Encompass Insurance Co v. Stone Mansion Restaurant Inc
902 F.3d 147 (2018)
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Rule of Law:
Under 28 U.S.C. § 1441(b)(2), a forum defendant may remove a case to federal court based on diversity jurisdiction before being formally served with process. Furthermore, Pennsylvania's Dram Shop law, which limits a liquor licensee's liability to injured third parties, does not preclude a joint tortfeasor from seeking contribution from the licensee under the Uniform Contribution Among Tort-feasors Act (UCATA).
Facts:
- On March 20-21, 2011, Stone Mansion Restaurant served alcohol to Brian Viviani, allegedly continuing to serve him after he became visibly intoxicated.
- After leaving the restaurant, Viviani drove a car with Helen Hoey as a passenger.
- Viviani crashed the vehicle, resulting in his own death and significant injuries to Hoey.
- Encompass Insurance Company was the liability insurance carrier for the vehicle Viviani was driving.
- Encompass, acting on behalf of Viviani's estate, paid Hoey $600,000 to settle her claims.
- As part of the settlement, Hoey released her claims against all potentially responsible parties, including Stone Mansion.
Procedural Posture:
- Helen Hoey filed a civil action against Brian Viviani's estate in the Court of Common Pleas of Allegheny County, Pennsylvania (a state trial court).
- Encompass Insurance Company settled Hoey's claims on behalf of the estate.
- Encompass then sued Stone Mansion Restaurant in the same state trial court, seeking contribution.
- Before being formally served with the complaint, Stone Mansion removed the action to the United States District Court for the Western District of Pennsylvania.
- Encompass filed a motion to remand the case to state court, which the District Court denied.
- Stone Mansion moved to dismiss the complaint for failure to state a claim, which the District Court granted.
- The District Court denied Encompass's subsequent motion for reconsideration.
- Encompass appealed both the denial of its motion to remand and the dismissal of its complaint to the U.S. Court of Appeals for the Third Circuit.
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Issue:
Does Pennsylvania's Dram Shop law, which limits a licensee's liability to third persons injured by an intoxicated patron, bar a joint tortfeasor from seeking contribution under the Uniform Contribution Among Tort-feasors Act (UCATA) against the licensee?
Opinions:
Majority - Chagares, Circuit Judge
No. Pennsylvania's Dram Shop law does not bar a claim for contribution under the UCATA. The court first affirmed the district court's denial of the motion to remand, holding that the forum defendant rule of 28 U.S.C. § 1441(b)(2) is procedural and its plain language unambiguously prevents removal only after an in-state defendant has been 'properly joined and served.' Because Stone Mansion removed the case before it was formally served, the removal was proper. The court rejected the argument that this literal interpretation produced an 'absurd result,' stating that while peculiar, it is a matter for Congress to address. On the substantive issue, the court reversed the dismissal of Encompass's complaint. It reasoned that Encompass's claim is not a direct action for damages under the Dram Shop law, but a distinct, equitable claim for contribution under the UCATA. The Dram Shop law limits a licensee's liability to injured third parties like Hoey; it does not address or limit the equitable duty of contribution among joint tortfeasors. Because Encompass's settlement extinguished Stone Mansion's potential liability to Hoey, Encompass is entitled to seek contribution from Stone Mansion as a potential joint tortfeasor.
Analysis:
This decision solidifies the 'snap removal' strategy, whereby a sophisticated in-state defendant who monitors dockets can remove a diversity case to federal court before a plaintiff can execute service, thereby circumventing the forum defendant rule. The court's adherence to a strict textualist reading of the statute places the burden on Congress to close this perceived loophole. Substantively, the ruling clarifies that specific tort statutes limiting liability to a certain class of plaintiffs do not necessarily insulate a tortfeasor from contribution claims brought by a co-tortfeasor. This reinforces the distinction between a primary tort action and a secondary action for contribution, emphasizing that contribution is an equitable remedy designed to apportion loss among responsible parties.
