Attorneys O'Connell and Guthridge File Appeal Leading to Precedential Opinion

In Encompass v. Stone Mansion Restaurant, an insurer filed suit against a bar for contribution under the Uniform Contribution Among Tortfeasors Act (“UCATA”) after it had settled a claim brought by an injured passenger against the insured driver of an automobile that was involved in an accident. The insurer claimed in its complaint that the bar was a joint tortfeasor with the driver of the vehicle because it had served the driver while he was visibly intoxicated and therefore was liable for contribution to the insurer, standing in the shoes of its insured driver, for the bar’s share of the liability to the injured passenger. The bar insisted that Pennsylvania's Dram Shop Law subjected it to liability only to injured individuals themselves and did not expose it to a claim for contribution to its joint tortfeasor or the joint tortfeasor’s insurer who paid to settle the claim. The United States District Court for the Western District of Pennsylvania dismissed the insurer’s complaint, finding that the Dram Shop Act did not create a cause of action for the insurer. On behalf of the insurer, Robb Leonard Mulvihill LLP appealed the dismissal to the United States Court of Appeals for the Third Circuit arguing that its claim was for contribution pursuant to the UCATA and that was not seeking an independent cause of action pursuant to the Dram Shop Act. In a precedential opinion, the Third Circuit reversed the District Court’s dismissal holding that an insurer that settled claims against a driver arising out of an automobile accident could bring a contribution claim against a bar that allegedly over-served alcoholic beverages to the driver. The Third Circuit concluded that nothing in the language of the Dram Shop Act precluded the contribution claim. Encompass Ins. Co. v. Stone Mansion Rest. Inc., 902 F.3d 147 (3d Cir. 2018)..

In the same case, the United States Court of Appeals for the Third Circuit also reached a decision on an important federal court removal issue for the first time. The insurer had filed suit for contribution against the bar in Pennsylvania. The bar was admittedly a citizen of Pennsylvania. The removal statute precludes removal of cases by a forum defendant that has been “properly joined and served.” The “properly joined and served” requirement is “to prevent a plaintiff from blocking removal by joining as a defendant a resident party against whom it does not intend to proceed, and whom it does not even serve.” Arthur Hellman, et al., Neutralizing the Strategem of “Snap Removal”: A Proposed Amendment to the Judicial Code, 9 Fed. Cts. L. Rev. 103, 108 (2016). Although the bar was the only defendant in the case and through its counsel agreed to accept service of the complaint, it removed the case to federal court before accepting service citing to the “properly joined and served” requirement in the statute. The District Court denied a motion to remand filed by the insurer. On appeal, the Third Circuit affirmed the District Court’s denial of remand holding that the plain meaning of the statute requires the defendant to have been served before removal is precluded. The Third Circuit held that “[r]easonable minds might conclude that the procedural result demonstrates a need for a change in the law; however, if such change is required, it is Congress—not the Judiciary—that must act.” Commentators have opined that the Third Circuit’s ruling encourages defendants to monitor the electronic state court dockets and quickly remove cases to federal court in that brief window of time between the filing of the complaint and service on the defendants (“Snap Removal”). Prior to the Third Circuit’s decision, the district courts had been divided on the issue of snap removals. The Third Circuit’s ruling removes any doubt as to whether defendants in Pennsylvania, New Jersey and Delaware can utilize snap removals. It remains to be seen whether Congress will take action to neutralize the stratagem of snap removal as urged by legal professionals.  Encompass Ins. Co. v. Stone Mansion Rest. Inc., 902 F.3d 147 (3d Cir. 2018).

Encompass Insurance Company is represented in the case by Robb Leonard Mulvihill partners R. Sean O’Connell, Esquire and Joshua R. Guthridge, Esquire.