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Encompass Insurance Co. v. Stone Mansion Restaurant Inc.

United States Court of Appeals, Third Circuit

August 22, 2018

ENCOMPASS INSURANCE COMPANY Appellant
v.
STONE MANSION RESTAURANT INCORPORATED

          Argued: October 12, 2017

          Appeal from the United States District Court for the Western District of Pennsylvania (No. 2-17-CV-00125) District Judge: Hon. Arthur J. Schwab

          Joshua R. Guthridge, Esq. [ARGUED] R. Sean O'Connell, Esq. Robb Leonard Mulvihill LLP Counsel for Appellant

          Miles A. Kirshner, Esq. [ARGUED] Kyle T. McGee, Esq. Margolis Edelstein Counsel for Appellee

          Before: CHAGARES, JORDAN, FUENTES, Circuit Judges.

          OPINION

          CHAGARES, CIRCUIT JUDGE.

         This appeal, which presents issues of statutory interpretation, stems from a tragic automobile crash that killed the intoxicated driver and seriously injured the sole passenger. Encompass Insurance Company ("Encompass"), the liability carrier for the vehicle, settled the passenger's claims against the driver's estate and all other possible parties, including Stone Mansion Restaurant Incorporated ("Stone Mansion") - the restaurant that allegedly overserved the driver. Thereafter, Encompass brought the instant action against Stone Mansion in Pennsylvania state court, seeking contribution under state law. Stone Mansion removed the case to the United States District Court for the Western District of Pennsylvania. Following a dispute over removal, the District Court concluded that the case was properly before it and later dismissed the case pursuant to Federal Rule of Civil Procedure 12(b)(6). Encompass appeals both the decision on the removal and the dismissal. For the reasons stated below, we will affirm in part and reverse in part.

         I.

         On the night of March 20 and the early morning of March 21, 2011, Brian Viviani attended an event at Stone Mansion, a restaurant in Pittsburgh, Pennsylvania. The restaurant allegedly furnished him with alcohol until he became intoxicated and then continued to serve him alcohol. Thereafter, Viviani left Stone Mansion and drove away in an automobile with Helen Hoey, who had hosted the event. After Viviani drove a short distance, the vehicle struck a guardrail and flipped onto its roof, killing him and causing Hoey significant injury.

         Hoey filed a civil action against Viviani's estate on July 25, 2013, in the Court of Common Pleas of Allegheny County, Pennsylvania. She alleged that the accident occurred because Viviani was driving while intoxicated. His estate tendered the defense against the lawsuit to Encompass, which was at all relevant times the liability insurance carrier for the vehicle. Encompass reached a settlement agreement with Hoey, whereby it paid her $600, 000 and she released her claims against all possible defendants.

         Encompass, a citizen of Illinois, then brought the instant action against Stone Mansion, a Pennsylvania corporation, in the Court of Common Pleas of Allegheny County. Encompass alleged that: (1) it stands in the shoes of the insured, Viviani's estate; (2) Stone Mansion served Viviani alcohol while he was visibly intoxicated; (3) "[u]nder Pennsylvania's Dram Shop law, a business or individual who serves alcohol to a visibly intoxicated person is legally responsible for any damage that person might cause"; and (4) as a joint tortfeasor under the Uniform Contribution Among Tort-feasors Act ("UCATA"), Stone Mansion is liable to Encompass for contribution. Appendix ("App.") 36-44.

         In email correspondence between counsel for Encompass and for Stone Mansion, counsel for Stone Mansion agreed to accept electronic service of process instead of requiring formal service. Specifically, counsel for Stone Mansion informed counsel for Encompass that "[i]n the event your client chooses to file suit in this matter, I will be authorized to accept service of process" and that "if and when you do file, provide your Complaint to me along with an Acceptance form."[1] App. 85. Minutes later, counsel for Encompass replied in relevant part, "Thank you . . . for agreeing to accept service." Id. On January 23, 2017, Encompass sent Stone Mansion a copy of the filed complaint and a service acceptance form via email. Counsel for Stone Mansion replied, "I will hold the acceptance of service until I get the docket n[umber]." App. 92. That same day, Encompass provided the docket number; however, Stone Mansion did not return the acceptance form. App. 95, 99. Instead, on January 26, counsel for Stone Mansion responded:

Thank you for your patience in this regard. . . . I want to explain why I have not yet returned the Acceptance of Service form.
Noting that there is diversity of citizenship, and an amount in controversy in excess of $75, 000, we are considering removing this action to federal court. While 28 USC [sic] §1441(b) generally prevents a resident defendant from removing an action to federal court in its own state, the language of the statute precludes such removal when a resident defendant has been "properly joined and served". We are aware of an opinion from Chief Judge Conti in the Western District of PA, interpreting this to mean that a resident defendant can remove prior to being served.
I fully acknowledge having agreed prior to your filing suit that we will accept service. I maintain that agreement, but because it may affect our client's procedural ability to remove the case, I have to hold off doing so until after the Notice of Removal is filed. I expect this will happen in the next one or two days. Happy to discuss this with you over the phone if you desire.

App. 99.

         Thereafter, prior to formal acceptance, Stone Mansion timely removed the matter to the United States District Court for the Western District of Pennsylvania. Encompass filed a motion to remand the matter to the Pennsylvania state trial court on the grounds that removal was improper pursuant to the forum defendant rule; however, the District Court denied the motion. The District Court concluded that the forum defendant rule does not apply because it precludes removal only "if any of the parties in interest properly joined and served as defendants is a citizen of the State in which [the] action is brought" and because Stone ...


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