Liberty Mutual tried to pull a $150 million collection case into federal court. On July 17, a co-defendant's move kept it in state court.
Years earlier, a woman won a Missouri judgment against the couple who abused her as a small child - $150 million against each of them - for what the court called "the physical and sexual abuse she endured while under their care when she was 3-4 years old."
Winning was one thing. Collecting was another. In January 2025, she sued again in state court, this time adding the couple's homeowner's insurer, Liberty Mutual Fire Insurance Company. She filed equitable garnishment claims - a way to reach insurance coverage to satisfy a judgment - against all three, and added bad faith, breach of contract, and breach of fiduciary duty claims against Liberty Mutual.
Liberty Mutual moved the case to federal court on Jan. 31, pointing to diversity of citizenship. Federal removal has a catch, though: on that basis, every defendant must agree.
They did not. One of the individual defendants had not been served when the insurer removed the case. When he entered weeks later, he sided with the plaintiff and asked to send the case back to state court. The district court agreed the defendants were not unanimous. A removal missing that agreement is "defective," it said, and remanded.
The insurer's appeal went nowhere. The Eighth Circuit ruled that federal law keeps appeals courts from reviewing most remand orders. If the district court believed it was acting on a procedural defect, the order stands - "no matter how plain the legal error in ordering the remand."
One judge dissented, arguing the objection came far too late and that a later-served defendant cannot "retroactively veto" a completed removal.
The takeaway for insurers: removal is fragile when several defendants are in play. A co-defendant, even the insured, can pull a case back to state court - and reversing that on appeal is nearly impossible.
