Apache Nitrogen Products, Inc. v. Harbor Insurance

145 F.R.D. 674, 26 Fed. R. Serv. 3d 360, 1993 U.S. Dist. LEXIS 912, 1993 WL 22043
CourtDistrict Court, D. Arizona
DecidedJanuary 28, 1993
DocketNo. CIV 92-685 TUC RMB
StatusPublished
Cited by12 cases

This text of 145 F.R.D. 674 (Apache Nitrogen Products, Inc. v. Harbor Insurance) is published on Counsel Stack Legal Research, covering District Court, D. Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Apache Nitrogen Products, Inc. v. Harbor Insurance, 145 F.R.D. 674, 26 Fed. R. Serv. 3d 360, 1993 U.S. Dist. LEXIS 912, 1993 WL 22043 (D. Ariz. 1993).

Opinion

ORDER

BILBY, District Judge.

This action arises from the Environmental Protection Agency’s (EPA) investigation of potential violations of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) at plaintiff Apache Nitrogen Products’ St. David, Arizona commercial explosives manufacturing facility. Beginning in late 1987 Apache Nitrogen Products (Apache) made repeated demands to its eighteen liability insurers, including defendants Continental Insurance Co. (Continental) and Stonewall Insurance Co. (Stonewall), for coverage in relation to the ongoing EPA investigation. These demands for coverage were unavailing, and on July 31, 1992, Apache filed suit against Continental, Stonewall, and its sixteen other liability insurers in Cochise County Superior Court, seeking declaratory relief and damages.

Rather than immediately initiate service of process pursuant to the Arizona Rules of Civil Procedure, Apache chose instead to mail “courtesy” copies of the Complaint to defendants Continental and Stonewall. Ac[676]*676companying each courtesy copy was a cover letter from plaintiffs counsel, Laura W. Janzik and dated September 1, 1992. That letter reads as follows:

Enclosed as a courtesy to you is a copy of a complaint which has been filed in Apache’s continuing efforts to obtain coverage pursuant to the terms of its insurance with you. In a final effort to resolve this matter before service of the summons and complaint and the commencement of full-blown litigation, which will be costly and time-consuming for all parties, this is to once again ask that you reconsider the position you have taken regarding Apache’s demands for coverage under your policies.

Having received its courtesy copy of the complaint on September 8, 1992, Stonewall removed to this Court on September 25, 1992.1 After having received notice of the removal and in response to the inquiry of Stonewall’s counsel, Stephen Kimble, Janzik stated, in a letter dated September 30, 1992, that “no defendant has been served in this matter, but we will be happy to notify you when that occurs.” In the same letter, Janzik requested whether Kimble would agree to accept service on Stonewall’s behalf. In a responsive letter of October 13, 1992, Robert P. Siegel, Stonewall’s associate counsel, advised Janzik that Stonewall’s counsel was not authorized to accept service on Stonewalls behalf. There were no further communications among counsel, nor was service effectuated on Stonewall. Instead, Apache on November 5, 1992 requested that the Clerk of the Court enter Stonewalls default. In support of this request, Apache argued that Stonewalls receipt on September 8 of the courtesy copy of the complaint triggered its response time under Federal Rule of Civil Procedure 81(c), which governs procedure in removed actions. Accordingly, Stonewall’s default was entered on November 9, 1992. Contemporaneously, Apache moved for a default judgment against Stonewall. On November 19, 1992 Stonewall moved to set aside the entry of default.

A similar course of events led to defendant Continental’s alleged default and its concomitant motion to set aside the entry of default. Upon receipt, also on September 8, 1992, of its courtesy copy of the Complaint, Continental’s counsel, Alison Lewis, contacted Janzik to discuss the pending lawsuit. After confirming that Continental had not yet been served, Janzik agreed that service would not be effectuat-' ed for thirty days from September 23, 1992 so that Continental could review Apache’s allegations and formulate a response to Apache’s coverage demand. On October 7, 1992, Continental removed the action to this Court.2 On October 21, 1992, Janzik, who was on notice of Continental’s removal, agreed to further delay service until October 30, 1992. On November 5, 1992, Continental having failed to respond to Apache’s coverage demand, Apache requested that the Clerk of the Court enter Continental’s default pursuant to Rule 81(c). Contemporaneously, Apache moved for entry of default judgment. On December 3, 1992, Continental moved to set aside the entry of default.

DISCUSSION

Confusion over identical language found in both Rule 81(c) and the federal removal statute lies at the heart of the current dispute. Section 1446(b) of Title 28 of the United States Code provides in pertinent part that:

The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based____

28 U.S.C. § 1446(b) (emphasis added). The cases are split as to when this thirty day [677]*677period starts to run. The majority view, often described as the Love approach, is that the defendant must both be served with process and receive a copy of the initial pleading before the clock starts ticking. See, e.g., Love v. State Farm Mutual Auto Ins. Co., 542 F.Supp. 65, 67 (N.D.Ga. 1982). But a significant minority of cases follow the so-called Tyler approach, and, focusing on the words “or otherwise,” hold that the thirty-day period commences upon defendant’s simple receipt of a copy of the initial pleading, regardless of whether service has been effectuated. See, e.g., Tyler v. Prudential Ins. Co. of America, 524 F.Supp. 1211, 1213 (W.D.Pa.1981). Within the Ninth Circuit, the reported cases reflect this split of authority, the Love approach holding a three-to-two edge. Compare Bennett v. Allstate Ins. Co., 753 F.Supp. 299 (N.D.Cal.1990) (service required) and Student A. v. Metcho, 710 F.Supp. 267 (N.D.Cal.1989) (service required) and Thomason v. Republic Ins. Co., 630 F.Supp. 331 (E.D.Cal.1986) (service required) with Uhles v. F. W. Woolworth Co., 715 F.Supp. 297 (C.D.Cal.1989) (service not required) and Pic-Mount Corp. v. Stoffel Seals Corp., 708 F.Supp. 1113 (D.Nev.1989) (service not required).

In view of this conflicting authority, receipt of the courtesy copies of the Complaint presented Continental and Stonewall with a dilemma: To await service of process or to remove immediately? Lacking foresight into which of the two conflicting approaches this Court would follow, both Stonewall and Continental prudently chose not to risk their right to remove by awaiting service. Instead, each defendant, acting independently and without knowledge of the other’s actions, filed a notice of removal to this Court within thirty days of its receipt of the courtesy copy.

By so doing, however, defendants unwittingly created a new problem; ironically, one that involves the interpretation of language identical to that of the federal removal statute discussed above. Federal Rule of Civil Procedure 81(c) provides that:

In a removed action in which the defendant has not yet answered, the defendant shall answer or present the other defenses or objections available under these rules within 20 days after the receipt through service or otherwise of a copy of the initial pleading setting forth the claim for relief upon which the action or proceeding is based____

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145 F.R.D. 674, 26 Fed. R. Serv. 3d 360, 1993 U.S. Dist. LEXIS 912, 1993 WL 22043, Counsel Stack Legal Research, https://law.counselstack.com/opinion/apache-nitrogen-products-inc-v-harbor-insurance-azd-1993.