Encompass Insurance Co. v. Stone Mansion Restaurant Inc.

902 F.3d 147 (2018)

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Encompass Insurance Co. v. Stone Mansion Restaurant Inc.

United States Court of Appeals for the Third Circuit
902 F.3d 147 (2018)

Facts

Stone Mansion Restaurant Inc. (Stone Mansion) (defendant), a Pennsylvania corporation, continued to serve alcohol to Brian Viviani after Viviani became intoxicated. After leaving Stone Mansion, Viviani crashed his car, killing himself and seriously injuring his passenger, Helen Hoey. Encompass Insurance Company (Encompass) (plaintiff), Viviani’s insurer, settled Hoey’s claim against Viviani’s estate for $600,000. Encompass, an Illinois corporation, then filed an action against Stone Mansion in Pennsylvania state court seeking contribution, arguing that (1) Stone Mansion violated Pennsylvania’s dram-shop act by overserving alcohol to Viviani and (2) because Stone Mansion and Viviani were joint tortfeasors, Encompass, as Viviani’s insurer, was entitled to recover Stone Mansion’s share of the settlement. Via email, Stone Mansion agreed to accept electronic service of Encompass’s complaint in lieu of personal service and to complete the required service-acceptance form. However, instead of returning the required service-acceptance form, Stone Mansion timely removed the pending state civil action to federal court based on diversity of citizenship. Because Stone Mansion never returned the acceptance of service, Stone Mansion was never properly joined and served in the state civil action. Encompass moved to remand the action back to state court, arguing that because Stone Mansion was a Pennsylvania corporation sued in Pennsylvania state court, removal was barred by the forum-defendant rule. The district court denied Encompass’s motion, holding that the forum-defendant rule applied only to resident defendants who had been properly joined and served in the underlying state action prior to removal. Encompass appealed, arguing that it would have completed service but for Stone Mansion’s failure to return the service-acceptance form as promised.

Rule of Law

Issue

Holding and Reasoning (Chagares, J.)

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