United States District Court, W.D. Oklahoma
TRAVIS B. HOLMAN, ET AL, Plaintiffs,
COVENTRY HEALTH & LIFE INSURANCE COMPANY, ET AL. Defendants.
HEATON, CHIEF U.S. DISTRICT JUDGE
case is before the court on plaintiffs' second motion to
remand. Having considered the parties' submissions at the
evidentiary hearing and otherwise, the court concludes the
motion should be granted.
particular claims asserted by plaintiffs and the facts or
alleged facts related to those claims are set out fully in
other filings and it is unnecessary to recite them in detail
here. Briefly stated, plaintiffs Travis Holman and Melissa
Holman assert defendant Coventry Health & Life Insurance
Company, their health insurer, wrongfully denied Ms.
Holman's claim for coverage of her gall bladder surgery.
Ms. Holman had a health policy in force issued by Coventry,
but decided to enroll in a different Coventry-provided
policy-with higher premiums and a lower deductible-prior to
the surgery. Green Insurance Associates Inc., an Oklahoma
corporation ("Green"), was involved in procuring
the new policy for the plaintiffs. Coventry ultimately
refused to pay for the surgery, on the basis that the new
policy was cancelled for non-payment of premiums and because
Ms. Holman misrepresented facts about her health on the
application for the policy. Plaintiffs assert claims for
breach of contract and for bad faith breach against Coventry.
case was originally filed in Oklahoma state court and removed
to this court. At the time of its original filing, plaintiffs
asserted claims against both Coventry and Green. Coventry
removed the case on the basis of diversity. It argued that
Green, a non-diverse defendant, was fraudulently joined and
should therefore be ignored for purposes of determining
diversity. This court concluded there was some possibility of
a valid claim being asserted against Green and that it should
not be viewed as fraudulently joined. The court remanded the
case to the District Court of Oklahoma County on December 6,
2016. Order, December 6, 2016, Case No. CIV-16-1078-HE [Doc.
proceedings occurred in state court after the December 2016
remand, including discovery by the parties. Coventry filed a
motion to dismiss. The state court converted the motion to
one for summary judgment and, on March 10, 2017, issued an
order refusing to dismiss the case and concluding that
plaintiffs' claims were not barred due to non-compliance
with the insurance policy's notice provisions. [Doc.
#10-1] at 1-2. Thereafter, on August 3, 2017, plaintiffs
dismissed Green from the case.
then removed this case a second time, arguing that the
one-year time limit on removal did not apply due to the
applicability of the "bad faith" exception. 28
U.S.C. § 1446(c)(1). It contends that plaintiffs did not
seriously pursue its claims against Green after the remand
and that plaintiffs' assertion and treatment of its
purported claims against Green were designed to manipulate
the jurisdictional calculation, take advantage of the
one-year bar, and ultimately avoid a second removal to this
court. Plaintiffs have since filed a second motion to remand.
The court held an evidentiary hearing on the motion on
October 31 and November 1, 2017, at which testimony was
received and other evidence offered.
"bad faith" exception to § 1446(c)(1)'s
one-year removal limitation is of relatively recent vintage
and there is no explicit guidance from the Tenth Circuit
Court of Appeals as to how the exception should be applied.
Another district court in this Circuit has addressed the
application of the exception in considerable detail. See
Aguavo v. AMCO Ins. Co.. 59 F.Supp.3d 1225 (D.N.M.
2014). A number of district courts, both in this circuit and
elsewhere, have followed its approach. See, e.g. Parkview
Gardens Bldg. Owners Ass'n v. Owners Ins. Co.. No.
16-CV-2673-WJM-CBS, 2017 WL 3288313 at **6-7 (D. Colo. May 3,
2017); Kamal-Hashmat v. Loews Miami Beach Hotel Operating
Co.. No. 16-cv-24864-GAYLES, 2017 WL 433209 at *4 (S.D.
Fla. Jan. 27, 2017); Bristol v. Ford Motor Co.. No.
4:16-cv-01649-JAR, 2016 WL 6277198 at **3-4 (E.D. Mo. Oct.
27, 2016). The court concludes the Aguavo analysis
is a useful guide for determining the current motion.
employed a two-step analysis in determining whether "bad
faith" within the meaning of § 1446(c) has been
shown. First, the court determines whether the plaintiff
actively litigated against the non-diverse defendant in state
court. Aguavo, 59 F.Supp.3d at 1274. If plaintiff
shows there was active litigation against that defendant, a
presumption of good faith arises. Id. at 1274-75.
That leads to step two, in which the question becomes whether
the defendant has shown, from all the evidence and despite
the active litigation, that the plaintiffs real reason for
keeping the non-diverse defendant in the case past the
one-year deadline was the desire to keep the case in state
court. Id. at 1275-76.
the first step, plaintiffs' submissions here are
sufficient to show that they actively litigated against Green
after the first remand. Plaintiffs issued discovery requests
to Green. They also issued discovery requests to Coventry
which implicated issues that were pertinent to the claims
against Green. Motion practice occurred, with Green seeking
dismissal of the claims against it and plaintiffs resisting
that effort. The court concludes these actions are sufficient
to show "active litigation" and hence to trigger
the presumption of good faith.
question becomes whether Coventry has offered sufficient
evidence to rebut that presumption. The Aguavo
court's discussion of the showing necessary to rebut a
presumption of good faith is perhaps more important than the
specific steps involved. Aguavo indicates, based
principally on the general presumption against removal, that
a court should "draw all reasonable inferences"
from the evidence in plaintiffs favor. Id. at 1276.
Or, as that court put it, "The Court wants a smoking gun
or close to it." Id. at 1277.
court has some hesitation about placing too much emphasis on
the presumption against removal. While that principle
continues to be referenced by the Tenth Circuit and other
authorities in various contexts, it is also true that
Congress has, in some circumstances, acted to protect the
availability of the federal forum via expanded removal
mechanisms. The Class Action Fairness Act of 2005, Pub. L.
109-2, 119 Stat. 4 (2005) is one such example. See Woods
v. Standard Ins. Co.. 771 F.3d 1257, 1262 (10th Cir.
2014) (explaining the purposes of the Class Action Fairness
Act was to expand federal court jurisdiction over class
actions). So there is at least some question as to how
aggressively the presumption against removal should be
applied in determining the nature of the exception involved
here, which was plainly intended to protect access to a
federal forum. Further, requiring a "smoking gun"
may often be tantamount to a requirement of direct evidence
of the intent to manipulate the forum selection, and evidence
of that sort will rarely be available even when bad faith is
actually involved. Still, even subject to those limitations,
it appears the Aguavo formulation is substantially
correct-that the defendant must present strong, relatively
compelling evidence, direct or circumstantial, of the
plaintiffs subjective intent in order to rebut the
presumption of good faith.
that standard here, the court concludes defendant's
evidence falls short- barely-of making the necessary showing.
There is ample evidence which circumstantially supports the
proposition that plaintiffs' principal purpose for
pursuing claims against Green, and for keeping it in the
case, was to defeat removal. The familial relationship
between Ms. Holman and the Green principals, Ms. Holman's
prior representation of Green or related companies (Ms.
Holman is an attorney),  the rather pointed question of Jason
Green early in the dispute as to whether the reason Green was
joined was to avoid federal court,  the timing of ...