, this opinion refers to those parties together as “Cobalt.”
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                                       No. 19-20519
Global Gold, Natural Resources, and Income Trust and GAMCO Natural
Resources, Gold & Income Trust (the “GAMCO funds”) together serve as lead
plaintiffs in that case.
       Cobalt and the class signed a settlement agreement (“the class action
settlement agreement”) in October 2018. Under the terms of the settlement
agreement, Cobalt agreed to pay $220 million. That amount was payable
exclusively from Cobalt’s liability policies, and the parties agreed that Cobalt
and the GAMCO funds would together pursue recovery against Cobalt’s
insurers. Cobalt and the GAMCO funds further agreed to divide any proceeds
from litigation against the insurers. The district court granted preliminary
approval of the agreement in November of the same year and finally approved
the agreement after a hearing on February 13, 2019.
       In May 2016—while the class action was pending—Cobalt filed suit in
Texas state court seeking insurance coverage for losses arising out of the class
action (the “insurance coverage suit”). 2 The GAMCO funds intervened in the
insurance coverage suit in January 2019, asserting a right to do so based on
the proposed settlement agreement in the class action. Illinois National
Insurance Company (“Illinois National”)—a defendant in the insurance
coverage suit—almost immediately filed a motion to strike the GAMCO funds’
petition in intervention. Illinois National argued that the GAMCO funds did
not have standing in the coverage litigation because the class action settlement
agreement had not yet received final court approval.
       On February 1, 2019, before final court approval of the class action
settlement agreement and before Illinois National’s motion to strike was

       2  The defendants in the insurance coverage action are insurance companies who
issued liability policies providing insurance coverage to Cobalt and its directors and officers.
According to Cobalt, the policies require the insurers to advance defense costs and pay losses
to Cobalt that were sustained from, among other things, government investigations and
private lawsuits.
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                                   No. 19-20519
heard, Cobalt and the GAMCO funds jointly filed a fifth amended petition
joining Alterra and Cobalt’s twelve other remaining excess insurers to the
insurance coverage action. Allied World, which had intervened in the
insurance coverage action in September 2018, then removed the insurance
coverage action to federal court pursuant to the Class Action Fairness Act of
2005 (“CAFA” or the “Act”). Alterra joined in Allied World’s removal three days
later.
         Cobalt filed a motion to remand, arguing both (1) that Allied World’s
removal was untimely because it was not filed within thirty days of the
GAMCO funds’ intervention; and (2) that the coverage action is not a “class
action” for purposes of CAFA. The district court agreed with both of Cobalt’s
arguments, concluded that it lacked subject matter jurisdiction over the
insurance coverage action, and granted the motion to remand. Allied World
and Alterra (together, “Defendant-Appellants”) appealed.
                          II. STANDARD OF REVIEW
         This court reviews a district court decision remanding a suit for lack of
subject matter jurisdiction de novo. Perritt v. Westlake Vinyls Co., L.P., 562 F.
App’x 228, 230 (5th Cir. 2014).
                                III. DISCUSSION
         To evaluate whether the district court properly granted Cobalt’s motion
to remand, this court must first consider whether the notice of removal was
timely. We conclude that it was not.
         Federal law requires a defendant seeking to remove a civil action to
federal court to file a notice of removal within 30 days of either (1) the
defendant’s receipt of a copy of the initial pleading, or (2) service of summons
upon the defendant. 28 U.S.C. § 1446(b)(1). If a case is not removable based on
its initial pleading, the 30-day deadline runs from the defendant’s receipt of an

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                                        No. 19-20519
amended pleading or other document “from which it may first be ascertained”
that the case is eligible for removal. 28 U.S.C. § 1446(b)(3).
       The GAMCO funds filed a petition in intervention in the insurance
coverage action on January 22, 2019. In Texas, intervention occurs the moment
the intervening party files its petition. Tex. R. Civ. P. 60 (“Any party may
intervene by filing a pleading . . .”); Guar. Fed. Sav. Bank v. Horseshoe
Operating Co., 793 S.W.2d 652, 657 (Tex. 1990) (“An intervenor is not required
to secure the court’s permission to intervene.”). Assuming momentarily that
the insurance coverage action did in fact become a class action under CAFA
because of the GAMCO funds’ status as lead plaintiffs in the federal class
litigation, Defendant-Appellants were on notice that the case was eligible for
removal when the GAMCO funds intervened. Therefore, any defendants must
have removed the insurance coverage action to federal court within 30 days of
January 22 (i.e., on or before February 21). Allied World’s notice of removal
was not filed until March 1 and was therefore untimely. 3
       Alterra’s later joinder in Allied World’s untimely removal is not curative.
Each defendant has 30 days following service of an initial pleading to “file the
notice of removal.” 28 U.S.C. § 1446(b)(2)(B). As noted above, Cobalt and the
GAMCO funds first named Alterra in their fifth amended petition. With
respect to Alterra, that amended petition was the “initial pleading” for
purposes of 28 U.S.C. § 1446(b)(2)(B). Alterra’s 30-day deadline to remove

       3  Defendant-Appellants maintain that they were unable to ascertain that the
insurance coverage action was eligible for removal until the district court’s final approval of
the class action settlement agreement mooted Illinois National’s motion to strike. However,
they cite no Texas law indicating that a pending motion to strike itself nullifies a petition in
intervention. The intervention remains valid until a court, in response to a motion to strike,
strikes the petition. See Tex. R. Civ. P. 60 (“Any party may intervene by filing a pleading,
subject to being stricken out by the court for sufficient cause on the motion of any party.”); In
re Union Carbide Corp., 273 S.W.3d 152, 155 (Tex. 2008) (“[P]arties to [a] pending case may
protect themselves from the intervention by filing a motion to strike”).
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                                 No. 19-20519
therefore started to run on February 11, 2019, the date the fifth amended
petition was served. Alterra’s notice of joinder was filed on March 4, 2019—
within that deadline. But Alterra did not file its own notice of removal, instead
choosing to join the previous (and untimely) notice filed by Allied World.
Indeed, Alterra’s filing was titled “Joinder of Defendant Alterra America
Insurance Company” and reflected that Alterra “joins in the Notice of Removal
filed March 1, 2019.” Given the clear language of the removal statute, which
directs each defendant to file its own “notice of removal,” Alterra’s joinder was
insufficient.
                              IV. CONCLUSION
      Defendant-Appellants failed to timely remove the insurance coverage
action to federal court. The district court’s order granting Cobalt’s motion to
remand is AFFIRMED.

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