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New York Federal Court Remands Insurance Coverage Action Based on Insurer’s Failure to Satisfy Unanimity Rule

Blogs, Insurance Coverage

Earlier this month, the U.S. District Court for the Southern District of New York remanded an action seeking a declaration as to insurance obligations in an underlying personal injury suit because the insurer defendant that removed the action to federal court failed to satisfy the unanimity rule set forth in 28 U.S.C. § 1446(b)(2). Metropolitan Transportation Authority v. United States Fidelity & Guaranty Co., No. 14 Civ. 9059 (PAE) (S.D.N.Y. Apr. 14, 2015).

Plaintiffs brought the declaratory judgment action in New York state court, seeking a declaration that various insurers had a duty to defend and indemnify Plaintiffs in connection with a personal injury suit, which ultimately settled during trial in state court. One of the six insurance companies named as defendants in the coverage action, General Star Indemnity Co. (“General Star”), removed the case to federal court. Thereafter, Plaintiffs moved to remand.

In considering Plaintiffs motion to remand, the Honorable Paul A. Engelmayer, U.S.D.J., noted that courts in the Second Circuit have interpreted 28 U.S.C. § 1446(b)(2) to require that all defendants independently express their consent to removal. In other words, in the Second Circuit, “it is insufficient for a defendant who has not signed the removal petition to merely advise the removing defendant that it consents to removal and that the removing defendant may represent such consent to the Court on its behalf.” Instead, the “rule of unanimity” requires that all defendants either sign the notice of removal or subsequently provide the Court with their own “unambiguous written consent to removal” within the statutory thirty-day time period. 

As none of General Star’s five co-defendants signed the notice of removal or submitted any writing evincing their consent to removal, the Court found that the rule of unanimity was not satisfied. Accordingly, the Court remanded the action to the New York state court. 

This ruling is significant as it confirms the Second Circuit’s interpretation of the unanimity rule. Notably, in certain other circuits, the rule has been interpreted to allow consent to be expressed by the removing defendant only. Seee.g.Samaan v. St. Joseph Hospital, 670 F.3d 21, 28-29 (1st Cor. 2012) (finding that “effective consent to the removal can be manifested in other ways [than simply by having all defendants sign the notice of removal]”); Sullivan v. Sullivan, No. 13-11624-NMG, 2014 WL 550986, *3 (D. Mass. Feb. 7, 2014) (finding unanimity rule satisfied where removing defendant filed notice of removal and also indicated that the other defendants consented and/or joined in the removal of the action).