United States District Court,

D. Kansas.

Randel and Kathryn McDONALD d/b/a McDonald Marketing Service, Plaintiffs,

v.

BAM, INC. d/b/a Bam Trucking or Bam Transportation, Lloyd’s Underwriters at London and Charter Oak Fire Insurance Company, Defendants.

 

Civil Action No. 13–2048–KHV–JPO.

March 5, 2013.

 

Paul P. Hasty, Jr., Hasty & Associates, LLC, Overland Park, KS, for Plaintiffs.

 

Marc A. Powell, Powell Law Offices, Wichita, KS, for Defendants.

 

MEMORANDUM AND ORDER

KATHRYN H. VRATIL, District Judge.

*1 On December 3, 2012, plaintiffs filed suit in the District Court of Wyandotte County, Kansas against BAM, Inc., d/b/a BAM Trucking or BAM Transportation, Lloyd’s Underwriters at London, and Charter Oak Fire Insurance Company. The state court petition sought damages for the loss of frozen food products which BAM had contracted to transport from Missouri to Kansas. On January 28, 2013, Charter Oak removed the case to this Court, asserting diversity jurisdiction under 28 U.S.C. § 1332. Notice Of Remand Of Civil Action (Doc. # 1). This matter comes before the Court on plaintiffs’ Motion To Remand And Memorandum In Support (Doc. # 4) filed January 30, 2013. Because the Court finds that the removal was procedurally defective, it sustains plaintiffs’ motion to remand, including plaintiffs’ request for attorney fees.

 

Legal Standards

A defendant may remove any state court civil action if a federal court has original jurisdiction over the claim. 28 U.S.C. § 1441(a). In addition to lack of subject matter jurisdiction, defects in the removal procedure are grounds for remand. See 28 U.S.C. § 1447(c); Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 711–12 (1996); Henderson v. Holmes, 920 F.Supp. 1184, 1186 (D.Kan.1996). Procedural defects include a deficient or untimely notice of removal, or any failure to comply with the procedural requirements of Section 1446(b). SBKC Serv. Corp. v. 1111 Prospect Partners, L.P., 105 F.3d 578, 580 (10th Cir.1997); Sheet Metal Workers Int’l Ass’n, AFL–CIO v. Seay, 693 F.2d 1000, 1005 n.8 (10th Cir.1982); Henderson, 920 F.Supp. at 1186. When the general removal statute—Section 1441(a)—is the sole basis for removal, “all defendants who have been properly joined and served must join in or consent to the removal of the action” within the 30–day period defined in Section 1446(b)(1). Henderson, 920 F.Supp. at 1187 (quoting 28 U.S.C. §§ 1446(b)(2)(A)). This is known as the unanimity requirement; unless all defendants join a notice of removal filed under Section 1441(a), it is procedurally defective and fails. Cornwall v. Robinson, 654 F.2d 685, 686 (10th Cir.1981); Henderson, 920 F.Supp. at 1186; see also 28 U.S.C. § 1447(c); SBKC Serv. Corp., 105 F.3d at 580; Sheet Metal Workers Int’l, 693 F.2d at 1005 n.8.

 

To “join” a notice of removal is to support it in writing. Henderson, 920 F.Supp. at 1186. This does not mean that each defendant must sign the same notice of removal, but each defendant must “independently and unambiguously file notice of its consent and its intent to join in the removal within the thirty-day period.” Wakefield v. Olcott, 983 F.Supp. 1018, 1021 (D.Kan.1997); Henderson, 920 F.Supp. at 1186; see also 28 U .S.C. § 1446(b)(1) (30–day period). Requiring each defendant to unambiguously join or consent to removal on the record is not an onerous requirement, and without it, nothing on the record would bind the allegedly consenting defendant.   Henderson, 920 F.Supp. at 1187 n.2.

 

*2 Exceptions to the unanimity rule exist where “nominal, unknown, unserved or fraudulently joined defendants” do not join or consent to removal.   McShares, Inc. v. Barry, 979 F.Supp. 1338, 1342 (D .Kan.1997); see also Dodson Aviation, Inc. v. HLMP Aviation Corp., No. 08–4102–EFM, 2009 WL 1036123, at *2–3 (D.Kan. Feb. 12, 2009) (denying motion to remand where nominal defendant failed to join or consent to removal). But the Court strictly construes removal statutes and resolves all doubts in favor of remand. See Ortiz v. Biscanin, 190 F.Supp.2d 1237, 1241 (D.Kan.2002); Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir.1995). As the removing party, Charter Oak has the burden to show that it properly removed the action. Wakefield, 983 F.Supp. at 1020; Henderson, 920 F.Supp. at 1186.

 

Factual And Procedural Background

As noted, on December 3, 2012, plaintiffs sued BAM, Lloyd’s Underwriters and Charter Oak in Wyandotte County District Court. On December 27, 2012, plaintiffs served Lloyd’s Underwriters and Charter Oak through the Kansas State Department of Insurance. Commissioner’s Proof Of Service (Doc. # 6 at 14–19) filed in Wyandotte County District Court on December 31, 2012; see K.S.A. § 40–218 (insurance companies transacting business in Kansas must consent to service of process through commissioner of insurance; commissioner shall make return of summons to issuing court; such return “shall have the same force and effect as a due and sufficient return made on process directed to a sheriff”). The record reflects that although plaintiffs requested service on defendant BAM, on January 9, 2013, the Sheriff’s Office of Pettis County, Missouri returned the summons without service, noting that BAM had moved with no forwarding address. See Doc. # 6 at 20, filed in Wyandotte County District Court on January 23, 2013.

 

On January 28, 2013, Charter Oak removed the case to this Court, asserting diversity jurisdiction under 28 U.S.C. § 1332. Notice Of Removal Of Civil Action (Doc. # 1).FN1 On January 30, 2013, plaintiffs filed a timely motion to remand. Motion To Remand And Memorandum In Support (Doc. # 4).

 

FN1. The notice of removal states that Charter Oak’s registered agent received the petition on December 31, 2012 or January 2, 2013.

 

Analysis

I. Motion To Remand

Charter Oak’s removal is based on the general removal statute, 28 U.S.C. § 1441(a), so “all defendants who have been properly joined and served must join in or consent to the removal of the action” within the 30–day period defined in Section 1446(b)(1).FN2 See 28 U.S.C. § 1446(b)(2)(A); Henderson, 920 F.Supp. at 1186–87. Failure to comply with this requirement renders the notice of removal procedurally defective and subject to remand. See 28 U.S.C. § 1447(c); Cornwall, 654 F.2d at 686; Henderson, 920 F.Supp. at 1186. Plaintiffs contend that removal was improper because Charter Oak’s co-defendant, Lloyd’s Underwriters, was served on December 27, 2013, but did not timely join or consent to removal.

 

FN2. 28 U.S.C. § 1446 provides in relevant part as follows:

 

(a) Generally.—defendant or defendants desiring to remove any civil action from a State court shall file in the district court of the United States for the district and division within which such action is pending a notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant or defendants in such action.

 

(b) Requirements; generally.

 

(1) The notice of removal of a civil action or proceeding shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within 30 days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

 

(2)(A) When a civil action is removed solely under section 1441(a), all defendants who have been properly joined and served must join in or consent to the removal of the action.

 

(B) Each defendant shall have 30 days after receipt by or service on that defendant of the initial pleading or summons described in paragraph (1) to file the notice of removal.

 

(C) If defendants are served at different times, and a later-served defendant files a notice of removal, any earlier-served defendant may consent to the removal even though that earlier-served defendant did not previously initiate or consent to removal.

 

*3 Charter Oak acknowledges that failure of all defendants to join or consent to removal constitutes a defect in removal and is therefore a basis for remand. Charter Oak asserts, however, that it properly removed the action based on the exception to the unanimity rule for unserved defendants. Plaintiffs correctly point out, however, that when Charter Oak filed the notice of removal on January 28, 2013, plaintiffs had properly joined and served Lloyd’s Underwriters. Charter Oak’s argument that the unserved defendant exception applies is without merit as to Lloyd’s Underwriters. See Henderson, 920 F.Supp. at 1186 (removing party has burden to show that it properly accomplished removal). Charter Oak has not carried its burden of proof to show that its notice of removal was procedurally proper, i.e. that all properly joined and served defendants joined in or consented to removal, 28 U.S.C. § 1446. See Geisler v. Don Hunt & Assocs., No. 11–1113–JTM, 2012 WL 966119, at *1 (D.Kan. Mar. 21, 2012); Henderson, 920 F.Supp. at 1186. Charter Oak’s notice of removal was therefore procedurally defective. See Wakefield, 983 F.Supp. at 1021; Henderson, 920 F.Supp. at 1186. The Court sustains plaintiffs’ motion to remand. See 28 U.S.C. § 1447(c).

 

II. Plaintiffs’ Request For Attorney Fees

Plaintiffs ask the Court to order Charter Oak to pay the just costs and actual expenses, including attorney fees, that plaintiffs incurred as a result of the removal. Under 28 U.S.C. § 1447(c), an order remanding a case “may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.” Absent unusual circumstances, courts may award costs and attorney fees under Section 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal. Conversely, when an objectively reasonable basis exists, courts should deny requests for costs and fees. Martin v. Franklin Cap. Corp., 546 U.S. 132, 141 (2005); Porter Trust v. Rural Water Sewer & Solid Waste Mgmt. Dist. No. 1, 607 F.3d 1251, 1253 (10th Cir.2010). As a prerequisite to awarding attorney fees and costs under 28 U.S.C. § 1447(c), the Court need not find that defendant removed the state court action in bad faith. Excell, Inc. v. Sterling Boiler & Mech., Inc., 106 F.3d 318, 322 (10th Cir.1997). The propriety of removal is the central issue in deciding whether to allow expenses and costs. Id. An award of costs and expenses under Section 1447(c) is committed to the Court’s broad discretion.

 

Charter Oak’s removal was procedurally defective because a properly served co-defendant did not timely join or consent to removal. Exercising its broad discretion, the Court grants plaintiffs’ request for costs and actual expenses. See FastPro Int’l, Inc. v. Great Plains Software O.C., No. 01–2082–KHV, 2001 WL 395287, at *2 (D. Kan. April 10, 2001).

 

IT IS THEREFORE ORDERED that plaintiffs’ Motion To Remand And Memorandum In Support (Doc. # 4) filed January 30, 2013 be and hereby is SUSTAINED. Under 28 U.S.C. § 1447(c), the Court remands this action to the District Court of Wyandotte County, Kansas. The Court orders Charter Oak to pay to plaintiffs the costs and expenses, including attorney fees, incurred as a result of the removal. In that regard, the parties shall follow the procedures set forth in D. Kan. Rule 54.2. On or before March 25, 2013, plaintiffs shall file the requisite stipulation and request for order, or statement of consultation and memorandum in support of its request for fees.

United States District Court,

E.D. California.

CHEVRON ENVIRONMENTAL MANAGEMENT COMPANY and Chevron USA, Plaintiffs,

v.

BKK CORPORATION, et. al, Defendants.

 

No. 1:11–CV–1396 LJO–BAM.

March 6, 2013.

 

FINDINGS AND RECOMMENDATIONS ON APPROVING SETTLEMENT AGREEMENT AND DISMISSING DEFENDANT WITH PREJUDICE

BARBARA A. McAULIFFE, United States Magistrate Judge.

INTRODUCTION

*1 Before the Court is Plaintiffs Chevron Environmental Management Company and Chevron USA’s (collectively “Chevron”) Motion for Good Settlement Determination. (Doc. 137). In this Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) action, Chevron moves for a good faith settlement determination pursuant to California Code of Civil Procedure Section 877.6 with Defendant Burtch Trucking Inc. d/b/a Burtch Construction. (“Burtch Trucking” or “Settling Party”). (Doc. 137). On March 1, 2013, a hearing on the motion was held. Counsel Courtney Carlson appeared by telephone on behalf of Plaintiffs Chevron. Counsel John Allen appeared by telephone for Defendants Burtch Trucking Inc., L.W. Potter Inc., MP Vacuum Truck Service, Ensign United States Drilling Inc., and San Joaquin Refining Co. For the reasons discussed below, this Court recommends that Chevron’s Motion for Good Faith Settlement Determination should be GRANTED.

 

BACKGROUND

Chevron is the owner of EPC Eastside Disposal Facility (the “Site”), which is located on Round Mountain Road in Kern County, fifteen (15) miles northeast of Bakersfield, California. Pl.’s Complaint at ¶ 1, Doc. 1. From approximately 1971 to 1985, the Site was operated as a waste disposal facility. During this time, the Site received millions of gallons of oil and non-oil waste that was later disposed of in unlined impoundments. After site testing, the State of California determined that clean-up of the Site was necessary.

 

As an effort to coordinate clean-up efforts with responsible parties, Chevron executed an Imminent and Substantial Endangerment Determination and Consent Order. The Remedial Action Plan for the Site was approved on February 1, 2008 by the Department of Toxic Substances Control. The Remedial Plan stemming from the Consent Order requires substantial remedial efforts, construction and long-term monitoring of the site. Chevron has paid and is currently paying the response costs associated with the investigation and cleanup of the EPC site.

 

On August 22, 2011, Chevron filed this cost recovery action under the CERCLA, 42 U.S.C. §§ 9601–9675; alleging CERCLA causes of action, as well as contribution and/or indemnity claims against a number of defendants in response to releases or threatened release of hazardous substances at the Site. Complaint at ¶ 1. In its Complaint, Chevron alleges that the total cost of clean-up exceeds $17,000,000 and that it is entitled to contribution and/or indemnity of the response costs from the named Defendants, as each are strictly, jointly and severally liable for all past and future response costs associated with the investigation and cleanup at the Site. Complaint at ¶ 41.

 

In October 2011, Chevron began settlement negotiations with the named Defendants in order to reduce the significant defense costs involved with this litigation as well as costs related to each Defendants’ apportionment of joint and several liability. See Complaint at ¶¶ 31–42. The potential share of liability for each Defendant, and Chevron, was calculated by Chris Wittenbrink, President of CR Consulting, Inc., a management consulting firm that specializes in resolution of environmental disputes and litigation. See Wittenbrink Decl. at ¶¶ 1–2, Ex. 2, Doc. 107. The basis for Mr. Wittenbrink’s calculations was the initial estimated amount of cleanup costs, $16,830,000. See Id. at ¶ 3. Mr. Wittenbrink subtracted the total amount of settlements received at the time of the calculation, $3,883,445.00, as well as the financial contribution made by the owner, $1,910,138.00. Id. at ¶ 3. Mr. Wittenbrink created a formula for liability based on each transporter’s and each generator’s relative share of oil and non-oil volumes, as shown in operational records and manifests. Id. at ¶ 4. He then allocated 10% of the unrecovered costs to the transporters and 90% to the generators and thereafter calculated the relative share according to the enumerated formula, taking into account the oil and non-oil related volumes, the toxicity premium, and a premium for avoidance costs and indemnity from Chevron. Id. at ¶¶ 3–6. Mr. Wittenbrink then assigned an approximate cost of clean-up for each Defendant, which Chevron used in its settlement negotiations.

 

*2 Chevron has now reached a settlement agreement with Defendant Burtch Trucking. The key terms of the settlement agreement are, without admitting liability and with no admission of wrongdoing: (1) Chevron assumes any and all obligations that the Settling Party may have to conduct and pay all costs related to clean-up at the Site; (2) Chevron and the Settling Party agree to mutually release existing or future claims related to clean up actions at the Site and Chevron further agrees to indemnify the Settling Party for costs incurred in connection to clean-up at the Site; and (3) the Settling Party agrees not to sue any other potentially responsible parties who enter into similar settlement agreements with Chevron. EPC Eastside Disposal Settlement Agreement, Exh. 1, Doc. 137–1.

 

Chevron moves for an order approving that its settlement with Burtch Trucking is in good faith pursuant to California Code of Civil Procedure § 877.6.

 

ANALYSIS

A court sitting in diversity has discretion to determine that a settlement is in good faith pursuant to California Code of Civil Procedure Section 877.   Mason & Dixon Intermodal, Inc. v. Lapmaster Int’l LLC, 632 F.3d 1056, 1064 (9th Cir.2011). The good faith provision of section 877 mandates that the courts review agreements purportedly made under its aegis to insure that such settlements appropriately balance the contribution statute’s dual objectives.”   Tech–Bilt, Inc. v. Woodward–Clyde & Assocs., 38 Cal.3d 488 (Cal .1985). The good faith provision further provides that when a settlement is determined by a court to have been made in good faith, the settlement “bar[s] any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor or co-obligor for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault.” CAL.CIV.PROC.CODE § 877.6(C). The party applying for a good faith settlement determination is required to give notice of its application to all other parties and to the court. CAL.CIV.PROC.CODE § 877.6(a). “A settling tortfeasor’s section 877.6, subdivision (c) good faith settlement determination discharges indemnity claims by other tortfeasors, whether or not named as parties, so long as the other tortfeasors were given notice and an opportunity to be heard.” Gackstetter v. Frawley, 135 Cal.App. 4th 1257, 1273 (Cal.App.2d Dist.2006).

 

To determine whether a settlement was entered into in good faith, the Courts consider the TechBilt factors which include:

 

(1) a rough approximation of plaintiff’s total recovery and the settler’s proportionate liability; (2) the amount paid in settlement; (3) a recognition that a settler should pay less in settlement than if found liable after trial; (4) the allocation of the settlement proceeds; (5) the settling party’s financial condition and the availability of insurance; and (6) evidence of any collusion, fraud or tortious conduct between the settler and the plaintiff aimed at requiring the non-settling parties to pay more than their fair share.

 

*3 Tech–Bilt, Inc., 38 Cal.3d at 499. “Once there is a showing made by the settlor of the settlement, the burden of proof on the issue of good faith shifts to the nonsettlor who asserts that the settlement was not made in good faith.” City of Grand Terrace v. Superior Court, 192 Cal.App.3d 1251, 1261 (1987). A party opposing the settlement agreement “must demonstrate … that the settlement is so far ‘out of the ballpark’ in relation to these factors as to be inconsistent with the equitable objectives of the statute.” Tech–Bilt, Inc., 38 Cal.3d at 499–500.

 

1. Terms of the Chevron–Burtch Trucking Settlement Agreement

Burtch Trucking has agreed to pay $150,000.00 to settle all of Chevron’s claims as to Burtch Trucking. (Doc. 137 at 4). As calculated by Mr. Wittenbrink, a rough approximation of Burtch Trucking’s proportionate liability is at least $179,567.23 in estimated clean-up costs. Wittenbrink Decl. at 6. This represents less than 1% of the $16,830,000.00 in total clean up costs. Wittenbrink Decl. at ¶ 3. Thus, the settlement amount is within the ballpark of Burtch Trucking’s alleged proportionate liability.

 

Further, the proposed settlement with Burtch Trucking was reached after extensive settlement negotiations. Chevron and Burtch Trucking negotiated the settlement for approximately fifteen (15) months. During that time period, the parties communicated no less than five (5) times via telephone and exchanged no less than nine (9) emails regarding settlement. Finally, Burtch Trucking represents that it does not oppose the motion for good faith settlement. Carlson Decl. at ¶ 5, Doc. 137–3.

 

2. The Chevron–Burtch Trucking Settlement is in Good Faith

The Court has reviewed Chevron’s motion for good faith settlement, its supporting declarations, the Tech–Bilt factors, and the lack of opposition. The Court finds that the settlement between Burtch Trucking and Chevron was reached in good faith under California Code of Civil Procedure section 877.6. All named Defendants received notice of the motion, the accompanying settlement amount, and the supporting declarations. The parties have now had an adequate opportunity to perform a complete analysis of the settlement agreements and express any objections or opposition. To date, no party has filed objections. Further, at the hearing on the motion, no party objected to the settlement. The motion is unopposed, and no party has demonstrated that the settlement agreement is unreasonable or inconsistent with the equitable objectives of Section 877.6. Moreover, no party has objected to the formula or calculations by Mr. Wittenbrink to determine the basis of liability for Chevron or Burtch Trucking.

 

Next, the Chevron–Burtch Trucking settlement satisfies the Tech–Bilt factors. One of the most important Tech–Bilt factors is the proportion of liability. Toyota Motor Sales U.S.A., Inc. v.Super. Ct., 220 Cal.App.3d 864, 871 (1990). A “settlement figure must not be grossly disproportionate to what a reasonable person, at the time of the settlement, would estimate the settling defendant’s liability to be.” Torres v. Union Pac. R.R. Co., 157 Cal.App.3d 499, 508 (1984). The $150,000.00 Burtch Trucking has agreed to pay is proportionate to Burtch Trucking’s potential liability of $179,567.23 as calculated by Mr. Wittenbrink. Further, the Court has considered that the settlement amount is less than the amount Burtch Trucking may have paid had it been found liable at trial. Tech–Bilt, Inc., 38 Cal.3d at 499. With regard to the remaining Tech–Bilt factors, in consideration of Burtch Trucking’s financial condition and insurance policy limits, Burtch Trucking does not dispute that it has sufficient finances and insurance to pay more than the settlement amount on any judgment that may be entered against it at the time of trial. Finally, no evidence suggests that the Chevron–Burtch Trucking settlement is a result of collusion, fraud, or tortious conduct. Indeed, the Chevron–Burtch Trucking settlement was initiated during an arms-length, informed, and independent settlement negotiation. The settlement agreement was reached early in the litigation and the settlement eliminates any additional costs of discovery, motions, and trial preparation as to the Settling Party.

 

*4 Accordingly, the Chevron–Burtch Trucking settlement agreement is a culmination of good faith negotiations, and no evidence has been presented to show the amount of settlement or any other matter in connection with the settlement is aimed at harming the non-settling defendants. Pursuant to Section 877.6, this Court recommends that Chevron’s settlement agreement with Burtch Trucking is in good faith.

 

FINDINGS AND RECOMMENDATIONS

For the reasons discussed above, this Court RECOMMENDS, that

 

1. Chevron’s settlement with Burtch Trucking, Inc. should be GRANTED as entered into in good faith within the meaning of California Code of Civil Procedure section 877.6 and therefore any and all claims for equitable comparative contribution, and partial and complete comparative indemnity, based on comparative negligence or comparative fault, against Burtch Trucking Inc. be forever barred pursuant to California Code of Civil Procedure § 877.6(c). (Doc. 137);

 

2. Chevron’s claims against Burtch Trucking Inc. should be DISMISSED with prejudice;

 

3. ounsel for Chevron is DIRECTED to serve a copy of this Order on all named defendants.

 

These Findings and Recommendations are submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Rule 304 of the Local Rules of Practice for the United States District Court, Eastern District of California. Within fifteen (15) days after being served with these Findings and Recommendations, any party may file written objections with the court and serve a copy on all parties. Such a document should be captioned “Objections to Magistrate Judge’s Findings and Recommendations.” The district judge will review the magistrate judge’s findings and recommendations pursuant to Title 28 of the United States Code section 636(b)(1)(C). The parties are advised that failure to file objections within the specified time may waive the right to appeal the District Court’s order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir.1991).

 

IT IS SO ORDERED.