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Cisney v. Johnson

United States District Court, M.D. Alabama, Northern Division

July 25, 2018

ERIC CISNEY AND KERRI CISNEY, Plaintiffs,
v.
ROBERT GREY JOHNSON, JR., Defendant.

          MEMORANDUM OPINION AND ORDER

          TERRY F. MOORER UNITED STATES MAGISTRATE JUDGE

         This action is assigned to the undersigned magistrate judge to conduct all proceedings and order entry of judgment by consent of all the parties (Docs. 17-19, filed 9/1/16) and 28 U.S.C. § 636(c). Pending before the Court is Plaintiffs' Motion to Remand (Doc. 7, filed 11/4/17) and Defendant's Motion to Dismiss or, In the Alternative, to Transfer (Doc. 6, filed 11/3/17). The motions have been fully briefed and are ripe for review. Having considered the motions and relevant law, the Court finds the motion to remand is due to be DENIED. Further, the Court finds that the Alternative Motion to Transfer Venue (Doc. 6) is due to be GRANTED in part and DENIED in part. This case shall be transferred to the Northern District of Alabama - Northeastern Division pursuant to 28 U.S.C. § 1404(a) and the remaining motions to dismiss shall be held in abeyance pending transfer to the new Court.

         I. Facts and Procedural History[1]

         Plaintiffs Eric Cisney and Kerri Cisney (collectively “Plaintiffs” or “Cisneys”) filed this a complaint in the Circuit Court of Montgomery County, Alabama on September 28, 2017. See Doc. 1, Atch 1, Complaint. Both Cisneys are Alabama citizens. The suit asserted four separate counts - Declaratory Judgment, Conversion, Wantonness, and Legal Malpractice. The allegations are against Robert Grey Johnson (“Defendant” or “Johnson”) who was Plaintiffs' original lawyer in the underlying auto accident lawsuit.[2] Johnson is a licensed attorney in the State of California. Around July 17, 2015, the Cisneys were in an accident while in Riverside County, California. Specifically, Eric Cisney was injured while a passenger in a fire truck owned by the Riverside County Fire Department. After the accident, the Cisneys signed a contingency fee agreement with Defendant Johnson during the representation of the lawsuit that followed.

         The first settlement from the at-fault party's insurance carrier occurred around April/May 2016. The settlement was for policy limits. Afterwards, Defendant (on behalf of Plaintiffs) pursued an underinsured motorist (“UIM”) claim from the Plaintiffs' insurance carrier, Metropolitan Property and Casualty Insurance Company (“Met”). Around June 2016, Met filed a declaratory judgment action in federal court wherein it asserted that it had no duty to pay the UIM claim because Plaintiffs and Defendant Johnson failed to give it notice of the proposed auto accident settlement and further failed to secure Met's consent to the settlement terms as required by the insurance contract (“declaratory judgment action). Consequently, Defendant retained a local law firm Balch & Bingham to serve as local counsel on the UIM claim against Met and to defend in the Met declaratory judgment case. Plaintiffs assert that both before and after retaining local counsel, Defendant still advised on the UIM claim by providing legal advice and recommendations to Plaintiffs including selection of an arbitrator, date, and preparation of the arbitration action in Alabama.

         On or about August 1, 2017, Plaintiffs terminated Defendants' services for cause and retained new counsel. On or about September 22, 2017, the UIM claim was resolved by agreement with MET for policy limits of $500, 000.00 and the proceeds deposited into the new counsel's trust account. Defendant sent notice that he claimed attorney's lien on proceeds payable from the UIM settlement in the amount of $175, 338.00 (“the lien”). The proceeds are still withheld until the matter resolved. See Doc. 1, Atch 3, Complaint. On September 28, 2017, Plaintiffs filed their lawsuit in the Circuit Court of Montgomery County, Alabama. Id. Plaintiffs request (1) declaratory judgment that the lien is subject to Alabama law and is unenforceable, (2) conversion, (3) wantonness, and (4) legal malpractice. Id. at p. 3-5. Plaintiffs seek the declaratory judgment on the lien and compensatory and punitive damages in the amount of $50, 000.00. Id. at p. 5.

         On October 6, 2017, Defendant Johnson initiated his own case in the Central District of California federal court. See Doc. 23 at p. 3. He asserts his own claim for declaratory relief and for breach of the contingency fee agreement. Id. Then on October 18, 2017, Defendant Johnson filed a Notice of Removal in this Court based on an assertion of diversity jurisdiction for the case originally brought by the Cisneys in Alabama state court. See Doc. 1, generally. Defendant states in the Notice of Removal that the case is properly removable under 28 U.S.C. §1441 because the United States District Court now has original jurisdiction over this case under 28 U.S.C. §1332. Specifically, Defendant asserts diversity jurisdiction exists in this case because the amount in controversy exceeds the $75, 000 jurisdictional threshold and complete diversity of citizenship exists among the parties. Plaintiffs are citizens of Alabama. Defendant is a citizen of California.

         Shortly after removal, Defendant filed his motion to dismiss and alternative motion to transfer venue. See Doc. 6. In the motion, Defendant asserts he is not subject to an Alabama malpractice claim. Id. at p. 2-3. He alternatively argues that the claims should be transferred to either the Northern District of Alabama or California federal court. Id. at 3-6. He also argues first-to-file with regard to California and argues this lawsuit was filed after his case filed in California. Id. at p. 5-6.

         On November 4, 2017, Plaintiffs timely filed their motion to remand in this case. See Doc. 7. Plaintiffs make the argument that the claim for declaratory judgment is not a claim for money. They merely seek the declaration that the attorneys' fee lien is invalid. Defendant filed its response arguing that “[t]he idea that there is any material separation between declaring a monetary lien invalid versus actually awarding a sum to a party is ridiculous and, at minimum, insufficient to have this case remanded to the Circuit Court in which the action was erroneously filed.” See Doc. 14 at p. 2. On November 30, 2017, Plaintiffs timely responded to Defendant's motion to dismiss and alternative motion to transfer venue. See Doc. 17.

         Finally, on January 5, 2018, the court in the Central District of California entered an order denying a motion to dismiss in its court, but stayed its case pending resolution by this Court. See Doc. 23, Copy of Order. Further, the California federal court makes the judicial finding that the Cisneys' case was the first filed. Id. at p. 5-6.

         After review of the various pleadings, motions, and responses, the Court determines the issues are fully briefed and no oral arguments are necessary. The motions are ripe for review.

         II. Standards of Review

         A. Jurisdiction/Remand

         Federal courts have a strict duty to exercise jurisdiction conferred on them by Congress. Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716, 116 S.Ct. 1712, 1720, 135 L.Ed.2d 1 (1996). However, federal courts are courts of limited jurisdiction and possess only that power authorized by Constitution and statute. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 1675, 128 L.Ed.2d 391 (1994); Burns v. Windsor Insurance Co., 31 F.3d 1092, 1095 (1994). Defendant, as the party removing this action, have the burden of establishing federal jurisdiction. See Leonard v. Enterprise Rent a Car, 279 F.3d 967, 972 (11th Cir. 2002) (citing Williams v. Best Buy Co., 269 F.3d 1316, 1318 (11th Cir. 2001)). Further, the federal removal statutes must be construed narrowly and doubts about removal must be resolved in favor of remand. Allen v. Christenberry, 327 F.3d 1290, 1293 (11th Cir. 2003) (citing Diaz v. Sheppard, 85 F.3d 1502, 1505 (11th Cir. 1996)); Burns, 31 F.3d at 1095 (citations omitted).

         B. Venue

         Rule 12(b)(3) of the Federal Rules of Civil Procedure provides that a party may assert a defense of improper venue by motion. Pursuant to § 1391(b), venue is proper in:

(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located;
(2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or (3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action.

28 U.S.C. § 1391(b). If venue is improper, the district court “shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.” 28 U.S.C. § 1406(a). The plaintiff carries the burden of showing that venue is proper in the chosen forum once the defendant contests venue under Rule 12(b)(3). Pritchett v. Paschall Truck Lines, Inc., 714 F.Supp.2d 1171, 1174 (M.D. Ala. 2010).

         When reviewing a challenge to venue, the Court accepts the allegations of the complaint “as true, to the extent they are uncontroverted by defendants' affidavits.” Delong Equip. Co. v. Wash. Mills Abrasive Co., 840 F.2d 843, 845 (11th Cir. 1988); see also Estate of Myhra v. Royal Caribbean Cruises, Ltd., 695 F.3d 1233, 1239 (11th Cir. 2012) (stating same). The Court “may make factual findings necessary to resolve motions to dismiss for improper venue, ” so long as the resolution of the factual disputes is not an adjudication on the merits of the case. Bryant v. Rich, 530 F.3d 1368, 1376 (11th Cir. 2008). A court must draw all reasonable inferences and resolve all factual conflicts in favor of the plaintiff. Wai v. Rainbow Holdings, 315 F.Supp.2d 1261, 1268 (S.D. Fla. 2004). “Rule 12(b)(3) is a somewhat unique context of dismissal in which we consciously look beyond the mere allegations of a complaint, and, although we continue to favor the plaintiff's facts in the context of any actual evidentiary dispute, we do not view the allegations of the complaint as the exclusive basis for decision.” Estate of Myhra, 695 F.3d at 1239.

         C. Failure to State a Claim

         A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the complaint. Gilmore, 125 F.Supp.2d at 471. To survive a motion to dismiss for failure to state a claim, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). In considering a defendant's motion to dismiss, the “court must view the complaint in the light most favorable to the plaintiff and accept all the plaintiff's well-pleaded facts as true.” Am. United Life Ins. v. Martinez, 480 F.3d 1043, 1057 (11th Cir. 2007) (citing St. Joseph's Hosp. Inc. v. Hosp. Corp. of Am., 795 F.2d 948, 954 (11th Cir. 1986)). In other words, in deciding a 12(b)(6) motion to dismiss, the court will accept the petitioner's allegations as true. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984); Ellis v. General Motors Acceptance Corp., 160 F.3d 703, 706 (11th Cir. 1998); Roberts v. Florida Power & Light Co., 146 F.3d 1305, 1307 (11th Cir. 1998) (citing Lopez v. First Union National Bank of Florida, 129 F.3d 1186, 1189 (11th Cir. 1997)). However, “[c]onclusory allegations, unwarranted deductions of facts or legal conclusions masquerading as facts will not prevent ...


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