Christensen Law Offices, LLC v. Eric Christensen ( 2022 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAR 14 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CHRISTENSEN LAW OFFICES, LLC, No. 21-15887
Plaintiff-Appellant, D.C. No.
2:21-cv-00424-JCM-BNW
v.
ERIC CHRISTENSEN; ELMINA ANN MEMORANDUM*
CHRISTENSEN,
Defendants-third-party-
plaintiffs-Appellees,
v.
GOVERNMENT EMPLOYEES
INSURANCE COMPANY; et al.,
Third-party-defendants-
Appellees.
Appeal from the United States District Court
for the District of Nevada
James C. Mahan, District Judge, Presiding
Submitted February 17, 2022**
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: SILER,*** S.R. THOMAS, and CALLAHAN, Circuit Judges.
Christensen Law Offices, LLC (CLO) appeals the district court order denying
its motion for attorneys’ fees and costs. For the foregoing reasons, we AFFIRM.
CLO sued Eric Christensen and Elmina Christensen (the Christensens) in the
Nevada state court to establish the Christensens’ debt under a retainer agreement.
The Christensens had hired CLO as their purported Cumis-Hansen counsel, see State
Farm Mut. Auto. Ins. Co. v. Hansen, 357 P.3d 338, 343 (Nev. 2015), while their
insurer, Government Employees Insurance Company (GEICO), was settling a claim
for them. The Christensens filed a third-party complaint against GEICO and the
lawyers GEICO had hired to represent the Christensens, Winner & Sherrod, Ltd.,
and Bruce W. Kelley, seeking indemnification for the Christensens’ debt for CLO’s
attorneys’ fees. CLO settled its claim against the Christensens but did not dismiss
the claim. GEICO then removed the case to federal court based on diversity
jurisdiction. CLO and the Christensens moved to remand because GEICO was the
only diverse party, and CLO sought attorneys’ fees and costs against GEICO for the
allegedly improper removal under 28 U.S.C. § 1447(c). The district court remanded
the case but declined to award any fees.
***
The Honorable Eugene E. Siler, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
2
We have jurisdiction to review a district court’s order granting or denying a
motion for fees and costs under § 1447(c). Gardner v. UICI, 508 F.3d 559, 560–61
(9th Cir. 2007). We review de novo whether the district court applied the correct
legal standard for awarding attorneys’ fees and review the award for abuse of
discretion. Moore v. Permanente Med. Grp., Inc., 981 F.2d 443, 445–46, 447 (9th
Cir. 1992).
Upon remand, a district court “may require payment of just costs and any
actual expenses, including attorney fees, incurred as a result of the removal.” 28
U.S.C. § 1447(c). Absent unusual circumstances, courts may award attorneys’ fees
“only where the removing party lacked an objectively reasonable basis for removal.”
Martin v. Franklin Cap. Corp., 546 U.S. 132, 141 (2005). “[R]emoval is not
objectively unreasonable solely because the removing party’s arguments lack merit.
. . .” Lussier v. Dollar Tree Stores, Inc., 518 F.3d 1062, 1065 (9th Cir. 2008). To
determine whether an objectively reasonable basis for seeking removal exists, we
consider whether “at the time the notice of removal was filed” the basis was “clearly
foreclosed.” Id at 1066.
Each of GEICO’s bases for removal was objectively reasonable, and CLO
never identified “unusual circumstances” that warrant “depart[ure] from the general
rule,” therefore, “fees should be denied.” Martin, 546 U.S. at 141.
3
Defendants may remove cases to federal court, but generally third-party
defendants may not. See Westwood Apex v. Contreras, 644 F.3d 799, 805 (9th Cir.
2011). Yet “[c]ourts may realign parties, according to their ultimate interests,
whether the realignment has the effect of conferring or denying subject matter
jurisdiction on the court.” Smith v. Salish Kootenai Coll., 434 F.3d 1127, 1133 (9th
Cir. 2006) (en banc). GEICO sought realignment as a defendant because CLO sued
the Christensens so the Christensens could sue GEICO.
Even though Winner & Sherrod, Ltd. and Bruce W. Kelley were non-diverse
defendants, see Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996) (requiring complete
diversity), courts may “disregard the citizenship of a non-diverse defendant who has
been fraudulently joined.” Grancare, LLC v. Thrower ex rel. Mills, 889 F.3d 543,
548 (9th Cir. 2018). GEICO reasonably argued its co-defendants were fraudulently
joined because the Christensens allegedly were not entitled to hire CLO in the first
place, and thus the Christensens “could not possibly” recover their debt for CLO’s
attorneys’ fees from either defendant. Id. at 548.
By the same token, GEICO reasonably forewent its co-defendants’ consent to
removal. See United Comput. Sys., Inc. v. AT&T Corp., 298 F.3d 756, 762 (9th Cir.
2002) (“The rule of unanimity does not apply to . . . fraudulently joined parties.”
(cleaned up)). It likewise reasonably argued the Christensens were not required to
consent, as they were plausibly aligned as plaintiffs. See 28 U.S.C. § 1446(b)(2)(A).
4
Finally, GEICO sensibly waited to remove the action on March 15, 2021, less
than thirty days after being served on February 22, 2021. GEICO had not become
“subject to any court’s authority” before being served and thus could not be expected
to file a notice of removal within thirty days of receiving the Christensens’ settlement
agreement with CLO. Murphy Bros. v. Michetti Pipe Stringing, Inc., 526 U.S. 344,
356 (1999). Therefore, “if the complaint is filed in court prior to any service”—as
both the complaint and third-party complaint were here—“the removal period runs
from the service of the summons.” Id. at 354.
Also, assuming the action commenced when CLO filed its complaint, GEICO
reasonably argued CLO and the Christensens acted in “bad faith” to prevent it from
seeking removal less “than 1 year after commencement of the action.” 28 U.S.C. §
1446(b)(3), (c)(1). We have yet to define this standard—which weighs in GEICO’s
favor—but considering CLO’s suit against the Christensens was admittedly pro
forma, and the Christensens filed their third-party complaint in October 2020 but
only served GEICO two days before the one-year bar, GEICO reasonably
complained of bad faith.
The district court did not abuse its discretion by denying attorneys’ fees and
costs.
AFFIRMED.
5