Tamm Consulting v. The Cincinnati Insurance Company
- Ronnie Abrams
- 1:18-cv-11415
- U.S. District Court · Southern District of New York
- 10
In Tamm Consulting v. The Cincinnati Insurance Company, Judge Abrams remanded the case to state court, denied fees and costs, and denied defendants’ dismissal motions as moot.
The plaintiffs’ case was returned to New York state court. The plaintiffs received no award of attorneys’ fees or costs, and the defendants’ motions to dismiss were denied as moot; the federal court did not resolve the underlying claims.
What happened
Tamm Consulting v. The Cincinnati Insurance Company arose from water damage and contamination to property stored by Einar Tamm and Tamm Consulting, and an insurance claim that The Cincinnati Insurance Company refused to pay for some of the property. The plaintiffs, who were representing themselves, sued the insurer and several engineering-related defendants in New York state court; the insurer later moved the case to federal court.
The court ordered the case returned to state court. It found that the engineering-related defendants were not improperly added to the case because the plaintiffs had a reasonable possible claim that they interfered with the insurance contract by issuing false reports. The court also found that those defendants did not independently give written consent to removal within the required 30-day period. The court did not award the plaintiffs fees or costs.
Judge Abrams ruled that the motion to remand was granted, the motion for attorneys’ fees and costs was denied, and the defendants’ motions to dismiss were denied as moot. The court did not decide whether the plaintiffs would ultimately win their underlying claims.
The detailed version
- Tamm Consulting v. The Cincinnati Insurance Company · No. 1:18-cv-11415
- Ronnie Abrams
- Mar. 9, 2020
Background
Einar Tamm and Tamm Consulting sued The Cincinnati Insurance Company, Turner Forensics, Turner Engineering, P.C., Daniel D. Turner, Troy McClure, and unidentified defendants. The plaintiffs were proceeding without lawyers. Their claims arose from water damage and other contamination to property kept in a storage facility, as well as The Cincinnati Insurance Company’s refusal to pay part of an insurance claim for the damaged property.
The plaintiffs originally filed in New York state court. The Cincinnati Insurance Company removed the case to the Southern District of New York based on diversity jurisdiction. The plaintiffs moved to remand, meaning they asked the federal court to return the case to state court. The defendants also moved to dismiss the amended complaint for failure to state a claim.
Magistrate Judge Moses recommended granting the motion to remand and denying an award of costs and attorneys’ fees. The parties objected to that recommendation, so Judge Abrams reviewed the challenged portions of the report and recommendation.
Reasons for Remand
The defendants argued that the magistrate judge improperly considered allegations of fraud that were not included in the original state-court pleading. The court rejected that argument. It explained that, when deciding whether defendants were fraudulently joined, the court could consider information outside the initial removal pleadings to clarify or amplify claims that had already been alleged. The plaintiffs had alleged tortious interference with contract against the engineering-related defendants, and the later allegations about allegedly false engineering reports supported that existing theory rather than creating a separate fraud claim.
The defendants also argued that the engineering-related defendants could not be liable for tortious interference because they were agents of The Cincinnati Insurance Company. The court rejected that argument at the remand stage. Under New York law, an agent may be liable when the agent acts in bad faith and commits independent tortious or predatory acts for personal financial gain. The court concluded that the plaintiffs had alleged a reasonable possibility that the engineering-related defendants could be liable if they committed fraud that induced The Cincinnati Insurance Company to breach its contract with Tamm. The court emphasized that the question was not whether the claim would probably survive dismissal, but whether there was any reasonable possibility that the state court would allow it to proceed.
The court identified a separate basis for remand: the engineering-related defendants did not independently provide written consent to removal within the required 30-day period. This requirement is commonly called the rule of unanimity, which generally requires all defendants to consent to removal within the statutory period. The Cincinnati Insurance Company’s statement that the engineering-related defendants consented was not enough, and the engineering-related defendants’ later notice did not cure the failure to provide timely independent consent.
Attorneys’ Fees and Motions to Dismiss
The plaintiffs asked for costs and attorneys’ fees based on the allegedly late consent to removal and their contention that The Cincinnati Insurance Company removed the case in bad faith. The court denied that request. It found that, although the defendants’ arguments for removal were unpersuasive, they had an objectively reasonable basis for seeking removal because of the legal issues concerning fraudulent joinder. The court therefore declined to award fees and costs.
The court reviewed the rest of the magistrate judge’s report for clear error and found none. In the conclusion, Judge Abrams granted the plaintiffs’ motion to remand, denied the plaintiffs’ motion for attorneys’ fees and costs, and denied the defendants’ motions to dismiss as moot. The clerk was directed to return the case to the Supreme Court of the State of New York, Bronx County, and close the federal case. The opinion did not decide the merits of the plaintiffs’ underlying claims.
Read the full 10-page opinion on CourtListener, the free public archive maintained by the Free Law Project.